reported that the Standing Committee on Vote No. 16.—“Health”, had agreed to the Vote.

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

1. (1) On page 3, in line 19, after “invertebrate,” to insert:

1. (2) on page 3, in line 20, after “sea animal” to insert “or aquatic animal”.

Allow me just to motivate the amendments briefly. The fact that Viskor will now be authorized—as is envisaged in clause 5—to exercise its powers in respect of fish and aquatic plants in fresh water too, is to be welcomed. Of course, this is being done with the view to encouraging a commercial fresh water fishing industry in South Africa.

However, when one looks at the definition of “aquatic plant” in clause 1, one notices that there is an express cross-reference to clause 5. Unfortunately, this is lacking in the definition of “fish”. In order to put it beyond all doubt that Viskor can now become involved in sea and fresh water species of fish, as well as with hybridization, etc. in fresh water, I move the definition of “fish” as set out in my amendment.

Mr. Chairman, the amendments of the hon. member for Worcester are completely acceptable to me.

Amendments agreed to.

Clause, as amended, agreed to.

Clause 4:

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

1. (1) On page 5, in line 38, after the second “of” to insert:

1. (2) on page 5, in line 38, to omit “carrying” and to substitute:

1. (3) on page 7, in line 58, to omit “with the prior approval of the Minister,”;
2. (4) on page 7, in line 60, after “money” to insert:

Mr. Chairman, I accept the amendments.

Amendments agreed to.

Clause, as amended, agreed to.

Clause 5:

Mr. Chairman, during his Second Reading speech the hon. the Minister made it clear what the broad intention of this clause was, and we made it clear that we accepted that. There are, however, certain questions of detail to which the hon. the Minister may think it appropriate to give us some reply at this stage. There are inquiries e.g. into just what sort of fresh waters and inland waters are contemplated and are not contemplated, in relation to this clause. If I recall correctly, the hon. the Minister spoke, during Second Reading, about lagoons and estuaries as places where it was desirable to carry on fish farming and research in connection therewith. It was not clear to us in these benches whether or not things like trout hatcheries, for example, which are now the responsibility of provincial administrations, are contemplated here; also whether large inland dams or farm dams, rivers, etc., are contemplated. What sort of activity is contemplated? While we have no objection in principle, other than to try to see to it that there is good order in the administration, we should like to hear more from the hon. the Minister about what his plans are.

Mr. Chairman, I should like to explain that, as I have already indicated in my Second Reading speech, there are various authorities that deal with and are responsible for one or other facet of fresh water fish. I should like to assure the hon. member that I definitely do not intend interfering with those specific activities. Surely it is obvious. I just want to explain that the responsibility of Viskor—as defined in section 3 of the principal Act and as is now being supplemented by clause 5 of the Bill—is, of course, the promotion of the fishing industry. The additional power covers the sphere of fresh water fish which is not covered by the other bodies. Now it is true that the provincial administrations are largely responsible for conserving fish resources. They also do some research work from the conservation point of view. I can give the hon. member an example of this. At the Lakes, Knysna, there is a research station of the Cape Department of Nature Conservation. This is research which I should like to see being continued in order to make the species available to farmers in the Western Cape for breeding purposes.

I just want to add that I myself did not refer to the lagoons and the estuaries. However, an hon. member referred to them and said that some fish species are fresh water as well as sea water fish. This is where the discussion arose. What I envisaged doing, was in fact merely to determine to what degree we can continue with the breeding of some species, especially with a view to water which is going to become available at power stations. I give the assurance that in any event I shall not enter any sphere at all if I am of the opinion that that particular sphere is being managed quite well at the moment by another department or breeding station.

Clause agreed to.

Clause 16:

Mr. Chairman, I want to ask the hon. the Minister why it is necessary to have a provision in the legislation to the effect that the A shares that are in the possession of the State—there are 2 500 000 of them—carry a vote which is equal to the vote of all other shares plus one. It seems rather strange when one takes into consideration the fact that the other shares amount to 500 000 at the most. I wonder whether this provision is not merely being transferred from the existing legislation without anyone having taken note of the present difference in the number of shares in the hands of various bodies or persons. It seems strange that 2,5 million shares should be a little more than equal to 0,5 million shares.

It is probably just a question of qualified franchise! Don’t you advocate that?

It nevertheless remains interesting.

Mr. Chairman, there is an explanation for this. Firstly, it is true that it has been taken over from the existing legislation. The explanation is also that there is a possibility in theory of the B shares being increased, and if this happens, one will need a provision of this nature.

Therefore, the provision should rather be left as it is.

Yes.

Clause agreed to.

Clause 36:

Mr. Chairman, hon. members will recall that we expressed our most serious misgivings about the legislation during the Second Reading debate specifically on the grounds of clause 36(2). I had something to say about the clause in that debate and the hon. the Minister replied to it fairly extensively. We have reconsidered the whole matter, and although we are not very keen on clause 36(2), we are, however, prepared to accept the hon. the Minister’s assurance that due to the other provisions of the clause, and especially the references to specific sections of the principal Act as well as some clauses of the Bill, it is probably true that it would not be possible to use the provisions of clause 36(2) to authorize anything essentially illegal, but could only be used to rectify a formality which may have been overlooked. In these circumstances we decided not to oppose the clause formally at this stage.

I want to ask the hon. the Minister, however, whether he can give us an assurance. He explained to us that the provisions of clause 36(2) were only included in the legislation in order to provide for the transitional stage when there will be a change from the provisions of the principal Act to those of the Bill and especially for the transfer of authority from the State President to the Minister himself in certain circumstances. It therefore seems as if the necessity for clause 36(2) will only be temporary. I wonder whether the hon. the Minister cannot give us the assurance now or perhaps after some consideration, that when the transitional stage is over and there is no longer the need for a provision of this nature, he will consider deleting subsection (2) from the legislation. We should greatly appreciate such an assurance.

Mr. Chairman, I have already indicated during the Second Reading debate that I understand the reservation hon. members have expressed about this type of clause. I went further and said that I naturally share this because I do not think one should have provisions that summarily condone default. This is basically what it implies. In other words, I want us to understand, in all fairness, that in these specific circumstances we are dealing with a transitional stage from one piece of legislation to another. The fact is, however, that the institution itself, which was established by the existing Act, viz. the Fisheries Development Corporation, is being continued with in terms of the new legislation. Most important in this specific regard is that certain powers could be exercised under the existing Act subject to certain formalities or requirements having been complied with. In certain cases, the specific actions also had to be given the approval of the State President and in other cases, perhaps, that of the Minister. It happened from time to time that there was not so much a deviation from the powers, as that as a result of an oversight, approval was not obtained. This clause aims at authorizing that action and therefore condoning any neglect, because where circumstances of this nature arose— and there were such cases, as I told hon. members during the Second Reading debate —certain rights and obligations emanated from those actions, rights and obligations that affected the corporation as well as other parties. I therefore think it is necessary that the position be confirmed. I want to be fair to the hon. member. Whether we shall reach a stage when we know that there are no more cases, is difficult to determine. However, if the need should subsequently lapse, the clause may just as well fall away too. I have no other reason to want such a clause on the Statute Book.

I think I must just say in conclusion that the restricting element is found in the fact that the actions had to be in agreement with the objectives or goals and the powers in the Act. I shall be pleased if the hon. member will accept it as such.

Mr. Chairman, can the hon. the Minister assure us that no person or party that played a part in the relevant transactions will suffer as a result of this provision in the legislation?

Mr. Chairman, the answer to that is very simple. They are being benefited by it now. Let me explain that. On grounds of a specific action, people entered into certain transactions and, quite correctly, assumed that the formalities of the legislation had been complied with. All that this provision does, is to say that if the formalities were not complied with, the action is considered valid in law.

Mr. Chairman, we accept the hon. the Minister’s explanation. This is how we understood the matter. I ask, however, for the assurance that not even a third or fourth party could suffer as a result of the fact that a second person’s rights, for instance, are protected by this provision in the Act. Since I do not know, I am merely asking whether the interests of a third or fourth person may not perhaps be prejudiced. I accept the hon. the Minister’s assurance that it is aimed at the protection of the rights of a second person only. I just want the assurance that no one will be prejudiced by this provision.

Mr. Chairman, I do not want there to be any misunderstanding. In terms of the existing Act, the corporation could carry out certain actions if they complied with certain formalities. Parties that were concerned with those actions would not necessarily know whether the corporation had complied with the formalities and could then have initiated negotiations with the corporation presuming that the corporation had complied with the requirements, in regard to what it did. In other words, in proposing this now—and I am pleased that the standpoint of hon. members is what it is—I am proposing nothing but to do post facto what should have been done at that time.

Clause agreed to.

House Resumed:

Bill reported with amendments.

Third Reading

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

Mr. Speaker, in the stages of the Bill thus far we have of course had to concentrate on the shortcomings of the Bill as we saw it. However, we do not want to let the Third Reading pass by without wishing the hon. the Minister and the corporation in particular everything of the best for the tasks that lie ahead. We are fully convinced that the fishing industry and its development in the years ahead are going to be of the utmost importance and that the efficiency or otherwise of the corporation’s actions can have a major impact on the prosperity and future welfare of our country and people. With these few words we should like to support the Third Reading of the Bill.

Question agreed to.

Bill read a Third Time.

Mr. Speaker, I move—

This Bill contains amendments to seven Acts administered by the Financial Institutions Office, i.e. the Insurance Act, the Stock Exchanges Control Act, the Pension Funds Act, the Inspection of Financial Institutions Act, the Participation Bonds Act, the Banks Act and the Building Societies Act. I shall confine my remarks to the more important issues.

Of the Amendments to the Insurance Act, the most important is the one which concerns the so-called “war risks clause” in life policies of members of the armed forces.

The statutory provisions governing the position are contained in section 38 of the Insurance Act, which dates from World War II. Both the life insurance industry and the Department of Defence agreed that those provisions are no longer adequate and should be revised. The revision was undertaken in close consultation with the industry and the defence authorities, and I am happy to say that they have accepted the amendments now proposed.

The existing provisions no longer serve the purpose for which they were enacted, because they were designed for conditions of war, whereas the kind of hostilities which servicemen have to face these days would not necessarily fall in that category. Furthermore section 38, which in its present form restricts the right of the insurer to exclude war risks, affords no real protection to the public in practice, for if in times of hostilities life insurers cannot exclude such risks, they have no option but to refuse to issue policies on the lives of persons liable to become exposed to such risks, and these people then suffer the hardship of being unable to obtain insurance for all other risks of death.

However, it is not the intention to repeal section 38. It will be retained, but will only apply to policies effected before the new measures become law.

The main features of the new measures are the following:—

1. (a) The military service to which the new measures will relate will no longer be restricted to conditions connected with war, but will embrace any military action against the enemy.
2. (b) If a serviceman whose life is insured dies in the course of military service, but the policy does not cover the military risk, the premiums previously paid under the policy become refundable. If the military risk is indeed covered under the policy, but for an amount less than the premiums paid, the premiums paid take the place of the insured amount.
3. (c) Where an insurer charges an extra premium for covering the military risk and the owner of the policy later decides to dispense with the cover given for the military risk, the insurer is obliged to reduce the premium by the amount of the extra premium charged.

I deal next with the amendment to the Stock Exchanges Control Act. At present a stockbroker when buying or selling Government and semi-Government securities listed on the Stock Exchange for his own account, has to do so through another stockbroker. The amendment proposed will make it possible for him to deal direct, and so place him on the same footing as banks, insurance companies and pension funds when dealing in securities of the abovementioned kind.

The amendments to the Pension Funds Act are all of a minor nature. No important principles are involved which need be elaborated on at this stage.

The amendment proposed to the Participation Bonds Act will extend the rights which a participant acquires in a participation bond, to any additional security which a manager of a scheme accepts for the protection of participants.

The amendments proposed to the Inspection of Financial Institutions Act will have the effect of extending the inspection powers of inspectors of the Financial Institutions Office. The additional powers will enable them to inspect two categories of persons outside a financial institution which is under inspection, viz. the holder of an interest in the institution and a person whose inspection the Registrar of Financial Institutions considers necessary for a proper inspection of the financial institution itself. The extension of the powers now proposed has been found to be necessary because inspectors have actually found themselves in the position where the inadequate inspection powers have prevented them from getting to the bottom of certain transactions which had suggested irregular practices on the part of the financial institution.

*Mr. Speaker, I come now to the amendments to the Banks Act and the Building Societies Act.

The rapid development in recent years of computer and data communication systems has already led to a great measure of automation of our money transfer systems, and this of course influences the money supply and monetary control.

Under the circumstances it has become necessary to make certain adjustments to the Banks Act and the Building Societies Act. The proposed amendments to the two laws in this connection are:

Firstly, to prevent savings accounts from being used for the purposes of transmitting money. Traditionally savings deposits have been classified as medium-term liabilities for the purposes of liquid asset requirements and monetary control. It is therefore essential to make provision in both Acts for a new transmission account and to distinguish clearly between savings accounts and transmission accounts. Secondly, provision is being made for the liquid assets which building societies will have to maintain in respect of transmission deposits. In respect of these deposits, precisely the same requirements are being laid down for building societies as well as banks, including the possibility of supplementary liquid assets, because these deposits fall into the category of day-to-day money and must therefore be subject to stricter control.

A further amendment to the Banks Act concerns the export promotion scheme. It is important that the prices of the capital goods and services which we export to other countries under the export credit reinsurance scheme, should be as competitive as possible. In this connection the cost of the in-process financing of such a project is an important factor. This cost can be further reduced if bills and promissory notes which banks accept from foreign purchasers under the schemes for short-term financing which they provide during the production period can be accepted as liquid assets for the banks. The recognition of these bills and promissory notes as liquid assets, will not mean an extension of the category of liquid assets since the Industrial Development Corporation is in fact able to undertake the financing concern under the existing provisions with moneys which it raises from banks against the issue of bonds or notes which count as liquid assets for banks. The alternative arrangement is being proposed because this short-term financing is the traditional business domain of the banks, which they would not like to relinquish, and they also argue that since their indirect financing, i.e. by means of IDC bonds or notes, does in fact count as liquid assets, it is reasonable to accept that in the case of their direct financing this investment also counts as liquid assets.

As hon. members know the Government intends, by way of legislation to establish a basis on which Blacks in Bantu townships in the White area, can acquire their own houses which will be theirs to dispose of entirely as they wish, including hypothecation. The basic legislation is being dealt with by the hon. the Minister of Plural Relations and Development, but it is also necessary to insert a provision in the Building Society Act to enable building societies to provide financing directly to the purchaser by means of mortgage loans. This Bill contains the necessary provision.

Another matter which necessitates urgent amendments to the Building Societies Act, is the business which various building societies are transacting in South West Africa. In view of the approaching independence of this territory, it is deemed to be in the best interests of the building societies that their business there be amalgamated and transferred to a building society which is to be established in South West Africa, or possibly to a State corporation for housing which can be established for this territory. Similar situations could also arise in the case of Bantu homelands which become independent. At present the Building Societies Act only makes provision for the transfer of all the assets and liabilities of a building society to another registered building society and for the complete merger of two or more building societies, but not for the transfer of only a portion of the assets and liabilities of a building society. It is therefore necessary to make provision in the Act empowering building societies, in certain circumstances, to transfer only a portion of their assets and liabilities to another building society or to any other approved institution. The Bill makes provision for the necessary power to effect such a transfer. Similar provision was made in the Banks Act last year.

I want to refer briefly to a few amendments which I want to propose in this Bill. Clause 29 contains an amendment to the Building Societies Act which limits the size of loans on dwelling houses according to the income of the borrower, while clause 30 contains a provision which prohibits a building society, except in such cases as the Registrar may approve, from making an advance if the borrower requires a further loan from a third party against second bond.

After considering representations in this connection from various parties, I decided to withdraw these provisions so that further consideration may be given to them.

I have also decided, in answer to requests, to extent the concession contained in clause 31 of the Bill a little by, in addition to insurer’s guarantees, allowing guarantees by other financial institutions which are approved by the Registrar in the specific cases as additional security. I shall move the necessary amendments during the Committee Stage.

Another matter which I want to raise because it has aroused wide public interest, is the question of the R18 000 limit which exists in respect of building society loans. This limit is prescribed by way of regulation in terms of section 44 of the Act and provides that loans for dwelling houses in excess of R18 000 shall not in aggregate exceed 37½% of the total value of loans from a building society. The object of this restriction was to control luxury housing. In view of the present circumstances it is felt that the abovementioned limit may be abolished and that other inhibiting measures may be applied in its stead, particularly differentiated bond rates, which are already being applied by building societies in practice and need only be refined. The provisions which I have just indicated I shall withdraw were also intended to act as a measure to inhibit luxury housing, but I feel that in view of all the circumstances we need not go this far at present. I should like to give the assurance that although we are doing away with the R18 000 limit, we shall continue to look after the interests of the small borrower, as in the past. My department remains in constant close contact with the building societies and will ensure, in co-operation with all societies, that the needs of the smaller borrower will not suffer. I am pleased to be able to say that the building societies are acting in a very responsible way in this connection.

The other amendments in the Bill are consequential amendments or amendments which adapt limits laid down in the relevant Acts to changing circumstances. I should like to point out that all the proposed amendments to the Banks Act and the Building Societies Act have been recommended by the Technical Committee on Banks and Building Societies legislation, after consideration and in co-operation with the interested institutions. The other important amendments were also discussed with the interested parties and accepted by them, and under the circumstances, I should like to request the support of this House for the Bill.

Mr. Chairman, the Bill which is before us deals with a large number of technical amendments and, in fact, covers a large number of existing Acts. Right at the outset I should like to say to the hon. the Minister that I think the Office of the Registrar of Financial Institutions, which falls under the hon. the Minister’s control, is par excellence the example of what can be achieved by consultation and co-operation with the interested parties concerned. This particular measure has again demonstrated that representations which are made do not fall on deaf ears in that office. I should like to express my thanks to the hon. the Minister, and through him to the Office of the Registrar of Financial Institutions, for the approach which they have taken to this matter. I should like to thank the hon. the Minister on behalf of the interested parties, as well as those hon. members of the House who have made representations, in regard to the amendments to the Building Society Act which the hon. the Minister has announced. These representations have to some extent pre-empted the amendments which are already on the Order Paper.

When dealing with a measure such as this one has to weigh up whether one should oppose its Second Reading or not. Although we still have some objections to some provisions—which I shall now deal with—it is quite clear that in view of the concessions which the hon. the Minister have made, on balance we have decided that we shall not oppose the Second Reading of the Bill, but rather deal with the individual matters in Committee.

I should like to start with what to my mind is perhaps the most important remaining problem in the Bill, i.e. the question which relates to life insurance and military service. The hon. the Minister knows my feelings in this regard. I have pestered him and his predecessor ever since I came to the House about this particular provision of Insurance Act in so far as it affects our servicemen. I have regarded section 38 as an anomaly which should not exist in its present form. There was then a commission of inquiry in regard to the long-term insurance industry. It produced a report, which we all should have. What I found surprising, is that the recommendations of that commission did not go far enough to protect servicemen and that in many respects even the Defence Force was willing to agree to some of the matters which were referred to in the commission’s report even though they were not to the advantage of servicemen. I should like to canvass some of them today.

Firstly I should like to put our view in regard to this matter. We believe that both national servicemen and Citizen Force members are entitled to have insurance protection in the event of death while on military service. I do not deal with Permanent Force personnel because they fall into a somewhat different category.

The second point I want to make, is that the only real additional risk which the insurer assumes, is death as a result of hostile enemy action. In the case of all other risks of death, whether by accident or by natural causes while a serviceman or a Citizen Force member is serving, the insurer should be prepared to regard the individual as being a civilian. I want to give a simple example. If a death occurs as a result of a motor accident while an individual is on military service, there should be no additional premium required from the insured in those circumstances, because that risk is no different from the risk he takes when he is driving his own motor vehicle upon a public road. The fact that he happens to be on military service, to my mind does not entitle the insurer to any additional premium.

The third point I want to raise with the hon. the Minister, is that in view of the obligation of the nation towards servicemen and Citizen Force soldiers, who are not given equality of bargaining power in relation to the insurer with his marketing ability and his ability to present the small print, which very many people do not understand even if they are able to read it, and his ability to withhold insurance, we believe that legislation is necessary to achieve three particular things. The first is to ensure that policies are not refused to individuals who are likely to render military service on that ground alone. The second is that domestic life insurance and accident type short-term insurance cover must be made available to servicemen and Citizen Force members. Thirdly it appears to us that group schemes should be made available to these people at more competitive rates. As far as the exclusion of any risk at all from normal life insurance cover is concerned, I want to say that the statistics of casualties as they are at present—and one is thankful for that—as forecast, are not in our view of such a nature as to warrant the exclusion of these risks or a substantial additional premium. If there is to be any exclusion at all, it should be an exclusion for one single risk only, viz. death as a result of hostile action while on military service, and not, as is stipulated by the proposed section 38A, death in the course of or as a result of any military service. In other words, the present section goes far too far at this stage in dealing with this type of risk. It is not the serviceman’s fault that he is exposed to this risk of death as a result of hostile military action as in most cases he is compelled to serve. We believe that he should be able to obtain cover against this risk by means of a short-term policy at a reasonable premium, subsidized by the State if necessary. We believe that pensions are not adequate compensation for most families if the breadwinner dies. Most responsible persons would therefore like to make this kind of provision for their families. Group policies should therefore be available to every serviceman at a subsidized premium, in order to cover him against this particular one risk which I believe is the only one which by law should be capable of being excluded. We believe that the benefits which are presently given to servicemen and to members of the Citizen Force, particularly married servicemen, as well as servicemen who are supporting other dependants, are of such a nature that every one of those servicemen should be given a policy for which they should be required to pay no premium at all, a policy for which the State should bear the cost and in terms of which an amount of R10 000 should be payable in the event of death by hostile action. Additional cover should be available, on the payment of a premium, to single soldiers who have no dependants, or if they want to have additional cover over and above R10 000.

Again, I stress, I am not dealing with Permanent Force personnel as we believe they are in a separate category and are, in many respects, separately dealt with by the State. If this approach were to be followed, a serviceman would be able to obtain ordinary life cover to provide for his dependants. The contingency of death by hostile action can be separately covered where the insurers seek to exclude it. As I say, this should be the only eventuality which companies should be entitled to exclude. The principle involved here is that the State has to subsidize premiums on policies covering death by enemy action of our soldiers, our sailors and our airmen. Their service is for the community. It is not just that financial hardship caused by death from enemy action should fall on the dependants of the fallen alone; it should be shared by the community at large. It is a responsibility of the whole community. If one talks about the financial implications of this, the type of hostility which South Africa is encountering and is likely to encounter, does not in my view mean heavy military casualties relative to the casualties which the civilian population is likely to suffer in the kind of action that is likely to occur in the future. The hon. the Minister will therefore have to look carefully at all policies, at domestic life policies and also at short-term accident policies, as he will in the future in the public interest have to look at the exclusion of the risk of urban terrorism and other hostile action which affects the private individual and affects his property. We already have some enabling legislation which can assist the hon. the Minister in dealing with some of these risks, but I believe that this requires more attention by the hon. the Minister, and we hope that he will say something about it during the course of this debate.

Turning specifically to the measures as set out in this Bill, I would like to ask the hon. the Minister whether the issue has been investigated of possible exclusionary provisions, now or in the future, in policies which concern police reservists and which concern civil defence personnel, because those two cannot be overlooked. The power of companies to seek to exclude death which results from those types of activities, needs to be examined. If necessary, legislation will have to be formulated to deal with this.

With regard to the existing section 38, which is remaining on the Statute Book and to which certain amendments are being effected, I should like to raise a number of points with the hon. the Minister. Firstly, is the phrase, “any war in which the Republic is involved” not likely to give difficulty? And should this not have been dealt with? I do not know what the hon. the Minister’s view is, but some of his colleagues in the Cabinet have said that we are already in a state of war. Others have said we are not in a state of war. What is the position in relation to a policy which is affected by section 38 of the Act? Is the Republic involved in a war? Would it not be better if this issue were clarified by providing that the only situation which could arise where this would be applicable would be a state of war to be proclaimed in terms of the Defence Act?

A second question which I would like to ask the hon. the Minister—and he has heard me on this subject a number of times before, and yet there is no change to this provision—

In the Air Force?

Yes, in the Air Force. As the hon. the Minister knows, section 38 of the Act deals specifically with the question of service rendered anywhere, on an aircraft in flight, or attempted flight or in landing after flight. May I ask the hon. the Minister—because it goes even further than the Air Force—why there should be a difference in life insurance cover under an existing policy for a serviceman who is being carried in a truck and a serviceman who is being carried in a helicopter? The poor serviceman cannot say to his sergeant: “Please, I want to go by truck and not by helicopter, because if I get into a helicopter my life insurance becomes void.” To my mind this is a ludicrous situation, and I believe that it is unfair to the Citizen Force soldier, who may have provided for his family, to be deprived of cover in these circumstances. I believe there should have been legislation to remedy this situation in regard to the existing policies issued and which are covered by section 38 of the Act.

Let me ask another question of the hon. the Minister. Why should existing insurance policies be affected by whether a soldier’s dependants are entitled to receive even the smallest of financial benefits from the Government? Why should that be? Why should there be a difference between a soldier who receives a benefit and one who does not receive a benefit in these particular circumstances? It does not make sense, particularly as I think that virtually every serviceman will receive a benefit if he dies while on military service. Then, may I also ask—if the premiums are to be refunded because there is a death while on service—why the insurer should not then pay interest on the premium, the use of which he has had, perhaps for many, many years? The policy is not paid out, and all that is done is that the premiums are refunded. The insurer has had the use of the money. The man has died and the insurer has no obligation to pay out the policy. Why should he not pay interest then on the premiums? I appeal to the hon. the Minister to look at the existing section 38 again and to try to improve the position for servicemen who have provided for their families until now in a completely bona fide manner. I ask the hon. the Minister to investigate whether some changes should not be made. I am in the difficulty that I am not allowed by the rules of this House to move amendments to the existing section 38 of the Act. They will be ruled out of order because I can only deal with amendments which deal with the specific provisions which are to be changed. However, with great respect to the hon. the Minister, I would appeal to him to look again at section 38 in order to give protection to the servicemen, protection to which, I believe, they are entitled.

Then, may we look at the proposed new section 38A. I believe that this proposed new section, again, does not go far enough, as I tried to indicate earlier when I set out our policy. The proposed new section 38A reads as follows—

1. (1) If a person whose life is insured under a domestic life policy effected after the commencement of the Financial Institutions Amendment Act, 1978, dies in the course of or as a result of any military service which he performs under the Government of the Republic or under the Government of any country which is associated with the Government of the Republic in any military action against a common enemy …

In other words, if he is on service and he dies in the course of that service, for example, of a heart condition or a motor car accident, what has this got to do with any additional risks for which any insurer should be entitled to claim any additional premium? Or, should he be entitled to exclude that risk and not be obliged to pay at all when the man who is insured dies as a result of one of those eventualities?

I would appeal to the hon. the Minister to look at this once before we come to the Committee Stage because I believe the only risk which should be dealt with here, is a risk of death as a result of hostile action; in other words, if a man is killed by the enemy, that issue is a war risk, a military risk. The other risks, however, to my mind are risks which companies should be obliged to pay. I repeat that merely to be on service and die as a result of natural causes or accident is not a risk insurance companies should be entitled to exclude.

The same point arises in regard to interest. Surely, if by reason of the provisions of the proposed section 38A the man’s policy is not paid out because he has died as a result of hostile action, and the premiums are to be refunded, they must then be refunded with interest since the insurance company has had the use of the money and they do not have to pay out on the risk as a result of which the man has died. Such an arrangement would seem fair to me. I think the dependents should under those circumstances at the very least receive a reasonable amount of interest on the premiums that are to be refunded.

I believe there should be an obligation to inform the potential insured before he applies for the policy that the policy does not cover death by hostile action. The hon. the Minister will know that most people never see the terms of a life insurance policy until they actually bind themselves. I may say that when they see it, most of them do not actually understand what is in it. I believe there should be an obligation—it should not be conveyed in the small print—on the insurance companies to make it quite clear to the insured as to what he is covered against and what he is not covered against in regard to military service. That, as far as I am concerned, is something very important when it comes to the bargaining power between the serviceman on the one hand and the insurance company on the other.

Subsection (2) deals with a situation in regard to the question of refund of premiums, but what is not dealt with in the measure now before the House, is that there is no provision which prohibits the refusal to issue a policy because the individual is likely to render military service. We believe there must be a specific provision contained in the Act in terms of which no one is entitled to refuse to issue a policy to a person on the ground that he either is performing or is likely to perform military service. In order to ensure that the contractual basis between the parties is level, we believe there should be a provision in this Bill that no domestic life policy shall contain any provision limiting the risk of death on military service other than that contemplated in subsection (1) and subsection (2). It should be limited to death as a result of hostile action while on military service.

Therefore while we consider that the proposed section 38A is an improvement, we hope that we are able to convince the hon. the Minister and to convince at least the hon. members of his finance group and, I hope, the hon. members of the defence group of the NP, that there is much more that should be done for the servicemen than is presently being done in the proposed section 38A and the existing section 38 of the Insurance Act.

I should like to touch on the question of the amendments which pertain to the Banks Act. To my mind the most important amendments which affect the ordinary man in the street, are the amendments which relate to savings accounts and transmission accounts. That also applies to the amendments to the Building Societies Act which are of a similar nature. The changes which the hon. the Minister seeks to make here affect the lower-income groups, those people who do not run cheque accounts at the ordinary commercial banks, but who have savings accounts. They put their savings into such accounts and they do not run a cheque account since the running of a cheque account is an expensive business as anybody who sits in this House knows, because I doubt whether there is anybody in this House who does not have a cheque account. If you work out what it costs you today to run a cheque account, if you work out that in South Africa you get no interest on credit balances in a cheque account and if you look at the profits which are made by the commercial banks in South Africa—you only have to look at the market now to find how, the moment the hon. the Minister lifts the lending limits, the prices of the shares of commercial banks go up—it is clear that from that point of view the use of a savings account is a facility for the poor in the community.

Many of them, I must tell hon. members, are very poor working people, amongst whom are included many Black people. What has happened is that many people have used that facility because they do not want to draw money out in cash to pay any particular account, in many cases because of the dangers of walking around with large sums of money. Because of that there has arisen the whole concept of the transmission of funds and the writing out of cheques in favour of third parties. In Europe one has the Giro system. That system is used to a large extent through post offices and other institutions to assist not only the people who are well off, but also to deal specifically with the poorer members of the community.

What, however, has happened here? Because this system has suddenly come into greater use, because the poorer members of the community and the general consumers are starting to use this system, what do we have? The legislation is now to be amended, and retrospectively at that, in such a way that one can still have transmission accounts, can still have one’s money transferred to another account and can still have a cheque written out in favour of another person. Now, however, the hon. the Minister wants to restrict the definition of a savings account and define a short-term liability as including a transmission account deposit. One is now therefore required to maintain higher liquid assets for this type of short-term liability. The result is that the rate of interest on transmission accounts becomes substantially less than on savings accounts, and so the poor man who uses the savings account is hit once again by the hon. the Minister. He seems to have had a phobia, during this session, about hitting the poor man. Can he not leave the poor man alone for once? He keeps on hitting the poor man. [Interjections.]

Doing this involves a complicated system. One will have to have a savings account and a transmission account and transfer money to the one account in anticipation of payment to third parties. This will involve more paper work, more trouble and less convenience to the consumer. What one would also be doing would be to hit the poor man, the man who really needs those extra few cents on savings accounts. The hon. the Minister simply does not want to take any notice of the interests of the consumer or the interests of the poor in South Africa. No, he is concerned about the fact that the rich get richer and the poor are just squeezed a little bit more in every conceivable way. [Interjections.] The hon. the Minister simply will not listen. At every opportunity he comes along with something else. Does he have some kind of problem about this? If he does, I do not know what it is. With great respect, however, the amendments now being affected in regard to savings and transmission accounts will only deprive the lower income groups of a reasonable amount of interest on savings accounts, interest which they have been able to earn up to now.

There is something—my colleagues will deal with this to a greater extent—that I just want to mention in passing. Obviously we support the concept of granting mortgages to Black people in urban areas. We do not, however, like the phraseology “Bantu village or location”. I doubt whether the hon. the Minister of Plural Relations and Development likes it either. On the Order Paper we have therefore suggested a different phraseology, and we shall deal with that in the course of the Committee Stage. Other members on this side of the House will deal with the rights that can be mortgaged and the security a building society has. Our view on this is clear. Blacks, whether male or female, should be entitled to freehold and to sell such freehold. It should also be capable of transmission by way of inheritance. The present uncertainty and the undesirable elements of that tenure need to be dealt with.

I should also like to touch on the issue of the debentures and the question of transferring a portion of the assets of a society to a new society. We support that principle and we think that that is necessary in the existing circumstances. There is just one question I should like to put to the hon. the Minister. Why is it necessary to have debentures? If one does have secure debentures, would this not result in preference being given to a transferor society over the depositors in a transferee society? I should like to hear the hon. the Minister’s reaction to that matter.

As regards the provision of liquid assets, I have already dealt with the question of transmission deposits and the point that one now has to have a provision with regard to those. Indeed, in terms of the excess or supplementary liquid asset requirements they can be increased to 60%. The right to claim these supplementary liquid assets and other supplementary liquid assets, if exercised to the full, could have a substantial effect on the ability of building societies to grant mortgages. In other words, this is a power that would have to be used circumspectly and very carefully because, as I have said, they could have very adverse effects.

We also support the provision in terms of which the period of mortgages between R20 000 and R30 000 is extended to 25 years. We actually believe it should be extended to 30 years. The reasons for that are very simple. Firstly, the average life of a building society bond is only about seven years. Overseas the lending periods are for more than 25 years even for timber frame houses. The durability of houses is therefore not an issue in South Africa. Such an extension will also assist younger people to buy better homes in anticipation of rising incomes and without taking any chances. In our view it would have a very negligible effect on the society’s cash flow. In our view, therefore, 30 years would be a reasonable period.

We also support the increase to R28 000 of the value of property on which 90% bonds may be granted under the internal guarantee schemes. We are very happy that the hon. the Minister has indicated that he will not proceed with the legislative entrenchment of the 25% income rule. We are also pleased that he is abandoning the provisions designed to restrict second bonds. We also feel that other financial institutions should be allowed to provide guarantees for collateral schemes.

One of the matters we are very concerned about is the current trends in the building industry in South Africa. As regards properties, the whole of the township industry already lies in tatters in South Africa. It is in trouble. We really find ourselves with very grave problems as far as that is concerned. The hon. the Minister has to be very careful in what he does with legislation and also with administrative measures as regards the home-building industry. If we look at some of the figures of building plans passed and of buildings completed, we find a very serious position. From 1976 to 1977 there was a 35% drop in units as regards building plans for dwellings. On the Witwatersrand the figure was as high as 47%. In terms of value, the drop was 31% in the Republic as a whole and 43% on the Witwatersrand. If we compare the figures for the first quarter of this year with those for the first quarter of 1977, we find that the drop in the number of units in respect of building plans amounts to over 40%. The number of buildings being completed is therefore decreasing both in terms of number of units and in terms of value. What is more, in areas where one would expect the greatest growth, the greatest dropping off is taking place. In the first quarter of 1978 the number of buildings completed has dropped by 34% overall and by 46% on the Witwatersrand. It therefore looks as if 1978 is going to be a very bad year for the building of dwellings. Therefore it seems to us that the hon. the Minister should rather seek to stimulate this industry than take any steps that could be harmful in this regard.

I have not covered all the points which are in the Bill. Some of my colleagues will cover other points while others again will be dealt with during the Committee Stage. However, as we have indicated, while we have a number of objections to some specific provisions, when we take the Bill as a whole, a Bill which covers 33 clauses in all, we find that there is more good in it than that to which we are opposed. Therefore we will support the Second Reading.

Mr. Speaker, at the very outset we should like to thank the hon. member for Yeoville and the Official Opposition for their support of this legislation. Secondly, it is clear to us all that legislation of this kind, which amends seven other Acts, can in actual fact be called the financial omnibus Act of the year. No real principles are involved in the legislation, and I think that it is legislation which must be debated chiefly during the Committee Stage.

I should like to refer to a few other aspects which, as far as I am concerned, affect a few principles. I should like to assure the hon. member for Yeoville that we on this side of the House have a great deal of sympathy now, as in the past and the future, for our national servicemen, our Defence Force and our Citizen Force. This side of the House has no problem as far as that is concerned. However, in all fairness we must admit that the steps that are envisaged here and the benefits that have been stipulated in terms of this legislation, go much further than the legislation that has existed for those people thus far. It is true that one should like to see it being taken even further than is being done at this stage. We want to put it for the consideration of the hon. member for Yeoville, that South Africa has been faced with a new situation. Whereas during the Second World War we were dealing with a war situation in regard to matters of this nature, especially insurance cover, we are now dealing with a new type of warfare. At the moment an investigation is being carried out by the assurance companies and the Government to see whether it is not possible to go even further than this legislation envisages. I do not think we must try to deal with the benefits due to the people who are acting in the interests of maintaining South Africa, on a party-political basis. I do not think the hon. member for Yeoville meant it in that way, but we can assure the hon. member that we on this side of the House will support him where we can obtain better benefits for our people. On the other hand we want to say in all fairness that the situation in which we find ourselves at the moment, means that we need time to work the matter out as far as it concerns the assurance companies, the State and those in the Defence Force who are involved.

There is another principle in this legislation which I believe is very important. It is bound up with the legislation which the hon. the Minister of Plural Relations and Development gave notice of today to amend the Bantu (Urban Areas) Consolidation Act. It concerns the principle of home ownership, and now for the first time in the history of South Africa, building societies will be able to grant mortgages or hypothecs to Bantu for the erection of dwelling houses in Bantu residential areas. It is a very important day in South Africa’s history when the hon. the Minister of Finance can introduce legislation for this purpose and at the same time the hon. the Minister of Plural Relations and Development can introduce legislation to fulfil the ideal.

I do not believe this is the time to go into detail about what the result of the amendment of the legislation concerning building societies will be. I believe the merits of the case will be discussed when the hon. the Minister of Plural Relations and Development submits his legislation. The legislation before us, which amends the Building Societies Act, merely entails a technical amendment of that Act. Therefore, we have a situation here where the hon. the Minister of Finance has to arrange the mechanics of the matter so that the other legislation can be put through. The details can then be discussed under the other legislation. I think we shall waste time if we try to discuss the details of the matter today. The matter has already been settled with the building societies as far as their responsibilities and the values of their securities are concerned. We can discuss the details of the matter some other time. But it is true that we can consider this an important event in South Africa.

I should also like to say something about another matter that the hon. member for Yeoville mentioned as well, as to thank the hon. the Minister for the assurance he gave during his Second Reading speech that the proposed clause 29(b) of the legislation would not be proceeded with. It is definitely true that not only the hon. member for Yeoville, the Official Opposition and the other Opposition parties received representations concerning this matter. I myself gave a hearing to representations on the matter as recently as last week when the hon. the Minister was not available, so that we could take up the representations with him without delay. However, the hon. the Minister has given attention to the representations, and that is why clause 29(b) is being deleted. I want to put it very clearly that this side of the House agrees with the principle that there must be an end to excessively luxurious housing in South Africa. I am not concerned about the man who can afford to live in luxury; I am concerned about the fact that many of our people are actually persuaded to buy houses they cannot afford. The building industry is always a sensitive area in any country in the world, and if it is stimulated excessively, one must expect that it will experience problems at some time or another. However, if the industry is given no stimulation, it is usually the industry which slumps most rapidly. We must therefore also consider the interests of the people in the building industry. Most important of all, however, is to teach our own people that we cannot afford this luxurious housing. In doing this, the methods we adopt must be of such a kind that anyone, whether he earns R300, R700 of R1 000 per month, is able, if he so wishes and can arrange his affairs accordingly, to afford a house. Accommodation and the ownership of one’s own home is very important for us in South Africa for maintaining sound family ties and society structures.

The hon. member for Yeoville also referred to the savings accounts, the transmission accounts, etc. I feel the hon. member went a little too far in this regard, because he wanted to maintain today that this side of the House and the hon. the Minister of Finance in particular—I do not know why he is singling out the hon. the Minister—are the people who are ruining the poor in this country. The issue in this regard is not that the custom of using a savings account for certain purposes, is being removed. It has always been the situation that fixed deposit accounts—the long-term investment and saving accounts—for the most part they were medium term—have been at building societies, etc. Savings accounts were not merely intended as short-term investments. I agree with the hon. member that there may be nobody in this House who does not make use of a cheque account. I do not think a cheque account is a bad thing. In fact, I think it is one of the best methods one can use and I think the hon. member will agree with me there. But we must not let the idea take root that a savings account can be used only to try and negotiate a certain interest rate, while in actual fact all it is a transmission account. We cannot afford that.

Why not?

Surely it is obvious why we cannot afford it. There are other institutions that provide facilities in this regard. Is the hon. member prepared to say that we should allow the present trend to continue, and tell the commercial banks that we cannot assist them to counter the trend among people to use savings accounts instead of cheque accounts? If the situation had to continue like this, it would definitely infringe upon those people’s rights.

I thought you were in favour of free enterprise!

The hon. member said in this regard that he receives no interest on his money in his current account in the bank.

Of course not!

It is not my fault or that of this side of the House that the hon. member does not receive interest on his money. Why then does he keep his money in the bank? [Interjections.] After all, he can make the most of it. One cannot accept or extend the principle that the medium term benefits of a savings account, which is an auxiliary account, be retained on the basis on which they are now developing.

As I said, the provisions of the Bill can be more effectively discussed during the Committee stage and that is why I do not want to be tempted to go into further details of clauses which we can discuss later on. It is important that we note that we have the office of the Registrar of Financial Institutions and it is very clear to anyone that that office is constantly giving attention to matters concerning the various Acts that they deal with. The Registrar of Financial Institutions and his office are on their toes. They are always looking at the relevant legislation and keeping us au fait with the modern trends, and the dangers which may arise in modern times, and we are very grateful for this.

We on this side of the House want to thank the hon. the Minister for the concessions he has made in connections with clause 29(b) and others. We trust that the solutions obtained in this regard, will satisfy everyone.

Mr. Speaker, one of the complications of the new system which we are following of debating Votes in one part of the building and legislation in the other, is that I am rather caught in the middle this afternoon. So I offer my apologies to the hon. the Minister if after having said what I have to say, I shall have to go somewhere else.

We in these benches shall support the Second Reading of the Bill before the House. I must say that I am one who has always regarded a compromise as being something which leaves neither party satisfied. When the study group of this party had a look at the provisions in the Bill relating to the insurance of military personnel, I thought that what we would find would be that neither the military personnel, nor the insurance companies, would be satisfied with the kind of arrangements that have been arrived at. However, I must say that we have arrived at a situation where they can indeed be satisfied. Provision is made by the Government for young people who are killed in action and at the same time the insurance companies are entitled, after the passing of this Bill, to exclude people from benefits should they be involved in military action. At the same time it is perfectly possible to write policies which will cover that situation at a higher premium. I think that is about the best situation which we can arrive at.

We have consulted with people in the industry, and the information which we have received indicates that as things are at the moment, with a sort of low-key bush war going on, there is no immediate intention to change the present system. However, should things escalate, quite obviously in order to protect themselves the life insurance people will have to take action of that nature. I do think that we should simply watch the situation. I think it will work out to be in the best interests of all the people concerned.

I think the hon. the Minister has defused the debate on the Bill to a very considerable extent by indicating that he will withdraw certain of the provisions of clause 29 … [Interjections.] … which were causing trouble. I think the hon. members on the other side of the House have probably put as much pressure on the hon. the Minister as anybody else to withdraw that provision. I am one of those who have felt for a long time that people, I mean White people specifically, have been indulging in a standard of housing in South Africa which was straining their resources, and in the situation in which we find ourselves today with the economic downturn, people are already under considerable pressure. I think the hon. the Minister has been wise to withdraw these particular provisions from the Bill pending further investigation, so that further discussion can take place and some other kind of arrangement be made. The Minister should tell us quite clearly whether it is his intention that the standard of housing of White people should be brought down. If so, it should be stated that the Government intends doing that. We will understand it and be able to take a stand on it.

I am inclined to be sympathetic because I do think that, as the hon. member for Yeoville has said earlier on, people have rather been living it up as far as housing is concerned.

The hon. member for Schweizer-Reneke dealt with the question of building society accounts. I am far from convinced by the argument he has advanced. If I were to judge between him and the hon. member for Yeoville, I think the hon. member for Yeoville carried the day. If the hon. member for Schweizer-Reneke wants to prove his case, he will have to argue a great deal more convincingly than he has done up to now.

Sir, we support the Second Reading of the Bill.

Mr. Speaker, I want to confine my remarks on this Bill to the matters concerning building societies.

There are some aspects that I think should be pointed out. Firstly, together with other hon. members, I want to express my appreciation for the fact that the hon. the Minister announced in his Second Reading speech that he will withdraw clause 29(b) as well as clause 30 during the Committee stage. There are certain aspects in this regard however, which I think should be pointed out.

As far as clause 29(b)—which deals with the ratio between the monthly payments that an applicant will have to make and his income is concerned—there are certain procedures which should enjoy attention. For instance, there are cases where people receive subsidies. This does not only affect employees of the Public Service, provincial administration and municipalities, but also some people in the private sector. Clause 29(b) would have imposed a restriction on the subsidies which could be made available to these people.

If we take into consideration the fact that the price of houses on the open market differs from area to area in many cases—it is not necessarily based on the cost involved in the building of the house, but on other aspects— one cannot lay down a fixed pattern in an Act and provide that all building societies should be bound to it. I feel that building societies should be allowed a certain degree of discretion. As recently as last week I received information to the effect that the normal middle-class home which is available for approximately R20 000 to R21 000 in Cape Town or R25 000 in Durban, simply cannot be obtained for less than R32 000 in Richard’s Bay, for instance. Therefore, laying down a fixed pattern would seriously restrict the entire housing market and make it practically impossible for people to obtain houses in certain areas if housing grants or subsidies could not be taken into consideration by the building societies because the Act places restrictions upon them by restricting their discretion in this regard. I therefore welcome the fact that this clause will be withdrawn and that other aspects will be considered. I agree entirely that there must be measures to curtail luxury housing. Up to now the R18 000 limit has been an efficient way of doing so. At one stage I hoped that this measure would also curtail the cost of houses. However, it soon became apparent that it had no effect on the building cost of houses whatsoever. The building cost of houses has increased at a rate of more than 12% per annum in recent times. One need only look at the way the prices of building material—cement and bricks are recent examples—have risen, in spite of the fact that there are massive reserves in the yards of the brick-makers. Thousands of bricks are stockpiled there, but nevertheless the prices have increased tremendously. I think that there should be some restriction on the rising cost of housing.

Another aspect I want to refer to concerns clause 30, whereby a restriction is imposed on second bonds. I am pleased that this clause, too, also being withdrawn. Nevertheless I want to refer to an aspect I feel should be considered. I feel that there is exploitation as regards allowing second bonds to third parties. I know of many cases where property developers sell houses to the public with a first bond and then make agreements with other financial institutions in order to give second bonds at an interest rate of 14%, I want to suggest that a proposal which I want to make be considered, viz. that limits be placed on the interest rate where second bonds are granted to third parties. It does not necessarily have to be done in this Bill.

The first mortgagee—the building society—must give permission for the issuing of a second bond. An agreement can be made with the building societies by way of an administrative arrangement to the effect that they will not grant permission for the issuing of second bonds to third parties if excessive interest rates are required. I should say that a fair criterion would be that the interest rate for second bonds should be equal to or not higher than the interest rate laid down by the Minister of Economic Affairs for land sold on terms. At this stage, the interest rate laid down by the hon. the Minister of Economic Affairs is 11½%, and 11½% is approximately half a percent higher than the interest rate of building societies on bonds higher than R15 000. Second bonds may entail a somewhat higher risk because they only have security once the first mortgagee has been satisfied. That is why second mortgagees, in my opinion, are in fact entitled to a slightly higher interest rate. However, to allow second bonds at an interest rate of 14%, is, I feel, an exploitation of the situation which was actually intended to impose a restriction on accommodation which may be considered luxurious for the particular income group which must be protected here.

Another aspect to which I should just like to refer, is the aspect which the hon. member for Yeoville raised. He tried to allege that the poor man was being placed at a disadvantage here once again. I feel that what is being envisaged here as regards the creation of transmission accounts, is a degree of reform of accounts as they used to be, in order to eliminate the possibility of abuses. In terms of the Act there is no distinction between the ordinary savings accounts—on which the interest usually amounts to 3½%—and the special savings accounts which were established a short time ago by building societies. The interest on the latter savings accounts amounts to 8%. The building societies themselves, however, have placed restrictions on the movement or “velocity” of money in the special savings accounts.

The building societies determined that the quantity of payments into special savings accounts are unlimited, but that only one withdrawal is allowed per month. Now banks have also established this type of special savings account. The banks, however, have placed no restriction on the number of withdrawals which may be made monthly. I agree that the ordinary man, who does not use many cheques, should also have a facility by means of which he is allowed to put money into his savings account and earn interest upon it, while payments to him take place through building societies or banks where he does not necessarily earn no interest, or where he has to pay ledger fees and cheque fees only. In terms of the legislation under discussion, however, people are not being deprived of this facility.

The ordinary man who earns a small salary or the pensioner can still pay his money into a special savings account.

At what interest rate?

At 8% interest. He can still pay it into a special savings account at 8% interest. When he calculates his expenditures for the month, he can make one withdrawal from his special savings account and transfer that money to the transmission account, or pay it into an ordinary savings account, on which he earns 3% interest. Then he can direct the bank or the building society to write out five or six cheques a month, for example, and pay them to certain bodies or people on his behalf. In this way he saves the cheque fees and still earns interest on the money remaining in the savings account.

However, it would be wrong to abuse an account intended to be a low velocity account by using it for a single payment at the beginning of the month, while virtually all of the money is withdrawn once again until the end of the month. The intention of clause 22 is that certain savings accounts should retain compulsory reserves. Then, when an account is no longer a low velocity account, when it in fact becomes an account which is used consistently for payments and withdrawals, it is fair that financial institutions should be allowed to keep a large cash reserve available for such accounts. This provision does not restrict either the ordinary man or the poor man in any way. He can still pay his salary cheque into a special savings account—a savings account that carries 8% interest—and when he has calculated his expenditure, he can be allowed to make one withdrawal. In this way he can still be assisted. Therefore, what the hon. member for Yeoville said is not correct, viz. that the Minister is once again trying to get at the poor man or cause him damage. That is simply not the case.

As a result of the announcement that the hon. the Minister made about the amendment of certain proposals, I welcome the legislation. I want to express the confidence that the building societies will now be able to assist in improving the housing and property market once again, because at this stage it is indeed true that the housing market has been so hard-hit that houses for all income groups—the lower, middle and upper income groups—are being sold on the open market at prices lower than the replacement cost or the present building cost of similar houses. I really want to express the confidence that the envisaged amendment will result in the property market looking up somewhat once again because it is essential for a sound economy that there should be a sound property market in the country.

Mr. Speaker, the hon. member for Klip River supported the Bill. Since we are also going to support it, I shall in the course of my speech deal with some of the remarks he has made. There is, however, one matter arising from his speech with which I should like to deal immediately. The hon. member suggested that a second bond should be limited to an amount to be fixed by the hon. the Minister of Economic Affairs and possibly to an amount of about 11½%. There are certain problems attached to such a proposal. One of the problems is that if you reduce the second bond to 11½%, some of the institutions that are lending the money will not be prepared to lend at 11½%. This, in turn, will have a depressing effect on the building industry, because if the financial institution concerned would not be prepared to lend the required amount, the transactions would not go through. In the second place I should like to tell the hon. member that he should take into account that most of the builders are paying 14% interest on their overdrafts. If they should lend money out at 11½% on second bond, they would actually be losing 2½% per annum over the period of the bond. Such a period may be for three, five or seven years.

I have all the sympathy in the world for a suggestion aimed at bringing down the costs for the buyer and I have also sympathy for the suggestion that it should be brought down to 11½%, but I believe this is the sort of suggestion that we must think of in boom times and not in these times when the building industry is going through a very depressive state. In fact, I think the hon. the Minister would be wise should he leave this matter in abeyance as he, in fact, indicated in this introductory speech. I think he would be wise should he not try to implement anything of that nature at the present time.

I should now like to turn to some of the remarks made by the hon. member for Yeoville. I think the hon. member for Yeoville has made some very valid points in relation to the insurance industry and the armed forces. I think these matters deserve the urgent attention of the hon. the Minister since they are matters which should be implemented. I can well understand that since we are to deal with the Committee Stage presently, it may not be possible for him to implement these suggestions today. I should, however, like to request him to have a look at these suggestions before the Bill goes to the Other Place. Some of the suggestions are very valid and they are very much in the interests of the armed forces. I think we have a duty in that regard.

As this is a financial measure I should like to say that we were pleased to read in the newspapers that the hon. the Minister struck a very optimistic note during his visit overseas last weak. His speech was one of confidence and the spirit of that speech is to be welcomed by all of us in South Africa.

We appreciate the explanatory memorandum which we have received. I should like to thank the officials who were responsible for compiling it.

The insurance companies, the Stock Exchange, the pension funds, the participation bond schemes, banks and building societies collectively are to a vast extent the life-blood of a country’s economic and financial stability. In our present situation these institutions can play a leading role in promoting business confidence amongst local and foreign investors. I take it that I am correct in assuming, from what the hon. the Minister has said, that these institutions are largely in agreement with all the measures that the hon. the Minister has introduced this afternoon. In the circumstances I do not intend dealing with the matters on which there is common agreement; I should like to deal with certain other matters.

I should like to tell the hon. the Minister that there is another group of very important people. They are the ones who are financed by these institutions.

These entrepreneurs can only continue their business activities provided their interests are also protected. I say this because it is very easy for the hon. the Minister to consult the institutions that are affected, but by the very nature of things it is not always very easy for him to consult all the entrepreneurs who are affected because their numbers are far greater. I accept that this measure was introduced in good faith, under the general impression that the entrepreneurs are also being catered for. As hon. members have heard, however, we have all had representation from the home building industry to the effect that certain amendments to the Building Societies Act were going to have a most adverse effect. In that regard we are very pleased that in his Second Reading speech the hon. the Minister mentioned that he was going to abandon those particular clauses. This industry has made an enormous contribution towards housing South Africans and has played a very vital part in our economy. The representations made to us show that some of the amendments to the Building Societies Act would have been absolutely disastrous to the industry, the most offensive clauses being the clauses mentioned, clause 29(b) and clause 30. Representations in regard to clause 29(b), clause 30 and the partial amendment in clause 31 were made, by the Opposition parties and by other affected parties, to the Registrar of Financial Institutions. In the circumstances we welcome the announcement that clause 29(b) and clause 30 are to be deleted and that there is to be an amendment to clause 31. We would be failing in our duty if we did not thank the Registrar for the time, the effort and the trouble he took in considering these representations, and also for the trouble he took in getting these representations before the hon. the Minister, bearing in mind that the hon. the Minister did not return to South Africa until the weekend. I therefore presume that the first time they could consult was either over the weekend or this morning. I therefore think we should pay tribute to the Registrar of Financial Institutions for taking the urgent steps that he did to rectify the situation.

We welcome the provision that allows building societies to grant advances against security of registered rights of stands in the Bantu townships. I believe, as we have said before, that it is right that people should be given an opportunity of acquiring a stake in South Africa because only if they have a stake in South Africa will there be real security for all of us. At the same time the hon. the Minister must watch the situation very closely because if the building societies require additional finance to meet the requirements of Bantu township bonds, obviously the hon. the Minister will have to facilitate things for the building society movement by granting them further concessions in order to obtain and generate the funds for the granting of the particular bonds.

People in the building society movement who have spoken to me are happy about paying 8% per annum on a Special Savings Account provided there is only one withdrawal per month. They inform me, however, that if they are forced to operate transmission accounts and there are numerous withdrawals per month, the increased costs will obviously have to be passed on to someone.

We accept the general provisions of this Bill and in the circumstances we shall not oppose this measure.

Mr. Speaker, I have listened with great interest to the debate on this Bill. I think many useful arguments have been advanced and I also think there were many useful suggestions. I shall try to refer to as many of them as possible although, as the hon. member for Schweizer-Reneke said quite rightly, this is really the type of Bill or measure which one is better dealt with during the Committee Stage than during the Second Reading debate or even during the Third Reading debate.

There are a number of amendments on the Order Paper and I understand that there are also certain other amendments which the hon. member for Yeoville intends moving today. I shall, of course, try to deal with them when we reach that stage.

In the first place I should like to thank the hon. member for Yeoville for the kind words which he addressed to the Registrar and his office. I can assure him that I appreciate this and I know that the Registrar will also particularly appreciate this. I wish to agree with the hon. member that this is an office which has only a few officials. It is a small staff, but the officials are of a high quality and very dedicated. One sees the results of their work in such a Bill. I should also like to thank the hon. member for Walmer for his words of appreciation, in respect of the explanatory memorandum as well.

†I want to thank hon. members on all sides of the House for their declared support of this measure. I appreciate that. It is a measure that goes into considerable detail and affects more than half a dozen important Acts. Its implications are also fairly far reaching.

The first point the hon. member for Yeoville made had to do with war risks insurance and section 38, which is now being amended. I have listened very carefully to the various points he made and the various questions he raised and we will obviously give further attention to those. I do want to stress, however, that the existing section 38 will now only apply to old policies—life insurance is a long-term business—and that it will not apply to any new policy. I think that that is very important. I got the impression, from some of the points he raised at any rate, that perhaps it was necessary to stress that difference. The proposed new section 38A certainly does not contain most of the limitations he raised and it will of course be applied to all new policies. I think that that is a very important point. I should like to say, too, that the office of the Registrar is looking with some urgency at further implications of, one might say, war losses or losses arising from hostilities. They are in fact working very closely with the insurance industry. I am pretty confident that I shall be able to introduce one or two clauses in the Finance Bill to extend the provision of insurance cover for damage or loss as a result of this type of activity. There will also be specific provision made there for losses affecting members of the armed forces. This matter is, therefore, not final. We are still giving close attention to it. I think the hon. member for Yeoville will agree with me that, as far as we have gone here, we are going in the right direction and that this can be regarded as an improvement on the status quo. I hope he will see it that way.

Then, the hon. member for Yeoville referred to the transmission accounts. He tackled me on that, saying that I was now taking an action that prejudiced the position of the poor. I think it is rather unfortunate that in this debate, which I think was conducted on a high level, the hon. member should have introduced that very paltry, partisan party political approach because I do not think that it really fits in here. It is, of course, a complete misconstruction of what we are doing. It has absolutely no validity in fact. Indeed, if the hon. member had taken the trouble to read the comment of the Registrar of Financial Institutions which was given considerable publicity in a number of newspapers about a month ago, when, after a rather misleading interpretation appeared in one of the Sunday newspapers, he put the matter right, I think the hon. member would have seen precisely what the whole purpose of this particular amendment is. It is a purely technical matter. The hon. member for Klip River hit the nail on the head. What has happened is that the old savings accounts have in some respects, one might almost say, degenerated into high velocity accounts. Obviously, if one is going to expect that sort of service from a savings account, one has to adjust the interest rate. The first people who will tell the hon. member that—he was a banker himself—are the banks because they support this in the interests of their clients.

It will be classified as a short-term liability.

No, a savings account is a medium-term liability. Short-term is anything up to 30 days while medium-term is 30 days to six months—as the hon. member knows— and long-term is longer than six months.

A transmission account is now a short-term liability.

No. Mr. Speaker, I think the hon. member raised some very good points and I enjoyed listening to him, but unfortunately, as far as this aspect is concerned, he completely missed the whole point. I do not now want to read to the House the statement which the Registrar made although I have it before me. It was published on 18 and 19 April in several papers and sets the matter out completely. It is a technical matter aimed at clarifying an unfortunate position which arose in practice and which made of the savings account something it was never intended to be, namely a high velocity account. We are now introducing a transmission account which will be the high velocity account. The savings account is then safeguarded to enable it to fulfil its original purpose as a low velocity account.

The transmission account is there and anybody can use it although the interest rate is lower. However, the interest rate must be lower because that is the whole basis on which these things are done. One cannot have a high velocity account paying out the same interest on deposits as a low velocity account.

Mr. Speaker, may I ask the hon. the Minister a question? If one uses an account more, it creates greater expense for the society and the argument that that would result in a lower interest rate, is a valid one. However, when one reclassifies a transmission account and a transmission deposit as a short-term liability, then one will have to put up a higher liquid asset ratio and therefore the institution is unable to pay a higher interest rate. In other words, is it not his action …

Order! That is not a question. The hon. member is making a speech.

Mr. Speaker, the question is: Is it not his action in reclassifying a transmission deposit as a short-term liability which prevents the institutions from paying a higher interest rate?

No, Mr. Speaker, I am glad the question has been put. It is not due to my action. A transmission deposit is a short-term deposit and it is the savings accounts which, in fact, were turned into transmission accounts in practice which caused this problem and which resulted in the interest rate being completely out of line for that type of service. That has nothing to do with me. We are regularizing a position which, strictly speaking, should not have arisen. This is a purely technical matter which has the support of the Technical Committee on Banking, which is one of our most highly competent authorities on these matters. They consult with the private sector and also with the banking sector and all the other bodies who are consulted by the Registrar. This measure has their complete support, but the hon. member now says this measure is aimed at prejudicing the poor. The hon. member must get that unfortunate obsession out of his mind. It is not going to do him any good and I do not think that sort of red herring should have any place in these serious discussions on strictly financial matters. However, that is the position and we are now simply safeguarding the savings account as an account dealing with medium-term deposits where an interest rate of 8% is fully justified. The hon. member for Klip River put it absolutely clearly; there is nothing more to it than that.

*I want to thank the hon. member for Schweizer-Reneke for his support. In general, he put the matter in the correct perspective. The hon. member for Mooi River, who was unable to be present here, also supported this Bill and he also supported us with regard to the amendment to section 38 of the Insurance Act.

†As regards clause 29(b), which has been referred to by a number of members and which we have undertaken to withdraw during the Committee Stage, I would like to say that we included the clause in this measure with the best of intentions. The provision arose from a unanimous recommendation by the Fouché Commission, which had gone into these matters very carefully. Our real intention is to place some limitation on unduly luxury housing which, in our state of affairs, is something against which qe should be constantly watching as we really want to see that there is a sufficient supply of capital for housing for all and that the high cost luxury housing should not have preference. That was the real intention, but as I have had many representations—I shall not go into it any further—I have agreed to withdraw the provision. We would like to have more time to look at possible ways of at least ensuring that the lower income groups obtain what for want of a better word I would say is a fair share of the available funds. That is the position and therefore I shall be withdrawing that provision. We are also withdrawing the provision relating to the restriction on the granting of second bonds, except with the approval of the Registrar. We shall look very carefully at the general position to see, in conjunction with the building societies, how we can ensure a fair distribution of funds for all types of housing.

The hon. member for Mooi River raised an important issue when he talked of the need to keep a very close watch on high cost housing and high cost building. Hon. members may remember that, a little less than two years ago, I appointed a Building Norms Committee to watch very closely over standards and norms affecting public buildings. Such a committee would really be watching over the building standards applied to buildings, roads and bridges where public capital is used for the building of these structures. It would therefore also affect hospitals, universities, schools and buildings required by the Public Service. This committee, under the chairmanship of the Secretary to the Treasury, is doing excellent work. Already in the short time that it has been in operation it has saved the taxpayer many millions of rand, not by simply arbitrarily reducing standards and thereby making buildings less efficient. That is not the case. They have, in fact, tried to save on capital without affecting the usefulness, the utility or the effectiveness of the buildings. As the committee is acquiring more and more experience and knowledge and as they are consulting more and more with the kind of people that can really help them technically, I must say that these people are doing something useful. This committee will probably be able to play its part in this regard not by interfering in the private sector, but also by being able, through consultation, to spread its own experience a little wider to the benefit of the taxpaying public.

*The hon. member for Klip River asked whether we would consider impose a restriction on the interest rates in respect of second bonds. I think the hon. member for Walmer has already reacted to this briefly. We shall consider all these suggestions. One must, however, be very careful, of course, and first see what the actual implications are going to be. We do not wish to intrude in any arbitrary manner on the normal course of events in the private sector. Nor is this what the hon. member for Klip River asked us to do.

With these few words I think I have tried to reply to all the matters raised. I think we shall, in a certain sense, be able to conduct a more fruitful debate during the Committee Stage. Therefore I hope the hon. members will be satisfied if at this stage I leave the matter at that. I just wish to thank all the parties once again for their support of this measure.

Question agreed to.

Bill read a Second Time.

Committee Stage

Clause 1:

Mr. Chairman, during the Second Reading debate I raised the question of the position of persons who were involved in civil defence work, as well as police reservists. If there are going to be provisions in domestic life insurance policies which adversely affect these individuals—at the present moment the wording in some of the policies might well have that effect—then may I ask the hon. the Minister whether in the circumstances—I do not want to move an amendment at this stage—he should not widen the definition of “military” in order to include this type of individual who, after all, should also receive some form of protection. Before carrying the matter further I should like to hear the hon. the Minister’s response to this.

Mr. Chairman, perhaps I should have referred to this matter in my reply a moment ago. I would appreciate it if the hon. member for Yeoville would give me a little more time to go into the matter carefully with the Registrar. If it proves that this definition should be broadened and that it would be justified, I shall certainly make provision for it in the Other Place, if we cannot do it at this stage. However, I do not have much time to discuss the matter with the Registrar now. I should appreciate having a little more time, because we are conducting very constructive discussions with the insurance industry at the moment and I think this is a matter which we can very conveniently bring in there as well. I take the point and shall do the best I can, so perhaps the hon. member can leave it at my discretion for the moment. It is very difficult for me to give him a conclusive answer just at the moment.

Mr. Chairman, I appreciate the approach of the hon. the Minister. The difficulty that exists is that there may be—I think there are—exclusionary provisions which are far broader than merely serving in military forces. In other words, if a person is in a civil defence organization he is in the service of the State. He might well be killed in exactly the same way as a man who is doing military service. I think we need to protect that individual just as we do the others.

Mr. Chairman, I take the point. As I have said, I shall go into this matter at the soonest opportunity and do my best to make provision for it.

Clause agreed to.

Clause 4:

Mr. Chairman, this clause puzzles us. I am not suggesting that we find it in any way offensive. It is provided here that there can be an exemption from the fixed asset requirements in favour of—

I suppose one could understand it if it were the intention of the hon. the Minister to put a pension fund of a religious institution in a somewhat better position than other pension funds, although even then one would want to hear argument before making up one’s mind that this was justified. I think we are all in favour of religious organizations, but there are other admirable organizations in the country too, e.g. educational organizations and those doing charitable work. However, from the phraseology here I am not sure that that is the intention. After all, the purpose of these requirements, the assets these funds must hold, is presumably to protect the safety of the funds and to ensure their capacity to meet their liabilities. I am sure it is not the intention of the hon. the Minister to put a religious institution at any disadvantage in that regard by permitting it to pursue a less prudent policy than other funds are compelled to pursue. One would have thought that what is sauce for the goose, ought to be sauce also for the gander. What Parliament in its wisdom decides, is the necessary policy that must be followed by any sort of pension fund, which should also suit the other one. If the hon. the Minister can enlighten us as to why the affairs of a religious institution ought to be differently conducted on this basis, perhaps we can make a judgement of the clause before we make up our minds.

Mr. Chairman, the principle is already contained in the Pension Funds Act. What we are really doing here is to take the opportunity to bring the Insurance Act in that specific respect into line with the Pensions Fund Act. We are doing no more than that. We certainly do not wish to put a religious institution in a less prudent or less sound position as a result of this. It is felt that we ought to bring the religious institutions, as far as the Insurance Act is concerned, into line with the Pensions Fund Act. That is the whole intention.

Mr. Chairman, I thank the hon. the Minister for the explanation. We appreciate that and fully realize that what is happening here, is that the Insurance Act is now being brought into line with the Pensions Fund Act. However, I actually wish to know why this was provided in the Pensions Fund Act. Surely the arguments I have just advanced, also apply in this regard. Unless there is a sound reason for this, I should rather suggest that the two Acts be brought into line by deleting this provision from the Pension Fund Act rather than introducing it into the Insurance Act now.

Mr. Chairman, that is one approach of course. Since the principle already exists, we felt that it was logical to insert it here now. I want to be reasonable, however, and therefore I shall look into the matter again. I cannot commit myself now. We can discuss that a little later on. In any event, that was the only reason why we have done it in this way. I shall discuss the matter peacefully with the hon. member later on. Perhaps I shall convince him or perhaps he will convince me, in which case we can move an amendment.

Mr. Chairman, I appreciate the offer to the hon. member for Parktown to discuss this matter in a placid, peaceful manner, but would the hon. the Minister please take us into his confidence and tell us why a pension fund of a religious organization should not have an obligation to invest in prescribed assets. What is the motivation for it? That is really the only thing I should like to know.

Mr. Chairman, all I can say is that this was decided before my time. The hon. member will have to give me an opportunity to see what was the precise reasoning at that time. There must have been a good reason. As the hon. member knows, we never do things without a good reason.

Mr. Chairman, before we leave this matter may I state clearly that we on this side of the Committee would be much opposed to any state of affairs in our legislation which placed the members of a pension fund connected with a religious institution at any sort of disadvantage compared with members of pension funds generally in the country. It is with that very deeply felt consideration in mind that we have raised this matter, and we are relying very heavily on the hon. the Minister to see that he protects the good people who belong to these pension funds.

Clause agreed to.

Clause 5:

Mr. Chairman, I would like to ask the hon. the Minister—and I am sure this has not happened before his time!—whether we are in a state of war in terms of this clause or are we not? I think it is important to the people who are insured. Secondly, why is the discrimination against the Air Force being perpetuated, why discriminate against the man who gets carried by helicopter as opposed to the man gets carried by a truck?

Mr.Chairman, let me say at once that I cannot see that there is discrimination against the Air Force. This I simply fail to see. It is not the intention and I do not think it is the position in fact. The hon. member also asks me whether we are in a state of war. Then he should look at the original Act, which I do not have before me at the moment, at the various definitions set out there. We shall have to follow that. If it is in order I should just like to have the Registrar’s specific reference on this matter and perhaps come back to this in a moment. Obviously, however, one has to look at the intention of the original Act. But I shall try to answer that in a moment if it is in order with you, Mr. Chairman.

Mr. Chairman, in order to allow the hon. the Minister a chance to deal with this matter I move—

Agreed to.

Clause 6:

Mr. Chairman, I start by moving the following amendments—

1. (1) On page 9, in lines 16 and 17, to omit “in the course of or as a result of any military service which he performs” and to substitute:

1. (2) on page 9, in line 31, after “paid” to insert:

1. (3) on page 9, in line 47, after “premium” to insert:

1. (4) on page 9, in line 54, after “concerned” to insert:

1. (5) on page 9, after line 59, to add:
2. (6) No insurer shall refuse to issue to any person a domestic life policy on the grounds that he is performing or is likely to perform military service.
3. (6) on page 9, after line 59, to add:
4. (7) No domestic life policy shall contain any provision limiting the risk of death on military service other than that contemplated in subsection (1).

I shall hand the signed amendments to you in a moment, Mr. Chairman. I should like to motivate these amendments individually. With regard to the first amendment, as I indicated in the Second Reading, in our view the only risk which should be dealt with here is the risk of a man dying as a result of hostile action. In other words, if he gets a coronary through natural causes, if he gets knocked over by a motor cycle, if he falls out of a window, or whatever happens, those are the ordinary risks which an insurance company should cover whether he is engaged in military service or not. We see no reason why there should be any different provision, except in the one case, namely if he is involved in action with the enemy—no matter what form it takes. If he dies as a result of hostile action, then one can understand there is an additional risk for which there should either be an additional premium or be excluded in terms of the policy. We feel that this is something which the hon. the Minister should accept and accept at this stage.

The second amendment deals with a situation where the premium has to be refunded because the exclusionary provisions has come into operation. Here, as I indicated in the Second Reading, we believe that the premium should be refunded together with interest. I have chosen 8% because I think it is a reasonable rate of interest. I am not wedded to it, and if the hon. the Minister feels it is too low I am quite happy to have it increased. However, it seems to me to be a reasonable rate of interest, bearing in mind that the company has had the use of the person’s money for that period of time.

The third amendment is the one that deals with the small print. In my view this is a matter which must be drawn to the person’s attention. This business of small print and little words which one can hardly see, is something which, I think, the hon. the Minister of Economic Affairs is dealing with in another measure in regard to other matters. The hon. the Minister knows from his own experience, having seen insurance policies, that there is lots of it which one cannot read. If one can understand it when one is able to read it, it is already an achievement for the ordinary man. The language is language which the ordinary man does not normally use. Therefore it should certainly be drawn to his attention in a clear form.

The fourth amendment is to the effect that a person must not be induced to cancel his insurance. In other words, if there is an insurance which covers him in the event of death by hostile action, and the insurance company may feel it wants to get out of that sort of thing, and therefore sends somebody to persuade the insured person to cancel his insurance, it is, in my view, a wrong situation. I believe that no insurance company should be allowed to induce, either directly or indirectly, anyone to cancel this type of policy. I have included “broker”. I have not included “agent”, because the term “insurer” would include anybody acting on his behalf. However, a “broker” could also be used for this purpose, and I think they should be specifically mentioned.

The fifth amendment—which is not like the American Fifth Amendment—is that no insurer shall refuse to issue to any person a domestic life policy on the grounds that he is performing or is likely to perform military service. That, to me, is the most important of all, because the whole intention of the hon. the Minister, in bringing a new section 38A, is to ensure that servicemen are no worse off in the treatment they receive from the insurance industry than anyone else. If we have a situation in which people decide—and they can find reasons—to refuse to give life insurance policies to servicemen, a very serious position arises. I do not believe that they should refuse to issue policies to servicemen or to people who are likely to perform military service on that ground. We similarly have a provision in the Defence Act which provides for it that a man cannot be refused employment because he may be about to do national service. This is the same kind of thing. It may be difficult to enforce, because it can be said that a man is being turned down because of bad health. However, it is exactly the same in terms of the Defence Act. One may not always be able to prove that someone is turned down for that reason. However, the provision is on the Statute Book and it must act as a deterrent.

The last amendment is that “no domestic life policy shall contain in it a provision limiting the risk of death on military service other than contemplated in (1)”. In other words, that is the only provision that should be allowed. Nothing else should be allowed in the policies dealing with military service. The only condition that should be allowed is that of death as a result of hostile action. Otherwise we are going to have a mass of provisions excluding people serving, for example in the police reserve. All such provisions can apply and all of them can be exclusionary provisions. In our view, as I have tried to indicate during Second Reading, we must try to restore the equality in bargaining power, because we have the situation that no ordinary person can negotiate with an insurance company as to the terms in its life insurance policies. The applicant fills in a proposal form. Unless he asks for it, he never sees the policy and he cannot really be in a position to request that a certain term or certain terms be altered. Therefore, we have an obligation to protect. That is the obligation which we in these benches are trying to discharge at this moment.

Mr. Chairman, I want to refer briefly to the amendments by the hon. member for Yeoville. The first one deals with his proposal that we should introduce the concept “hostile action” into the legislation. There may be merit in the hon. member’s proposal, but at the same time we shall encounter problems if we merely insert this in the legislation without further ado. I want to know from the hon. member exactly what “hostile action” is. How does one define it? If one considers the situation on our borders, one can argue that when someone is being shot at, there is hostile action. When a serviceman drives a vehicle however, and overturns it, how is one to determine that there was hostile action? Therefore I am really hesitant to agree with him that we should insert this.

The second amendment he proposed, embodies the idea of the repayment of interest. On the face of it it seems to be fair, but I do not think it is quite as simple as that. One should not forget that the premiums concerned here …

Now I am a bit disappointed.

… have in fact been paid for something quite different than the policy which provides for death as a result of military action. In the proposed section 38A(3) specific provision is made for the levying of higher premiums if the policy is issued with a view to benefits payable in the event of death while engaged in military service. The premiums in question as far as the hon. member’s amendment is concerned, however, are premiums paid for an ordinary life policy which provides benefits if the person dies for any reasons other than military action. However, if the policy provides for benefits in the case of death as a result of military action, higher premiums are payable. That is something for which subsection 3 makes provision at present.

A second point in this regard is that the amount one pays in premiums is actuarially calculated. The possible earnings in interest in the normal run of affairs is included in such a calculation. If the insurer should refund the interest he will have to take into account in determining the premiums, that the premiums plus the interest will have to be refunded. That will probably cause the premiums to be higher. How can one know in advance that there is a possibility that the next of kin of the man applying for the policy will get back the premiums later if he dies as a result of military action? In the situation in South Africa today, people who have reached the age of 40 cannot be called up to fight in the war on the borders any more. Therefore nothing can happen to people older than 40 years as a result of military action, but the situation may change. How is the poor insurer to know so long before the time that when he sells a policy to someone, he must bear in mind in calculating the policy that the premium might have to be paid back one day, and together with it interest of 8%. Moreover, during the period in which the policy is in force, the policy holder enjoys full cover for anything that could happen to him, viz. if he should die as a result of something other than military action. I think the policyholder should pay something to the insurer for the cover he enjoys. I believe, therefore, that the insurer does in fact earn the interest on those premiums. In this regard, unfortunately, I cannot agree with the hon. member for Yeoville that the interest should also be repaid to the policyholders.

As regards the hon. member’s second amendment, it is in my opinion not really essential, but I do not believe one can really object to it.

As far as amendment No. 3 is concerned, I do not believe it is particularly necessary either, but again I suppose we cannot really object to it very strongly.

Are you referring to amendments No. 2 and 3 on the Order Paper?

Yes, it is amendments No. 2 and 3 on the Order Paper to which we have no objection. With amendment No. 3 we also have a problem, however, although we have no essential objection to it. I want to ask the hon. member how one is going to prove this? I am referring to the provision “provided that an insurer or a broker shall not induce such owner to cancel such insurance”. How is one to prove something like that? Who is going to prove it? Are we now to appoint officials to question such people? How is it going to work in practice? I should like to know what the hon. member for Yeoville has to say about that.

Then, too, there is amendment No. 5 which the hon. member moved. What it amounts to is that the insurer may not refuse if he suspects that an applicant still has to do military duty. Personally I think it is a good amendment and that we should like to support it.

I just want to say something in general about this clause as well. Clause 6, which inserts section 38A, in fact shows a very positive approach on the part of the Government towards our servicemen. When it comes into effect it will regulate all new policies from now on. In broad outline, what it amounts to is that insurers will no longer be obliged to include or exclude death as a result of military service in their life policies. It is left to the insurer and the person involved to negotiate that between themselves. If it is in fact excluded, as we have seen, the premiums will have to be refunded. If it is included, however, it covers death as a result of military action, inside or outside of the Republic or war waged by the Republic or by another Government against a common enemy. There need not be war in the juridical sense of the word and this constitutes a vital adaptation to the present circumstances in Southern Africa where it is often essential for us to counteract acts of war in the absence of a true state of war.

From these preceding amendments one can in my view reach one conclusion. It is clear that the points of view of the Life Offices Association and of the Department of Defence, who submitted evidence in this case—as one can see when looking at the report which the hon. member for Yeoville also referred to—are in fact being taken into account, that a balance is being struck between these two parties and that their interests are in all cases being accommodated as far as possible. I think this is a vital measure which will not only afford our people legal security in the sphere of life insurance, but will also afford peace of mind to everyone involved in the defence of our country. We have no hesitation in supporting this measure.

Mr. Chairman, the hon. member for Yeoville is of course quite entitled to motivate the amendments which he moved himself, and he will presumably continue to do so if it appears to be desirable to him.

I just want to react to one or two of the things that the hon. member for Verwoerdburg said about one or two of my hon. friend’s motions.

Firstly, he asks how it will be possible to define and identify “hostile action”. I want to concede that there will in fact be cases where there may be some doubt. For instance I am referring to cases where a motor vehicle is involved in an accident and it is not clear whether a landmine was involved and whether the enemy may not have damaged the road in some or other way. There will in fact be these doubtful cases, but there should not be many of them. In the vast majority of cases where a national serviceman dies in the course of duty, the cause of death is surely very clear. What my hon. friend would like to do—and I assume that this would be the intention of any hon. member in this House— is to ensure that if an insured person should die in the course of duty as a result of causes which would have occurred in any event, for instance an illness of some nature which was already present before he became a national serviceman, it would very clearly be excluded from any proviso in the policy. It seems to me that although there may be the odd difficult case, we are dealing here with a very important principle. In the vast majority of cases it will not be difficult to determine what is necessary, and I really hope that the hon. the Minister and other members will give this proposal very favourable consideration.

I now come to my hon. friend’s proposal in connection with the new section 38A(a)(b) which reads that the amount may not be less than the premiums paid. My hon. friend proposed that interest should be paid and that the rate of interest may be 8%. He said he was not very concerned about what the rate should be. In this regard we found it difficult to follow the arguments of the hon. member for Verwoerdburg concerning why this might not be possible. The insurance company has the use of that money. The whole basis on which it operates is that it invests that money and that there is a yield attached to it. It pays bonuses on ordinary policies. It is accustomed to derive revenue from the premiums invested with it. We are now concerned with one particular case. The hon. member for Verwoerdburg correctly said that premiums are not only paid as regards this specific risk, but also as regards other risks. This is true, but those other risks must nevertheless be covered; provision must be made for them. We are dealing here with the specific circumstances set out by the clause and under those circumstances we cannot see why the insurance company should be able to use that money during the period for which it has it, without having to pay any interest upon it.

The hon. member did not go very deeply into the amendment of my hon. colleague as regards the “type no smaller than that used elsewhere in the policy”. This is not very important either, but we believe that since it so often happens that insured people do not know what is stated in their policy, everything possible must be done to assist them to understand their policies.

If I understood the hon. member for Verwoerdburg correctly, he thought it appropriate to support the following amendment of my hon. colleague: “No insurer shall refuse to issue to any person a domestic life policy on the grounds that he is performing or is likely to perform military service.” I think I understood it correctly and I want to say that we appreciate this and that we are therefore making progress.

I do not think that the hon. member reacted to the last amendment of my hon. colleague, i.e. that no policy should contain any provision “limiting the risk of death on military service other than that contemplated in subsection (1)”. This is also an important proposal and I hope that we shall hear something from the hon. the Minister or other hon. members on that side of the House about it.

Mr. Chairman, I should like to support the hon. member for Verwoerdburg in his rejection of the first of the proposed amendments by the hon. member for Yeoville. I am now referring to his suggestion that the following words be inserted: “As a result of any hostile action arising while such person is performing military service.” The provision as is stated in the Bill at the moment, actually has a wider purview. A person who is performing his military service, may be killed in an accident while driving a motor vehicle, in circumstances which do not specifically relate to military action of the nature for which the hon. member wants to make provision in his amendment. I therefore agree with the hon. member for Verwoerdburg that that amendment should be rejected.

I actually rose in order to point out another aspect. The amendments as well as the proposed clauses may perhaps give the public the impression that the people involved in military action, are involved in great danger and run tremendous risks. The type of military action in which South Africa is involved at the moment, is of such a nature that one can safely say that the risk to one’s life involved in service in the operational area is lower than the risk involved in using the roads of South Africa. During the limited action against the Swapo bases codenamed Moscow and Vietnam recently, six people lost their lives in an action which lasted approximately eight hours. The following day, however, I read in the newspapers about a motor accident in which eight persons were killed. I should like the general public to be aware of the fact that the risks involved in participating in the type of military action in which we are involved at present, are lower than the risks which people run on the roads of South Africa. I am not referring to the type of military action in which Europe was involved during the Second World War. During such action the casualty rate may be higher. At this state, people who are involved in military action, are not exposed to greater danger or greater risks.

Mr. Chairman, I think that I am in a fairly indulgent mood today and that is why I am trying to accept amendments that I am able to accept. I am sorry, however, that I am unable to accept the first and second amendments moved by the hon. member for Yeoville. There are good reasons for this, and I think that the reasons were very well put by hon. members who spoke on this side, viz. the hon. member for Verwoerdburg and the hon. member for Klip River.

†The amendment proposed by the hon. member will undoubtedly limit the military risk. If death arises from a cause which is associated with and is, in fact, caused by military service for whatever reason, other than hostile action as such, it appears to me to be correct that an insurer should regard it as a military risk. That is the difficulty with the changing of the wording as the hon. member for Yeoville desires. I hope he will see our point of view in that respect.

As far as the second amendment is concerned, an insurer who issues a policy which excludes the military risk, receives premiums calculated in respect of other risks. If premiums become refundable in terms of the proposed amendment, the insurer would have been contractually on risk in respect of such other risks only. In those circumstances it seems to me to be actuarially correct that the interest should accrue to the insurer as he has contractually been on risk. I would further point out that the existing section 38 also provides for the refund of premiums only and that there is no question of interest being paid in that instance. It is an arguable point, but I think on balance this is perhaps a very justifiable attitude to take. It puts me in some difficulty as regards the acceptance of the second amendment. I am taking the amendments seriatim, and not as they appear on the Order Paper. As far as the third amendment is concerned, there is the question of the small print. I am not sure whether it is strictly necessary, but I am not going to object and I am prepared to accept that. There is a case to argue for it and I am prepared to accept that amendment. The fourth amendment moved by the hon. member is again very much the same. I am not very sure myself whether it is strictly necessary, but I am prepared to accept that amendment as well. The fifth amendment is rather more important. I agree with the hon. member for Verwoerdburg and I am prepared to accept that as well. As far as the sixth amendment is concerned, the hon. member will appreciate that this amendment would be consequential to the first one and since I have difficulty with the first, I would be in difficulty with the sixth as well. I have difficulty in accepting that. I hope the hon. member will appreciate my position. Nevertheless, I am prepared to accept three amendments out of those moved under clause 6.

Mr. Chairman, I have listened to the arguments of both the hon. member for Yeoville and the hon. the Minister with great interest. It strikes me that some sort of compromise situation could be achieved in respect of the first amendment as proposed by the hon. member for Yeoville. As I see it, his difficulty lies with the words “in the course of … any military service”. The words “in the course of military service” could embrace a tremendously wide period of time. A trainee, who is called up for two years, is “in the course of military service” for the whole of those two years, regardless of what he might be doing at the time. To me this seems to be the difficulty. If the words “in the course of” were taken out, we would then be left with—

We might then be achieving what the hon. member for Yeoville is in fact seeking to achieve without creating the difficulties of definition of “hostile action” which hon. members on that side have correctly referred to. I would therefore ask the hon. the Minister perhaps to give this matter some consideration before he takes the Bill to the Other Place.

Mr. Chairman, in reacting briefly to that proposal by the hon. member, I think we must again read the new proposed section 38A(1) as inserted by clause 6 of the Bill before us. It states—

If the hon. member will read the whole provision, I think he will find that the position is stated pretty carefully. It is for that reason that I find difficulty in changing this. The wording has been drawn up with very great care and one must take note of the words—

That, to my mind, states my approach in that regard. One obviously wants to try to meet reasonable arguments, but I certainly am in difficulty with this amendment of the hon. member which seems to me to restrict the case unduly.

Mr. Chairman, firstly I want to thank the hon. the Minister for accepting my amendments Nos. 3, 4 and 5. I also want to tell the hon. the Minister that we are actually conducting this debate, as he knows, in a non-political sense in order to try to achieve a satisfactory object. I think the hon. the Minister knows that and that is why I appreciate the spirit in which he has approached those amendments.

I want immediately to come to the other matter which the hon. the Minister referred to. If the hon. the Minister is right in his interpretation that the provision only applies if a person dies “in the course of or as a result of any military service … in any military action against a common enemy …” then there will be no need to have any amendments at all, because then it means that one will only have an exclusionary provision if he dies in any military action. The tragedy is, however, that if one reads the clause—the Afrikaans makes it even clearer—one finds that the words “in any military action” only relate to any military action against a common enemy where that action is in association with the Government of the Republic and another state. In Afrikaans the clause reads as follows—

That part is not important, but the following is—

As it is stated here in Afrikaans the meaning is very clear, and this holds true of the English version as well. This applies only to military action against a common enemy of the Government of South Africa and another country which is associated with the Government. That is really the problem. The remarkable thing about this debate is that the hon. the Minister, to my mind, actually a seems to agree with what I want to achieve. It was also clear from the arguments of the hon. member for Klip River, who actually stated our case as we saw it and then in the end said that he was against it. What I would like to establish from the hon. the Minister is whether we are right in what we assume his view to be. I should like the hon. the Minister to deal with this situation specifically. Let us take the example of a youngster, especially a Citizen Force man, who has an insurance policy and goes into the forces. Let us assume that this Citizen Force man is called up for three months’ border service and that while he is on the border he dies because he has had cancer all the time although nobody knew about it. Should his insurer pay out or not? The hon. members are nodding their heads. They are possibly saying: “Of course”; but the tragedy is that in terms of this wording he is not going to be paid out. We are actually agreed upon this and it is only the words which are bedevilling the situation. Therefore, we have to agree on the words. The words at issue are: “dies in the course of … any military service”, which in Afrikaans reads: “sterf in die loop van … militêre diens”. In other words, this provision will apply if this man dies while doing border service. He can get measles or anything else and can die of it. Let us take another example. A Citizen Force man doing his three-month service may be knocked over while on leave for the weekend. Should he be covered? Let me mention another case. This serviceman may be driving a truck while in the service and a civilian motorist knocks into him and kills him. Should he be covered, or not? As I understand it, what the hon. members on that side want and what the hon. the Minister wants, is a situation where this provision applies to a person who is in the service and dies because of the fact that he is in the service. If that is the situation, then unfortunately we are being unfair to the serviceman who has taken out a policy to make provision for his family. To me that is a tragedy; it is a tragedy that we should be doing this and that we should be bedevilled by words when all of us in the House have the same objective.

May I just touch on my second amendment, which deals with the interest issue. I should like to say to the hon. the Minister that I know and accept that the insurance company is on risk in respect of its policy. If the man does not die during military service, the life policy has to be paid out whatever happens. In other words, a life policy is not like an accident policy where the policy is only paid out when there is an accident. It is also not like term insurance where, when the term is over, one is no longer on risk. In a life insurance policy every insurer anticipates having to pay. In other words, a life insurance policy eventually has to be paid out. That is really what it is. The risk which the insurer takes is that the man will either die after a short time, or that he will live to a ripe old age. That is where the whole actuarial assessment comes in. If in this case one has the situation where the insurer is relieved of his obligation to pay the amount in terms of the policy and only has to refund the premium, he has escaped the risk altogether.

The insurer has two advantages. The one is that he has had the use of the money. In other words, he has made profit with the premium of the serviceman. The second advantage is that, as happens in every contract of insurance, one takes good money away from the insured and pays him out in bad money eventually, because of the basis of what inflation is all about. I do not want to knock the insurance industry, but we all know that in the ordinary course insurance is not a good investment because one gets bad money when one has paid good money. Normally one’s return is not equal to the kind of return one can get on a gilt-edged investment. However, one takes out insurance to cover one against contingencies which one cannot otherwise deal with. That is why young people take out insurance to cover themselves against families who may be left alone, or wives who may be left with small children. That is why one takes out insurance for. Insurance is not an investment medium in the true sense which can compete with other investments. So, in this case, money is actually made out of a man. He is given back bad money whereas his good money was taken away over a period of time. The hon. the Minister knows, for example, that from 1970 until the present day the consumer price index has resulted in the rand having 50% less purchasing power. To then only give the premium back, on those principles seems to me to be not fair. The hon. member for Verwoerdburg became a little lyrical and asked: “Wat van die arme versekeraar?” I do not want to play politics, but want to ask: “Wat van die arme man wat die polis uitgeneem het?” He must not become emotional about the rich, but about the people who need to be looked after.

I want to come back to two simple premises. Firstly, when one uses somebody’s money, reap the benefit from it and pay back money which is worthless, one must compensate. Secondly, my sixth amendment— even if my first amendment is not accepted— is material and not consequential, because the risks will be as defined in subsection (1). In other words, I do not want a situation in which they can enlarge even on what the hon. the Minister wants in subsection (1), because then we may have a situation in which they can start enlarging on what can happen in the course of or as a result of military service and we can have a much wider exclusionary provision, as for example in regard to the people connected with civil defence. That is why amendment No. (6) really stands on its own, because it either applies to the limited risk which I want to have in subsection (1) or it will apply to the larger risk the hon. the Minister wants in subsection (1). However, whichever it is, I do not want the insurance company to be able to go further than the risk as defined in subsection (1). That is why I appeal to the hon. the Minister, if he feels in respect of subsection (1) that we have made out a case … [Time expired.]

Mr. Chairman, I should like to add just one word to what the hon. member for Yeoville has already said in connection with the interpretation the hon. the Minister has offered us of this clause. I really do not believe that the meaning is what the hon. the Minister takes it to be, although it is easy to see how the words can be interpreted that way. The hon. member for Yeoville has correctly shown that the Afrikaans version makes it quite clear that the words “in any military action against a common enemy” merely refer to the association of two Governments and not to what the deceased was doing at the time of his death. I want to suggest that this is made absolutely crystal clear simply by a contemplation of the word “common” which is inserted in the proposed subsection (1). In the nature of things it cannot mean anything else than that it refers only to the association of the two Governments, because if it did, it would mean that if the man was killed in an action against a single enemy as opposed to a common enemy, or if he were killed in an action in which the Republic was involved without an ally, he could not possibly be covered because that enemy would not be a common one. Therefore I think it must be what we think it means. It is not that we are particularly clever, but just have the luck of the draw this time.

Mr. Chairman, I rise just to finish what I was about to say to the hon. the Minister when my time expired. I appreciated two things in this matter. The first is that I think the hon. the Minister has only seen the amendments at relatively short notice. Secondly, I think the hon. the Minister would like at least to give effect to what he believes is the correct thing to do in the circumstances. If he feels that in these circumstances a discussion with the Registrar would perhaps help, I want to suggest that, in the same way as we have allowed clause 5 to stand over, we should also allow clause 6 to stand over. If it stands over, we can continue with the debate when the House resumes tonight after dinner. I think the hon. the Minister may by then be in a better position to deal with the situation. If the hon. the Minister agrees—he seems to nod to indicate his approval—may this clause then stand over until later in the Committee Stage?

Mr. Chairman, I appreciate the spirit of the suggestion. It is not unreasonable. I had contemplated putting it slightly differently. Obviously the wording in the Bill has been decided upon very carefully. It is the outcome of very long discussions with interested parties and a very careful study by the Registrar’s office and, indeed, consultations with me. I am in difficulty about accepting this amendment. I would prefer more time, and I am therefore prepared to suggest to the hon. member that he gives me the opportunity to discuss his first amendment quite fully again with the Registrar and others. If I can see my way clear—I have listened to the arguments very carefully and, of course, I shall also study Hansard—to accepting the amendments on further reflection, I shall certainly do so in the Other Place. That would give me just a little more time.

I am certainly in difficulty with the second amendment. With respect, I do not think it is correct to introduce the problem of inflation into this matter, because even if there was no inflation and supposing there was a situation of constant prices, my view would still be that interest ought not to be brought into the calculations. That is the way we have approached these matters for a long time. There are other types of legislation where the same principle applies. It would be quite a considerable departure from the fairly longstanding approach to this particular type of matter. Amendment No. (6) does in fact have relevance for No. (1), or No. (1) for No. (6), and I would prefer to have more opportunity to thoroughly thrash this out with my advisers. We have, too, as the hon. member knows, an advisory committee on long-term insurance which consists of leading personalities and figures in the life insurance and long-term insurance field. I would therefore like an opportunity to take this matter further in that regard as well. If I may put it on that basis, viz. that we can see how far we can go before taking it to the Other Place, I shall get in touch with the hon. member and tell him my view of the matter at that point and try to motivate it fully at that stage. I agree with him: We are not trying to score points over each other. These are very important matters and we want to achieve the best result for the people involved. If I may approach the matter in that way, I think it will be more helpful than trying to arrive at a quick decision still this afternoon.

Mr. Chairman, may I ask the hon. the Minister a question? I think what the hon. the Minister has suggested is reasonable and I therefore ask him to deal with the matter in the Other Place. We in these benches shall accept that and not force a vote.

Order! That is not a question.

Mr. Chairman, in the light of the undertaking given by the hon. the Minister and with the leave of the Committee I withdraw amendment (1).

Amendment (1), with leave, withdrawn.

Amendment (2) negatived (Official Opposition dissenting).

Amendments (3), (4) and (5) agreed to.

Mr. Chairman, in the light of the hon. the Minister’s undertaking and with the leave of the Committee, I withdraw amendment (6).

Amendment (6), with leave, withdrawn.

Clause, as amended, agreed to.

Clause 7:

Mr. Chairman, prior to 1971, apart from stockbrokers, there were also a number of financial institutions that had the right to operate on the Stock Exchange. The committee of the Exchange objected very strongly to this, and when the Act of 1946 was amended in 1971, it was agreed that those institutions forfeit their right to operate on the Exchange. However, in the process a mistake slipped in that had an adverse effect on the brokers as well. It was that certain stocks, for instance Government stocks, Escom stocks, Rand Water Board stocks, Land Bank stocks and IDC stocks, etc., could not even be handled by brokers, unless it was done through another broker. This put the broker in a worse position than that of certain other financial institutions, for instance a merchant bank or a discount house, etc. All that is now being moved in this amendment, is that the broker be placed in the same position as that of other financial institutions. Of course, this only applies to quoted stocks. I think this is a very good change, a change that I want to support very strongly. Of course, I do not want to allege for a moment that the recession which has occurred on the exchange since the Act of 1971, is due to the relevant Act; by no means. However, there are a few sections of Act No. 86 of 1971—especially section 3 and section 24—which possibly contributed towards a smaller turnover on the Exchange. Since this is now being rectified here, and also because we urgently need a further upturn on the Stock Exchange, I want to support this amendment wholeheartedly.

Clause agreed to.

Clause 9:

Mr. Chairman, the arguments I advanced concerning clause 7, also apply to a large extent to clause 9. Perhaps I should just explain why it is so essential that this change be made. Prior to the Act of 1971, there were many cases of clients suffering at the hands of brokers because the broker had not provided sufficient security in dealing with clients’ stocks. One of the forms of security was handing stocks over to the bank where they were deposited. Another was the granting of loans by brokers, not for the purchase of stocks, but for other purposes. Such a loan for other purposes then counted as a form of security for the client. The result was that less money was channelled from the brokers for the purchase of stocks than would have otherwise been the case. All that is being done now, is to do away with the other loans as a form of security for purchasing stocks. I take pleasure in supporting the clause.

Clause agreed to.

Clause 10:

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

to insert:

I should like to motivate the amendment briefly. I believe that in the definition of “dependent” the spouse of a child or a grandchild should be included. Let me give a very simple example. One may find that a man’s married son who has children dies. The wife and the children remain. I believe that a wife is as much dependent upon the family when she looks after the children as one of the children is himself. This amendment will not bring about an obligatory provision; it merely enables the trustees of a pension fund to do something in respect of the dependant and it does open the door to what I think is a recognition of the wives of children in the main cause. I therefore ask the hon. the Minister to accept the amendment.

Mr. Chairman, I have no objection to the amendment. It is acceptable to me.

Amendment agreed to.

Clause, as amended, agreed to.

Clause 11:

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

1. (1) On page 13, in line 1, after “member” to insert “or his spouse”;
2. (2) on page 13, in line 8, after “dwelling” to insert “or improvements to land”;
3. (3) on page 13, in line 9, after “member” to insert “or his spouse”.

I should like to motivate these amendments very briefly. I shall first of all deal with amendment No. 1. We find in many cases today, as has been the custom for many years in the past, that when a man buys a house, he often buys it in his wife’s name. There seems to be no logical reason why, in those circumstances, he should not be able to borrow the money in the same way as though the property were registered in his own name. The same applies in the case of amendment No. 3. If a house is in his wife’s name and he wishes to effect improvements, he should, in those circumstances, be able to borrow to do so. As long as he and his wife are liable to the pension fund, there is no problem in so far as the finance is concerned. After all, pensions are really designed to help a family or a family unit. I therefore suggest that there can really be no objection in substance to this.

The second amendment seeks to insert the words “or improvements to land”. This, again, is purely a technical matter because as the clause reads at the moment, one can only borrow for improvement to the dwelling itself. The improvement, however, may be separate from the dwelling. Let me give an example. You may have the situation where you want to have a swimming pool on the property. That will not be an improvement to the dwelling, but an improvement to the land. You may have a situation—this is an example of something I know of—where the wife is an artist and you want to erect a studio separate from the house. That is an improvement to the land, but because it is not actually an improvement to the dwelling, you cannot borrow for that purpose.

It seems to me that these are merely amendments which will improve the situation in so far as members of pension funds will be allowed to get the benefit from such funds by means of loans in a realistic manner and therefore I urge the hon. the Minister to accept them.

Mr. Chairman, the hon. member seems to be inserting the word “spouse” into quite a number of places. There is, however, only one definition of “spouse” in the Pension Funds Act. I refer to clause 10(b)(1) which of the Bill which defines it as including—

I therefore think that it is perhaps going to be necessary to have that definition applying to the concept “spouse” which the hon. member for Yeoville has introduced in his various amendments. I should therefore like to suggest to the hon. the Minister that since we are, in this legislation, mentioning the word “spouse” in a number of places, it might be advisable, in the Other Place, to insert in clause 1 a definition of “spouse”, defining the concept as applying also to a union according to Bantu law or a marriage under the tenets of Indian religion, etc. In other words, I feel that we might just have some difficulty with the definition if we do not do this.

Mr. Chairman, I should just like to take the last point first. I think I shall need a little more time for that particular suggestion. If the hon. member for East London North will give me a little time, I shall look into it. If it is necessary to take the matter further, we shall have the opportunity of doing so later.

I now come to the hon. member for Yeoville. His first amendment to clause 11 deals with the insertion of “or his spouse”. I have no objection to it as it is consistent with what goes before. His third amendment to clause 11 is again to insert “or his spouse”. Again I am quite prepared to accept that.

The second amendment to clause 11, however, causes me some difficulty. The words “or improvements to land” would go much further than “alterations to a dwelling … which is occupied … by the member” and could be of a nature which may result in the dissipation of pension rights. I think we have to be very careful on that score. The Registrar has given very careful thought to this, so I hope the hon. member will be able to accept our problem there. As I have said, I have no problem with his first and third amendments, but I certainly do have some difficulty with his second amendment. I would prefer to retain the words as they stand in the Bill. I think his amendment goes too far.

Mr. Chairman, I am indebted to the hon. the Minister for accepting my first and third amendments. May I just make a couple of points in regard to my second amendment. Firstly there is no obligation upon any registered pension fund to grant any loan to a member at all. One merely needs to refer to clause 11 where it is stated—

In other words, if the nature of the improvement to land is such that this would jeopardize the pension rights and the property would thereby not really be improved, there is no obligation upon the pension fund to grant the loan at all. In other words, there is no right to obtain a loan; the pension fund may merely grant it.

There is, however, also a second point I should like to make. I have great difficulty in understanding why certain things are permissible and others not. For example, let us suppose I want to build a studio for my wife. If I add it onto the house, it is an addition to the dwelling, but if I move it three yards away, I cannot borrow the money because it is then an addition to the land and is not an alteration or addition to the dwelling. Let me take another example. Let us assume that I have a home which does not have a garage. If I add the garage physically to the house, so that it is adjacent to it, I am entitled to borrow the money to do it. If, however, because of the building regulations, there is a two foot gap between the house and the garage, I am not allowed to borrow the money to do it. I regret that the logic of allowing additions or alterations to a dwelling as opposed to allowing additions and alterations which are, in fact, improvements to land, escapes me.

If the hon. the Minister can tell me where I am wrong, I would be very happy to hear it, but, with respect, it does seem to me that it is logical to say that, if the principle is that a person can borrow money for additions or alterations to a dwelling on land belonging to him, he should also be able to make improvements to the land on the same basis, though at the discretion of the Pension Fund. I ask the hon. the Minister to reconsider the matter.

Mr. Chairman, I should like to associate myself with the remarks made by the hon. member for Yeoville. In the newer areas that are being developed, the areas where younger people are buying homes, garages are often not built. Frequently, the owners have garages built at a later stage. In many cases, too, servant’s quarters are not built initially. Servant’s quarters are not necessarily part and parcel of the main dwelling. More often than not they are separate from the main dwelling, possibly with a courtyard in between. I ask this; If what one might call a screen wall were built linking the two, would one then be entitled to consider the servant’s quarters as part and parcel of the main dwelling?

I think the hon. the Minister would do well to reconsider his decision in respect of this particular amendment proposed by the hon. member for Yeoville, which I think is a very, very important one, particularly in respect of the young home-owner who wants to improve his property without adding to the dwelling he has on the property. I must say that, quite honestly, I do not go along with the swimming-pool idea. I am referring to, for instance, building a garage, converting a single garage into a double garage if the owner reaches the stage where he can afford a second car, or enlarging or improving the servant’s quarters. This is frequently done. In the case of older dwellings servant’s quarters are frequently not of the standard one would like. I experienced this at my own home where the servant’s quarters were certainly not of the standard I felt they should be. I consequently improved those quarters. However, they are not attached to my home. This provision would exclude a person from borrowing in order to effect alterations of that nature.

Mr. Chairman, I have listened carefully to the arguments raised. I personally have no doubt that the words “or improvements to land” are too wide. The hon. member for Umhlanga said he did not have swimming-pools in mind. I certainly did not have that in mind either. I want to suggest that we put this on the same basis as we did with an earlier amendment. I will ask the Registrar to give this his immediate attention and I will consult with him myself to see whether, in the light of the arguments raised, we can find an alternative wording to “improvements to land”, a wording which will give effect to some of the reasoning put forward. If we succeed in that, I shall move the necessary amendment in the Other Place.

Mr. Chairman, this time I do not have to ask the hon. the Minister to get up so that I can ask him a question. I merely want to say that I am quite happy with the arrangement suggested by the hon. the Minister and, accordingly, with the leave of the House, I withdraw my second amendment.

Amendments (1) and (3) agreed to.

Amendment (2), with leave, withdrawn.

Clause, as amended, agreed to.

Clause 14:

Mr. Chairman, I would like to get some reaction from the hon. the Minister in regard to this. I tried to appreciate from the explanatory memorandum what he has in mind. However, a very wide purpose is stated. In the case of subscriptions for medical schemes and insurance premiums, it is obvious that the items are for the beneficiaries’ benefit. However, the wide nature of the proposed subsection (c)(iii) would enable the Registrar to approve a request from a fund even if that was not in the direct benefit of the beneficiary in terms of the pension. I would like to know from the hon. the Minister, to enable me to assess the position, what he has in mind, what sort of benefits he envisages and what sort of deductions could take place. It is a very wide provision, and one would obviously want to protect the pensions of people as far as possible so that there are no deductions which are not in their interests.

Mr. Chairman, I would like to read this clause so that we can get the full picture—

1. 14. Section 37D of the Pension Fund Act, 1956, is hereby amended by the substitution of the following paragraph for paragraph (c):

1. “(c) deduct any amount which the fund has paid or will pay by arrangement with, and on behalf of, a member or beneficiary in respect of—

1. (i) such member’s or beneficiary’s subscription to a medical scheme, registered otherwise …;
2. (ii) any insurance premium payable by such member or beneficiary to an insurer registered in terms of the Insurance Act, 1943 …;
3. (iii) any purpose approved by the Registrar on the conditions determined by him, upon a request in writing from the fund,

The only answer I can give at this point is that the Registrar feels that this does restrict him. He gets suggestions from time to time from a fund which is not provided for under subsection (c)(i) and (ii), and he would like some discretion. I cannot give the hon. member any hard and fast example now that might be before him in writing. I will have to determine that and I will give it to the hon. member at the Third Reading. However, the Registrar has informed me that he would like to have some further discretion here in certain cases. I will obtain examples of those cases as I do not have them before me.

Mr. Chairman, perhaps I am misunderstanding the position, but it would seem to me that the provision which we are now discussing bears somewhat on what we were discussing a moment ago when we were wondering whether it would be proper to permit withdrawals from the pension fund to improve land as distinct from extending a dwelling. Understandably—although we did not agree with him—the hon. the Minister expressed concern as to whether allowing people to withdraw funds from a pension fund, with the approval of that fund and in accordance with rules, for the purposes of improvements to land, was not too wide and was not perhaps allowing too much discretion. Yet here, it would seem to me, we are giving the Registrar a blanket power to allow people to withdraw money from the fund for any purpose he may approve of. We are not necessarily opposed to this—I emphasize that—as we have been pressing for wider powers than the hon. Minister has been wanting to give. However, it would seem that there is something of a logical discrepancy between denying the one and permitting the other. Perhaps while the hon. the Minister is cogitating about the impact of the clause he could cogitate about this aspect also.

I will do that and would also like to give concrete examples.

Mr. Chairman, I have a grave difficulty about this and would like to put it to the hon. the Minister. One of the basic concepts relating to pensions is that they are protected against creditors and that they are protected upon insolvency. The hon. the Minister knows that. What worries me in this respect—I would appreciate it if the hon. the Minister would, after consultation, react to it—is that the whole purpose and the whole protection could be frustrated if one could now get the situation that one could get a deduction in order to pay a creditor, a hire purchase agreement or a mortgage bond. There could be a whole variety of things which could completely frustrate the protection that is given to pensioners to make sure that they get the money. If one looks at the other two deductions, i.e. for an insurance premium and for a medical benefit scheme, these are obviously in the interest of the beneficiary, but the moment one opens the door so that any deduction can be made, one is opening the door to something which we are a little afraid of in regard to the protection of pensioners particularly against creditors and other matters of that nature. That is why I say that, in the absence of an example, we find ourselves in a predicament in this respect.

Do we in fact say here that we must vote against this provision because we believe that pensioners must be protected in the manner I have indicated, or is there perhaps some innocent reason why this will be permitted? One thing is clear, however, and that is that we would need an assurance from the hon. the Minister that he will certainly instruct the Registrar that this clause can never be used in order to pay a creditor. If it cannot be used to pay a creditor, what can it be used for? Can it be used for charitable donations? The explanatory memorandum says for “deserving purposes”. I do not know what “deserving purposes” are, because “deserving purposes” are in the eye of the beholder. We therefore have an innocuous amendment which might in fact open the door to quite a serious consequence in regard to pensions.

Mr. Chairman, the Registrar informs me that in the one case there is a danger of dissipation of pension rights in respect of built-up funds before a pension is payable. In the other case we are concerned with deductions from the actual pension. I hope the hon. member sees the point. I am still prepared, however, to try to obtain an actual example of what may be in mind here, and I shall give it to the hon. member as soon as I can. This is, however, the distinction drawn here.

Mr. Chairman, the clause reads that it is a deduction of “any amount which the fund has paid or will pay by arrangement with or on behalf of a member of or beneficiary …” Therefore we are only dealing with one set of circumstances here. The difficulty I have with the Registrar’s reply, is that it does not tell what the provision is going to be used for. We need an assurance from the hon. the Minister that the provision is not going to be used to pay creditors, because if it is, then there is a dramatic inroad on the whole pension situation. If this provision has an innocent purpose, I do not want to vote against it, but at the moment—in the light of the information that we have been given—we have no choice but to vote against the measure. We have really been placed in quite an impossible situation.

Mr. Chairman, the Registrar has just given me the absolute assurance that creditors are out. That can therefore not arise.

Mr. Chairman, we are very grateful for the information we have just received, because this affords a measure of relief from the anxiety which we experienced when we originally read the provision. However, we now know of certain activities which the Registrar will not approve. But we do not yet know what he envisages approving. To us, this is a peculiar sort of provision. We should not like to spoil in any way the accommodating atmosphere which has prevailed here this far. But precisely because the hon. the Minister is being so accommodating today, he ought to grasp our problem with this provision. We are now at the point where we have to vote either for or against the provision, but it is still not clear to us what it is about and what we are being asked to vote for.

Mr. Chairman, one should keep in mind, after all, that the Registrar of Financial Institutions is an absolutely responsible senior official, and on the grounds of his experience, he now requests that in certain circumstances he be granted a little more discretion than the cases mentioned in paragraph (c)(i) and (ii). We feel that in future there may be good grounds for the deduction of an amount—apart from the amounts which are, strictly speaking, at issue in the above named two paragraphs. The Registrar merely wants that discretion. If any hon. member would only take a brief look at the manner in which these things have been done since the introduction of the legislation, he will see with what responsibility these things are in fact done.

†To follow up what I said a moment ago, I should like to refer to a note given to me by the Registrar which says that pensioners want their water and electricity accounts paid. It only applies to municipal funds. So, the hon. members can see that these things can in the future be important to pensioners, and I think we must give the Registrar that little extra discretion. I want to repeat that in the light of the very conservative way these things are conducted, I am more than satisfied to give him this discretion. I do not think it would be right only to allow the deductions under paragraph (i) and (ii), and I think we should give the Registrar this discretion.

Mr. Chairman, may I ask the hon. the Minister whether it is going to be allowed that water and electricity accounts be paid in terms of this?

I should not like to give a general view of this. I should rather like to leave it to the Registrar to see exactly what the benefit to the pensioner in a specific case is.

Clause agreed to (Official Opposition dissenting).

Clause 16:

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

1. (1) On page 17, in line 21, after “company” to insert:

1. (2) on page 17, in lines 26 to 29, to omit paragraph (c).

I should like to motivate these amendments briefly. We have no objection to the powers of inspection which the inspector of the Registrar has in respect of financial institutions, because we have had experience of financial institutions which have not conducted their business satisfactorily, and the Registrar needs to have weapons in order to deal with this situation. However, how far can one carry this? In respect of my first amendment one has the situation that it may be that Mr. X, says the hon. member for Schweizer-Reneke, owns a hundred shares in a company which is listed on the Stock Exchange. If the Registrar wants to investigate that financial institution, which may be a quoted company, he has the right to inspect the books, records and everything else of the hon. member for Schweizer-Reneke. That can really not be the situation. In these circumstances we feel that where a man has shares in a public company which do not exceed 5% of the issued share capital of that company, he certainly should not be put into jeopardy by a provision in terms of which his affairs could be investigated. This would mean that one could investigate thousands of people’s affairs in order to deal with this. When a man substantially owns a financial institution, an institution in which he has a meaningful stake which he may use in order to abuse his position, and when he may have records in his possession which show that he is abusing that position, the Registrar should quite obviously have the power of investigation, but not in a situation in which there is a minimal interest of no consequence. That is why I moved my first amendment.

My second amendment goes even further. Section 4(4) stipulates that if the Registrar considers it necessary for a proper inspection, the securities, books and records of anybody can be inspected. There is not even a connection with a company. In other words, he has a warrant which applies at large throughout the whole of the State. That is a warrant with very wide powers, far wider than some of the powers the hon. the Minister of Police has. We cannot really agree to give such a wide power. We agree to some extent that there should be powers of inspection, but there must be a limit in the interest and protection of the ordinary individual.

Mr. Chairman, I am really having difficulties with both these amendments. If the Registrar feels it is absolutely incumbent upon him or his office that there should be an inspection, as set out, why should we wish to restrict him? Why should we not allow him, in his good discretion, to make that inspection as effective as he can? Goodness knows, in practice it is difficult enough, very often, to obtain the relevant information. Section 4(4), as it is to be amended, reads as follows—

1. (a) if the registrar has reason to believe that the financial institution the affairs of which are being inspected, has or had a direct or indirect interest in or in the business of such person, partnership or company, or
2. (b) if the registrar has reason to believe that such person, partnership or company has or had a direct or indirect interest in or in the business of such financial institution; or
3. (c) if the registrar considers it necessary for a proper inspection of the affairs of such financial institution that such securities, books, records, accounts or documents be inspected, …

In the case of an official heading an office which has a most conservative approach to these matters, why should he be restricted when he feels it absolutely necessary in terms of his duties to undertake this type of inspection? It seems to me it could happen, albeit in rare cases, that if one restricts him in this way, one might jeopardize or vitiate the whole inspection. I do not think it is correct to put this on a par with other kinds of inspections which may or may not be made. I think this is very carefully circumscribed in the proposed subsection (4), which stipulates that an inspector may inspect the securities, books, records, accounts or documents of any person, partnership or company. The three circumstances in which this is done, are then cited. I think it would be very unwise to try to put this sort of limit on an official like the Registrar of Financial Institutions. I think it could absolutely jeopardize the effectiveness of the whole exercise in certain cases.

Mr. Chairman, the hon. the Minister has appealed to us on the basis of the undoubted probity and conservatism of the Registrar and his office and has thought it right to assure us that the Registrar is a most responsible person, one who would never abuse the powers placed in him. I hasten to assure the hon. the Minister that we cast no kind of imputation whatsoever on the Registrar or his office. That is not the point at all. The hon. the Minister asks us why we want to restrict these powers. We want to restrict them because we believe that the whole principle of how one conducts the affairs of a country with a Western tradition is that people’s affairs are private and that they are only interfered with on good reason being shown. Therefore the onus of justification, if I may put it that way, is not on us; it is on the hon. the Minister. In terms of this legislation he is asking Parliament to give one of his officials power—needless to say it is a permanent power; so, while the official will change, the power will remain the same—to examine any of the books, records, securities, accounts or documents of any person, partnership or company. With respect, it is the hon. the Minister who must give Parliament a reason why that has not been done. He must not simply say that it is a responsible official and therefore we must give him the power. In that case privacy simply comes to an end. Nobody will have the right to the control of his own affairs unencumbered by the inquisitions of peripatetic officials.

The last matter I wish to raise is a matter of drafting. Perhaps by raising this matter one will be able to throw some light on the reasons for this. The proposed new subsection (4) reads—

What are paragraphs (a) and (b) there for? Paragraph (a) seems to say that if the institution being inspected has 100 shares in any other company the inspector may inspect it. Paragraph (b) says that if any other company ever had 100 shares in the institution the inspector may inspect that. Paragraph (c) says that the inspector may inspect anybody and anything at any time anywhere. Under these circumstances I do not know whether (a) and (b) are merely there to make the clause look better, and we would appreciate an explanation as to why they are necessary at all in the circumstances.

Mr. Chairman, I have listened attentively to the explanation for the amendment moved by the hon. member for Yeoville, but until now I have not been able to find out, unless I am really a little slow on the uptake—what exactly the hon. members want to achieve with that amendment. I think the hon. members owe it to the Committee to make it very clear exactly what they want to achieve. Do they want to insert a provision in the Bill that the Registrar is only entitled to undertake investigations above a certain percentage interest? That is the impression I get. The hon. member for Parktown can perhaps just nod his head and say whether or not that is correct.

Yes, with certain limitations.

If the hon. member is prepared to have an inspection take place as laid down in this clause— provided a certain company has a certain interest in another company, with a certain percentage and higher—then what can be his objection if that percentage is lower? In the light of the experience which the two hon. members on the opposite side and I have, we have seen that things ought to be opened up and thoroughly scrutinized. Why do the hon. members not want an inspection where there is a smaller percentage of interest? But if it goes above a certain percentage, the hon. members are quite satisfied.

Surely there is no substance in such an argument. I think that it is the intention of this particular clause that it should be obligatory that the documents which are necessary to do the inspection and which are visualized here, should be available. I really cannot understand why the hon. members have an objection to this provision.

Mr. Chairman, just as loath as we are to cast the slightest imputation on the Registrar, so we are not implying that the hon. member for Schweizer-Reneke is in any way slow in the uptake. I want to rectify that misunderstanding at once. [Interjections.]

I shall try, by means of an example, to illustrate the argument I am advancing. I know, and the hon. member for Schweizer-Reneke knows—I do not think it is necessary to mention names—that there are at least two big national insurance companies which are not mutual companies, in other words, companies which have shareholders. One of the companies is a wholly-owned subsidiary of another company or group of companies, while the second company is a public company with a very widely diversified share portfolio. If the first of those two companies were to be subjected to an investigation, it goes without saying—or almost goes without saying—that it will be essential for the investigator also to look into the other company—the company which is wholly owned by the insurance company. The two are so closely related to each other that it will not be possible to understand the business of the insurance company without also looking at the business of the other company. The second one of the two insurance companies to which I have referred—the public company— is a company with many thousands—perhaps even millions—of shareholders. I myself owned 100 shares in that company at one stage. If, at the time, an inspection of that company had taken place—say for example there were 50 million shares involved, of which I owned 100—I should have felt quite offended if an inspector had come to my house and had said that he wanted to look at all my accounts, my statements and my personal affairs merely because I owned 100 shares in that company. That is precisely the power which is now being sought here. Actually—as indeed I stressed a moment ago—the powers in the envisaged new section 4(4)(iv) are far wider.

Assume that there were to be an investigation tomorrow into a company in which I never had any interest whatsoever, then the Registrar can nevertheless still come and have a look. The motivation of our argument is simply that the citizen is entitled to the privacy of his own affairs, unless the State proves that there is a very good cause for an investigation to be instituted into those affairs. I get the impression that we do not understand each other very clearly. In our view, it is obvious that the private accounts and statements of a person or company should remain confidential, unless cause can be shown for them to be investigated. For that reason it is our conviction that the onus is on the hon. the Minister and his supporters to convince us, and not the other way round.

Mr. Chairman, I believe that we must go along with the hon. member for Yeoville and the hon. member for Parktown in this instance. Basically we believe in the private enterprise system. Where one has a clause of this nature, Parliament is giving a very, very wide power to the Registrar. I must also agree with the hon. members that we have nothing against the Registrar in question. We believe that he is a first class official in every way. However, this does not alter the fact that because he is a good official we should nevertheless give him extremely wide powers.

There are so many intricate connections among so many persons and companies within the Republic of South Africa, and of course outside the Republic as well, that I believe that any responsible company should, upon request, make available the particulars asked for. Should the Registrar approach them in the first place, tell them that he requires some information from them and ascertain whether they are prepared to supply it, there would be no problem involved with these companies in making the information available. I believe, however, that when we try to force an inspecting official onto a company, we are then beginning to interfere with the rights of a company in a private enterprise system. We are also interfering with the rights of the people and the State. For these reasons we shall support the Official Opposition in this regard.

Mr. Chairman, I want to add just one further argument. I believe we are dealing here with a very important principle. The principle is whether the State respects the right to confidentiality on the part of persons and companies.

Those members must remember very carefully what they are saying today.

The fact is that the State does respect that confidentiality. Let us for example take the case of the Receiver of Revenue. He has certain rights to information about any number of persons and companies. It is nevertheless a clear principle, understood by every taxpayer in South Africa, that the Receiver of Revenue will not divulge that information to any other Government department. It is privy to him and it is privy between him and the taxpayer. The courts also recognize that principle. It is not right, it is not allowed that somebody, without a proper warrant granted in certain special circumstances, may go to a private individual or company and inspect the documents of that person or that company. This principle is recognized and protected by the State.

Here, however, we have a complete deviation from it. There is no qualification, as it stands here. It merely says the Registrar may, if he deems it necessary, see these documents. I believe that if we should allow this principle to go, we would, on the terms as stated in the Bill, be undermining a principle which has been continuously respected by the other organs of State. I think we would in fact be surrendering a principle which is of great importance. I think that the addition of these paragraphs must be averted. The motive for their inclusion are, no doubt, sound. I believe, however, that they touch on something which is very important and which we in Parliament cannot allow to be touched without very careful qualifications.

Mr. Chairman, we have made a little progress after the previous question which I put to the hon. member for Parktown, but now the hon. member for Parktown has not explained yet where they get the 5%. Why 5%? The hon. member for Parktown takes a hypothetical case where he himself owns 100 shares, etc. The explanation has improved somewhat, but it is not yet good enough. The hon. members must explain to me how they get to 5%. What is the ratio for 5%?

In my view, the hon. member for Constantia should—with respect—not enter the arena in which those two hon. members find themselves at this stage. The hon. member really does not understand anything about these things. I say that with the greatest measure of respect towards him. [Interjections.] The hon. member for Constantia—just like the hon. member for East London North—thought he saw something in this. They think they have got hold of something and for that reason they both “jumped onto the bandwagon” because the hon. member for Yeoville has moved an amendment. But he cannot explain where the 5% comes from. [Interjections.] The hon. members should, after all, be much more specific in connection with this matter.

The hon. members are wrong. They ought to realize that nobody who has a business undertaking, would like to have somebody walking into his office every now and then and telling him that he wants to look at this or at that. Nobody among us would be interested in that. But surely this provision does not read that somebody can simply walk in. It must already be an organization which is being investigated. It is not true that an inspector can simply walk in even if there is no reason whatsoever for him to walk in. I quote from clause 16, where the proposed subsection (4) reads as follows—

1. (a) if the registrar has reason to believe that the financial institution the affairs of which are being inspected …

In other words an inspection is already in progress—

Then follow subsection 4(b) and (c). The fact of the matter is that provision is being made for an extension of the inspection which is already in progress. It is also provided that the registrar should have reason to believe that it is necessary that further steps should be taken. The inspection is already in progress, and as an additional provision it is stated that the registrar must have a reason. In other words, if it can be proved that the registrar had no reason to go further with the inspection which is already being carried out, then surely action can be taken against the registrar. Then he can be stopped from going further. I think the hon. member for Parktown almost let the cat out of the bag. But I think they ought now to let out the cat altogether. Its tail is already moving about here. Let us therefore let the cat out of the bag altogether. Let the hon. members tell us why they referred to 5%.

Mr. Chairman, I just want to tell the hon. member for Schweizer-Reneke that the party is over now. He must not come with allegations in this House which he cannot substantiate. [Interjections.] Yes, let us get that quite clear. Firstly, there is a completely unwarranted attack on the hon. member for Constantia. At least this hon. member took the trouble to read the Bill before he came to the House and he at least understands it. As far as not reading the Bill and not understanding it are concerned, however, I am not going to point a finger. This is not something that hon. member should start talking about in this House. Let us just get that quite clear. He must not start this kind of nonsense.

Secondly, the hon. member comes with a challenge. He asks: What about the 5%? There are also the veiled threats that one is going to have to remember what one has said about inspections and looking into documents.

What is he talking about?

Let us take him up on that for just a moment. When it comes to public money, they cover up. They hide. They will not allow Thor Communicators to be looked at. They cover it up. They are not prepared to have it looked at. Here in the House a Minister also gets up and says he is not even prepared to answer questions about all these companies. He is not prepared to tell us anything. However, when it comes to private enterprise …

Order! Could the hon. member tell me what he means by “they are covering up; they are hiding”?

They are covering up and hiding.

Order! What are they covering up and hiding?

They are not allowing us to have a look at what is going on behind Thor Communicators. They are not telling us what is happening to public money behind the scenes.

Order! Thor is not relevant now.

That is the point. Let me come back to the Bill.

Order! I am not satisfied. What does the hon. member mean when he says they are hiding certain facts?

Sir, they are covering up about certain companies.

Who are “they”?

The NP, the Minister of Information.

Order! Is that a reflection on any hon. member in this House?

Sir, I am saying that the hon. the Minister of Information and hon. members of the NP have refused to tell us what has happened to public funds that are behind the screen of a company. That is a fact.

You said we have covered up.

I have said hon. members cover it up.

Order! I think the hon. member must withdraw the words “cover up”.

Sir, I shall withdraw the words “cover up” and say that they have refused to make public what has happened to public money. What they want to do here is to send inspectors to look into private persons’ affairs when those persons have nothing whatsoever to do with a company other than that they have a few shares in it. The hon. member got all lyrical about the 5%. To him there is some secret attached to that figure. Let me tell him why it is 5%. In our view more than 5% would constitute a meaningful stake and less than 5% an insignificant stake. If he believes it should not be 5% but 4%, let him move an amendment accordingly. In our view, when a person owns 5% or 1/20th of a business, that is a meaningful stake.

Mr. Chairman, may I ask the hon. member whether according to him there is no difference between 5% of R100 million and 5% of R100 000?

That is quite right: 5% is 1/20th whether it is of 1 million or 100. If the hon. member would like a calculator to work that out, I shall lend him one. It remains l/20th. There can be no question about it but that it is l/20th. I think that less than l/20th would not represent a meaningful stake. That is the position.

Let me put our view—it is a clear view. There can be an investigation into an institution and there can be an investigation into any one who has a meaningful stake in it, but one cannot have a warrant allowing the people concerned to run from door to door to see what is going on. In that respect we cannot give a blank cheque to anybody. If the hon. member for Schweizer-Reneke, who has ventured into this debate and has started to tread this somewhat difficult ground, would give us the same facility tomorrow that he is seeking in this Bill today, he would be able to speak. If he would give us the same facilities in respect of public money that is being asked for in respect of private money, he would be in a position to speak. In respect of public money, indeed, there is a greater right to carry out an inspection because it is the taxpayer’s money and the House is the custodian of that. In the case of private affairs, one is entitled to interfere when it affects institutions and the public interest, but one cannot use a roving warrant to do exactly as one likes.

Mr. Chairman, I have listened to this debate and the views put forward by the Opposition—the hon. member for East London North came into it too. I must say that the longer I listened, the more astonished I became. As if a new principle is involved! Are any one of the hon. members who took part, viz. the hon. members for Yeoville, Parktown, Constantia and East London North, suggesting that there should not be the necessary power to investigate a financial institution’s books even if there is a clear indication that there is something seriously wrong, so wrong that the money of the public—the hon. members referred to that—is being malinvested or fraudulently used?

We have said that we are in favour of that.

With respect, Sir, if one analyses some of the things that have been said here by members of the Opposition, I want to maintain that they are in fact arguing against the principle of this being done.

What does our amendment say?

I have listened very carefully to the argument. It is not a new principle that is involved here. The hon. member for Schweizer-Reneke pointed out very clearly what the clause is about. If there is an investigation under way and the Registrar is brought under the clear impression that there is a need to conduct the inquiry on a broader basis as set out here, he will, I believe, be acting irresponsibly and against the best interests of the public if under those circumstances he does not do the things set out here. What is at stake here is the interests of the very public the hon. member for Yeoville is so concerned about, i.e. the small man. With respect, Sir, he said again today in the most ridiculous way that something in this Bill is aimed against the poor. The hon. member for Klip River had to put him right and within two minutes he did it so effectively that the hon. member for Yeoville could not come back on it. We must keep a sense of perspective on this. The Registrar is an extremely important official and has an extremely important role to play as watchdog of the public’s money, the shareholder’s money, the partnership’s money or the individual’s money. The provision in the Bill relates to an investigation that is taking place. There is nothing new about that. I should like to ask specifically whether any member of the Opposition or any member of the House is opposed to that where there is a clear presumption that it should be done in the interests of the public. Of course not! It is done in all countries. What is the SEC doing in the United States? Has the hon. member ever thought of that? There is no restriction on those inquiries. As I say, here it comes to the point where there is a clear presumption in the mind of the Registrar, for very good reasons. I was not referring to him as an individual earlier. I was referring to the great tradition his office has built up in this respect for complete reliability in the public interest. This comes to him as head of that office. He will then have a very clear indication that it is necessary to conduct the sort of inquiry that is set out here. He will do so in the interest of the investing public and sound business in the country because that is all he is concerned with. The hon. Opposition say that he must be prevented from doing this by this incredibly arbitrary, meaningless 5%.

*The hon. member for Schweizer-Reneke has asked, with justification, why exactly it should now be 5% and not 15%, 1%, 25% or 100%. We should take due note of the underlying principles of this matter. I have listened attentively to many of the arguments of the Opposition today and I have accepted certain amendments moved by them. But when they come up with this sort of argument, I ask: How is it possible for me to accept such an argument? It is altogether arbitrary. Furthermore, it will only tie the hands of the Registrar and his office in cases where an important investigation must be conducted in the interests of the public itself. What is the difference? The hon. member for Yeoville has referred to the spending of and the control over public funds. He has said that in the case of those funds, things can be done in a different way, but not in the case of the private sector. However, that has nothing to do with the private sector; it concerns the money of the public—the shareholders, or whomsoever. It can be of the greatest importance to those investors and the public that they should know that their investments are protected against certain malpractices.

How many cases of this nature have we not already had—not only in South Africa, but throughout the world? Unfortunately, these malpractices occur from time to time. One could point to a few cases which have occurred in South Africa during the past few years. Does the Official Opposition want the Registrar’s actions to be restricted when they are in the best interests of the public? I cannot accept that, and that is the point at issue. It does not concern the principle, because the principle was adopted in this country long ago. I therefore want to request that the Opposition should see this matter in the right perspective. It is also stated that the onus is on me.

†What onus is on me? Here one has a senior, experienced official with an office with a long tradition of probity and good sense and a sense of what is right and proper in financial transactions, operating in the best interests of the public. Yet, that hon. member wants to cut off his hands. Surely, how can the Registrar be expected to do a thing like this unless he has the clearest indication that something is wrong which must be further investigated? This is the only way in which he can do it. Can anyone imagine the Registrar lightly sending his inspectors into any business if he has no grave reason for doing so? I would say that that would be the last thing he would ever conceive of. It does not happen.

I want to meet the Opposition wherever I can on reasonable grounds, but I think this has been carried a little far. Of all the clauses in this Bill which I had hoped the House would support unanimously, I thought this one would by eminence have fallen into that category. I hope the Opposition, after they have enjoyed their evening meal, will also come under that impression. In fact, I hope they enjoy their meal so well that when they come back they will unanimously support us on this clause.

Business suspended at 18h30 and resumed at 20h00.

Evening Sitting

Mr. Chairman, shortly before the House adjourned for the evening meal, the hon. member for Schweizer-Reneke and the hon. the Minister were questioning my hon. colleagues and myself as to why exactly we were suggesting 5% as the percentage shareholding which, according to our amendment, should determine whether the Registrar should have a particular person or organization investigated. This called to my mind a debate which took place in this House approximately 20 years ago on a very interesting subject, i.e. dagga. The Minister responsible for the Bill which was discussed that day, was the late Oom Albertus van Rhyn, who was then still sitting on those benches. The most vociferous hon. member of the Opposition was the then member for Turffontein, the present hon. member for Von Brandis. The then hon. member for Turffontein carried on as he alone can carry on. He wagged his long finger and he wanted to know what kind of legislation the hon. the Minister was introducing now, legislation in which it was provided that if a person had more than eight ounces of dagga in his possession, he would be subject to heavy penalties, but that he would suffer only a minor penalty if he had less than eight ounces of dagga in his possession. The then hon. member for Turffontein carried on and put all the questions which the hon. member for Schweizer-Reneke has just put to me, questions like: “Why so arbitrary? Why eight ounces? Why not six ounces? Why not ten ounces? Why not four? Why not twelve?” When the then hon. member for Turffontein eventually sat down, oom Albertus Van Rhyn, the Minister, stood up, unruffled, and said: “Well, I suppose it is a lot of dagga.” As the hon. the Minister should surely know, and as any experienced hon. member of this House will know, there are many instances in our legislation where a line simply has to be drawn, where it simply has to be defined what is too little and what is too much. The drawing of a definite line also came under discussion earlier in the debate on this legislation, when one of my colleagues was talking about an interest rate of 8%. He said that this rate might just as well be fixed at 6% or at 10%. In the same way, we do not really mind whether the percentage at present under discussion, is 5% or not. If the hon. member for Schweizer-Reneke wants to suggest 4%, we can talk about that, and if the hon. the Minister prefers 6%, we can talk about that, too. What is important in this respect, is that there is a difference between an insignificant shareholding and a significant shareholding and that the distinction must be drawn somewhere, that, at the same time, is the reply to the charge against us—during his last speech before the evening meal, the hon. the Minister came very close to that—when we were asked whether in view of our arguments, we did not want to allow a right of inspection.

If we had not wanted to allow a right of inspection, why did we then propose the 5% as we indeed did in the amendments now before the House? It is surely very clear from that, that when there is a need to investigate the business of a certain financial institution, the business of related institutions should also be investigated. The problem is: How does one define a related institution? For good reasons—and I am not going to repeat them now, because we stated them very clearly before the adjournment—we believe that the clause, as it reads now, is hopelessly too wide because iz enables the Registrar and his inspector virtually to go and inspect any member of the entire population of South Africa, because they have, for example, to go and investigate a certain commercial bank in Pretoria. That is the meaning of clause 16(c) as it stands here, and I quote—

There hon. members now have the reply as to why we propose 5%, and that is also the reply to the question whether we are opposed to the idea that there should be any inspection at all.

Mr. Chairman, the two hon. members have now proposed that the percentage in this connection should be 5%, but I should like them to state what they understand by “interest”. After all, the entire matter revolves around the concept “interest”. If one reads the new subsection (4) as proposed by clause 16, one can see why the Registrar is concerned. The proposed subsection reads—

Such a person therefore need not necessarily own shares in the financial institution. Can hon. members tell me what the position would have been if a company had had no shares in a specific financial institution, but nevertheless had the right to appoint all the directors and therefore controlled the financial institution due to control over the appointment of the directors? Secondly, can this financial institution have a direct or indirect interest in the affairs of that company or private person if this institution advances all the working and fixed capital by way of 100% loan to the company or private person that is to be investigated? The hon. members cannot therefore talk of a 5% shareholding, because in this case, the organization which has loaned the money, does not own a single share; it controls the entire institution either by appointing the full board of directors, or by a full loan. We have many instances of this. I should therefore be very pleased if the hon. member could tell me why they use that argument.

Mr. Chairman, I should like to respond to the hon. member for Sunnyside immediately. I think with regret that he has not actually read the amendment, because if all that the man has is shares, then of course there is no question that he has any other interest. However, if he actually has another financial interest which not only exceeds a shareholding but involves the control of the board, that is not excluded. Therefore, it is only in the case where a man only has this type of shareholding that he is not affected.

I think we have to get the record quite straight so that there should be no misunderstanding. The hon. the Minister tried to debate the principle of investigation as opposed to the extension of the powers of investigation. We have no quarrel with the principle of investigation or with the principle of the Registrar having powers to investigate a financial institution. These principles are not before the House. There is no question of it being debated because that principle was accepted when the principal Act was accepted by the House. What is before the House is whether the extensions of the powers which are sought in this Bill are either necessary or desirable.

In our submission the powers which now are sought to be given to the Registrar go beyond what is required by the Registrar to fulfil his function. That is what the hon. the Minister has to reply to. In other words, the hon. the Minister has to tell us how he is hampered at the present moment, in regard to the investigatory powers, that he needs further powers of investigation. If the hon. the Minister can give us one single example where the powers which have existed since 1962 in terms of the principal Act have been insufficient or where further powers were needed, he has a case which he can argue. However, so far he has not tried to do so. All he has said so far is that we appear to be against the powers of investigation, which is of course, with respect, not correct.

Two issues arise. The one is: Is it reasonable that where a man only has a relatively small shareholding in a company, where he has no element of control over the destiny of the company and can exercise no powers except those of a small minority shareholder, he should be exposed to an investigation? I think the answer is “no”, because unless it can be shown that there is a reason why the powers should be extended in this manner, the general principle of the sanctity of the individual, his property and his records applies. It is only where it is required that one should interfere with that situation.

The second issue is that if the Registrar is able to call for a complete investigation purely in his own discretion as is set out in the proposed new section 4(4)(c), the hon. the Minister has not answered the question as to why he needs the powers given in paragraphs (a) and (b). That question also remains unanswered. When one seeks an extension of powers …

We must agree to differ.

The hon. member for Schweizer-Reneke says we must agree to differ. However, we feel this is a logical argument and that we are entitled to know the reasons which motivate the Government in seeking this extension of powers. If the Government cannot motivate this provision they have to stand exposed as having come here with a case which they cannot substantiate. That is the simple point.

That is not the point.

The point is: Why do they want greater powers? Not one single hon. member on that side of the House, from the hon. the Minister downwards or upwards, whichever way one cares to put it, has tried to substantiate why there should be an extension of powers. I challenge the hon. member for Schweizer-Reneke to say to us why the powers which presently vest in the Registrar are insufficient. What has happened? Where is there a case in which it has been demonstrated that it is not enough? I venture to say that there can be no such example. If there is one, we are entitled to know about it, otherwise, I regret to say, not only must we persist in our amendments, but as this clause deals with all these amendments and not with the principle, we shall vote against it.

Mr. Chairman, just before we adjourned I expressed the hope that the hon. member for Yeoville and some of his hon. colleagues on that side of the House would so enjoy their repast that they would return here and approve the rest of the Bill, but unfortunately there must have been something that precluded them from quite that happy meal, because they have come back just as obstreperous as they were before. The position is that both the Registrar and the Technical Committee have assured me that in their experience it is absolutely essential that the Registrar should have this discretion. The hon. member has said there cannot be a case in which this power is necessary. That is not correct. There can be a case in which this is essential. As I have said, the two authorities who are the best advisers I can go by, viz. the Registrar and the Technical Committee on Banking and Building Societies Legislation, tell me that this is essential. Under those circumstances I must really persevere with this provision. It is an extension of the discretion given to the Registrar. It is not given in order to be abused, but to be used in the best interests of the public, especially the investing public.

Amendment (1) negatived (Official Opposition dissenting).

Amendment (2) negatived (Official Opposition and New Republic Party dissenting).

Clause put and the Committee divided:

Ayes—89: Badenhorst, P. J.; Ballot, G. C.; Botha, C. J. van R.; Botha, J. C. G.; Botha, P. W.; Botha, S. P.; Clase, P. J.; Coetsee, H. J.; Coetzer, H. S.; Conradie, F. D.; Cronje, P.; Cruywagen, W. A.; Cuyler, W. J.; De Jager, A. M. van A.; Delport, W. H.; De Villiers, J. D.; De Wet, M. W.; Durr, K. D.; Durrant, R. B.; Geldenhuys, G. T.; Greeff, J. W.; Hartzenberg, F.; Hayward, S. A. S.; Hefer, W. J.; Henning, J. M.; Herman, F.; Horn, J. W. L.; Janson, T. N. H.; Jordaan, J. H.; Kotzé, G. J.; Kotzé, S. F.; Krijnauw, P. H. J.; Kruger, J. T.; Langley, T.; Le Roux, F. J. (Brakpan); Le Roux, F. J. (Hercules); Ligthelm, N. W.; Louw, E.; Louw, E. van der M.; Malan, G. F.; Malan, J. J.; Malan, W. C. (Paarl); Marais, J. S.; Marais, P. S.; Mentz, J. H. W.; Morrison, G. de V.; Myburgh, G. B.; Nel, D. J. L.; Niemann, J. J.; Nortje, J. H.; Nothnagel, A. E.; Olckers, R. de V.; Potgieter, S. P.; Raubenheimer, A. J.; Rencken, C. R. E.; Rossouw, W. J. C.; Schlebusch, A. L.; Schutte, D. P. A.; Scott, D. B.; Smit, H. H.; Snyman, W. J.; Steyn, D. W.; Tempel, H. J.; Terblanche, G. P. D.; Theunissen, L. M.; Ungerer, J. H. B.; Uys, C.; Van den Berg, J. C.; Van der Merwe, C. V.; Van der Merwe, H. D. K.; Van der Spuy, S. J. H.; Van der Walt, A. T.; Van der Walt, H. J. D.; Van der Watt, L.; Van Rensburg, H. M. J. (Mosselbaai); Van Tonder, J. A.; Van Vuuren, J. J. M. J.; Van Zyl, J. J. B.; Venter, A. A.; Viljoen, P. J. van B.; Vlok, A. J.; Wentzel, J. J. G.; Wilkens, B. H.

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

Noes—22: Aronson, T.; Bartlett, G. S.; De Beer, Z. J.; De Jong, G.; Lorimer, R. J.; Malcomess, D. J. N.; Marais, J. F.; Miller, R. B.; Myburgh, P. A.; Oldfield, G. N.; Page, B. W. B.; Pyper, P. A.; Raw, W. V.; Rossouw, D. H.; Schwarz, H. H.; Slabbert, F. van Z.; Sutton, W. M.; Swart, R. A. F.; Van der Merwe, S S.; Wood, N. B.

Tellers: A. L. Boraine and H. Suzman.

Clause agreed to.

Clause 18:

Mr. Chairman, I now move the following amendments—

1. (1) On page 19, in lines 44 to 58, to omit paragraph (b);
2. (2) on page 19, in lines 59 to 63, and on page 21, in lines 1 to 4, to omit paragraph (c);
3. (3) on page 21, in lines 5 to 16, to omit paragraph (d).

This particular section of the Banks Act deals with two important aspects. The first is one about which we have no quarrel with the hon. the Minister. That is the inclusion in the definition of liquid assets of the promissory notes of the nature as specified in clause 18 (a). We believe that in the circumstances in which we are this is logical and that this type of promissory note should form a part of liquid assets. It is a desirable development.

The second one concerns clause 18(b), (c) and (d). These, in effect, all deal with the new transmission account and transmission deposit and the consequential amendment to the definition of savings account.

During Second Reading the hon. the Minister, when replying to what we had to say about the transmission account—and he always gets very prickly when we refer to his attitude towards the poor and the underprivileged—said this had nothing to do with him. The hon. the Minister said that a transmission deposit was a liquid asset. However, the very contrary is the case. It has everything to do with the hon. the Minister because the fact is that he is asking this House to amend the definition of a savings account. He is asking this House, for the first time ever, to introduce into the definition of short-term liability a transmission deposit, and he is asking us to define transmission account and transmission deposit. The truth of the matter is that if a transmission deposit were not included in the definition of a short-term liability it would be unnecessary for a bank to provide liquid assets in respect of a transmission deposit, as they have to in respect of ordinary short-term deposits. Therefore, there is no question about it that what the hon. the Minister is asking us to do in this House is to create a situation which makes it impossible for banks to pay the same interests on a transmission account as they are able to pay on a savings account. That is the truth of it.

[Inaudible.]

That is right. Therefore, for the hon. the Minister to say it has nothing to do with him …

When did I say that?

You are doing it.

When did I say that?

During Second Reading. The hon. the Minister should read his Hansard. I cannot account for what he says. He must know what he says. That is what he said. I am telling the hon. the Minister that he is responsible. To suggest in these circumstances that the reason why banks cannot pay the higher interest rate is the increased cost of operating these transmission accounts, is therefore not a correct statement of fact. There are increased costs, but in the competitive world in which we live the banks have until now been able to bear these increased costs without any handicap to them and without any dramatic inroads into their pockets. I have not heard it said that because this is so unprofitable, we have to do away with it. We are in a competitive banking world. We are in a competitive situation. The hon. member for Pinetown once said that banking would never be the same. The tragedy is that banking continues to be the same in the sense that, in fact, when there are real competitive elements in it— there are others to which I can refer the hon. the Minister—then something happens to remove such competitive elements. Here we have a situation, with great respect, that if we do not include a transmission deposit in the definition of short-term liability, the ordinary working man will continue to be able to receive a higher interest rate when he is the sort of person who cannot really operate a chequeing account.

Let us look at what happens with savings accounts. If one analyses the sort of people who have savings accounts, I ask the hon. the Minister, through you, Sir, who those people are. Are they the rich in South Africa?

They are the fat cats.

An hon. member talks about the fat cats, but are they the fat cats? [Interjections.] No, the truth, if one looks at the situation in South Africa, is that the kind of people who have savings accounts with building societies or with banks are the ordinary wage-earner, the lower-income group man. He is the mainstay of the whole savings account business. If it is so, why should that particular person who finds the financial burden of having to have a chequeing account too great and who does not indeed need a chequeing account because he has three or four payments by cheque a month, not be able to use this facility and at the same time earn the right rate of interest?

There has been no effective answer given to this. The real problem is that when we look at the situation, we find that here we now have a competitive position where banks— general banks and commercial banks—and building societies are all competing for the savings accounts. They have been prepared to give this facility. Nobody has forced them; there is nothing in the Act which obliges them to do this. When, however, this facility is used in the competitive world, it is in fact done away with and we have a different situation.

In my Second Reading speech I referred to the position—the hon. member for Klip River echoed it a little later—that one can still arrange one’s affairs in such a way that if one has two accounts—one savings account and one transmission account—one can transfer from the one to the other and on one’s transmission account, one can have those payments made. The point, however, which I tried to make at the time when we debated this during the Second Reading was: Why create a situation of more work, more paper work, more returns to be made in order to achieve the same object and in the process the holder of the savings account will still lose interest? He will still be penalized in that he cannot earn the interest for the full period on the balance until the actual cheques are drawn from it.

Therefore, with great respect to the hon. the Minister: In the first place, this is a measure which directly affects the lower-income group, the poor people of South Africa. This is a measure which affects the savings account of the thousands of people who do not want to walk around with cash in their pockets to pay their accounts and who cannot afford to have chequeing accounts. Those are the people who are affected by it, the people who get into trains and travel, whether it be to Soweto or to Brakpan, and who in many cases find themselves as a result of assault or robbery deprived of their money which they have in their pockets. Those are the people who utilize this kind of facility. Those are the people who in this instance are being deprived of the benefit of earning a few cents extra interest per month. If this is not acting against the lower-income group and against the poor, then I do not know what it is.

It does not matter if the hon. the Minister is prickly about it. It does not matter f he does not like to be attacked, but his history during this session of Parliament is that he comes to this House with measure after measure which is discriminatory against the poor. That is why we move these amendments and shall persist with them.

Mr. Chairman, when we were dealing with this matter earlier this afternoon, the hon. the Minister pointed out that what had happened was that the old type of savings account from which withdrawals were made only on relatively rare occasions, had “degenerated”—that is the word he used, not the word I would have chosen, I think I would have used the word “developed”—a more high velocity type of account out of which payments are made more frequently. The hon. the Minister argued that since these accounts had therefore changed their character in this way and had become very much more liquid and fast-moving than they had been before, it was fitting that the liquid asset requirements attaching to them should be those normally attaching to a cheque account or something of a similar nature. If it were the case that this development had taken place against a totally static technological background, I think the hon. the Minister would have had a pretty strong case, but the fact is that this is not so. The fact of the matter is that development in the banking world—I do not profess to be an expert, there are, however, experts in the House—in particular computerization, but also the development of more sophisticated techniques for the placing of money, have led to a situation in terms of which it is much more possible to make constructive use of money held for a shorter period than it used to be. I suggest that it is for this reason that bankers have become able to offer the type of account we are discussing here, accounts which offer certain of the advantages of both the savings account and the cheque account. I am referring to the fact that an acceptable interest rate can be paid whilst, at the same time, the account may be used as the medium for settling the payment requirement of the depositor. I think it is an exciting development that we are becoming able to move into an era in banking in which accounts as attractive as this can be offered to ordinary people, as my hon. friend said. I think it is a great pity that the hon. the Minister, basing his opinions I believe on the technological state of banking some years ago and not today …

Precisely today.

… feels that he has to adopt what to my mind is an excessively conservative line. Of course, the hon. member for Klip River and the hon. member for Schweizer-Reneke said it was the responsibility of the depositor himself to make his money work. I suppose that ideally we should all have accounts of varying kinds, high interest accounts, cheque accounts and accounts in between, and we should spend an hour or two each day running around and moving our money from one to the other. That is not, however, what people want to do. People want service, and progress is made in banking when service is given. The sort of savings account that exists today is, of course, the concomitant of the development of technology and skills by the modern banker. As my hon. friend has said, this very useful facility that has been developed does not affect people in this House, because we all have cheque accounts. But there are other people who have a greater need of this convenience. Therefore it is difficult to believe that this facility should be cut short or that it should be made difficult in the way in which it is being made difficult by these amendments. We find it very difficult to see why these high-backing requirements which are now being asked for, are in fact required. The present state of affairs suits us quite well until we are given some fairly tangible evidence that a change in the present state of affairs is indicated. That is why, as at present advised, we do not see why we should support these amendments.

Mr. Chairman, I should like to say at once that I fundamentally disagree with the hon. member for Yeoville and the hon. member for Park-town on this issue. It seems as if our views are very far apart, and unless they are prepared to take a more modern view of this very important development in banking, obviously we shall not find each other at all. There is no doubt at all in my mind that the introduction of transmission accounts is thoroughly desirable in modern, present-day circumstances. It is a principle which is also accepted by the banks and building societies and which they regard as desirable. It has also been accepted, after a very careful analysis, by the technical committee on banking and building societies. In fact, during all the consultations I have had, I have not been confronted with any serious objection to this. The view of the hon. member for Parktown that this is presumably a measure in some way consistent with some old-fashioned technological idea of banking or building society services, is not correct. It is in truth just the opposite. It is absolutely modern-day technique we are dealing with here.

I should now like to refer to the statement the Registrar of Financial Institutions made last month when one or two Press articles appeared which, in his opinion and also in mine, thoroughly confused the public. His comments have my full support. He started by saying—

I shall give some of the main points of what he said—

This happens to be The Star’s report on his statement—

which they never have been and are not intended to be—

He went on to say—

He goes on to say—

which I have already referred to. The report goes on to say—

I hope the hon. members opposite will note these reasons, because I was told no reasons had been put before the House—

It goes on to say—

I am quoting from the report in The Star—

This is the most modern type of technological development we are trying to give effect to here. Anybody looking at the rationale of banking carefully and objectively will, I think, agree that it is wise, practicable and highly desirable that this distinction should be made between these two types of accounts in modern-day banking. I have the full support of the experts in banking, and I really believe we have a very strong case indeed for introducing this clause.

Mr. Chairman, the crucial matter which the hon. the Minister did not reply to is that it does not require any amendment to the Act to use modern methods for the transfer of funds. That has been going on without any amendments to the Act. It does not need the introduction of a definition of a transmission account to enable the transmission to take place. Another crucial aspect to which the hon. the Minister has not replied is why it is necessary to classify a transmission deposit as a short-term liability. He, in fact, strengthened my argument when he drew attention to a matter that is obvious to those who know what the liquid asset ratios are. Once one classifies a transmission deposit as a short-term liability, the liquid asset requirements are so high in relation to what they are for a savings account, that one then stops the institution from paying the higher rate of interest.

Mr. Chairman, may I ask the hon. member whether he is suggesting that a transmission deposit is a medium or long-term investment?

As at this moment, before we pass this Bill, there are no transmission accounts; there are only savings accounts. Transmission accounts are included in savings accounts and they are not covered as short-term liabilities because …

That is the whole trouble.

That is the whole point. Now we are getting to the real crux of the matter, the difference between the view of the hon. the Minister and ours. There is no problem about the technical aspect of this matter. There is no problem about the concept of eventually developing a Giro-type system. There is no difference on that issue, not in any way. The difference between us is purely the classification of a transmission account as a short-term liability. The effect of that is that the depositor to that account is unable to receive the rate of interest which he can get on an ordinary savings account. That is why I say it is discriminatory against the type of person who uses the savings account. That is where we differ.

What stops him from using the savings account?

Because he then cannot get the transmission facility. He has to use a transmission account in order to have his cheques paid.

You want your cake and you want to eat it.

No, I want what exists now. At present the ordinary man can use a savings account and can have some of his accounts paid from it by means of cheques issued by the institution. He can have them transmitted from that account to another account He is now being deprived of that right as he has to go to a transmission account which is now classified as a short-term liability where, as a result of the hon. the Minister’s action, the rate of interest cannot be the same as on a savings account. That is the crux of the matter and that is what I said right at the beginning when the hon. the Minister started talking about the expense of running a transmission account That is irrelevant because the real crux of the matter is that by the hon. the Minister’s action he has classified this as a short-term liability. This means that 75% has to be invested in liquid assets. This also means that an institution cannot pay the same rate of interest on the savings account and it means that people who have previously been using a savings account for this purpose are deprived of it. This means that he is directing this measure at the poorer section of the community who do not have cheque accounts and who need to use this facility. That is the crux of the matter. We have talked about modern practices and the hon. the Minister knows what modern practices are, for example, in the United Kingdom, Germany and elsewhere. If one keeps a credit balance in one’s current account in the United Kingdom at a commercial bank, one does not pay any bank charges. Why is that not so in South Africa? In South Africa it is not so and the hon. member for Pinetown can tell hon. members why. It is because there is an agreement, a monopolistic agreement in terms of which the public is made to pay such charges. That is what it is all about If we want to look at modern practices, there is nothing wrong with introducing a transmission account or a Giro-type system according to which, on the credit balances one keeps, one gets a reasonable rate of interest which is then not classified as a short-term liability. There is nothing to stop that.

What do you suggest as a reasonable rate?

The same as on a savings account. One can get up to 8% interest on a savings account. What is one going to get on a transmission account?

Do you want us to pay an interest rate of 8% on a transmission account?

You are paying it now.

I am saying that it should not be done.

You are paying it now and I say that for a small saver it is reasonable. Another example of discrimination against the small saver is the interest rate control that is applied …

Why always the poor savers? [Interjections.]

That hon. member is right; I do have an obsession with poor people as it is my job to try and help them. Another example is the interest rate control system which the hon. the Minister applies. If one is rich, however, and one can deposit R250 000, then there is no control and interest can be paid up to the sky. Who is now being put in a privileged position? It is only the people of the rich battalion. All I ask of the hon. the Minister—I want nothing more of him—is not to classify a transmission deposit as a short-term liability. I ask no more of him. Who is getting the benefit of it?

That is exactly what we are doing.

Of course that is what you are doing; I am asking you not to do it I am pleased that the hon. member for Schweizer-Reneke has at last understood and appreciated what this is all about and I want to congratulate him oh it. That is the issue. Who is getting the benefit of it? The hon. the Minister wants these people to invest in more liquid assets. There will then be a lower rate of interest and, after All, it will be the poor man who will bear the burden … [Interjections.] I know it hurts you, but it is true.

You are a pathetic person; why do you not sit down or give us something new?

Now I know that the hon. the Minister knows that he is doing wrong. I would not have called him a pathetic person. I would not have become personal. I would not have pointed out to the House that he had not even read the Bill. I would not have pointed out to the House that he had to ask for assistance because he could not answer the questions put to him. If the hon. the Minister wants to become personal and if he wants to talk about performances in this debate, the hon. the Minister must watch himself before pointing fingers at other people. It is pathetic that the hon. the Minister did not even know the provisions in the clauses of this Bill; he had to read them out aloud in the House to find out what they were all about. Let us now put the cards on the table. It is not I who started becoming personal. Let us put the cards on the table. The hon. the Minister put up a performance in the House which is, in fact, unequalled in the annals of any financial piece of legislation …

You are the most personal person in the House. [Interjections.]

Who started it? The hon. the Minister cannot take his medicine. I did not want to become personal, but he started calling me pathetic and if anything is pathetic, it is his performance in respect of this piece of legislation. The hon. the Minister himself must decide whether he wishes to carry on with this personal campaign or not; the choice is his.

Mr. Chairman, I certainly could not hope to emulate, in any sense at all, the hon. member for Yeoville when it comes to personalities in debate; he is the greatest past master of that in the House. The trouble with that hon. member is that when he is driven into a comer and starts talking in a circle as he has been doing for the last half-hour, he becomes personal.

You became personal first.

I have not only read the Bill, but I have also discussed it at practically every point with my senior officials. Nobody in this House can immediately answer every single question that can be raised in respect of the provisions of this Bill; not even the hon. member for Yeoville with all his self-imposed brilliance. I can probably raise 25 questions from the Bill which the hon. member will never get near answering.

Try! [Interjections.]

What has the hon. member for Yeoville done in his last so-called contribution to the debate? He has in fact justified exactly what we are doing. What are we trying to do? We are trying to introduce proper order into this aspect of banking. It has the support of all the experts in this country. I thought the hon. member for Yeoville at one time was engaged in banking. I am astonished and absolutely amazed that he cannot see the point of this. [Interjections.] Before the hon. member becomes impertinent in the House, he should do his homework. He should go and talk to the experts and find out if he cannot understand what modern banking means, because this transmission account is absolutely essential to our banking system.

That is not the issue and you know it.

I want to make the statement here today that a bank cannot pay 8% on funds deposited in a transmission account because of the services involved.

They have been doing it.

They have been doing it because it has degenerated—not developed— that way in usage, and we are now stopping it with the best reason in the world, i.e. to introduce proper order so that one’s savings account will be what it originally was supposed to be, viz. a true savings account paying a higher rate of interest with a lower velocity of withdrawals. The other account, the new type of transmission account, will be a higher velocity account in which, obviously, a lower rate of interest has to operate. It is as simple as that and I am prepared to stand on that in any debate with the hon. member or anybody else. If the hon. member wants to be personal, he can be personal and I shall still stick to the techniques introduced by the Bill.

You started it.

No, I did not.

Of course you did.

I do not think the hon. member for Pinelands should intervene in this debate. He has not said a single word on the merits of the Bill up to now. [Interjections.] What happened? The whole House heard that when the hon. member for Yeoville dealt with what should be an absolutely technical discussion, he started throwing this pathetic rubbish into the debate that we discriminate against poor people. [Interjections.] If I were to use the word which really describes that argument, I would be ruled out of order because it is disgraceful.

But is it true.

Because we are introducing orderly banking? Then the banks, the Technical Committee and everybody else who is qualified to say that this is the best banking technique, all stand condemned by that bright hon. member as discriminating against the poor. We shall hear more about that because I do not intend allowing that type of debate to prevail in the House … [Interjections.] … unanswered, despite the intervention of the distinguished hon. member for Pinelands. [Interjections.]

I have no more to say about the merits of this particular clause or the three amendments. I have already stated my case on the merits of the considered statement put out by the Registrar with my full knowledge and approval. I hope the next time the hon. member for Yeoville talks on that, he might care to analyse this matter on its merits. I have great confidence in proposing this measure.

On amendment (1),

Question put: That the paragraph stand part of the Clause,

Upon which the Committee divided.

As fewer than 15 members (viz. Drs. A. L. Boraine, Z. J. de Beer, Messrs. R. J. Lorimer, J. F. Marais, P. A. Myburgh, H. H. Schwarz, Dr. F. van Z. Slabbert, Mrs. H. Suzman, Messrs. R. A. F. Swart and S. S. van der Merwe) appeared on one side,

Question declared affirmed and amendment dropped.

Amendments (2) and (3) negatived (Official Opposition dissenting).

Clause agreed to (Official Opposition dissenting).

Clause 20:

Mr. Chairman, there are two points I want to raise concerning this clause. Firstly, we are obviously in favour of the increase of the amount in respect of the credit balance on savings accounts to R25 000. Secondly, we are also in favour of the addition of the proposed section 21(8), which stipulates that banking institutions shall not hold out to the public that they will consent to the repayment of savings deposits at shorter notice than is determined by the rules.

However, I have a question to put to the hon. the Minister. If there has been deception in respect of this matter and there has been an incorrect holding out, why is it necessary to amend the law by the insertion of this provision when the same action could have been taken in terms of the Trade Practices Act? Why did the authorities not invoke the provisions of the Trade Practices Act in order to stop this type of misleading advertisement? Why is it necessary to introduce legislation which does not go further than the Trade Practices Act in this regard but purely relates to a particular type of institution?

Mr. Chairman, there is a brief answer to that. In the development of our financial legislation over a long period we have tried to deal with these matters as financial measures or in financial measures as such. This is the tradition we are maintaining and it is to be found in many other countries as well. If a financial institution has to be subjected to this type of regulation or law, then that would be provided for in a financial measure. There is no more to it than that.

Clause agreed to.

Clause 22:

Mr. Chairman, I wish to move the following four amendments—

1. (1) On page 23, in lines 15 to 29, to omit paragraph (a);
2. (2) on page 23, in lines 30 to 36, to omit paragraph (b);
3. (3) on page 23, in lines 37 to 47, to omit paragraph (c);
4. (4) on page 23, in lines 51 and 52, to omit “a Bantu village or location” and to substitute:

If I may briefly motivate these amendments, I refer in the first instance to amendments 1, 2 and 3. We have just had a fairly stormy debate in regard to banks. The same arguments apply here and I do not believe that I should repeat those same arguments in this debate at this moment of time. This provision relates to the “savings account”, the “transmission account” and to the classification of “transmission deposits” as shortterm liabilities, all in terms of the Building Societies Act, whereas previously we were dealing with the Banks Act. I do not believe that I need motivate the case once again.

With regard to amendment No. 4, relating to the words “Bantu village or location”, we believe that in the modern times in which we live, with the change in terminology that has occurred, those words are not desirable and should be substituted by other words. My colleague, the hon. member for Parktown, will enlarge on this in a moment.

Mr. Chairman, I wish to deal exclusively with clause 22(d). This subsection deals with two issues, the first being the broad issue of what is being done, about which I shall speak in a moment. The other, as my hon. friend has said, and as the amendment which he has moved reflects, is a question of terminology. It is good, and I think all sides of the Committee will agree, that we continually move away from the rather old-fashioned language which we all employed in times gone by and which was anything but edifying as applied by the dominant White people in this country towards the other people of this country, and the many changes that have taken place have, I think, all been for the good. The term “location” is certainly among those which I think all of us would wish to be rid of as having a stigma of the bad old days about it. We wish to delete it from the law and I very much hope that the hon. the Minister is going to agree to the alternative terminology that has been put forward. Now that we have a Department of Plural Relations instead of a Department of Bantu Administration and Development and a Department of Education and Training instead of a Department of Bantu Education the word “Bantu” is also one which we would wish to get rid of. However, in our search for an alternative wording for the rather inelegant phraseology of the draft Bill it was difficult for the time being to get past a reference to what is still called the Bantu (Urban Areas) Consolidation Act of 1945. For that reason we have moved accordingly that the phraseology should be such. We would add the hope, not only that the hon. the Minister will see fit to accept this amendment, but that it will not be very long before the proper process of law is applied to remove those words, too, and to give us a different word for the laws which govern our Black people in our cities.

*Then there is the further consideration that one also wishes to say something with regard to the real meaning of this subsection. This is that we are providing—as has already been said during the Second Reading debate—for change that is of profound importance in our country, viz. not only is provision now being made for home ownership by Black people in the urban areas, but also that home ownership will be based on the system of free enterprise and that the building society movement, which has played such a key role in the development of the housing of our more privileged Whites, will now also play the same role in the lives of our urban Blacks.

I believe that all hon. members are glad about this, that all hon. members are grateful that this is happening. In this regard it is also very important to emphasize that it is vital that the conditions of ownership will be such as to afford absolute and full security to those building societies advancing the money to our urban Black people. As an hon. member has said here this afternoon, the amounts involved will be very large. It will involve vast sums of money and therefore, from the point of view of the building societies, there must be certainty that the security offered is safe, that it is transferable, that it is inheritable, that it can be sold, that trade can be carried on in the houses and on the premises concerned. I believe the House will want to know the requirements as soon as possible.

From the way in which this legislation was drafted, it only depends on the approval of the Minister whether the form of ownership will comply with the provisions of the Act or not. This is all very well, but the matter is of such importance that we should like to know—as soon as possible—what form this ownership will take. As far as we are concerned, we hope that it will be as close as possible—and if at all possible, as soon as possible—that it will be fully equivalent to the form of home ownership and land ownership which we all know and which forms the basis for the building society loans which enabled the White man in South Africa to enjoy home ownership to such a great extent.

Mr. Chairman, I have looked very closely at this amendment. I have also looked again at the wording used in the Bantu (Urban Areas) Consolidation Act, 1945. I think that this is a reasonable proposal. However, in order to have it quite consistent with the provisions of the said Act, I would like to propose that we word this amendment as follows—

*As far as the Afrikaans version is concerned I propose that we word this amendment as follows—

As far as I am concerned, this wording will be adequate. I think this is in fact what the Opposition wants as well. The meaning is the same in my opinion.

Mr. Chairman, now we seem to be sailing in more tranquil waters again. I think there is no difficulty with what the hon. the Minister suggests because we are both seeking to achieve the same object. If he moves the wording as he has it, we have no objection. I take it that he has formally moved an amendment. If that is the case, I shall formally ask the leave of the Committee to withdraw mine.

Amendment (4) moved by Mr. H. H. Schwarz, with leave, withdrawn.

Mr. Chairman, I thank the hon. member for Yeoville for that. I now move formally—

I should have said that for the reasons given earlier in the more lively part of the debate, I regret that I cannot accept the first three amendments affecting the transmission accounts of building societies. As regards the fourth amendment I have moved an amendment which will reach the same objective.

Amendments (1), (2) and (3) moved by Mr. H. H. Schwarz negatived (Official Opposition dissenting).

Amendment moved by the Minister of Finance agreed to.

Clause, as amended, agreed to.

Clause 27:

Mr. Chairman, I want to raise the question of the new provision which deals with supplementary liquid assets. Here we have the situation that firstly in so far as the transmission accounts in respect of building societies are concerned, it is 30% of the liabilities in regard to transmission deposits of the liquid asset requirements at the moment. In terms of the proposed amendment in respect of supplementary liquid assets, the Bill will enable it to be raised to 60%. When we deal with the remaining requirements—i.e. the remaining provisions authorizing the Reserve Bank to cause a building society to have supplementary liquid assets—we find that the Bill enables the Reserve Bank to increase this to 70%.

The matter which concerns me here is not only the fact that in so far as transmission deposits are concerned this will mean that the rate will have to go down very substantially on any transmission deposit, but the more significant matter is that if, in fact, there is a 70% requirement in respect of other liquid assets of this kind, the availability of money for mortgage purposes will be very substantially affected. In other words, this is not like a banking situation; it is a slightly more serious situation because in so far as the building societies are concerned, their proportion of funds in this type of investment is of such a nature that it will, in fact, adversely affect the ability to lend on mortgage. I realize that this would obviously not be executed unless there were an extreme type of economic situation, but I should like to hear from the hon. the Minister why what is to my mind drastic permissive provisions—because this is not something that comes into force immediately—are now required for building societies. Going to these extremes is a new departure, and I think we need to hear from the hon. the Minister why he considers such a provision to be desirable at this particular time.

Mr. Chairman, as the hon. member has said, this is a permissive clause in the sense that—

do certain things. I quote further—

It depends on the circumstances, and obviously the Reserve Bank will deal with this with its usual circumspection. As far as subsection (b) is concerned—which inserts a provision authorizing the Reserve Bank to prescribe, in certain circumstances, that building societies maintain supplementary liquid assets, of course in respect of their transmission accounts—if this is done it will bring the position of building societies on a par with that of banking institutions as regards the liquid asset requirements in respect of transmission accounts. That is an important part of the consideration, i.e. that one does not have that differentiation under those circumstances if it is deemed that they should be on a par. I hope that deals with the main part of that particular point. However, obviously this is something which is not obligatory. It is something which, if it is deemed to be in the national interest, may be done, and it will obviously have to be done with very good reason.

Mr. Chairman, I am still a little concerned about the provisions relating to the supplementary liquid assets. The basic situation, as I see it, is the consequence for the mortgage business of the company. It may well be that one is in an economic position in which there may be very substantial withdrawals from building societies. There are a whole series of situations that may arise. The difficulty I have with the hon. the Minister’s answer, however, is that he has not, with respect, tried to deal with the problem of how building societies would fulfil their functions in this kind of situation, because a 70% liquid asset requirement might well be crippling to the mortgage business of a building society. That is why I expressed the concern, even though it is as I have indicated, a permissive provision in the sense in which we are using the word “permissive” at this moment in time.

I do not think I can take the matter any further. The Reserve Bank and the Treasury will clearly have to work in conjunction here, will clearly have to take all the circumstances into account and see to it that this is done in a way which does not prejudice the one or the other institution.

Mr. Chairman, I should like to move as an amendment—

The situation created by the Bill is such that the period of mortgages in the R20 000 to R30 000 range is being extended to 25 years. The question that has to be answered, however, is why it is not being extended to 30 years, which, in fact, is the period for amounts below R20 000. I indicated earlier that the average building society loan had a life of only about seven years, according to statistics, and that in overseas countries the period for this type of mortgage at this kind of financial level are longer than 25 years. Even where it concerns timber-frame houses, which one would expect not to have the life of the kind of houses we have in South Africa, this period is exceeded. Therefore the question of the durability of a house and the security does not appear to be an issue. Also, it would seem to us that if the period were extended to 30 years, it would enable the younger people to buy better homes in anticipation of rising incomes, because it may well be that at the time they buy their homes they are not able to meet instalments on a 25 year basis. They can, however, do so on a 30 year basis. As I have also indicated, if one looks at the figures, it is quite clear that by increasing the period to 30 years, the cash flow of the societies would not be adversely affected. Therefore we believe that it is in everyone’s interest that the period be increased to 30 years.

Mr. Chairman, the need was felt to increase the period. That is why this particular proposal is before the House. I am informed that this question was looked at closely by the technical committee and that the building societies were also consulted and indicated that they were happy about it. Under those circumstances I would obviously be inclined to accept what the Bill provides. If the hon. member feels strongly about this, I am quite prepared to ask the Registrar to refer it back to the technical committee so that they can consider the matter in the light of what he has said. I think the matter has in any event been very carefully discussed, but I am nevertheless quite prepared to do that. In the light of the information I have, that this matter has been very carefully gone into and that, indeed, the building societies have been consulted, it would be difficult for me to change the period now without consulting them again. Therefore I am quite prepared to ask the Registrar to refer it back to the committee. He himself is the chairman of that committee. If, on reflection and in the light of what has been put forward, it should be felt that a period of 30 years would after all be better than 25 years, I will have no objection to it. It is not a matter of great moment to me. However, I would appreciate it if we could leave this provision as it stands at the moment because of the information I have at my disposal. I am quite prepared to do it that way.

Mr. Chairman, as we are in these tranquil waters, I will not put the sort of question to the hon. the Minister which the hon. member for Schweizer-Reneke put to me, viz. why 5%? Why choose that? I could use the same argument, but of course I will not do so. If the hon. the Minister will refer this matter to the technical committee, I hope they might be able to deal with this before the Bill goes to the Other Place. If this is not possible, I am quite sure that next year we will have another Financial Institutions Amendment Bill. We would then be able to include it in that. In the meantime we feel that a good case can be made out for extending the period to 30 years. I think the hon. the Minister must concede that there is some merit in the argument, because he has not tried to deal with the individual points I have raised. We shall therefore continue with our amendment and hope that he may be able to move it himself in the Other Place.

As long as we do not talk about transmission accounts next year.

Amendment negatived (Official Opposition dissenting).

Clause agreed to.

Clause 29:

Mr. Chairman, I move as an amendment—

I do not think it is necessary for me to motivate this amendment. I think that it might be generally accepted at this stage. The paragraph concerned deals of course with the 25% limitation on the repayment of loans.

Mr. Chairman, I have only one problem with the hon. the Minister’s amendment and that is my amendment to the same effect on the Order Paper. Since mine does appear on the Order Paper, I would have assumed that I would have enjoyed preference. I think I am correct in that. However, as we both agree on what the amendment should be, I really do not mind whether we vote on the hon. the Minister’s amendment or whether we vote on mine, which is printed in my name on the Order Paper and which I now formally move as follows—

Amendment moved by the Minister of Finance agreed to and amendment moved by Mr. H. H. Schwarz dropped.

Clause, as amended, agreed to.

Clause 30:

Mr. Chairman, I move that this clause be negatived. I do not think I have to motivate this, because the hon. the Minister also agrees with it. Therefore we will all vote for it.

Mr. Chairman, I suppose it is unnecessary to say that I support the motion that clause 30 be negatived. According to my information a corresponding amendment now has to be effected in respect of the long title as well.

Order! The hon. the Minister must move it later.

Clause 30 negatived.

Clause 31:

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

1. (1) On page 31, in lines 44 and 45, to omit “of which the major business is the provision of dwelling houses, and”;
2. (2) on page 31, in line 49, after “insurer” to insert:

Mr. Chairman, I want to move one amendment as follows—

I do not think it is necessary to motivate my amendment, but I should like to quote the following from clause 31—

I should now like to go somewhat further by stipulating that a guarantee by a financial institution approved by the registrar will also be valid. That is my amendment.

Mr. Chairman, the two amendments which I have moved are not the same as the hon. the Minister’s. I want to deal with the second one first because the hon. the Minister moved a similar one. However, I want to try to convince him that the wording of the amendment that I have moved is slightly more satisfactory than his. In the case of his amendment it is the guarantee of a financial institution as such which is approved by the Registrar. In the case of our amendment we give a choice that the guarantee shall be provided either by a financial institution of a nature generally approved or one which is specifically approved. In other words, instead of each specific institution having to be approved of by name, if the Registrar so chooses, he can say: “I approve of all commercial banks” or “I approve of all general banks” or “I approve of all short-term insurance.” He could do a whole series of things on a general basis, whereas in the case of the amendment moved by the hon. the Minister it means that each individual institution has to be approved of by name. We give a choice. Let us take general banks. Let us assume for the moment that the Registrar says that he will not approve of all general banks and that he will only approve of general banks of a certain size. He can then do it on a general basis or he can do it specifically in respect of individual banks. On the other hand, if he wants to approve of all the commercial banks, he can merely classify them in that category. While there is no difference between our amendments in principle, from a practical point of view I think ours is a more satisfactory amendment.

Our first amendment provides for the omission of the words “of which the major business is the provision of dwelling-houses, and”. The reason for it is that there seems to be no logic here as to why it should only be a company of which the major business is the provision of dwelling-houses. Let me take the example of a big construction company of which the major business might well be—I am thinking of companies in which even hon. members in this House might be involved in—the building of office blocks, blocks of flats or other types of structures like factories, although a substantial portion of such a company’s business may also be the provision of dwelling-houses. That would mean that those companies would not be able to use this facility. That, to me, does not seem to be either logical or correct. In the second place a number of groups or companies, which are public companies, and which are in this type of business have a subsidiary company actually providing the dwelling, while the holding company or another subsidiary company provides the financial assistance. Those people are again being left out of this. To provide, therefore, only for the companies, the major business of which is the provision of dwelling-houses, is something which creates real problems. It creates problems in all the categories that I have listed, and I understand that representations have been made, by people who are in the construction business, along these same lines. In these circumstances it therefore seems that they themselves would find themselves in an embarrassing position. Let us take the case of a public company which has a subsidiary that provides the dwelling-houses while the holding company is the company of substance. In those circumstances it does seem quite illogical to exclude such a concern, as also it would to exclude the large construction company which indulges in all sorts of other construction activities and which does not, in fact, have as the major portion of its business, the provision of dwelling-houses. I would therefore like to urge upon the hon. the Minister that he should also accept that amendment from this side of the House.

Mr. Chairman, I want to deal with the hon. member’s second amendment first, because that is the one that I have referred to as well. In fact, I too have moved an amendment in that respect. If we accept the hon. member for Yeoville’s wording, which refers to the approval of a general category, the possibility exists that there could arise, out of that general category that has been approved, a specific case in future which the registrar would not be happy to accept, for some reason that might emerge. It therefore seems to me that it would be safer to simply word the provision by saying: “or a financial institution approved by the Registrar”. I hope the hon. member for Yeoville sees that such a difficulty could in fact arise as a result of his amendment.

In regard to his first amendment to clause 31, the amendment as printed is a concession to construction companies which often assist the buyers of houses from them by providing collateral security to building societies. It is proposed that the collateral security be covered by certain guarantees instead of partly by cash. It would therefore defeat the original object of the legislation if the concession to building contractors were to be extended to all companies, as is the meaning of the hon. member’s amendment. That is my difficulty in accepting the hon. member’s amendment. As far as I am concerned, it would be better to leave it as the clause is printed. I grant the hon. member that his amendment has merit, but it could give rise to some difficulty.

Mr. Chairman, having listened to the exchange between my hon. colleague and the hon. the Minister, I wonder whether an acceptable compromise between the two points of view cannot be found. I am not moving this at the moment, but would merely like to ask the hon. the Minister what he thinks of this wording: “or a guarantee by a company which is engaged in the provision of dwelling-houses”. That meets the point which my hon. colleague makes in regard to a construction company, of which there are many, whose primary business is civil engineering and whose secondary business is house provision. It would also seem to meet the point which the hon. the Minister is making in that he only wishes it to be a concession to such companies.

Mr. Chairman, obviously the implications of that will have to be looked at very carefully, because the wording as it is has been carefully considered. As I have tried to be fair and quiet throughout this debate, I shall take the matter up further, if the hon. member gives me the opportunity. It is in that category where this will be applied, and if we can find a way of meeting the hon. member’s point of view, we obviously will do so. However, I do not want to be bound at this moment for the reason which I have given. I am quite prepared to ask the registrar to look at the matter further, and if we can find a solution which will not defeat the whole object of the Bill, then clearly we shall do so. I shall then take the necessary steps before the Bill goes to the Other Place. I hope that is acceptable to the hon. members.

I am prepared to accept the proposal in the spirit in which it is put. I should like, however, to add that it would be a disaster if one allowed, say, a small one-man building company to get this facility, and excluded a large public company which does other kinds of work. I think it just does not make sense and the hon. the Minister will appreciate that. That is all we are trying to achieve. I think the question as to whether subsidiary companies and holding companies can also be covered by this, should also be looked at. If the hon. the Minister will look at all these aspects before the Bill goes to the Other Place, we are quite satisfied.

The second point concerns the conflict between the hon. the Minister’s amendment and mine. In this regard I should like to put one point to the hon. the Minister which has always worried me. When one has a provision in the law that an individual institution has to be approved, one then finds the situation that people will pester the Registrar’s office in order to get approval for their particular institution. That is why I prefer, wherever possible, to deal in general categories of institutions. One of the matters which redounds very much to the credit of this Registrar and his office is that he is so accessible to people, but on the other hand this could also be a disadvantage because people take advantage of this accessibility. If we leave the provision as the hon. the Minister suggests, i.e. that each individual institution has to be approved, one may find that individuals then make their representations and seek to obtain approval for their institutions. The amendment which I have moved does not exclude specific approval; it specifically says—

In other words, these approvals can still be given individually if the Registrar wishes to do so. However, I believe that in order to cover himself, the Registrar should be given the ability to give general approval for categories of institutions. If the Registrar were, for example, to approve of category A and there is one institution that has to be excluded, the Registrar would have the power to withdraw that approval at the time in any event. So, I would like to urge the hon. the Minister to give consideration to this. Even if he changes his mind between here and the Other Place, it seems to me that one is actually removing a source of pressure and embarrassment to the Registrar if one gives him the power to deal with things generally as opposed to only dealing with them specifically.

Mr. Chairman, I would not like to give an assurance that I shall necessarily make these amendments before the Bill goes to the Other Place because the Registrar has gone into this very carefully in the light of his own experience. I do not think that there are many cases which come up. What I would suggest, unless the Registrar on reflection feels that we should change the provision, which I doubt, is that we ought to let the provision as it stands run for, say, a year. The hon. member for Yeoville said we are almost bound to come with some amendments to the Financial Institutions Act again in the next session. It might be wise to let us see how this provision works out and if indeed there is a problem, as the hon. member feels might arise, we could very easily handle it at that time. I shall obviously talk to the Registrar in the light of the points raised, but I do not want to give any assurance that we will necessarily change the provision this session.

Amendment (1) moved by Mr. H. H. Schwarz negatived (Official Opposition dissenting).

Amendment moved by the Minister of Finance agreed to and amendment (2) moved by Mr. H. H. Schwarz dropped.

Clause, as amended, agreed to.

Clause 32:

Mr. Chairman, at Second Reading I raised a matter to which the hon. the Minister did not reply at that stage, and I want to ask him to reply to it now. I refer to the position regarding debentures. When debentures are issued and they are not defined as being unsecured debentures, does he have in mind that they will be secured debentures, because if they are, the transferor company, which would hold those debentures, would have a degree of security and preference over the ordinary depositors in the transferee building society? I want to take a simple example. If one hives off assets to a building society in South West Africa, that building society would issue debentures in favour of the society in South Africa. If those were to be secured—and this clause does not stipulate whether they are to be secured or unsecured; it merely refers to debentures—the depositors to the society in South West Africa would be at a disadvantage, because certain of their assets would be subject to the debenture in favour of the local society. I do not know whether that is what he has in mind, but to my mind there is some need for explanation. That might well affect the ability of the new society to attract deposits, because there has never been a concept that a building society’s assets should be pledged or secured to anybody at all. The assets have always been free. That is why I have raised this issue as to what he really has in mind in this regard. If they are going to be unsecured debentures, there is of course no problem, because then they are merely acknowledgements of debt and the matter does not go any further.

Mr. Chairman, they will not be secured debentures. It will be a liability like deposits with the society. That should answer the hon. member.

Clause agreed to.

Clause 5 (standing over):

Mr. Chairman, the answer to the point raised by the hon. member for Yeoville is that we are not at war in terms of section 38. I think that is clear. I have checked up on that. Policies already issued are contracts and cannot be changed, but new policies are not governed by the existing section. As I understand it, the crisp question put to me was whether we were at war or not in terms of section 38.

Mr. Chairman, I am very relieved to hear that we are not at war, but I must say that there is no definition of war in terms of section 38 and so I must assume that the hon. the Minister of Defence agrees with that as well and that we are not at war.

The other matter to which we have not had an answer—I hope the hon. the Minister can deal with it—is why we are perpetuating discrimination—and I use the word “discrimination” deliberately—against people in the Air Force. Why do we not change this while we have the chance of doing it?

Secondly, why are we discriminating against a man who is directed to board a helicopter to fly somewhere, as opposed to a man who is directed to climb into a truck to go somewhere? I want to point out a very simple situation. If a serving Citizen Force soldier, who has a policy and who is on the border, is told to board a helicopter, he knows that if he were to die in those circumstances, his policy would be void, whereas if he were carried in a truck, his policy would not be void. I find that an unacceptable situation. I am quite sure the hon. the Minister of Defence finds that unacceptable. I am not blaming the hon. the Minister for introducing this provision, because this provision was introduced in 1943 at a time when circumstances were quite different and people regarded those who flew for the Air Force as taking their lives in their hands and taking an additional risk. Now, however, I think the situation is different. For example, helicopters were not used in those days. As I say, I do not blame the hon. the Minister for having introduced this. On the contrary; in the new section 38A he has made sure that it has been deleted. Can we not now delete this provision? The rules of the House do not permit me to move this amendment, but will the hon. the Minister not look at this and discuss it with the hon. the Minister of Defence and with people in the Department of Defence, and then come back here and give us a provision in terms of which this discrimination is removed against people who are carried in aircraft and helicopters and the members of the S.A. Air Force?

Mr. Chairman, as I said earlier, I do not agree that one is discriminating against Air Force personnel. Maybe there is this somewhat different treatment which has arisen, but I did indicate earlier that this is not the final word and that we are in fact working on two schemes. The one is a more general scheme, covering certain war risks and losses arising from those conditions, and the second scheme specifically relates to military personnel. I shall certainly bear in mind the point which the hon. member has raised. We can discuss that further and we can see, when we come to make a decision on this additional scheme we are working on, a scheme which is a much broader based one, whether we can rule out any sort of differentiation, if that in fact is what is happening. There is a good opportunity to do that. In fact, as I indicated, I am hoping to bring something to this House in the Finance Bill this year on those two schemes, one of which is more general while the other relates specifically to the military. I shall certainly bear that in mind.

Clause agreed to.

Title:

Mr. Chairman, arising out of my proposed amendment to clause 30, I believe that it is appropriate that I move the following amendment—

I do not think that it is necessary for me to explain this any further.

Amendment agreed to.

Title, as amended, agreed to.

House Resumed:

Bill reported with amendments.

Third Reading

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

Mr. Speaker, we have had a long debate, a debate with many peaceful and co-operative phases. There was a volcanic outburst only on one particular provision. There are a couple of things that, I believe, have to be said about the debate. Firstly, I want to express my regret that so few hon. members have taken part in what I regard as so important a piece of legislation.

You never gave us a chance!

That hon. member’s Whips, I think, would have welcomed the opportunity if only he were willing to participate. I think it is unfortunate that hon. members of this House regard financial legislation, legislation which affects so many people in so important a manner, in such a way that they do not participate to a greater extent. I hope that in future debates of this kind there will be greater participation by hon. members.

I am not making a political point, and I am not singling out hon. members of the NP. I am merely making a point in respect of the House as a whole, because I regard it to be important.

The second point I would like to make is that the hon. the Minister must understand one very simple thing. That is that it is, in our view, our duty to speak for those who are least able to speak for themselves. That means underprivileged people, people to whom I refer as lower income group people, people who are poor. If there is nobody to speak for them in this House it would in fact be a most unfortunate situation in South Africa I use the term “underprivileged” not as applying to one race group but as applying to all people in South Africa who do not have all the privileges that others have. When we find that there is legislation which, in our view, discriminates against the poor and against the underprivileged, the hon. the Minister must know before he comes into this House that he will have to face criticism. It is a criticism which we raise in this House without apologizing for it because we regard it as being our duty to do so.

I believe that the debate should be tranquil. It is the kind of debate in which there is a fair amount of give and take in regard to the clauses which are introduced. I want to say here to the hon. the Minister that I am sorry that it had the outburst. I am saying it publicly that I am sorry that this had to occur, because it was a debate in which many amendments were accepted, a debate which took place in a very good spirit. However, Parliament being what it is, if one starts something one should be prepared to finish it.

That is what life is all about. The hon. the Minister must know that.

However, at the same time I say that whereas I am prepared to criticize him and to attack him, there are other aspects of this debate in which the hon. the Minister has behaved in a most reasonable fashion in regard to the amendments moved. That is something which I appreciate. I am sure other hon. members appreciate it too.

I wonder if I may deal now with a couple of, what I regard to be, the highlights of the debate. Firstly, there is the question of the servicemen. I think we do have an improved situation, but we have not yet solved the problem. Until such time as there is a proper insurance scheme in terms of which servicemen and Citizen Force members who have dependants—whether wives or other dependants—receive an insurance, free or on a subsidized basis, we will not have solved this problem.

I believe this is the responsibility of the community at large. It is not merely the responsibility of the serviceman and his dependants. When a serviceman is killed it is not fair that the financial burden caused by that man’s death should fall purely on his dependants. I believe it is a community responsibility and I believe we should face it as a responsibility for the community as a whole.

Secondly, I want to deal with the building society situation. I do not believe that what we have done in this debate has been to solve the problem in regard to home ownership in South Africa. Home ownership is a stabilizing factor. However, it is becoming more and more difficult for young people in South Africa to own their own homes. The burden of having to pay a deposit, of having to pay instalments, of carrying the increasing costs of construction, is making it very very difficult for young people to start their lives in their own homes. Far too many are starting their married lives living with parents or parents-in-law, sharing accommodation or in circumstances which do not help towards tranquil and peaceful family life. The hon. the Minister will have to know that we are going to have to do more in South Africa for more people of all colours to become home-owners, because home ownership is one of the greatest contributing factors towards stability.

I want to touch again, if I may, on the question of inspections, one of the aspects which perhaps causes serious differences in this House. We have no objection to inspections to ascertain whether something wrong has been done in a financial institution. We agree with the hon. the Minister that if one holds money of the public on deposit, there must be safeguards to make sure that abuses do not occur. If one bears in mind the past history of financial institutions that found themselves in difficulties, more recent history by contrast will have shown the value, in more difficult circumstances, not only of the legislation, but also of the very sound office of the Registrar of Financial Institutions. I think it stood us in good stead in very difficult times. At the same time, however, we have to bear in mind that the privacy of the individual should also be respected in this type of situation.

I also want to touch on the thorny question of transmission accounts. I believe that modern practice in banking will eventually evolve in such a way in South Africa that two things will happen. Firstly, I think we shall have an automatic transmission system on the lines of the giro systems in other countries of the world. In terms of this we will, in fact, be able to transmit money without having recourse to paper work, or other inconveniences of that nature. I want to make another forecast. The day will come in South Africa when people who have credit balances in their accounts, whether it be with commercial banks, in savings accounts or in transmission accounts, will be adequately compensated by way of interest. Competitive conditions should be of such a nature that that should be the highest interest possible, particularly for those who are the poorest in the community. I believe that that day will still come, and that is what free enterprise is all about. Free enterprise implies a situation in which that kind of competitiveness can come about, with this type of interest for those who perhaps have the least. It is one of the tragedies of society that the rich are always able to obtain higher interest rates. The rich are always able to obtain benefit.

I think that one can best describe it by means of an illustration. Those who are able to buy things wholesale are those who are really able to afford to buy retail, whereas those who cannot afford to buy retail never have the chance of buying wholesale. This is one of the inequalities which always come about in a society which does not have any equality in bargaining power. My object is to restore equality in bargaining power, to see to it that the underprivileged get as fair a break as those who are in a privileged position. That is where the role of the State comes in. Its role is to make sure that there is equality in bargaining power.

We have debated this at length. We have now come to the Third Reading. Some of our amendments have not been accepted in the Committee Stage whilst others have been accepted. If we look at the Bill as a whole, however, we still believe that it leaves the country better off than before, and therefore we shall support the Third Reading.

Mr. Speaker, I am rising merely to tell the hon. member for Yeoville that I am very pleased about the admission he made at the end when he said that this amending Bill would improve the situation in the country. As I said earlier this evening, what we actually have before us here is a piece of omnibus legislation, a Bill which affects many other laws. But hon. members must be assured of the fact that constant attention is being given to these matters. It is not unlikely that we will introduce another few amendments to this particular legislation next year.

The hon. member must not be too encouraged by the fact that so many of his amendments were accepted this evening. Other legislation will be introduced this year, including the tax legislation, and I am sure that we are not going to agree so easily on amendments to that measure. I think that the way in which the debate on the various amendment was conducted here was very appropriate, and I thank hon. members for their support for the Third Reading of the Bill.

Mr. Speaker, as we come to the end of a quiet, peaceful and pleasant day, there are a last few ideas I want to express. The hon. member for Yeoville referred eloquently and very clearly to the highlights of the debate. It is therefore not necessary for me to do so as well. There are two general ideas which I want to express, with reference to what emerged during the various stages of the debate. The one is that I frequently wonder whether we are not in too much of a hurry to intervene in the natural course of the market. It goes without saying that we as a legislature will try to force things to go in the direction we think appropriate. Frequently it is probably necessary to act in this way, but the Western countries do after all have centuries of experience which indicate that if the market’s own forces are allowed to operate unhindered, matters frequently reach the correct level. I am referring on the one hand to what was said earlier this afternoon about what the interest on second mortages ought to be. Someone said that it was difficult for people to find the financial assistance when they need it, and that the tremendously high interest rates which were being charged were unfair. He said that they should be controlled and that care should be taken to ensure that the interest rates on second mortgages remain at reasonable level. I think it was the hon. member for Walmer who pointed out that if any attempt was made to keep those interest rates on an artificially low level, the only result would be that one would simply not be able to acquire those bonds because they would simply not be available. What effect does it have if similar bonds are available, but at high rates of interest? The result would simply be that the expenditure which people would be able to afford would be less than would have been the case if they had been able to obtain the necessary money at an artificially low interest rate. That was in fact what all sides of this House deemed desirable today. We said that a tendency frequently exists among South Africans—this applies to all races—to exceed their housing needs, i.e. to acquire larger houses than they can really afford in view of their real income. If one simply leaves it to the market, the effect would frequently be that people would be forced in the direction of the correct level of expenditure and of subsistence.

Finally, I still think—I do not think the hon. Minister agrees with me on this score— that this has some bearing on the argument which we had about the transmission accounts. I think that there ought to be competition between the banks. I think that the sound competition which does exist, has the effect of forcing the banks in the direction of greater efficiency and greater economy as far as their own expenditure is concerned. This leads to accounts of various kinds, including ordinary current accounts, eventually being made more attractive to the person who makes use of these services. I am not going so far as to say that we should never intervene. However, if we were a little less inclined to intervene, I believe that we would frequently be able to generate a healthier and more viable economic process. With those few words I am very pleased to support this Third Reading.

Mr. Speaker, I shall only occupy one or two minutes of your time. In the first place I want to thank hon. members sincerely for their contributions to this debate. I think it was a very thorough discussion of a very important measure. This is a comprehensive Bill. Its preparation required a great deal of hard work—there can be no doubt about that. Many discussions took place. I have no doubt that this Bill is a thorough and a good piece of work. I also think that we have done well to accept the amendments which were accepted.

I listened attentively to the speeches made by hon. members and I do not wish to go into the matters which were raised separately. There were references to transmission accounts, to the position of building societies, to military staff, etc. But there will be further opportunities to discuss those matters.

†In conclusion, Mr. Speaker, I merely like to say that we must all accept the rough and tumble of debate. Clearly, we get stirred up a bit at times in the course of a long debate. I do not think there are any hard feelings, certainly not from my side. I would like to say—and that is the only comment I want to make—that I cannot accept that the hon. member for Yeoville or his party can claim for themselves the right to speak for the poor in the country. I do not so much mind him doing that, and if he wants to sympathize with the poor, it is perfectly justifiable. However, to suggest, as he has done more than once in this House during this session, that we are seeking to discriminate against the poor, is to me completely unacceptable. I will certainly oppose that sort of attack on every occasion it is made, because it is quite unjustifiable. One only has to look at the budget and the scores of letters I have had— particularly since the budget—from less-privileged people in all national groups. If the hon. member read them himself—and there are scores of them on that issue alone, viz. the budget—he would see how far-fetched that particular claim of his is. However, I do not want to end the debate on an unpleasant note. I say this only because I think it is absolutely justifiable to say it.

I thank hon. members once again on all sides for their long consideration of this rather important Bill. It is a many-sided Bill amending as it does something like six or seven important Acts. I think we have achieved something today. As time passes on and we come to next year we will have another amending Bill and then we can improve things still further with the co-operation of the whole House.

Question agreed to.

Bill read a Third Time.

Mr. Chairman, …

Guilty or not guilty?

… the position is very clear as to the attitude of this party as far as clause 1 of the Bill is concerned. We shall vote against it because we do not support the principle that any person may be detained without a court order having been obtained for that purpose. No one ought to be deprived of his freedom without a proper trial. This party is not in favour of such a practice, regardless of whether a person is detained for 90 of for 180 days. Nor is this party in favour of the practice as set out in clause 1, viz. that a person who has not yet been tried and who may be completely innocent, may be detained for an indefinite period of time.

The hon. the Minister indicated during the Second Reading debate that a practical need for such a measure existed. That is his problem, and he must find a solution to it. The guarantees which he gave, are inadequate. In the first place the guarantee contained here in clause 1, to alleviate the matter, is that the Attorney-General may order that such a witness be released sooner, i.e. sooner than the end of the proceedings in which he is expected to testify. The matter is therefore being left to the discretion of an official. During the Second Reading debate certain of my colleagues, hon. members of the NRP and I indicated why the ipse dixit of an official such as the Attorney-General cannot be deemed sufficient. Another reason is that the proceedings must commence within six months after the commencement of detention. It is true that this is one favourable element in this otherwise quite unattractive situation, but the question which really arises in this regard is: If the proceedings commence before six months have elapsed—the State’s case is always heard first—is it not then possible to tell the Attorney-General that unless he calls upon a witness to testify within three months after the commencement of the criminal proceedings, he should be released in that case as well? It depends on the Attorney-General or his representative at what stage of the criminal proceedings a witness is going to be called. This is consequently a matter over which he has the ability to adjudicate. We in this party cannot therefore understand why such an improvement or guarantee cannot be effected in regard to the limit. However there is another possibility which has already been debated back and forth across the floor of this House, i.e. that there should be judicial consent for the detention of a witness after a period of six months has elapsed. In my opinion no sound reason has been put forward as to why the trial judge cannot do this. If the objection is made that the criminal trial judge is hearing the case in camera, as he will have to do, there is certainly no good reason why another judge cannot be called in to adjudicate on this specific issue. The issue is a very simply question: Is there sufficient reason for detaining the witness for a further indefinite period, or why the judge shall not in such a case determine a specific period within which the witness has to testify, and subsequently be released? In my opinion this entire matter has been brought in this form to the House with insufficient perception and inadequate reflection. That is why this party will vote against the clause.

Mr. Chairman, we have now reached the Committee Stage of a Bill which created a fair stir during its Second Reading. In the first clause, which is under consideration at the moment, we are dealing with the Internal Security Act. We are also dealing with a principle that has been agreed to during the Second Reading, i.e. that any person arrested should be detained for longer than six months if there is a trial in progress. We made our position perfectly clear during the Second Reading, i.e. that we do not believe that the Attorney-General should have been allowed to put the man in prison in the first place or that he should be able to extend the period of imprisonment without some kind of judicial respectability being lent to the proceeding. Consequently, and in order to try to bring a measure of judicial respectability into this particular amending Bill, I move the amendment standing in my name on the Order Paper, as follows—

We move this amendment not in any shape or form lightheartedly, but because we in these benches believe that it is in the best interest of South Africa that we should do so. There is no question about the fact that this country has received a great deal of opprobrium from overseas in terms of its internal security laws. We in these benches believe that the more that can be done to illustrate to the rest of the world that we are trying to adhere to the due processes of law as far as possible, the better our image will be in the outside world.

Order! I regret that I am unable to accept the amendment moved by the hon. member for East London North as it is in conflict with the principle of the Bill as read a Second Time.

Mr. Chairman, I should like to move the following amendment—

The motive in introducing the Bill is obviously that the detention of witnesses should be extended by a period necessary for the purposes of the criminal proceedings concerned. As far as the wording of clause 1 is concerned, I think it is capable of improvement. I say this because the words “such period” appear in line 15. The only other reference to the word “period” appears earlier in the proposed new section 12B(3), viz. in line 8, and obviously the two periods to which reference is being made are not the same. The intention is of course that the period in line 15 refers to the period of six months which is mentioned in the proposed new section 12B(3)(1)(b). Accordingly, to refer to “the six months referred to”, as I have proposed, will in my opinion place the position beyond any doubt and also make the clause easier to understand. As far as the English version is concerned, the amendment is even more useful because in the English version there is only reference to “such period”, because there is apparently no equivalent in the English language for the accentuated “dié” in the Afrikaans, and the confusion can more easily arise there.

To sum up: If the confusion which I fear does in fact arise, it will mean that the qualification on this extended period which is being proposed will not be effective.

Mr. Chairman, I have already tried, during the Second Reading debate, to reply to the aspects which have again been raised now to the best of my ability. It is not possible for me now to accept this amendment either.

Amendment moved by Mr. S. S. van der Merwe, negatived (Official Opposition and New Republic Party dissenting).

Clause put and the Committee divided:

Ayes—88: Aronson, T.; Ballot, G. C.; Botha, C. J. van R.; Botha, J. C. G.; Botha, P. W.; Botha, S. P.; Clase, P. J.; Coetsee, H. J.; Coetzer, H. S.; Conradie, F. D.; Cronje, P.; Cruywagen, W. A.; Cuyler, W. J.; De Jager, A. M. van A.;Delport, W. H.; De Villiers, J. D.; De Wet, M. W.; Durr, K. D.; Durrant, R. B.; Geldenhuys, G. T.; Greeff, J. W.; Hayward, S. A. S.; Hefer, W. J.; Henning, J. M.; Herman, F.; Heyns, J. H.; Horn, J. W. L.; Janson, T. N. H.; Jordaan, J. H.; Koornhof, P. G. J.; Kotzé, G. J.; Krijnauw, P. H. J.; Kruger, J. T.; Langley, T.; Le Roux, F. J. (Brakpan); Le Roux, F. J. (Hercules); Ligthelm, N. W.; Lloyd, J. J.; Louw, E.; Louw, E. van der M.; Malan, G. F.; Marais, J. S.; Marais, P. S.; Mentz, J. H. W.; Morrison, G. de V.; Myburgh, G. B.; Nel, D. J. L.; Niemann, J. J.; Nortje, J. H.; Nothnagel, A. E.; Olckers, R. de V.; Potgieter, S. P.; Rencken, C. R. E.; Rossouw, D. H.; Rossouw, W. J. C.; Schlebusch, A. L.; Schutte, D. P. A.; Scott, D. B.; Smit, H. H.; Snyman, W. J.; Steyn, D. W.; Tempel, H. J.; Terblanche, G. P. D.; Theunissen, L. M.; Ungerer, J. H. B.; Uys, C.; Van den Berg, J. C.; Van der Merwe, C. V.; Van der Merwe, H. D. K.; Van der Spuy, S. J. H.; Van der Walt, A. T.; Van der Walt, H. J. D.; Van der Watt, L.; Van Rensburg, H. M. J. (Mossel Bay); Van Tonder, J. A.; Van Vuuren, J. J. M. J.; Van Zyl, J. J. B.; Venter, A. A.; Viljoen, P. J. van B.; Vlok, A. J.; Wentzel, J. J. G.; Wilkens, B. H.

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

Noes—17: Bartlett, G. S.; De Jong, G.; Lorimer, R. J.; Malcomess, D. J. N.; Marais, J. F.; Miller, R. B.; Myburgh, P. A.; Oldfield, G. N.; Page, B. W. B.; Raw, W. V.; Schwarz, H. H.; Sutton, W. M.; Swart, R. A. F.; Van der Merwe, S. S.; Wood, N. B.

Tellers: Z. J. de Beer and H. Suzman. Clause agreed to.

Clause 2:

Mr. Chairman, it is already clear why this party will vote against this clause as well. Our reasons for refusing to accept such a practice are the same as the reasons I have already put forward under clause 1. I am sorry that the hon. the Minister did not see his way clear to replying to them. I take it that he will not reply at this stage either. We shall consequently vote against the clause, whatever the attitude of the hon. the Minister may be.

Mr. Chairman, we in these benches shall also vote against this clause.

Mr. Chairman, I move as an amendment—

The same arguments apply which I have already advanced during the discussion of clause 1.

Amendment moved by Mr. S. S. van der Merwe negatived (Official Opposition and New Republic Party dissenting).

Clause put and the Committee divided:

Ayes—88: Badenhorst, P. J.; Ballot, G. C.; Botha, C. J. van R.; Botha, J. C. G.; Botha, R. F.; Botha, S. P.; Clase, P. J.; Coetsee, H. J.; Coetzer, H. S.; Conradie, F. D.; Cronje, P.; Craywagen, W. A.; Cuyler, W. J.; De Jager, A. M. van A.; Delport, W. H.; De Villiers, J. D.; De Wet, M. W.; Durr, K. D.; Durrant, R. B.; Geldenhuys, G. T.; Greeff, J. W.; Hayward, S. A. S.; Hefer, W. J.; Henning, J. M.; Herman, F.; Heyns, J. H.; Horn, J. W. L.; Janson, T. N. H.; Jordaan, J. H.; Koornhof, P. G. J.; Kotzé, G. J.; Krijnauw, P. H. J.; Kruger, J. T.; Langley, T.; Le Roux, F. J. (Brakpan); Le Roux, F. J. (Hercules); Ligthelm, N. W.; Lloyd, J. J.; Louw, E.; Louw, E. van der M.; Malan, G. F.; Marais, J. S.; Marais, P. S.; Mentz, J. H. W.; Morrison, G. de V.; Myburgh, G. B.; Nel, D. J. L.; Niemann, J. J.; Nortje, J. H.; Nothnagel, A. E.; Olckers, R. de V.; Potgieter, S. P.; Rencken, C. R. E.; Rossouw, D. H.; Rossouw, W. J. C.; Schlebusch, A. L.; Schutte, D. P. A.; Scott, D. B.; Smit, H. H.; Snyman, W.J.; Steyn, D. W.; Tempel, H. J.; Terblanche, G. P. D.; Theunissen, L. M.; Ungerer, J. H. B.; Uys, C.; Van den Berg, J. C.; Van der Merwe, C. V.; Van der Merwe, H. D. K.; Van der Spuy, S. J. H.; Van der Walt, A. T.; Van der Walt, H. J. D.; Van der Watt, L.; Van Rensburg, H. M. J. (Mosselbaai); Van Tonder, J. A.; Van Vuuren, J. J. M. J.; Van Zyl, J. J. B.; Venter, A. A.; Viljoen, P. J. van B.; Vlok, A. J.; Wentzel, J. J. G.; Wilkens, B. H.

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

Noes—17: Bartlett, G. S.; De Jong, G.; Lorimer, R. J.; Malcomess, D. J. N.; Marais, J. F.; Miller, R. B.; Myburgh, P. A.; Oldfield, G. N.; Page, B. W. B.; Raw, W. V.; Schwarz, H. H.; Sutton, W. M.; Swart, R. A. F.; Van der Merwe, S. S.; Wood, N. B.

Tellers: Z. J. De Beer and H. Suzman. Clause agreed to.

Remaining Clause and Title, with leave, agreed to.

House Resumed:

Bill reported without amendment.