announced that a vacancy had occurred in the representation in this House of the electoral division of Johannesburg West owing to the resignation with effect from 1 April 1979 of Dr. Dawid Jacobus de Villiers.

as Chairman, presented the Report of the Select Committee on the subject of the Water Amendment Bill [B. 28—’79] (Assembly), reporting the Bill with amendments [B. 28a—’79].

Report and proceedings to be printed.

Mr. Speaker, when the hon. the Minister of Finance presented his budget he punctuated his speech with a series of quotations from a variety of sources. While he was quoting from the Bible, I felt there was still hope for his salvation. However, when it came to some of his other sources of quotation, I found myself of necessity dissociating myself from the kind of material used by him. I refer to Nietzsche and Machiavelli, for example. It is quite fascinating, because having listened to the hon. the Minister quote from Machiavelli, s The Prince, I thought I should perhaps have another look at that book which I read during my student days. I did that in order to establish with what the hon. the Minister was concerning himself now. What is fascinating is that The Prince, from which he quoted, could almost be the handbook used by Dr. Rhoodie in the Information scandal. [Interjections.] Allow me to make just one quotation applicable to what I have just said ( The Prince, (The World’s Classics), p. 79)—

He goes on to say that the prince must take great care that nothing goes out of his mouth which is not full of the above qualities, even though he may not be practising it. However, I had to read the entire book to find the quotation used by the hon. the Minister. What I find fascinating is that the quotation dealing with benefits to be granted little by little—a quotation coming from chapter 8—is to be found under the heading: “Of those who have attained the position of Prince by villainy.” [Interjections.]

I am not suggesting anything at all, except that I would prefer to look to other works to decide how to judge this budget. What is remarkable is that I found, in the sort of kinder and gentler pursuits, a remarkable similarity between the gardener who seeks to stimulate growth and the economist who seeks to stimulate growth. Unlike the hon. the Minister and Machiavelli, who seek to stimulate growth drop by drop, the gardener knows that he must not flood the garden, but that he has to give it a good soaking to enable the plants to grow. If he does it drop by drop, as the hon. the Minister seeks to do, that will evaporate in the sun before the plants had a chance to take advantage of the nourishment given to them. It is in that spirit, the spirit of a good gardener who wants his plants to grow, who wants to see the flowers in his garden and who wants to see the fruits of his labour, that I move the following amendment—

1. (1)the expansionary measures contained in the Budget are inadequate to bring about the rate of economic growth required to achieve adequate employment and social stability;
2. (2)the Government’s continued failure to rid our society of discrimination constitutes a major obstacle to higher productivity, which is the prerequisite to adequate economic progress;
3. (3)the Government has failed to improve in adequate measure the quality of life of the underprivileged section of the community;
4. (4)the Government has not taken appropriate steps in respect of the means test applicable to pensioners, the level of social pensions and investments to be made for retirement; and
5. (5)the Government’s bungling of the Information scandal is undermining confidence, and there is no evidence of improvement in its performance in that regard”.

What is remarkable is that we in South Africa, being so used to bad news, being so used to adjusting ourselves to difficult situations, tend to become euphoric when we get a little bit of good news. The hon. the Minister’s budget contains certain concessions. However, we are going to demonstrate that the budget could have been much better. [Interjections.] In order to do so, I am going to list no fewer than 18 points on which we in these benches are not satisfied with this budget. We are not satisfied with the degree of stimulation of the economy. We are not satisfied that there is adequate action taken to deal with unemployment. We are not satisfied on the level of pensions and the inaction on the means test. We are not satisfied with the inadequate steps taken to close the gap on pensions for the different races. We are not satisfied with the inadequate subsidies for the basic essentials of life, with the continuation of the import levy and with, the failures in action on GST and sales tax. We are not satisfied with the extent of the concessions for the divorcee and despite improvements, the position of the working married woman is still not satisfactory. There is confusion in regard to pensions and retirement annuity concessions. We regard the whole approach to inflation as unsatisfactory. The position of export trade incentives leaves much to be desired. Then there is the bungling of the position in regard to teachers’ salaries, the failure to help the savers of South Africa—those who save in order to provide for themselves—and the lack of encouragement for productivity. While we welcome the proposed elimination of the discriminatory aspect of taxation for Blacks, the time over which it is proposed to implement this is, in our view, far too long. Lastly, and perhaps most important, we are not satisfied with the steps which are being taken in order to restore confidence, in the broad sense of the word, in South Africa.

In examining the budget we need to look at its objectives, determine how the hon. the Minister proposes to achieve them and examine his proposals for so doing. We must also, however, ask whether they are the correct objectives, and if they are not, whether there are better alternative objectives which we have in mind and which we can submit to achieve these objectives.

We will contend that an objective analysis of the budget demonstrates that the hon. the Minister of Finance has done no more than stimulate the economy moderately in an orthodox manner to be expected when the business cycle is the recovery phase from a recession. We further submit that he has failed to take adequate stimulatory measures, bearing in mind the duration of the recession which we have had and the extent of unemployment. We also submit that he has failed to attack the structural problems of our economy. In view of these factors the extent of the cyclical upswing, and the extent of the endeavours to remedy the structural defects, will depend almost exclusively on the degree of confidence shown by investors and consumers. We in these benches want the upswing. We know that South Africa needs the upswing and therefore we make the appeal to the private sector to take up the challenge and to make the economy go. In this respect we do not differ with the objectives of the hon. the Minister.

The hon. the Minister has summarized his objectives as being “growth from strength”. There can be no quarrel with that object, but the assumption of strength needs some examination. How strong is our economy? Inherently South Africa is strong. It has massive resources of people and minerals, and, in our present position certainly, the current account of the balance of payments is in a healthy condition. The rise in exports and the gold windfalls were the causes of this, and we have entered 1979 with improved foreign exchange and gold reserves. There has been some improvement in both the gross domestic and national products, the employment position has improved marginally and the Exchequer coffers are full. Interest rates are falling and stock exchange prices have been rising. The symptoms are clearly those of an economy which, having gone through a prolonged recession, is now in an uptrend and given the right stimulus could achieve the momentum which could lead, if not to a boom, then at least to a much healthier level of economic activity.

The actual strength of the economy must, however, be judged also taking into account the adverse factors. The capital account of the balance of payments is still in an unsatisfactory position. The total net outflow last year, mainly of short-term capital, amounted to no less than Rl,380 million. Even though the ability of the Government and the private sector to raise overseas loans appears to have improved, rates are still too high and the duration of loans too short relative to other international borrowers, the creditworthiness of some certainly bears no comparison to South Africa’s true status as a borrower in the world.

The oil situation has assumed serious proportions, both in regard to price and availability and the need to have capital intensive programmes of a strategic nature, as well as a continued need for high defence expenditure, is obviously diverting much needed capital from what would otherwise be expenditure more related to improving the quality of life.

The threat of sanctions, the delicate South West Africa situation and other political factors, all have a bearing on both local and international confidence and affect not only the capital account of the balance of payments, but also the degree of local business confidence which is reflected in the reduction in the rate of domestic fixed investment, which declined by no less than 7,4% in 1978. Bearing in mind population growth, the per capita growth in domestic product was nil last year. Agricultural conditions have taken a down-turn, while the economies of our major trading partners cannot be said to be satisfactory. We still have an inflation rate which is unacceptably high, and a degree of unemployment which holds serious dangers for the country. While undoubtedly our economy is in a better state than when last year’s budget was presented, we feel it our duty to warn against euphoria, because there are still many weaknesses and problems which, unless they are adequately dealt with, can make the cyclical upswing of relatively short duration.

I want to examine not only the hon. the Minister’s objectives, but also the tools he employs to achieve them, and then indicate our views on them. The hon. the Minister, as I have said, wants growth. This is the correct objective, but growth per se is not enough. Growth in the wrong sectors can produce attractive statistics, but no solutions to problems. I just want to give one example. The Central African Empire had a quite dramatic growth rate in relative terms over a five-year period and yet the bulk of its people were no better off at the end of that five-year period than they had been when it started. In the same period a dozen or more Third World States had per capita growth rates far higher, at times twice or three times that of South Africa, but in the main it was growth in the wrong direction. In many cases it meant improving the position of a small new group of élite while the bulk of the population remained impoverished. This type of growth solves few economic problems, but rather creates new political problems. The growth which is needed in South Africa, is growth in those sectors which give employment and enable wealth and income gaps to become less by the operation of basic economic forces, so resulting in an improved quality of life for the less privileged without others being required to sacrifice their standards. In other words, what is required, is not growth to make the rich richer, but growth to improve the quality of life of all the people of South Africa. This is a major ingredient in the solution of South Africa’s problems, and its implementation is an urgent political priority if stability is to be maintained. We therefore have to look to see whether the kind of growth the hon. the Minister has suggested, will bring this about.

The hon. the Minister aims at a 4% growth rate this year. His actual words were: “We might well reach 4% in 1979.” Whether this rate of growth can be reached, is doubted by some economists, and in our view it is an inadequate overall growth rate. The need to solve the unemployment situation is an urgent necessity in any plan to achieve true stability in South Africa. South Africa needs to create at least three jobs in every minute of every 40-hour working week of the year in order to deal with her unemployment problem. Unemployment is a political time-bomb, and the fuse to this bomb is the frustration of the young unemployed, who constitute a major portion of the unemployed and who are pouring into the labour market at a rate in excess of 200 000 per year. Young people are receiving education in various forms today, and history should teach us that the frustrations of the young educated unemployed can lead to unrest and worse in any community—let alone a community divided by race and colour.

The budget provides increased money for the education of Blacks, but it fails to do enough to absorb into the labour market those it seeks to train and educate. The hon. the Minister of Finance drew attention to a very important factor, namely that the cost of creating a job at Sasol 2 was in his view about R350 000 whereas he put the average cost in manufacturing as a whole at R10 000. This high-lights the distortion in the economy caused by the need to deal with strategic projects of this nature. In addition we have to bear in mind that technological advances in the world create fears amongst workers everywhere in the world in respect of employment In our view it is therefore necessary to plan in depth to create more jobs with minimal capital investment, as South Africa’s capital generating capacity is limited and as the demands for jobs is not only high, but is escalating.

The hon. the Minister of Economic Affairs has a working group on industrial strategy under Dr. Kleu. Whether it will be done by this group or another group, the reformulation of our strategy for employment is an urgent priority and cannot be left to be solved by a mildly stimulatory budget. It needs far more drastic action.

There are some other things the Government should do almost at once. There is a need for relief plans to bridge the situation for the unemployed beyond the limited unemployment insurance that presently exists.

There needs to be an examination even of the Government’s own policy as to why it now employees less Blacks than it did 18 months ago and whether there is not scope for additional labour-intensive Government activity which will give some limited relief. The hon. the Minister has said that he wants to stimulate growth by consumer demand through the private sector, and we agree the private sector is in the main, though not exclusively, the medium for economic growth. But has enough been done to stimulate the correct sectors of the economy? We believe that there should have been direct incentives for the establishment of new labour intensive industry and the creation of further jobs in existing enterprises. I specifically want to ask the hon. the Minister whether it is logical to seek to stimulate private enterprise by simultaneously announcing undefined action on fringe benefits and the consideration of a capital gains tax, an announcement in so vague a reference that it can only cause uncertainty and concern. Whatever the merits or demerits of the capital gains tax may be, the spectre of uncertainty will do no good for investment. If it is merely going to be a method of taxing inflationary increases in the value of assets, then nobody is going to support this proposal. The timing of the announcement, in my view in any case, is not designed to create confidence on the part of the entrepreneurial class. There could have been some announcements that would have helped, for example, the relaxation of laws to enable industry to expand when it is economically logical to do so and not necessarily when it is ideologically desirable in the Government’s opinion.

If consumer demand is to lead the way into a new growth phase, two other criteria should be considered. Firstly, to what extent will the additional cash be extra real disposable income and, secondly, to what extent will it merely buy the same quantity at a higher price? A 10% increase for public servants, even if we include the tax concessions, mean an increase only slightly in excess of 10% in actual disposable income, but at the current rate of inflation, in real terms, the public servants’ earnings remain without any increase whatsoever and have the same purchasing power now as the lesser earnings had a year ago. Unless, therefore, we contain inflation, the concessions spread across the approximately R25 000 million spent on the purchase of movables and services are unlikely to see a material increase in production in real as opposed to money terms. Then the question has to be posed: Will the consumer actually spend the extra money? Is there an incentive to spend? Many of our people have had to bite into their savings or they have had to borrow in order to keep up living standards which have fallen over the last few years. Credit is going to be more readily available and members of the public will have more cash. However, what is needed, is not only consumer spending, but spending by the right people on the right goods. For the rich to spend more on imported luxuries is no solution whatsoever. Spending must be on goods and services which stimulate local production. In this respect it is the consumer’s choice, and there is no incentive given by the hon. the Minister to spend it in a particular direction.

In the final analysis it will come down to confidence based on expectation, confidence that the economy will pick up, confidence that inflation will be contained within reasonable limits, confidence that whatever credit obligations are incurred, they will be met in a rising economy. But confidence does not only mean matters related to the economy, and we have tried to encourage confidence in this field. Confidence also means confidence in the political sphere, and in this respect we need some real action.

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

No, I am not prepared to answer questions. This country needs to pull itself right We cannot go on with the political malaise of the Information scandal. Firstly, it was just inefficiency that was demonstrated, then lack of control, then an abuse of public money for a party political purpose, following by a paralysing effect on the Government when it needed to devote its attention to vital international events. Now it is a threat to relationships with other Governments, caused by a leakage of information by a frustrated man who knows too much, was allowed to become too powerful and who allegedly indulged in activities which if disclosed would, it is feared, discredit personalities in media and the public life of the West.

Today, if anybody wanted to advocate South Africa’s cause overseas—and there are people who genuinely believe in that cause—a finger would immediately be pointed at that person and it would be said that he is not genuine because he might well be in the pay of the Government. [Interjections.] That is the harm that has been done. That is the tragedy of South Africa. That is the real problem for which the Government has to take responsibility. Let me say that this cannot be allowed to continue. One does not even want to think of the potential effect on investments, let alone our political position in the world. Whether the allegations are true or not, the harm has, in part, already been done. This country needs a reassurance on the institution of government, on the codes of behaviour to be adopted in the defence of our cause and on the moral strength of the country’s leadership. If South Africa’s cause is good, why do we have to indulge in all this? Why do we have to employ these methods if our cause is good? Let us all agree to have it all out, to have it on the table; let us deal with the irregularities; let the offenders be punished; let us recover what we can of the assets, but let us get it all over with! [Interjections.] I therefore want to make an appeal to the Government. Let our cause be advanced by means which demonstrate the values that we hold dear. Machiavelli’s work is not the handbook in terms of which our country should operate. [Interjections.]

Since I am dealing with the question of the erstwhile Department of Information, I want to pose a question to the hon. the Minister. What is the actual amount of money that has been wasted in this debacle? What is the amount of money that was actually spent on The Citizen? [Interjections.] What are the amounts, spent on secret projects, that can be said to have been well spent? Despite the questions and the debates, and despite the commission’s report, there is no certainty about these figures. I therefore ask the hon. the Minister of Finance to give them.

Why do you quote figures then?

Should Parliament not, in fact, receive a formal report from the Auditor-General on the wasteful expenditure? In this connection I should like to deal specifically with the Auditor-General. His is a special, protected position, with safeguards for his independence prescribed in section 1 of the Exchequor and Audit Act. The Act requires the Auditor-General to investigate, examine and audit all the accounts of accounting officers in the Public Service, the Railways, the Post Office and various statutory bodies. Only when a statute expressly excludes him, or when the hon. the Minister regards the matter as confidential, shall these powers not be exercised. Section 45 of the Act also requires him to report to Parliament on his audit and his investigations. Is he then not the agent of this Parliament? Is this Parliament not, in fact, the public’s safeguard when it comes to the expenditure of taxpayers’ money?

Let us, in the light of these questions, look at the irregularities in the Department of Information and the Auditor-General’s role in them. He is obliged by law to report annually to Parliament. He presented a report to Parliament in January 1978, a report covering the financial year ended 31 March 1977 and dated 30 November 1977—a very significant date! However, he presented a secret report, apparently to both the then Prime Minister and the Minister of Finance, in August 1977.

That is absolute rubbish!

Rubbish, is it? The hon. the Minister must just listen to what he himself has said.

That is absolute rubbish!

That report was never presented to the Select Committee on Public Accounts or to Parliament. Yet in the Exchequor and Audit Act there is no provision for reports which are not to be tabled in Parliament.

Mr. Speaker, on a point of order: Is that hon. member entitled to say that that report or memorandum which the Auditor-General drew up, was handed to me, when it was made public, through a debate in the Other Place, that it was not so? A specific question was put to me in the Other Place and I answered it on the facts…

That is not a point of order. That is a speech!

Mr. Speaker, may I address you? With respect, this is an abuse

Order! It is not for the hon. member to adjudicate whether a point of order is an abuse…

Mr. Speaker, I am asking to address you on the subject.

Order! The hon. member may address me, but he cannot adjudicate…

No, Sir. I am making a submission.

Order! No, the hon. member cannot express himself about whether a point of order is an abuse or not. That is for the Chair to do. Does the hon. member want to address me?

With respect, Sir, it was not a point of order that was raised by the hon. the Minister, and he knows it

Order! If the hon. member for Yeoville does not have anything to say about the point of order raised by the hon. the Minister, he can leave the matter to the Chair to adjudicate on. At this stage I should like to point out to the hon. the Minister that I do not think the point he has raised is a point of order. If the hon. the Minister wants to raise on a point of personal explanation, I shall allow him to do so. I do not have any record of what happened in the Other Place.

Mr. Speaker, on a point of personal explanation

Mr. Speaker, on a point of order: Is it not the rule that the hon. member who has the floor has the right to decide whether the point of personal explanation can be put now or whether it should be put later?

Order! The hon. Chief Whip is quite correct. If the hon. member for Yeoville wants to give way, I can allow the hon. the Minister his point of personal explanation now; if not, I can allow him to do so at the end of the hon. member’s speech.

Mr. Speaker, I shall continue with my speech. I want to repeat that the Auditor-General presented a secret report apparently both to the then Prime Minister and to the Minister of Finance in August 1977.

You are guilty of an untruth in this House.

This report was never presented to Parliament or to the Select Committee. No provision is made in the Exchequer and Audit Act for reports which are not to be tabled in Parliament. If the hon. the Minister does not present them—and he can say whether he had it or not—the Auditor-General must send them to the President of the Senate, and also to the Speaker of this House. This secret report should therefore not have been secret at all. In this regard I want to refer specifically to section 47 of the Act, which deals specifically with the duty to report when a grant has been exceeded or used for a purpose other than intended—this clearly applies in this respect—and on other matters which are in the public interest Therefore the facts in relation to The Citizen and the fact that a secret report existed should have come before Parliament. The Auditor-General’s report for 1977 was signed on 30 November of that year. When the printed report was tabled in 1978, both the then Prime Minister and the hon. the Minister of Finance knew that the Auditor-General had done certain secret investigations; they knew about the secret report, but did not say a word about it. On the former Prime Minister’s admission, in August 1977 he was told by the Auditor-General of the funding of The Citizen, but nobody has said whether the Auditor-General has told this to anybody else than the Prime Minister. If it is so that he only told it to the then Prime Minister, then an election campaign was fought for more than three months with The Citizen supporting the NP with the taxpayers’ money whilst more money was flowing into it for a political purpose with full knowledge of those facts. It was the Sunday Express who discovered the fact that there was such a secret report. We on this side of the House have not seen that report to this day. What happened then? The sessional Select Committee on Public Accounts dealt with the matter, and I think it is perhaps necessary to quote again from the evidence. I quote from page 293 of the Third Report of the Select Committee on Public Accounts (question 2050)—

Further on the following question was put—

It goes on to say further—

So the questioning continues, and at one stage he says—

I quote further—

That was evidence given at a time when the Auditor-General knew about The Citizen and had already told the then Prime Minister about it. That is the evidence we were given, and we asked for a commission of inquiry. I want to say to the hon. the Minister of Finance that, if this matter had been dealt with then and there in the Select Committee, we would not have had a year of disaster for South Africa. What is more, when the debate on that matter took place in the House, the Auditor-General was sitting in a bay here, but not a word was said. When the Secret Services legislation was debated, again there was silence. That is why I think I can ask in all fairness today what in fact the duty of the Auditor-General is to Parliament and whether it will be discharged.

That is laid down in the Exchequer and Audit Act

The next question relates to the administration of the Secret Funds. Auditing is only permitted to the extent the Ministers concerned decide. That is in terms of the new Act. If there are irregularities in regard to ordinary funds, is there not also the likelihood or at least the possibility of irregularities in Secret Funds? If the hon. the Minister of Finance can by means of his signature authorize spending without knowing what the money is to be used for, is this satisfactory? We believe the public of South Africa want a complete audit of Secret Funds, and if there is any argument that a particular Auditor-General cannot be trusted—I do not believe that argument should be advanced—that particular person should not have been appointed as Auditor-General. The responsibility should rest with the Minister of Finance. He should know what he is authorizing.

In addition, just as there is an auditor’s report submitted to a Select Committee in respect of ordinary funds, there should be one in respect of Secret Funds, and the Select Committee should be in a position to consider the irregularities and report to Parliament without jeopardizing the security of the State.

I have dealt with the question of the Information debacle in so far as it affects confidence. There is, however, another matter affecting confidence and that matter relates to the whole future of the country. We are living in a period of change, that is certain. What is uncertain, is the nature of the change. Uncertainty and change are major causes of instability, and instability is a major deterrent to economic progress. What investors, both local and abroad, want are tangible signs that not only will stability be maintained, but that changes will also be effected which will ensure the continuance of that stability in the long term. The most common misconception about change in South Africa is that all we need to get over all our troubles is a formula for political change. However, the structure of society which has to be examined is not only political, but also social and economic. Those aspects are as important. Political changes are already on the way. They may not offer acceptable solutions, but changes they certainly are. The open-ended Select Committee to make recommendations for a new Constitution could—I stress that word—constitute an historical breakthrough. But can we not also start on the road to more meaningful changes in the social and economic fields? The promises that discrimination will be eliminated should be kept, because the demands for that will become more insistent. The Government could readily accelerate along the path to a non-discriminatory society by removing compulsion in separation and leaving it to the people to exercise their right to associate with whom they choose.

If the Government would support a Select Committee similar to that on the Constitution to examine all legislation which discriminates on the grounds of race or colour, a major breakthrough would have been achieved. However, major attention is also required in the field of economics. Anyone who believe that political change alone is a solution to our problems is living in a dream world. The income and wealth gap in any community is a cause of conflict. When political power was obtained in Third World countries, it was used to bring about changes in the economic field. History shows that in virtually every community which has undergone political change, it has been preceded, accompanied or followed by major economic change of one kind or another. Political change in South Africa will create economic aspirations which could cause conflict. Therefore, what we need in South Africa is to look at economic aspirations at the same time as political changes. Ideally, for a stable society, we should look at the economic situation first. This would involve a plan to bring the entire population into the system. It means, if South Africa is committed to free enterprise, creating a substantial capitalist class among Black people. It means having a large Black middle and professional group. It means private ownership of assets including land, and above all it means jobs for the young. It also means, as I have indicated, not only a substantial growth rate, but growth in the right sectors.

Growth means that living standards need not be reduced for those who have them, and improvement to those who seek advancement. The PFP has decided to appoint a commission to investigate the kind of economic policies which South Africa requires to avoid conflict. I believe that the Government could do well to follow suite. The danger of conflict for economic reasons is as real as the danger from unfulfilled political aspirations.

We need the confidence that these problems are receiving attention. However, what is required today, is some dramatic gesture that the Government is not only fully aware of the problem, but is also capable of meaningful action. Promises are fine, but action speaks louder than words. There is such an opportunity. There are plans to electrify Soweto. A development plan has been prepared for Soweto to become a city with a quality of living which will not make it viable, but also attractive to its people.

When I first came to this House, I suggested to the hon. the Minister of Finance’s predecessor that defence bonds should be issued. There was a need for them. I believe that the people responded and that defence bonds have served a good purpose and should be continued.

However, there is also a need for cooperation, co-existence and peace. There are many people in South Africa who speak of change. Should they not be given the opportunity of turning those words that they used, asking for change, into action? The Urban Foundation has already shown the way in which this kind of action by the private sector is possible.

The present economy is awash with liquidity. New loan issues can readily be raised at this time. I would like to submit to the hon. the Minister whether this is not an occasion for a new loan issue, a Peace Bond issue. It should not be to compete in terms of presentation with defence bonds, but a special Government long-term bond issue to raise money specifically for the purpose of raising the quality of life in the Black urban townships, not only in Soweto, but everywhere in South Africa. I suggest that this is no charitable project; it is no do-gooder action, but a suggestion for a viable raising of funds for a purpose that many people speak about and want, and where they, including myself, can now have an opportunity of putting their money where they put their mouths. With respect, I would like to submit that to the hon. the Minister for his consideration.

When it comes to savings I want to remind the hon. the Minister how often we have been asked to save. Sometimes we are told to save for prosperity. This time we have been told to spend for prosperity. But any discussion about social pensions gets the answer from hon. members on that side of the House that people should make provision for their own old age. However, what happens when one saves? The individual believes that there would be enough for himself and his wife for his old age and after his death for his widow. All over South Africa we have elderly people, widows of men who have worked hard all their lives, now facing reducing living standards every day. The longer one lives, the worse it becomes.

If we should take a look at the average inflation rate over the last four years, the purchasing power of a constant income has dropped by one-third. At a time when the economy improves, like now—where we are talking of improved economic conditions—the lot of the aged saver, living on a fixed income, becomes even worse because interest rates are falling. Why should the saver be the mug in the economy? Why can’t the protection of a special savings bond at higher interest rates and for specified maximum amounts not be given to the aged saver, to him who has made his contribution to South Africa? May I here also refer to what I have said earlier about the pensioner. I believe that not enough is being done for pensioners on this occasion. One cannot just keep up with the inflation rate. Something more must be done at this time. When it comes to the means test, we are sadly disappointed that nothing has been done in this regard.

May I deal with one other matter. That is the question of the teachers. In recent days we have heard of the protests of the organized teaching profession. The complaints are that nothing was said in the budget about teachers’ salaries, that teachers received 8% on 1 January 1978, when employees in the Public Service received 5,5% increases. Now public servants are to receive a further 10% while nothing is said about teachers. The hon. the Minister of National Education has already made a series of statements about this matter. According to him, increases have amounted to 26,5% since June 1976. All in all, it seems that someone has blundered. Who was it? That is the question that remains. Was it the Cabinet? Was it the hon. the Minister of Finance? Was it the hon. the Minister of National Education, or was it the present hon. Minister of Plural Relations, previously the Minister of National Education? We have a fascinating situation. In Die Burger of last Friday the hon. the Minister of National Education is quoted as follows—

He goes on to say—

Just look how he criticizes his own Cabinet colleagues! He goes on to say—

He is criticizing the hon. the Minister of Finance here for his budget. He is criticizing his own colleague in the Cabinet—

If it were Mr. Louis Nel who had written a letter in these terms, he would have been thrown out by now.

[Inaudible.]

What does actually happen to joint Cabinet responsibility? Is it again a case of “I did not know”? What is “Piet Promises’” position? I see he has now disappeared from the House. What is “Piet Promises’” position? Was it not implied that he had let the teachers down? His own colleague in the Cabinet said he had let the teachers down. If it were true…

Order! The hon. member may refer to the hon. the Minister in that way at a political meeting, but not here in the House.

I apologize, Mr. Speaker, although the hon. the Minister of Plural Relations and Development is referred to in that fashion outside the House. If he had indeed let the teachers down, what will the value then be of words used by him when he was in this particular portfolio?

I should like to deal with one final point. That is the question of whether this is actually an election budget. It may well be. I have not seen the interim Erasmus Commission’s report. I do not know what is in it. It has just been given to me. The hon. the Prime Minister has undertaken to resign and call an election in certain specified circumstances. However, whether or not those circumstances arise, it seems as though an election is going to come in any case, within a reasonably short time.

Perhaps the hon. the Minister of Finance has a better idea than most of us on the prospects for an election. This budget provides for increases to Public Servants and for tax concessions to every taxpayer. Its election value is very clear. But to have an election within two years of the last one, before the Information scandal is completely cleaned up, would solve nothing. The problems would continue to plague a new Government. The Government should go to the country, there should be an election, but the election should be held after complete disclosure and after firm action has been taken. Then the people of South Africa can judge. We should have an election, but only after South Africa has been cleansed of the Information scandal.

Order! Before putting the hon. member for Yeoville’s amendment and before offering the hon. the Minister of Finance an opportunity to make a personal explanation, if he so wishes, I want to ask the hon. member if he is not prepared to give the House the assurance that when he used the words “If the Auditor-General cannot be trusted” it was not his intention to cast any reflection on the integrity of the then Auditor-General.

Mr. Speaker, I give that assurance without any hesitation, because I believe he should be trusted.

Does the hon. the Minister of Finance still wish to give a personal explanation?

Mr. Speaker, I thank you, but the matter is absolutely clear in all the newspapers I have seen and I will deal with it in my own way.

Mr. Speaker, I have had to listen to the hon. member for Yeoville for quite a number of years in this House in reply to the budget speech of the Minister of Finance, and before today I have never felt the need to react first as Eliza Doolittle of My Fair Lady fame did when she said: “Words, words, words, that is all you blighters can do.” At this stage I do not intend to react in detail to what the hon. member for Yeoville said, because the hon. member was obviously out of his depth and tried to dispose of the whole financial side of this debate within a few minutes while we are in fact dealing with a budget which is of historic value to South Africa. The official Opposition is not able to perceive that we are dealing here with a full-fledged budget of a full-fledged economy and of full-fledged financial institutions. I shall come back to the hon. member for Yeoville later. I do not want us to obscure the importance of this budget by reacting to the hon. member’s remarks on the former Department of Information, the Auditor-General etc. Although I shall come back to that, we cannot obscure this moment by attaching any significant meaning to the nonsensical statements made by the hon. member for Yeoville on those topics.

As I have said, we are dealing here with an historic budget. Not only should we congratulate the hon. the Minister, but also all the people who have been concerned with the financial and economic planning of South Africa over the past few years, and we should also be very grateful that we have had such people who made such a budget possible.

The hon. the Minister said in his budget speech that this budget was aimed at stimulating the economy. However, it would be stupid of any hon. member in this House and anyone outside this House not to take cognizance of what has been said in budget speeches during the past three years and what has been happening in the economic sphere in South Africa. Not only do I want to refer to the previous two budgets, but also to the preparatory legislation which we passed last year and which dealt with a new taxation system for South Africa.

From this budget it was apparent that we are now dealing with phase three, as the hon. the Minister stated. The period from 1975 to 1977 was known as the phase of the damping of excessive spending. During 1978 there was a shift of emphasis to growth, but the hon. the Minister stated explicitly that it should be growth with discipline. This year the hon. the Minister stated that the disciplinary action should not be set aside in this budget, but that the watchwords for this budget would be “growth from strength”. Surely it is an exceptional budget if a Minister of Finance, more particularly the Minister of Finance of South Africa, despite all the circumstances which South Africa has experienced in political and economic spheres over the past few years, was able to give the peoples of this country net concessions amounting to R762 million.

It is easy for the hon. member for Yeoville simply to dismiss it as supposedly not being enough because inflation is so high, etc., but we can imagine where South Africa would have been if we had not adopted these policies over the past few years. Surely it is nonsensical for the hon. member for Yeoville to say that they have now appointed a commission to determine an economic and financial policy for South Africa. The success of this budget is partly owing to the very fact that the hon. the Minister at times appointed commissions to institute investigations and to report, and that he evaluated the findings of those commissions well and accepted what was acceptable.

In the same way we cannot evaluate this budget if we do not take cognizance of the interim report of the De Kock Commission, a report which created a new exchange rate policy and made a relaxation of the monetary policy possible. This is all part of a planned economic policy. We have finally reached the stage in which we have struck a balance in these circumstances. The controlled floating of an independent rand which can stand on its own two feet, affords the Reserve Bank and the Treasury more independence in their internal policy. In my opinion the single concept—it is also our policy—that the economy of South Africa is capable of carrying a floating rand which can stand on its own two feet, is of tremendous value.

I now want to go on to discuss this full-fledged economic potential in our country. This is of great significance to me. The new arrangements for forward exchange cover by importers and exporters so that they can make greater use of foreign credit facilities than of domestic credit facilities, is surely what we need in South Africa. Surely these are trends which indicate to the world that South Africa has reached maturity in its view of the economy. If we see how successful this policy has been up to now, it also shows us that we are worthy of handling such a policy.

The new financial rand system is working well. We are now attracting more foreign investments of the right type. We now get the situation that people are investing more specifically in industries etc., instead of purchasing the securities rand. Surely this is a much better situation for us in South Africa.

The new exchange policy has enabled us to lower the bank rate in the last few weeks, at first from 8½ to 8% and then again from 8 to 7½%. Show me a single economy in the world today which is capable of doing this at the rate at which we did it We also know that there will have to be a concomitant lowering of building society interest rates on mortgage loans. We also know—I am mentioning this at this stage because I should like to come back to it later—that it is also of particular significance to our people in the agricultural sector if bank interest rates drop. Today in particular the agricultural sector in South Africa is very strongly geared to financing by the banking sector and a drop in interest rates could mean a great deal to them. It did not end there. We were also in a position to grant a 5% increase in the credit ceiling. I want to say today that I am convinced that if we are going to continue to be as successful with the new system as we appear to be at the moment, we could reach a stage within the foreseeable future in which it will no longer be necessary to fix credit ceilings for the banking sector. The banks derived further benefit from the lowering of liquidity. However, I do not want to dwell on that.

If we take all these things into consideration and look at the maturity of the budget before us, a budget based on discipline which has to extend over a few years, we see the harmony between the exchange rate policy, the monetary policy and the budget policy more effectively coordinated than ever before in South Africa. In addition I want to say that we should never lose sight of this, because it is also obvious from the budget before us at present that we have hit on a brand-new, modern system of taxation. These two factors taken together, surely make this budget an exceptional one. This is true and not only because of the concessions that have been made.

As far as I am concerned, the table has now been laid. Now the higher growth rate which we should like, can begin. There is no problem on this side of the House in that there is an urgent desire on our part to have a higher growth rate. Hon. members opposite can say what they like, but this side of the House is more concerned about situations of unemployment than they can ever conceive of being.

The hon. member for Yeoville is just reading the latest Erasmus report.

The hon. member for Yeoville can go ahead and read the report. I shall tell him in a moment what is contained in that report. My colleague is also reading the report and with the notes which I receive, I shall be able to advise him on what he can expect from the report.

I want to associate myself in one aspect with the hon. member for Yeoville, namely that the South African Government has done what can be expected of any Government in a modern economy in order to stimulate the economy. It is time that the private sector also played its part in stimulating the economy. However, I want to proceed. I waited for the hon. member for Yeoville to come forward with a certain type of criticism, but he did not do so today. Time and again we have heard from the Opposition benches that this Government is occupying itself with a socialistic economic system in South Africa. However, if there is a budget testifying to confidence in capitalism, it is this budget! I have never in my life seen a document in South Africa which expresses greater confidence in capitalism than this budget speech of the hon. the Minister of Finance in fact does.

I now want to pause for a moment and try to reply to a few more of the hon. member’s points, but I must say that it was such a conglomeration of bits and pieces that one cannot react to it properly. However, there are a few things which the hon. member said which are important. For example, I share his doubt about the allocations that have been made to our aged, but no economy can go faster than it is allowed to go. We should never forget that it is not only the Government’s duty to care for our elderly people. There are also children who have obligations.

Let us consider the means test for a moment. I have the hon. the Minister’s permission to tell the hon. member that the hon. the Minister has not simply forgotten the means test in this process. That means test is a very complicated procedure. One cannot simply attempt to deal with the means test with all its implications in one budget. Bearing in mind the effect which the sales tax would have on our pensioners, the hon. the Minister gave pensioners an ex gratia amount of R10 million last year, over and above the normal increase which was granted last year. Surely this has some significance! I am convinced that, as the hon. the Minister indicated, the means test has not simply been put to one side in the process and that it will be continually examined.

I should now like to mention a few figures. The hon. member said that the stimulation of the economy was insufficient. However, we began to stimulate the economy as far back as 1977. Can we forget the R250 million which was made available in November 1977 for the stimulation of the economy? Can we forget the R48 million which was made available in last year’s budget for the 2,5% lowering of the surcharge on companies? Can we forget the tax concessions by way of loan levies amounting to R206 million? Can we forget the R160 million which was made available due to the accelerated repayment of loan levies during February last year? If all these amounts are added together, we arrive at a total of R664 million. Add to that the R762 million in the present budget and we arrive at the figure of R1 426 million which has been made available by this Government since November 1977, as stimulation, whether for the utilization of unutilized capacity or for the encouragement of consumer spending. If we investigate and calculate the cumulative effect of this injection, we shall see that in reality it will be far more than R2 000 million. Is this a trifling injection on the part of the Government? Seen in the light of the state of our economy at the end of 1976 and the beginning of 1977, this is an absolutely remarkable figure. It was only vision, discipline and sacrifice which could have brought about such a remarkable situation. I am also particularly grateful that South Africa was in a position to come forward with such a budget as this at a time in which great changes are awaiting us. In this regard I am referring specifically to the possibilities inherent in the constitutional developments in our country. So South Africa has done what was necessary. One can only bring about political stability if one’s economic foundation has been correctly laid, and we have laid our economic foundation correctly for the future political dispensation in this country.

What do the farmers in your vicinity say?

I shall come to the farmers in a moment. That hon. member need not be concerned, because this side of the House has a completely fair record with regard to the farmers. I just want to come to the farmers, before I finally reply to the hon. member for Yeoville. In all seriousness I want to state here today, and not without having informed the hon. the Minister of Finance about it, that the situation of our farmers at the moment requires the urgent attention of all of us. We cannot get away from that. There is no point in trying to reproach anyone on how this situation could possibly have developed. We have all taken cognizance of the short-term recommendations of the Jacobs Commission, as the hon. the Minister discussed them in his budget speech. We know that the Jacobs Commission has still to publish its long-term recommendations with regard to the whole matter. I also have the hon. the Minister’s permission to tell this House today that the hon. the Minister of Agriculture and he have decided that the Jacobs Commission will not dissolve after it has completed its next terms of reference but that it will continue to act as a watch-dog over the agricultural situation. I think that this in itself is of particular significance.

Some of my colleagues will discuss the agricultural side of matters further. We should not simply see agriculture as a question of the farmer receiving this and the farmer receiving that, but we should also bear in mind that these people are our food producers. If unemployment and a slow economic growth rate are causes of concern to us, an underproduction of food should be a greater cause of concern in South Africa than any of the other problems. Basically it remains the case that a country’s economy is carried by what its agriculture can establish. We cannot get away from that.

Do hon. members know that it is departmental policy to move away from subsidies as far as agriculture is concerned? I think these subsidies have always been seen incorrectly in the past as agricultural subsidies. It is not the agriculturist who benefits from them; ultimately it is the consumer who benefits. If we want to rectify the agricultural situation in South Africa, we can simply increase the producer’s price, and then we shall have to bear the consequences. We shall really have to take cognizance of the fact that the time has passed when we could produce cheap food in South Africa. We have to be realistic and realize that there is no point in thinking that we can push up the producer’s price at this stage in order to help agriculture out of its dilemma in this way. Such a step would have a tremendous effect on the consumer price index. For that reason I want to repeat the argument which I used in the part appropriation by saying that we have seen various industries in difficult situations in the past There was the marginal mining industry and we assisted them. We did not ask those people to repay a single cent although we poured approximately R600 million into those industries. The same mines earned almost R400 million this year. This was a temporary measure to overcome the problem to the benefit of South Africa. I believe that food prices in this country will have to rise and that the increased prices will again enable the agriculturist to carry on with his work in a normal way. I have a number of figures which I can quote here, but I shall only use a few. The total subsidies given to agriculture in 1976-’77, amounted to R187 million. Since then these have decreased. In the 1978-’79 financial year they amounted to R135 million and in the present budget they are once again less. This House should not get the impression that I am opposed to the concessions made in the short-term to agriculture. While I welcome all these concessions, there is one which I should like to single out in particular, i.e. the R25 million over five years to provide a comprehensive crop insurance scheme. This is the type of investment which we should make in agriculture.

However, it is the duty of the State to subsidize agriculture. In America agriculture is subsidized to the tune of approximately $7,9 billion per annum. Nevertheless the farmers there organized a tractor parade because they still considered the subsidies too low. Therefore this is not an unknown thing. Let us look at the subsidy on fertilizer. In the present budget provision is being made for a subsidy of approximately R11 million. A few years ago the subsidy on fertilizer amounted to R20 million. It has therefore decreased. But if one subsidizes fertilizer, one should note to what extent it has a cumulative effect. It does not affect only the maize farmer, but all the people who are dependent on maize, for example the broiler industry, the cattle industry, etc. Therefore, this is something which works all the way through.

In the coming financial year the agricultural industry will spend approximately R300 million on fertilizer and R200 million on fuel. If we can subsidize basic inputs, this could be drawn all the way through and ultimately the consumer would also benefit from this. If we want to accommodate the farmer this will therefore be the cheapest way in which to do it. It will also be the easiest to administer. I am convinced that we shall again have a surplus at the end of the current financial year. If it becomes clear in the course of the year which lies ahead that there is again going to be a surplus, I want to plead with the hon. the Minister to look at agriculture with a sympathetic eye because I am convinced that it is clear that agriculture will have a hard time of it this year. If the hon. the Minister would do this, it will be of great significance to South Africa.

My time has almost expired and I still want to pause for a few moments to discuss what the hon. member for Yeoville said. I find it surprising that he again attacked the previous Auditor-General, Mr. Barrie, after a year had elapsed. Mr. Barrie no longer occupies that post, nor can he defend himself here.

That is what they do.

The hon. member also let me know through the Sunday Times that he was going to put questions to me because I supposedly prevented him from putting certain question on the Select Committee. Surely all the quotations of the hon. member from the Third Report of the Select Committee, a report which was submitted in June last year, are not something new which the hon. member is presenting to us here. Surely he knows that the previous Auditor-General testified before the Erasmus Commission.

What do you think he paid the Sunday Times for that advertisement?

Surely he knows this, because it was announced that the previous Auditor-General had testified before the Erasmus Commission.

Yes, but what did he say at that stage?

If the hon. member has certain information in this regard, he should tell us. Can he tell us that, when the previous Auditor-General published the report in August 1977, the previous Prime Minister knew about The Citizen?

That is what the State President, the then Prime Minister, said.

It makes me absolutely despondent. The previous Prime Minister, after the Auditor-General had made a report available to him—a report which in any case did not have to be referred to a Select Committee, since it dealt with secret funds and the Select Committee has no say over secret funds—appointed Mr. Reynders to examine those anomalies. Up to now there has been no proof, and if there is proof, the hon. member for Yeoville should come forward with it. There has been no proof up to now that the previous Auditor-General informed the previous Prime Minister about The Citizen. He published a report. Does the hon. member know what is contained in that report?

I never saw it.

What does that mean? If the hon. member makes such an allegation, he should know what is contained in that report.

I am not saying that it is contained in the report. [Interjections.]

If the hon. member wants to make any allegations based on what is contained in that report, he should tell us whether he has seen that report and whether he, when he saw it, brought the matters to the attention of the proper people. [Interjections.]

Mr. Speaker, my time is now becoming very limited. There are still a few other matters which I should like to deal with. I wanted to come back to the report which was tabled this afternoon, but since I had to listen to what was rather a miscellany of a speech by the hon. member for Yeoville, I did not have time to examine the report. Since I began by congratulating the hon. the Minister on this budget, I want to extend my congratulations, because hon. members on this side of the House have drawn my attention to the fact that the interim report of the Erasmus Commission completely exonerates the hon. the Minister of Finance with regard to any allegations concerning The Citizen. [Interjections.] The fact that this has happened, causes me to suspect that the rest of the report will also exonerate the rest of the Cabinet.

I want to say to hon. members on this side of the House that from today on the hon. the Leader of the Opposition and hon. members of the PFP will, believe me, have to tell the nation why they have conducted this campaign in the way they did. [Interjections.] If the Erasmus Commission exonerates the Cabinet, there is no reason why the hon. the Leader of the Opposition should not resign. [Interjections.] Hon. members can laugh loudly now. However, the most serious allegations were made against the Cabinet, serious allegations were levelled at the hon. the Minister of Finance. We cannot continue to govern this country on a basis where we have to reply to gossip every day. [Interjections.] It cannot be allowed. If it depends on me, the hon. the Prime Minister can take the evidence of the Erasmus Commission to the State Security Council to go through it so that the evidence can be made public.

I agree with the hon. member for Yeoville that there is no reason for an election at this stage, because we have lanced the abscess and taken all those things. The steps which were taken by the Government, have been confirmed. Since this has happened, hon. members opposite should pray that we do not have another election. If we do have one, their numbers will be fewer than they are at present. [Interjections.]

Mr. Speaker, the hon. member for Schweizer-Reneke started off so calmly and collectedly that I began to wonder whether we were going to have á debate at all on what he had to say later on. But he really began to hot up towards the end of his speech.

The hon. member said the Government could not continue to govern this country with all the gossip doing the rounds. I want to ask that hon. member where all that gossip originated. [Interjections.] The gossip originated in certain quarters. It revolves around the question of whether the former Prime Minister knew anything about the Citizen affair…

W. D. KOTZÉ: Why did you not give evidence before the Erasmus Commission? I do not see one word of yours in the report. [Interjections.]

I shall put this question to the hon. member who has such a lot to say now: How many people stated in public that the former leader of his party had not known anything about the affairs, while others maintained that he had known everything about it? It is not the NRP that comes to light with gossip, but the leaders of the NP. It is not the NRP, but a former leader of the NP in particular who is coming to light with this gossip. [Interjections.]

A former Minister of the NP issued a Press statement the other day claiming that the former Prime Minister had known everything. I challenge hon. members on that side of the House to say whether they are now going to expell the former Minister from the party or not. [Interjections.] Until that step has been taken, that gossip will never come to an end. [Interjections.] There are hon. members on that side of the House who believe what the former Minister said. Why not? If they do not believe him, why don’t they kick him out? I put it to hon. members on the other side, people who are supporters of that former Minister. [Interjections.]

Come on Andries! [Interjections.]

There are quite a number of them sitting on the opposite side. We are not preventing the Government from continuing to govern this country. It is the Government itself that has become despondent, that does not know which way to turn and does not see its way clear to governing the country. [Interjections.] They have a big stone in their stomach, a stone which they cannot themselves remove. [Interjections.] That is the problem which we have to contend with. [Interjections.]

†I am perfectly entitled to attack the Government and to say to them that they are sitting there absolutely hopeless and helpless, while the time span allowed the White man is shrinking day by day. That is our problem. While we have only a brief span of time left to us for negotiations and arrangements the Government sits there knowing, as we know, as the hon. the Minister of Agriculture knows, in spite of the charming smile on his face, that they have to solve the problem. They have to solve the problem in their own party. They are, after all, the people who caused all the trouble. It is in the governing party that the trouble originated. Until they do something about it they will never get things right [Interjections.]

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

No, sit down. [Interjections.] I should like to react now to some of the points raised by the hon. member for Schweizer-Reneke. He is the chairman of the Select Committee on Public Accounts, and sooner or later we are going to have to have an answer from the hon. member for Schweizer-Reneke to the question of whether he is satisfied with the way in which the secret accounts are controlled. He cannot evade the question. Secret accounts are set up by Parliament. There is a mechanism which is set up to control those secret accounts. Somebody or other has got to take responsibility for immense amounts of money voted by Parliament and disappearing out of the ken of Parliament. Somewhere or other somebody is going to have to put a finger on those amounts of money and satisfy us here in this House in some way or other that those amounts of money are being correctly spent. The hon. member for Schweizer-Reneke has a peculiar responsibility to this House, as chairman of the Select Committee on Public Accounts. He has a peculiar responsibility to this House, in the light of the fact that the previous Auditor-General, the so-called watchdog of public funds, was forced into the situation in which he was, when something was going on which he was not allowed to report to you, Mr. Speaker, as the representative of this House.

It will be rectified.

The hon. member says it will be rectified. Mr. Speaker, the hon. member for Schweizer-Reneke has a peculiar responsibility to take active steps in this regard. [Interjections.]

[Inaudible.]

Has the hon. member asked for a Select Committee? Has he asked for a Select Committee of this House to look into that matter or not? [Interjections.]

If not, why not? [Interjections.]

Mr. Speaker, I believe that this is a situation which has become a constitutional problem for this House. There is a question of principle which cannot be solved across the floor of this House.

[Inaudible.]

We cannot rectify the matter across the floor of this House. I still maintain that there is a responsibility on the shoulders of the hon. member for Schweizer-Reneke to ask for the appointment of a Select Committee of this House to investigate this matter. [Interjections.] There is also one other matter. It concerns the question which has evolved round the present State President I shall be very careful when referring to the State President. It is true, however, that there is no precedent in South Africa which gives us an indication of when remarks by the State President amount to political statements and when not. The hon. member for Durban Point requested a Select Committee the other day to give a decisive answer on whether the present State President had exceeded his bounds in this regard or not. I consider it a very fair request.

Order! I cannot allow a further discussion of that matter.

As you please, Mr. Speaker.

†I will return to that matter in a very short while. First of all, I want to make a couple of general comments on the budget as such, and on the speech by the hon. member for Schweizer-Reneke. Hon. members opposite, the Press and everybody else, have been in a state of euphoria, shouting what a marvellous budget this is, how we are going to stimulate growth, etc. The hon. member for Schweizer-Reneke mentioned the figure of R1 000 million that has been pumped into the economy over the last couple of years.

If this is so, why has there been so little growth in the past few years? Here we have a further sum of money being pumped into the economy, ostensibly to create growth. The figure of 4% has been mentioned, and I want to ask hon. members on the other side of the House whether they have confidence in their own minds that we are going to get anywhere near that figure, or are we going to be doing what we did last year and gamble on gold? Is this the situation we are going to face again this year? Let us look at the matter that the hon. the Minister has put before the House. An amount of R257 million is being put into the pockets of the public servants and the hon. the Minister will not be collecting R394 million in the form of direct income tax. These two figures added together come to an impressive amount of money. I now want to ask hon. members on the other side of the House the question I ask myself: Is this money not merely going to enable the civil servants and the ordinary taxpayer to hold the line? The hon. the Minister says that this amount of money is going to generate growth, a blast-off, an inventory growth, will create new orders, take up the slack in the economy, raise the productive capacity and so on. I want to tell the hon. the Minister that a great deal of this money has already been committed; it has already been spent; it has already been borrowed. I do not agree for one minute that this state of euphoria, where we have a banner headline saying “Hooray for Horwood” and so on, is the sort of thing which we can be so grateful about. We can be grateful from the point of view that the hon. the Minister has not found it necessary to stick his hand directly into our pockets again, but that he has been able to reduce income tax because he has already collected the money that he needs for the service of the State from gold, in particular, and the general sales tax. But I think one should be very careful about hailing the hon. the Minister as the new saviour or the new marvellous guy who is going to come along and help us out of the problems that we face.

Are you saying that the financial analysts are wrong?

I do not see that this is going to do all this…

Are you saying the financial analysts are wrong?

Many financial analysts have been wrong in the past, and anybody who says that this is a magnificent budget and that it is geared for growth, is wrong, because the public have already anticipated the sort of thing from the budget and are not going to dash out wildly and spend money left and right in the situation which we are facing.

I believe indications of the economy taking off are fair, but we are faced with a problem of confidence. In this regard I think the hon. member for Yeoville is quite correct. Confidence should reflect not only business confidence in the economy, but a confidence also in the Government, and I have already indicated that I do not think the public has confidence in the Government because of the division which is taking place and the situation in which the Government finds itself in that it cannot resolve the question of Information and the quarrel between two of their former leaders.

I believe the hon. the Minister has introduced a budget which we take to be a social and ideological budget I want to comment on the ideological thinking behind the budget But before I do this, I want to take issue with the hon. member for Schweizer-Reneke with regard to the farming community. I want to say with all the earnestness at my command that I believe that the farming community today faces a situation which could well turn out to be as serious as the crisis of 1933. I want the hon. Minister of Agriculture and the hon. members on the other side of the House who form their agricultural group to think very seriously indeed whether we are not in fact facing a similar situation.

Can we invite you to address us on this subject?

If I thought for one moment that the hon. member for Von Brandis would be able to understand the pearls of wisdom that I would cast before him, I would come and address them. The farming community faces the situation that rising costs are of such a nature that the domestic consumer market in this country cannot absorb them. There is no chance whatsoever that the South African housewife can absorb the sort of increases that is facing the farmer today. On three occasions last year I put the point to the hon. the Minister whether it was not desirable that we should assist the farming community on the input side by forming, as I suggested, a joint committee of the Department of Agriculture, the Department of Finance and the Department of Economic Affairs to establish what costs the Government itself directly imposes upon the farmers thus increasing their input costs.

I am quite certain that a significant percentage would be involved. I want to say that I am against subsidies in principle, because the paying of subsidies is an extremely expensive way of handling money. Yet if there is no other way out, such as in the case of the bread price, it has to be done and one welcomes it on behalf of the people who will benefit by that. But better ways must be found to bring down the input costs of farmers. Now the hon. member for Schweizer-Reneke says in so many words—the same words we used last year—that one has to decrease the input costs of farmers before one can bring down food prices to any considerable extent. But one does not only have to do that One also has to establish a margin of profit for the farming community. That is surely something we shall have to do, because unless we can create a margin of profit, the whole investment pattern in agriculture is going to become very serious indeed. I believe that the extent of the problems we face may well require the Government to provide an amount in excess of R100 million over the next few years to do what the hon. member for Schweizer-Reneke suggested, and that is to keep the fanning community floating. Whether it is a practical suggestion or not, I believe it could be done. I think the hon. the Minister and the department are going to have to face the writing off of debts in the farming community. I want to say again—the hon. the Minister was not here when I said it the first time—that the costs of the farming community are rising so fast that the consumer market simply cannot absorb the increases. I do not believe that subsidies can cover that situation adequately. I should like to suggest that committees be established—if possible by working through organized agriculture—which will be able to assess the situation of farmers and, if necessary, write off the debts of farmers in deserving cases because assistance with interest on loans and so on will merely perpetuate a situation in which there will be a building up of an immense input of capital which the farming community will never be able to recover. While we are waiting for the economy to recover and for the consumer market to be able to absorb price increases on the part of the farmer, the farming community is sliding into a debt situation which I regard as being very serious indeed. I should like to make an appeal to the hon. the Minister and the hon. the Minister of Agriculture to work through organized agriculture and to put to them the question whether or not we have reached this situation. For the hon. the Minister I say that we are facing a situation which is probably as serious as that in 1933, because the farming community’s debts are mounting at a rate they are simply unable to control. We shall have to find a way of writing off debts simply to keep the farmers floating.

Do you not think that if we increase the producer’s price so that the consumer will have to pay a little more, it might help a great deal?

The hon. the Minister asks whether we should not increase the price of the producer thus effecting the consumer price. I do not think we are in a position to do that in any significant extent. One can, of course, increase the producer price. The hon. the Minister is going to increase the price of maize by 15% or 20%, or something like that. It has to happen now. The price of milk and wheat will have to be increased. But all this will have an effect on the price of meat, of chickens and of everything else right through the economy, and I do not believe that the domestic market today can absorb that kind of increase without there being a decrease in consumption. It will not be of any benefit to the farming community if they have to cope with an absolute ceiling of resistance as a result of which their products are simply not being sold. My answer to the hon. the Minister’s question is therefore that I think that the situation is far more serious than that. I support him entirely when he says that producer prices have to be increased, but it places an obligation on the Government to make sure that food prices remain at a level where people can still afford to buy food. I did a great deal of reading on the position of agriculture in Great Britain between the world wars, a period in which agriculture collapsed. One of the great problems Great Britain faced in 1940 was to resuscitate agriculture from a state of absolute collapse, at a time when the U-boat blockade and other things made the supply of food to Great Britain of the utmost importance. I think that we are facing a situation like that today.

As I have said, food is power, so, if we have food in South Africa we have power. There are people all along our borders to whom we can make direct approaches and to whom this will mean such a great deal. Beyond our borders we face an Africa in which the plagues of Africa are running rampant: ignorance, disease, squalor, poverty, hunger, etc. For a moment in time the coming of the colonial powers brought some kind of hope to Africa. It gave them a future; it gave them a go-ahead sign, which I believe is beginning to slow down today. Hon. members will remember that Lord Grey, the Foreign Secretary in the House of Commons when war was declared on 3 August 1914, said that he could see the lights of Europe going out one after the other and that they would not see them lit again in their time. So I believe that we, as we sit here in this southern end of Africa, can see the lights of Africa going out one after the other, and if we are going to see them come on in our time, we are going to be the key with which they can be switched on.

That leads me to the second point I wish to make about this budget. I have said that I regard it as being a social and ideological document However, I want to say to the hon. the Minister that I welcome what he has said about a re-emphasis of the part to be played by the private sector. One hundred years ago Karl Marx was still alive and Engels was one of the people who was moving into a godfather situation in the German social democracy. From that day until now capitalism has been under the most vicious and violent attack from socialist and other organizations. If there is one place in this world where capitalism has got to be rehabilitated, where we have got to stand up for it, speak out for it and implement it, then it is here in our country, for the simple reason that we have here a mass of Black people who are moving into the middle class. Capitalism is peculiar to the middle class, and the middle class carry standards, values and achievements which can be duplicated by no other group anywhere. One of the greatest dreams that the nations of Europe ever had was that the working class, the proletariat, would in the course of time be drawn into the middle class. But what we have seen over the past 100 years is that the middle class have been drawn down. The process of history has been reversed. The greatest danger that we see in our country today where we have the Black people coming into the middle class is that as they stand at the very gate, and look through the gate, they will see the standards and values to which they are aspiring dissolve before their eyes. I need hardly say that the dictum of history is that revolutions are made in the middle class. If we are going to allow the situation to develop in our country where millions of Black people will be aspiring to middle-class status, but on looking through the door see everything that they have achieved being undermined, dissolved and washed away before their eyes, there is no chance whatsoever that the system we practise here is going to survive.

I believe the key to all this is investment in the hands of private enterprise. The hon. the Minister will remember that I said last year during the budget debate that the key to our future was the building of capital in private hands. That is how it has got to happen. The problem of maintaining the standards of the Black people is a question of investment and a question of being able to introduce into our own thinking and into the thinking of the Black people in our country the idea of what has become benign capitalism, if I may use that phrase. Capitalism in its early days was undoubtedly a ruthless, vicious, exploitative system and brought much unhappiness upon many millions of people. But in the course of time capitalism has become institutionalized in the shape of banks, insurance companies, etc. They are the leading figures in the capital scene today, and I think they at least bear some kind of lip-service to the concept of social responsibility. What we have got to do, however, is to get back to the idea of capital in private hands. Let me in this connection say that I was very disappointed indeed to hear from the hon. the Minister that a suggestion has been made in our country for the introduction of a capital gains tax.

Let us understand one thing. We are in an infancy stage of capitalism in our country. We are drawing many people into our capitalist system who are achievers, but on a very small scale. However, one sets the limits for people who are affected by capital gains tax, etc., I do not think this is something that is going to benefit the concept that we wish to have in our country, the concept of capitalism as the agent of change. Let us understand what we are facing. Beyond our borders we are faced with countries which have fallen under the sway of the Marxists way of life and thought, people who are challenging us. I should like to think that what we can do is to offer the Western World an immense historical success story. Surely everyone in this House can agree that this is the one thing that has to be done. The hon. the Minister has indicated that he is moving in that direction. He has, for example, indicated that he wishes to reduce the State’s participation in the investment scene to 40% to get back to the figure that was applicable before. He has indicated that Sasol 3 is going to make such demands upon the State that that share is going to increase inordinately in the next couple of years. He has set himself a target that one can only welcome, but one wonders whether the hon. the Minister is really going to be able to achieve it.

There is a further point I should like to make. We have a system of taxation that is based on income, a system we believe to be punitive as it gets into the higher bracket. When one takes the taxation principles of horizontal equity and vertical distribution one finds, at the upper limits, what is virtually a punitive tax on achievement. I should therefore like to suggest something to the hon. the Minister merely for investigation. I want to stress, however, that this party, being a new party, has tried to look for new ideas in the new situation we are going to meet. [Interjections.] Let me say that there are other proposals that have been made. I am referring, for example, to a report that was made by Prof. Meade of the Institute of Financial Studies in Great Britain. He went into the structure and form of direct taxation in Great Britain and made some very far-reaching proposals. Obviously we are not the people who can give a really considered opinion on the merits or demerits of this, but if any change is going to be made, it will obviously have to be made on the same basis as that on which the general sales tax was introduced, over an extended period of time and after a great deal of consideration. We know that we face an administrative problem in that there is a considerable body of case law already relating to income tax, e.g. decided issues, etc. The advantage of this new system is, however, that it does not take money on the income side. People can use their incomes for whatever purposes they wish, for investment or anything else. Tax does not fall on that side of the equation. It falls on the other side, on that of utilization or consumption. What I am referring to here is not GST either. I am referring to direct taxation. I consequently want to ask the hon. the Minister whether he would be prepared to ask his Standing Committee on Tax Matters to investigate the matter and find out whether it might not be a very potent tool in his hands, and in the hands of South Africa, to allow capital generation to be in private hands, to allow the person who has the income to use it for his own purposes, as he sees fit, keeping it out of the hands of the State until such time as that person has disposed of his money as he wants to. When the spending comes, the State can then have its share. This is not designed to reduce State action or to render it impossible. Neither is it designed to cut taxation out of existence or anything like that. The intention is to find an alternative method, and I believe this would be the greatest benefit to the capitalist system that one could possibly imagine. Let me say again that we, in trying to look for some new ideas, have come across this aspect, and I think it is very worthy of being followed up.

I also want to refer to another matter. The hon. member for Schweizer-Reneke referred to the new dispensation we are going to meet. This is one of the last budgets that is going to be introduced in this form in this House. So when that hon. member said it is an historic budget, he was quite right. This may be the second or third last time we shall ever debate, in this House, a budget of this nature because it will be one of the last times that the White man in this Parliament is going to dispose of the income of everybody else in South Africa without consultation or anything else at all. I think that we have to understand that.

What I want to say to the hon. the Minister is that when we go into a new situation where there will be other Parliaments as well, we in this Parliament will remain as the guarantor of White sovereignty, and we should not forget it I say to the hon. the Minister that taxation is an indispensable adjunct to sovereignty. We cannot get away from that idea, and it has to be borne in mind by everyone of the members who will serve in the Select Committee that is to be appointed. They will have to remember that by having the power to tax in one’s own hands, one can ensure that as regards the things that are of personal and of vital interest to one’s group, whether Whites, Indians, Coloureds or whatever other group, there will be no interference in what they wish to do for themselves, whatever the structuring together of the interests of all the various groups may be. If nothing else flows from this budget, I should like to think that it is the idea that taxation is something that can be divisible. We are fortunate in that we have just moved into a situation where we have direct personal taxes on income, on persons, on companies and also a general sales tax which is levied on everyone. It must be perfectly feasible to make some kind of arrangement between the different groups so that there will be a guarantor of sovereignty and that there will be security in the hands of each of the bodies that will be set up and that there should still be a fund, a considerable amount of money, at the disposal of the general body—whatever it might be—that emerges when the final situation is arrived at.

With this situation we hope that we will be able to enter a new arrangement whereby what has been the failure of this Parliament can be avoided. The failure of this Parliament has been that nobody has evolved a system whereby the tax revenues of this country can be shared on a basis which other groups consider equitable. That is where it has gone wrong, and that is why this Parliament has to be changed. We have not evolved such a system, we have not reached that stage, and therefore we have to go into a new dispensation which is going to convince the other peoples in this country of the fairness of the distribution of the wealth of the country. Without some kind of guarantee for ourselves, and without some kind of common fund, we in this party do not believe that it can possibly be achieved.

The final point I wish to make is that if we are going to achieve a situation of no discrimination, then there has to be a guarantee of security for the White population. That is a final thought one can leave with the Select Committee that is going to be appointed. Without absolute security for the White population, one cannot come to a situation where discrimination can be abolished and phased out.

I have made these comments on the budget as someone who is an economic historian, something I was trained for. I see it as my job to look beneath the surface, to go beyond all the froth which the hon. the Minister created when he made his speech and to flutters in the popular Press, and to identify serious issues underneath. The problems of the farming community is an issue which the hon. the Minister is going to have to face, and the emergence of the Black population to the middle class as capitalists, is another situation which the hon. the Minister should, at all costs, try to perpetuate.

Mr. Speaker, the hon. member for Mooi River started his speech by making a further attack on various Ministers, in spite of the assurance given by the hon. member for Schweizer-Reneke that the Erasmus Commission has, in their interim report, given judgement in favour of the Government.

I never mentioned Cabinet Ministers.

He also said the Government should resign.

I did not.

He certainly did. If I were a member of his party, I would not be so keen to go to the polls, because I think all the indications are that his party is a dying party anyway. [Interjections.]

During the course of my speech I will come back to his allegations about various Cabinet members. He also made some remarks about secret accounts. With that, too, I shall deal in the course of my speech. What is amazing, is that the hon. member today once again asked the Government to appoint a Select Committee of the House to investigate certain members of the Cabinet.

I did not. You are wrong.

I find it quite surprising in the light of the fact that they have been asking for a judicial commission all these years. What can be fairer than a judicial commission? If we were to adopt the hon. member’s view, we would have to appoint members of the House to examine themselves. I think the whole idea is absurd.

The hon. member also said that was not enough money would go into the pockets of the taxpayers of the middle class, the general taxpayers. Although he professed to be a supporter of the capitalist system, one gets the impression that he is not really a great believer in the free enterprise system. If one analyses what he said, it seems as if he wants the Government to make money available. In fact, the only duty of the Government is to create the general climate in which free enterprise can prosper. That is the point. I think the hon. the Minister of Finance has achieved exactly that object in this budget. I think we can leave that argument there.

The hon. member also made some remarks about the Black middle class. I can assure you, Sir, that to a great extent I do agree with what he said. One cannot, however, escape the fact that it will take generations to change the so-called subsistence economy of the Black man in South Africa into a complete market economy set-up. That cannot come about overnight. However, by means of this budget we are providing the climate and the means for that to be achieved.

Having dealt briefly with the remarks of the hon. member for Mooi River, I want to turn to the comments made by the hon. member for Yeoville. That hon. member tried very hard to discredit the outstanding budget before us today. However, he only managed to scratch the surface. I think hon. members will all agree that both he and the hon. member for Mooi River failed to propose any fundamental change as far as the main economic principles are concerned. The hon. member said the Government would fail to achieve the objects set out in this budget because of its inability to solve the Information affair. He also said we are not moving away from discrimination fast enough. To quote him, we are not undertaking “the political action necessary to supplement the fiscal measures of this budget”. I agree with him that consumer confidence, as well as investors’ confidence, is seriously hampered, but I say that it is hampered because of the fact that the Information affair is being exploited to such an extent by the Opposition and the Press in South Africa for their own political gain. That is the real reason for any existing lack of consumer confidence or political confidence in South Africa.

I do not believe it exists to any great extent. However, the irony of the situation is that these opposition forces cannot survive without this Information debacle, that they are blowing up out of all proportion. They are absolutely bound to keep it alive because their own existence and survival depends on it at this stage. They cannot care less whether it damages South Africa almost beyond repair and even hampers public confidence, which is so essential to achieve the maximum benefits of a strong economic growth, as provided for in this budget.

The hon. member for Yeoville appeals to the Government to do everything possible while the investigation into this affair is still in progress, though he himself is playing a part to achieve a contrary effect.

In the history of South Africa we have never had so many slanderous accusations against this Government and hon. members on this side of the House, without any substantial evidence whatsoever, as we have had during the past few weeks. The way in which even the hon. member for Yeoville tried to pull the former Auditor-General into the Information controversy over the weekend, and today in his speech, is absolutely shameful. The Auditor-General has acted honourably and efficiently all along, without fear and has received high praise in the past, even from the hon. member for Yeoville.

The hon. member for Yeoville knows very well that the former Auditor-General had almost no insight into secret accounts and that he is bound by the secrecy legislation. He also knows about the ruling that the Select Committee on Public Accounts does not have the authority to examine secret accounts, yet he still drags the matter by its hair into this debate and into the Press of South Africa. [Interjections.] The hon. member also knows that the secret accounts fall outside the scope of the activities of the Select Committee on Public Accounts, yet in spite of this knowledge he still tries to create the impression of a deliberate cover-up by the Auditor-General. This is certainly a very shameful thing to have done.

The time has come to examine the actions of this so-called innocent hon. member who issues Press statements left, right and centre almost every second day. I would be interested to know whether the hon. the Leader of the official Opposition approves of all these statements that are issued. On whose authority does he do it?

It is said that a half-truth is a bigger sin than an outright lie. I venture to say that it seems to me that this is, of late, almost a speciality on the part of some hon. members.

Order! Is the hon. member referring to the hon. member for Yeoville?

I am not referring to the hon. member in particular. [Interjections.]

Order! Is the hon. member referring to hon. members of this House? If so, the hon. member must withdraw his words.

Mr. Speaker, I shall withdraw those words. I was merely referring to the combined Opposition forces, including the Press. After all, we are now, more than ever before, faced with half-truths in the politics of South Africa. That is a fact. The hon. member for Yeoville accused me, during the debate in December 1978, of a cover-up in the Select Committee on Public Accounts, simply because I asked a question in an attempt to give Dr. Rhoodie a fair hearing. If one were to examine the evidence of the hon. member for Yeoville, however, one would find that he knew practically everything about the Information affair. I say this in the light of the questions he asked in the Select Committee whilst no other hon. members in the Select Committee knew anything, at the time, about the situation. [Interjections.] Where did he get this information from? What made him ask questions about Thor, about Jussen and about McGoff? At that time we had never heard about these people. Where did he get this information from? Did he perhaps get it from Anglo American’s secret service? [Interjections.] Who passed it on to the Press? I should even venture to guess that the hon. member got this information from the CIA or some other similar organization. What did he do with his information? Did he release it in the national interest? I ask this question because the hon. member and his colleagues always profess that they have the national interest at heart. What actually happened was that they kept this information to themselves until they could derive the maximum political advantage possible from it. They cannot afford to see justice taking its normal course. If they let justice take its normal course they would be forced to face the realities of the political situation in South Africa again. They will be forced back into a situation in which they will have to explain their own stupid policy. That is why they want to keep this whole affair alive as long as they possibly can irrespective of the harm done to South Africa.

Then they went for the next big lie. I hope they can still live with their conscience. I am referring now to one of the huge headlines that read “R65 million Information scandal”. We may know, but the public does not know, that this figure represented the total appropriation over a period of five years. However, a quite different impression was being created in this manner. The suggestion was made that that whole amount has been misappropriated. All secret projects were presented as instances of irregular spending. That was the next big lie we had to face. Then, of course, they had to try to create the impression that misappropriation was also rife in other departments. Therefore the next big lie dished up in the politics of South Africa was presented to us under the headline—“R100 million irregular spending by Defence”.

The hon. member for Yeoville also issues another statement on the matter. He does that in spite of the fact that he knows no such evidence has ever been presented to the Select Committee on Public Accounts. He does so also in spite of the fact that he knows no evidence to that effect is available at the time of his issuing his statement. The hon. member also knows that almost all items in the Auditor-General’s report listed as unauthorized expenditure are normally satisfactorily explained and that they only involve small technicalities. Nevertheless, he issues a statement telling the world there is another R100 million query. How can one expect any responsibility from an Opposition such as that, an Opposition professing to be an alternative Government of the country? All the hon. member wanted to achieve by that was to create the impression and the suspicion that something serious was wrong. However, as it subsequently turned out, just the opposite was proved.

There are many other examples, but I prefer to let the matter rest there. However, it is my contention that the hon. member for Yeoville should seriously reconsider his position as a member of the Select Committee on Public Accounts. [Interjections.] I believe the hon. member has shown himself to be completely prejudiced in these matters. To me it is clear that he should consider resigning from that Select Committee. [Interjections.]

*In order to see this budget in the right perspective, we have to examine the historic course taken by the economy, especially during the past five years. Only in that way can we grasp its true significance. We have gone through a difficult period, a period characterized by balance of payments problems, a difficult foreign reserves position, a high inflation rate, a low growth rate and unemployment The period 1973-’74 was characterized by a very strong upswing in the economy. The real gross domestic product and the gross national product grew by 6,4% and 9,3% respectively on an annual basis. Unfortunately, this was followed by a rapidly growing money and credit supply as well as quasi money and rose by 21% during that period. Serious shortages arose in the balance of payments. World inflation was higher than ever, and even in South Africa the inflation rate soared to 17% in 1974. The economic collapse in the United States of America and Western Europe had its effect on South Africa approximately six to 12 months later, as usual. It was indeed remarkable that imports did not drop during that period and that this may have created a false impression in respect of the whole economic picture. The price of gold suddenly dropped very sharply in 1975, and we entered an energy crisis, which dealt a blow to our foreign balance of payments and added further fuel to inflation. In 1976, the shortage in the balance of payments amounted to approximately R2,4 billion, i.e. 9% of the gross foreign product. The money and credit totals rose by 20% a year, and we found ourselves in a very difficult situation. That was more or less the state our economy was in at the time when the present hon. Minister of Finance took over. His was not an enviable task in having to take over our economy at such a low point. Like a good doctor, however, he began by administering his medicine in a painful way with the needle, and it hurt. After that he allowed his patient to rest in order to consolidate his strength, to build up his reserves and to receive intravenous nourishment. And then, round about the third quarter of 1975, he had to take these strong measures to get the whole situation firmly in hand and to place us on the road of economic prosperity on which we find ourselves at the moment At that moment, we discontinued the independent floating of the rand. In July 1975, the rand was devaluated by 4,8% as against the dollar. In September 1975, the rand was further devaluated by 17,9%. Exchange rate measures were adjusted to stimulate the inflow of foreign capital. The bank rate was increased from 5½% to 8½%, and eventually to 9%. Ceilings were introduced for bank credit to the private sector and the liquid assets ratio of banks was increased. Government expenditure was drastically curtailed by the 1976-’77 and 1977-’78 budgets. This naturally caused a drop in the growth rate, while inflation was placing us in a difficult position, but the balance of payments was gradually improving. By the end of 1977, these drastic measures were beginning to bear fruit and the upswing in the cyclical phase began in January 1978. The foreign balance of payments, which amounted to almost R1 000 billion at that time, recovered remarkably. The reserves improved more slowly, mainly because of the repayment of short-term loans.

This long-term plan proved to be a remarkable achievement indeed, as was rightly remarked by the officials of the International Monetary Fund who examined our economic situation on two occasions over the past two years. They regard it as one of the most remarkable achievements in the world. There is an obligation resting on us in this debate not only to thank the hon. the Minister of Finance, but also to pay tribute to him, because he has placed South Africa on a new road of economic progress in an extremely efficient and well-planned way. He has led us through these difficult times because, in the first place, it is academically and personally qualified to perform this task.

I want to go so far as to say that he is one of the best Ministers of Finance that we have had in our lifetime. Without detracting from his very efficient officials, I want to say that he determines our financial policy, and we must give him credit for that. He has proved this by making possible this economic revival which is already taking place in South Africa, in spite of the fact that the world situation has not yet improved. It is no wonder that the enemies of the NP have been conducting one of the fiercest vendettas against this very man, especially in recent times. They know that he is one of the forces in the party they have to take account of. This will not be the end of the onslaught.

The fact is that the hon. the Minister of Finance and other members of the Cabinet have been exonerated by judicial inquiries on two occasions. What has become of decent standards in South Africa if corroborated evidence and judicial findings are given in an inquiry and the Opposition in South Africa nevertheless persists with this attack on people? If they have any decency left, the hon. the Leader of the Opposition ought to resign, because this thing is now beginning to boomerang against that side of the House.

I want to quote paragraph 72 of the interim report of the Commission of Inquire into Alleged Irregularities in the Former Department of Information—

This is one of the most important findings in the report. The fact remains that evidence has been incorporated into this report which irrefutably proves that this Government is completely blameless. I hope that the Opposition in South Africa will now have the decency to stop these base attacks. I read paragraph 71(a) on page 20 of the report—

Once and for all, it is now being made clear to the Opposition what the situation is. Let them now put a stop to this witch-hunt in South Africa which is harming us and which is undermining business confidence in this remarkable budget. The economy of South Africa does not deserve the treatment it is getting from hon. members on that side of the House. The economy, which belongs to them as well as to us, does not deserve that treatment, nor does South Africa.

We are making progress and all the economic indications are that South Africa is entering upon a period of prosperity. Consumer expenditure has already grown considerably in South Africa over the past year, and it is still growing. Interest rates are going down; there is a drop in the wholesale price index; the gross domestic product is rising; the manufacturing industry is expanding; and domestic savings are on a very high level—so the opportunities are there for the private sector to flourish. This brings me back to the point made by the hon. member for Mooi River, i.e. that in terms of the savings rate, there are considerable assets in the hands of the people who can be responsible for an economic revival which can boost consumer expenditure and investment in South Africa considerably.

As I have already said, the budget has only set the ball rolling, and consumer and investment confidence must now take over. It is true that capital expenditure is still rather low, because it is a fact that there is still considerable unused capacity in our industries and that it will be some time before large-scale new capital expenditure takes place in South Africa. It is also true that usually, expenditure only follows some time after consumer demand has reached its peak.

This is a budget which will stimulate growth, but the Opposition says it is not enough. Last year they also said it was not enough. The fact is, however, that we are not prepared to let growth get out of hand, because we know that we have the other problem as well, i.e. to curb inflation. For that reason we have taken measures by means of this budget to cope with this problem at the same time. If the anti-inflation campaign in South Africa does not continue in the midst of a high growth rate, the inflation situation will overtake us again. Therefore I want to appeal to South Africa and to each one of us in this House actively to support the anti-inflation campaign which has been conducted very effectively in the past.

Free enterprise has been unshackled, job opportunities are being created and will have to be created in the future, and in this connection, we have great responsibilities in South Africa. I believe that the Government has in fact paved the way with this budget and we believe that every one of us can look to the future with confidence, especially in view of the fact that change is taking place in the world. [Time expired.]

Mr. Speaker, it is a great pleasure to me to follow the hon. member for Newcastle and I should like to congratulate him on the very effective way in which he dealt with the Opposition. It is a fact that after the hon. the Minister had made his Second Reading speech, we had a certain measure of agreement from the Opposition in this debate. The initial reaction of the hon. member for Yeoville as well as the hon. member for Mooi River was very favourable, but after having examined the budget over the weekend, they are today raising all kinds of objections. Now, it is a fact that one’s first impressions are usually the right impressions. However, they are motivated only by political expediency today. They do not really have any objection to the budget, but as Opposition parties they have to say something about it.

I notice that the hon. member for Yeoville has left the House. That does not surprise me, because that hon. member is a very busy man. In fact, I think he is so busy that he did not have the time to prepare a proper speech for this debate. I shall indicate why I make this statement. Last Thursday Die Burger reported that Mr. Schwarz had not yet sizned the petition against the State President. Mr. Schwarz was then approached, but he said that he did not want to comment on the petition. That, of course, is his right. Then Mr. Bamford, the Chief Whip of the PFP…

Order! I am not allowing that subject to be discussed in this House. I am not allowing any discussion of the petition, the signing of it and the reasons for it.

Mr. Speaker, I shall leave it at that. [Interjections.] The fact remains that Mr. Schwarz was so occupied with the Van der Walt Commission that he did not have the time to pay attention to that. It is surprising that the hon. member for Yeoville became so emotional today, but I think that was mainly for want of something to say about the budget itself. Just as good wine needs no bush, this budget does not have to be praised from this side of the House. However, we should like to express our appreciation to the hon. the Minister and the officials who I believe succeeded, through good judgment, faith and much hard work, in drafting a budget which is generally accepted by financial experts, businessmen and academics as a very good budget. As I have said, even the hon. member for Yeoville at first supported the budget and expressed his appreciation for it.

Why is it a good budget? It is a good budget because it has certain qualities one demands from a budget. In the first place, it has the quality of good timing; in the second place, it has the quality of good financial planning; in the third place, it takes the requirements of the country and its problems into account; and in the fourth place, it is a good budget because it takes the requirement of realism into account. In the first place, as I have said, the times in which we live make high demands with regard to the protection and development of South Africa, and the protection and development of South Africa can only be brought about if the economy of the country is sound and if it develops and grows. A stagnant economy would mean that the defence of the country could not be handled effectively, something which would certainly be tragical for South Africa and its people in the present international political climate. The time has come for a good growth budget to be introduced. All experts in the financial sphere agree with that.

I should like to state categorically that this budget was not introduced for political gain, as The Cape Times alleged last Thursday. I find it reprehensible, as do many businessmen outside politics and outside this House, I believe, that this budget, which is sincerely aimed at inspiring economic confidence, was called an “election budget” by The Cape Times. The hon. member for Yeoville associated himself with that in his arguments this afternoon. However, that is not true.

As a result of the depressive economic climate of previous years, consumer confidence waned; it has only started to show a reasonable revival during the past few months. This budget should have a positive psychological influence, because it holds out the prospect of a better deal. The Cape Times now says, in effect, to the man in the street: Take care, these concessions—they call it “massive give-always”—are only a trick of the Government; hang on to your money and do not spend it. Be wary of the so-called upswing, this is an election budget. Why should our country have to put up with such irresponsibility? The foundation for this budget is not of recent origin; it has been laid over a period, and hon. members on this side of the House have already referred to that. Now is the right time to introduce such a measure.

In the second place, this budget meets the demands of good financial planning. In cooperation with his able officials, the hon. the Minister examined the economy in 1975-’76, and they asked themselves, “How can we use the budget as instrument for putting the South African economy on a sound basis?” They decided for themselves that this instrument should initially be used to put a damper on the supply of money in the country. The balance of payments had to be changed drastically from a negative to a positive figure. Government spending had to be curtailed drastically. The strictest financial discipline had to be maintained, and that was done without fear for the general political reaction that might ensue. No concessions with regard to the tax structure were made at that time, although the fact that the economy should not be distorted or fragmented was constantly kept in mind.

The results did not fail to come. Excessive expenditure decreased and inflationary pressure was lightened. The result of this was a sharp negative multiplication effect on the general level of economic activity.

In 1977-’78 a new phase could be entered upon, the so-called growth with discipline. The supply of money showed a slower increase. The current account of the balance of payments improved dramatically, especially as a result of an increase in the price of gold and increased exports of raw material and foodstuffs. Local investment by the private sector, outside the banking sector, increased, and the Government succeeded in curbing its expenditure. It is important to note that the Government was disciplined itself by curbing its own expenditure.

In the meantime, as a result of the Government’s acceptance of the recommendations of the De Kock Commission, a possibility arose of better relationship between the monetary and fiscal instruments. The position used to be that the country’s reserves came under heavy pressure when internal short-term interest rates dropped considerably below overseas rates. This forced importers in particular to use internal rather than overseas financing. Therefore, in order to protect reserves, the Government was forced to restrict internal expenditure, because there is a direct relationship between real growth and real imports. When the Government suppresses imports to protect the level of reserves, it is also depressing domestic production and economic growth on the other hand. With the establishment of the independent rand subject to the supervision of the Reserve Bank, the speculative outflow of capital can be better prevented and the Government has been able, through the fiscal measures it has announced, to encourage consumer expenditure with greater confidence. Therefore, in the second place, the budget meets the demand of good financial planning, not only in the short term, but also in the long term. Therefore the third phase of broad economic strategies can now be embarked upon. The stimulation of the economy by the Government at this stage is also in accordance with the demands and views of the private sector. Organizations such as the Chamber of Mining and the S.A. Handelsinstituut, as well as various academic and financial journals and writers, have insisted on this. Everyone insists, too, that while the revival will be mainly consumer-orientated, we should guard against an uncontrolled increase in consumer spending. We are very grateful for this budget. We believe that it will have the right effect. However, we cannot afford to go on a large-scale spending spree now, because the rate of inflation is still too high. Let us admit that it is too high and that we should like to see it lowered. However, as long as the inflation rate is so high, it will be driven up by excessive expenditure with all the attendant disadvantages.

In the third place, the budget takes into account the requirements of the country and its problems. One can basically divide the problems of South Africa into two categories, i.e. the non-political problems and the political problems. We should always endeavour to solve or alleviate the problems we are confronted with. In this endeavour we are aided to a greater or lesser extent by the fiscal measures taken by the Government. The hon. member for Yeoville said once again this afternoon that we have to bring about change. That is correct: We should work for change and improvement, but it also reminds one of the old Chinese saying, “Give me courage to change the things that can be changed, the serenity not to try to change the things that cannot be changed, and especially the wisdom to distinguish the one from the other”. It is important to distinguish between that which can be changed and that which cannot be changed. I think it is in this regard that the Opposition so often fails completely.

In the category of non-political problems, the economic problems and especially the maintenance of general economic prosperity play the most important role. The budget very effectively provides for this. In this category there are also problems to which more specific attention has to be paid, problems such as the provision of energy, of food, of job opportunities, of weapons, the use of resources, the provision of education and training facilities for the establishment of a prepared labour force, and care of the aged. One could keep adding to the list of specific matters for which provision should be made. The question is: Does the budget provide for these? In my opinion the answer is: Yes, as far as possible. If I have time, I shall return to some of these categories. In the category of political problems, I consider the reconciliation of the ideals and aspirations of the different population groups of South Africa the most important. That is our basic problem, to reconcile the ideals and aspirations of the various population groups of this country. The Whites, who are the leaders, should always take care of those population groups that are still in various phases of development. That is the reason why this budget takes into account the fact I have just stated.

If we look at these budget proposals, we shall see that the Department of Plural Relations and Development receives R461 million. The expenditure of one year, therefore, is twice as much as the amount the United Nations has spent over a period of ten years in the whole of Africa. The Department of Indian Affairs receives R122 million and the Department of Coloured Affairs R328 million. This, however, is not all that the other Coloured groups receive from this budget. These are only the direct allocations. In addition they receive benefits from almost all the other Votes as well, benefits with regard to defence, police, justice, health and social welfare.

The peace and good order in South Africa can mainly be ascribed to the fact that the Blacks, the Coloureds and the Indians share in the benefits which a free economy and a National Government have brought the country over the years.

We can now look at a few specific problem areas in the non-political categories. The budget provides for development of energy resources by way of grants to Soekor and Sasol. As far as the provision of food is concerned, we are faced with a twofold problem. We have to look after the interests of the consumer as well as those of the producer. The State has examined both problems. I said at the outset that it was not necessary for us to praise this budget. Therefore we can make bold to tell the hon. the Minister of Finance where we think he has not done enough for certain sectors. My personal opinion is that more can be done with regard to the producers of agricultural products, because that is a strategically important industry. This industry has specific problems, as the hon. member for Schweizer-Reneke also pointed out. The fact is that the budget takes the existing problems into account and does something about them. Whether it is enough, however, is another question.

In the fourth place, a budget should also meet the demands of realism. It is no use getting excited and saying that we should have had more here or there. We should look at what is realistic in South Africa today.

South Africa is a democratic country with a free economy and it remains our ideal to do justice to private initiative with as little State interference as possible. It is easy to say that the budget does not go far enough, but the question arises how much Government interference we really want. The budget is an instrument, but anyone with a sense of realism will realize that everything cannot be done in one year.

We are very grateful for what the budget is going to do in 1979 and therefore we support this Bill.

The hon. member for Yeoville has asked me for an opportunity to make a short statement and I now grant him the opportunity.

Mr. Speaker, I rise on a point of personal explanation. When I addressed the House earlier, I used the words “However, he presented the secret report apparently to both the previous Prime Minister and to the hon. the Minister of Finance”. In saying that I relied upon what had been said in this House in December 1978 in Hansard. However, the hon. the Minister of Finance has said in this House that he had said in the Other Place—and that it was reported in the Press—that he denied having received that report. I have verified that he was reported in the Press that he had denied receiving that report.

If the hon. the Minister denies receiving the report, I accept that denial and withdraw the inference that may have been drawn from my statement.

Mr. Speaker, may I just say that I accept that statement without qualification from the hon. member for Yeoville.

Mr. Speaker, the hon. member for Newcastle and the hon. member for Malmesbury will realize that my time is far more limited, of course, than that of other hon. members of the Opposition. Consequently I shall react very briefly to what they said. They referred to the Information scandal. We received the interim report of the Erasmus Commission this afternoon. We shall make a thorough study of the report and give it our full attention. There has to be a full exposure of the Information affair, and in that spirit the third report of the commission, as well as the evidence given before the commission, should be submitted to us as a matter of extreme urgency.

We welcome the fact that there is sufficient money this year for certain concessions to be made. In cases where certain concessions were in fact, made, we are grateful for them and welcome them. Of course, we were hoping for more than we actually got. But that is only human. If I may single out two of the concessions, I should like to tell the hon. the Minister that he could have done more for the police and for pensioners. I wish to thank the officials who presented this difficult budget in such a clear and readily comprehensible manner. The hon. the Minister may rightly be proud of the officials who serve his department with so much devotion to duty. We thank Mr. Pretorius for the outstanding services rendered by him during his term of office, and wish him everything of the best for his imminent retirement on pension. We also welcome Mr. Du Plessis to his new office. If he follows in the footsteps of Mr. Pretorius, we are certain that he will not go wrong. We also wish him everything of the best.

It was easier to criticize the budgets of the hon. the Minister in the past than it is this year.

†Mr. Speaker, I am worried about the attitudes of White unto White in South Africa. Unless the Whites in South Africa can find each other I do not believe it will be possible for them to accommodate the other race groups. One would think that with all the particular problems that require urgent solution, there would be goodwill amongst all groups. The White group, however, is not setting the example…

Why do you not join us then?

Mr. Speaker, the hon. the Minister wants to know why I do not join them. I do not think that will solve the problem.

You are so right!

Mr. Speaker, the White group, however, is not setting the example that could be expected from it in the circumstances. By Whites not being able to find each other the seeds of destruction are being sown. There is an enormous front of goodwill for South Africa, even in countries which are hostile to us, countries the Governments of which are hostile to South Africa. The people in commerce and industry and in many other walks of life criticize us constructively. Most important, is that they want to maintain their relationships with us. Political stability is one of the strongest components in ensuring economic viability. In fact, I am convinced that large scale long-term foreign loans can be raised if they are raised by objectives, objectives that foreign leaders and foreign lenders can justify, even to South Africa’s worst critics. A housing project, for example, can be started with money borrowed abroad, both for this purpose and for the purpose of creating twin cities for other race groups, fully-fledged cities with all the facilities and all the amenities that are needed. Let us take Coloured housing as an example. There are approximately 45 900 units still to be built. Last year 23 000 units were built. It means that if there were sufficient funds more houses could be built urgently. One would require, say, R7 000 per unit which means that the amount required for Coloured housing would be approximately R320 million. For Indian housing approximately R150 million will be needed, and for Black housing about R530 million will be needed. One does not know exactly what the backlog is in the case of Black housing, but it stood at the figure of 274 000 housing units in about 1975. Of those 163 000 housing units were in the homelands.

The hon. the Minister would then be looking for an amount of R1 000 million from a consortium of lenders. These lenders will draw no adverse criticism because they will improve the quality of life of people of all races if they should advance that money to South Africa. I want to ask the hon. the Minister to consider foreign loans for specific objectives such as the one I have mentioned. If the hon. the Minister should succeed, he will go a long way towards providing homes and employment for a large number of unemployed people. At the same time the hon. the Minister will boost the building industry, which desperately needs a boost. Funds can be borrowed for educational projects such as providing more classrooms, schools, colleges and amenities for other races. We will make it easier for our friends abroad who want to lend us money if the projects are free of controversy. Naturally, we must also encourage foreign investments or foreign loans in other spheres. South Africa can give foreign investors a return on their money that is almost unparalleled anywhere else in the world, more especially now that foreign investors are able to invest in the financial rand. We must face the fact that, while the foreign capital inflow in 1975 was R1 746 million, in 1976 it declined to R989 million and in 1977 it declined further to R278 million. I sincerely believe we could attract the moneys we previously attracted if the hon. the Minister would adopt the suggestions that I made earlier. Our economy needs foreign investment in order that we can provide employment for all our peoples and in order that we may stimulate the economy even further. I was interested to read in a report that Alaska is seeking permission to start buying R440 million worth of gold bullion as the drop in the buying power is eroding the value of pension funds. The members of the Municipal Financial Officers Association estimate that the interested States in the USA could have as much as R1 690 million available for investment in gold bullion. I think that one should try to obtain a copy of this particular pension fund’s evaluation that prompted it to move in the direction of gold. I believe that we should do our own evaluation—and I am convinced that we can do an even better evaluation than they—of the drop in the future buying power of money and then institute a more intensive campaign overseas encouraging big and small investors to invest in gold. They will see that in the long term money is no substitute for gold. Any money spent on this campaign will be money well-spent and the hon. the Minister will be free from criticism in this regard.

South Africans go overseas in their thousands every year and some 600 000 tourists come to South Africa every year. Many of these tourists are prepared to sell South Africa overseas, but they lack the necessary ammunition. We in these benches would like to see that these tourists are requested to buy, even if for a very nominal charge, an inexpensive publication which briefly puts the case for South Africa. We envisage something along the lines of the publication entitled South Africa, International Bone of Contention. This type of publication, and other further improved publications, will assist South Africa and its friends to sell our country abroad. I am not saying that the particular publication I have referred to should be used, but we should have some publication available which effectively and briefly states our case and which will thus assist the tourist to this country and the South African travelling abroad to sell the case for South Africa. I am convinced that there are thousands of South Africans who go abroad and who could be the most fantastic ambassadors for South Africa if they were in possession of the necessary information. I want the hon. the Minister to give this matter some serious thought.

The hon. the Minister appointed a committee to investigate the financing of municipalities and other bodies. The hon. the Minister mentioned in his budget speech that this committee, viz. the Browne Committee, is still busy with its investigations and that it is anticipated that they will report in the near future. I want to bring it to the hon. the Minister’s attention that there are provincial buildings and central Government buildings in respect of which the authorities are not contributing the millions of rand they should contribute to municipal coffers. The result is that, because municipalities are short of money, they are having to bleed the ratepayers white. I think the hon. the Minister should give very urgent attention to this matter. I believe he should regard it as a matter which must receive priority.

There is a further matter I want to bring to the attention of the hon. the Minister. I have received complaints from businessmen that when the Reserve Bank reduces the rate of interest, certain bankers do not pass this reduction on unless specific application is made to them.

If this is correct, the banks which act like that are surely not acting in the interests of the economy. Is it not the intention of the Reserve Bank, in reducing the interest rate, to have the reduction passed on by the banks to their clients? I should like to give a concrete example of a wealthy businessman who told me that, as a matter of interest he had asked his bankers what his rate of interest had been reduced to in view of the reduction by the Reserve Bank. The answer was that his rate had not been reduced because he had not applied. He then applied to his banker to reduce the rate, which was then reduced merely by an over the table discussion. He then asked the manager what procedure was followed by other banks and the manager said that he thought that they only reduced interest rates on application. The businessman felt that this was completely wrong and wanted the matter to be brought to the attention of the hon. the Minister. If the bank classifies customers according to a credit rating for overdraft interest purposes, that is fine, but surely if the Reserve Bank reduces the rate, the bank should automatically review the rate charged by them. I see that the hon. the Minister is nodding his head but I do not know whether it is in agreement or disagreement. It may well be that the remarks made by this businessman only apply to certain banks and my remarks would then only apply to those banks. We would appreciate it if the hon. the Minister would consider this matter, because if a lower interest rate is charged, it filters all the way through the economy and I think that is the intention behind the reduction of the interest rate by the Reserve Bank. I should like the hon. the Minister to make a statement about that matter if he is in agreement with what I am saying. Of course, if he disagrees, I expect him to say so.

There is a tendency for private business enterprises not to keep pace with each share of the gross domestic fixed investment. In 1946 private business enterprises were responsible for 63% of the gross domestic fixed investment, while this declined gradually to 46% in 1977. The share of public authorities and public corporations together increased from 37% in 1946 to 54% in 1977. It is disturbing, in view of the unemployment situation, that private business enterprises have lagged behind. There may be good reasons for this domestic change, but it is something that certainly needs investigation. I should like to ask the hon. the Minister to investigate this matter in consultation with Assocom, the FCI, the Handelsinstituut and other bodies which would readily furnish him with the necessary information. The hon. the Minister may well find that more incentives are required to stimulate private business enterprise. It is, however, a matter that requires investigation urgently.

The other matter I should like to raise is that Port Elizabeth, as the hon. the Minister is aware, is the Cinderella city because it does not have the perks that other cities have. For example, it does not have a Sasol, an Iscor and border concessions like other areas have, and therefore the hon. the Minister has a special obligation to assist the Port Elizabeth region, for example by assisting the motor industry. I am pleased that the hon. the Minister of Economic Affairs is now sitting there.

I have been here all the time.

Yes, but he is now sitting next to the hon. the Minister of Finance. The hon. the Minister of Finance can assist the motor industry with further concessions and incentives. I am aware of the fact that he has slightly reduced deposits in the last few days, but I think he should also lengthen the period in which HP-buyers can pay their installments. I think that would be an inducement for more cars to be sold. Furthermore he should, of course, eliminate the surcharge completely. In that regard I should like to hear from him.

You are now talking to two Ministers at the same time.

Yes, I am talking to both hon. Ministers at the same time. I was under the impression that the surcharge was merely a temporary measure.

I shall do my best to persuade him.

The hon. the Minister of Finance says he will do his best to persuade the hon. the Minister of Economic Affairs. The problem is that the hon. the Minister of Finance presented the budget. I hope these two hon. Ministers can sort out these problems between them so that the surcharge can be eliminated.

Secondly, the hon. the Minister of Finance can help us and the building industry by allocating more funds to our region to assist in eliminating the housing backlog. There is an enormous backlog of Coloured and Black housing in Port Elizabeth and this requires urgent attention.

I should also like to talk to the hon. the Minister about the increase in pensions and about the means test. We are pleased that an increase has been granted, but the problem is that the increase still does not allow pensioners to make ends meet. The increase in the cost of living has hit the have-nots the hardest. I should therefore like to appeal to the hon. the Minister to have an argument in depth investigation undertaken by the Department of Social Welfare and Pensions to establish what the position of the pensioner is and then to come forward with constructive proposals. In that regard he can consult with the hon. the Minister of Social Welfare and Pensions sitting right next to him. I am serious about this, because I believe that the hon. the Minister of Finance must come forward with realistic proposals to allow a ray of sunshine to enter the lives of the pensioners.

The hon. the Minister told me in another budget debate that the Public Service Commission does not obstruct the granting of increases for the Police Force in any way. In fact, the hon. the Minister thought that the Public Service Commission was of great assistance to the police. The increases and the various clothing allowances allocated to the Police are obviously very welcome, but in reply to a question we were told that 3 377 men joined the Police Force in 1978 and 2 172 purchased their discharge. These figures must be investigated. It is obvious that if these figures were to be investigated in depth, one would find that the main reason for resignations is the inadequate pay received by policemen. The 2 172 members of the Force who purchased their discharge were trained at great expense to the State. These people joined the service knowing the enormous sacrifices they and their families would have to make, sometimes under great pressure and in extremely difficult circumstances. We have made extraordinary calls on both our Police Force and our armed forces. These people have made great sacrifices at great cost both to themselves and their families. There must be a proper in depth investigation into why the Force has lost so much personnel, and, at the same time, they must come with recommendations to relieve the plight of the police. This matter must enjoy the urgent attention of the hon. the Minister.

South Africa must take the lead in Southern Africa in economic and other fields. We have the stability and expertise to form an African economic community in Africa, like the EEC in Europe. The economic community can bring dramatic economic improvement to the entire Southern Africa. The African economic community could trade with the West and the East and place this continent in the forefront of economic activity. I believe that, if the States of Africa were to work together collectively, each individual State could also improve its own economic position. The Marxist imperialists would obviously oppose this form of union as they do not have the interests of Africa at heart. Their presence in Africa does not augur well for the States of Africa. They have come to take from Africa; they have not come to put into Africa Africa has far greater needs than military hardware, needs in the fields of health services, the infrastructure, economic development, transportation, etc. The West has a role to play in Africa but, because of its weak-kneed attitude, many States of Africa have lost or are busy losing faith in the West. The West should encourage the development of an African economic community and the hon. the Minister, his colleagues and the department should do their utmost to bring this about, and so should every other South African who can do anything about the matter at all.

Export is absolutely essential and South Africa has the potential to vastly increase its export trade. In order to achieve the maximum export trade, it is most essential that the Government must pull out all stops to ensure export promotion. It is in this spirit that we welcome the establishment of an export promotion fund as announced in the budget. More important is the fact that the money available for export promotion is going to be trebled next year on the figures provided last year. May I ask the hon. the Minister whether I am correct in assuming that if he is going to treble the figure for the previous year—R121 million is provided for 1979-’80 and approximately R97 million was provided for the previous year—he is in fact going to provide about R300 million for the export promotion fund? I think that should be almost correct. Does this mean that exporters will receive more assistance and concessions, or is this amount merely envisaged because the total amount of exports will increase during the next financial year?

It would therefore seem fair to assume that the increase would also enable the department to make further concessions to exporters. At the same time part of the increase would finance the increase in the totality of our exports. Should the hon. the Minister of Finance be in a position to give us further information about this matter through his colleague the hon. the Minister of Economic Affairs we should appreciate it.

We can discuss that further under the relevant Vote.

Yes, we can discuss it further under the Vote as well, but the main thing is that we welcome the increase to the Export Promotion Fund. The hon. the Minister has made many concessions, but like Ministers of Finance all over the world, the hon. the Minister can never satisfy everybody. So, too, we have our reservations about many aspects, as I have mentioned earlier. Because of that I consequently move as a further amendment—

1. (1) combat unemployment by taking the necessary steps to ensure a satisfactory growth rate and an improved standard of living for all our people;
2. (2)investigate in depth ways and means of increasing the share of private business enterprise in gross domestic fixed investment;
3. (3) give more effective relief to pensioners and others from the tremendous increase in prices, especially of foodstuffs, and will raise the amount of the means test for old age pensions; and
4. (4) assist every South African, wherever possible, to obtain a meaningful stake in South Africa in, for example, the field of housing”.

Mr. Speaker, what the hon. member for Walmer requests in his amendment is exactly what this budget will ensure, as I shall prove, step for step, in the course of my speech. In fact he had little fault to find with the budget Since 1975 South Africa has had to effect far-reaching adjustments in order to rectify the over-expenditure in the ’sixties and the early ’seventies. These measures were so effective that within the short space of a few years, South Africa’s economy has recovered to such an extent that today we are the envy of other countries. The authorities were in a position to cause the real growth rate of the gross domestic product to increase, after a drop of 8% in 1974, to an annual average of approximately 1½ in the three subsequent years and 2½% in 1978. The net result of this course of events in the economy over the past year has undoubtedly been an economy far stronger than it was a year ago. With a sound balance of trade position, a swing to a positive economic growth rate, a substantial increase in the net gold and other foreign reserves, and with State expenditure, bank credit, money supply and the rate of inflation well under control and with improved profits, a more favourable business climate and greater confidence on the part of foreign investors in South Africa, it can therefore be said that the adoption by the authorities of an economic policy of growth with discipline has paid dividends, and that the South African economy is now in a position to enter a phase of accelerated economic growth.

To a great extent the current account of the balance of payments has increased, thanks to a higher gold price and steadily increasing exports, from R465 million in 1977 to R1 412 million in 1978. The value of exports has been pushed up to R6 795 million with a growth rate of 20%. At the same time the net gold production has increased by 31% to R3 218 million.

At present, insufficient growth is one of South Africa’s major problems. Despite the fact that the country has saved more than has been invested and that there has been a consequent increase in money supply, growth is being limited due to a lack of demand. The result is unemployment and excess production capacity. The promotion of further successful economic growth is of cardinal importance at the present stage, particularly from the point of view of greater employment, greater confidence in the long-term potential of South Africa, labour peace and an effective total strategy in the times we are living in. Industry is at present operating at an average of 84,5% of capacity and insufficient demand is one of the reasons for this. A greater demand will not only stimulate growth but will also lead to the better utilization of available capacity and result in lower unit costs. Emphasis on growth ought not, therefore, to exert excessive pressure on the existing rate of inflation.

Very important steps have been taken by the Government in this budget affording the economy opportunities for greater vitality. The relaxation of monetary and fiscal measures, together with the boosts to the economy such as import replacement and increasing export earnings in gold and merchandise are all, to a greater or lesser degree, factors promoting the recovery of business activities over a wide front.

The pivot on which everything, it seems, is going to depend for a sustained recovery of the economy over a wide front, is the issue of confidence on the part of both businessmen and the private consumer. By jolting confidence, one will indisputably place a strong weapon in the hands of our enemies. The threat of sanctions against us which we are hearing more and more is aimed at creating uncertainty as to the South African economy. All of us, including the official Opposition, will have to set ourselves against this with all our might. Let us all as a team put our shoulders to the wheel and continue to lend greater force to the recovery of the economy.

Although greater demand will have a positive effect over the short-term, the country’s economy is still dependent on long-term foreign capital to maintain the necessary growth in order to absorb the increasing entry into the labour market. Consequently we are grateful to have been told by the hon. the Minister over the past few weeks that he has succeeded in negotiating certain foreign loans.

Balance of payments problems and the acceleration of rates of inflation in the majority of large industrial countries of the West are and remain serious stumbling blocks which tie the hands of the shapers of economic policy in the countries concerned as regards more effective stimulation of their economies and the combating of unemployment. This situation also explains the hesitant pace of recovery which has characterized the world economy for so long. It seems as if countries such as the USA, Britain, France, Italy and Canada do not have much margin in which to stimulate their economies.

The real problem facing the world economy is in my opinion to be found in the powerlessness of the majority of Western countries to curb cost inflation. As matters stand at present, it is hardly possible to look to abroad for any noticeable expansionistic influence on the South African economy. Consequently it will be necessary to rely on domestic factors for the sustained recovery of our economy.

Therefore, in order to set the economy on the right road, it is necessary to increase domestic expenditure, in other words the demand for goods and services. This state of affairs puts private consumption expenditure squarely in the limelight as the most important factor with which to provide stronger impetus. A consumer-led upswing, supported by, among other things, the additional effect of the higher gold price and increasing exports, is very clearly the basis which will determine the strength and duration of the economic recovery. Against this background, therefore, it is clear that basically, a recovery in the economy must be led by a combination of forces, a combination of higher export earnings and higher consumer expenditure.

I should also like to stress another aspect of cardinal importance even over the short-term in affording the South African economy greater resilience. I refer to the “Buy South African” campaign, which has not yet had the desired effect. The fact that problems are being experienced in obtaining foreign capital, demands that we give preference to South African products. By means of such a campaign we could save hundreds of millions of rands annually in precious foreign currency without forfeiting price or quality. What is more, it would be difficult to make a better investment for the future of South Africa. Every rand spent on a locally manufactured product instead of an imported product represents a contribution to the economic strength of the country, more employment opportunities and greater welfare and political stability. I therefore want to make an earnest appeal to everyone to throw their full weight behind the campaign to give preference to South African products. In this regard I want to make a special appeal to the manufacturing sector, the import trade, foreign-controlled companies and John Citizen. Indeed, the extent of the idle production capacity in the majority of manufacturing sectors affords us a golden opportunity to counteract the pressure of import trade on the country’s balance of payments position.

The hon. member for Yeoville reeled off 18 reasons why this was supposedly not a good budget I could furnish far more reasons as to why it is in fact a good budget. Let me refer to a few. The following steps have already been taken recently by the authorities: The repayment of loans to the value of R376 million; the repayment of loan levies on companies to the value of R160 million; the decision to redeem Government stocks which were to lapse in February, without offering new issues; the raising of the credit ceiling of banking institutions; the substantial reduction in the liquid asset requirements of banks and the acceptance and implementation of the recommendations of the De Kock Commission, a matter which has already been effectively dealt with by the hon. member for Schweizer-Reneke. All these measures have already assisted in improving the business climate. Now the hon. the Minister has come up with a budget of growth from strength, which has been generally welcomed by economists, academics, industrialists, businessmen, tax experts and also the general public. Therefore the Opposition are the only people to find fault with the budget.

Tax concessions relating to tax and loan levies to the value of R762 million are distributed across a wide field. The most important concessions, however, are the following—I state them again as against the list of reservations which the hon. member for Yeoville reeled off: A reduction in the personal tax scales effecting an average saving of approximately 35%; a reduction in loan levies on companies; the abolition of the 2½% tax surcharge on gold and diamond-mining companies; aid to farmers over the short-term; bigger deductions from the earnings of married women and relief for divorced persons; bigger tax rebates for the elderly and on medical expenditure, insurance, pensions and children; bigger deductions with a view to estate duties; a bigger subsidy on bread; an increase in the pensions of social and civil pensioners; a reduction in the surcharge on imported goods; lower excise duty on unfortified and fortified liquor and sparkling wines; and relief for Black taxpayers with the object of achieving parity within the next three years. Apart from these concessions, Government officials are being awarded higher salaries amounting to R257 million. I could continue in this vein.

What is there to set against all these benefits which the budget offers us? As against all these benefits there is only an increase in the excise duty on grain spirits and certain diesel vehicles.

Hon. members on that side of the House, particularly the hon. member for Walmer, maintain that inadequate provision has been made for social services. I want to make the statement this afternoon that economic growth and social services to the masses cannot be maximized simultaneously in the present situation. There are limits to the social services a country can afford, and this limit is determined by the strength of its economy. Before social services can be expanded it is necessary to bring about economic growth.

Free enterprise is the economic system which can ensure the most rapid economic growth. I want to quote an example of this. The hon. member for Walmer has already referred to the fact that more houses must be built Since it costs between R7 OCX) and R10 000 to create an employment opportunity and approximately the same amount to build a subeconomic dwelling unit, it is necessary to guard against building too many houses, for example, at the cost of employment opportunities. When a house is built, it is built, whereas an employment opportunity, together with the education and training that goes with it, is there for life and enables the worker to purchase a house himself. By saying that I do not wish to intimate that more houses should not be built. I merely want to show that it is always necessary to set a limit, determined by the strength of a country’s economy.

The hon. member for Yeoville also referred to the increased deductions from the earnings of married women. I dealt with this matter at length last year during the part appropriation debate. I do not intend to repeat all those arguments and hon. members on that side of the House who are interested can go and look them up if they like. This afternoon I merely want to repeat a few statements I made then. I still stand by those statements. The first statement I made was that the acceptance of the married couple as the tax unit is based on the principle of ability to pay, taking into account the means of the unit which earns and disposes of the income. The existing tax structure is still based on the principle of ability to pay and consequently this statement is still obviously true. The second statement with which I concluded at that time was that the solution should therefore rather be sought in the general revision of tax scales, particularly as far as the marginal scale is concerned. I therefore welcome the proposal of the hon. the Minister to afford greater relief to the married woman by, firstly, increasing the tax deduction from R750 to R900 and, secondly, reducing the tax scales in general.

Some hon. members have already referred to The Cape Times editorial and I too should like to refer to it. The hon. member for Yeoville also quoted the title of this editorial, namely “Election budget”. I assumed that this was once again the sound of “His Master’s Voice”. I quote from this editorial—

This is a ridiculous and far-fetched statement and the hon. member for Yeoville even echoed it.

This budget is based on pure economic foundations as I have already shown in my speech. The author of this article goes on—

Is this not the old well-known cry of the official Opposition—an unqualified redistribution of wealth? We heard it again this afternoon. The Cape Times, just like the PFP, advocates an economic system in South Africa which is not in line with the philosophy of the PFP nor with the powers and interests behind the PFP. That applies to The Cape Times as well. What they are pleading for here does not correspond with the interests and the powers behind that newspaper which are at present bedevilling matters. What we have here is an instance of the utmost hypocrisy.

The intention behind introducing the general sales tax last year—something which was also violently opposed by the official Opposition—was to bring about a gradual shift from direct to indirect tax in order to bring a more balanced tax pressure to bear on the population as a whole and effect stabilization in the flow of tax. The hon. the Minister has already made such good progress in this regard in the first year that it has been possible to bring about a reduction in the scales of personal tax.

For example, it was possible to reduce the highest rate of tax from 60% to 55%. The ideal ought to be to ensure that the highest marginal tax rate should never be higher than 50%. Indeed, in a system of free enterprise the State ought never to be the senior partner. I should like to congratulate the hon. the Minister and his department wholeheartedly on this fine budget. It is a privilege for me to support it.

Mr. Speaker, I should like to begin my speech by referring only briefly to the Information scandal. I do that only because the hon. member for Newcastle demanded that the hon. the Leader of the Opposition and the hon. member for Yeoville should resign their positions in the House and so put an end to the Information scandal. [Interjections.] I believe the exact opposite to be the case, because the work they have done in the investigations and in representing the attitude and the point of view of a vast number of people of all parties, has been invaluable. I believe the Government’s handling of this issue has at times been like a slapstick turn in a vaudeville show. They made endless mistakes. I think they should beware of making this last mistake by demanding the withdrawal of these two hon. gentlemen, because the people of South Africa will believe this thing to be finally cleaned up and finished—a state which, I hope, we will soon reach—when these two hon. gentlemen say they are satisfied. When they finally say they are satisfied that will be the answer. [Interjections.]

[Inaudible.]

I beg the hon. member for Von Brandis and other hon. members opposite not to make the ultimate mistake. If they do what the hon. member for Newcastle suggested, we will never get this thing cleaned up.

I now want to turn immediately to the budget. I must say at once that the budget contains good features. It will be churlish not to recognize that. I want to look at the budget critically, nevertheless, and in particular to examine to what extent the budget is a purely accounting exercise and to what extent it is a policy-making instrument. I believe we have to look at the major economic desiderata in this country at the present time in order to ask ourselves what it is that we need, what the cardinal requisites of the economy of South Africa are at the present time. The criteria we must look at are clearly and, I believe, almost indisputably; in the first instance, that of growth; in the second instance, that of employment; in the third instance, that of productivity; in the fourth instance, that of disinflation; and in the fifth instance, that of social justice. These are cardinal to the full restoration of confidence in this country and in the community of nations. I believe that they are cardinal also to the full restoration of our political, social and economic systems in South Africa.

I want to turn first to the matter of growth because this is obviously a major target of the budget. We have of course a grievous backlog in respect of growth. Between 1975 and 1977 South Africa’s gross domestic product grew at the rate of approximately 1½% per annum. In 1978 there was some improvement and the gross domestic product grew by 2½%. But all these figures are grossly inadequate in relation to the basic minima which are required by our rapid population growth and the rising expectations of our people. The fact that we achieved a 2½% growth in the past year is very largely due to the increase of 23,5% in our gold and mineral production; but this was a rather isolated phenomenon in our economy and certainly not characteristic of the economy as a whole. Real investment, as the hon. the Minister noted, is down by 7½%. The inventories are very low, and the question which we ought to ask ourselves is whether the stimulatory measures taken by the hon. the Minister will be adequate to raise the gross domestic product to the very modest rate of 4%.

The hon. the Minister has taken the step of budgeting for a deficit of 2% of the GDP. This is theoretically expansionary, but one cannot help having doubts whether the deficit is in part not more apparent than real. If one looks for example at the Inland Revenue Account, one finds an estimated net increase of R1 400 million over what was achieved in 1978-’79. One finds however, that the estimate of gold and mineral production to be extremely conservative for this coming financial year. In the Revenue Account one finds that there has been excluded from accounting the loan levy of R556 million, while the repayment of the levy of R55 million is taken into account So, part of a very large part of our revenue is left out of account, in accordance with normal accounting practice, while the R55 million paid back is brought into account.

There is also in the estimated revenue the amount of R400 million by way of surcharge on customs duties. This is an expectation of what is to be paid into our revenues. This is not taken into account in the hon. the Minister’s assessment of what will be available to him through this budget. R160 million is, however, taken into account by way of deduction of the amount by which this surcharge would be reduced in the coming year. This means that on these two items there is something like R1 000 million which has not been strictly taken into account, but which will be available to the Minister in the coming year. If he is going to dispose of it in the course of the year, then this would serve as an additional stimulus, but if he is not going to dispose of it, it means that the 2% of GDP deficit in the budget will be more apparent than real, that the actual deficit will not be as large as intended and therefore the stimulus to the economy will be less effective than intended. One must nevertheless agree that of the five criteria which I have mentioned, the hon. the Minister has undoubtedly come closest and done most to achieving the first criterion, namely growth.

I now turn to the second criterion, that of employment The hon. the Minister mentioned that there has been a slight decline in the registered unemployment figures for Whites, Coloureds and Asians. The fact remains that there are 250 000 new workseekers every year, and I think the hon. the Minister must really refrain from looking at the register of unemployed as being a good measurement of the state of unemployment in this country.

Registering oneself as unemployed is a voluntary action. Many workseekers do not go to the work bureau to register their being unemployed. Many of them are altogether ignorant of this procedure. I believe that the true figures are very different from the figures obtained from the register of unemployed. If one accepts that it costs R10 000 to create a job and that 250 000 workseekers are annually entering the labour market, our investment figures in South Africa are woefully below target. In fact, there has been a decline in investments. If we are to create jobs, there obviously has to be an enormous stimulus for investment. In this regard I want to say that I welcome what the hon. the Minister has said about an in-depth inquiry into the long-term equilibrium between capital and labour. Clearly there is a grave disequilibrium at the moment, and this needs to be looked at. However, I might say in parenthesis that this is exactly what the Economic Advisory Council of the hon. the Prime Minister has been looking at and talking about for a long time. But apparently it has been a “dialogue of the deaf", because so much has been said in such dramatic terms by the Economic Advisory Council. The problem has been stated so clearly, yet so little has been done. However, if the hon. the Minister’s new commission or investigation helps to open people’s ears to this problem, it will be serving a very valuable purpose.

Let me now deal with productivity. This is obviously a key factor relating to growth, employment and indeed to investments. In the part appropriation debate I spoke at some length about the very poor standard of productivity in South Africa. We have one of the worst standards of productivity amongst all the developed and developing countries in the world. I could quote a large number of statistics, but my time is limited. I think the hon. the Minister will accept that it is beyond argument that productivity in South Africa is not only low, but is also getting worse. I believe this is a very serious matter in South Africa. There is nothing to comfort us in the figures produced by the various sources of statistics, e.g. the Bureau for Economic Research of Stellenbosch, the Bureau for Statistics in Pretoria and other sources.

We welcome the improvements in the income tax structure, which to some extent create incentives for executive, managerial, professional and technical classes. We have discussed before in this House the question of the disincentives of high taxation. In this budget we have seen what I believe to be the first small step towards the gradual restoration of a fiscal system which has been heavily distorted by inflation. I believe we still have a long way to go. However, one welcome step has been taken.

Another criterion is inflation. We have lived with inflation for so long now that it seems we have come to the strange belief that any inflation rate below 10% is tolerable. But an inflation rate of 10% is highly corrosive. The past year’s inflation rate of 11,2% is destructive to our entire system. One must concede that growth and inflation are two difficult horses to drive in harness. There is little to comfort us in the budget’s somewhat disturbing equilibrium between inflationary and disinflationary elements. For example, an effort is made to increase consumer demands, but, of course, this is opposed by the factors of low productivity and low investments.

I think these things have to be taken together, but, as I have said, the solution to the problem of driving these two horses at the same time in the same direction is not an easy one.

I think social justice will readily be accepted as being a major objective in achieving social stability in our country. In some circles there already exists an assumption that economic strength and the provision of strategic materials will compel the society of nations to accept us on our own terms. There may be some element of truth in this, but I think it must be equally true for anyone who is reasonably closely aware of what is going on in our relationships with other countries of the world that things are not going well and that they will not get better until there is real evidence of social reform in South Africa. I believe that the budget has given too little evidence of a meaningful attempt to restore the South African society to the kind of level which many of us in this country feel is necessary, which the majority in this country feel is essential and which the rest of the world demands of us before full, prosperous and cordial relations can be established in the international society. I should like to quote a few examples to illustrate what I mean. The burden of taxation on Blacks, for example, has been relieved to some extent by the budget, but the threshold at which a Black man begins to pay taxes stands at R1 201 and, in addition, he gets no relief by way of abatements, etc. A White man with a wife and two children, who can perhaps be compared with the average Black man, only begins to pay tax when his taxable income exceeds R3 900. However, to be fair to the hon. the Minister, he indicated that he himself agrees that this is a first step and that he proposes to make further improvements over the next three years. Increases in pensions have been granted to Black pensioners, but these increases have had the effect of further widening the absolute gap. In monetary terms the gap has become wider and not narrower. I draw attention to these things, not by way of accusing the hon. the Minister of not being aware of them or not intending to do something about them, because I think he does have such an intention, but merely to emphasize that social justice has many facets including fiscal ones. I believe the hon. the Minister would do well to give a stronger lead through his budgets in this important field of reform, both social and economic, in South Africa.

Let me sum up very briefly. The budget does have some attractive features. I believe it is in some ways a facile budget, but certainly it is a popular budget. However, if we test it by the hard criteria I have mentioned, the five cardinal issues on which our society will survive or fail, the budget cannot be said to be a fully successful policymaking instrument in respect of these five issues. On that I think the budget must be judged. I believe the hon. the Minister must come back next year and do better in respect of these five issues, in which case we shall find it possible to praise him more warmly than I have been able to do this afternoon.

Mr. Speaker, I think that when the Hansard of this debate is read one day, it will make very interesting reading, for although one can never expect the Opposition to put aside its task of criticizing a budget, it is a fact that it certainly must have been extremely difficult for them to find valid grounds on which to criticize this budget. I think that we should test them in this regard. We should start judging them according to the philosophy on which they based their evaluation of the budget. I think the time has come for the Opposition to give us a clear definition of the philosophical basis on which they criticize our financial measures and policies in this country, instead of letting fly with criticism to the effect of: “Yes, you have done well, but it is still not good enough,” adding at the same time “You have not done it well,” after which they subject us to fierce criticism on those grounds, as if the things which are still lacking in the budget—because one really cannot achieve everything in one budget—were left out deliberately because of the policies of the Government and not because certain things perhaps had to be given priority. That is the test to which we must subject them in future as far as the evaluation of budgets is concerned.