as chairman, brought up the third report of the Select Committee on Railways and Harbours as follows—

1. (1) Your committee begs to report that sums amounting to £26,510 15s. 8d. are shown in paragraph 63 on page 88 of the Controller and Auditor-General’s Report on the Railways and Harbours Accounts for the financial year 1925-’26 as Unauthorized Expenditure and requiring to be covered by Vote.
2. (2) The amount of £26,510 15s. 8d. is apportioned as follows:

(3) Your committee recommends the sum of £26,510 15s. 8d. for appropriation by Parliament.

Report to be considered on 27th April.

Hon. members on both sides of the House, no doubt, are glad that we have now reached the stage when our annual battle on the budget is fast drawing its weary course to a close. I understand that there have been disappointments in regard to the budget. The first one apparently was the total absence of thrill. I am sorry that I consider the financial matters, the financial and economic problems of this country, of too much importance for me to resort to all sorts of spectacular financial exploits in order to supply the apparent craving for thrills. As one who, for my sins, has been condemned to listen for five days to the debate we have had, I must sympathize with our friends of the press whose duty it is every morning to supply these glaring headlines designed to revive the drooping spirits of a party sojourning in the wilderness. I say I must sympathize with them that this budget debate has supplied so few thrills, but there has, at least, been one thrill, and that was when the right hon. member for Standerton (Gen. Smuts), after a period of three years that this Government has been in office—in spite of the prophecy we heard at the time that we would only last three months—apparently thought the time had come to issue a challenge in connection with the financial and administrative policy of the Government. Well, we had that challenge to mortal combat, but if we take into consideration the times when the ranks were depleted, the steadily depleted ranks of hon. members who no doubt will accompany him to the last ditch when the division bells have rung, I think that it is indicative of the importance which hon. members opposite attach to this challenge. I sympathize with the right hon. member; I think he will find that that is more or less the feeling in the country. I am sure I do not know whether all we heard in the House, and especially from the right hon. member, about financial inefficiency and this country having been brought on the rocks but for extreme luck and the grace of God, will not be received in the country with amused tolerance rather than ridicule. One thing I will prophesy: that after the din of battle has subsided and all the political smoke and dust has cleared away, this budget will stand unscathed. We have had a lengthy debate, and a lot of irrelevant matter was introduced, and some important questions of policy and administration were raised. I do not propose to traverse all the points that have been raised, many of which can perhaps more conveniently be dealt with on the votes of the respective Ministers. I only want to deal with a few of the main principles that were raised here, and mainly the charge of the right hon. member for Standerton of sending up public expenditure in this country to an unwarrantable extent, and the failure of the Government to reduce taxation. He has coupled with that the policy of the Government in regard to extending the provisions of the Conciliation Act into the country, and also the supposed misdeeds of my hon. friend here. In regard to the former, the Minister of Labour has already dealt with that, and has met the criticism in that regard, and my hon. friend here will deal with the other question. Before I proceed to deal with the amendment of the right hon. member for Standerton in so far as it deals with the financial policy of the Government, I wish to deal with a few points raised by the hon. member for Cape Town (Central) (Mr. Jagger). It is true that he was, of course, the first to raise the hue and cry about inflated expenditure and no reduction in taxation, but it was the right hon. member for Standerton who really led the attack on this point. Of course, the hon. member for Cape Town (Central) had to be true to the faith that is in him, and he had perforce again to deal with this question of the fiscal policy of the Government. I notice that this year he had even less support from hon. members sitting behind him. We have, of course, had again the repetition of the annual vindication of the Government’s policy in this regard by his colleague, the hon. member for Zululand (Mr. Nicholls). I must congratulate the hon. member for Cape Town (Central) on his persistency and on his success in at least gaining over to his side the hon. member for Bloemfontein (North) (Mr. Barlow). That hon. gentleman has now come forward as an outspoken, unabashed and unashamed a free trader, as he described me to be a Tory. He has now placed himself unreservedly by the side of the hon. member for Cape Town (Central) in regard to the fiscal question. The hon. gentleman (Mr. Jagger) has not only launched forth his annual tirade against protection—which has become in this House an academic question—but he has definitely also stated that this policy is resulting in a prevention of a drop in prices, bringing down the cost of living. The hon. gentleman has now shifted his ground. Formerly he prophesied that this tariff policy was going to result in increasing the cost of living. I am glad to have this concession from him now that what it has really done is not to increase the cost of living, but that it has prevented the cost of living from coming down; it has prevented a fall in prices, as has been the case in other countries. But I am afraid the figures which the hon. member quoted in support of that statement did not bear him out. He stated that in the United Kingdom since 1924 prices had fallen by 15½ per cent., 7½ per cent. in Canada, and in South Africa only 1 per cent. I would like to know the source from which he gathered those figures, because I have taken out the figures appearing in the British Board of Trade Journal, and they tell altogether a different tale, and I think another mistake he makes is this, that he is confusing wholesale prices with the cost of living, or rather, he is unfairly comparing wholesale prices with the cost of living. I think it would have been a fairer comparison if he had taken the retail prices. He will admit that wholesale prices are very often subject to alarmist rumours in trade, and to speculation and disturbance in trade channels. For that reason they are not very reliable when you want to make the comparison the hon. gentleman tried to make, and it would be better if we took the retail prices. We have between 1924 and 1926 a fall in the retail prices in the United Kingdom of one point, or less than 1 per cent. on July, 1924. When we come to the wholesale prices, we find it is true that in the United Kingdom during 1924 there was an appreciable fall, especially as the result of the return to the gold standard. The hon. gentleman must remember that here our position is quite different, and we had a heavy fall in prices between 1922 and 1923. We had passed legislation forcing our banks to return to the gold standard by 1923—we were the only country in the world to do so—and consequently, when 1923 was reached, we had practically reached the bedrock of deflation. It was only subsequently we officially returned to the gold standard, but for a long time our £ was on a parity with the dollar. It was only when the British Government returned to the gold standard that they had an appreciable fall in wholesale prices, and so the hon. member is not quite fair when he compares our prices with the periods I have mentioned in England. But even in Canada, on the otherhand, we had a rise in the retail prices. In South Africa there has been an appreciable fall. The figures of the hon. gentleman that the prices have not come down here, commensurate with the fall in the United Kingdom and Canada, are not in accordance with the facts at all.

You are taking the retail prices again.

In Canada the retail prices show a rise, and in the United Kingdom a slight drop; in South Africa a fair decrease. In Canada there was a rise of five points in retail prices. South Africa is in a specially favourable position in that, and also in regard to price levels generally as compared with the countries mentioned by the hon. member, and another remarkable fact is, if you take the import figures in January, 1926, the index was 96 less than January, 1925, 1609 as compared with 1705. If the effect of the tariff was as stated by the hon. member, you would not expect to find such an appreciable drop in the wholesale index prices. The consequences the hon. member has drawn from this I think are not warranted at all. But then the hon. member proceeded, and of course trotted out this bogey again, and he was followed by the hon. member for Bloemfontein North (Mr. Barlow), that is, the detrimental effect this fiscal policy has on primary production in this country, especially farmers, and I do not think I could put up a stronger case in refutation of that than was put up by the hon. member for Zululand (Mr. Nicholls). He was rather embarrassed by the cheers that went up from this side, but they were not for the purpose of embarrassing the hon. member at all, because he really hit the nail on the head when he told you that, notwithstanding the cry we nave heard in the country all these years—

in spite of that, they are not sticking to the land. That was the experience of hon. members opposite, and that is the experience of the Government. As the hon. member said himself, farming is the worst paid industry in this country. We have for a number of years been doing everything that could stimulate agriculture, spending money on the agricultural department, teaching farmers the best methods, spending much money on land settlement and getting people to come from overseas. That policy has been intensified by the present Government, and, in spite of that, people are dropping off the land. I think we should look the matter in the face.

There is no reason for despair.

I admit we do not despair at all, but we must face the realities. In spite of the efforts which the right hon. member made, the people were dropping off the land by the thousand, and you had this position—they came to the towns, and there was nothing for them to do. That was what my hon. friend the Minister of Railways and Harbours found on assuming office, and he decided that something had to be done, and the situation was met by a change in our fiscal policy to provide fields of employment for these people; but in the meantime you could not allow them to starve. I do not want to pride ourselves on the fact that we have given this employment. We have done the best under the circumstances. Thousands have been employed in factories; we have been at it only a few years.

made an interjection.

The hon. member for Bloemfontein (North) (Mr. Barlow) is altogether too impatient. Of course, we all agree with the hon. member for Yeoville (Mr. Duncan) that we ought to do everything to stimulate production, and do everything to get people on the land, but you are not achieving that object. Even farmers’ sons cannot all remain on the land. They have not the opportunities nor the inclination. We must see, especially in this country, where your two primary industries, mining and agriculture, are in the first instance based on black labour, that avenues of employment are created for the people who have been on the land and who are dropping off.

Do not make it more difficult for them.

I do not agree with the hon. member that the protective policy we have followed so far is making it more difficult for them. The hon. member and his friends who have used this argument have advocated that if a reduction of the customs duties and of taxation is made, you will stimulate employment. If these customs duties were reduced by half to-morrow, I do not think it would make the slightest difference to the consumers and the farmers. The position has been, so far, that when we have made reductions in customs duties, I have been criticized by commercial members, and told that it would not be passed on.

You have never been in business.

I have sacrificed £100,000 in respect of one article imported, and I am told you are reducing the price of a suit of clothes by 6d., and what is the use of this?

You might double it, and it would be just the same.

That would be a foolish policy to pursue. There is a limit to these things, but a moderate policy of protection has not increased prices. Will the hon. member tell me if we are going to have a large reduction on account of the duties that are rebated?

You will get the reduction on the cotton goods.

That may be the theoretical argument of the free trader, but it does not work out in practice, and the farming community have not suffered any disadvantages as a result of the moderate raising of the customs duty. On the other hand there have been very considerable reductions, especially in articles used by farmers. The other day the right hon. the member for Standerton (Gen. Smuts) went to a neighbouring district, and he is supposed to have stated that as a result of our protection duty the prices of farming implements have gone up. I do not suppose he intended deliberately to be unfair, and am not sure that he was reported correctly.

No, wrongly.

The price of wheelbarrows was raised by 30 per cent.

I don’t think there will be many farmers driven off the land as the result of the increased duty on wheelbarrows. The main charge of the right hon. member is that we have sent up the expenditure to an unreasonable extent, and that taxation should have been reduced. It is rather unfortunate for the right hon. member and his party that they have a past which has to be lived down, and with that past behind them I think they will find the public rather sceptical when they read of these vague and general charges about extravagance and failure to reduce taxation. The right hon. gentleman now says: “It is all very well for the Government to blame us for the state of the finances, but the Minister of Finance has been wonderfully lucky.” I sympathize with him if he wants to make it out that the late Government’s footsteps were always dogged by misfortune. For three years the position has not been so bad as that which was experienced by the right hon. gentleman when he ruled over the destinies of this country. Does he want to say that during all those years he had nothing but misfortune? I don’t want to make that allegation. The country has had its ups and downs: we have just gone through an unprecedented drought, and the climatic conditions have been against this Government as they were against the previous Government. The last Government had their troubles and I have no doubt that we shall have our troubles. What was the experience of this country during the last five years of the Government of the right hon. gentleman? He apparently blames me for this rise in expenditure, but it was claimed during the debate— and the right hon. gentleman made the same claim himself last year—that just before this Government took office the Cabinet appointed a committee, a Geddes committee, as the result of our criticism. Last year the right hon. gentleman told us that he reduced the expenditure by £6,000,000. He made a mistake, the actual figure being £1,700,000: We must assume that our predecessors were not extravagant, and that they had put the finances in order by the time we assumed office. It is necessary in order to get at the correct position that we should separate the expenditure at the time prior to our taking office and the expenditure incurred by this Government. When we took office we must assume that the right hon. gentleman and his government when they made economies in administration and reductions in the salaries of civil servants, and brought down the expenditure by £1,700,000, exhausted all the methods of securing reduced expenditure. Then we have to deal with the £3,000,000 additional expenditure which, according to the right hon. gentleman, had been incurred by this Government. I agree it is reasonable to say that we should bear the responsibility for that £3,000,000 we have added to the expenditure. We are quite prepared, when we go into committee, for the right hon. gentleman to point out any of these services on which we have incurred this expenditure, and for him to say where we could reduce or dispense with certain services. We are prepared to join issue with him on that point, and to submit the matter to the country. The right hon. gentleman knows that a great portion of that expenditure is due to the increased subsidies to the provincial councils for education. We know that our predecessors forced the provincial councils to accept the position that they had to go slow, and in many cases were unable to open schools and there was a grave danger that education was going to suffer. We, however, have put the provincial councils on their feet, and they have been able to carry on for the last two years. I challenge hon. members opposite to reverse that decision—that policy—to make adequate provision for the carrying on of these services by the provincial councils. We get increased expenditure in connection with pensions. Pensions put on a proper footing and meeting our liabilities. Are hon. members prepared to support a measure, if introduced, to alter the basis of the pensions list in the country for the public services? I don’t think they will. Increased expenditure on various social services—child welfare, mental hospitals and other hospitals, vocational training, technical education. Will hon. members be prepared to dispense with those services? No, they will not. I do not want to exhaust the list. Hon. members will have an opportunity of challenging any one of those services and we shall meet them on that ground.

But that is cheap.

It is cheap to make a general statement and this is the only way we can meet the test. They say there should have been reduction in taxation. What was the experience under the previous Government? Did the country experience reduction of taxation? I would like to ask hon. members opposite whether, in their recollection, they recollect any occasion on which we had a reduction of taxation in connection with any budget.

We never had a normal time like this before.

No, misfortune always dogged their footsteps. I was startled when I got these figures. The need was always felt, if possible, that the country should have relief in the reduction of taxation. I want to take a five years’ period— 1919-1920: increased customs, excise, export tax on diamonds, excess profits duties, transferred from loan account, a total of £1,395,000. That was one year. Then we come to the next year. We find that was a very good year and my predecessor had hoped to come through without any increased taxation, but in the House a motion was moved, I think by the hon. member for Parktown at that time, increasing the income tax abatement and the Government suffered a defeat and my predecessor had to submit. It resulted in a remission of £400,000 for the year.

By accident.

Yes. Then we come to the next year. Increased postage to two pence per ounce, newspapers, customs and excise, £1,077,000; income tax, £1,500,000; loan receipts again—breaking the law again— £934,000; sinking fund, part of the previous year’s surplus appropriated, £460,000, making a net increase of £4,276,000.

You ought to be able to make some reduction, times have changed.

We had not got surpluses in those days. That is why we put the taxation on.

Then we come to 1922-’23, customs duties, and this is surprising, on blankets, £45,000; death duties, loan receipts, again, £826,000, a total of £1,121,000, and with a tobacco rebate of £385,000, making a net increase of £636,000.

Another abnormal year that.

1923-’24 excise duty, customs duty, patent medicine duty, protective duties, loan receipts, again, £785,000. They were all abnormal years I understand. Then we at once come to normal years. Hon. members can amuse themselves by totalling up the amounts.

£7,000,000.

The hon. member for Cape Town (Central) (Mr. Jagger) says: “Look at the examples set you by other countries. Only South Africa has not reduced taxation since the war. Look at Australia and Canada.” Let me say that argument does not bear examination. It depends upon your basis. It depends on the basis of taxation in the various countries as to what you can do by way of reduction. The hon. member will agree that is a fair proposition and it is not bringing us any further to say that if Canada’s taxation has been higher than ours for a number of years that they have reduced taxation by one million more than you have done yourself. That is no answer at all. What is the position? I do not say that definite conclusions can be based on the figures I have given here, because of the difficulty of making comparisons. You have various differences in the forms of Government and the financial systems of those countries. In Canada the principal railway system is not state-owned. That is one difficulty. Then you have a difficulty in regard to the population. It is complicated here by the natives. It is rather interesting to give the latest figures available to show hon. members what the taxation is which is being levied in the various countries and I think he will see the deduction he made is not fair and takes us no further. In Canada, 1924-’25, customs taxation, £22,000,000; Australia, 26.4 millions; South Africa, £8,500,000. Excise: Canada, £8,000,000; Australia, 10.8 millions; South Africa, £2,000,000. In Canada I do not wonder they have been able to reduce taxation. I have not been able to verify the statement, but it is no wonder they were able to do so when you find they have a sales tax in that country producing 17 millions.

Dollars?

No. Sterling £’s. The relative income tax figures are: Canada, 11 millions; Australia, 11 millions; the Union, 6.5 millions. In addition to that you have, of course, the provincial taxes, which are very much heavier in those countries than they are in South Africa. The provincial or State taxes in Canada are £13,000,000; Australia, £21.6 millions, and the Union, £3.5 millions. You therefore get total figures of £72,000,000 for Canada, £74.4 millions for Australia, and £24,000,000 for the Union.

What does it work out at per head of European population?

Why does the hon. member want to make a comparison only per head of European population? I think our natives should at least also be considered as an economic factor, and should be taken into account if you are making a calculation of this kind. It is very difficult to ascertain the relative values of these figures by reason of the difficulty of making a comparison according to your population. Taking four natives as more or less equal to one white for this purpose, which is the generally accepted figure, and taking the actual population of these countries, I think you will find that South Africa compares very favourably to the countries I have mentioned, and, therefore, if they have been or are in a position to effect greater reductions in taxation than we have been or are in a position to do, I do not think any definite conclusions can be drawn from that. One thing is clear from these figures, and that is the customs duties in the Union are lower than the Canadian duties, and very much lower than the Australian duties. The Union is not subject to the sales tax as Canada is, the land tax is not levied here as in Australia and the Union income tax is lower than that of Australia and the states there, though it is probably a little higher than that of Canada. I now come to the question of remission of taxation. The right hon. gentleman is disappointed because we have not reduced taxation since we have a surplus. Before I deal with that, let me say that I am rather disappointed at the reception which the announcement of this surplus was accorded from the other side of the House. I do not want to take to myself any particular virtue for bringing out the surplus, but I think we all ought to be very glad and proud of the fact that this, our country, has shown such a wonderful resiliency that in a time of abnormal drought we have been able to come out on the right side to such an extent. I think it shows that, notwithstanding the vagaries of climate and the difficulties that our agricultural community have to contend with, it is fortunate that we have other sources of wealth in this country which can bring us out in such a position during such difficult times. The right hon. gentleman says that we have had a surplus, and that we should have reduced taxation. I do not know whether he wants me to use that surplus for actually remitting taxation for the coming year, whether he wants me to carry forward that surplus, in other words, or whether his argument is that, having had such a big surplus last year, we have been too conservative, we have under-estimated our revenue again, and we should give very much more. I would like to know what the real point of attack is which the hon. member is making. If it is the first, namely, because we have realized this surplus, we should carry it over and so reduce taxation, I must tell the right hon. gentleman that I cannot do that.

That is not my argument.

I am glad to hear that. It must be that because we had that surplus last year we should be in a position to do very much more than we are doing by way of reducing taxation. That would imply that my revenue has been very much underestimated. If that was so, I think it was the duty of the Opposition to criticise the revenue estimates as they have criticised other parts of the budget. I am not wedded to these figures. I have frankly told the House that last year was an abnormal year. We expected to find a drop in the importations into the country, instead of which they have kept up during the year, and they are keeping up now, so that hon. members will agree that it would be very unsafe and very unwise to bank on the continuance of that during the coming year. I think experience shows also that the effects of the good maize crop did not disappear as quickly as we had anticipated. If that is so, I think we are safe in assuming that the result of the bad maize crop will only be felt during this year, instead of last year. Nobody has been able, in this country or any other country, to estimate revenue correctly. We must take these factors into consideration. I have given them all due consideration. I have consulted the commercial community, as we have done in the past, as to the future commercial prospects. As far as I have been able to gather, my estimates with regard to importations are far too sanguine. I have provided for a drop of 5 per cent., but I am told that I shall be lucky if the drop is not 10 per cent. Then there is the diamond position. As I told the House when I introduced the budget, we hope, as a result of the steps we are taking to control the output, that we won’t have a collapse of the diamond market, and that we shall be able to continue to reckon on having diamond receipts as we have done in the past. I do not think hon. members would say that I am dealing right by the country if I disregarded the possibilities, if not the probabilities, of the situation which may arise during this financial year. If I have not under-estimated revenue, how is it possible to reduce this taxation if we want to balance our budget, unless, of course, we have very drastically to cut expenditure. That is the only way. With that I have already dealt. The right hon. gentleman is not satisfied with a reasonable reduction of taxation. He wants a spectacular reduction, he told us. That can only mean reducing the administrative expenses, cutting the salaries and allowances of our public servants, and we know what the position is. The other day we debated a motion in this House where our public servants asked the House to consider their position and to grant them higher scales. It is true that hon. members opposite, who now clamour for economy, supported the Government’s view on that question, but we must also remember that there was quite a respectable phalanx that crossed over and supported this proposal—the stern economists of the other side. Was the right hon. gentleman speaking for the whole party when he deprecated and commented on the growth of expenditure and tabled his amendment, while we had that experience a few weeks ago when a large number of his followers supported that proposal, not for a reduction of the expenditure in connection with our public service, but for an increase? That is the only way you can effect it, or you must be prepared to cut down the other services to which reference has been made. We can discuss that when we come into committee. I shall be glad to have an indication from hon. members opposite as to where we can make reductions. I have invited it, but I have not had a very ready response. The hon. member for Rondebosch (Mr. Close) attempted to do something in that direction. He said—

That is hardly fair.

I want to be fair. I am going to enumerate the whole list. He said—

I may say that this is paid out of a fund, and does not come out of the taxpayers’ pocket at all. All I can say is that if those economies are effected, they will not enable me to take one-thousandth of a penny in the pound off the income tax of this country.

We did not know there were 275 civil servants treated like that.

I do not want to shirk that issue. I laid the return on the table of the House and the hon. member knows that by far the largest proportion of those people were members of the defence force who were retired as a result of the re-organization scheme of my colleague in order to effect economies in the defence of this country. The hon. member knows that we followed exactly the same policy which his Government followed a few years ago in order to get a reduction of that vote, when they also retired a large number of those people, and gave them exactly the same terms on retirement.

Why were the members of the Public Service Commission retired?

That question has been debated in this House. It was the policy of the country and the Government. Listening to the speech of the right hon. the member for Standerton, one would assume that nothing has been done during the three years this Government has been in office by way of reducing expenditure. But is that so? I do not know whether the hon. member did not go into the figures which I have supplied to this House in connection with this matter. I do not want to suggest that he tried to be unfair intentionally, but I do not think he stated the position correctly or fairly when he dealt with this question of reduction of taxation. I am going to give the figures to the House, and I would like hon. members opposite and the right hon. gentleman to tell me where they think that the conclusions that I have put before the House are incorrect or unreasonable. In 1924-’25 we made certain amendments to the customs tariff, and we made a reduction in the tax on roll and pipe tobacco. We got in that year these figures which the right hon. gentleman does not dispute—we got in that year a remission of £135,000 for the full year, or £104,000 for the portion of the year. Then we came to the next year, 1925-’26. We then had a remission in connection with leaf tobacco of £200,000. There was the return to the penny postage, £100,000 for that year; the return to the farthing newspaper rate, £30,000, increase of income tax abatement for children, £30,000, repeal of turnover tax in all the provinces £215,000, repeal of the companies tax in the Cape £30,000.

That is provincial taxation.

I am going to argue that. The hon. gentleman is apparently indisposed to give me credit for a reduction in the provincial taxes. In arriving at his figure he discarded that, and also a few of the others, for instance, the abatement in the case of children, but I think probably he did not know about that. What is the position in regard to the provincial taxes? My action in having taken credit for these remissions in my claims in regard to the reduction of taxation has been questioned. What is the actual position? We had two systems of taxation when we dealt with the matter. We discussed the position with the provinces and an arrangement was arrived at. I told the provinces—

And these taxes were scrapped by legislation passed by this House, not by the provinces, as the result of that arrangement which we made. Is it not quite fair and reasonable on my part to say: “If I give you more money I am going to repeal those taxes”? I have compensated them from the revenues of the central Government for the loss of those taxes.

What about the additional and increased licences?

Let me tell the hon. member that the taxpayers of this country under the new licensing ordinance are not paying a penny more than they paid formerly. If particular licences were raised, others were decreased. Finally, the result was that these licences were stabilized on the basis of the licences which obtained in the Cape.

Do you mean to say the whole of the licences are not more than they were before?

I say we have stabilized the licences on the basis of the Cape figures. Then we made the various adjustments. Some licences became less, others more. We gave the Cape the same figure as it had formerly.

The Transvaal is paying practically double.

If you consult the Inland Revenue Department, you will find that the Union is paying more in licences than it did before.

If you take these figures, then instead of an increase during the year of £270,000, you have a credit of about £5,000. The House must remember that all the provinces had deficits at that time, and as a result of this arrangement we avoided the taxation by these provinces to an extent of between £500,000 and a million. That is undoubtedly the position.

Yes, by putting on the licences.

The licences did not affect the position to that extent; it may have to a smaller extent in some of the provinces. Then we come to the next year. There is no dispute about this figure; I think the right hon. member accepts this figure with the exception of the employers’ tax in the Transvaal. What happened there was that it was agreed in Durban that that tax had to go. Before legislation was introduced into the House, for political or other reasons I was informed that the province would prefer to keep the tax. I said—

Before the Bill was actually passed they changed their mind, and we then provided they would only get the tax for that year, and I reduced the subsidy for that year; but next year the tax was repealed, and I increased their subsidy. So hon. members will see that we are entitled to take credit for that. We come to this year, £215,000, and that figure is not disputed. If hon. members accept this basis, the only point in dispute will be the question of the licences. You get a total figure of £1,095,000. I think I can reasonably claim you should add to that £128,000 which we are now transferring from loan account to revenue. That has been the practice in the past under the previous Government, in the case of expenditure of this nature on buildings which are credited to loan account and which, under this new departure, are transferred from loan account.

It is not a remission.

No. But for the purpose of my argument it decreases my ability to reduce taxation to that extent. That means we get a figure of £1,223,000, surrenders of revenue which have taken place during the three years. I do not think hon. members are entitled to say we have done nothing. I think we have not done badly at all. If the revenues continue to come in, if we do not have a slump or depression in the country, then it may be possible we shall be able to do more next year, unless, of course, the House decides not to honour its undertaking to face this question of old age pensions. I need not go into that question. Hon. members know that my predecessor dealt with the matter, and he definitely, on behalf of the previous Government, undertook that that question had to be faced. We have taken certain steps, also as the result of motions passed by this House instructing the Government to take action. The matter is being investigated by a commission, and we shall have that report during the recess, and I think we shall have in the near future to face the establishment of a reasonable scheme for our aged and infirm poor. That, of course, is something which I considered even when I framed the estimates for this year; that is a prospective liability upon the central Government which I shall have to shoulder. Accordingly, if we decide to honour our obligations in that respect, then it is doubtful whether even next year we shall be able to have that spectacular reduction in taxation which the right hon. member for Standerton (Gen. Smuts) is clamouring for. I just wish to deal shortly with the position of the reduction which has taken place in our unproductive debt. Here again let me say that I was disappointed to see the attitude which our hon. friends opposite adopted. Here again, certainly as far as I was concerned, I had no intention of trotting this out as a particular financial virtue or a wonderful achievement of the Government. I was very glad that I was able to give to the House and the country this improvement, this wonderful improvement which has taken place in this connection during a short period of three years. I did that with an object. We have from time to time, as a developing country going in for productive loan expenditure, we have to look to other countries for our loan requirements, and we are very glad if we are able to show the world how sound our position really is, and what we have been able to achieve during that period of three years, not as the result of a wonderful financial achievement of this Government, but as the result of the really healthy state of the finances and resources of this country. I did not hide anything. I explained very fully in my budget statement how this reduction was achieved. I did not claim it as a debt paid off by this Government, as the right hon. member wanted to make out. The position is simply this, that, according to this basis—hon. members may disagree with the basis, but I think it is a fair basis to arrive at the exact position—according to this basis, that is, where the interest which we pay on our debt is recovered from the objects of expenditure or whether the whole or a portion of that has to be raised by taxation, if we adopt that basis, then we arrive at the following position.

Which head do you put loans to the provinces under?

I am taking it that the provinces are paying interest; they are, and we hope they will continue to do so. We find that first there was the deficit on the revenue account at the 31st March, 1924, and forming portion of the existing debt was extinguished by the surplus for 1924-’25, and the portion of the custodian surplus. That was £2,000,000. Then we get the debt extinguished out of the revenue surplus of 1925-’26 sinking fund and custodian surplus, £2,700,000. Then there were mining leases, land sales, etc., and we get a surplus revenue for this year, and that gives you a total of £11,000,000. Then you get expenditure reaching the interest-bearing stage after being unproductive in the initial stages, for instance, the expenditure in connection with the Electricity Commission. When the previous calculation was made, they had not started to pay interest, and interest did not come into account that year. They are now paying their interest, and consequently this expenditure became productive. Then you get the saving of interest in connection with the conversion of the £9,000,000 loan not long ago. The figures I have given give another £3,000,000, and that makes £14,000,000. A word in regard to this custodian surplus. I regret to find that attempts are repeatedly being made to mix up what I might call a windfall with the general finances of the country, because they really have nothing to do with ordinary revenue. The right hon. member made an attempt, and other members said—

Of course, hon. members know that not a penny of that surplus went into general revenue for the purpose of general revenue surpluses. A portion was used for the extinction of the revenue deficit which I found when I took office, and that is my one regret, that it was necessary to appropriate a portion of that amount for what was really not expenditure of a capital nature, which would be a lasting asset to this country, The right hon. gentleman has said I have gone about distributing largesse to my friends in the country. Was he quite fair in that? He knows what was done by the proceeds of these funds. A portion was used for roads, another for land settlement, and the full balance went in the reduction of debt. The hon. member for Bezuidenhout (Mr. Blackwell) said I had frittered away this nest-egg. I think that that is very unfair, and attempts have been made to twit us with gaily using this money for the service of this country, so that we have taken up a different position from formerly. Hon. members know quite well that we at that time did not join in the general hue and cry that we should pursue a policy of frightfulness in regard to our late enemies, and it is to the lasting credit of this country that the Government at the time, and with the consent of our representatives, adopted a more generous attitude to our late enemies than the rest of the world did. As far as this surplus is concerned, we have restored to late enemy subjects all their property, and the only money we have taken is the profits in excess of a certain amount on investments which they had while the two countries were at war. No exception can be taken to the manner in which we appropriated the money; therefore I have no hesitation in appropriating the balance I find available in the manner I have done, in the interests of South Africa. We must be glad that the position is not as bad as some hon. members have tried to make out with regard to the position of the country. I think the position is very much sounder to-day than it has ever been. I have been criticized in connection with the disposal of the surplus, and criticized from my own side, but I have not carried out a policy which would bring me cheap popularity. My object has been to put and to maintain the finances in a sound position, and thereby to inspire confidence and strengthen the credit position of the country. I claim that during the three years many unsatisfactory features of the public finances were eliminated. We have returned to the practice of balanced budgets, and we retain that. We have made more satisfactory provision for debt redemption, and we are meeting our liabilities with regard to our pension funds. We have definitely abandoned the practice which existed of appropriating moneys destined for loan purposes for revenue purposes. I can only say that nobody subscribes more fully than I do to the sound maxim of living within our means, of living without extravagance, and reducing taxation if possible. But we must take into account the realities of the situation. We have arrived at a stage where a check has been placed on progressive expenditure. The country is developing, and it is becoming more prosperous. We have raised more taxation, but we have not raised the incidence of taxation. We have done away with a number of nuisance taxes—taxes which annoy the public, and which do not bring in much money, and we have contracted the field of taxation. It is only as the result of the general prosperity of the country that taxation has yielded more than it did formerly. Taking into account the necessity of development in a young and undeveloped country, I think our people can be considered fortunate that the financial position of the country is so sound to-day If the burden is compared with that of other countries, taxation is not heavy. Every one of us would like to see that burden reduced, but it is not right to say that we are carrying heavier burdens than other countries are doing.

I think we are carrying a very heavy burden.

I do not want to deal with some of the other and interesting points that have been raised at this stage, and I think it will be better to deal with these matters of policy in regard to the different votes of Ministers. Just a word in regard to the differences in the subsidies payable to certain provinces which has been raised by certain hon. members. Here again I very much regret that this question is being raised in the manner in which it is being done. Hon. members know very well that we adopted this basis as a result of the careful investigation made by two commissions which had been appointed by the previous Government. The whole thing is based on the generally accepted principle of local allowances payable in certain centres—that the cost of living is more in certain centres than in others. The commission laid down that there should be a different basis for different provinces, and the whole thing was laid down on these lines. Now, after three years, when an election is on, we have this trotted out again. The right hon. member for Standerton (Gen. Smuts) does not subscribe to that, and I do not think that the hon. member for Cape Town (Central) (Mr. Jagger) does, but it is regrettable that a certain section of the party opposite have brought this forward again. This is one of the greatest pieces of political hypocrisy and humbug that we have had for a long time—to make this the object of attack when hon. members know the history of this already. I do not agree with the hon. member for Cape Town (Hanover Street) (Mr. Alexander) on this point. He did not raise this question three years ago, I think, when it was adopted in the House, but if the hon. member is right, he would have to advocate the sweeping away of the present basis which exists in regard to allowances paid to public servants, because the whole tiling is based on that. I have been criticized by hon. members in various parts of the House, and especially hon. members on the cross benches, as to the disposal of the surplus; but on reflection, hon. members will agree that this is the soundest course we have adopted. Although we have provided in future that revenue surpluses need not necessarily be applied to debt redemption, and may be carried forward, I think it would be a mistake if we should do so and complicate the accounts of subsequent years by surpluses which have been obtained in previous years. I hope that it will be possible for me and my successors in future, in certain cases to continue to apply surpluses in this way, and that was contemplated when we passed the Act last year. Although in the past applying surpluses to debt redemption was much neglected, and we hope to apply surpluses in the future to debt redemption, at least the surpluses should be carried forward to capital, and not revenue, purposes. There may be a heavy importation of goods and heavy customs receipts one year, and they only come into consumption during the next year, and would be legitimate revenue. But as to general revenue, I hope this sound course will be adopted, to strengthen our credit position by the application of revenue surpluses in this manner. I have been asked to raise the income tax abatement by several hon. members—the abatement in regard to children. As I pointed out last year, our abatements are very generous. With the £400 abatement and the abatement for children, in the case of a man with three children it gives a total exemption of £600. We eliminated several thousands of income tax payers, and I do not think we can reasonably be asked to go further at present. We have a comparatively small white population, and we can raise the revenues we do only if we distribute that burden. If we adopt the policy of steepening that tax in the upper circles and tax the richer people out of existence, you would not raise the revenue you require unless you spread it over the people. Also here, again, if we intend to shoulder that old age pension scheme, of course it becomes more impossible to consider any suggestion of this nature. I think I shall not keep the House any longer. In a debate like this it is impossible to deal with all the questions that have been raised, and I hope, after my hon. friend (the Minister of Railways and Harbours) has dealt with the railway position, the House will agree to this motion, and not support the amendment which has been moved by the right hon. the member for Standerton (Gen. Smuts).

I don’t propose dealing with all the points which have been raised by individual members in the course of the debate, for if I were to do that I should have to keep the House a very long time. I agree with my colleague that it is far better that points of local interest only should be dealt with in committee on the estimates. I desire to deal with a few outstanding points of general criticism which have been raised by hon. members opposite. I first wish to say a few words regarding the preparation of branch line statistics. The criticism has been fairly general that by abolishing the publication of these statistics the Government is taking a wrong step and is keeping information from the country. The saving effected through the non-publication is, according to the officers best able to judge, £11,000, which is not an inconsiderable figure. The basis we have adopted is purely an arbitrary one. We credit 10 per cent. of the earnings on the main line to the branch line, both on incoming and outgoing traffic. In Australia and India the credit is 40 per cent. and I am told that in New Zealand the whole of the traffic is credited to the branch lines on which it originates. After all, what would be the actual value to the country of these statistics. I repeat that if any hon. member desires particulars regarding any branch line I am always willing to give it. We have the returns, but we don’t employ the necessary clerks to take out the statistics unless they are particularly asked for. There is, however, no desire to keep any figures from the House. The hon. member for Yeoville (Mr. Duncan) has advocated the preparation of statistics regarding ton mileage. I have investigated the matter and find that the preparation of these statistics will cost at least £18,000.

It is well worth it.

I am rather doubtful whether results would justify that expenditure. The right hon. member for Standerton (Gen. Smuts) has dealt with the question of the export coal rates. I agree that the export of coal is a matter of very great importance, but evidently the right hon. gentleman has not studied the question. Our export coal rate is only 8d. per ton higher than it was pre-war and the whole position with regard to export coal is dominated by the freight question to the eastern market. A reduction of 8d. would not assist the exporters of coal for there would have to be a far greater reduction if there is to be any benefit. The shipping freights are the dominating freights, and they have gone up. I hope that is only temporary, for our coal exporters are experiencing great difficulty in retaining their markets. They have to compete with Australian, Welsh and Japanese coal. Well, I am prepared to take every necessary step to assist the coal exporters but the reduction of 8d. would mean the surrender of revenue we badly want, and would not assist the position. I have indicated to the collieries that if they are prepared to make a reduction in the pit’s mouth price of coal I am prepared to consider the matter. The hon. member for Umvoti (Mr. Deane), perhaps in order to support his leader, made certain complaints regarding the working of the grain elevators. The hon. member, although he promised to hand me the papers, has not done so. He told the House that the complaints were made about the middle of March, but so far neither the department nor I have received any particulars. He said the conditions were a disgrace as far as the elevators were concerned. Last year we handled 700,000 bags of maize and received only five complaints from Natal, in regard to maize delivered against No. 2 certificates and of these complaints four were found to be groundless. In one instance a mistake had been made which was immediately rectified. On the other hand I have received two totally unsolicited testimonials to the grain elevator system. On April 8 Messrs. Frenkel and Co. telegraphed—

I have had the following telegram from the managing director of the Vereeniging Milling Company—

I can only repeat why does not the hon. member bring the complaints to which he refers to the notice of the department. Why cry stinking fish over the elevator system? I do not say that system is perfect and that mistakes do not sometimes happen, but I do say that the system is efficient and is a credit to the officers controlling it. Therefore, a statement of the kind made by the hon. member for Umvoti was unjustified and should never have been made. The hon. member for Cape Town (Harbour) (Maj. G. B. van Zyl) has dealt with the question of railway rates, and has quoted certain figures from New South Wales and Victoria. Let me remind him of the record of the South African party with regard to this question of rates. It is not a pleasant record. During the years 1910 to 1913 when the railways were under the guidance of the late Mr. Sauer—one of the best, if not the best, Minister of Railways we have ever had—the decreases were £465,000, £121,500 and £750,000. On the other hand during 1916-’1917—

The war period.

I know it is the war period, but I shall also deal with the period after the war. The increases were: 1916-’17, £526,200; 1917-’18, £320,000; 1918-’19, £2,047,800.

Prices were rising then.

The inflation period.

The increases in 1919-’20 were £1,772,000. Now we come to the peak. In 1920-’21 railway rates were increased by £4,654,000.

Highway robbery!

In that year there was a compensating reduction of a million. In 1921-’22 the rates were reduced by £1,328,750, in 1922-’1923 by £819,598, in 1923-’24 by £280,000 and during the first period of 1924 the rates were reduced under my predecessor by £487,400.

We made nothing but decreases after 1921.

There was £1,000,000 decrease in 1920-’21. During the latter portion of 1924-’25 there was a decrease of £560,517; in 1925 ’26 the decrease was £534,611 and in 1926-’27 a decrease of £25,326. With such a record I must say is surprising to hear members opposite dealing with the question of the increase of rates.

You don’t believe it.

The country believed it and turned you out. I now come to the allegations of the hon. member for Cape Town (Harbour) (Maj. G. B. van Zyl) with regard to New South Wales and Victoria. I do not know where he got his information from, but the information is inaccurate and misleading.

I got the information from their own year books.

There has been an increase in Great Britain. The hon. member for Standerton (Gen. Smuts) forgot to tell the country that Great Britain, efficiently managed, under private enterprise, increased their rate 7½ per cent. on goods.

What has that got to do with us?

It shows that both companies and Governments have found it necessary to increase their rates, and that is probably what has happened in New South Wales and Victoria. The South African railway tariff provides for the issue of excursion tickets at single fare for the return journey. In New South Wales and Victoria the return fares are double the single fare and excursion fares exceed the single fare. New South Wales’ fares, quoted by the hon. member for Cape Town (Harbour), have been increased to a level above those of South African railway fares, and advantages are enjoyed by the South African public by reason of the cheap excursion tickets both ways. I want to give first the single fares in Victoria compared with South Africa. 50 miles: Victoria, 9s. 9d.; South Africa, 9s. 6d. 100 miles; Victoria, 18s. 11d.; South Africa, 19s. 150 miles: Victoria, £1 8s.; South Africa, £1 8s 200 miles: Victoria, £1 17s. 9d.; South Africa, £1 17s. 250 miles: Victoria, £2 7s. 2d.; South Africa, £2 6s. 300 miles: Victoria, £2 12s. 9d.; South Africa, £2 15s. 350 miles: Victoria, £2 18s. 5d.; South Africa, £3 3s. 3d.

You are giving the same figures as I gave, and you say I am wrong.

Where is the case of my hon. friend, then?

That our fares are higher than theirs.

Take the Victoria railways, 1st class, excursion. 50 miles: Victoria, 16s. 3d. South Africa, 9s. 6d. 100 miles: Victoria, £1 11s. 9d.; South Africa, 19s. 150 miles: Victoria, £2 6s. 11d.; South Africa, £1 8s 200 miles: Victoria, £3 3s. 2d.; South Africa, £1 17s. 250 miles; Victoria, £3 18s. 9d.; South Africa, £2 6s. 300 miles: Victoria, £4 8s. 3d. South Africa, £2 15s. 350 miles: Victoria’ £4 17s. 4d.; South Africa, £3 3s. 3d.

Have you not recently raised the rates for the circular tour?

Yes, we have made certain adjustments.

That is going to be a favourite word now.

Does the hon. member think we are going to get increased revenue from it? We have made adjustments to bring the whole thing into line, and the expected revenue is not considerable. The single fares, in some cases, are slightly lower in New South Wales than here, but the return fares in South Africa are lower than in New South Wales. The advantage, therefore, in favour of the South African Railways is obvious. Why did not the hon. member give those figures?

I was replying to you, and I stuck to the point. You go off it.

When the hon. member cries “stinking fish” about our State railways the country is entitled to know the whole story. He said the tariff on meat in New South Wales was lower, but he forgets the essential factor that their quotations are for full truck loads only, and ours are for all quantities. That is the essential difference.

Where, in your tariff list, do you make any reduction for a full truck load?

We don’t. That is not the whole story. The hon. member gave inaccurately the rates for meat. For distances of 500 miles it is not £4 13s. 4d., as quoted by the hon. member, but £4 3s. 4d. per ton.

That is for export.

Yes, that is the figure you dealt with.

I gave the other figure for local consumption. What is that?

I have not got that figure.

That is conveniently left out.

He dealt with the export figure, and I am correcting that.

You are beat.

I come now to the deficit dealt with by the right hon. member for Standerton, who, I see, has disappeared from the House, because, probably, he suspects that I am going to deal with some of his mis-statements. I have to deal with the remarks of the hon. member for Standerton, speaking for the whole of his party as he does. The hon. member has referred to the expected deficit of £146,424, and, in his recklessness, in the desire to score a point, justly or not, he made a statement that I was budgeting for another deficit next year. It is a point of small importance, because time will show, but it does show the recklessness of the hon. member when he makes such statements without investigation. The fact is just the opposite. The hon. member forgets I have carried forward £21,844 from last year, and that reduces the estimated deficit to £124,580. He also forgets, conveniently, that last year out of the profit I put aside £450,000 for the rates equalization fund, a nest-egg which will allow us to deal with the position satisfactorily.

That does not make any difference. The deficit is on the working last year.

Does the hon. member for Cape Town (Central) (Mr. Jagger) share his leader’s views about the deficit?

I do

Then let me remind him of their record in this regard. I give 1915-’16 again, because, although a war period, there was a profit of £1,357,357. Now take the period after 1915-’16, under the South African party Government, which is so alarmed at the deficit of £146,424 in an expenditure of £28,000,000: 1916-’17, £9,593; 1917-’18, £931,266; 1918-’19, £987,667; 1919-’20, £598,897; 1920-’21, £1,049,690.

That was an abnormal year.

When the hon. member for Cape Town (Central) referred to them they Were boom years, and he was right, because in 1920-’21 we had a revenue of £27,298,873 and, notwithstanding that there was a deficit of £1,049,690. The next year £1,590,491; 1922-’23 £31,137; and then there was a surplus the next year. In 1923-’24, £1,450,267, and 1024-’25, a surplus of £765,059; 1925-’26 a surplus of £769,691. The position, therefore, is that in regard to deficits the record of the South African party is a bad one, and, included in those years, were boom years.

There were booms in wages as well as traffic.

Who was responsible for adopting the 8-hour day on the railways without consideration of the necessities of the public?

And why have you gone back to it?

Those are the gentlemen who tell the country they are the only people who can run the railways. At any rate, they take that credit, but the public does not think so. Then the hon. member for Standerton said that—

That is no proof. The hon. member will have to search further into the records before asking the country to believe that just because in one particular year there is a deficit of £146,424 that the railways are badly run. I want now to deal with the statement of the hon. member for Cape Town (Central) that the expenditure has increased during my regime by £1,410,000. When he made that statement he overlooked the fact that that was the increase on the three services, harbours and steamships included. The figure for the railways is £1,350,767, and he forgets that during those years there has been a decrease in rates of £1,250,000. So that is set off. I could very easily have maintained the revenue if I had not reduced the rates. When the hon. member speaks of an increase of £1,350,767 he forgets this decrease in the rates. Of course, he conveniently forgets it. He also gives a further figure which I want this House to consider. Since 1923-’24, he states, the increase of revenue has been 17¾ per cent., while the expenditure has increased by 25 per cent. Let us look at the facts. Railway revenue during this period has increased by £4,056,349, but to that must be added, if the hon. member wants to get the true per cent., the reduction in rates of £1,250,000. You then have a figure of £5,306,349. The expenditure has increased by £5,407,116, but the hon. member forgets that the expenditure includes two items, the first being provision for renewals. Surely there are very few members in this House, even on the other side, who would agree to the proposal to take 7 per cent. of the revenue towards renewals

If it comes to that, you should contribute more to renewals now than you are doing.

The hon. member must appreciate that that is not the basis on which you should build up your renewals fund.

That is a matter of opinion.

You may have a good year and your revenue may be good, and you may make a big contribution to renewals fund, or you may have a bad year, and your revenue may be down and you may make a small contribution. My hon. friend may say that he was pressed owing to circumstances to adopt other ideas, but I think he will be the first to admit that the only sound basis is to take the life of the asset.

You cannot do it.

That is going to be done, I think. I am awaiting the report of the departmental committee and I hope we shall be able to do it. The hon. member forgets that included in that figure is the extra provision which we had to make for renewals, £238,375 additional contribution to the renewals fund. My predecessor adopted a basis which was purely arbitrary, namely, 7 per cent. of the revenue in a particular year. For purposes of comparison the fact remains that we made this additional contribution up to £238,375 to the renewals fund and there is another fact that must not be lost sight of and that is that we made a contribution of £163,789 as increased provision towards the deficiency in the railway pension fund. If hon. members take these figures they will see that our expenditure is reduced by £402,165 and you get an expenditure of £5,004,961, which is equal to an increase in expenditure of 23 per cent. while the revenue has increased by 23.2 per cent. I put it to the hon. member for Cape Town (Central) (Mr. Jagger), is it fair to say that our revenue has increased by 17¾ per cent. and our expenditure by 25 per cent.? Was it not his duty to inform the country and the House that we have made this provision which he did not make and that changes the whole aspect of the matter? There has been some reference to the cost of running these railways. I have had the figures taken out from the year book available. I will give the House the basis on which the figures have been taken out. The operating cost per cent. of revenue in Tasmania is, I find, 92.4.

That is nothing to go by, a small island like that.

In New South Wales the percentage is 73.2; Victoria, 77.1; Queensland, 86.8; Western Australia, 75.2; South Australia, 73.2; New Zealand, 74.6; while the figure for the South African railways is 71.3.

Where did you get that from?

I got it from the report on the South African railways. I have got it from my department.

It is on a different basis from the general manager’s report then—77.4.

The hon. member knows perfectly well what items I indicated and what deductions I make. I now come to the right hon. the member for Standerton (Gen. Smuts) in regard to his claim that we have had a growth of expenditure which is extraordinary and alarming. He said that when I spoke of the saving of 1.1d. it is childish. His words were—

Very slim, I must say. Then he goes on—

Does the hon. member appreciate what a saving of 1.1d. per train mile means? Does he not grasp the first principles of railway management? We are running 44 million train miles. I will test it from the actual figures whether it is a “childish argument” on my part to say that we have saved 1.1d. per train mile. We are running 44 million train miles. Does the right hon. member know that a saving of 1.1d. per train mile on that means a saving of £200,000 per annum?

Yet you have a deficit.

And so had the South African party Government with much bigger figures. That proves nothing. The hon. member (Mr. Jagger) wants to draw a red herring across the trail in regard to this particular point. The fact is that a saving such as we have effected redounds to the credit of our officers, and I paytribute to the general manager and the officers and men who have been able to effect this. With all the talk about inefficiency, about which I shall say a word later on, here is the proof positive that our railways at the present time are being run economically. But the right hon. gentleman, in his anxiety to blacken this Government, paid no attention to a very material fact that I disclosed to the House. I said to the House in my budget statement that, as a result of the fact that the tractor force of our locomotives has increased enormously during this period, the train loads have increased, which means that you are running fewer train miles and, consequently, if you had the tractor force which operated under my hon. friend, our saving would be very much more. Surely that is clear to him.

If you are running fewer train miles, surely you need fewer servants.

I am now referring to the cost. I say that if the tractive force of our locomotives had remained the same as it was under my predecessor, we would have saved 4.6d. per train mile. I do not pretend for a single moment that I have ascertained these figures for myself. There are officials there for that purpose, and they are quite capable of doing it.

When you arrived at 71 and the general manager at 77 there is something wrong.

I have dealt with that. I know the hon. member will never accept anything from this side of the House, and that is why, because he would not accept the figures of his officials, he made such a ghastly mess of running the railways.

You said exactly the opposite. You are making a mess of it now, because you are running away from his policy.

I am glad the hon. member for Rondebosch (Mr. Close) is just beginning to see light, because, judging by his speech, he was very much in the dark. If the tractive force had remained the same, we would have saved £800,000. I now come to the right hon. the member for Standerton (Gen. Smuts) with regard to our running expenses. He made a statement last year, and he repeated it this year, that I have frittered away the position achieved by my predecessor; that there was a surplus in 1923-’24 of £1,450,267, and now I am frittering it away. These are his words—

Let me put it to him and ask him whether he considers the following to be “frittering away.” Does he consider the reduction of rates by a million and a quarter as—

He does not, because he presses for a further reduction. Does he consider that my making contributions to the renewals fund, building up reserves, is “frittering away”? A contribution of close on £200,000 to the deficiency in the pension fund—is that “frittering away”? In 1919, when the valuation took place, did the previous Government face it? Oh dear, no, they did not; they ran away from it. But now this Government is dealing with it, we are frittering away the surplus.

You have had better times.

In 1921 there was a revenue of £27 298,873, and you talk about bad times. It is absurd. Let me go further. We have increased the benefits to the staff under the Pensions Act; it is costing £237,000. Is that frittering away the surplus? We have increased the benefits of the hours of duty Ito the extent of £240,000. Not as done by the previous Government, holus bolus, without any consideration for the interests of the public. Last year there was silence all the time. We never had a word from the Opposition. I put it finally whether making a contribution from revenue of a quarter of a million of non-interest bearing capital, saving it up for the people, is frittering it away.” If not, what becomes of the allegations, the reckless statements of the right hon. member? Here you have close on £2,500,000, and no-one has a word to say about any item. Yet he comes and makes loose, irresponsible, reckless statements, and I can only say this to him—that the country has found him out, and the railwaymen have found him out. I want to repeat what my colleague said to-day. Here are all these items specified in the estimates. He will have an opportunity in committee of challenging these items. Will he accept that challenge?

What is the good of a cheap challenge of that kind? It is very cheap.

This is the second occasion this afternoon upon which the hon. member has used the word “cheap” with regard to statements made on this side. I am not surprised. After he has listened to the speech of his leader and thought of his own speech, he must think they are cheap. I am glad my hon. friends have something to please them. I know these facts will not please them. I come to a further statement by the right hon. the member for Standerton. There are four charges he has made. I will give them summarized: Inefficiency and slackness, political considerations introduced and men harried and transferred because of their political opinions, no consideration to efficiency and, fourthly, ministerial correspondence with men low down in the service. I say this, and I say it deliberately, that if these statements cannot be substantiated, they are disgraceful. If these statements can be substantiated, they amount to a most serious indictment of this Government’s policy. I admit that at once. But I say also that if they cannot be substantiated, they are disgraceful, and the right hon. member should be ashamed of using them.

Do you mean to deny there has been correspondence?

The hon. member asks me whether I deny it. I am going to deal with each one of these statements. The hon. member knows I have never run away from criticism from that side of the House. The right hon. member for Standerton, when he made that statement about a week ago, must have realized that such a statement, made by him in his responsible position, must cause the very gravest feeling in the minds of the public. I am not referring for the moment to the very serious reflection on the members of the staff; I will deal with that at a later stage. I want to stress this. Does he think that with the South African public owning these railways he should make statements of this kind unless he is prepared to challenge the policy of the Government on that point?

He has done so.

Has he given any evidence? We have had about three months of the session. Has any single question been addressed to me with regard to the transfer of any individual on political grounds? I make bold to say he will admit that during the three years of my administration I have never been influenced by political considerations in dealing with the staff.

Oh!

I will make that statement. Hon. members are evidently in possession of circulars issued by the department. The hon. member for Uitenhage (Mr. Bates) did not scruple to produce a circular issued by the general manager. If these men are harried, transferred for political considerations, it must be known to the country. Let them give an individual case. They have endeavoured to nose it out, and have not succeeded.

Last year I gave you five cases, and I have not heard of them since.

Five cases where men were transferred because of their political views?

I suggested it, and you were going to look into it.

The hon. member for Cape Town (Harbour) (Maj. G. B. van Zyl) is an expert at suggestion and innuendo, but he fails hopelessly when it comes to facts. Let me deal with the last point first.

What about “Dear Charlie”?

I denied that, and I deny it again. I found the whole system seething with discontent when I took office. I found that the channels of appeal had been blocked up, and I make bold to say that they are open to-day; certainly, thanks to this Government. I never said, and I do not say now, that correspondence does not come forward from the men in contravention of the regulations. The statement made by the right hon. gentleman is—

The right hon. member is reported to have said—

and I am reported to have said—

I deny it.

You did.

The right hon. gentleman wanted to take advantage of the inaccuracy of this report.

I heard you say it.

Does anybody suggest that a Minister will not get letters from members of the staff? But I did deny, and I do deny, that I ever conducted correspondence with men higher up or lower down in the service with regard to their grievances. The impression of the men was that they were in the habit of writing to the Minister. These letters were referred to the general manager, and he was asked to deal with them; but when the hon. member makes statements that there was ministerial correspondence, he is making a statement which is not correct. I now come to the statement—

Surely it is easy for the right hon. gentleman to give me a single instance, but he will not.

You want more smelling out.

Is this the reply, I ask the House, to a serious allegation, that the Railway Administration is being conducted on political grounds? The hon. member ought to be ashamed of himself making a statement of this sort, unless he is prepared to substantiate it. I say it is not correct. He made the further statement that political considerations are introduced, and he has not given any proof. I now come to the grand attack—

I ask the right hon. member to give me an instance. I said in my budget statement that there are cases of bad work and delays. It would be foolish not to admit it; but to talk about general inefficiency and slackness—the country is entitled to ask the right hon. gentleman, in the responsible position he occupies, to give cases and to give instances. There are in the railway service cases of inefficiency and a certain amount of slackness.

And the number is increasing.

I shall deal with it. In a big service like ours, with 95,000 men of all sorts and colours, it is impossible that you will not have a certain amount of inefficiency. I have admitted it, and dealt with it. I do not expect any assistance from them, especially after the disclosure of the hon. member for Uitenhage (Mr. Bates), but I warn hon. members that slackness and inefficiency will not be lightly dealt with by the Government. If they can bring forward circulars, and slackness and inefficiency must be dealt with, their press comes out with it as—

Steps have been taken, and will be continued to be taken to deal with it.

As the result of the criticism of this side.

I dealt with the subject many years ago. The hon. member forgets that there was a railway board about 18 months ago, and Mr. Rissik and Mr. Orr, who had access to every document in the railway service. Do you actually suggest that men like Mr. Rissik and Mr. Orr would, under any circumstances, seeing the condition of affairs, not report it? I must say I am surprised that hon. members do not hide their heads in shame. Let us look at the tests. The first is the public. I challenge the right hon. member for Standerton—I am not referring to individual cases—to say whether the treatment the public receives is not better than under my predecessor. You can ask commercial travellers, visitors to this country, and farmers. As to the farmer, he is certainly getting fair play as regards his language, and he was not getting that previously. I challenge the right hon. member to go to the business people, and he will see it is so.

You had a complaint from Worcester the other day.

Does the hon. member seriously suggest that during his time trains were not late? Really, the hon. member, with his leader, are becoming childish. I now want to deal with another aspect. It is the relation of the Minister with staff organizations. Does the hon. member know what that relation is? It is of a very friendly nature.

Especially the Nurahs, to judge by the papers.

My hon. friend, in his quarrel with the “Nurahs,” did no good to the country. I am not prepared to accept what is placed before me by the staff organization without very careful inquiry, and that applies to “Nurahs” and every organization, but the test remains largely our relations with the several organizations, and they are good. That does not mean I have done everything they have asked me to do, but I say our relations are good. In his anxiety to criticize, the hon. member for Cape Town (Harbour) goes one step further, and says—

This is serious—this is a sign, he said, of panic. I have been told by a little bird that the hon. member for Cape Town (Harbour) (Maj. G. B. van Zyl) is most anxiously qualifying to be my successor. Let me tell him that first he should get down to some simple facts. Does he know that there are periods of seasonal rush, and during these periods we take on a very large number of men, and instructions are then issued not to replace wastage until such time as the staff is once again down to normal strength? This big grievance of the hon. member is too ridiculous for words. Does he not appreciate that there was a summer season, and that as a result a large number of men came into the service, and that in February, when the season was over, they were taken off?

Is that the only reason for the circular?

Certainly. This is quite a normal thing in the railway service, and to make a grievance of it seems to be missing the whole point in regard to railway organization.

Has that circular been laid on the Table?

I laid on the Table the circular referred to by the hon. member for Uitenhage (Mr. Bates), but when I did so hon. members opposite never said a word. They have made loose statements, reckless statements, statements they are not prepared to maintain.

Do you say the statements I made were loose?

I said, with regard to these statements of yours, it showed ignorance.

It is your own circular.

I will now deal with the criticisms of the hon. member for Cape Town (Harbour) regarding the organization and development committee. I took the House into my confidence last year when I said that we were not satisfied that we were getting efficiency from a very large number of civilized labourers we had taken into the service. As a result of that conviction, this committee of senior officers was appointed. Now he complains that the terms of reference were suggested to the committee by myself. Does he suggest that I should allow these senior officers to dictate a policy to the Government? All we asked them to do was to deal with the facts as they found them, and to report on the requirements necessary in order to amend the system.

Why did you not publish that document?

Because I did not want to waste money.

That is too lame altogether. Let the public know what you are doing.

Hon. members Have seen the document. I am not prepared to publish a document of that sort, but I am prepared to publish the findings and what we are doing as a result of those findings. I have nothing to hide, because I put the document on the Table. With regard to these proposals, I want to deal with the suggestion that these officers were, in a way, dictated to as to what they should report. These officers gave me a preliminary report giving the Lad scheme regarding the admission of youths to the service. I felt that unless we could carry the members of the staff with us we should be in for trouble, and I then referred these preliminary proposals to the Conciliation Board, which I asked to deal with the matter. They did so, but unfortunately they came to the conclusion that these proposals were so unacceptable that they were not even prepared to accept any part of them. When that happened, the organization and development committee went into the matter further, subsequently sending in a further report. I also asked the department to give assistance in evolving an acceptable scheme. When the official report of the organization and development committee was received, I again referred it to the Conciliation Board, for I felt that we must have the staff with us. I am glad to say that, as a result of the work of the Conciliation Board in consultation with these three senior officers, we have evolved a scheme which is now brought into operation.

Is that what was laid on the Table?

Yes.

That should be published. It is a very important document.

I agree that the final result and the scheme should be published, and it will be done. Whatever the defects of the old system may have been—and I am the first to admit that the old scheme had its defects— we are taking thousands of men into the service. Hon. members opposite have criticized the Government very severely for doing this, but I stand unabashed. Here we had thousands of men unemployed, and the Government said it was far better to take these men into the service as native wastage occurred, and then have a close, careful and scientific investigation, so as to place the whole matter on a sound basis. Now we have the agreement and the cordial co-operation of all grades of the staff and the whole matter thrashed out, we are on an absolutely sound basis. Hon. members have asked why the Government does not continue to publish the figures showing the extra cost of this system. We can bring in a far larger number of natives at a much lower wage into all grades of the service. In Portuguese East Africa natives occupy important positions of trust. It is quite conceivable that a Government might be so foolish as to bring in a large number of natives and allow them to proceed to various positions. Do hon. members not see we should then have to continue the system of accounting as to what the difference is between the employment of a white man as an engine driver or a native at a low wage? That is the principle. I admit that while the scheme was not on a sound basis, and we were still experimenting and investigating, it was right that Parliament should know what the scheme was costing. Now the scheme is on a sound basis, and we are getting full value for our money. Admission of young men is controlled properly, and promotion is controlled, and there is now no necessity to keep the cost separate.

You are not giving us the cost of last year.

The cost was disclosed in the estimates. I wish the hon. member would read the documents put before him. The thanks of the country are due to the three senior officers and those who co-operated with them in bringing in this valuable report. Our thanks are due to the Conciliation Board in finding the scheme which is operating at the present time and which will place the whole matter on a sound basis. Consider now how we have made provision for the youths of the country who were in many cases running the streets without employment. We admit them as probationers. If they are not satisfactory in the first period of 12 months, they are not taken into the service. If they show they are capable and give indications that they will make good railwaymen, we admit them to the learner grade, learner checkers,. learner cleaners, learner shunters, and, if they prove they are suitable, they are put on the graded staff, and in future we shall be training our young men to run the railway service. Apprentices are being taken, 50 per cent. by competitive examination and 50 per cent. from the workshops. Instead of a word of credit to the men who have given their time to evolving a scheme which the hon. member will admit has placed the matter on a sound basis, instead of a word of praise, not for the Government, but for the men who have co-operated with us, instead of that, what have we had? We have had platitudes. I will now deal with the right hon. member’s platitude—

The late General Botha and Mr. Sauer can take credit, but not the hon. gentleman. It was General Botha and Mr. Sauer who initiated the scheme in the Transvaal, and I am the apostle.

The hon. member for Standerton was in the Cabinet.

I shall deal with the sane and moderate policy of the Opposition, because at last the country has a declaration from the hon. member on behalf of his party. The people of Natal do not want this policy of wastage in regard to Indians. Every Indian who leaves the service on account of wastage is replaced with white labour, and what was the comment in the Natal press? They accused the Government of flooding Natal with “poor whites.”

And described them as white kaffirs.

The attitude they adopted was that of thinking they were interlopers. Let me say to the hon. member for Durban (Berea) (Mr. Henderson) that the Dutch fraternity has as much right to occupy positions in the Natal railway service as Englishmen have.

You are talking absolute non-sense.

The hon. member has not read his press. Here we had the Natal “Mercury” and the Natal “Advertiser” talking about the invasion of poor whites as if Natal was being flooded, and I watched the papers for a word of protest from the members representing Natal.

Does the hon. member say there was no protest?

I am glad the hon. member for Newcastle (Mr. Nel), who is of Dutch extraction, has felt that the action of the press in Natal against the Government policy is not justified. [Interjections and uproar.] This is on a par with S.A. party politics in the past. When you do justice to your own people, then it is racialism. It is so easy for hon. member’ to laugh and jeer, but let me tell the hon. member for Rondebosch (Mr. Close) he cannot appreciate it, that when there was this organized movement in Natal against my kith and kin, we felt very sore. I don’t know whether you do appreciate it. I do not know whether the leader of the Opposition, who is also of Dutch extraction, was also hurt by it. I hope he was.

Drop these theatricals; drop this fooling.

Yes, I know they are theatricals—

Cheap melodrama.

I want to draw the attention of the House to Standing Order 63. [Standing Order read.] I am not disposed to stop interruptions altogether, but I think the tendency is far too much to interrupt hon. members, and I hope it will stop.

On a point of order, the Minister has been continually addressing questions to this side of the House and my interruption was to reply. If I am not allowed to interrupt is the hon. Minister in order to address questions to this side of the House.

I was not referring when I spoke just now to the right hon. the member for Standerton, but he will certainly realize that it is quite impossible to carry on the debate as it should be when the Minister is continually being Interrupted with questions by a number of members. I think that tendency should be checked.

On another point of order, is the Minister in order in charging the Natal people with hostility—

I did not charge the people. I charged the press.

—with hostility to the Dutch-speaking people.

I do not think that is a point of order.

It is absolutely untrue.

I am glad to hear you draw attention to that particular rule, as no member of the House is more subjected to interruptions than I have been.

I am glad of this interlude, not only because it has given me a little rest, but it now gives me an opportunity as well of correcting a misstatement. I did not charge the people of Natal with an organized agitation, but I charged the Natal press, and I mentioned the names of the papers. I never mentioned the people of Natal. I am glad to say that there are many citizens in Natal, many voters in Natal, both English and Dutch-speaking, who do not countenance any organized agitation of that sort. Let us test out what—

of civilized labour is of the S.A. party. I refer to the years 1922-’23. I am now going to give the official figures disclosing the policy of the S.A. party while in power. I find that at the end of December, 1922, there were 4,756 European labourers in the service, and at the end of December, 1923, there were 4,390, a decrease in one year in European labourers of all classes—permanent, temporary, casual, piece-workers—of 366. Taking the position in regard to non-Europeans, I find that on December 31, 1922, there were 38,970 non-Europeans in the service. The corresponding figures for natives were 29,331. At the end of December, 1923, the corresponding figures are 44,699 non-Europeans, 33,082 natives, an increase, therefore, in the non-European staff of 5,729. Of course, that is—

of civilized labour, and the support given to it by the S.A. party. Well, it did not stop there, for my predecessor took further steps. He removed the European labourers from branch lines, and in order to make it most difficult for the man to follow his employment he broke down the dwelling houses. That was the sane and moderate execution of a civilized labour policy.

How many houses were broken down?

The hon. member will know, because he was very keen that his instructions were to be carried out, and they were carried out, as I find now when I have reversed that policy and the country has to pay for putting those houses up again.

Let us know how many were broken down.

I am prepared to give a return if my hon. friend will call for it.

All right, I call for it now.

Let us deal with the present policy. That was the past policy. That is how they understood when they were in power a “sane and moderate civilized labour policy.” What is their attitude towards the policy of this Government? I quote the right hon. gentleman (Gen. Smuts)—

May I ask does the right hon. gentleman prefer bodies of natives dotted all over the country to assist the S.A. party at election times? Can I help it if a man must work at Ladysmith, De Aar, Naauwpoort, or any other centres?

At election times.

Does the hon. member suggest that those men have been brought there at election times? Why doesn’t he give a figure, or make an allegation supported by facts? No—

of my hon. friend is to provide mobile forces of natives spread all over the country in order to vote for the South African party. I have never, on any occasion, interfered with the political opinions of these European labourers wherever they may be.

What about De Aar?

Certainly I have addressed them. I am glad that the hon. member again interrupted. I do not pretend, when I go out to address election meetings, to go there as Minister. When I travel as a politician in order to assist party candidates, I travel at my own expense, privately. Can hon. members opposite say that when they were in the Government?

Yes.

When I visit De Aar in the interests of a candidate, I travel privately, and I pay my own expenses. When I go as a Minister to De Aar, I go in my official capacity, and party politics are barred. I challenge hon. members to give me a single instance where I have visited a railway centre as a Minister, and introduced party politics.

Do you have a ministerial coach with you?

I certainly do not when I go on private business. Does the hon. member suggest that when I went to De Aar I went in a ministerial coach? The hon. member for Port Elizabeth (South) (Sir William Macintosh) went a step farther and he described civilized labour as another name for civilized loafing.

made an interjection.

Does the hon. member for Ron aebosch (Mr. Close) deny that? Will he refer Hansard? Not only did the hon. member for Port Elizabeth (South) say this, but the hon. member for Cape Town (Central) (Mr. Jagger) endorsed it.

You have only to go along the line to Wynberg.

I am glad that my hon. friend is always candid. He admits. Civilized labour, according to the supporters of my hon. friend there, is civilized loafing.

No.

Have we two voices? Must we accept the hon. member for Cape Town (Central), who now admits that he did say so, “civilized loafing.”

I did not say so.

Let me read to him from my notes what he did say—

He did not say that.

That is as he was reported. I know the right hon. member will try to get out of this—

It is perfectly true.

Now the right hon. member denies that this was said, and his colleague admits he did say so.

He was discussing a special case.

I will leave the two hon. members to fight this out between themselves, but the right hon. member for Standerton will pardon me if I prefer the word of the hon. member for Cape Town (Central). I say this quite frankly.

What are you quoting from?

I am quoting from an excellent authority.

To a point of order I refer the Minister to Section 662, sub-section (1) of the standing rules ’and orders “reports of speeches made,” and I would like an answer to my question.

My authority for making this statement is an excellent one.

Why don’t you say what it is?

Does the hon. member think he is going to dictate to me what I say in this House? No, when hon. members opposite carried out this policy, what they lost sight of was that they treated this as relief work. That is the cardinal mistake they made, and it is only now that it has been placed on a sound, scientific basis that they fail to appreciate the change that has come, and they are crying out against a policy which is in the interests of the public. These men are doing an honest day’s work. These men—I honour them. I do not say this for any ulterior reason. Many of these men were owners of farms all over the Union. Drought and distress and other difficulties upset them, and they were driven off the farms, and I honour the South African who is not too proud to work, even if it is with a pick and shovel. The hon. member for Port Elizabeth (South) (Sir William Macintosh) may say this is melodrama; he probably will say so, and hon. members will say so, but I say that when South Africans, whether Dutch or English, are still prepared by the sweat of their brow to earn an honest day’s wage then we have reason to be proud of our people. It hurts me that a fellow South African should refer to these men as civilized loafers. I can quite understand that the right hon. member for Standerton is saying, as he said last year—

I can quite understand his saying that, but the people of South Africa will not, I feel sure, endorse the policy that was carried out by the previous Government, but will give their approval to the policy which is being carried out by the present Government. There is no reason whatsoever why the policy of civilized labour, carried out on sound economic lines, should not form a part of our railway system in the future, and no reason why we should not get full value from a large number, probably larger even than to-day, of civilized men working for a low wage I admit, but honestly working and receiving a salary and, at the same time, receiving training which will assist them to make their homes in South Africa, and in that way help to build up South Africa.