Mr. Speaker, I move—

Agreed to.

Mr. Chairman, there is probably no Minister’s policies that are discussed more frequently in this House than those of the Minister of Finance. One of the most important debates is that on the budget and hon. members are allotted ample time to debate it in detail.

We come today to the discussion of my Vote as such and I want to approach this discussion as constructively as possible. I think there are many important matters of policy which ought to be thrashed out thoroughly here. I do not think that financial and economic policy has been adequately discussed in this session up to now. Of course there are various reasons for that and hon. members know all about them. I should like to put a few aspects before the hon. members at once, and I hope that these as well as other aspects of our financial activities will be subjected to a thorough scrutiny.

†The first aspect I should like to raise is the progress we have been making with the implementation of the new exchange rate system. I can say that steady progress is being made with the implementation of the new official exchange rate policy of what we call managed floating for an independent rand. Once the new system is in full operation, the rand will no longer be pegged to the US dollar, but will be finding its own level in response to supply and demand in the South African foreign exchange market, subject of course to Reserve Bank surveillance.

Thus far the new system has not yet been fully implemented. At first there was a transitional stage during which the Reserve Bank still quoted predetermined buying and selling rates for dollars at which it was prepared to deal without limit with banking institutions. Then, on 27 February 1979, the Reserve Bank began to move towards the desired system of managed floating by ceasing to announce in advance its predetermined buying and selling rates for dollars. However, partly owing to difficulties in establishing a satisfactory network of communications with the other banks in the foreign exchange market, the Reserve Bank continued to deal in dollars with other banks at buying and selling rates which were known to them in advance, and which were never changed during the course of the day and sometimes not for several days on end. Moreover, the bank maintained a fixed spread of 20 points between its buying and selling rates. This system was therefore still a form of so-called “variable dollar pegging” and not yet one of managed floating.

Apart from suffering from the disadvantages attached to any system of variable pegging, including the danger of speculation, this arrangement was not conducive to the desired development of active and competitive spot and forward exchange markets in South Africa. For technical reasons, it also contributed to an undue narrowing of the margin between the buying and selling rates of the banks, resulting in an excessive decline in the banks’ profits on foreign exchange transactions.

I am therefore pleased to be able to report to the House today that the Reserve Bank has informed me that it has now overcome most of its earlier problems of telephonic and other communications with other banking institutions and is now ready to move further towards a proper system of managed floating in accordance with the Government’s policy.

In future market forces will therefore play a greater role in determining the exchange rate of the rand. The Reserve Bank will still participate actively and continually in the market as a buyer and seller of dollars. Thereby it will not only eliminate unnecessary exchange rate fluctuations, but also exert a large measure of control over the movements of the rand-dollar rate. However, the rates at which the Reserve Bank will deal in dollars, will be freely varied in response to market forces, even during the course of the day, with due regard to policy considerations and all other relevant factors. In this manner a proper system of managed floating for the rand will come into being.

These are, of course, rather technical matters, but they are of importance to the successful operation of the exchange rate system in South Africa, something which affects the standard of living of every person in the country.

Taken as a whole, the new exchange rate system, including also the new forward cover and financial rand arrangements, is working well and has already produced favourable results. The most important of these is that the new system has afforded the Treasury and the Reserve Bank more independence in their domestic economic policies and has clearly facilitated the recent shift of emphasis in policy towards the promotion of economic growth.

In this regard I was pleased to note that, in a comprehensive report on the South African exchange system prepared in April 1979 by the International Monetary Fund, favourable comment has been expressed on our new exchange rate system and policy. Among other things, this authoritative report expresses the view that the new policy of managed floating, once fully implemented, should assist us in our efforts to attain a better reconciliation between domestic and external objectives than proved possible under the previous exchange rate arrangements.

*While I am on the subject of foreign exchange and exchange rates I should like to say something about exchange control and make a further announcement on this matter. In my budget speech this year and in my reply to the budget debate I set out the connection between the Government’s new exchange rate policy and the future of exchange control. I think the matter is clear now. In future, to deal with the inevitable fluctuations in the balance of payments, the Government intends to place relatively greater reliance on a sound fiscal and monetary policy on the one hand, and on more variable and market-related exchange rates on the other, and less on exchange control. Although exchange control continues to perform an essential function in South Africa it naturally cannot protect the official reserves at all times and under all circumstances from considerable erosion. Exchange control measures are effective up to a certain point, but experience throughout the entire world has shown that they can be circumvented in all kinds of ways, legal as well as illegal. Exchange control also has certain disadvantages. One of these is that it can seriously curtail the inflow of foreign capital. As I announced earlier this year, the Government has consequently decided, as part of the new exchange rate policy, gradually to simplify, and where possible relax exchange control with the ultimate object of abolishing it in respect of nonresidents. Such abolition in respect of nonresidents will then form an integral part of the planned return in the long term to a unitary exchange rate for the rand in the place of the dual exchange rate system or blocked rand system which has existed since the introduction of exchange control over nonresidents in 1961. As recommended by the De Kock Commission, however, comprehensive exchange control over the short term will be retained over non-residents as well as residents, and even over the long term exchange control over inhabitants in some form or other will continue to exist. The motivation for this, as set out by the commission, is as follows: Firstly, that it will obviously take time to develop the spot and forward exchange markets sufficiently and to get the new exchange rate policy well under way. Secondly, the real or supposed political uncertainties in Southern Africa necessitate the retention of a certain measure of exchange control, and thirdly, the retention of exchange control over non-residents as well as residents over a period of many years has probably had a certain damming-up effect. For these reasons the abolition of exchange control over residents as well as non-residents would in the short term probably bring about an unacceptable degree of depreciation of the rand and/or an excessive loss of gold and other foreign reserves. But this does not mean that the status quo in respect of exchange control should be retained for the present.

On the contrary, a start has already been made with a process of simplifying and relaxing exchange control. So, for example, we have already put the new financial rand system into operation, and it remains our intention to expand this system gradually. At present attention is also being given to various ways in which the existing exchange control procedures can be simplified and unnecessary red tape and inconvenience can be eliminated. Consequently I hope soon to be able to announce certain further improvements in and relaxations of the exchange control system. As part of this rationalization process, however, I want to announce certain important adjustments in tourist and business travel allowances today. Some of these allowances are still on the same level today as they were when they were introduced in 1962. Since that time the consumer price index in a number of the principal countries visited by South Africans has risen as follows:

Moreover, if one takes into consideration that the monetary units of some of these countries have appreciated against the rand during this period, it is clear that the real buying power of our travellers’ allowances has diminished considerably over the years. To partially counteract this problem, supplementary allowances have in recent years been granted quite generally by the exchange control authorities.

In view of all these considerations it has been decided to amend the tourist and business travel allowances as follows:

1. Tourist visits to foreign countries

2. Business visits to foreign countries

All these increases in travel allowances come into operation immediately and will also be applicable in the case of persons who have already undertaken trips abroad this year or are still overseas at present. Such persons will consequently, through the agency of their bankers, be able to obtain further exchange in order to avail themselves of this concession. Since these ample new allowances ought to be sufficient to meet the needs of travellers, I must mention that applications for increased allowances will in future be considered only in highly exceptional cases, and that the authorities will not hesitate to take strict action against persons who contravene the exchange control regulations.

Next I want to refer briefly to another aspect of policy, dealing with banking. During 1976-’77 the South African banking system came under considerable pressure as recessionary conditions developed in the domestic economy. It was the smaller banks and especially the banks with a heavy involvement in property investments that were hit the hardest. Consequently the authorities had to intervene on several occasions to render assistance to certain banking institutions. In two cases the Registrar of Financial Institutions appointed curators who had to continue to manage the affairs of the banks in question, while various smaller banking institutions were absorbed into larger groups.

During February 1977 a special auxiliary fund was established with the co-operation of the five major banking institutions to render temporary financial assistance to the smaller banking institutions through the agency of the National Finance Corporation of South Africa. This auxiliary fund was terminated in September 1977 when it became apparent that it had served its purpose. All these measures, as well as the general improvement in the economic climate which has occurred in the meantime, have contributed to the South African banking system being healthier at present than was the case two years ago. The Government is grateful for this, and also considers it to be of the utmost importance for the future economic development of South Africa that our banking system should remain strong and healthy. Representations are still being made to me to reconsider a remaining problem with which some banks still have to cope, viz. the excessive investments in properties which were for the most part made prior to 1977. These excessive investments, which can hardly be discontinued without losses, in the still prevailing slack conditions in the property market, makes it very difficult for some banks to restore their income and reserves to healthy levels again within a reasonable space of time.

Since the property market is already improving and ought to consolidate further as the Government’s accepted policy of the deliberate stimulation of domestic economic activities is successfully implemented, I am of the opinion that it is justified and desirable under the circumstances that the authorities render temporary assistance to such banking institutions until such time as these properties are again marketable at better prices. Consequently I have requested the President of the Reserve Bank to make such financial aid in the form of loans available to any banking institution which is able to present clear evidence that its financial recovery is being handicapped at this stage by excessive exposure in properties. Acceptable collateral in the form of Government securities will have to be made available for such loans to the banks. I want to emphasize that the Reserve Bank will render this assistance only in very exceptional cases and on a temporary basis and that, for the period for which these facilities may be used, there will have to be close consultation between the Reserve Bank and the banking institutions concerned in respect of the management and control of the property portfolios of the institutions.

I should also like to say a few words to my hon. friends in agriculture. Recently we have heard a great deal about the serious problems of the farming community, particularly as a result of the drought conditions in many parts of our country. The Government is very aware of these problems and is firmly resolved to do everything it is able to do within reasonable limits to improve the situation.

Swellendam! [Interjections.]

From time to time the accusation is levelled in certain circles that the State is neglecting the farming sector.

That is correct.

Perhaps it would be a good thing to examine critically for once the spending in the budget on agriculture in comparison, for example, with the spending on commerce and industry. I just want to see whether we cannot find a certain basis for viewing this matter in better perspective.

The total planned spending on agriculture for 1979-’80 amounts to R285,6 million. If one were to deduct the subsidies, which may be regarded as consumer subsidies, to the amount of R124 million in respect of wheat, maize, grain sorghum and dairy products, a net amount of R161,6 million remains. This represents the Government’s direct spending on agriculture. As far as commerce is concerned, the total planned spending for the present financial year is R127,3 million. If one were to deduct the small amount of approximately R0,4 million for spending on consumer matters, the net amount is R126,9 million. As far as industries are concerned, the total planned spending for the present financial year amounts to R283,1 million. If one were to deduct the spending of R16,6 million on the fishing industry, R2,6 million in respect of the National Supplies Procurement Fund, R1,8 million in respect of Swawec—the electricity supply corporation of South West Africa—and R185 million in respect of the shareholding in the IDC and in Iscor—in aggregate a total of R206 million—a net amount of R77,1 million remains. If we take into consideration that the contribution of agriculture to the GNP in 1978 amounted to 7,5% and that the total net appropriation spending amounted to R161,6 million, as I have just explained, we can say that for every 1% contribution by agriculture to the GNP, after the elimination of subsidies which may be regarded as consumer subsidies, an amount of R21,5 million is being spent on agriculture.

Little calculations will not satisfy the farmers.

The farmers are no longer harvesting at Swellendam and soon we ought to see a very fine outcome there as well. [Interjections.] However, I do not want to start talking politics too soon. Let me first get these little calculations out of the way.

If we consider the contribution to the GNP of commerce and industry, we see that collectively it amounts to 34,9%, while the total net spending is R204 million. The corresponding Government spending for each 1% contribution by commerce and industry to the GNP is therefore R5,8 million. I am furnishing this figure just to indicate that in comparison with the commerce and industry sectors, agriculture is receiving more assistance and aid, as one would expect. In so doing I am not denying the strategic importance of the agricultural sector and the problems, arising in particular from our climatic conditions, which are unique to agriculture. On the contrary. The Government is very thoroughly aware of the economic problems which, as I have already said, agriculture is in point of fact experiencing. For this reason the hon. the Minister of Agriculture and I appointed the so-called Jacobs Committee to investigate the economic position of the farmers and to make recommendations to remedy it. Apart from various Government departments, organized agriculture, the co-operative sector, the Land Bank and the Reserve Bank are also represented on the committee. As I have already indicated, this committee has already done valuable work.

I am thinking for example of the recommendations in respect of the comprehensive crop insurance scheme, interest subsidies on certain production credits in drought-stricken areas, the extension of Land Bank credit, inter alia, for the manufacturing activities of agricultural co-operatives, and so on. The committee is at present giving attention to certain long-term aspects. These include inter alia the suitability and adequacy of the existing sources of finance, the part played by the co-operative sector in the farming industry, and the price policy in respect of price-controlled products. What it amounts to in short is that the committee has to investigate the real problems of the farming sector and has to recommend solutions to certain problem areas.

A further demonstration that the Government is thoroughly aware of what the farmer is going through, is to be found in the recent maize price increase. The standard formula normally used to determine the maize price was adjusted this year to make partial provision, inter alia, for the poorer crops harvested and to serve as encouragement to continued production. The farming sector remains one of strategic and economic importance and it remains the duty of the Government to ensure that this industry develops on sound economic basis, without having to rely upon excessive State aid. Anything which prevents this happening, justifies urgent investigation and adjustment Such an investigation will take place and very thorough attention will be devoted to the matter. Once again I want to give the assurance that at present this is a very important priority of the Government.

†Mr. Chairman, on this question of finance, I have just seen a very interesting report in Business Week of 16 April 1979. The report is called “A pipeline for overseas’ investment” and deals with the possibilities of investment in various parts of the world. It contains a little table which is headed “The lure of investing abroad”. It names various countries and gives the figures for the 12 months which ended on 28 March. These figures represent the percentages gained in stock-market performance. They are therefore right up to date. The countries referred to are South Africa, Great Britain, Canada, France, Australia, Switzerland, Japan, Hong Kong, the USA, the Netherlands and West Germany. Heading the list of all these countries and showing the very best performance is South Africa, with an increase of 49%. Great Britain shows an increase of 44%; Canada, 35%; France, 30%; Australia, 29%; Switzerland, 22%; Japan, 21%; right down to West Germany, with an increase of only 8%. I thought the House would be interested, because this bears out precisely what I was trying to say in a few minutes when I replied to the budget debate only the other day and quoted from another source in Great Britain about investment possibilities in South Africa. These are the sort of figures which to my mind again clearly show what an extremely attractive investment outlet South Africa is at this moment in the world at large.

What was the base year that was used for that?

I shall let the hon. member see this report. I have just received it, but I think one can take it that Business Week is an up-to-date publication and is pretty reliable.

Mr. Chairman, I feel it will be expected of me to make some reference, although I would have liked to have treated it with the disdain which I am afraid I have for the matter, to the heavy attack which has just been made upon me in public by my ex-colleague Dr. Mulder. I have never attacked Dr. Mulder at any stage at all and I was rather astonished to see that I should come under this heavy fire through the medium of newspapers against which, I would have thought, Dr. Mulder had tried to establish The Citizen as a competitor. However, he is now using them, and I am certainly not going to respond in any detail to this very belated series of allegations against me by Dr. Mulder in spite of the fact that his statements contain a large number of factual inaccuracies. As I have already stated, my case is squarely before a judicial commission of inquiry, the Erasmus Commission. It is there in some detail, and I am content to leave these matters in their hands—in fact, I have to do so. I believe it is only right that the commission should be given an opportunity to complete its final report on which it is now engaged without the mass of unfounded interference with which it has had to contend for months on end. The House will recall—I shall be brief—that the Erasmus Commission in its first report referred to a short meeting I had had with Dr. Mulder at his request in the late afternoon of 26 April 1978. It was on that occasion that Dr. Mulder asked me, as a matter of the greatest urgency, to sign a document marked “Uiters geheim—geen afskrifte”—it subsequently transpired that there were a number of copies lying around—so as to enable the Department of Information—so he said—to draw cash for secret operation purposes against the amount approved for that purpose in the budget. When I asked why I should sign that document and why the tearing hurry, he said two things: Firstly, that the Auditor-General had informed Information that the only way the money could be released at that stage was by acquiring the signature of the Minister of Finance; and secondly, that if the necessary cash was not available to pay certain salaries and certain other commitments the very next morning, i.e. 27 April 1978, he and the department would be in an untenable position.

Under protest and the most earnest pleas of my Cabinet colleague I signed and initialled the document in complete good faith, stressing that I would not look at its contents as I was not at that stage going to be accused of approving any secret project where I had consistently been kept completely in the dark about them. Dr. Mulder assured me no one would accuse me of any such thing.

The Erasmus Commission has explained how, as soon as I was informed by the law advisers that my signature was not required on that document to enable cash to be withdrawn, I immediately cancelled my signature and initials. Now I see that Dr. Mulder says that my initials appear on the document near an item “To the Point”. What Dr. Mulder is careful not to say is that in initialling and signing that document, I took great care to obliterate any items as I turned over the foot of each page precisely so that I should not see anything in the document.

Were you wearing dark glasses?

Except for a couple of inscriptions on the front page, which appeared to be in a sort of code, I did not see a single item in that document. That is very well-known to Dr. Mulder. I did exactly the same when, a few days later, I cancelled my signature, as a member of my staff can attest.

As Dr. Mulder has now seen fit to quote selectively from a letter dated 4 May 1978, which I wrote to him in connection with my cancellation of my signature on the letter placed before me by him on 26 April 1978—the document to which I have just referred—I deem it necessary to quote a paragraph from my letter of 4 May 1978, a paragraph which, I feel, is of great relevance to this matter. I have the permission of the chairman of the commission to do so. This is my letter to Dr. Mulder, the letter accompanying the document on which my signature had been cancelled. This is what I said in the covering letter—

At no stage did Dr. Mulder respond to this. Surely, if what he now says is true, he would not have allowed such a statement to have passed unchallenged only to decide months thereafter that I did in fact, as he says, have prior knowledge of and had approved secret projects. I also regard the fact that Dr. Mulder makes no mention of this most material paragraph in my letter—whereas he quotes other parts of the letter—as a serious reflection on his credibility.

I mentioned earlier that Dr. Mulder had stressed to me that the Auditor-General had laid down that my signature had to be obtained on the letter of 26 April 1978. I am authorized by the then Auditor-General, Mr. Barrie, to say that this is untrue, and that at no time was he consulted by Information on this matter and at no time gave any such ruling.

I also mentioned how Dr. Mulder had repeatedly stressed on 26 April 1978 how urgent it was that cash had to be available the very next day. What Dr. Mulder has now to explain is how it happened that, by 8 May 1978—12 days after my signature had been appended to that document—no amounts whatever had been drawn by the Department of Information. In fact, the first amount drawn against the department’s approved Vote, was drawn on 15 May 1978, some three weeks after he had said that money had to be available the next morning or he could land in court. Those were his words to me.

It is perfectly clear that the whole episode was a carefully laid trap by Dr. Mulder, who was a Cabinet colleague of mine at the time, and by Dr. Rhoodie, to ensnare me into a false position where they could say that I had had a hand in approving their nefarious secret activities.

I referred earlier to Dr. Mulder’s reference to To the Point. In March this year I gave evidence before the Erasmus Commission in the course of their inquiry into whether Cabinet Ministers knew of irregularities in the former Department of Information before any of these were generally known to the Cabinet, on or about 26 September 1978, and thereafter. Subsequently, of course, the commission issued an interim report on this inquiry.

In the course of the inquiry I was asked about my knowledge of State funding of To the Point. As soon as my attention was drawn to the form of the question put to me and my reply thereto, as they appear on page 1878 of the evidence attached to the interim report, I realized that there was a mistake, and immediately asked leave to appear before the commission to put the matter right on oath. This was done the same day, and the matter is now in the hands of the commission, where it is drawing up its final report. There is nothing more I can say on that matter. The commission has in fact asked me to leave the matter with them. However, I have cleared my side of the picture.

To come back to Dr. Mulder and to illustrate further my problem with Dr. Mulder’s credibility, I quote only three more of a number of examples of the recent allegations made by Dr. Mulder concerning me, allegations which simply do not stand the test of scrutiny, as they are factually incorrect.

Let me deal with the first allegation. Let us call this one allegation No. 1. In this instance Dr. Mulder said the following, according to a Press report—

My comment on this is—

I have been able to establish conclusively from written records that after I became Minister of Finance early in February 1975, I met with Dr. Diederichs on only one occasion to discuss certain financial matters. That was some weeks later and nothing whatever was “handed over” to me as alleged.

Allegation No. 2 is this from Dr. Mulder—

My comment: This is untrue. What is more, there is no indication in my own or in my secretary’s detail office diaries of any discussions with Dr. Mulder throughout April 1978. The on-the-spur-of-the-moment short-meeting late one afternoon—on 26 April 1978—involving the document which I have referred to, was not recorded. Nothing cropped up then in any shape or form about The Citizen. Allegation No. 3 is this from Dr. Mulder—

My comment: This truly astonishing reconstruction of events by Dr. Mulder is quite untrue. Although Dr. Mulder had requested an interview with me on this date, no such meeting in fact took place as I was delayed at a meeting of the State Tender Board and asked my secretary to cancel the proposed meeting with Dr. Mulder. No other meeting was arranged to take the place of this cancelled meeting. I want to reiterate categorically that never at any time or in any form whatsoever did Dr. Mulder raise the matter of The Citizen with me, nor for that matter of To the Point.

So I can continue to deal with Dr. Mulder’s lamentable lapses of memory. The question which arises in my mind is: Why would a man with whom I was always on friendly terms and whom I always tried to assist wherever I reasonably and legitimately could, now, six months after his departure from the Cabinet and indeed six months after giving detailed evidence to the Erasmus Commission—as he did last year—suddenly turn on me and hurl a series of unfounded allegations at me? This attack, coming so soon after a similarly vicious and baseless attack on me, through the same newspapers, by Dr. Rhoodie, leads me to wonder! Could it be that Dr. Mulder is under the whip from Dr. Rhoodie? What I now expect from Dr. Mulder is to place all these allegations he has made verbatim before the Erasmus Commission where he will be under oath.

Just on that point, I cannot refrain from reminding the House what the evidence was which Dr. Mulder himself gave to the commission in November last It is referred to in the interim report of the Erasmus Commission on page 11. Dr. Mulder obviously gave evidence for hours on end. Obviously, he had to think carefully about the whole position. This was one of the questions which the commission put to him (page 11)—

This was his answer—

*Mr. Chairman, this is the biggest lie of all, and hon. members have already heard what the then Prime Minister had to say about it.

†Mr. Chairman, I think I will leave the matter there.

There is one domestic matter which I would very much like to bring to the attention of hon. members because it affects the retirement from the Public Service of an extremely valuable official.

*For the second time within a matter of a few months I have to inform this House of the retirement on pension of a senior member of the staff of the Treasury. Mr. Pieter Muller, Accountant-General since July 1973, will be retiring with effect from 1 August 1979 after an outstanding career of 42 years. It is fitting to mention this now, since the Accountant-General is the accounting officer for the Treasury Vote. As the receiver of revenue for money borrowed by the Treasury, he is also accountable for such funds and responsible for the administration of Public Debt. He also exercises continuous control over the finances of the Treasury, as well as overall financial and accounting control over departmental accountants. In this way he ensures uniformity and order in public accounts and, in conjunction with the Auditor-General, he is also responsible for all accounting systems applied in the Public Service. It is obvious that only an official of the highest calibre can successfully hold the office of Accountant-General. Mr. Muller is such an official, and I should like to express my gratitude and appreciation to him for the efficient way in which he has been performing his task. I wish him and his wife a well-earned rest.

Mr. Chairman, I request the privilege of the half hour.

The hon. the Minister has covered a large variety of subjects in his address to the House. It is rather difficult for me to cover them all, but I will nevertheless endeavour to do so in the short time at my disposal. I want to start off right away by associating myself with his remarks about the retirement of Mr. Muller. I too want to wish Mr. Muller a happy retirement and at the same time express the hope that he may still be of service to the State during his retirement.

In so far as the hon. the Minister’s announcement about exchange control are concerned, I should like to regard those announcements as an indication of a greater degree of confidence in the economy as such, because if we are able to give people increases in travel allowance of this nature, then one should say that it is really only possible at a time when one is optimistic about the state of one’s foreign reserves. I think it should be construed in that light by both local and foreign investors. This is somewhat relevant to something which I will come to in a moment.

In so far as the bank sector is concerned, we would like to study his proposals in greater detail. But I want to say straight away that whereas it is perhaps true that if you invest your money in big banks you are looking for safety, I for one always treat it with some fear and disappointment when there are trends which tend to remove small banks from the banking sector. The entrepreneurial ability of people should be encouraged and there should, in fact, be provision for new banks to enter the banking sector and there should be prospects for new and small banks to grow and to make their contribution. If one looks at the banking sector in South Africa, there are very many people who have displayed tremendous entrepreneurial ability and have made a very substantial contribution, which they have only been able to do because of the existence of the small banks. This is particularly true if one looks at the rise of the Afrikaner in the banking sector of South Africa. It has been due to his ability to start with small banks. I should therefore like to appeal to the hon. the Minister to give encouragement to small banks rather than to have this whole new trend in South Africa towards regarding “big” as being beautiful, whilst one should be careful of small enterprises. I for one want to encourage small businessmen, and small banks are, to my mind, part and parcel of this.

The hon. the Minister referred to agriculture. I do not want to get involved in his statistics at the moment because by adding and subtracting figures it is very easy to come to virtually any result one wants to. He did, however, touch upon the increase in the maize price. Let me tell him here and now that although we believe that agriculture plays an integral part in the whole economy of South Africa, that a strong agricultural sector is necessary for the benefit of the whole of South Africa and that food is one of the main weapons we have in our struggle for survival in South Africa, I also think that the consumer is important. There is one thing however, with respect, on which we disagree with the hon. the Minister and the Cabinet. One must of course, in certain circumstances, have increases in order to meet the requirements of the farming community. I do not dispute that. In the existing situation in South Africa, however, there is a clear case to be made out—one even supported by the Economic Adviser to the Prime Minister—for subsidies to assist the lower income groups, and the maize price is a basic, essential feature in that because mealie meal is part of the staple diet of the poorest in the community. That is a matter on which, with respect, we cannot agree with the hon. the Minister. There should have been subsidies to assist the people in the lower income groups.

We can now look back on the budget and see it in a slightly different light. In doing so, we can ask the hon. the Minister whether the budget has given the economy the stimulus that was hoped for. There is no doubt that there is still a hesitancy about spending and investing. Why is this? I want to suggest to the hon. the Minister that there are three factors that require his attention.

The first of these is inflation. The inflation rate is far too high. The increases in Government-administered prices and the impact of oil price increases are eroding the extra potential spending power that has been generated by the increases in public service salaries and tax concessions. To increase the disposable income by less than 2% is not meaningful at all when one looks at the fact that the increase in the inflation rate is running somewhat in excess of 1% per month. The latest available figures show that it is as high as 1,7% per month. We do, of course, hope that it will come down, but that is the rate it is running at This means that the same quantity of goods is merely being bought at higher prices, giving no incentives to produce more or to stock up supplies. If the economy is to move, this factor needs attention. If the economy is to move—this may seem to be a contradiction in terms, but it is real in this situation—one has, in fact, to look at some new stimulatory measures to encourage people to invest and to spend, yet at the same time to try to keep the inflation rate within reasonable limits. Here I want to appeal to the hon. the Minister again to abolish the import levy in its entirety. This would not only bring down the cost of imported goods, but would also make more money available.

The second factor that is hampering us is unemployment, because with inadequate revival there has been relatively little impact on unemployment. This, however, remains the No. 1 problem threatening the stability of South Africa. I therefore submit to the hon. the Minister that with the ordinary incentives he has given he is not going to solve this problem adequately. What he has to do is to give incentives for the creation of every individual new job. In the same way—and I have said this to him before—as one gives investment allowances for new machinery, one needs to give job allowances for every new job that is created in South Africa. If one does not solve the unemployment problem one will not, in fact, solve South Africa’s problems.

The third factor is confidence. There is no lack of confidence in South Africa’s natural wealth and economic potential. Unfortunately, however, the confidence factor in South Africa is linked with politics. It is not only a factor in regard to foreign investors, but also in regard to our own investing community—there is no question about it. There are, unfortunately, worrying features in the economy. People are asking whether the solution in Rhodesia is going to work and whether the problem of South West Africa is going to be solved. The impasse in South West Africa is a matter of grave concern and the danger of selective sanctions and also such incidents as that at the Moroka police station yesterday are matters which, unfortunately, have an adverse effect on investment. The question I want to ask today is whether we should not shake off this pessimism, because pessimism does not help to improve matters. On the contrary, pessimism makes things worse.

I want to suggest that there are positive features. Although the final results are not available yet, it is perhaps not inappropriate to say that a Conservative victory in the UK is, I believe, a positive factor for us in many respects.

Hear, hear!

Together with the hon. the Minister, who is saying “hear, hear”, I welcome it, and I do not think I need enlarge upon it. Secondly, the Rhodesian election and the fact that the percentage poll was so high are, I believe, positive factors for Southern Africa. I also want to say quite frankly that the open-ended approach of the Government with the appointment of the constitutional committee is a positive factor in South Africa. The new look at consolidation is a positive factor. The actions of Dr. Koornhof over Crossroads are a positive factor. Finally, the Government’s acceptance of the Wiehahn Commission’s recommendations is a positive factor.

How far these things will take us, the future will show. I want to say today that I believe that our businessmen should shake off their hesitancy and should look on the positive side. To get the economy going will not only help them to get profits but will also make political solutions easier in South Africa. While I therefore appeal to the hon. the Minister for more stimulatory measures and for restraint in respect of increases in Government-administered prices, I also appeal to businessmen to be positive, to invest and to shake off the pessimism and hesitancy which appear to exist in their ranks.

I want now to enlarge briefly on one of the positive features I have mentioned, viz. the Government’s acceptance in principle of the recommendations of the Wiehahn Commission. I believe this should be told to the outside world in clear, positive terms, because it is a factor that can encourage foreign investment in South Africa. Our Capital Account is not that healthy. It is improving, but it is still not as healthy as we would like to see it Fortunately, the gold price is holding up. If we look at what we need in regard to investments, the one thing we are able to say today to people overseas when they talk about the EEC codes, the Sullivan codes, the House of Commons committees and all such codes is that there is now no reason why subsidiaries of foreign companies should not be able to comply with them There is no restraint on the wages they can now pay to workers. It is, therefore, up to them now. If they now want to look for excuses, they cannot point a finger and say: “We cannot do it in South Africa,” because they will now be permitted to comply with the codes. They have an answer to give their shareholders and they have an answer to the criticism that is levelled. I believe we have to market this in the world today to indicate to people that, if they want to apply the codes and if they want to assist in peaceful change, this is their opportunity to do so. That is why I want to welcome the whole approach of the Government to the Wiehahn Commission.

The hon. the Minister has thought it necessary today to deal with his position vis-à-vis Dr. Mulder. I want to say to him right at the outset that it is not for me to judge between him and Dr. Mulder.

It is not necessary.

I think it is not for me to do that. What is important, however, is that it is the public who, finally, sit in judgment on this issue. I want to say to the hon. the Minister that, unfortunately, it is no answer any more to say: “I leave it in the hands of the Erasmus Commission.” That is no answer.

How can I disclose evidence that has not been reported on yet? [Interjections.]

I will deal with that in a moment. All the matters that are at issue here are not matters concerning which there is any security sensitivity at all. They are all out in the open. The Citizen issue and the To the Point issue are not sensitive security issues, and I think the public are going to make some very simple demands. First they shall want to see the whole of the evidence everybody gives. It is therefore no good for the hon. the Minister to say that he has told the Erasmus Commission that there is a mistake on the last page of the interim report, but he has not told us what the mistake is. The public will want to know what the mistake is.

How can I tell you that when evidence was given before the commission on oath? The commission has told me I could not… [Interjections.]

Of course the hon. the Minister can. I find it, with great respect to the hon. the Minister, most remarkable that he has given evidence under oath before the commission, that he tells us there has been a mistake, but that he does not tell us what the mistake is. This is something which cannot be allowed to take place.

Mr. Chairman, on a point of personal explanation…

No, the hon. the Minister cannot do that now.

[Inaudible.]

Order!

Mr. Chairman, I have limited time at my disposal. He can give an explanation immediately after my speech.

Order! I am sorry, but I cannot allow the hon. the Minister to do it now.

I do not want him not to give an explanation, but he knows I have limited time at my disposal. I want to tell the hon. the Minister that this can only be done if all the evidence becomes public. I want to make an appeal to him—and I use these words deliberately—and I want to challenge Dr. Connie Mulder. Note that I do not challenge the hon. the Minister of Finance. I appeal to him. I want them to be prepared to appear before a public tribunal to subject themselves to cross-examination on this issue so that the public can judge for themselves. This is the only way in which this problem is going to be solved. I must tell him that in my view it is the people’s judgment that counts, because the persons involved are politicians.

[Inaudible.]

That is the only way it can be done. I want to tell the hon. the Minister and the Erasmus Commission that nobody can convince me as a lawyer—and the hon. the Minister who is interjecting just behind the hon. the Minister of Finance should know better—that there has been cross-examination on the evidence that has been published until now.

There is a second thing that needs to be done. [Interjections.] How does the hon. the Minister see Dr. Mulder’s position in the light of the fact that he has been publicly told by the chairman of the Erasmus Commission that he is afraid to give evidence and to subject himself to cross-examination? I want to ask the hon. member for Schweizer-Reneke, because he is going to reply to me in a moment, what in fact would happen to a judge who said that concerning a matter on which he had to make a judgment. I ask him to deal with that. One therefore cannot now tell the public that it is only the Erasmus Commission and that they may not see all the evidence because we have been told we shall only see the evidence supporting the findings. One needs all the evidence in order to see whether there has been a true cross-examination.

I want to ask another thing of the hon. the Minister, and I ask him to deal with it. This interim report we have been given contains his evidence as he gave it, including the evidence on page 1878 to which he referred, but it also contains the crucial letter which he says he signed in the late afternoon of 26 April 1978. We were given a photostat copy of that letter from which the names of all the projects were deleted. In one of the newspapers we then saw a photostat of a section of that document, including the words “To The Point”. When I look at my copy of the interim report—and I am sure it is the same as everyone else’s—and I look at the initials and the stroke, one sees that it is almost impossible to cover up what the hon. the Minister said and not see the words “To The Point”. In my copy, which is a photostat copy, not the original, the initials seem to me to be the only place where the section containing the words “To The Point” could be. What did I do? I do not want to sit in judgment on the hon. the Minister. I wrote to the commission and asked whether I could see the original evidence. What was the answer? The answer was “No”. Is that a fair approach? The hon. the Minister was able to say in the House that he obtained permission to quote from documents. We, however, are not allowed to see documents to try to form a fair and honest judgment in respect of this matter. [Interjections.]

Let me put another question to the hon. the Minister. If the words “To The Point” were on this document, I would have imagined that any tribunal, which truly wanted to examine the position, would have then cross-examined the Minister on it and would have said to him in so many words: “Now just a minute, there is the following evidence” (p. 1878): “Have you any particular knowledge about State funds being syphoned to To The Point?” Answer: “I have no specific knowledge on that, no knowledge which I can regard as authoritative, other than what I have read and what I have heard about this one.” Question: “But no own peculiar knowledge?” Answer: “No own peculiar knowledge.” I would imagine that if Dr. Mulder’s advocate had been there he would immediately have said to the hon. the Minister: “Now, Sir, would you care to have a look at the letter of 26 April? How is it that you did not see the words ‘To The Point’ there?” That was not done. We asked the commission, when it started, to allow us to see what was going on and to permit examination, because that is the only way in which this matter can be truly tested. I say it is as much in the interests of the hon. the Minister of Finance as anybody else to have that done. Now we are told that what happened is that he took care to obliterate and to initial in such a way as not to see what he was initialling or what he was signing. I must say, with great respect to the hon. the Minister, that as far as we are concerned—and I think he should know that—if the law we have in South Africa to control secret funds enables a Minister of State to carefully cover up what he is signing and what he is initialling, then we do not want that law. We want a Minister of Finance who takes responsibility for what he signs, who knows what he is signing, who knows what he is doing and who can then account to this House. I believe that the explanation which the hon. the Minister has given today about the words “To The Point” creates a far bigger problem for him than the problem which existed before he gave that explanation. We cannot have that situation. How can a Cabinet Minister say—and these are the words as far as I can recollect them—“I took care to obliterate so as not to see the document”? How can one do that? [Interjections.] I want to tell hon. members what the dilemma is. The hon. the Minister may be quite innocent and that is why I want to have this fair test.

The tragic dilemma in South Africa is that we have had prosecutions take place before the S.A. Press Council. We had three of them which related to To The Point. What happened in that situation—in the first instance it was Rapport and Beeld which published statements to the effect, inter alia, that there were connections between To The Point and the Department of Information—is that in the one case we were told that evidence was given on oath and that there was no connection. In the other case what were relied upon—I gather without evidence on oath—were statements which were made. As a result those two newspapers were found guilty, were fined and the whole of South Africa was told that they had in fact published what was incorrect news without any substance whatsoever. Somebody knew at that time, however, that at that very moment of time a fraud had been committed and perjury had been committed, and those who knew have committed one of the most dastardly acts in South Africa’s political history, because no person in public life is entitled to allow such a miscarriage of justice to take place. We are entitled to ask, and we do ask: Who was it in Government at that time who knew that these statements were not correct? Of course it is clear now. I want to quote the words of the man who made those untrue statements. He stated them to be incorrect and he is on record today. I refer to Dr. Rhoodie, South Africa’s own Machiavelli. What did he say? He said that in 1972 he was made a senior executive as far as the publishing of To The Point was concerned. He was made a senior executive with the object, I quote his own words—

These events took place in 1975.

There is another case, that of the Sunday Express. Here the dates are very interesting. If we look at the dates in relation to the Sunday Express case, we find that this all took place at a very crucial time in the beginning of 1978. On 19 February the Sunday Express published a statement also relating to the connection with the Department of Information. There was another publication on 26 February, and on 27 February there was a complaint lodged. On 14 April there was a hearing, and on 22 May a letter was written to the Press Secretariat attached to the office of the Prime Minister. On 28 May the publication of the correction, after the Sunday Express had been found guilty, took place.

Those were very interesting times. One cannot consider these dates in isolation. The hon. member for Schweizer-Reneke smiles; he and I were involved in those very interesting times. What was happening in those days? I shall tell the Committee what was happening. On 14 April the second report of the Select Committee on Public Accounts was tabled and brought the whole of the Information furore into the open. 26 April was the famous day, the day on which Dr. Mulder came to see the hon. the Minister of Finance to get him to sign that famous letter. The dates continue. On 28 April the assistant editor of the Sunday Express flew to Cape Town to see Dr. Mulder and to tell him that he had found out about the secret report on the Department of Information. The story goes on. Dr. Mulder contacted Dr. Rhoodie and he and Gen. Van den Bergh flew to Cape Town on 2 May. The Sunday Express of 30 April reported that they had seen Dr. Mulder. The newspapers were full of the crisis of the Department of Information. We have the famous 2 May, the date of the letter which was later withdrawn. We have Ascension Day, 4 May. We had all these marvellous events which were taking place—if “marvellous” is the right word—at that time.

It was at that moment that the whole of the Sunday Express issue was in the open. The allegation then was that there was a connection between the Department of Information and To The Point. At that time nobody in the whole of the Government spoke to say that there was a miscarriage of justice. That is why we cannot allow that situation to rest. That is why the people who allowed that miscarriage of justice to take place, the people who knew that a fraud was being committed, the people who knew that there had been perjury committed have no place in the public life of South Africa. I say it with great respect: They have no place at all in the public life of South Africa.

Let us talk about To the Point. There is no difference between To the Point and The Citizen. [Interjections.] In this budget there are funds for To the Point. One of the things I want to do, so as to show our view in relation to this, is to remove from this budget money which relates to To the Point. To the Point should be closed down; it should be closed down now. There is no justification for it. I therefore move as an amendment—

We cannot allow this to take place. I want to ask the hon. the Minister: When did he actually become aware of the situation relating to To the Point? I believe the hon. the Minister must give an answer clearly and affirmatively.

Immediately!

I want to tell the hon. the Minister that I have an amendment ready to have his salary deleted from the budget. [Interjections.] Yes, hon. members can laugh. They have a majority. However, a majority will not help them now. [Interjections.]

Order!

I put this to the hon. the Minister and will not move my amendment at this point of time. I will give him a further opportunity of explaining. [Interjections.]

How magnanimous of you!

If he can explain when he first became aware of it, bearing in mind what I have said to him, bearing in mind the evidence he has given, I want to prove to him that we have an open mind and that we do not want to sit in judgment. We want to give him every opportunity of explaining. Therefore I also feel that I must draw the attention of the hon. the Minister to another matter. That is that the hon. the Minister of Foreign Affairs—and the hon. the Minister can tell me whether this is correct or incorrect—according to a newspaper report of 2 May 1978, which I am quite prepared to pass it on to the hon. the Minister is reported as saying—

Well, I am asking him now. I am asking him that right now. [Interjections.] I want an answer. I want an answer in relation to that. I also want an answer in relation to how it ties up with the evidence and with the date upon which he gave evidence before the Erasmus Commission, as referred to in the interim report. I want an answer too about when he knew about To the Point. We want an answer to the question of whether he is now prepared to close down To the Point, to withhold money from To the Point. We want an answer about the question whether he is going to look at what he signs in future without covering up what he is signing, whether he is going to take responsibility for what he signs, and whether he accepts that hon. members of Parliament want the hon. the Minister of Finance to exercise proper control over secret funds. If he is not prepared to do that, I regret to say that we prefer to have another Minister of Finance.

Order! The hon. the Minister of Finance asked me for an opportunity to furnish a personal explanation to this House. I give him that opportunity now.

Thank you very much, Mr. Chairman, but I think that I shall rather do so in my reply to this debate.

Mr. Chairman, it is very difficult to come back once again to the whole matter of the old Department of Information in this debate, in which we are now dealing with the Vote of the hon. the Minister of Finance, and in which we should make use of the opportunity to discuss the policy of the hon. the Minister of Finance. Since the last time I participated in a debate in this House on the activities of the Department of Information, I now for the first time want to say something in this regard again. It is very clear that I never expressed an opinion on this matter in public. Even less have I expressed any opinion on this matter since the Mostert Commission was replaced by the present commission of inquiry into possible contraventions of the foreign exchange regulations.

However, I shall have to react to what the hon. member for Yeoville said. It has been, as he indicated, almost a year now since the irregularities in the Department of Information were discussed for the first time in this House. Now, there are certain questions which have been put directly to the hon. the Minister, questions which the hon. the Minister will reply to in his own good time and in an appropriate way. On the other hand, we have heard nothing from the Opposition parties in this budget debate in connection with their financial or economic policy. All they have spoken about is Information. Today we have had the same situation again. Except for a few other incidental remarks, the hon. member for Yeoville again discussed only the Information matter. I want to say today that surely the hon. member for Yeoville, regardless of the questions which he or anyone else asks about what Dr. Rhoodie did or said, should know by this time who and what Dr. Rhoodie is. Surely we know that this man has already been characterized as an “amazing schemer”.

At one stage you defended him, did you not?

I do not intend to defend Dr. Rhoodie. [Interjections.] What I want to bring home to the hon. member for Yeoville is that since the investigations began, a judicial commission such as that of Mr. Justice Erasmus and the Pretorius Committee have not been able to produce anything tangible which could link the hon. the Minister of Finance or other Cabinet Ministers still in the Cabinet at present to the irregularities. The hon. member for Yeoville knows just as well as I do what methods Dr. Rhoodie used. He got away with those methods.

Whose fault is that?

I do not want to say that it is anyone’s fault. I want to say today that it is more a system than a person that is at fault. It would be as well if we assess the whole system. In fact, we are already doing so. Surely we have already announced that the Auditor-General is now going to audit the secret funds as well. We must not get carried away with a matter now, simply to make political capital out of it. In our hearts we know what the situation is.

Today I want to tell the hon. member for Yeoville and the hon. members of the official Opposition that at this stage of South Africa’s history we should rather discuss the future of South Africa with regard to all these things mentioned by the hon. member as well as the need to instil confidence in the future of South Africa. Let us wait with this whole Information matter so that the machinery can run its course and Mr. Justice Erasmus can publish his report. What I find surprising today, is that hon. members of the official Opposition are always asking us to appoint judicial commissions. I want to tell the hon. member for Yeoville that I find it a little strange that he wants to prescribe to a judge and a judicial commission today how they should do their work. After all, the hon. member was not there to testify before that commission so that he could determine what procedure they were adopting. I do not believe that the hon. member knows precisely what procedure they are adopting.

I was there several times.

But the hon. member for Yeoville cannot tell me today that he knows what procedure that commission is adopting.

It is a secret.

Surely he cannot in that case express criticism today. I can go further and ask uncomfortable questions, too. I could, for example, ask why not one of the hon. members of the official Opposition went to testify on the 90-page memorandum which was submitted to the Erasmus Commission.

This time you are wrong again, not so? [Interjections.]

No, I am not wrong. Did one of the hon. members of the official Opposition testify on that memorandum?

I was there with the evidence, and you know it.

I am asking whether the hon. member testified?

I offered to testify.

Did the hon. member testify?

I offered on various occasions.

Is it not true that hon. members of the official Opposition allowed a previous colleague to testify on the memoradum? In that case we can ask the hon. member for Yeoville…

What you are saying is not true.

… why they have to this day not yet done so, if they are so concerned about the disclosure of everything…

We were not those who were involved in the irregularities. [Interjections.]

I want to ask the hon. Leader of the Opposition why those hon. members have never had the courage to make available to us as parliamentarians the contents of that 90-pages memorandum. [Interjections.] If this is a matter which the hon. member feels so seriously about, surely they can make it available to us as parliamentarians. We can go ahead and do this type of thing, but I do not think it is in the interests of South Africa.

The hon. member for Yeoville asked me to comment on the standpoint adopted by Mr. Justice Erasmus, viz. that he told Dr. Connie Mulder in public that he was afraid to testify. Mr. Justice Erasmus is a South African judge. If he adopts such a standpoint, it is his standpoint and I cannot comment on it. Nor am I prepared to comment on it The hon. ex-judge can comment on it if he wishes to, but I do not intend to adopt the standpoint in this country which the hon. member for Yeoville adopted and then take refuge in the fact that we have an independent judiciary in South Africa and that we allow the law to take its course. I feel just as strongly as as hon. members on the opposite side of this House about the “rule of law”.

He is not serving on the commission in his capacity as judge.

The hon. member is splitting hairs now. If the hon. member serves on a commission, is he no longer an MP?

He is not acting there as a judge on the Bench.

It simply does not work that way. We cannot do this type of thing. The hon. member for Yeoville said in advance today that nothing remained of the credibility of the Erasmus Commission. That was what the hon. member told the country today. Does the hon. member think that it is in the interests of South Africa to put it in that way? I do not want to go into this matter much further, but I should like to make the following statement to the hon. member and all other members of this House: We must get this Information story out of the way.

Of course!

We must use any method to get this Information story out of the way. I want to appeal to the hon. the Minister of Foreign Affairs to say as quickly as possible those things which he feels he can say, because there is far more important work which still has to be done in future.

I want to come back to the financial matters which ought to be debated. Hon. members of the Opposition must explain to us what their financial and economic policy is. Where do they differ from the hon. the Minister of Finance? After the introduction of the budget I could not help but get the impression over the past few weeks that the hon. the Minister has been receiving very great recognition, not only in South Africa, but also outside South Africa, for the budget which he introduced. We have a Minister of Finance who is universally accepted as a good Minister of Finance. [Time expired.]

He is competent.

Mr. Chairman, I rise to afford the hon. member for Schweizer-Reneke an opportunity to continue his speech.

Mr. Chairman, I thank the hon. member for the opportunity he has given me. If we examine the policy which the hon. the Minister has adopted in his planning for the economy of South Africa, I want to refer in the first place to what the hon. member for Yeoville called the restoring of confidence in South Africa. I want to associate myself with the appeal made by the hon. member, viz. that the private sector and the entrepreneurs should now contribute their share to really getting the growth of the South African economy into its stride. I think the time is ripe for very good economic growth in South Africa. If we examine the matters which the hon. member mentioned, viz. the events in Rhodesia, in South West Africa, what has happened today in Soweto and the election in Britain—and my information at this stage is that the Conservative Party has already won so many seats that they will be the new Government—I want to tell the hon. member that we agree with him that we should not be obsessed with these problems. If we simply discuss the situation in Rhodesia or South West or Soweto and cannot come forward with solutions to rectify these matters, there is no point in simply uttering hollow words.

I believe the public of South Africa have confidence in the NP Government, specifically in the Minister of Finance as well, and they know that their confidence will be confirmed by further investment in South Africa. The announcement made by the hon. the Minister on a certain degree of relaxation of foreign exchange regulations, is a further indication—and here I agree with that hon. member—that this Government has confidence in the economy of South Africa. But this is also a demonstration that the economy is already growing.

I should also like to turn my attention to a few other matters. The hon. member said there are three major factors with which he is experiencing problems, and these are inflation, unemployment and the confidence gap. I do not want to say much about inflation. Our inflation rate is high, but I am sure that the most recent increases in the inflation rate will level off again in due course. This is not something which will continue normally. This is merely the result of certain price increases which have taken place and a levelling off can again be expected in this regard.

This side of the House is, of course, just as concerned about the unemployment situation as the other side of the House could conceive of being. The Government is taking drastic steps to curb unemployment. I am sure that when we receive the findings of the Riekert Commission, and couple them with the findings of the Wiehahn Commission, it will be possible to improve the unemployment situation considerably. In an economy which is hesitant to move, we simply cannot expect to create labour posts if the economy cannot support them. We shall have to make adjustments.

I now want to refer to the maize price, a matter to which the hon. member referred. The hon. the Minister said that the maize price has been increased this year to afford the drought-stricken maize farmers an opportunity to overcome their problems. I just want to draw the hon. member’s attention to a specific point. He says that mealie meal—and this is true—is the staple diet of the bulk of the Black population of South Africa. But the hon. member should ascertain to what extent the maize producer uses the product which he produces himself. If he were to do so, he would see that the increase in the maize price has just as prejudicial an effect on the maize producer himself—if we consider the matter from this angle—as it has on any other consumer, because the maize farmer himself is also a consumer. We have to bear in mind that 33% of South Africa’s Black economically active population is engaged in the agricultural industry, and surely we know what the situation is in agriculture. The agricultural workers do not pay for the rations they themselves receive. In 99% of the cases they receive those rations free of charge. Therefore the increase in the maize price has in actual fact no influence on 33% of the Black labour force, because they do not pay for their rations.

There is a matter which I should like to bring to the attention of the hon. the Minister. While I am dealing with agriculture, I should like to tell the hon. the Minister that we agriculturists appreciate what the hon. the Minister has said here today in connection with agriculture. We are also looking forward with great anticipation to the next report of the Jacobs Committee. But there is a matter concerning agriculture which I should like to bring to the attention of the hon. the Minister. Almost a year has passed since we accepted the general sales tax in principle and this tax system came into operation. There is, however, one aspect of this tax system which has given us in agriculture tremendous problems. We discussed the problem last year with the Secretary for the Department of Inland Revenue. However, I think it is time we examined this aspect again. The problem is that agriculture has to pay tax on the fuel it uses to get its product from the farm to the market. Let us take a very practical example. We have in mind, as far as this tax is concerned, that the end product should be taxed. While my bag of maize is lying on the land, it means nothing to me. I first have to get it into my silo or deliver it to my cooperative. In other words, I believe that we should take into account the transport costs of getting it from the farm to a marketing point, and that we should remove the tax on the fuel used for this purpose.

Hear, hear.

There is another matter I want to point out—I do not want to go into it in detail. I should like the hon. Minister to react to this. We are now moving in the direction of a broad tax base and the hon. the Minister and his department are considering the idea of taking a look at capital gain—I know the hon. Minister does not like that word, but for want of another word I shall continue to use it at this stage—as a possible source of taxation. I want to put it this way—if it is at all possible for the hon. the Minister to make the tax base even broader than it is at the moment, I want to ask him to consider two other tax situations as well. In the first place I should, of course, like to see the tax rate in general being lowered, particularly as far as the marginal scale is concerned. In the second place I should like to see the total abandonment of the entire principle of estate duty in South Africa. I know that estate duty is an important source of revenue at this stage. For that reason I put it in this way: If we broaden the tax base, we should take a look at this situation. While we may perhaps not be able to abolish it soon, what I should like to see is that we initiate a phasing out process in respect of estate duty. To me there is something wrong in the concept of estate duty. To me it is taxation on tax. It is concerned with things which one obtained during one’s lifetime with money on which one had already paid tax, except perhaps if one had inherited it.

To take this a little further, I should specifically like to point out the difficulties which estate duty causes in the agricultural sector. A perfectly normal economic unit of, say, 500 morgen, can already place the owner in a scale in terms of which he has to pay estate duty. This is a perfectly normal economic unit. The farmer who has such a piece of ground, is not a big farmer. He is not even a middle-ranking farmer. Today he is really a small farmer. We should take this matter into account. I appeal to the hon. the Minister to take a look at this aspect for us.

Order! Before I call upon the following hon. member to speak, I should like to remind hon. members that it is customary to allow the first speaker on each side considerably more leeway in his speech. Consequently this will apply to the next speaker too. After that, however, I shall require hon. members to confine themselves strictly to the Votes, and I shall not allow a general discussion of the Information scandal.

Mr. Chairman, I thank you for your ruling. I should like to say to the hon. member for Schweizer-Reneke that there is one thing he said this morning with which we totally agree, and that is that not only must we get the Information scandal behind us in Parliament, but we must also get it out of the system of South Africa. I think the hon. member will agree that my hon. leader said, during the Prime Minister’s Vote, I think it was, that we have to get rid of this, and the only people who can get rid of it are the hon. members on that side of the House. I want to liken the Information scandal to a ball chained to the legs of the members of the Government. Not only is it chained to them, but it is also chained to Parliament. We are spending hour after hour debating the matter here and I believe that that is doing the country a lot of harm because it is wasting our valuable time. It is paralysing the country, the Government and this House. I do not intend going into the details of the Information scandal, because I must talk about another event, an event which occurred during a debate in the Other Place yesterday afternoon, and about the hon. the Minister’s actions during the afternoon’s debate. Before I do so, however, I should like to tell the hon. the Minister that I would have preferred to have debated his Vote and the economy.

I should also like to tell him that I do believe that there are encouraging signs as far as South Africa’s economy is concerned. There are also some encouraging signs as far as changes of emphasis on the part of the hon. the Minister and his department are concerned. Yet there are still many important issues which this House should be debating. There are, as the hon. member for Yeoville has said, the problems in the agricultural sector, the problems of creating growth in the economy so that we can have more jobs for our unemployed, and the problem of inflation, which is eroding earnings, especially those of our entrepreneurs and our upper-income earners, and I believe that all these things should be receiving our time and attention in this debating chamber.

However, I want to say to the hon. the Minister that I feel that this is not possible today because of the events that have occurred in the last few weeks. This is especially so because of an event which occurred yesterday; an event which, I believe, strikes at the very basis of the political and parliamentary principles in which this House believes, so much so that I believe it is incumbent upon us to have this debated in this House today. However, I should first like to point out to the hon. the Minister that the NRP is not a protest party. This is not a party which just opposes for the sake of opposition. I think he will agree that this is a party that gives credit where credit is due. It is a party that has definite policies in respect of the economy and the discus and has particular political ideals, especially when it comes to the standards of conduct of Ministers of State. It is a party that prefers to debate these issues in the chambers of this Parliament, especially issues which concern political and parliamentary principles. We are prepared to debate with him his actions as Minister of Finance. I should like to put it to him that this is, after all, our duty as an essential part of a democratically elected Parliament. This is what the people of South Africa who elected us to this House expect us to do. Having said this, I should like to tell the hon. the Minister that his actions in walking out of the debate in the Other Place yesterday have seriously frustrated and hampered hon. members of our party in performing their parliamentary duties.

[Inaudible.]

Yes, the hon. the Minister’s actions and those of his colleagues in the Other Place yesterday have seriously hampered us and Parliament. [Interjections.] I should like to remind the hon. the Minister that the motion before the Other Place concerned him. [Interjections.] In doing what he did, I believe the hon. the Minister has done a disservice to the role this Parliament plays in the democratic political life of South Africa. I therefore move the following amendment—

Less tax.

I move this motion for three reasons. Firstly, I move it because in the light of recent developments, we in these benches seriously question whether the hon. the Minister is today capable of effectively carrying out his duties as Minister of Finance. Secondly, we move it because of his refusal to submit himself to debate, in the Other Place, on an issue which was on the Order Paper and which concerned him. Thirdly, we move it because of his actions in signing a document involving millions of rands of taxpayers’ money without knowing the contents of the particular document.

It is a vendetta of hate never seen in this country before.

I want to ask the hon. the Minister whether he honestly believes that in the light of the circumstances in which he finds himself at present, he can really apply his mind to the serious duties and responsibilities entrusted to him as Minister of Finance. After all, South Africa is entering a very, very serious stage at the moment. Secondly, I should like to ask the hon. the Minister whether he honestly believes, as a democratically minded person, that his actions in the Other Place live up to the best traditions of parliamentary practice and ministerial conduct. I should like to say that I would not call an unprecedented stand which he took yesterday, because I believe the last time this happened was in 1942 when this nation was at war, but I put it to the hon. the Minister that his action, and those of his fellow senators, in walking out of the Other Place, were deplorable. I believe that these actions were calculated to stifle debate on an important issue of national interest. The hon. the Minister shakes his head.

It is an admission of guilt.

I say that such action strikes at the root principle of parliamentary democracies—and I should like to ask the hon. the Minister whether he accepts this responsibility—in which Ministers are answerable to the democratically elected representatives of the people who come to this House and the Other Place to debate these issues. One could say that the hon. the Minister and his colleagues were in contempt of accepted parliamentary practice one expects from members of Parliament.

I should also like to ask the hon. the Minister whether he does not feel that his actions, and those of his fellow Senators, are admissions of guilt

Order! The hon. member must not express further criticism of hon. Senators in the Other Place.

I abide by your ruling, Mr. Chairman. All I should like to say to the hon. the Minister is that we in these benches are asking ourselves, as a result of recent events, what this hon. Minister has to hide. Therefore I should like to tell the hon. the Minister that our colleagues in the Other Place are going to resubmit the motion that was on the Order Paper. We should like to ask the hon. the Minister whether he would be prepared to debate that issue in the Other Place. This is a challenge which we issue to the hon. the Minister. You know, Mr. Chairman, there was a time in the history of this Parliament—and that of most democratic parliaments—when a mere suggestion of a scandal, a mere suggestion of serious controversy on the part of any particular Minister, was enough reason for that responsible Minister either to offer his resignation to the Prime Minister or to call for a Select Committee of Parliament to investigate the allegations placed before it.

In conclusion I should like to say that this NP Government has humiliated this Parliament in the eyes of all South Africans who believe in the abiding values of parliamentary democracy. Therefore I put the question to hon. members on the other side: How much further is the NP going to humiliate Parliament and South Africa? This deplorable state of affairs, with hon. Ministers walking out on a debate, I believe has got to come to an end. It is for these reasons that I move my amendment.

Mr. Chairman, the attack on the hon. the Minister by the hon. member for Amanzimtoti made me think of a motorist who wants to drive from Cape Town to Pretoria with only one tank of fuel. The PFP and the NRP have distilled one tank of fuel between them from the remains of the Information matter, and with that they are now trying to reach Pretoria. I want to say to them, however, and the hon. member for Amanzimtoti in particular must listen to this, that they will hardly reach Beaufort West on half a tank.

They are not even going to make Swellendam.

The fuel which a political party can derive from one incident, is not enough to allow them to carry on indefinitely. It gets an inexhaustible supply of fuel from a policy which stands on its own two feet, a policy which the voters of South Africa can accept. As far as the hon. member for Amanzimtoti and his party are concerned, we have seen during the past year or so, since the election, that they have been amazingly quiet about various aspects of their policy. On the one hand, the NRP attempted to create the impression that it tries to follow the NP and its policy in certain respects. Particularly as far as foreign affairs and defence are concerned, that party tries very hard to create the impression that it is very near to the NP. However, when we ask whether hon. members of the official Opposition can be trusted with certain information, it is the Whitelys of the NRP who rushes in to defend hon. members of the PFP. We can hardly be blamed for describing the NRP as in reality only a tame PFP. On the one hand, it tries to sail very close to the PFP and, on the other hand, while pretending that it does not wish to reach any election agreement with the PFP, it signs petitions by the PFP; while making a fuss…

Mr. Chairman, on a point of order…

No. My time is very limited.

Mr. Chairman, I do not want to ask the hon. member anything, I wish to raise a point of order. You ruled, Sir, that the first two speakers would be permitted to stray from the Vote, and I now want to know what this hon. member’s speech has to do with this particular Vote. What does the Swellendam by-election have to do with this Vote?

Order! The hon. member must come back to the Vote under discussion.

Mr. Chairman, I am trying to show that the NRP is very slow to say what its policy is, whether it be financial policy or the policy with regard to any of the other burning questions in our country. The NRP tries to maintain as low a profile as possible in the interaction between the official Opposition and the NP…

Order! The hon. member must come back to the Vote.

Why do you not just sit down?

I can understand that hon. members of the NRP are most afraid that we shall make any mention whatsoever of the lack of a financial policy, the lack of any policy worth mentioning, on their side. They are afraid that their policy will be nailed to the mast during next week’s by-election so that the voters of South Africa, of Beaufort West and of Swellendam will be able to analyse it.

We shall see what happens with South Coast.

And Umlazi next.

As far as the relationship between population groups in our country is concerned, too, that party…

Order! The hon. member must confine himself to the Vote.

Hear, hear!

In the budget the hon. the Minister of Finance announced measures which had the effect that the NRP and the PFP had to approve it. The Opposition was unable to attack this budget in any meaningful way. This applies not only to the Opposition here in Parliament, but also to economists and financiers outside these walls. They too, praise this budget as one which restores confidence in South Africa. What does he get in return? Does he get praise from the NRP? No. Yesterday we saw in the Other Place that, in return for the best financial policy and the best financial measures we have had in South Africa in years, he has had to deal with personal attacks on him, that attempts are made, by means of personal attacks, to…

Order! I cannot allow the hon. member to refer to a debate which took place in the Other Place.

Sit down, man!

Hon. members of the NRP… [Interjections.]

We are friendly chaps. [Interjections.]

Hon. members of the NRP would very much like to get out of trouble. Because it is not possible to discuss the policy in finer detail, in accordance with your ruling, Mr. Chairman, I want to give them the guarantee that the opportunity for doing so will indeed arise.

Mr. Chairman, I should like to associate myself with the hon. member for Schweizer-Reneke, who asked that we strive towards the eventual total abolition of the levying of estate duty, because it is in fact an additional duty which is levied on what remains after a person has paid a great deal of money to the Receiver of Revenue throughout his life, considerable amounts for income tax, as well as general sales tax, in terms of the existing system as we know it.

As the first phase in the possible systematic elimination of estate duty, I want to plead with the hon. the Minister that he consider relieving Masters of the Supreme Court in South Africa of the obligation to levy estate duty and death duties, which are still levied in terms of certain extremely old laws. Some of the old laws in terms of which estate duty is still levied, are pre-Union statutes, laws in terms of which estate duty and death duties still have to be levied, but which at the same time create endless problems in practice for legal practitioners, laws which also cause major problems for staff of the Masters of the Supreme Court—so much so that it is not really worth the trouble to collect the amounts levied in terms of these laws, amounts which are in fact very small.

Here I refer specifically to death duties which are levied in terms of Act No. 5 of 1864 in the Cape Province. This is a law which is 115 years old. Then there are also the death duties levied in terms of Act No. 33 of 1908 in the Cape Province. That is a law which is 71 years old. Possibly there are other pre-Union statutes as well, which are still applicable in South Africa I also refer specifically to estate duty and death duties levied in terms of Act No. 28 of 1922, a law which is already 57 years old. It is interesting to note that all three of these laws have already been repealed, but that under the laws in terms of which they are repealed, it is stated that these two pre-Union statutes will still be applicable with regard to those who died before 1 July 1922, and, in the case of Act No. 28 of 1922, those who died before 1 April 1955. The cases in which these laws are still applicable, are really exceptional cases, mainly cases in which immovable property is involved, immovable property which was lost for some reason or another, in the sense that it does not appear in the liquidation and distribution account of the deceased, and indeed came to light a long time afterwards. This means that if such immovable property is found today, immovable property belonging to someone who, for instance, died in 1919—60 years ago—the duty has to be levied today on a valuation of that particular property in accordance with the value it had 60 years ago. It is obviously virtually impossible to determine such an evaluation, because municipal records are not available any more, because sworn assessors cannot make an evaluation of a property in accordance with what its value was 60 years ago.

Apart from this particular problem of determining the value, these are also many other practical problems the legal practitioners and the staff of the Master’s Office have to deal with.

In the first place, legal practitioners, as well as the office staff of the Master of the Supreme Court, are no longer au fait or acquainted with the provisions of those old laws, and it is in fact very difficult for someone to acquaint himself with them when it is just an exceptional case, and it is also difficult for anyone to acquaint himself with the very difficult formulas in terms of which these duties have to be determined. In the second place, it takes one an enormous amount of time, because of this leeway one has to make up, to eventually try to determine what duty should be levied. The cost of calculation and labour usually is so much higher than the nominal income which can be obtained from such estate duty could in fact be, that it does not justify the calculation and levying. It will become obvious how nominal is the income levied from these sources, if I inform hon. members that from two Cape laws of 1864 and 1908, in both cases in the following three years, only the following nominal amounts of death duties were levied: In 1974 there were four assessments which yielded a total income of R374; in 1975, ten assessments which earned a total income of R1 788; and in 1976, 12 assessments which earned R876. Therefore, over a period of three years, an average amount of less than R1 000 per annum in death duties was paid to the State. Unfortunately I do not have the information in respect of the Act of 1922, and therefore I am unable to present comparable statistics for that year, but in respect of the Act of 1922, too, the cost of levying was probably so much higher than the duties collected that it was probably not worth the trouble.

I can perhaps explain it much better by way of example. A certain Mr. Louw died in Fraserburg in 1939. He owned property, plot No. 120 in Fraserburg. The existence of that property only became apparent in 1973, when a second usufructuary died and the property had to be offered for sale by public auction. The liquidation and estate account of Mr. Louw amounted to only three pages. Calculation of the succession duty, however, amounted to no less than 2½ pages, 2½ pages of extremely difficult calculations. The amount eventually obtained, after all those hours and days of work, was a meagre R9,78.

There are indeed precedents for eliminating the levying of a duty which may indeed be levied theoretically, in terms of an Act which has been repealed. Here I refer specifically to section 3 of Act 81 of 1957. Therefore, I humbly ask whether the hon. the Minister will not investigate and consider the elimination of the obligation to levy death duties in terms of the Cape Pre-Union statutes of 1864 and 1908. I also want to ask the hon. the Minister whether he does not consider it worth the trouble, in the light of the time wasted in this way, to do the same in respect of estate duty which may be levied in terms of the Act of 1922.

Finally, I should just like to say that the Law Societies of South Africa also support the principle I have argued here.

Mr. Chairman, the hon. Minister of Finance began his speech by dealing with financial policy. The hon. member for Durbanville also dealt with certain financial aspects. In the comments I am going to make, I shall deal with some of those aspects.

†The hon. the Minister mentioned that the financial rand had produced certain results. I would like to ask him if he means by that that foreign investors have already made use of the financial rand and if he could indicate to us, if the information is available, to what extent foreign investors have made use of the financial rand.

Overseas investors have always found South Africa a good haven of investment. They have done exceptionally well in South Africa and could show an exceptionally high rate of return on their investments. The financial rand should stimulate foreign investment even further, and we would like to ask the hon. the Minister whether there is going to be any full-scale publicity and a campaign to promote the financial rand. We believe this is something that should be promoted and we would like to know in what manner the hon. the Minister and his department intend doing it.

Busines suspended at 12h45 and resumed at 14h15.

Afternoon Sitting

Mr. Chairman, we welcome the announcement by the hon. the Minister that there will be a change in the exchange control procedures. The hon. the Minister went on to tell the House that for foreign investors he would relax exchange control procedures. I think this is a sign of confidence in the economy and serves as an encouragement for foreign investors to continue investing in South Africa. We also welcome the increase in the overseas allowances for tourists and businessmen. We think that the existing allowances are insufficient because costs overseas have escalated enormously. In the present circumstances we think that those increases are reasonable and warranted. We welcome any improvements for the farming sector because we believe this is a most important and vital sector of our economy. The supply of food is a major problem throughout the world, but despite the hardships our farming community has suffered, it has made its contribution and played its part fully in the South African economy.

The local authorities throughout South Africa urgently need financial assistance. In order to make ends meet the local authorities have to increase rates to an extent which subjects the home owner in South Africa today to real hardships. It is therefore absolutely vital that the Browne Commission brings out its report as a matter of extreme urgency and that the hon. the Minister immediately assists local authorities with additional financial assistance so that they do not have to impose the extremely high rates which they have to impose at present on the home owners in South Africa.

We should like to wish Mr. Muller of the Treasury and his family all the very best for the future and to thank him for the service he has rendered to the Treasury over a period of many years.

Unemployment is one of the most important and serious problems facing us. The Government must give far more concessions to private enterprise to encourage them to expand and to enter into additional and fresh ventures. The Government must also do its utmost to stimulate the economy.

Reports indicate—and I hope we will hear the formal announcement this afternoon—that a Conservative victory in Britain now seems to be a certainty. We hope this will augur well for South Africa, but not only for South Africa as we hope that the new British Government will bring the USA to its senses and that they will jointly recognize the new Government of Rhodesia, lift sanctions and adopt a more reasonable attitude towards South West Africa and South Africa. I believe this election could be a turning point, but only time will tell which way things will turn.

It was mentioned earlier in the debate that a wrong was perpetrated against two newspapers. They were wrongly fined. This wrong must be rectified as a matter of urgency. The Information affair has reached alarming proportions and allegations of a serious nature have been made against the hon. the Minister of Finance. The hon. the Minister has a key role in the Cabinet and it is in his interests as well as in the interests of South Africa, that these allegations be tested objectively, so that one can take decisions based on facts and can look at the situation impartially and objectively. There are certain questions that we should like to put to the hon. the Minister, and we would appreciate it if he would reply to them during the course of this debate. We put these questions to the hon. the Minister on the assumption that as a senior member of the Cabinet he must have considerable influence with the hon. the State President, the hon. the Prime Minister and the hon. the Leader of the House. The first question is: Will the hon. the Minister make representations to the Prime Minister that this session be prolonged, if necessary, to enable a special debate to take place on the final report of the Erasmus Commission and such evidence of the commission as is placed before the House? Secondly, will he make representations to the Leader of the House that the Opposition and the Government be afforded equal time in the debate? We would have no quarrel if the hon. the Minister wanted his time, or the hon. the Prime Minister’s time, to be excluded from the division of time. They can have whatever additional time the debate allows. Thirdly, we realize that there may be evidence, affecting national security, which the Government may not wish to disclose, evidence over which the hon. the Minister may have no power, but will he undertake to make representations for the evidence relating to himself, and Dr. Mulder, and any other relevant evidence, to be disclosed in full? Fourthly, can we have the hon. the Minister’s assurance that he will make himself available if he is again called by the commission to answer the allegations made by Dr. Mulder, naturally only if Dr. Mulder first gives evidence before the commission.

That is the question.

Yes, that is the question. I should however like the hon. the Minister’s assurance that he would, if called upon, give evidence again. Fifthly, can we have the hon. the Minister’s assurance that all secret funds for secret projects will be audited to the fullest extent by the Auditor-General and that the Auditor-General will be allowed the fullest possible facilities?

That has already been done.

The hon. member says “that has already been done”, but I want to point out to him that in the Auditor-General’s! department there is a staff shortage. That is why I am asking for the fullest possible facilities so he can insure that as comprehensive an audit as possible does take place.

The reason why we want a special debate on the findings of the Erasmus Commission is because I think that we have more important things to debate during the Third Reading than the findings of the Erasmus Commission report. I believe there are serious matters that must be discussed during the Third Reading debate, and if we do not have a special debate, most of the Third Reading debate will be taken up by a debate on the Erasmus Commission report and evidence.

If the hon. the Minister were to answer “Yes” to the questions we have put to him, it would be obvious to us that the hon. the Minister is as anxious as we are to have this Information matter cut open to the bone during this session, because we can only do our duty to South Africa if this matter is not allowed to go on festering like a running sore. It is the duty of hon. members of the Opposition to question, debate, investigate and probe any alleged irregularity related to public funds. From a political point of view, since there are by-elections in the offing, I suppose one is entitled to get as much mileage as one can out of a situation of this kind. I want to say however, just in passing, that of the four parties in the House ours is the only one not taking part in the by-elections. We are therefore in a position to be more objective about the matter than all the other parties sitting in the House. [Interjections.]

Our viewpoint in a nutshell is that the Erasmus Commission is hearing evidence from such witnesses as they may, in their discretion, subpoena. Witnesses such as the hon. the Minister of Finance, Dr. Mulder and others will have their evidence tested and evaluated, and thereafter the commission will make its findings. Approximately one month from now we should have the commission’s report and any evidence they may make available to us. Then it is up to us to deliberate and debate the report and the evidence.

At this point in time allegations have been made against the hon. the Minister of Finance. We sincerely believe, however, that we would be usurping our function and duty if we tried to pass judgment today, before having had an insight into the commission’s final report and evidence. We must bear in mind that the commission fully cleared the hon. the Minister of Finance in its second report.

One would not say so judging from the debate this morning.

We all believe that the other side of the question should be heard. That is why our time for a final assessment can only be in June when we are in possession of sufficient facts to form a balanced judgment Our desire is for objectivity in the matter, and we have always believed that in circumstances such as these a man is innocent until proven guilty. To hang one’s political foe because one is not prepared to wait approximately one month to see a report and supporting facts would not do any one of us any credit. For that reason we would vote against any proposed reduction in the hon. the Minister’s salary.

Order! I am afraid the hon. member’s time has expired.

I am merely rising to give the hon. member an opportunity of finishing his speech.

Mr. Chairman, I thank the hon. Whip. We in the SAP will wait until next month when we receive the information dealing with both sides of the matter. Thereafter we shall form a balanced judgment. We are not interested in protecting any person or party, no matter what the position of that person or party happens to be. That is why we shall make our assessment next month on the merits of the situation. I want to remind the House that in December we introduced an amendment, and I should like to refer very briefly to it because it deals mostly with financial matters.

We asked that legislation be introduced to amend the Exchequer and Audit Act, 1975, relating to secret funds. We asked for the irregularities to be referred to the Attorney-General. We wanted assets not required, and purchased from the secret funds, to be disposed of to best advantage to the State and that all irregular transactions be set aside and State moneys be recouped. We asked further that the Department of Inland Revenue levy taxes due on all money expended from the secret funds. We asked for certain safeguards of interests of the State in regard to The Citizen. We have asked for other matters as well. From what I have said it can be seen that we wanted the full force of the law to protect the State’s interests and to prosecute those against whom the Attorney-General could prefer charges. The matter will not be solved by a slanging match in Parliament at this stage, but by a methodical and in-depth debate next month when we are in possession of all the facts.

Mr. Chairman, the hon. member for Walmer asked the hon. the Minister quite a few questions and I think the Minister will reply to them. The hon. member started off with a subject which I also want to discuss. Allow me just to say that we held no consultations on it. I am referring to the subject of the Browne report on local authorities. I should also like to ask the hon. the Minister what progress has been made with that report and whether it can be expedited. I want to refer in particular to the local authority of Pretoria which is really having a difficult time. Pretoria is a big city with a vast number of Government buildings on which no rates are paid. The result is that the inhabitants of Pretoria have to carry a very heavy load. There is assistance from the Government, but I think that the sooner we look into this matter, the better. If it can therefore be expedited, I shall be very happy.

Mr. Chairman, we are perhaps being a little too hard on the PFP.

Never!

We asked them this afternoon to tell us what their financial policy is. Let us be honest, however. Since they have no financial policy and the hon. the Minister introduced the financial discipline which he did during recent years, on the basis of which he developed and promoted South Africa, in the eyes of the outside world as well, surely one cannot expect them to do anything but keep quiet about their financial policy. I would also do that if I was in their position. If my neighbour has a motor-car while I do not have one and have to travel on foot, I shall not say a word about my motorcar when he gives me a lift. This is also applicable to the PFP. They have no financial policy. Therefore we cannot criticize it either. The hon. member for Yeoville asked a few questions and, if the time allows me, I shall come back to them. It seems to me as if their policy might be contained in them.

I did not ask any questions.

There is another matter which I should like to discuss with the hon. the Minister. It concerns the Auditor-General. It is true that, in respect of any position, one wishes it to be filled by a person with the best knowledge of that particular field. For example, our State Attorney is a trained and professional man. Our law advisers are professional people. They have been properly trained. The Surgeon-General is a trained, professional man. Whatever school one goes to, one will find that the principal of the school will be a man who has been trained in his field. Those are people who know the world. The rector of a university is a trained man. Not only does he have practical experience, but he is a trained man with professional knowledge. The airline pilot is a trained man. The same applies to the truck driver. Wherever one goes, one finds trained people. If I am in the private sector and I register a small company, I have to appoint a firm of auditors—and the auditors are trained people. It is a tradition which has been preserved over the years that a senior official in the Public Service is appointed as Auditor-General. He must have integrity, personality and years of experience in the Public Service. He must also have passed certain examinations in the course of the years. If I have formed a small company with R100, I have to appoint an auditor. The Auditor-General, on the other hand, when he examines the books of the State, deals with more than R11 000 million which is voted by the central Government. Then there are also the books of, inter alia, the Railways, the Post Office, 24 control boards and many other statutory bodies.

The hon. the Prime Minister indicated that the Public Service is going to be changed considerably, that there will be fewer departments and that the private sector will be involved. In view of that, I want to make a request to the hon. the Minister. When I do so, I am not reflecting in any way on the present Auditor-General or his predecessors. The request I want to make, actually originated in the private sector. I want to ask that we should, at this early stage already, bring chartered accountants into the department so that, when the Auditor-General retires one day, we shall be able to appoint a professional man to that position. Furthermore, I should like to say that I think it would also be a very good thing if we could take a closer look at the staff of the Auditor-General. It is true that the Auditor-General’s staff are not all trained men. Junior staff members have to do a great deal of the work. Moreover, there is a shortage of staff. If we look at his first report which was tabled here this year, we see how many staff members he employs and what kind of shortage exists. Consequently I think that it is of the utmost importance that sufficient staff should be employed for this section of the Public Service, for if the Audit section functions well, things cannot go badly in the Public Service. One of the most important things that has ever happened, was the passing of the Exchequer and Audit Act a few years ago. In terms of that Act the Auditor-General was entrusted with wide-ranging tasks. His tasks are now more difficult and of a more penetrating nature. The better his people are trained, the better they will be able to fulfil those tasks. We want better trained people, as I have said, people with more knowledge, in this department. If the people in the Public Service can be so trained that they will have the same qualifications as the people who are employed by professional firms, everything will be fine. I should just like to advocate that these people should have the best knowledge to enable them to do their work.

I should now like to refer to the speech made by the hon. member for Yeoville. That hon. member is the main spokesman of the PFP of finance. In ten minutes he advanced quite a few arguments and asked a number of questions. The hon. member for Schweizer-Reneke has already replied to him on the maize price. It is a fact that farmers give their servants free maize or flour. I know that a farmer does not like to talk about it. How many Black labourers in the cities eat maize porridge, however? They eat bread. To what extent is that bread subsidized? The hon. member had a lot to say about subsidies, but when we ask for one thing, we should not omit to mention another. The hon. member also said that the hon. the Minister should stimulate the economy. He did not specify what should be stimulated. One of the things he did ask for, however, was that the import surcharge should be abolished. What will the effect of that be? It would make imports cheaper and would contribute enormously to an increase in imports. One of his pleas was that people should spend more. But what would the effect of increased imports be? Without saying so, the hon. member implied that the hon. the Minister should do away with his policy which he has developed over the years, the policy of decreasing imports and to stimulate the economy so that more will be produced internally in order to maintain our balance of payments. The hon. member must remember, however, that if we are vulnerable in respect of our balance of payments, we are in trouble. Another thing the hon. member said, was that everyone should have work. I now want to ask the hon. member who has to provide those work opportunities. Should the State provide them? It is being said that the State should not spend. Should the State now spend more money to take over the private sector, or what? I want to ask him how every worker can be provided with employment? We should like to hear from the hon. member for Parktown, who I presume will speak later on, whether it has to be the responsibility of the Government or that of the private sector, and how these work opportunities should be created. I think the hon. the Minister has made a fantastic contribution to stimulating the economy this year. I do not think that the hon. the Minister can or dares to do more, for then inflation will soar.

In conclusion, I should just like to point out another matter to the hon. member as far as inflation is concerned. It is true that the Government is really concerned about inflation and that the hon. the Minister has done a lot to curb inflation, but it is not only the responsibility of the Government. The private sector is just as implicated in it as the Government.

Mr. Chairman, the hon. member for Sunnyside, invited me to say a few words about import duty and inflation, matters which he discussed the past few minutes. It is as plain as a pikestaff that one of the ways in which prices can be lowered in South Africa, is to abolish import duty. It is for this reason that it was advocated by my hon. friend and it is for this reason that I support him in that regard. It is as plain as a pikestaff, too, that if we want to grow and if we want to move in the direction of providing employment opportunities, we need a low cost structure so as to enable us to export more. Our domestic market is in fact very important, but we shall not escape from the economic pressure if we do not export as well, and to do that, our domestic cost structure must be kept as low as possible. It has always been the classical corruptible influence of import duty to raise the domestic cost structure and consequently to decrease export and to contribute in that way to the weakening of the balance of payments. Miracles cannot be expected, of course, and where the hon. member now asks whether we want the Government to provide work for all, for all who need work, I say: Heaven forbid that that day should ever dawn, because on the basis of the operating efficiency of most Government-controlled industries, the creation of those employment opportunities will only have the effect of raising the cost structure once again. What we want to see, is sound, natural growth, based on the free market system as a corner-stone, and we shall be able to bring this about by means of stimulation, provided that such stimulation is sufficient and provided we shall be able to meet the three requirements to which my hon. friend referred. They are, to be specific, to curb inflation at a reasonable level in order that our inflation rate will not exceed that of our most important trading partners, which is the case today, and one way of doing this, is to keep a watchful eye on administered prices. The second requirement is to deal with unemployment effectively so as to remove the instability resulting from unemployment, as we have it at present. The third and possibly the most difficult and delicate requirement of the three, is to regain confidence, both locally and abroad. This requires of us to deal with the political problems awaiting us.

It has been asked whether this side of the House does not want to state its economic policy. I am going to dwell on that for a minute or so. One of the most important aspects of financial and economic policy in South Africa today—and this was also confirmed by the Economic Advisor to the hon. the Prime Minister the other day in his excellent speech to which I have already referred—is to start narrowing the wealth-gap in South Africa. In this regard, I want to say that it worries me to hear all around me, from Government circles, of income tax having to be decreased even further, of estate duty having to be abolished and of widening the tax base in South Africa. I still do not quite know what the hon. the Minister has in mind and I hope that he shall avail himself of the opportunity today to tell us. We sounded a warning as early as last year, when general sales tax was introduced, with the consequential decrease in income tax, that we should not go too far in this direction. What we are doing, is to shift the tax burden from the shoulders of the rich people to those of the poor people.

That is not true.

I concede that it is desirable to decrease income tax to some extent, but we should not follow this course too far. We should not move so far that we make the burden even heavier for the people who are the poorest people in South Africa as it is.

What do you suggest?

The hon. member for Schweizer-Reneke—I think an echo came from the hon. member for Sunnyside as well—wanted to know why we were not denoting more of our time to policy and why we are talking so much about the Information affair. The answer is very simple. If the Government had accepted the advice of this side of the House from the outset and had revealed everything, if it had held the necessary investigations in public, and had made known the facts as soon as possible, it would not have been necessary for us here to try to extract one tooth after the other so as to obtain some information about what was happening. If the cover-up had ended just a little sooner, there would have been far more of an opportunity…

Order! The hon. member for Parktown must abide by my ruling.

What ruling, Sir?

Order! I ruled that hon. members should confine themselves to discussing the hon. the Minister’s Votes and that this was not an Information debate.

I apologize, Sir, but I was merely reacting to the allegation made by the hon. members for Schweizer-Reneke and Sunnyside.

Now I should like to give my attention to an item which appears very clearly on the Vote we are discussing at the moment, viz. the salary of the hon. the Minister of Finance.

†Mr. Chairman, the question of the hon. the Minister’s salary, to which the hon. member for Yeoville has already referred, relates to the hon. the Minister’s performance as Minister of Finance, and that is what I now want to speak about. During the short session of last year we had certain exchanges with the hon. the Minister, and at that stage he gave a considerable explanation of his role in the whole Information affair. He said that he had not been informed of what was going on. [Interjections.] It all appears in Hansard and therefore I need not quote it at length. The hon. the Minister told us at considerable length how “they” would not tell him what the money was for. He said that he tried and tried to find out what all the money was for and that he had also said that they had to phase the thing down. He further told us that he had succeeded in getting the money, voted for secret projects, reduced by a R2 million here and a R3 million there, but that “they” would never tell him what it was for. According to him it was only the other day, when he returned from wherever he was, that he heard about The Citizen.

Then during the no-confidence debate the hon. the Leader of the Opposition asked: “He knew nothing?” and the Minister said: “No. I knew nothing.” The hon. the Leader of the Opposition again asked: “He knew nothing?” and the hon. the Minister said: “No. I knew nothing.” That was the no-confidence debate, also known as the Know-nothing debate.

Then, not so long ago, we had the interim report of the Erasmus Commission in which there appeared the correspondence between the Secretary of the hon. the Minister’s department and the Secretary for Information. In this exchange the Secretary for Information was completely arrogant and contemptuous in his handling of the hon. the Minister’s department The hon. the Minister’s department asked: “Is our Minister not entitled to know…

Mr. Chairman, on a point of order: Have you not ruled that this matter may not be discussed in this debate?

The hon. member for Parktown is discussing the hon. the Minister’s administration of his department

We also have these letters in which the Secretary for Information simply slaps the head of the hon. the Minister’s department in the face. This was what happened to the hon. the Minister of Finance. The Commission explains that there was this cabal involving the Secretary for Information, the Minister of Information and the former Prime Minister which simply terrorized this poor Minister so that he did not ask any questions but simply forked out the money and provided what was necessary. Today we all sat in anticipation, waiting to hear the hon. the Minister’s explanation for his initialling next fo the words “To The Point” and by George, the hon. the Minister explained that when he signs things like that, he puts his hand over all the printed matter and puts his signature on the blank paper at the bottom of the page. Most of us have been trained to administer or to run something or other, and most of us have been brought up to recognize that our signatures are of some importance. One often has to sign many things, and often people put documents before one and say: “Do not waste time, sign quickly”, but one always at least glances through the document to see what the subject matter is about before signing. If one is responsible, one does not put one’s signature on something without looking, but worse than that, one does not put one’s fingers over the facts and then sign underneath. What kind of picture does that build up of this hon. Minister? We get the picture that he is someone who simply does what he is told. In some businesses, where a lot of documents have to be signed and the top executives of the business cannot spare the time to do all that signing, they actually appoint old pensioners whose sole task it is to sign documents.

It seems to us as if the hon. the Minister has been behaving like that, because he has made no attempt to find out where our money is going. We should like to tell him that we actually do not want a Minister who does not know what is going on and continues signing documents on that basis year after year. We want a Minister who is eager to look after our money, who will see where the money is going to, one who will only sign after he has been satisfied that the money is being properly applied. It is on this ground, as the hon. member for Yeoville has said, that we have serious reservations about the hon. the Minister’s salary, but we are waiting for his reply in this respect.

Mr. Chairman, the hon. member for Parktown said that we should restore economic confidence. The hon. member and his party could do much to help us in this by being less negative in their conduct and by putting an end to their many negative remarks. They should be less intent on exploiting negative things, such as Information, and they should tell us what their financial policy actually is.

According to this afternoon’s news bulletins, the value of the British pound has risen sharply. We want to congratulate Mrs. Margaret Thatcher and her party on that and we want to express the hope that she will restore her country to financial prosperity, and that the financial ties between South Africa and Great Britain will be greatly strengthened in the years to come, to the advantage of both countries.

Mr. Chairman, you have ruled that we are to discuss finance this afternoon. I therefore wish to confine myself to that subject. When we look at the world around us, at the East and at the West, and at Europe as well, we find political instability everywhere. We find instability in the monetary field. There are the increasing demands of trade unions. There is inflation which cannot be curbed. There is growing concern about the oil supply and about the high price of oil. All these factors are having a detrimental effect on economies all over the world. Most countries of the world are faced with a very difficult problem, the problem of maintaining a favourable balance of payments and of paying for the more expensive oil and the many other more expensive things they have to import.

South Africa is in a much more fortunate position in this respect. We have a healthy balance of payments. South Africa is one of the few countries in the world that can pay for their imports. When we behold the stormy world around us, South Africa stands out as a beacon of light in the financial-economic field, as a peaceful island in a stormy sea. Strangely enough, there are so many people in our country who do not notice these things. Strangely enough, economists and financiers have to come from abroad to tell us how well off South Africa actually is. South Africa is blessed with many advantages. South Africa is blessed with a good Government, with a good Minister of Finance…[Interjections.]

With a useless Opposition.

We have great confidence in our hon. Minister of Finance and he enjoys just as much confidence abroad. Therefore we want to point out to the hon. Opposition that they will not succeed in their attempts to denigrate the hon. the Minister of Finance. Let us count the blessings of South Africa, as seen by people from abroad. There is Dr. Hans Mask, for example, one of Switzerland’s most influential bankers. He says—

Investors the world over are easily frightened away. We have seen it again in Iran, where American concerns lost $12 milliard. Then one does not blame investors for taking a second look at their investments. In America, International Political Surveys made important surveys and analyses of the political stability in the countries of the world. Their finding is that South Africa is still one of the safest countries in the world in which to invest.

A prominent American businessman, Mr. Robert O’Brien, president of the Moore McCormick Lines, is one of the people who have again come out in favour of investment in South Africa. He says the following to the Americans, and I quote—

So you see, Mr. Chairman, how the world is realizing that the political stability and economic power of South Africa are not to be scorned. Here we have an encouraging and gratifying picture and we are grateful for the confidence and optimism which it shows. However, I want to come back to the home front. There are red lights flashing in our economy which we dare not ignore. We must tell one another frankly today that South Africa’s growth rate of 2,5% in 1978 is not as it should be. In order to face the political, social and economic problems in the future, it is of the utmost importance that we should have a much higher growth rate in South Africa.

According to authoritative projections, unemployment will keep increasing in South Africa until we have regained a growth rate of 5%. Only then will unemployment begin to decline. The hon. member for Parktown agrees with me.

Perhaps 5,5%.

But a growth rate of 5% cannot be expected before 1982, according to estimates by the office of the Economic Adviser to the Prime Minister. This is a red light which is flashing.

The blame for the present low growth rate should not be laid at the door of the Government only. The hon. the Minister of Finance has taken a great number of courageous steps to stimulate growth, and his latest budget is another proof of this. However, we have to look elsewhere for the reason why the growth rate in South Africa is not higher. We are not working hard enough in this country and our entrepreneurs are still too reluctant to start new ventures. We are still not manufacturing and producing enough and we are not properly utilizing our labour potential, and our people are still saving too little.

Unfortunately, the message of South Africa’s need has not yet penetrated to all the people in this country. We live in a time which requires us to make sacrifices. In spite of this, there are alarming signs of a lack of economic discipline in this country. People are guilty of extravagance and addicted to credit. Warnings that fuel should be used sparingly are recklessly ignored by many South Africans. They still come tearing past us in their cars.

The demands for more holidays and more leisure are constantly increasing, while the level of productivity in many spheres is among the lowest in the world. The rate of development in the industrial sector remains low. As we know, this sector is the one on which we are largely relying to give new impetus to our general economic development. This sector must produce the goods which must replace imported commodities and make an increasing contribution to our export effort, and which must do much to remedy the situation of unemployment with which we are faced.

It is indeed cause for concern that production in the industrial sector is not increasing as it should. What we need is more confidence in the future of South Africa and more enterprise. It is time our entrepreneurs showed greater daring and said that what we are doing, we are doing for South Africa.

Mr. Chairman, I certainly do not want to enter into a debate with my hon. friends on this side of the House. Since it is a tradition in Parliament that discussions in this House take the form of debate, I suppose I shall have to turn to the previous speaker on the Opposition side if I am to conduct a meaningful debate.

The hon. member for Parktown attacked the hon. member for Sunnyside on his statement that we should not heed the call of the hon. member for Yeoville. The hon. member for Yeoville wants the surcharge on imports to be completely abolished, because according to him, it causes an excessive escalation in our internal cost structure and seriously inhibits our ability to compete in the international market I fully agree with the hon. member for Parktown that it is essential that we keep our internal cost structure as low as possible if we want to compete in the foreign market. To a very large extent we are already doing this. Fortunately, we are also exporting a whole number of commodities in respect of which we do not have much competition overseas. I may mention, for example, our deciduous fruits, which are marketed in the northern hemisphere when they are out of season there. We also provide 60% to 80% of the world demand for gold and certain other minerals. Therefore we are in a fortunate position. When the hon. member said that we should keep down our internal cost structure, I thought that this was very much in conflict with a policy which hon. members of the official Opposition are always advocating, namely that we should close or minimize the wage gap.

I fully agree that this is a splendid ideal, but if we want to wipe out the wage gap without a simultaneous increase in the productivity of the people who are now receiving low wages, this would only lead to greater unemployment among the Blacks, because the employer is simply going to say that that labour has become too expensive for him and he will then buy a machine. An entrepreneur cannot be expected to go in for charity. He is led by strictly economic considerations, and if his wages become too high for him, he simply buys a machine, and in this way, even more Black people are rendered unemployed. Therefore I want to plead with the Opposition again this afternoon that they should not keep advocating the closing of the wage gap, but that they should also advocate higher productivity. By higher productivity I do not only mean working a little harder. What is more important is greater responsibility in employment That is what we must strive for.

Mr. Chairman, before I run into trouble with you, I wish to return to the discussion of the Vote. To be able to do this, I must refer to the financial policy of the hon. the Minister as he spelt it out in his budget speech. The budget was highly praised by everyone and also testifies, in my humble opinion, to a very sound financial policy. Only, it is a tragedy that as a result of repeated oil crises, we find ourselves in a very high inflation spiral which the Government can do nothing about. I read what was recently said by a very well-known economist—

This is criticism which I have heard from that side of the House as well. Hon. members on that side also allege that the fault or the defect in our budget lies in the fact that we have not given enough attention to inflation. The economist continued—

This is the dilemma with which we are faced: Because of the repeated oil crisis we find ourselves in a spiral of high inflation. Over the period 1972-’77, the rand depreciated every year by 13,6% on average, according to the figures of the International Monetary Fund. Fortunately, the depreciation rate dropped to 9,1% in 1978, because we were moving further away from the 1973 oil crisis. However, in 1979 we had another tremendous oil crisis, one which was much worse than the one of 1973. The result is that we must simply expect to have further problems with inflation, and with all its harmful effects. This means, for example, that certain sectors of our community are very hard hit indeed.

I have often spoken in this House about the lot of the retired person who is living on his own savings. I am referring to someone who receives neither a civil nor a social pension. The State recognizes the harmful effect of such a high inflation rate in the case of civil and social pensions, and for that reason, those pensions are increased every year. The poor fellow who is living on his own savings is having a very difficult time, however.

I may refer to a few figures, but in doing so, I must be careful, because I think it was Bernard Shaw who said that there were actually only two kinds of lies worth mentioning: downright lies and statistics. I must be careful not to fall into the trap of telling downright lies, nor to quote statistics in such a way that Bernard Shaw would have regarded me as a downright liar.

If someone retired six years ago and had a savings fund of R100 000 available to him, he would, at an interest rate of 10%, have had an income of R10 000 a year. Since then, the interest rate has dropped by 2%, so he now has an income of R8 000 a year. However, when one takes into account the depreciation of the currency—I shall put it at 60%, for although it is actually much higher, I must allow for Bernard Shaw as well—one is shocked to discover that where the effective purchasing power of that man’s savings was R10 000 six years ago, it is now only R3 200. That poor fellow is not getting a single cent from the State.

I must thank the hon. the Minister for having announced tax concessions in his budget to help people who have to live on their savings. The effective purchasing power in the example I mentioned has dropped from R10 000 six years ago to R3 200 today, however. The question now arises: How can the State assist him? The wage or salary of the man who is still working is adjusted to the high inflation rate.

The hon. the Minister said that he wanted to encourage debate on the question of whether he should introduce a capital gains tax, and I want to say something about that. He should please not think of introducing a capital gains tax in the case of people over the age of 65 years, because capital gains is the only way left for such a person to accumulate more money; he does not get anything from the State. Please, Mr. Minister. [Time expired.]

Mr. Chairman, we have listened with interest to the hon. member for Paarl, notably to his urgent appeal to the hon. the Minister not to introduce capital gains tax.

You are under 65; so you are all right.

Sir, we shall all reach the age of 65, if we are lucky. We have to bear that in mind.

Before I deal with a particular form of capital gains tax which is already being applied in this country—I do not know whether the hon. member for Paarl is aware that there already is a capital gains tax applied in this country—I should like to deal briefly with a few of the comments made by the hon. member. The hon. member appealed to the Opposition to recognize that productivity is in fact a key factor in breaking down the effects of inflation. For the hon. member to say that to us in these benches is really rather curious, because my hon. colleagues and I personally have frequently pointed out—we did so as recently as the Second Reading debate of the budget—that productivity is the only real solution to the grave problem of dealing at the same time with growth and inflation. Growth and inflation run in a pair. They are harnessed together like two horses. The only way in which one can separate them from each other or deal with the joint problem is to achieve greater productivity. The hon. member quoted some anonymous economist who said: “’n Mens kan nie inflasie reg dokter met ’n begroting nie.”

*If one cannot remedy that with a budget, I want to ask: What other remedies exist? The budget is, after all, an important instrument to apply if one wants to combat inflation. The hon. member has pointed out that in many countries the rate of inflation is higher than it is in South Africa He advanced the increased cost of crude oil as a reason for the intensified inflation in South Africa. I just want to point out to the hon. member that at present there are quite a number of important countries with which we trade, that have lower rates of inflation than South Africa has, although they are far more dependent on oil as part of their energy pattern than South Africa is.

But they are not on the blacklist of the Arabs.

We are in the fortunate position that we are only dependent upon oil for 25% of our energy consumption.

Thanks to the NP Government.

It has nothing to do with the NP Government.

It is they who are in power.

It is attributable to the availability of coal. The fact remains that there are countries that are dependent upon oil imports to the extent of 80% or even more in order to maintain their level of production. They are therefore heavily dependent on oil imports and their prices, even though they are not on the black list. Nevertheless, their rates of inflation are much lower than that of South Africa. I am thinking, for example, of countries such as Switzerland, America and Germany. It can therefore not be argued that everything is simply attributable to the oil price.

†I now want to come briefly to what I claim is a case of capital gains tax in South Africa. I refer, of course, to estate duty. What I want to say about estate duty is entirely consistent with what the hon. member for Parktown said. It is true, of course, that if we want to close the income gap, the wealth gap, in South Africa, we cannot simply move the tax burden away from the rich onto the backs of the poor. This is self-evident. Nevertheless, I think it is right that, although the rich or the comparatively rich do bear a heavy tax burden, the tax burden should be equitably and equally administered. I believe that if one looks at the special case, which I wish to plead this afternoon, of the calculation of widows’ pensions for the purposes of estate duty, one would see that there is a very strong case to be made for relief in this respect. The hon. the Minister did afford some relief in respect of estate duties by raising the unit rebate from R25 000 to R30 000 per head. This is a welcome relief, but I think the hon. the Minister would be the first to concede that in relation to the course of inflation since the R25 000 rebate was first created, a R5 000 increased rebate per unit is, in fact, a very small compensation for the ravages of inflation.

What has actually happened, is, as the hon. the Minister knows, that a widow’s pension is calculated or capitalized in terms of the benefit received minus the pension contributions or premiums actually paid by the beneficiary herself. In other words, the amount which qualifies for assessment, in terms of estate duties, is in fact the capital sum calculated on the basis of the benefit received less premiums paid by the beneficiary herself. Then this is calculated further by reducing the total amount by 12% per annum as the years go by. Nevertheless, it does happen—one has heard very strong criticism and appeals made by those who administer widows’ funds, by boards of executors and by insurance companies which are concerned with some of these matters—that this bears down very hard on widows because the capital sum can, in fact be a very large one if calculated in that manner. For example, a widow of, say, 60 years of age who receives an annual pension of R10 000, has the value of this benefit capitalized at R88 000, and this is then added to the estate for estate duty purposes. I can give many other examples, but my time might be running short However, I believe it illustrates the nature of the burden which might have to be carried by a widow in these circumstances. I believe this is a matter which needs attention, and perhaps even more urgent attention than the simple question of rebates. I believe that here we are dealing with a special case and a special hardships falling on people who, on the whole, tend to be of advanced years and are dealing with a capital asset which, as the hon. member for Paarl has rightly pointed out, is subject to severe erosion, with little remedy in the hands of the owner of that capital asset as his years advance. I believe that the burden is even greater in the case of a widow who is deprived of her income in all respects, save for the capital sum which has been left to her in this manner, or the income or the pension which then becomes a capital sum in terms of this form of calculation. This theoretical capital sum is then heavily penalized by the estate duty provisions and further reduced in this way. I think this is a matter which, without great cost to the State, could be put right, and this would give relief to the people who can least afford to meet this hardship. I believe that the loss of revenue will be infinitesimal in comparison with the great relief which will be afforded by this measure. I suggest this to the hon. the Minister for his serious consideration.

Mr. Chairman, the hon. member for Constantia raised two aspects. In the first instance he referred to the question of inflation. Inflation is a problem which we have with us just as we have the PFP with us. It is a headache which we shall simply have to put up with.

We shall always be there.

I am still coming to the hon. member for Yeoville. [Interjections.] We are combating inflation, and we shall do the same with these people. I do not want to quarrel about the other aspect to which the hon. member referred, viz. the matter of people of advanced years, who are no longer economically active, and the effect on them of the depreciation of their money. There is a book written by a certain Mr. Adams, an engineer in Johannesburg; The Propagation of Useful Activities, which contains an interesting chapter, under the heading “Robbing the Aged”. The hon. member should really read it. This, too, is a problem which has been with mankind for many years.

The hon. member for Yeoville mentioned three main points and I want to refer to one of them only, viz. where he expressed his opinion on the lack of confidence which supposedly exists. With your approval, Mr. Chairman, I want to refer to the hon. member for Yeoville as “the real white-collar pessimist today”.

You could not have listened to what I said today.

I think that the hon. member for Yeoville was also a guest last Friday on the occasion of the opening of the new Stock Exchange building.

No.

Were you not present?

No, I was in this House, where I was doing my duty. [Interjections.]

Since the hon. member, as a South African, as a patriot here, displays a lack of confidence in the finances of our country, he would do well to go and read the comments… [Interjections.]

Mr. Chairman, on a point of order: Is it permissible for an hon. member deliberately to misquote somebody in a speech he has just made, because I said the very opposite to what he is saying?

That is not a point of order.

Thank you, Mr. Chairman. This man is taking up my time.

Order! The hon. member, not “this man”.

The hon. member is wasting my valuable time. On that occasion, the official opening of the new Stock Exchange building, a visitor from Britain, and not simply a visitor, but the chairman of the London Stock Exchange—in my opinion the leading exchange in the world—said the following—

Here is another quotation from Mr. Joel Stem, chairman of the Chase Manhattan Bank of America.

He is not the chairman.

I quote from Hoofstad of 28 April 1979. This man says the following—

While these people from large financial institutions in the world have confidence in our country—I am not speaking about ourselves, who are sitting here—this member comes along with his pessimism. I will tell you what the hon. member bases his pessimism on.

I am not pessimistic.

What it is based on is that, in his environment in which he lives… and he is an optimist.

And you are stupid. [Interjections.]

Order! The hon. member must withdraw that

I withdraw it. The hon. member is simply ignorant [Interjections.]

I think the hon. member is really very insulting. The hon. member is not a pessimist If one sees him walk, one can see he is an optimist (“optimis”). After all, he walks reasonably briskly.

Does he walk on the dung (“op die mis”)? [Interjections.]

The company he keeps will be the death of him. They are smothering him. [Interjections.] He is unhappy where he is sitting. He cannot live. He cannot feel optimism. He cannot breathe, because how is he to get away from that leader, who allowed another great flagrant matter to occur this year? How can one get away and how can one live with that thought? [Interjections.]

Order! The hon. member must come back to the Vote.

Thank you, Mr. Chairman. I just wanted to rub it in. The hon. the Minister of Finance is the co-ordinator of the financial functions of our State machinery. This House, through the hon. the Minister, wants to maintain its say in so far as perusal and examination of the activities and individual expenditures within the various cost structures are concerned. This, in my opinion, we are fully entitled to do and is the reason why we receive the annual reports and financial statements of the various departments. One usually examines these reports carefully to see what is going on in the departments. On the other hand one continually hears calls from that side of the House to provide, for example, free education services across the whole spectrum, Brown, White, Black…

Pink.

Everyone. In my opinion, no such concept as “free” exists, because the taxpayer pays for that means or service which is provided. I just want us to examine for a moment that component of the budget. We are here in the midst of the discussion of the votes, as set out in the budget objectives, so that we can see what amounts have been appropriated for the various budget items. For example, there is the Vote of the hon. the Minister of Public Works, with its various structures. If, however, we want to single out a few of the votes and, among other things, want the Department of Education and Training to supply free books, or at least departmental books, to Black scholars on secondary levels…

He is wrong again.

Order! The Education Vote is not under discussion at present.

I respect your ruling, Sir, but I should like to refer to the financial implication of this. There is, for example, a backlog of 7 000 classrooms. If the classrooms were to be calculated as units against which our finances would be debited, it comes to R42 million.

Mr. Chairman, on a point of order, the hon. member has again digressed from the Vote.

But surely those classrooms cost money!

Yes, money is after all, spent on them.

Order! The money for them was appropriated under another Vote.

With great respect, Sir, these people are misleading you. [Interjections.]

This is a reflection of the Chair, Mr. Chairman.

Order! Does the hon. member mean that they are deliberately misleading this House?

No, Sir. I withdraw the idea.

Order! The hon. member must now confine himself to the discussion of these Votes.

I simply wanted to quote the example, because we have already spent some time discussing agriculture today, and I simply thought that this would be a profitable subject for me to discuss. [Interjections.]

It is rather difficult if one does not have a speech, not so? [Interjections.]

I have very fruitful ideas, and even without a speech I am better off than that hon. member. [Interjections.] Another matter I want to refer to, is the pension scheme for our old people, who made no contribution to our finances in their time, in the form of taxes.

Mr. Chairman, on a point of order: That falls under the Department of Social Welfare.

Order! The hon. the Minister appropriated this specific amount in the budget, and it must, therefore, be raised with him.

Mr. Chairman, on a point of order: The amount is allocated under a different Vote, and it is only the money that is allocated under the hon. the Minister of Finance’s Vote that is under discussion now. The hon. member can therefore not talk about social pensions. [Interjections.]

Order! The hon. member is entitled to advocate relief for these people. He may proceed.

Thank you for your ruling, Sir. The general request to the hon. the Minister is that some scheme be initiated in accordance with which the pension contributions of people in various post structures, wherever they may be, may continue. I think that both the hon. the Minister and myself, with respect to you, Sir, have, when we changed our work, paid the price by allowing our pensions to lapse, under the provisions of a law of this country. [Time expired.]

Mr. Chairman, I am really grateful to be speaking after one of my own colleagues so that I need not be tempted to react to the meagre harvest hon. members of the Opposition have given us today with regard to finance.

However, I should very much like to broach a matter which I believe is a very important one. I wish to exchange a few ideas about the very good work done by the De Kock Commission in the interests of South Africa. The situation today is that exchange rate problems occur throughout the world in every country of any significance. Over the years innumerable efforts have been made to stabilize exchange rates and establish international trade on a more stable basis. South Africa also made its contribution in this regard when Dr. De Kock and Dr. Gerald Browne were members of the committee of 20 that sought to iron out these matters. I fear, however, that their good work has not produced lasting results either. The fact is, then, that as long as there is an imbalance in the international world between trade deficits and trade surpluses among the great powers of the world, and as long as the rate of inflation remains where it is today, there can be no possibility whatsoever of stable exchange rates in international trade and therefore exchange rates will continue to fluctuate.

That is why the work done by the De Kock Commission is of such tremendous importance. It is important because South Africa is extremely vulnerable as regards its exchange rate policy and its policy relating to the flow of currency. As a major trading country, South Africa is one of the 20 biggest trading countries among the 134 member countries of the International Monetary Fund. At any given period of the day we have literally hundreds of millions of rands outstanding in South Africa with regard to import and export. If we were to permit these large sums to remain vulnerable to manipulation and speculation we could suffer a blow greater still than that we suffered in 1974-’75 when we encountered difficulties as a result of our exchange rate policy at that stage, among other things. If we were to adopt an incorrect policy today it would be Ichabod for all our fine plans to promote economic growth in South Africa.

We all know that the fact is that the economic strength of South Africa determines not only its military preparedness but also its political options. Consequently we must be very careful when we begin to effect changes to our exchange rate and currency policy. For this reason the De Kock Commission deserve the thanks, appreciation and congratulations of this House. At the same time the hon. the Minister of Finance deserves the same thanks and appreciation because it was of course his idea that the commission be appointed and because it was of course his responsibility to appoint the members of the commission. The commission he appointed is a unique commission in the results of their work and in the history of South Africa’s financial development. It was a small, capable commission. The commission did not consist of people appointed on the basis of their representation of the Afrikaanse Handelsinstituut, Assocom or any other body whatsoever. They were appointed purely on the basis of their personal abilities, and they were unanimous in every recommendation they made, so that the Government, without setting a single proviso, was able to say that it accepted the recommendations of the De Kock Commission and that it would immediately begin to put those recommendations into effect.

Seven of the nine members of the commission were from the private sector. This is a feather in the cap of the hon. the Minister and also a sign that he has committed himself irrevocably to the promotion of the system of free enterprise in South Africa. Moreover, the success of the recommendations of the De Kock Commission are duly reflected in the fine results achieved thus far with the financial rand. The rise in the rate of the financial rand is a clear indication that a strong demand for it is developing and that our new policy is succeeding. However, there is another important school of thought in South Africa which believes that rather than to float free of control, we should have relied on the variable link with the dollar. However, the fact of the matter is that that very policy of ours encountered tremendous difficulties and we were eventually compelled to announce an enormous devaluation. That was in 1974-’75. When a country links itself to a monetary unit it has to put up with it when that monetary unit drags it to and fro through the world markets. It is simply impossible that the movements of the different monetary unit would always suit South Africa. It will be pure coincidence. If we were to bind ourselves to the dollar again and adjust ourselves upwards and downwards as the dollar rate varied—something which does not always necessarily suit us—then technically and practically it would amount to a devaluation or a revaluation on each occasion, with the concomitant problems for us. Consequently there is yet another important aspect of this which we must bear in mind and of which this school of thought which wants to impose this thing on us in South Africa should take careful note of. If the Government were to commit itself to a variable link with the dollar it would also mean that the Government, in its adjustments to give effect to this variability, would also have to read certain market trends, and having done so, would have to change the rate of the link, at a rate which is usually determined on a fairly arbitrary basis. The fact of the matter is that intelligent speculators discover the formula very quickly. They look at the market and know that if the dollar is moving in a certain way, as a result of the cyclical circumstances in the business world or due to certain political circumstances or whatever the case may be—it could also be a dollar rate which did not suit us—we should have to change. The speculators are then in a very good position to do us a tremendous amount of harm. That is indeed what has occurred in the past.

Consequently this new system of controlled floating is a matter which probably affords us the best chance of success at this stage. The truth is of course that if we were to permit people to estimate our position in advance they would do us harm, because we are being subjected to careful scrutiny with a view to sabotaging our country’s economy. To me, controlled floating is very important and here I want to compliment the commission to a great extent on the fact that the philosophy that underlies the recommendations of the De Kock Commission is once again indicative of a country that has committed itself irrevocably to the free enterprise system. The commission is even prepared to change what it has done in the past and which has not perhaps given full effect to it, and to give the laws operating in the market-place the chance to rectify the evils in our community. It is also gratifying that this commission did not come forward with a wealth of regulations and laws in an effort to heal the ills of our economy. The fact of the matter is that if the rand is a weak money unit, there is nothing we can do to support it artificially. Consequently it is an exciting idea that we now have in our rand a true international barometer of the prestige our economy enjoys worldwide. It is also a compliment to our country that the rand has not fluctuated since then and that as I have said, even the financial rand is winning ground in the international market. Therefore we can join the hon. the Minister of Finance and his department in looking forward to the day when the financial rand will have reached the level at which it can be abolished so that we can have a single money unit with which to carry on our international affairs.

In conclusion I want to make one remark about exchange control. In this regard, too, the approach of the commission is the typical approach of people who believe in the laws of the system of free enterprise. They did not come forward with an addition to the number of laws and regulations but held out a long-term prospect of an eventual total abolition of exchange control for non-inhabitants of South Africa. I think it is an exciting idea that we have reflected this degree of confidence in our own economy so that these steps could be considered. That is how the matter stands. By expressing this confidence, we have not merely expressed confidence in our economy; arising out of that is another very important matter. By doing so we have also expressed confidence that we shall solve the political problems in South Africa internally, because this can have a direct and significant influence on the value of the rand. If we can reach a stage at which we have no fear as regards the value of our rand because we are sure that our politics and our economy are in order, then we must again achieve our prestige in the international world as one of the best countries for investment in the world. Therefore the hon. the Minister must be complimented on the way in which he set to work. It puts this unnecessary motion by the official Opposition that his salary should be reduced, in a light in which they make themselves absolutely ridiculous. They are opposed not only to the general view of the hon. the Minister but also the positive view of those who point to the fine results he has achieved in our economy.

Mr. Chairman, I do not intend to speak about the monetary policy of the hon. the Minister, but I would like to say that I agree with a lot of what the hon. member for Florida has said. I especially agree with him that South Africa does have a strong economy, and I do believe that many of the recommendations of the De Kock Commission which are now being implemented by the hon. the Minister will help greatly in improving and strengthening the South African economy. When one considers the population of South Africa, I think one can be very proud of the position we do hold in the international sphere as far as economics and trade are concerned.

In the few minutes I have at my disposal, however, I want to stress that while the economy is looking a lot healthier than it has in the immediate past, I want to put it to the hon. the Minister that one of our major needs is to stimulate still more growth within the economy. I want to put this to the hon. the Minister with the view to a reduction in taxation which we on these benches believe is having a rather crippling effect upon the economy as a whole. Before discussing this point however, I want to refer to something which the hon. member for Schweizer-Reneke—who regrettably is not in the House at the moment—said earlier on in the debate. I was rather amazed to hear the praises he sang on behalf of the hon. the Minister for the assistance we hear is now going to be given to the farmers, in particular with regard to the possibility that farmers would not have to pay GST on the cost of transporting their products from the farm to the market, and also for a mentioned reduction in the input costs of the farming industry. I could hardly believe my ears. Last year, during the debates in this House, the main theme of the hon. member for Mooi River was that the agriculture community required a reduction in input costs. Earlier in this session, during a discussion of the Agriculture Vote, the hon. member for Pietermaritzburg South again stressed the need for this. What happened then? He was criticized by hon. members on the other side of the House, including the hon. the Minister of Agriculture, and yet today we hear the hon. member for Schweizer-Reneke putting forward exactly the same proposals that my hon. colleagues in these benches made.

Later on in the debate, the hon. member for Sunnyside praised the decision, announced by the hon. the Prime Minister, to review the number of Government departments. He praised the fact that the Government departments were in time going to be reduced to a lot less than there are at present. This is exactly the sort of thing which has been debated by hon. members in this House for the last year or two. I can remember my benchmate referring last year to an article which appeared in the Sunday Times in 1976 under the heading “Do you know you are being strangled by the biggest octopus in the world?” The hon. the Minister of Finance will remember that debate. I want to remind hon. members just where South Africa stands in the world as far as the number of Government departments are concerned. My hon. colleague mentioned last year that in Japan, which has a population of…

The hon. member must realize the hon. member for Sunnyside only used that statement to plead for an increase in the Auditor-General’s staff. He did not discuss State departments per se.

Mr. Chairman, I accept that. I should, however, like to say that we in these benches are extremely pleased to see that the number of State departments is going to be reduced. It is on record in Hansard for hon. members to read that we have called for this for years. I am also pleased that the hon. member for Sunnyside referred to the fact that the number of statutory boards and public corporations was also going to be investigated. We are extremely pleased about this because we would like to think that it means that in future the taxpayer is going to be asked for less money to finance Government spending and spending on the part of the statutory bodies. I should like to remind the hon. the Minister that today the South African worker and businessman are under tremendous pressure. The hon. the Minister knows that. It is also his department which plans for the future financial security and prosperity of South Africa.

Today the South African taxpayer not only has to pay his taxes, but in the light of the recent increases in fuel prices, he has also been asked to finance one of the greatest industrial developments South Africa has ever seen in the form of Sasol. Something like an extra R900 million has been taken from his pocket to finance Sasol 3. We do not oppose these developments. We believe it is in the interests of South Africa. The taxpayer has also been asked to finance the tremendous development of Escom. These State corporations are bleeding off thousands of millions of rand from our people. Therefore I believe that it is incumbent on the hon. the Minister of Finance, in his planning of the financial future of South Africa, to alleviate this burden which has been placed on the citizens of South Africa by reducing Government spending to a minimum.

Getting back to the hon. the Prime Minister’s statement, I sincerely hope that, when the review of Government departments has taken place, there will be some financial saving as far as State expenditure is concerned. If there is a saving, I want to appeal to the hon. the Minister to use this saving to reduce the taxes paid by the citizens of South Africa.

I accept that the hon. members to my right have made an appeal on behalf of the lower income groups as far as reductions are concerned. That is absolutely correct. I do believe, however, that, with the new light the Government has now apparently seen, as evidenced by the Wiehahn Commission’s report, in a growing economy the working-class people in South Africa will see their position in life improve as time goes by. Essential to this, is increased growth within the economy, and this must come from the entrepreneur, the businessman and the professional people, who get the economy going. It is for this reason that I should like to appeal to the hon. the Minister to consider once again the level of taxation applicable to the higher income groups. I would like to quote from a report which appeared in the Sunday Times of 18 March which said—

I think the hon. the Minister will concede this point. It is not only made in this particular report, but also in many other reports. I have with me the annual report of a large insurance company. In the chairman’s report we find once again that it is said—

I do not have the time to read it all, but he goes on to say that by the year 1978-’79 this man has lost nearly 28% of his 1971 take-home pay.

In conclusion I want to direct an appeal to the hon. the Minister. As I have said, these are the people who can get the economy going. If, therefore, there are any savings made as a result of the rationalization of Government departments, statutory committees, boards and so on, I appeal to the hon. the Minister to use these savings to reduce the income tax of the wage earners and salary earners in South Africa.

Mr. Chairman, the hon. member who has just resumed his seat asked for a reduction in the rate of income tax. It is already the standpoint of this side of the House to establish a broader basis so that such a reduction can indeed be brought about.

Although the contribution of the agricultural industry to the gross domestic product amounts to only approximately 7½%, as the hon. the Minister showed us this morning, and is therefore a relatively small sector of the South African economy, fluctuations in the agricultural production play a very important role in the national economy as regards both the effect it has on the business cycle in the period concerned and the influence it exercises on the balance of payments. For instance, agriculture has substantially counteracted the strong downturn in the real economic activities in 1977. Had it not been for the good agricultural production and the increase in non-gold mining production, the depression in the economy would have assumed far graver proportions in 1977. At the very time when it was so necessary to strengthen the position of the country’s balance of payments, the export of agricultural products increased and greatly contributed towards strengthening it. In fact, the South African economy depends heavily on agricultural exports as an earner of foreign exchange in order to improve its trade balance.

The importance of agriculture and the farmer in the South African national economy is to be seen in the role it plays as the provider of essential food, as a provider of raw materials for the country’s secondary industries, as an employer, as a buyer of durable consumer goods and other means of production, as a consumer of industrial products and as an earner of important foreign exchange. This role of the farmer can have a very favourable and stimulating effect on the economy and therefore the farmer and agriculture as such should never be seen in isolation.

Heavy demands are being made on the managerial ability of the farmer today and due to circumstances he is being forced to pay more and more attention to, and spend more and more time on, the financial aspects of his farming activities. Agriculture is subject to the vagaries of nature, and this results in varying and unstable production. The risk and instability to which the agricultural industry is subject, has been very strongly emphasized over the past years. In contrast to industry, for instance, agriculture cannot always maintain an even production pattern.

Furthermore the agricultural industry has to deal with a rising production cost structure which cannot always be passed on to the final consumer as is being done in the case of trade and industry, for instance.

In spite of the prosperous agricultural years from 1973 up to last year, generally speaking, the financial position of farmers in South Africa has deteriorated. This is also clearly reflected in the annual report of the Land Bank. Due to the rising production costs in agriculture, the financing requirements have also increased sharply during the last few years. The production credit of the Land Bank which is granted via agricultural cooperatives to their members, increased from R87 million in 1974 to R332 million in 1978. This represents an increase of 281,6% over four years.

Aspects which are really causing concern, are the replacement of durable assets and the relatively rapidly rising prices of short-term requirements. The replacement of durable assets is creating real problems. A farmer who bought a tractor for, say, R4 000 seven years ago, will have to pay between R11 000 and R13 000 for it if he wishes to replace a tractor of that size today.

With the advent of the Marketing Act and the establishment of controlled marketing for our most important agricultural products, a different situation of supply and demand has arisen in the marketing of agricultural products, in that the producer prices of most products are being controlled. In contrast, production costs are not subject to the same control. As a result of the constant increase in the prices of means of production, the producer prices of the various products are not keeping up with production inputs. For that reason, in order to promote the progress and stability of agriculture as a key industry and to enable it to cope with the risks and vagaries to which it is subject, it is necessary that specially adapting financing be put at the disposal of the industry.

Profit-motivated financial institutions cannot be expected to supply the needs of farmers in all circumstances, although they are making an important contribution to agricultural financing in general. We are grateful for the role played by the Land Bank in the financing and development of the agricultural industry, but as a result of the difficult circumstances in which agriculture finds itself, a real need exists for the supply of particular types of financing and other favourable conditions. In this regard the Land Bank, in my humble opinion, must play a far more important role. I do not mean thereby that excessive and injudicious credit should be granted. The excessive and injudicious granting of credit is a greater evil which can only be to the detriment of agriculture. Prosperity can only be promoted through a conservative credit policy.

According to Press reports, Dr. Jacobs, the chairman of the working committee investigating the financial position of farmers as well as agricultural financing, stated that he did not regard the paying of subsidies to agriculture in order to combat rising production costs and inputs, as the ideal solution for the farmers’ problems. In the main I agree with Dr. Jacobs, although to a lesser extent I may differ from him on certain aspects. I also believe in principle that inputs should be taken into account where necessary, but in addition I also believe that the principle of subsidies should not be rejected entirely. If it is accepted that subsidies are not the correct method whereby to counter the rising cost structure of agriculture, it should be taken into account in the price policy for agricultural products.

In theory this may sound all very well, but in practice it does not always work like that, and therefore I should like to indicate by way of a few examples, how a situation may differ from season to season. In the first place, should there be adequate domestic demand, without any surplus or consumer resistance worth mentioning, and if, in the second place, there were even over-production in respect of the domestic demand, and there were an export market with higher prices than the domestic prices, it would be practically and physically possible to adjust producer prices fully to the increase in production inputs, but when the opposite happens and, for instance, the domestic demand is too small or if there is consumer resistance and the world prices are lower than the domestic price, other steps have to be taken to save the particular branch of the agricultural industry which is experiencing the problem from destruction, or at least help it to weather the storm, in order by so doing to maintain this economic structure of which agriculture is an integral part. We simply cannot afford to allow this important branch of the agricultural industry to come to grief. I wish to suggest various measures which can be effected, as different situations arise. In the first place, steps can be taken with regard to the subsidizing of production inputs of the branch in question; in the second place, with regard to the subsidizing of the consumer at the consumption point; and in the third place, with regard to the subsidizing of exports, when the stabilization fund has been paid off. For that reason it is encouraging, and we welcome the fact, that the Jacobs Committee has been converted into a standing committee in order to give the necessary attention to this important aspect on a continual basis.

Mr. Chairman, I want to start off by saying something I believe we shall all support wholeheartedly. This is that the hon. the Minister of Finance did not leave South Africa in the lurch in the past financial year, but has built up a strong economy for South Africa by way of his fiscal and monetary disciplines. I want to allege, too, that the hon. the Minister did not leave us in the lurch abroad either, but has continued the struggle there and achieved good results as well. Here I call to mind the battle he had to fight against certain institutions which wanted to demonetize gold, and the success which the hon. the Minister has had in that struggle redounds to his great credit and to our country’s safety. In the third place I want to say I believe the hon. the Minister did a great deal in the past financial year—as well as in the latest budget which was recently presented—to stimulate the economy in such a way that I hope we shall outgrow many of our problems in the coming financial year.

This debate is usually the occasion where people ask something of the hon. the Minister, make requests or try to motivate their cases, asking him to consider a certain matter with great sympathy. I shall therefore refer to two things today. The hon. member for Paarl has already discussed one and I shall come back to it later.

I should like to talk about an institute in my constituency which is very dear to the hearts of all of us, viz. the one for the blind and the deaf, and I want to ask the hon. the Minister whether he will not be generous to us. The Institute for the Blind and the Deaf is an institution established by the Dutch Reformed Church many years ago. The Department of National Education is responsible for a large part of the expenses, for teaching posts etc. But perhaps hon. members do not know that this institute annually finances as many as 40 posts from its own resources. These have to be paid for from funds not provided by the department, but which are collected by way of collections and fund raisings throughout the Cape Province. There are certain posts which do not fit into the formula of the State. However, these are posts which were created in response to the needs of the children. In this way, the institute has to find an extra R370 000 per annum to be able to finance these posts and to help needy children as well as to buy vehicles for particular purposes which are not in any way subsidized by the department So the management of this institute has to find approximately R370 000 every year in order to cover these extra costs. Now the question arises: Where must they get the money from? I have said by way of collection. I also want to make an appeal to the hon. the Minister. The management would like to retain its autonomy and is striving to accumulate a capital of R5 million. Now I wonder whether the hon. the Minister will not do what he does in the case of universities. We hope he will say: “Very well, you have five years during which all donations made to you will be exempt from tax.” I know it goes without saying, but we all have great sympathy for underprivileged children. I know too that we all have great appreciation for this institution as well as for the institutions in Pretoria, Prinshof and others. The children of these institutions do not see themselves as underprivileged. However, when one meets a deaf and blind boy or girl who cannot speak either and who is in need of something, one’s heart bleeds. I do not want to appeal to the emotions of the hon. the Minister. I know that his purse is a little fuller than usual, but also that the holes he has to stop up have become bigger too. Nevertheless I want to call on the hon. the Minister to lend his assistance. We have already appointed two Ministers as directors of development. Could the hon. the Minister not perhaps help us by stipulating that all donations which we collect from donors will be deductable from their income tax for a period of five years? It would be a happy and great day for us if the hon. the Minister could accede to that.

The hon. member for Paarl referred to the question of retired people who are living on their interest and who are having a hard time. I also want to raise a few aspects in this regard. I have a letter here in my hand. I am not going to read the whole letter to the House, but on the basis of this letter I should like to make a suggestion which I believe will be of help in this regard. All people who are earning money today receive salary increases at some stage or perhaps a higher price for their product. Even the pensioner is assisted from time to time, but the retired person who may have spent 30 to 40 years in the public sector as an entrepreneur has now reached the stage where he has to live on his interest. What is happening now? Interest rates drop, but the cost of living rises. The National Productivity Institute says, inter alia, that the rise in the inflation rate is such that the prices of articles double every six years. In the light of all this I should like to quote what this person wrote to me in his letter—

What is my suggestion in this regard? I foresee no problem for the person with an annual interest income of R10 000. I believe we all realize that our standard of living will go down a little when we retire. The problems which I foresee, however, apply to the person with an annual income from interest of R4 000 to R5 000, on which he has to live. Such a person is not entitled to free medical services because he does not receive a pension, and he has to pay the same price as I for a loaf of bread. The older such a man and his wife get, the more they come to depend on medicine. I have wondered whether we should not introduce a sliding scale which provides for someone with an annual interest income of less than R6 000 to be compensated according to some formula for the financial loss which he will suffer when price rises occur and the inflation rate increases. I do not know how it can be done, but there are clever people working in the Department of Inland Revenue, and perhaps they can work out a formula in this regard. So I am pleading the cause of the person with an interest income of R4 000 of R6 000 per annum. Such a person has cause for concern, because he does not qualify for any pension. I believe we should assist someone like that. Very often it is a person who worked very hard for many years and perhaps helped to build up the infrastructure of our country during his lifetime.

Mr. Chairman, if one examines the short-term economic pointers of the statistics newsletter of the Department of Statistics, then almost every sector reflects sustained growth, which shows a steady upward trend. Unemployment is gradually decreasing and local production, the manufacturing industry and construction works are increasing. All the components of the manufacturing industry have shown an increase, as expressed in the physical volume measured against the indices of 1978 and 1979. The growth is there and the question is—what are we going to do with it? This country is prepared to meet increased production. Labour is available, investment is available and production in the manufacturing industry can, therefore, be increased. If we are able to succeed in this, we can enter the future with confidence. But manufacture simply for the purpose of production, is not sufficient Linked with that is, obviously, the sale of factory goods. There is no encouragement to enter the manufacturing sector, when the market is not available. If, therefore, one wants to bring about the coupling of manufacture and sales, this matter has to be examined systematically.

Years ago we began with the campaign “Buy South African”. The periodic launching of this campaign bore dividends. Good results were obtained with this campaign, and in this way South African manufactured goods were brought to the attention of the South African buying public. But it is not only the buyer who should be mindful of the South African manufactured article. The dealer can and must play a very important part here as well. Selective purchasing and available stock ultimately guide the buyer to the decision on what he should buy. For that reason those dealers who deliberately, by means of advertising, try to instil the “Buy South African” idea in the minds of the buyers’ public, deserve the support of the consumer.

The influence of this campaign is so obvious, but yet so effective, because it has a direct influence on the current account of the balance of payments. The more successful this campaign is, the lower our import figure. The results of this are obvious. Let us again remind ourselves that we should buy the South African product This is a definite contribution to the benefit of South Africa, an investment which cannot be measured in terms of money. It is the more luxurious articles in particular which give rise to the purchase of non-South African products. Self-discipline in this regard can save South Africa much in foreign exchange. Every consumer in South Africa can contribute his share in this regard.

I now wish to turn to a completely different matter, something which I should like to bring to the attention of the hon. the Minister. This is something which he really could consider. Three years ago we passed the Teachers Council for Whites Act—Act No. 116 of 1976. Section 3 of that Act defines the objectives of the Act as follows—

The Act therefore aims at the confirmation and the consolidation of the professional status of the teacher.

Order! The hon. member must digress a little less.

Mr. Chairman, I have already finished. [Interjections.] It is on the basis of this professional status of the teacher that I feel obliged to make a plea here today for the deduction of the expenditure incurred in purchasing books and magazines from the taxable income of the teacher.

It is true that expenditure incurred by professional people, such as engineers, architects, as well as professors and other teaching staff members at universities, to cover the cost of the purchase of books and magazines concerning their professions or subjects as well as their membership fees of professional associations, may be deducted from their taxable income. In the case of a library a depreciation allowance of 33⅓% is allowed per annum, in accordance with the fixed payments method, while the full amount in respect of magazines in a particular year may be deducted. This also applies to professional membership fees.

It is unfortunately true that teachers are excluded from this rebate. Two possible reasons for this can be identified. Firstly, up to and including 1977 the teacher did not enjoy legal and professional recognition. Secondly, the Secretary for Inland Revenue informed me that he was not aware that representations for such deductions in the case of teachers had ever been received. This request for the granting of a rebate to teachers too, does not, in the first place, relate to the financial advantage which teachers would derive from it. What is important, is that the principle of professional recognition is thereby placed on record. The teacher is a professional person and carries an extremely important responsibility for the education and the teaching of his nation’s children. If we recognize this and accept his status on that level, we have no choice but to plead with the hon. the Minister for the introduction of such a rebate for teachers, too.

Mr. Chairman, I am grateful to follow the hon. member for Gezina, although I no longer have much knowledge of teaching, since I have not been a member of the profession for a long time. If one listens to the official Opposition, however, one wonders whether it is necessary to have a brain or a standpoint when criticism is expressed. I do not know whether the PFP changed their policy during the lunch hour, but up to and including lunch I was under the impression that they still objected to the high tax scales. At one stage they spoke of the “brain drain” as a result of our high tax structure. Now it is they who are saying that the tax scales should not be lowered, because in that case we would be taking from the poor to pay the rich. A great deal of water will probably still have to pass under the bridge before our people will be able to follow the policy of that party from day to day.

If one reviews the foreign policy of the Western powers, particularly after the Vietnam war, it is very clear that the most important factor underlying it is that of economic considerations. For that reason, apart from the necessity of military preparedness, it is very necessary for us in South Africa to maintain economic and political stability. It is therefore a pity that the PFP, that really represents the financially powerful here, does not use an opportunity such as this to boost our economy.

The hon. member for Yeoville commenced his speech this morning on a very positive note. But less than two or three minutes after that the hon. member again relapsed into politicking by launching a personal attack on the hon. the Minister of Finance, without realizing that by doing so he was achieving exactly the opposite of what he had been advocating a minute before, viz. confidence in the economy of South Africa. Who can have confidence in our economy if the hon. the Minister of Finance is not to be trusted? In a magazine such as Management one finds that the editorial staff, together with many others, not only in South Africa, but throughout the world, have appreciation for the hon. the Minister of Finance. They say, inter alia—

This is how we see him. This is how the official Opposition sees him and how the whole world sees him—as a man who has to arrange today what the economic future of South Africa will be. Therefore I think that any attack on the person of the hon. the Minister can only create a lack of confidence in the economy.

The hon. member for Yeoville is a person who ensures at all times that he is covered on all sides. When the budget was discussed, the hon. member stated that he had 18 points of objection to the budget. He said, inter alia, that inadequate provision had been made for the salaries of teachers, as well as for pensions. But he concluded his speech by saying that it was such a good budget and that he thought that the hon. the Minister had introduced it with a view to an early election. If he had not been thinking about an election, the hon. the Minister would probably not have introduced such a good budget. That is what the hon. member suggested.

The hon. the Minister said in his budget speech—

That is exactly what the budget has achieved. I think that the hon. member for Yeoville, in saying that the economy should be stimulated further, did not really show the necessary confidence in our economy. The people in our economy are mature enough to realize that their achievements should not depend exclusively on what the Government does and that it is not solely the Government’s responsibility to stimulate the economy. In the past many appeals have been made to the private sector, and I think the time has come to make one’s voice heard again and for the private sector to react positively to the steps taken by the Government. The climate for economic growth has been created, money has been made available, interest rates are dropping, but what is happening in the process? Prices are continuing to rise. Surely this is an abnormality. The manufacturing sector is in a very favourable position to increase its turnover without any further capital expansion, since there is such a tremendous reserve capacity in this sector. But if one reads what the National Productivity Institute has to say, it is cause for concern when one sees what this sector’s real efforts are to revive the economy. The institute says that productivity fell to such an extent during the years 1977-’78 as to result in a loss of labour productivity totalling R137 million. The drop in productivity of material is responsible for a deficit of R546 million. This gives a total of R683 million. Most alarming, however, is that they say that this increase is being countered by price increases of R175 million which are being passed on to the consumer. I think that the time has come for the manufacturing sector, instead of increasing their prices and passing them on to the consumer, in actual fact countering inflation by better utilization of manpower and the reserve capital available. If this is done, South Africa has a great future. We have a fine country; we provide a vast number of opportunities, but the time has come for each of us to do his duty. I think our people are capable of it.

In the time at my disposal I want to elaborate on the arguments advanced by the hon. members for Schweizer-Reneke and Durbanville with regard to estate duty. I realize that to consider the abolution of estate duty as a whole is a difficult problem for the hon. the Minister and his department at any time, because in agriculture in particular one finds that there is an increase in assets due to exemptions granted in respect of improvements. Agriculture could ultimately suffer as a result of this because professional people can simply purchase and improve land, and in this way build up an estate on which no estate duty is payable.

I do think that there is a bottleneck in agriculture, in that estate duty has to be paid while there are in fact sons, who are hereditary successors, to continue with the farming. This is a tremendous problem, because agriculture does not lend itself to the regular payment of the necessary insurance to provide for estate duty. If the hon. the Minister has any intention of affording relief in this regard, I want to ask him whether it might not perhaps be considered, where a son succeeds his father in farming, to decrease the estate duty progressively so that it will disappear over a number of years, if the son stays in farming. In agriculture it is difficult to form new capital. If a young man has to enter the farming enterprise of his late father and has to pay estate duty, he immediately finds himself at a disadvantage. I think it would be of tremendous help to agriculture if such a policy could be favourably considered. Moreover, the sacrifice of revenue which such a policy would entail, would not be too great in any case as far as the Treasury is concerned. I realize that the abolition of estate duty as far as agriculture is concerned, will give certain people an unreasonable advantage in being able to leave large estates, as a result of assets which they have built up by way of tax concessions.

Mr. Chairman, it is very clear to me that when the Opposition were off to a flying start this afternoon, they thought that they were going to make a political discussion of this debate. But they have been disappointed in this, and they have not been able to say much about the financial side of the matter either. I am now the fifth successive speaker on this side of the House, while they remain silent Surely this indicates that they have already said all they could think of. In spite of the fact that the NRP had the temerity to suggest that the hon. the Minister’s salary should be taken away, I still make bold to ask the Opposition whether they have confidence in the hon. the Minister of Finance. Do they trust him? They do not say a word. I can therefore tell the hon. the Minister that the dust they have tried to raise was simply aimed at making a little political capital. In actual fact they have confidence in South Africa’s Minister of Finance.

Because I represent an agricultural constituency in the Free State, I should like to avail myself of this opportunity of conveying a few words of thanks to the Land Bank. I am thinking in particular of the assistance rendered to agriculture via the co-operatives, the assistance with the consolidation of debts, the purchase of land and other farming requirements. At the same time I should also like to express my thanks for the manner in which one is received when having an interview with the Land Bank staff. I want to tell this House that we as representatives may request an interview with the Land Bank without the slightest hesitation and may put the case of our voters to them. We are shown only the greatest courtesy by those officials. I should like to thank them for that.

I now want to address myself to the hon. the Minister. I want to thank him for the fact that he and the Government understand the dilemma in which the farmer finds himself today, as he showed this afternoon, and for having assured us again that agriculture is an important priority of the Government. I think that those few words conveyed to the farmers will reassure them to a certain extent.

When reading newspaper reports and the report of the Land and Agricultural Bank, we see that the farmers’ burden of debt increased by R351 million from the beginning of 1977 to the beginning of 1978. However, I think the increase will be even higher this year. What is the real cause of this exceptionally high burden of debt? In reply to that I should like to quote from the Land Bank’s report (page 18)—

Therein lies one of the crucial problems of agriculture, viz. that food prices have to be kept as low as possible. On two occasions now the Opposition has objected when a somewhat realistic price for maize was announced.

This is one of the clauses which plunged the farmers into that burden of debt. Then, of course, we have the severe drought which has been going on for more than two years in some districts. This is a further cause of that tremendously high burden of debt of the farmers.

One finds that the proportion of the total debt to the total capital investment in agriculture is approximately 13%. Economically speaking, this is not alarming. If one breaks down agriculture into certain components, however, one finds that the position of the food producer is much weaker. If one confines oneself to the food producer, such as the maize producer, the wheat producer, the meat producer and the producer of dairy products—I exclude the wine producer and the angora farmer—one finds that their burden of debt in relation to their inputs varies from 27% to 33%, an alarming figure. The mortgage debts amount to approximately 65% of this burden of debt. If one examines these mortgage debts further, one sees that the commercial banks have hitherto been the largest mortgagees, carrying mortgage liabilities of R560 million, while the Land Bank carries R512 million.

I now want to turn to the hon. the Minister of Finance. He announced in the budget that he wanted to phase out the subsidy on the farm mortgage interest of 2,5% within the following five years. I want to ask him please to reconsider that decision, because I believe that that interest rate of 2,5% still serves a real purpose at this stage. From 1976 to 1977, an amount of R2 273 955 was paid out in such subsidies. From 1977 to 1978, those subsidies rose to R3 905 730. This indicates that those subsidies are really still serving a very good purpose. It is true that interest rates have dropped, but interest rates on farm mortgages have not dropped so rapidly in all cases that the abolition of that 2,5% can be justified. I want to thank the hon. the Minister for the appointment of the Jacobs Committee and for the implementation of the commission’s recommendations, the short-term recommendations in particular. We are very pleased about the granting of the subsidies on overdue production loans, but I do want to say today, too, that we are somewhat disappointed about the fact that the extra amount of R2 million which has been made available for the consolidation of debts is, in my opinion, really very small at the stage in which agriculture finds itself at present. I want to ask him please to reconsider that.

In the budget debate the hon. the Minister announced that the Land Bank would adopt a more accommodating policy in future. I want to ask them to examine the evaluation of the security of land as well. Between the agricultural value and the market value there is a tremendous gap and I think, therefore, that we may justifiably ask the Land Bank Board to consider a way of narrowing that gap. There is another matter which the Land Bank should examine. In 1971 a loan limit of R50 000 was introduced. In 1972 that limit was increased to R100 000. According to this year’s report it has been decided to exceed that loan limit of R100 000 in a few cases. However, if one examines the depreciation of the rand, which depreciated by more than 50% from 1972 to 1979, one sees that R100 000 is almost small change at present. I want to ask the Land Bank to relax that loan limit considerably.

Finally, I want to thank the hon. the Minister for the way in which he has led our country’s economy. [Time expired.]

Mr. Chairman, while in the nature of the matter I have no quarrel with the hon. member for Winburg, and whereas I am the sixth successive speaker on this side of the House I want to come back to the speech made earlier today in the course of this debate by the hon. member for Yeoville and to comment on it.

The hon. member for Yeoville, who is unfortunately not present at the moment—I find it strange that an hon. member who is the chief spokesman of his party on a specific Vote and moves outrageous, I am tempted to say, ridiculous, motions, should not be present towards the end of the debate—used these words in his speech earlier today: “I cannot be convinced.” Listening to his speech, I formed the impression that he indeed could not be convinced. During the budget debate the hon. member for Yeoville said, inter alia—

In his argument earlier today he repeated this standpoint and reproached the hon. the Minister for the fact that there had not been a more spectacular upturn in the economy since the budget debate or a radical drop in the inflation rate. However, let us look at the evaluation of the hon. the Minister’s policy and his actions by unprejudiced and capable witnesses, expert witnesses, in this field. Let me first quote what Dr. Conrad Strauss, the managing director of Standard Bank, has to say in this regard—

Then Mr. Richard Lurie, president of the Johannesburg Stock Exchange, says—

A further witness, Mr. Raymond Parsons, managing director of Assocom, said—

To conclude my remarks in this regard I wish to quote the witness whom I believe hon. members of the official Opposition will probably recognize as an authority, Mr. Paul Dold, the financial editor of the Sunday Times. He says—

In his speech the hon. member for Yeoville charged the hon. the Minister specifically with not doing enough in this regard and of taking half measures. In spite of all this evidence and the general praise, the hon. member for Yeoville still reproaches the Minister with not taking the necessary steps to stimulate the economy, reduce unemployment and lower the rate of inflation. Indeed, the hon. member for Yeoville certainly cannot be convinced.

To demonstrate his prejudice further I refer to a further allegation he made in the course of the budget debate. I quote—

In contrast Mr. Jack van Wyk, the president of the S.A. Handelsinstituut, says—

The opinion of the financial editor of The Cape Times is as follows—

Note, he calls it a “growth budget”—

However, the hon. member for Yeoville cannot be convinced. He has no confidence in the hon. the Minister and his team at the Department of Finance. The hon. member for Yeoville must not take it amiss of me but I would prefer to believe the evidence of the experts I quoted and innumerable others rather than the prejudiced nonsense he uttered in this regard.

If hon. members of the Opposition really value the confidence of foreign investors and businessmen in the Republic of South Africa—I think the hon. member for Parktown also referred to this—and if they want to strengthen that confidence as they maintain, then disparaging the hon. the Minister of Finance of the Republic of South Africa, as they tried to do again in this debate, is the very last thing they ought to do. This is the most effective way of destroying confidence in the economy of the Republic of South Africa—by running down the hon. the Minister of Finance and questioning his ability. I accuse hon. members of the Opposition of being a party to jolting confidence in the economy of South Africa, despite their pious talk here of confidence in the economy of the Republic, by uttering this negative and destructive criticism of the way the hon. the Minister of Finance runs his department.

In the few moments still at my disposal I should like to refer to another matter. I take pleasure in supporting the plea by the hon. member for Smithfield with regard to agricultural financing. In the light of the problems being experienced at present by the agricultural sector—which I cannot go into at present—the Government ought to afford agricultural financing the highest priority. In conclusion I appeal to the hon. the Minister to give sympathetic attention to the possible abolition of sales tax paid by fanners on their own products consumed by themselves and their families. [Time expired.]

Mr. Chairman, I have listened attentively to the debate today, and I want to begin by expressing my thanks to hon. members on this side of the House for their positive conduct, for their very good, useful and constructive contributions and also for their support of my own position. I greatly appreciate this, especially since it has apparently become the fashion to make allegations against me, allegations which are quite untrue. However, truth is not the criterion, it seems. It seems to be the fashion simply to make these allegations and accusations and then to leave it at that, without proving them. On top of that, it is being done while a judicial commission is conducting its investigations in this city. As far as I know, not a single one of the hon. members of the Opposition has ever testified under oath before that commission in all the months that the commission has been conducting its investigations. I want to ask again how it is possible for hon. members to stand up in this House, to make wild accusations against me and to cast reflections on my character, without giving evidence before the commission or making their accusations against me under oath there. Surely that would be the responsible thing to do. I believe that the public outside noticed this very long ago. If the Opposition parties believe that they have done well by behaving like that, I believe they are making the biggest mistake of their lives.

Contributions have been made in this debate by 14 hon. members on this side of the House. They are the hon. members for Schweizer-Reneke, Umlazi, Durbanville, Sunnyside, Bloemfontein North, Paarl, Standerton, Florida, Smithfield, Worcester, Gezina, Losberg, Middelburg and Mossel Bay. As is usual in financial debates, it will not be easy for me to respond to all these contributions. However, I want to assure hon. members that I listened to them carefully. I took notes throughout, and all the aspects that were raised will be thoroughly investigated, representations will be studied, and if there is time, I shall try to respond in the course of my reply to some of their statements and arguments.

†Mr. Chairman, I too am looking forward to the day when we will be able to get up in this distinguished House and talk in a responsible, dignified and objective way about the big issues confronting this great country without having the atmosphere completely polluted by these rather disgraceful insinuations and allegations that are being hurled around. Whatever anybody might like to aver, both inside and outside this House, I want to repeat what I have said before, that in this whole matter my hands are clean. I challenge anybody to prove the opposite. I challenge anybody, inside and outside this House. I am not in the dock. What am I accused of? After this commission of inquiry—a judicial commission—has heard, not hours, but weeks of evidence, since November last year, and has so far twice reported, and will indeed be making a final report shortly, what is my position? The commission has found that I have had absolutely no part whatsoever in any irregularities of any kind. However, would one think that if one listens to some of these speeches, both here and in the Other Place?

The hon. member for Yeoville sent me a note to say he had to go away. That is why he is not in the House now. Suddenly, this morning, the hon. member for Yeoville tried to turn the belated issue of To The Point against me. In what way am I involved in To The Point? In what way? Evidence on this issue has been given to the commission by different people. Evidence has also been given by myself. I have given evidence on oath. The Erasmus Commission is a judicial commission, and if that judicial commission tells me that, on all the evidence it has obtained, I am guilty of some misdemeanour in regard to To The Point, then it is a very serious matter indeed. However, if it should do the opposite, then the least I expect, at least from hon. members in this House, is that they accept that. The worst is that there are some hon. members of this House who have had the benefit of legal training. One would not think so if one looks at some of the speeches they have made in the last few months. I want to say again that nobody is going to make me, an innocent man in this matter, guilty. Furthermore, I want to say that there have been the most remarkable slanders and calumnies published in this country about a number of us, but particularly about me. All along I have said that I would await the final report of this judicial commission. Surely that is the responsible thing to do. Here is a judicial commission; give it an opportunity to complete its inquiry and put up its final report. We shall then have a look at the position and perhaps the day of reckoning will then come for a few people. We live in a civilized society where every man and woman have certain rights which he and she cherish and which this country guarantees them. One of those rights is that no man’s character will be taken away unjustly—not by anybody, not by newspapers either.

As far as To The Point is concerned, I made a statement this morning. That is all I can say on the matter. I have given evidence on oath to the commission and the commission has asked every witness at this juncture, where it is in the very final stages of its final report, if it is humanly possible not to go and talk outside on the evidence they have given on oath.

Not even in Parliament?

Certainly not on this point The final report of the commission is due in a few weeks. If hon. members of the official Opposition are not prepared to accept that position, then they are under an absolute obligation to this House and this country immediately to go to the commission, put their point of view and tell them why it is that they cannot wait for that commission’s considered findings. They must tell them what it is that is so serious, affecting me or anybody else, why they cannot give that evidence on oath to the commission. It is a very brave and gallant thing to stand up here under privilege of Parliament and to talk in a remarkable manner. Let us hear the same talk in front of that judicial commission on oath. I have been there several times.

We did not sign the cheques.

That type of cheap sarcasm ill befits the hon. member for Parktown. [Interjections.]

How did you obliterate that page?

Sir, I must admit that I have so little respect for the hon. member for Groote Schuur that if you do not mind, I would rather ignore him. [Interjections.]

I have given my evidence. That is quite clear. The whole country will see the effect and the findings on all these issues. I also want to say that I very much regret to have heard the first speech today by the hon. member for Amanzimtoti. I do not think it was characteristic of the hon. member. I thought his speech this afternoon was much more in line with him as I know him. This morning he talked about a matter which I think he knows, with respect, virtually nothing about, namely what has happened in the Other Place. When the hon. member criticizes me and hon. members of the Other Place who belong to the NP, he is on very uncertain and dangerous ground. What is it that the whole country is talking about and has been talking about for several months? What is it in relation to this Information matter and the Other Place? It is this unprecedented campaign of hate which an hon. member of the Other Place, namely Senator Crook, is conducting against me. It is an unprecedented vendetta and campaign of hate. Read the speeches and talk to anybody you like, you might like to talk to one or two hon. members of his own party who came to me in some distress. Only the fact that I do not disclose the private conversations of people who talk to me in confidence stops me from making them known. [Interjections.] I have received many letters and telegrams on this matter. I have received telegrams even from people I have never heard of. Last Saturday evening I addressed a big meeting in Durban and was told that 70% of the people who attended the meeting were English speaking. I wish the hon. member had been there to see what the issue was that was worrying those people. It is this fantastic campaign of hate that is being conducted against me in this matter, particularly by Senator Crook. This is the position.

After two debates the Senate has already expressed itself on this issue. I want to read a resolution that was adopted by the Senate as recently as March this year—

i.e. the first report of the commission.

*The resolution goes on to quote what the commission said about me, and I shall not quote the relevant passage now. The commission completely exonerated me. The resolution goes on to say—

This resolution was adopted by the Senate on 6 March 1979, and as far as I know, not one of these two Senators ever went near the commission. That is the position. Yesterday, Senator Crook moved a member’s motion in the Senate for the third time. What is to become of the other business of the Senate? Are we to extend the Parliamentary session by a week or two because this Senator wants to conduct a campaign of hate against me?

†What did Senator Crook do? He published his speech. He was asked, his party was asked to leave this matter alone. By all means discuss it during the normal debates, but stop this fantastic campaign being conducted in this manner. Of course this had no effect at all. Senator Crook rose to introduce his motion yesterday and spontaneously—as one man—all the…

Spontaneously?

Spontaneously. Within a matter of a few minutes it was decided that this was not going to be put up with, and the Senators on our side of the House walked out That was a very far-reaching thing to do, but under the circumstances I completely support it. What did Senator Crook do? He had already distributed his speech, and I have a copy of it He published his speech. I want to say that this speech is the gravest indictment I have ever seen of a commission. I only have to read certain passages from it and I think the House will listen in horror. I say there is no other way open now to the NRP—and Senator Crook by name—but that Senator Crook must now appear before the commission. If Senator Crook is an honourable Senator of this Parliament, he will have to say these things to the commission. This speech which he has published is a very grave matter.

Mr. Chairman, may I ask the hon. the Minister a question?

No, not at the moment

Where was that speech published?

He dished it out to the Press.

To whom?

If you hand out a speech to the Press, as far as I am concerned you are making it public. [Interjections.] He handed it out to the Press. Go and ask the Press.

Was it embargoed?

No, there is no embargo on it whatsoever.

Has it appeared in the Press?

It was given to the Press and thus published. A whole number of people had it I want to say that it is a very grave matter. When one reads the speech, one’s hair will stand on end. That is the sort of thing that is going on. So when the hon. member criticizes me for this, he should be a little more careful and first make quite sure of his facts. I think this matter is going to cause repercussions which are obviously going to be rather far-reaching.

More threats!

No, it is not a threat at all. There are certain people who have certain rights and there are certain people who have a certain conception of human dignity and decency among men, and they are probably going to wish to uphold those standards.

Why do you not sue for defamation?

I am not interested in that hon. member’s advice. Let him give his advice to the commission. That hon. member is a member of a party that drew up a 90-page document on the Information affair. Did he go to the commission with that document and tell them that he would like to give evidence on oath?

Yes.

You did?

No, I did not do it personally.

Did you go to the commission? Of course you did not!

[Inaudible.]

Why not? The hon. member is a lawyer. Is he not a man with legal training? [Interjections.] Seeing that so many questions have been asked, I want to ask what the standing, the status, of that document is. Was that document simply sent as a piece of light reading to the commission?

No, it is very serious reading.

What was its status? Was it a sworn document, was it an affidavit? Sir, I get no answer. [Interjections.] I want to know whether it was a sworn document and, if not, what the object was of sending a document of 90 pages to a judicial commission.

It offered the Commission certain things to think about.

It was offered to the commission? That was very kind. What has subsequently happened to that as far as that party is concerned?

Why are you so worried about it?

No, I am not worried at all. I am merely curious. [Interjections.] We have been told all the time that…

Would you like to have a copy of it?

… We must see to it that all the evidence is made public. I want to say that as far as I am concerned I have never sought to hide a single fact of what I know about this matter. In December 1978 I stated openly, in this House and in the Senate, where I came into the matter and what the situation was as far as I was concerned. I stated it openly, and it is in Hansard. I have also stated it quite openly and on oath before the commission. I want to know what is happening to that document. Is it evidence? When these things are made known, will that document be published as part of that evidence?

We should like it to be published.

Have hon. members asked for it to be published? [Interjections.]

You may have it now. You can also publish it.

Well, send it to us. Will the hon. member send it to us?

We want all the evidence published, as we have said, including that.

Will the hon. member let us have it?

Yes.

The hon. member says he can send it to us. Will he send it to me this afternoon?

Yes.

He will send it to me. Thank you very much. In this House he says that I can have it and I accept that offer. So at least I shall see that document. Then we can see what is in it.

The hon. member for Amanzimtoti went further and became rather personal. He cast reflections on me as Minister of Finance and said that he was going to move that my salary be reduced. Well, that has nothing to do with me. If he wants to do that sort of thing, let him do it However, I think he owes it to the House and to the country to have his reasons for it. I listened very carefully to his reasons and I do not think those reasons hold water at all because I do not think that they were reasons. I cannot possibly get up here and take out a file—which is now perhaps eight or nine inches thick—containing only letters which I have received from all comers of South Africa and beyond, from the world’s banking fraternity, from the capital markets of the world and from top financiers since 1975, when I took over, but particularly during the past year or two. It is a pity that these letters are in connection with myself, and I obviously am not going to quote them. But these letters are a source of enormous encouragement to me. I received one yesterday from the head of one of the biggest Swiss banks. That letter is lying here. I would not like to be immodest and read it But it warmed my heart. It was written in a very different language from what the hon. member for Amanzimtoti tried to use this morning. Why is it that these people, who come here to discuss things with us, people who are trained world bankers, financiers and authorities, plus all our own top people, right across the party line, say that type of thing about me and the hon. member gets up and moves that my salary must be reduced? On what grounds does he do this? Is it on the grounds of the administration of my department?

No.

If it is, I would suggest that he go and ask the people with whom I work every day, people in my important departments, which have at their head some of the best public servants we have, together with the Land Bank, the Reserve Bank, the Tender Board, the office of the Registrar of Financial Institutions and all the others that fall under me day and night, people whom I talk to day and night, conducting ceaseless negotiations for long hours, as I did with the Reserve Bank two days ago. He must first talk to them and then try to move a motion such as this on merit. One can stand up under privilege of Parliament and say anything one likes. One thinks one can talk because one thinks one is being responsible and that people are going to think that one is responsible. However, that is on my hon. friend’s conscience. He can do exactly what he likes about it. It leaves me absolutely stone cold.

*Many important points were raised here, as I have already said. The hon. member for Schweizer-Reneke, who also apologized for having to go to the Transvaal, made a plea for the abolition of estate duty. I do not think it is quite correct to say that it is a tax on tax, as the hon. member alleged, i.e. on assets obtained from earned and taxed income. The greatest single asset is perhaps derived from legacies or gifts. A very large proportion of assets is accumulated from untaxed income, from capital gain, for example, or as a result of allowances under the Income Tax Act, improvements and so forth. Secondly, I am glad that the abolition of an important source of taxation is being linked to approval for a possible alternative, and the matter will be considered when the whole tax system is reviewed, as is done from time to time by the Standing Commission on Taxation Policy. In the third place, I want to say that the appreciation of assets is due not only to inflation, but also to a healthy economy, to which the Government of a country makes a not inconsiderable contribution. Just like the taxation of consumption, the taxation of wealth must also be approached with circumspection. However, both are essential in order to develop a balanced tax system. The hon. member for Gezina and one or two other hon. members also had something to say about estate duty. We shall study those aspects and I shall contact them again.

The hon. member for Durbanville spoke about death duties and suggested that the death duties levied under the pre-1955 laws be discontinued. He argued that their calculation, for example, was very problematical. I am glad that the hon. member raised the matter and I want to thank him for having brought it to my attention. When one is working with broad principles and large amounts of money, one sometimes tends to disregard the small but nevertheless important matters. I agree that these laws can really be repealed now. I shall give attention to this and I shall also ask my officials to do the same at once so that we may see how soon we can do it.

I think I should leave the matter at that for the moment. I thank you, Mr. Chairman, for the opportunity I have had of saying these few words.

Mr. Chairman, before I come to the remarks I want to make, I am first going to react briefly to something which the hon. the Minister of Finance said repeatedly this afternoon, something which has repeatedly been replied to, viz. the question of why hon. members of the PFP did not give evidence before the commission. For the umpteenth time I want to say that the task of the commission is to report on irregularities in and around the former Department of Information, and the persons responsible for the irregularities in the former Department of Information are not sitting on this side of the House, but on that side. [Interjections.] The people who know how those irregularities originated are therefore sitting on that side of the House, and not on this side of the House. The hon. the Minister today asked what the general contents were of the documents which we submitted. I shall tell the hon. the Minister. Broadly speaking, it was an analysis of statements of hon. members on that side of the House, from Hansard and from Press reports, on the apparent irregularities, on things which were alleged to have happened, but of which we have no direct knowledge. [Interjections.] We have no direct knowledge of them because we are not the party responsible for all the irregularities which took place. [Interjections.] This is, for the umpteenth time, the position.

I want to make a second point before I come to my own points. The hon. the Minister said we were very brave to stand up here under the privilege of Parliament and make speeches. I want to say that I reject that standpoint and find it reprehensible. As far as I know, none of my hon. colleagues nor I said anything in Parliament on the entire Information scandal which we are not prepared to say outside, and which we have not in most cases already said outside. Surely we are simply reacting to the evidence, and to the findings of the commission and to those things which hon. members on that side of the House are saying.

†Earlier in this debate the hon. member for Yeoville mentioned that he was ready to move an amendment concerning the hon. the Minister’s salary. He said he would not move it until he had put certain questions and until the hon. the Minister had had the opportunity to reply. The hon. the Minister now has had the opportunity to reply and I am now going to examine what those replies are worth.

A few minutes ago the hon. the Minister asked the hon. member for Amanzimtoti, in the tone of a man much hurt and aggrieved, whether the hon. member was moving for a reduction in his salary on grounds of poor administration of his department. I do not want to speak for the hon. member for Amanzimtoti, but I would imagine that his objections to the hon. the Minister are much like mine and that they are not concerned with the administration of the hon. the Minister’s departments, departments which certainly, as the hon. the Minister said, include some very fine civil servants indeed. I imagine the contents of the hon. member’s amendment have to do with the extraordinary replies which we have had from the hon. the Minister relating to matters which went through his hands during the development of the Information scandal. The hon. member for Yeoville made two specific points this morning. First he asked about the timing of the information about To The Point becoming available. He was quoting from a very good source, namely the hon. the Minister of Foreign Affairs, who, according to the Rand Daily Mail of 2 May, said—

This immediately attracted people’s attention to the fact that the hon. the Minister had given evidence on, I think, 23 March this ear and told the Erasmus Commission that he had no specific knowledge. My hon. colleague quoted that passage in extenso this morning, and I therefore have no need to quote it again. But when the hon. the Minister of Foreign Affairs was asked at his Press conference whether Senator Horwood had been given access to the list of projects, the Minister said: “Don’t ask me that Ask Senator Horwood.” Sir, we have now asked Senator Horwood.

And I have given you the answer.

The hon. the Minister has told us that he has given some further evidence to the commission. We do not have the faintest idea what it is. All we know is that the evidence which he has given and which has been selectively published by the commission—it has not published much evidence, but it elected to publish this bit of evidence—does not square with the other evidence. This matter of To The Point is not a matter of yesterday. We have been asking questions specifically and trying to use the machinery of this House to get the Government to come clean about To The Point literally for years past. But the Government has remained absolutely “stumm” on the subject. The issue of To The Point is an exactly parallel case with The Citizen. It has also been kept absolutely quiet and has been covered up. We have done nothing which is not in accordance with the best parliamentary traditions in our endeavours to obtain these answers. But we are not getting them.

The other matters which the hon. member for Yeoville and I were both concerned about this morning—and so was the hon. the Minister himself because he spoke about it before we did—is the question of the initials on the document that was given to Dr. Mulder on 26 April last year. The hon. the Minister said quite clearly today—

Sir, many of us are interested in the actual mechanics of this process, of how you can turn over and initial a page while making quite sure that you see nothing in it. However, we should not take up the time of the House with that. We have the word of the hon. the Minister, and we accept it, that he saw nothing whatever on the pages he was signing, nor did he see anything when he went back to those same pages to cancel those signatures. The point that struck us is that this compares oddly with some other statements that the hon. the Minister has made. On 8 December 1978, in dealing with this matter in the Senate, he said (Senate Hansard, 8 December 1978, col. 97)—

The hon. the Minister told us that this morning. He went on to say—

How did the hon. the Minister know they were in code if he had not looked at them?

He has X-ray eyes!

It was impossible for him to see, he says, but yet he knew they were in code. He did not say this only on that day. He confirmed this again and again. On 22 March 1979 he said in the Senate (Senate Hansard No. 5, col. 1013)—

How did he know they were in very cryptic form?

Did I deliver that speech in December last year?

It was made in the Senate on 22 March 1979. Thirdly, on 8 February in this House, the hon. the Minister said, during his uberrima fides speech (Hansard No. 1, col. 322)—

I remember that at that time we were interested in and fascinated by this. However, this must now be compared with the hon. the Minister’s statement now that in fact he has not seen it. If so, he would not have known whether it was in code form or not. And, it also compares with the photograph, false or not, showing the hon. the Minister’s initials near the words “To The Point”, which as it happens, are not in code.

Certain inscriptions on the front page are in code form.

This morning the hon. the Minister said that there were certain inscriptions on the front page that appeared to be in code, but his other statements do not refer only to the inscriptions on the front page, but to most of the items in the document. The hon. the Minister has on occasions told us that he knew what the document looked like, while on other occasions he has told us that he did not know what it looked like. I shall not now refer to the remarks I made this morning, remarks which have been left entirely unanswered. Accepting that all the statements of the hon. the Minister are absolutely correct and that his hands are absolutely clean, he has nevertheless behaved in a most extraordinary way, because he has made no attempt to find out how public funds were being spent If there is one thing a Minister of Finance ought to be doing, that is what we believe he ought to be doing. In the circumstances, and in accordance with what the hon. member for Yeoville has foreshadowed when he spoke this morning, I wish to move the amendment he had already prepared at that time, viz.—

Mr. Chairman, there are a few other aspects to which I should like to make further reference, because I see it as my duty after the useful arguments that have been raised here. I have nothing further to say about the contribution the hon. member for Parktown has just made, but I want to come to one or two matters of policy. I want to refer very briefly to the capital gains tax because there seems to be some confusion in the minds of certain people and in certain newspapers.

As regards the idea behind the capital gains tax, I want to say that we in South Africa are presently engaged in an important tax reform programme aimed at spreading the tax burden more equally so as to prevent hard work, initiative and enterprise from being discouraged by too high a tax on income. Therefore it is essential to take cognizance of new sources in order to alleviate the burden on existing sources and to spread the burden. In the tax components of any country it is important to take cognizance of the tax on income consumption and wealth, etc., and to ensure that each component makes a reasonable contribution and that one component is not overburdened to the point where the proverbial last straw breaks the camel’s back. It is in the light of this that capital gains tax should be evaluated. I can give the assurance that the proposals establish a fair basis for the tax, and that provision is in fact being made for the effect of inflation and that the sale of a private residence which is the main residence of a taxpayer, will be left unaffected. These are still mere proposals. I simply ask that the proposals, when they are published, be judged objectively so that the Government may be provided with well-balanced viewpoints on the basis of which it can pass judgment, since the Government, as I said during my budget speech, was not yet committed in any way to the introduction of such a tax and would take its decision after all the facts had been considered.

†The second point to which I want to refer briefly is the one we call “fringe benefits”. This, too, has, I think, caused unnecessary worry in one or two quarters. Indeed, I think there has lately been some fairly emotional reporting in the Press of arising from my announcement in my budget speech earlier this year that the Standing Commission on Taxation and the Department of Inland Revenue were studying the problem for some time and that I intended publishing the Standing Commission’s report towards the middle of the year so that comments on the practical application of the proposals could be submitted and considered before any kind of decision was taken. Unfortunately, before knowing what these proposals were, articles have appeared in the Press that can only lead to prejudging of the issue and which will not be conducive to objective consideration of the report when it appears. Taxation of fringe benefits is not new, of course. Such income has been included in the definition of “gross income” in the Income Tax Act since 1917. There can be no question but that the practice of remunerating employees partly by way of non-cash benefits which, generally speaking, are not taxed, has become widespread, especially in so far as the higher paid staff are concerned. There are no accurate statistics available, but some surveys made in the private sector put non-cash earnings in the higher income brackets as high as 25%, or even higher, of the total remuneration. The high marginal rates of personal income tax, the disparity between these rates and the company rates, and the legal and practical difficulties in the way of taxing non-cash benefits, have made this trend inevitable. While the trend is understandable, the result has been a serious erosion of the tax base, which has, in turn, contributed to the existing high rates of personal tax. Moreover, employees who are in the fortunate position of being provided with these tax-free perquisites have been placed at an advantage, tax-wise, vis-à-vis others enjoying an identical income which is taxed in full. This can only lead to the integrity of the tax system being brought into some kind of question.

It is clearly the intention behind the Income Tax Act that not only money, but also the value of any other form of property or pecuniary benefit should be taxed. “Gross income” is defined in section 1 as the total amount, whether in cash or otherwise, received by or accrued to the taxpayer, while paragraph (i) of the definition includes “the value during any year of assessment of any quarters or board or residence or of any other benefit or advantage granted in respect of employment”.

What is now being sought, is to lay down general rules for the determination of the value of the benefits so that the payer of noncash benefits can readily establish the amount to be included in a recipient’s income for purposes of PAYE deductions and reporting to the Revenue authorities.

I am sure that hon. members will agree that methods for the avoidance or evasion of income tax cannot be countenanced as this will lead to the erosion of the tax base, which in turn militates against the further reduction of the income tax burden, which is the main object of our whole exercise in trying to reform the tax system.

Mr. Chairman, I have a few more things to say, but I shall leave that over until next week.

Business interrupted in accordance with Standing Order No. 22.

House Resumed:

Progress reported and leave granted to sit again.