Mr. Speaker, just before the debate was adjourned after the hon. the Minister had delivered his budget speech last Wednesday, my immediate reaction was that this was an inflationary budget which would retard South Africa’s economic growth. A further examination of the details of expected revenue and expenditure in the coming year gave me no reason to alter this opinion. It is indeed an inflationary budget and there is no doubt at all that it will aggravate the inflationary spiral.

The hon. the Minister no doubt feels that because inflation has severely affected Railway operating costs, which have risen very sharply indeed—and we admit this—in the circumstances he has to keep tariff increases to a minimum. I do regret, however, that I cannot agree with him on this because I believe there are a number of very good reasons why tariff increases need not have been quite so extreme, and it is my intention to outline some of the measures which could have enabled the Administration to cut costs and lighten the additional burden which is being placed on Railway users and on the South African community as a whole. Before I comment on the facts and figures which the hon. the Minister presented to us, perhaps I may be permitted to raise another matter which is of considerable interest to us all.

I was somewhat surprised that the speech by the hon. the Minister appeared to tell us only half the story of what was going on in the Railways. I was more than surprised to read headlines across the front page of The Argus last Thursday evening which are of interest to us all. The day after the hon. the Minister had delivered his budget speech, it told of a new R2 000 million passenger and goods service which is to be developed by the S.A. Railways. I understand from this report that a “high-level multi-disciplinary team” has been briefed by the General Manager to—

It tells us that the new 180 km per hour passenger service was already well on its way in that some of the new generation main-line coaches have already been delivered—

I believe all of us are aware of the tremendous technological breakthrough that has taken place in the Railways. The invention of the high-stability bogie is a great feather in South Africa’s cap. That has indicated to all of us that there are exciting possibilities for the future. Now it seems that the practical application of technological advances is approaching reality, so much so that they are going to “scrap everything and start from scratch”. With this phrase I must perhaps allow for a bit of journalistic licence. Perhaps the Press reported it incorrectly.

I agree fully with the report.

If it was incorrect one would have expected a denial from S.A. Railway headquarters at the very least. If it was true, I believe it was the most extraordinary omission from the hon. the Minister’s budget speech. I am absolutely certain that hon. members would have been tremendously interested and excited to hear of the project which is already being undertaken. This is quite obviously no run-of-the-mill modernization which the S.A. Railways carries through every year, but the spending of R2 000 million for a major project announced by the General Manager.

I must therefore ask the hon. the Minister why he did not see his way clear to inform the House about his plans. He has told us across the floor of the House that he would deal with this fully, but if we are really going to indulge in this level of capital expenditure I would have thought, however, it would be necessary to give hon. members proper warning so that we could consider this in the light of South Africa’s capital expenditure priorities. I do believe the hon. the Minister was guilty of a serious omission and that he should understand that as long as this Parliament is charged with the responsibility of the close scrutiny of the operations of the S.A. Railways Administration, we should at least be told what is going on. I must ask the hon. the Minister, who, after all, is new to this portfolio, to make sure that Parliament is kept fully in the picture, and to give us some details during his reply to this debate of what programme is being laid down for this major conversion campaign.

I should now like to return to the substance of the budget speech, specifically to the subject of tariff increases, and at this stage I move the following amendment—

1. (1) tariff increases will aggravate the inflationary spiral and inhibit economic growth; and
2. (2) living standards of all South Africans will be adversely affected.”.

There is no doubt at all that the very substantial tariff increases are highly inflationary. I see from the weekend Press that a study conducted by the Randse Afrikaanse Universiteit for the Association of Chambers of Commerce calculates that the impact of the increases will add 0,9% to the country’s gross domestic product The report adds that, and this is a masterpiece of understatement—

I doubt if a truer word has ever been spoken. It is certainly not going to be beneficial to anyone at all. Regrettably, increases of this nature tend to be given as an excuse for lifting prices on all sorts of consumer goods in excess of the actual increase of transport costs, and it is my belief therefore that the overall effect will be far greater than the calculated 0,9%.

Why do you say that?

Well, we know this from bitter experience. Time and time again we have seen the ripple effect going right through the economy, far in excess of the actual transport tariff increases. Transport is basic to everything and therefore no segment of life in South Africa is unaffected by this sort of increase. Inevitably, goods and services will cost more, living standards will drop and all South Africans will be worse off. In these days of galloping double-figure inflation 0,9% might appear to be very little. Perhaps one of the most unfortunate indications we get from the size of these increases is that the Government appears to be giving up the fight against inflation. The Government claims that inflation is a worldwide phenomenon and that nothing can be done about it. We admit that it is worldwide, but we believe that something can be done about it and, as I said in my reaction straight after the budget speech, we in South Africa are in the happy situation of being in a better position to fight it than most other countries.

We have a tremendous amount going for us in this country, e.g. our raw material resources, our mineral wealth and a huge increase in the gold price. All these factors should enable us to fight inflation with more hope of success than most other countries in the world. This Government does not, however, seem to see it this way. The Government simply accepts inflation as a fact of life, and the measures the Government adopts to inhibit what is probably the major danger to our economic future are, I believe, inadequate and unsuccessful. I believe that it would be possible to strike a major blow against inflation by a somewhat more intelligent approach to Railway financing and Railway spending.

A major portion of capital expenditure is to be financed from revenue at a time when loan capital, on the local market, is readily available, and also at reasonable rates of interest. As the hon. the Minister will know, in the Select Committee on Railways and Harbours I opposed the further addition of 10% on depreciation contributions to the Renewals Fund, which will cost us an additional R50 million this year. I should like to remind hon. members of just what has happened in regard to this additional percentage on depreciation over the last few years. From 1 April 1977 there was a 20% increase on the basic rate in force, the basic rate being applicable to the financial year 1976-’77. This was followed by a further 20%—making a total of 20% plus 20%—from 1 April 1978. Last year this was increased by a further 10%, and now we have again decided to increase this contribution by another 10%. I am aware of the fact that the Franzsen Commission of 1970—not to be confused with the recent Franzsen Committee—recommended that the share of internal funds, as a source of financing capital expenditure, should be minimized to reduce dependence on borrowed funds and the accompanying pressure on interest rates, and also to reduce the interest and redemption burden on current revenue. The commission used a very interesting phrase. It claimed that by not increasing the level of financing of capital expenditure from revenue it was shifting the burden of higher prices on to future generations. Well, perhaps that is so. Perhaps by depreciating at this rate we are saving future generations from being so burdened. What has happened is that we are now, in fact, bearing the burden of higher prices which we anticipate having to pay in the future for renewals. In other words, we are in fact bearing the burden for the future generations. This is a form of inflation accounting that means that we now have to find something in the region of an additional R250 million per year from revenue. In this particular financial year we would have to be finding approximately R250 million that we would not have had to find if we had kept to the 1976-’77 rate. Hon. members will perhaps know that there is considerable controversy about inflation accounting theories taking place in the accounting profession itself. Many members of the profession do not believe that inflation accounting serves any useful or practical purpose, whilst others believe that it is a sound and conservative method of operating.

What is your belief?

I am coming to what my belief is. That hon. member sitting in the front bench over there knows that he will have an opportunity to speak, so I hope he will now keep quiet. My contention is that in an organization of the size of the Railways, which is so much a basic part of our South African economy, inflation accounting of this nature is, in itself, inflationary. As a result we are, in fact, worsening the situation for future generations by inflating revenue to pay for inflated replacement costs. I am prepared to go some of the way with the hon. the Minister, but I believe that we should revert, in part, to the level of depreciation …

Would you just give me an indication of what percentage you suggest?

I am just not able to say because I do not have the intimate knowledge of Railway accounts that the hon. the Minister and his department obviously have.

Would you give me some idea of what percentage you suggest?

Well, we have had an increase of 20%, 20%, 10% and again 10%. I went along with this in the Select Committee for the first couple of increases, but thereafter I dug my heels in and voted against it because I believed we were going far too far. I believe that the hon. the Minister has to find a balance. I will admit also that things change as the money market adapts. When the Franzsen Commission made its recommendations we were in a totally different situation. We did not have capital. Capital was at an absolute premium. Two or three years ago capital was at a premium, but we are in a different situation now.

It is interesting to note that, in dealings with private enterprise, the Receiver of Revenue agrees with me and not with the hon. the Minister in that the Receiver of Revenue will not allow depreciation relative to replacement value to be charged as an expense to be taken into consideration for tax purposes. I believe the Government must make up its mind on this. It ought to be consistent. What is good for the Railways in terms of Government policy should be good for private enterprise. If this approach were good for private enterprise, the result would be that the amount of company taxation which flows into the central Treasury would diminish to a marked extent. For that reason I cannot see this ever happening. I think the hon. the Minister of Finance would probably have a heart attack if this were to happen. Nor do I think that it should happen. The result would be so unbelievably inflationary that I do not believe the economy would benefit in any way. In other words, what is sauce for the goose should be sauce for the gander. The inflationary tendency, in a smaller field, the Railways is having on the whole economy would be disastrous if it were followed right through the economy. If the present policy were not pursued, the hon. the Minister would have in the region of R250 million less to find this year and that would have made a large difference to the size of his tariff increases. If it is really necessary for capital expenditure to be as high as it is, I believe the hon. the Minister should revert to the use of local loan capital, which is fairly readily available at reasonable rates of interest at the moment.

The hon. member for Amanzimtoti, my bench mate, defined “inflation” in a Railways debate a few years ago. He got his definition from the Oxford dictionary. He said inflation was due to “undue increase …

The big one or the little one?

I hope it is not the pocket-sized one you used the other day.

No, I believe he used the bigger dictionary. I have his personal assurance that it was the bigger one. In any event, he defined inflation as “the undue increase in the quantity of money in relation to goods available for purchase”. I do not think anybody will quarrel with the fact that there has been a substantial increase in the quantity of money available. I believe that at this stage we should be taking advantage of the present state of the money market instead of pursuing financial policies which are in themselves inflationary. It is interesting to see, if one looks back a couple of years to the report of the Select Committee—and the hon. the Minister might be interested in looking at this—that the Auditor-General commented, a comment I quite agree with, that in an inflationary period it is better to owe money than to own it, the reasoning behind this being that, when one has to pay money back, it is worth much less and one is usually better able to pay it back. I believe the Government should have the courage and determination to try to make the inflationary steamroller stop dead in its tracks. The Government cannot do it completely, but it must at least try.

I should like to go on from there to the situation with regard to commuters. In his introductory speech, the hon. the Minister pointed out that the S.A. Railways is responsible for the transport of some 690 million rail passengers per annum. That is a huge figure, and 94% of these are commuters in the metropolitan areas. These people have been very hard hit indeed by this budget. First and second class passengers will pay 15% more and third class passengers an additional 10%. I want to ask the hon. the Minister whether it was really necessary to punish commuters in this way. As a result of the recommendations of the Franzsen Committee, which looked into the socio-economic services rendered by the Administration in regard to passengers, the hon. the Minister will receive an additional R241 million this year from the central Treasury. This is an absolute bonanza. [Interjections.] R241 million from the central Treasury is what the hon. the Minister said in his introductory speech. Not only does he get the benefit of this, but he also gets the benefit of the huge increase he has announced. Losses to the Administration from passenger services should therefore be cut drastically. I believe it was unnecessary to load commuters with this additional burden, and with regard to third-class commuters, I believe that there should have been no increase at all at this stage. The poorer sections of the community suffer more from inflation than the rest of the population. The hon. the Minister is very well aware of the sensitivity of fare increases, and I believe that now was not the time to punish these people, especially at a time of considerable unemployment. [Interjections.] It is the most punishing increase—and that hon. member should know it—to people with a low income. He should realize just what an increase of this kind means. He probably arrives every morning in his large car, unlike me. I travel by rail most mornings. [Interjections.] Perhaps, if one is to be constructive about passenger services, one should make suggestions as to how losses could be curtailed. I have one suggestion, and I have made this before. I believe that the Administration should be following a deliberate policy of racially integrating rail and bus passenger services. The economic good sense of this is inescapable in that optimum use could be made of the available facilities. One would not see, for example, the sight of half empty carriages, reserved for different race groups, passing by in trains going through the station. I am not asking for this to happen overnight I am well aware of the opinion which is so often expressed by the other side, namely that this is a very sensitive area. Possibly it is the case. It may also be a possible point for racial friction. On that basis, we would find an expression of intent acceptable, an expression of intent which would be followed by a gradual integration of services. When one talks about possible friction, one should realize how hurtful it is for people of colour to be treated as they are: separate entrances, separate facilities on stations, with more favourable facilities for Whites. Hon. members should realize just how damaging this is to race relations. If one talks about friction between races, one should realize that this sort of discrimination is likely to result in friction on a national scale. Perhaps I might be allowed to echo sentiments expressed in the last couple of days by the hon. the Prime Minister. We must stop treating people of colour as if they were lepers. If we continue to do so, we are running the risk of major racial confrontation in South Africa. [Interjections.] There are so many relatively small matters of discrimination which could be rectified I believe with a minimum amount of difficulty and cost. Just to illustrate this, I want to say that my attention was recently drawn to conditions which exist at the Nelspruit Station. There is evidently a train from Komatipoort which passes through Nelspruit late in the evening. Provision is made for shelter for White passengers, in that a coach is drawn into the station so that these White passengers can sit in the coach to await the arrival of the through train. I understand that shelter for Black passengers is totally inadequate. As I remember Nelspruit Station, it is like that. There might have been very recent additions, but shelter for Black passengers is totally inadequate, and in rainy weather those people are exposed to the elements in considerable discomfort with their clothing and suitcases becoming completely saturated.

The comments from my informant was “I wondered what they were thinking as they stood there in the rain, watching the Whites sitting in comfort.” However, completely forgetting the political common sense of this, one should also accept that the economic arguments in favour of integration are absolutely unanswerable. It would be cheaper to run integrated services than to run segregated services. While I am on this subject, perhaps I could ask the hon. the Minister just how extensively he is using people of colour in senior positions in the Administration. Again I believe that it is going to be necessary to do everything possible, not only to train Black people for technical or clerical jobs, but also to ensure that opportunities are made available to men and women of ability to reach senior positions in the service. I am not convinced that that is being done on any large scale, except at the lower levels. I would appreciate comment from the hon. the Minister on whether policy is changing in this regard, whether programmes are being accelerated, or exactly where we stand now.

One of the toughest increases is undoubtedly the 20% increase in air passenger fares and freight charges. That is a tremendous jump and I believe it is very serious indeed because many long-distance travellers are going to return to using motor vehicles, and therefore using more fuel. The study eminating from RAU, to which I have referred previously, put forward some interesting statistics which illustrates what I mean when I make this claim. I do not know whether the hon. the Minister has seen this study.

I have.

The calculations contained in this study indicate that before the increases the return air fare for two persons between Johannesburg and Durban showed a saving of R44 over doing the trip in a private car. The new fare structures will wipe out this advantage and two people will now be marginally better off if they travelled by car. A similar situation exists with regard to trips elsewhere. I do not know whether this is being done deliberately. It may be a deliberate policy to discourage air passengers at the moment because it is obvious to everyone that the S.A. Airways are working very close to capacity at the present time. Perhaps it is the policy to slow down the trend towards air travel at least until S.A. Airways takes delivery of the new Airbus and new Boeings towards the end of next year. However, there is an even more serious side to fuel savings which have been maintained in view of the fact that the private motorists have converted to air travel. These fuel savings could well be wiped out. I hope this possibility was considered when the decision was taken about the increase in air fares.

I must admit that I was most disappointed to see the loss on the workings of the Airways. There is no doubt that the tremendous escalation in air fares has taken its toll, and it is difficult to make concrete suggestions as to what should be done to improve the profitability when we are already working somewhere near to capacity. Elsewhere in the world we have seen the dramatic effects which competition can have on air fares. The international operation of Mr. Laker has shown that it is possible to cut air fares. Admittedly a certain degree of luxury and comfort have been sacrificed, but I am sure that many passengers would prefer that inconvenience to paying the increased charges. I did a little exercise in comparisons of air fares around the world. For example, a one-way ticket for a 700 km trip from Paris to Nice costs R75. It is quite apparent to me that generally our internal fares appear to be higher than those anywhere else. I realize that the high cost of aviation fuel in South Africa has taken its toll, but I believe that nothing would ensure absolute efficiency in the Airways more than a bit of competition, both with regard to passenger and to freight. I have argued before at some length in other Railway budget debates about the benefits of competition in a free enterprise system. Perhaps S.A. Airways can benefit from a little competition.

I think one must also give credit where credit is due and we are grateful to the hon. the Minister for the salary boost that he gave to employees. This is much needed, and I am sure that it will be much appreciated. Increases in the past have tended to lag behind the inflation rate. This increase has been slightly more generous, but bearing in mind just how low Railway pensions are I can only say that I believe the hon. the Minister should have been more generous to these pensioners. The pensions start from a very low base. The hon. the Minister knows that Railway pensions are low. He has upped them, but I feel that he could have been a little more generous.

As my time is very limited, other hon. members in these benches will deal with aspects of Railway working.

In the time still available to me I merely want to sum up. We believe that the capital expenditure programme is high and there seems to have been little restraint. Whether the hon. the Minister has exercised the necessary financial discipline, is very difficult to evaluate, because no one without a very intimate knowledge of the inner workings of all sections and departments will be in a position to do so. However, the size of the increase indicates that he has not. Increases in goods rates will damage our growth potential and one would have hoped that the anticipation of increased traffic would have allowed the hon. the Minister to be a bit more courageous. One hesitates to be over-dramatic about this inflationary budget, but we do believe that these tariff increases will lead to accelerated increases in other sectors.

Mr. Speaker, since this is the 10th time I have risen to speak in this capacity in this House, I am enthusiastic and impressed in one regard only and that is the way in which the hon. the Minister of Transport Affairs presented his budget, although he was acting in this capacity in this House for the first time. Not much remains to add to what he said. Not only do I want to congratulate the hon. the Minister, but I also want to wish him everything of the best as a person well endowed with intellect who strives to achieve his goals with a spirit of tremendous enthusiasm. May he lead this great Railway organization from strength to strength to make it an ever greater asset in our national development. I have no doubt that he will. I trust that this will be attended by good health and a long term of office.

In the past it was my uninteresting task as first speaker on this side of this House to give lessons. In the past the problem was for the most part “poor planning” and “inadequate budget”. This continued for seven years in this House. The new problem on which I now have to give a lesson—I shall try to do so in the course of my speech—is inflation. One’s problem in this regard is that when one comes to the discussion of or argumentation about a problematic matter such as inflation in this country, one is dealing with a restricting factor, viz. the lack of insight and objectivity with which it is done.

I have a problem with the hon. member for Orange Grove. One malady he definitely does not suffer from is political modesty, and if I may put it this way, he also suffers from a lack of political responsibility and a feeling of co-operation. He does not have a desire to co-operate in order to improve the functioning of such a powerful and complex organization as the S.A. Railways. Then I must also say that the way in which the hon. member approaches some of the subjects also leads me to believe that he is not one of the most endearing members of this House, particularly when he is in this House. In dealings outside this House he can be an extremely easy-going and pleasant fellow. Just to give credence to the statement I have just made, I wish to point out that in his references to the struggle against inflation the hon. member did not take into account the fact that increased capital investments in services and in the building of infrastructures create increased productivity which is an antidote to inflation. The hon. member did not go into that What he wants to know is: Where is all the capital going to? If he had read the budget properly, he would have known where all the money was going.

The inflation problem we have in this country is cost-push inflation; hence the salary increases. I also referred to RAU’s information in connection with the 0,9% growth in the cost of the national product The hon. member conveniently forgot that there are other scientists in this country, too, who have determined that by the end of 1981 our inflation rate is expected to be below two figures. Surely one must choose between two evils when one is dealing with such a large organization as the Railways—the evil of inflation and the evil of the obstruction of growth. It is only the person with insight, the person who has a scientific approach who is able to choose between these two evils. I would be failing in my duty if I did not congratulate the hon. the Minister and his staff on the brilliant way, the clever way in which they were able to choose between these two evils. They had to decide when to create an infrastructure and when to increase production. I should just like to refer to a few practical examples. During a period of recession in this country, when there was a poor demand for our coal abroad, when there was a steel crisis abroad, the decision was made to continue with Richards Bay and the Sishen-Saldanha project. What was the result of this decision? Today we are all shouting hurrah. I can clearly remember what the Opposition’s standpoint was at that time: You are being ridiculous; you do not know what you are doing. Today we are seeing the results of this decision.

[Inaudible.]

You fought the Sishen-Saldanha line.

That is my real objection to the Opposition. Another argument advanced by the hon. member for Orange Grove was so clever, so malicious. That is why his political personality is not among the most endearing I know. The hon. member referred to the increase in air transport tariffs, but he does not realize what the problems of the S.A. Airways are. As far as its overseas services are concerned, it has to cover longer distances than that of its competitors. It has to fly around the bulge of Africa. It has to pay more for its fuel. Furthermore it has also, up to now, rendered this service on a competitive basis. If it did not have to pay so much for its fuel it would have shown a much greater profit margin than is the case. There is just one thing the hon. member must do for South Africa. He must give us cheaper fuel. After that he can make all the demands he has made here today. I only hope it is not Lorimer gas because we shall not get off the ground with that.

I want to mention a few comparable examples in connection with air-traffic. The distance between Johannesburg and Cape Town is 1 271 km and the airfare is R90. A comparable overseas flight is that between Perth and Karati in Australia. The distance is 1 251 km and the airfare is R113—a difference of almost 25%. Despite this the hon. member complained that we were being unreasonable and unfair. The distance between Johannesburg and Durban is 505 km and the airfare is R50. The distance between Berlin and Munich in West Germany is 499 km and the airfare R86—a difference of more than 36%.

Of course the exchange rate does not come into it?

The distance from East London to Port Elizabeth is 230 km and the airfare is R30. The distance between Cardiff and Manchester is 230 km and the airfare is R52. First-class international air-tariffs between Johannesburg and London have risen by 35%, economy class by 45%. Air-tariffs between Johannesburg and Salisbury have risen by 70% and in contrast to that the domestic air-tariffs have risen by only 20%. A rise of 20% as opposed to 35%, 45% and 70%. Surely it is rather unreasonable and uncalled for to point out only that our air-tariffs alone have risen. After all, we are living in a world in which comparisons can be made. Take the price of fuel: In Johannesburg it is 36 cents per litre; in Cape Town 35 cents; Windhoek 38 cents; London, 21 cents; Lisbon, 30 cents; New York, 18 cents; Sidney, 15 cents; Buenos Aires, 19 cents, Zurich, 24 cents; as opposed to 36 cents in South Africa. Surely this is an unreasonable and unfair comparison and conclusion the hon. member wants to make. Surely this is a way of making political capital. Surely this is being unbalanced, unobjective and unsympathetic towards one’s fatherland and towards the problem. [Interjections.]

Every year when the Railway budget is introduced I am amazed at the size of the organization and the extent to which it affects all of us in our daily lives.

In the first place I wish to single out certain things in the budget of the hon. the Minister and refer to criteria which we should apply when we judge or criticize. I wish to discuss the role of this organization and the service it has to render to each member of the public as well as of this House. It is not a question of making an appeal to the hon. the Minister, as we have just heard, to stop dead in his tracks, to cut down on capital investments and limit cost increases so that inflation can be curbed. Surely this is an organization which runs parallel to and has to be integrated and sinchronized with the entire national economy which is forging ahead. Surely it cannot be compared to a separate little tank of 1 000 gallons the tap of which one can turn open to drink water from and then close again. Nor can it be compared to a fish-and-chips shop which one can close today to enable one to go and catch fish tomorrow, only to reopen it again the next day to carry on one’s business. After all, this organization fulfils its function in the national interests. Surely this is an organization that serves this country. After all, it has to serve millions of people and many business enterprises.

What does this organization do and what does it mean to us? It promotes inter-state relations something one does not normally expect from such an organization. When Zambia, Mozambique and Zaïre experienced problems and approached us, the S.A. Railways was prepared to listen and ready to undertake new ventures. We were fortunate enough to have an executive staff management of men with initiative who were able to make the necessary adjustments in the interests of all the parties concerned and particularly in the interests of sound and good relations. These tentative arrangements gave rise to fixed trade agreements. I maintain that this as a single factor was one of the greatest contributions made during the past few years in the interests of this country and its people and in the interests of sound relations. The officials paid reciprocal visits and informed their politicians. The eventual fruits borne by this enterprise were that the officials told their own political leaders that the White South Africans were not such monsters as they had been depicted, but sincere people who planned well, on whom one could rely and with whom one could do business. This has created the opportunity for us to move further along this path. This was a great responsibility and a duty which our Railways discharged with great honour in the interests of our country.

I want to refer to the question of capital. The hon. member asked: “Where does all this money go to?” According to the report of the Railways and Harbours Board the estimated cost of a new railway line to Atlantis amounts to more than R650 000 per km. Think about that: It costs R650 000 or more per km to construct a relatively simple railway line which is not even electrified and has no passenger stations or platforms. As may be deduced from the Brown Book, there is an upward tendency in the price. The hon. member wants to know: “Where does all this money go to?” We have to provide this new complex with services. We have to create a new infrastructure for the expansion of industries and the exploitation of the labour factor in the Western Province.

The increases in prices are phenomenal. Today electrical locomotives cost approximately one million rand each. The Railways pays approximately R100 000 for an ordinary railway carriage. These few examples must serve to illustrate the particularly large capital requirements of the Railways. We do not live lavishly. We require this capital for essential services. As further proof I can advance the fact that whereas the Railways spent R592,7 million in capital in the 1974-’75 financial year, this figure had more than doubled in the 1979-’80 financial year, because the eventual sum came to R1 287 million during that financial year. This was done to enable us to be of better service to our country, to ensure greater participation in growth and to stimulate growth even further.

Where did this capital come from? I am replying to this question as well for the benefit of the hon. member for Orange Grove, for he said, inter alia, that one could borrow capital for expansion at a reasonable rate of interest. He also said that he considered it to be sound business policy to borrow capital in that way. In the 1974-’75 financial year we borrowed R390,6 million externally, and R902,8 million in the 1979-’80 financial year. We borrowed R202,l million internally in the 1974-’75 financial year, and R384,l million in the 1979-’80 financial year. In the form of own capital, i.e. self-generated new capital, we invested R40,4 million in 1974-’75 and R167,3 million in 1979-’80. The capital contribution which we made available internally and from our own resources, fluctuated between 50% and 60% of the total capital supply. The rest is obtained from external sources. However we may be criticized about these figures, one thing is very clear: Apart from the national appropriation, this capital expenditure is definitely the factor with the greatest effect on our national economy.

The Railways’ expenditure on capital goods as well as daily consumer articles keeps various industries in this country going. The manufacturers of rolling stock have one client: The Railways. The same applies to the suppliers of specialized electronic signalling and communications equipment. As is the case with all Government departments, the supply of these goods is regulated by means of tenders. However, as far as we and the Railways are concerned, these suppliers enjoy a built-in subsidy of 10% on the total free on land costs of imported articles. This is being done to support local industries.

I may be asked why this is being done and what the results are. Apart from the fact that we have supported and assisted local industries in this way, the Railways is not yet satisfied—to me this is a fine thing—and it provides technical advice and guidance on quality control as well. In addition the Railways also assists with the testing in order to improve the quality of the product, to make it more efficient and valuable. The Railways works hand in hand with the local industries. One could justifiably refer to it as a national institution.

What is the effect of this on imports and exports? In the 1973-’74 financial year the Railways spent only R13,l million on the importation of specialized articles, while R313 million was spent on local purchases. In 1977-’78 the importation of such articles amounted to R83,7 million and the expenditure on domestic purchases to R631,2 million. Do hon. members still recall the days of the Smuts Government when we had to import everything? Do hon. members still recall the days when the late Minister Paul Sauer had to take over this task, when he did not know where he was going to get railway carriages from, and did not have the money to buy them either? There is a big difference between that time and the present, particularly from the point of view of planning. I am now referring to insight and long-term planning; not ad hoc planning for the next 14 days or so, but in fact for the next 14 years or more.

If the Railways was suddenly to stop supplying goods and services this would have a tremendous effect on the economy of our country. The inflation rate is very closely linked to this capital programme. The Railways administration was a co-signatory of the manifesto against inflation and is consequently not indifferent to this national problem. The S.A. Railways pledged to hold infrastructures and extensions that were not essential in abeyance. However, the Railways also realized that it is often very dangerous to try to save at the cost of infrastructure. This requires careful planning, good financial calculation, because what is saved today on infrastructure, could cost twice as much tomorrow, while it is absolutely necessary to stimulate growth.

The Management of the S.A. Railways takes these things into account in its policy. Hon. members opposite are not prepared to do so. They want to enjoy the privilege of criticizing. They will be delighted if the Railways administration makes an error of judgment here and there. This has been our experience so far. During a very difficult period, two or three years ago, the S.A. Railways realized that something would have to be done in view of the increase in the price of fuel, liquid fuel in particular. Consequently a start was made with an accelerated programme of electrification, which has entailed a tremendous saving, particularly on foreign exchange. The S.A. Railways administration foresaw this problem coming two or three years ahead. However, it took action and made its contribution. Was this not anti-inflationary?

The costs saving with regard to containerizing, together with local capital expenditure, has encouraged economic growth in South Africa and has counteracted inflation tremendously. The Railways administration is not indifferent to this problem. It regards the matter in the long term and makes adjustments. The Railways administration is integrated and synchronized with this country’s problems, and is constitutionally committed to being the carrier in this country, but, of course, in the interests of this country, and not solely for the sake of profit.

Up to now hon. members may have thought that the Railways is interested in money only, that money is the alpha and the omega of its existence. However, the Railways adopts a completely different view. With approximately 265 000 employees the Railways is an organization of the people for the people. In this regard we could just note that almost no office or profession exists outside the Railways that is not represented on the Railways. The Railways is sociologically geared to the lives of probably more than 1,5 million people who live on Railway salaries and pensions. During the past three years the performance of the employees of the S.A. Railways administration has also been impressive. In 1977 the number of workers on the S.A. Railways was 262 000 and in 1979 only 265 000, whereas its budget has risen by 20% this year. In proportion to the larger capital investment, and I take it its turn-over as well—its production growth per annum is 3%—the Railways should have had at least 8 000 more staff members. However, the Railways has only 3 000 more and despite this it undertakes the enterprises that it does undertake, and does so with confidence, because the people have a goal and because the control of its people is planned according to its own objectives. The Railways knows how to use its people properly in the service of its own organization and in the service of our national economy. This is certainly no mean task. We must give the Management of the Railways credit for that. We must give the members of the Management credit for what they have done to find the necessary, competent officials capable of doing this work, in the form of managers and of trained people. The Railways does so by granting bursaries at our universities for a variety of degrees in a considerable number of disciplines or professions. However, the Railways also does this by means of its Railway Colleges where it trains its people for specific tasks. Thus I want to reiterate that we are dealing here with an organization which has both its feet planted firmly on the ground and is well-versed in practical experience, which plans ahead, which has a clear concept of its task and which regularly checks and measures its own achievements.

The second half of this picture with regard to the staff is even more admirable. The Railways is now applying a system of goal-directed management. According to this system each manager, from a first level supervisor right up to the top, will be responsible for the setting and achievement of his own goals. He now has to set his goal, that goal which he himself has to achieve, and not according to instructions from the top, from his management. Let me mention a practical example. The station master at Steynsrust is instructed to save and create increased productivity. What does he do? He takes his tea-maker and tells him to look after the garden, the porch and the water buckets. This is a goal he sets himself and which he knows he must achieve. This is no longer an instruction from above. It is normal and natural that such a person will achieve more because his personality is involved in that achievement and can fulfil himself in it. This is a fine undertaking, a commendable effort on the part of the Railways, the Government and the Management, and it cannot be allowed to pass unnoticed.

However, I want to go further. Quite apart from the management by objectives the Railways is also a service organization. Thus there is something I want to say to those who are on Oppenheimer’s payroll. There is not one hon. member in this House who is not being subsidized by the Railways. All of us are directly subsidized. Just think about our air tickets. But quite apart from that, we are also being subsidized as citizens. The Railways conveys cattle and feed from drought-stricken areas to the abattoirs at a loss, at below cost We are being subsidized. The Railways also conveys passengers at a loss. Hon. members have heard what the figure is. In that way the Railways subsidizes the employer, because if the employer is not subsidized in that way, he would have to pay his people more to enable them to afford their train tickets. Of course this would ultimately affect the end-product which would in turn then become more expensive. In this way the Railways subsidizes every individual in this country. Do we appreciate this?

At the moment I have two Belgian medical practitioners as guests in my house. I had a few meals with them and taught them to eat South African brown bread. The women then told me “Mr. Schoeman, you are privileged”. When I asked why, she said: “I am enjoying this bread tremendously.” I asked her whether they did not have such bread overseas. Then she said, “This loaf of bread would cost me a rand overseas, whereas it costs 16 cents here. We only eat meat twice a week.” [Time expired.]

Mr. Speaker, I just want to come back to a few matters that the hon. member for Orange Grove raised in his speech. He criticized this side of the House and said that the Minister of Transport Affairs has introduced an inflationary budget. The hon. member is quite entitled to move an amendment like this to the Second Reading. He argued that the tariffs should not be increased. Once again, the hon. member is entitled to argue in this way, but the essence and the theme running through his speech can be summarized in a single sentence, viz. that it was an irresponsible speech. Whilst the hon. member expressed criticism and said that the budget was inflationary and that the tariffs should not be increased, he failed to say where we should have economized or where the creation of the infrastructure was badly planned, and where a tariff increase could accordingly have been avoided. The hon. member must spell out to the House whether he would have wanted the Railway officials to have gone without their salary increases.

I did not say that at all.

Then what does the hon. member want? On the one hand he wanted us to increase salaries in order to keep abreast with the increasing cost of living and on the other hand to keep the tariffs low. Surely these are two matters that cannot be reconciled. To sum it up in a single sentence, I want to say that the hon. member’s speech was an irresponsible one. He is entitled to criticize, but then he should criticize constructively so that we can debate that criticism in a constructive way. He must not simply criticize on the one hand without saying on the other what should be done and how we should go about doing so.

I want to turn to the central theme of my speech. I want to begin by stating that there has been no single factor that made as great an impact on the South African economy than the S.A. Railways. The S.A. Railways have played a role in everything from creating an infrastructure to act as the life-blood of the South African economy to the conversion of raw materials into consumer goods and manufactured products in the interior. At specific times, and at particular places, the S.A. Railways has made certain contributions to everything from the balance of payments on the current account in respect of countries abroad to the consumer price index in the interior.

The fact—and we often overlook this—that we are budgeting for a transport expenditure of R4 200 million as against a national budget of R11 400 million, shows us that in its budget the S.A. Railways reflects 37% of the expenditure in comparison with the main budget. Since this is the case, we have the exceptional fact that the S.A. Railways plays a joint role in determining a specific economic climate in South Africa This is a fact that we cannot argue away. Not only does the S.A. Railways play a joint role in determining a specific economic climate in South Africa, but since a strong, vital economy is a prerequisite for improving the quality of life and standards of living of all the people in South Africa, the S.A. Railways also plays a part in determining the conditions for survival of all the inhabitants of South Africa. There is a close and intimate connection between the S.A. Railways in its role of national transport organization and the state of the economy in general. If we accept this as an axiom, we can argue that the objectives of the S.A. Railways, in management and industry, in marketing and planning, in economizing and housing, must be synchronized with the general economic objectives of South Africa as a whole. However, they must be synchronized in a special way. Say for example that one of South Africa’s economic objectives is growth, then the S.A. Railways must not merely adopt a growth policy. This means that the S.A. Railways must act as an instrument, or medium, in order to adapt its management policy and its tariff policy so that these economic objectives may be realized. In other words, just like the other sectors in the economy, the S.A. Railways is a medium of achieving our economic objectives. I do not want to allege for a moment that the top management of the S.A. Railways and the other 260 000 employees are not motivated to co-operate towards achieving this objective. The motivation is in fact there. In this debate I should like us to give serious attention to a matter which I now want to enlarge on further in my argument, and this is that I have reservations about the philosophy and basic principles which underlie the Railways’ tariff policy—I think they are counterproductive in achieving our national objectives in certain respects. Let us now take a look at a few facts without motivating them. If we look at the working expenditure and the working results of the past few years, it is clear that the revenue is scarcely able to cover the working loss. It is true that a loss is being experienced in socio-economic services year after year.

How much is the loss?

It is not necessary to determine how much it is for the purpose of my argument. Let us put it at R484 million. However, I am simply stating a fact. If we take a further look at the fact that a declining volume of high-rated traffic which has to be transported above cost, has to subsidize the ever-increasing volume of low-rated traffic that must be transported below cost, it is clear that there must be a short circuit somewhere in the whole set-up. The real question is not whether the appropriation is inflationary or not. This is an important question, it is true, but if we approach the affairs of the S.A. Railways in a serious way, we must look deeper, and the real question is whether the philosophy and principles which today form the basis of tariff determination, or of the entire tariff policy, are still those of an era which has changed, both economically and politically.

I am asking this question, because which changes have taken place since the principles of the tariff policy were determined in 1910? The first one I want to mention, is that the entire economy underwent a structural change. I do not want to take the matter further, except to point out that every sector that is based on transport has increased its gross national product since 1910. I want to mention a few figures. The part played by the different sectors in the gross domestic product is as follows: Since 1946 agriculture has decreased from 12,1% to 7,5%; mining has increased from 11,1% to 15%; manufacturing industries have increased from 16% to 22%. I am mentioning these figures to show hon. members that the structural set-up of the South African economy has changed, and that the nature of transport has been influenced as a result.

The second aspect is that the demand for transport has changed. When the principles of tariff determination were laid down in 1910 and afterwards, traffic consisted of low value goods, passengers, and importing high value goods. Various changes have taken place. There was no question of inflation when the tariff policy as such was determined. The changes were all factors that had a radical influence on the nature of transport Whilst circumstances have changed so drastically, the principles of tariff determination have remained constant, a policy that was based upon the value-for-service principle and on what the traffic could carry.

I just want to give a few examples of how the tariff policy is in fact determined. It is a complicated, highly technical matter, but I want to suggest here this afternoon that, in view of the changed economic circumstances of South Africa, and in view of the economic objectives of South Africa, the time has come for these basic principles of tariff determination and tariff policy to be revised. I quote from Sahipa, Volume 12, No. 1 of March 1977, in order to give the House an idea of how the Railway tariff policy is determined. I quote from page 7—

The article goes on in this way. [Interjections.] What I am trying to say here, is that it is a highly technical matter. We cannot reach finality on this this afternoon, but the fact remains that this principle which underlies the policy must be revised.

We would still be here tomorrow if we were to argue about the question of whether supply and demand plays a role in the Railway tariff policy. The fact is—and we must accept it—that tariff determination and tariff policy are not governed by the free market mechanism. We could argue here until tomorrow about the question of how to make the tariff determination more cost oriented. However, I shall tell hon. members that it is not possible, and if it were possible, it would in any event not be desirable to make the tariff determination cost oriented. We must receive a definite answer on the consequences of this tariff policy. The crucial question is whether the consequences of this Railway tariff policy are not counter-productive in achieving our national economic objectives. The consequences of the present Railway tariff policy are a question of cross-subsidization, subsidization of Railway services by the other main services, subsidization of the low-rated traffic by the high-rated traffic and subsidization of long distance traffic by short distance traffic. Let me give hon. members a few examples of this pattern of subsidization. The estimated profit of R119 million from pipelines is used to subsidize the estimated loss of R46 million on rail services. The estimated profit of R84 million from harbours is used to subsidize the loss of RX million on suburban passenger services. The whole crux of the matter is the fact that high-rated transport, which represents 12% of the goods tonnage and is responsible for 40% of the revenue, must subsidize the low-rated traffic, which represents 88% of the goods tonnage and is responsible for 60% of the revenue. What actually happens, is that high-rated traffic, which consists chiefly of consumer goods and is indirectly inflationary to a certain extent, must be loaded in order to subsidize low-rated goods, and I do not believe that this is sound economic policy.

It is also counter-productive to some of our national economic objectives. That is why I am asking whether we cannot restore the true character of the S.A. Railways as ordained in the Constitution, viz. a national transport organization as the most effective means of transport for mass traffic over long and medium distances. I am not advocating doing away with a differentiated tariff policy, but I am asking for the rationalization of a differentiated tariff policy. That is why I am asking the hon. the Minister seriously to consider appointing a commission to investigate the rationalization of the tariff policy, with the sole mandate to determine whether the present principle of the tariff policy still has a place in the changed economic circumstances and whether the principles of the tariff policy can be reconciled with our national economic objectives.

This commission could look at the rationalization of the tariff policy; at the rationalization of the National Transport Commission and its place in the present transport set-up as well as at the legal provisions in terms of which the Railways operates today. I could have enlarged on this further if I had had the time. There are certain provisions in the mandate of the Railways, according to which the Railways operates today, which are antiquated and have to be adapted. Section 103 of our Constitution, which gives the mandate to the Railways, provides that the Railways shall be administered on business principles, due regard being had to agriculture and industrial development in the interior. I ask why it should be the interior only. In the circumstances that prevail today, why should we not take a look at the development of our coastal areas, for instance Port Elizabeth, East London and Durban? I do not think it is in the interest of the country for the profit on, for instance, pipelines and, indirectly, the motorist in the Transvaal, to be used to subsidize losses on suburban train services in the Cape. Could the money not be put to better use by rather stabilizing the fuel price? I do not think it constitutes part of our economic objectives to load the consumer price index in the interior in order to subsidize the steel industry in Japan. This is not part of our economic objectives. Hon. members will ask me according to which principles and in which direction we should then start thinking, and with this I wish to conclude with.

I think that a new tariff policy which should be investigated by a commission, is to cut the financial tie between the different main services and to operate each main service—railways, harbours, pipelines and airways—as autonomous, separate entities. I think the financial tie between high-rated and low-rated traffic should also be cut and high-rated traffic should be linked financially to the free market mechanism, with due regard to the fuel situation. Low-rated traffic should be linked to the Exchequer in order to make the whole basis of providing socio-economic services not only a charge on the Railways, but on the State. I ask: For whom are we building two harbours and two railway lines? Are we doing it for the Railways, or for South Africa? I ask: For whom are socio-economic services being provided? Are we doing it for the Railways or for South Africa? That is why, in view of the argument that I have tried to put forward, and in view of the change in the economic conditions of South Africa, an investigation into the basic principles of railway tariff policy and how it can be synchronized with our national economic objectives, deserves the serious attention of the hon. the Minister.

Mr. Speaker, I was most interested in what the hon. member for Bellville had to say towards the end of his speech about the different branches of the S.A. Railways, namely that they should be looked upon as independent individual sections. I think he has put forward some thoughts which I believe have been discussed from time to time in the past, and I think they require possibly further discussions.

However, I want to concentrate this afternoon on the broader effects which the Railways have on the total South African economy. The two previous speakers referred to this, especially the hon. member for Bellville. He said no single factor had such a great impact on the South African economy as the Railway budget. I am inclined to agree with him. In fact, I stated this to the previous hon. the Minister of Transport Affairs, i.e. that the Railways budget has a major effect upon the South African economy. It is in this light and in the light of this reality that I believe this budget has to be examined today. I feel a little sorry for the hon. the Minister, because this is his first budget. Quite honestly, I do not think he has had any really favourable response to it. The hon. member for Orange Grove referred to the report in the Business Times. The budget was described there as—

I agree with those feelings. That is why I have labelled the hon. the Minister—when I issued a Press report on Wednesday—as the “Minister of Inflation”. I am pleased to see the Press has taken this up. During the course of my address I am going to give the reasons why I have called him that. I find this budget most surprising, especially after reading the hon. the Minister’s speech. Under the heading “Synchronization: S.A. Railways and State”, the hon. the Minister said the following in regard to synchronization (Hansard, 5 March 1980, col. 1995)—

This is a very important statement But having said this, the hon. the Minister went even further and admitted the following (Hansard, 5 March 1980, col. 1997)—

It is true.

I agree entirely with the hon. the Minister. He has said that it is true, and I agree with him. However, because of these statements I want to stress the effect which this budget has on inflation and how it is affecting economic growth in South Africa. It is retarding economic growth.

However, having said these things, which I admit are true, one would have thought and in fact expected it of the hon. the Minister to have produced a budget which was synchronized with the economy of the whole of South Africa so as to defeat inflation and to promote growth. However, this has not happened. All the economists in South Africa are saying this. Certainly the admirable pay increases will contribute to increased consumer spending, and this I believe is a very positive aspect of this budget.

And it will stimulate growth.

It should stimulate growth. The hon. the Minister says that it will stimulate growth, but I say that it should do so, and I want to prove that it will not stimulate growth. I believe Railway employees have been most restrained in the past two or three years as far as their wage demands are concerned. I believe they need these increases just to catch up on their standards of living. They had to endure lower standards of living over the last few years, and they lost out because their wages and salaries were not keeping pace with inflation.

I would therefore not for one moment deny the employees of the S.A. Railways and Harbours these increases for which provision is made in this budget. However, the size of these increases, which vary from 16% to way above 20% in some cases when one takes into account the service bonus, are in themselves inflationary in the short term, as I believe is borne out by this budget. After all, the resulting tariff increases, which are required to pay for this, are amongst the highest and biggest ever, despite the fact that the hon. the Minister has said in his report that there has been increased productivity on the part of the staff of the Railways. I believe it is just a matter of time before another round of price hikes is going to start in the economy as a whole as a result of this budget. Before long we are going to be back to square one and the Railway employees are going to be fighting inflation just as before, and not only the Railway employees. I believe also the house-wives, farmers and those in the manufacturing sector in this country are going to suffer from this budget.

I believe there is something radically wrong with the synchronization of the economy. I believe this should be one of the most important roles which the Government especially the hon. the Minister because of the size and the vastness of his budget should play. Hon. members who have spoken before me, have also referred to it. I believe this lack of synchronization has a lot to do with the Government’s overall economic planning in general and more specific with the hon. the Minister’s contribution to the economic planning, originally as the Minister of Economic Affairs and now as the Minister of Transport Affairs. I should like to point out to him that we have not forgotten that it was he who agreed to the massive increases in electricity tariffs a few years ago when he was Minister of Economic Affairs in order at that time, as it was said, to allow Escom to finance a portion of its capital development programme from revenue.

Did you oppose it?

At the time I criticized it very much …

But did you oppose it?

Yes, I think I did. We also know what effect these tariff hikes had on electricity. We know, too, that in some cases tariffs went up nearly 100% in a matter of two or three years. As a result thereof we had a massive round of inflation. Hundreds of millions of rands was drawn from the consumers’ pockets. Their hard-earned money went to finance Escom’s tremendous capital development programme.

Last year this same hon. Minister nearly doubled the price of petroleum products, ostensibly, so he said, to meet Opec’s price increases and to obtain oil on the spot market. The hon. the Minister repeatedly said that he was not to blame for the increases in the price of petrol; that it was the Arabs’ or Opec’s fault. He conveniently forgets, however, the massive levies imposed on fuel. The yield of these levies goes to the State Oil Fund, the State Fuel Fund and the Equilization Fund, especially to the two former ones. As a result of this many millions of rands contributed to those Funds has again been bled from the consumer. These huge amounts have gone into the coffers of the State or of the State corporations.

I am not saying for one moment that Sasol 2 and 3 should not have come into being; not at all. The capital to build them, however, could easily have been raised from private investors in South Africa … [Interjections.] … and not from the consumers. I believe that such a statement is justified by the tremendous over-subscribing of the recent Sasol share issue—25 times or more.

I should like to ask the hon. the Minister to inform hon. members, when he replies to this debate, what the balance of the SOF and SFF is at the present time. I am sure he will not, because despite my plea last year when we were debating this that, while I accepted that information on these Funds could be classified as of a strategic nature and therefore should be limited in publication, we believed that the Funds should at least be audited by the Auditor-General and should be examined by a Select Committee of Parliament—the hon. the Minister got very angry with me at the time …

You do not know what is in store for you this year.

… the hon. the Minister insisted that these Funds should remain secret. Therefore we shall never know how much money is left lying in these Funds or exactly how this money is being spent.

Order! Is that argument strictly relevant to this debate?

Sir, the one point I want to make is that those actions resulted in fuel price increases amounting to R190 million last year on the part of the Railways. Part of this loss to the Railways was caused by the levies imposed by the hon. the Minister last year. We have heard that last year’s operations of the Railways resulted in a loss of R173 million.

The history of this hon. Minister in the light of his contribution to inflation in South Africa justifies, I believe, my calling him the hon. the Minister of Inflation. [Interjections.] He has been unable to supervise the economy of South Africa correctly. For this reason I move as a further amendment—

1. (1) the Railways and Harbours budget is not synchronized with the needs of the South African economy as a whole;
2. (2) the proposed tariff increases are inflationary; and
3. (3) the excessively avaricious profit demands of the Railways are retarding economic growth in South Africa”.

The hon. the Minister will, no doubt, be surprised, as hon. members opposite, in particular by this reference to profits.

To return to the budget, however, we see that while revenue is estimated to rise by R742 million, which is 20,3%, and expenditure by R627 million, which is 17,4% over the previous year, the net working results at the end of the year will be a surplus of only R3,55 million. I should like to ask the hon. the Minister whether the S.A. Railways makes a profit or not. That is what I ask the hon. the Minister. [Interjections.] Does the S.A. Railways make a profit or does it not?

He does not know.

All right. I should like to put the same question to the hon. member for Von Brandis. Can he tell us whether the S.A. Railways makes a profit or not? [Interjections.]

You have so little understanding of Railway financing that it will not be worth my while arguing with you. [Interjections.]

Mr. Speaker, that is the sort of reply we get. [Interjections.]

The final financial accounts for last year show a loss of R136,9 million, and I should like to ask the hon. the Minister whether this is a fair reflection of last year’s operating figures of the S.A. Railways.

No, of course not.

A good accountant and a tame Select Committee on Railways Accounts can do miracles with accounts. I should like to know whether the hon. the Minister is of the opinion that an appropriation of net revenue of some R176 million last year to the Revenue Reserve Account is a profit. Is this a profit or is it not? I should like the hon. the Minister to reply to this; if not now, maybe later. Is it a profit or is it not a profit?

No response!

This amount certainly was not part of the actual cost of operations of the S.A. Railways. It is a profit which is going into a capital Fund. One might ask exactly where this R176 million is at the present time. Accounts such as those before the House, involving some R4,232 million of current expenditure and R1 600 million of capital expenditure are of necessity complex. The hon. member for Orange Grove said so earlier. And as such they require a lot of study. If one is to get any in-depth appreciation of what is going on one has to do this study. The working estimates for the past three years will show, e.g. that, at 31 March 1978, the S.A. Railways had made a profit of R38,l million. A year later, at 31 March 1979, the profit was R102 million. At 30 November 1979 the 1979-’80 financial year was heading for a loss of R28,8 million. Therefore, over this period, from March 1978 to December 1979, there was a net overall profit or surplus of some R61,3 million for that period.

As is normal practice, this amount, these surpluses or deficits—with the approval of Parliament, as we are doing now—will, in the case of surpluses, be transferred to the Rates Equalization Fund. That was a total of R61,3 million for this 20-month period. I should like to point out to the hon. the Minister that the Railways also has other Funds. There are other capital Funds, such as the Betterment Fund, the General Renewals Fund, the Level-crossing Eliminations Fund, the Sinking Fund, which have a redemption account and a reserve account, all of which—and I believe the hon. the Minister should concede this to me—are in one way or another financed from revenue. I should like to ask the hon. the Minister whether he has any idea of how much money is at present lying in these Funds.

He has no idea.

Has the hon. the Minister any idea of how much of this money, which was written off as expenditure, is lying in these Funds at the present time? I do not have the figures at my disposal right now, but I do know from studying these accounts and these reports that, on 3 November 1979, the total was R2 082,6 million. [Interjections.] This is a vast sum of money. The real surprise, however, comes when one asks how much money was in these Funds just 20 months earlier. Does the hon. the Minister know? How much money was in these Funds on 31 March 1978? Does the hon. member for Von Brandis know? [Interjections.] The hon. member for Von Brandis is also a member of the Select Committee. Does he know how much money was in these Funds at that stage? [Interjections.] It was R416,622 million, and what does this mean? It means that in a period of 20 months these funds have increased by R1 665 million, which is an increase of some 398%. [Interjections.] These are the figures I have here in the hon. the Minister’s report. If one is prepared to go back five years, one sees that five years ago there was only R218 million in those Funds, which is some 10% of what there is in those Funds now. This has all been achieved, in this period of 20 months, with a resulting net profit of R61,3 million, as reflected in the accounts. However, there is R1 665 million stashed away in Capital Funds. Could the hon. the Minister tell us where this extra R1 665 million has come from over the past 20 months? It certainly has its origin in the revenue earned by the S.A. Railways, and that means that it is earned from the tariffs applicable to the passengers or users of the Railways and Harbours services. When the hon. the Minister replies, I should like him to give hon. members in this House—especially those on his side—his views on where this money came from, where it is at the present time and to what use it is going to be put.

It is manna from heaven.

This Parliament votes this money through these various Funds. For example, if we pass this Bill we shall increase the average rate of depreciation, as the hon. member for Orange Grove, said earlier, by a further 10%. This was a recommendation of the Select Committee and will add, as he has said, a further figure of approximately R50 million to expenditure. I regret to say that in the Select Committee two weeks ago I agreed to this additional 10%. We have an awful lot to do in this Parliament, and possibly when it comes to big financial accounts like this, Select Committee members of the various parties should have professional advisers advising them on these accounts, rather than just leaving it to us to suddenly have a few figures given to us before the debate and then to have to debate such a very important budget.

You certainly need a financial adviser.

I am quite sure you need such assistance.

I voted for this, but the hon. member for Orange Grove, who is not in my party, voted against it, and I want to say here and now that he was right and I was wrong. I recall that when this first came before the Select Committee three or four years ago I objected to it. I was opposed to it. I called it inflation accounting. I think the hon. the Minister should read that debate on inflation accounting conducted over the years in the Select Committee. As the hon. member for Orange Grove has said, there is no consensus on this matter amongst the accountants themselves. I call it inflation accounting. In other words, today Parliament increases the South African Railways rates of depreciation to meet tomorrow’s inflated prices of capital goods, and this depreciation is recovered from revenue. Therefore tariffs must be increased to obtain this revenue to pay for tomorrow’s inflation today. Surely this policy creates inflation today. I know this all sounds very confusing, but I would like to quote from an issue of Time Magazine in which there is the heading: “Trying Anew to Bash Inflation”. I quote—

The article goes on to say—

So one sees that there is confusion about inflation. When one tries to analyse it, however, one finds that Governments are the cause of inflation. This Parliament is the cause of inflation. As has already been said, we shall be adding 1% to our inflation rate by passing this budget. I believe that the hon. the Minister could have done better. I believe that he should have accepted that inflation in South Africa has to be beaten. In the same article it is stated that people blame the increase in fuel price as a result of the Opec increases. In the USA these increases contribute 2,2% to the current inflation rate of 13%. The important thing, however, is that in West Germany, which imports just as much fuel from Opec countries …

What is the cause of the other 11%?

… and where the price of fuel also has an inflationary effect in the economy, their management of the economy is resulting in an inflation rate of only 5%. They are subject to the same conditions of importing fuel, in fact are probably even worse off because the USA supplies a lot of its own fuel.

I believe the hon. the Minister should have accepted that the capital reserves the Railways have at the present time are getting out of proportion. They are getting out of synchronization with the whole economy. I believe that, in this process, the Railways have skinned the consumer in South Africa, if I may use that term. They have skinned him of the money he has earned and which he should have been spending on consumer goods. I believe the hon. the Minister could have considered doing the following. Firstly, he should have reviewed the whole capital expenditure programme and the capital funds with a view to reducing the heavy burden which capital exerts on the budget. I have added it up. Last year it was 33%, but because of the high price of fuel and salary increases it has this year gone down to 29,1% of the total expenditure of the Railways. That goes to interest payments, depreciation and appropriation to capital funds. Secondly, he could have considered not increasing the depreciation rate by 10% this year.

Even though you voted in favour of it?

I have said I was wrong. I want to ask the hon. the Minister whether he was wrong too. Is he prepared to admit that he was wrong? That is the point. I go further: Instead of not increasing it by 10%, I would much rather have had him come to the Select Committee and say: “Look, chaps, we have too much money in these funds. Let us revert back to the old rates of depreciation which served this nation so well for decades—50, 60 or 70 years. Let us for one year go back to those old rates of depreciation.” In that way we would have saved the consumer R250 million this year. [Interjections.] With the economic tools available to the hon. the Minister, I would call it deficit budgeting to use these funds at this stage. Thirdly, he could have considered pruning the expenditure account to bare necessity. After all, the private sector has been asked earlier by this hon. Minister to absorb some 20% of rising costs. Do the S.A. Railways do this? I should like to know. Fourthly, he could have considered all ways and means of reducing the cost and increasing revenue without putting up tariffs. I am quite sure he could have done this. After studying the accounts, I believe that, as I have said, this could be done.

I am prepared to say that South Africa’s high rate of inflation is basically due to high Government spending. The Government contributes to inflation on two fronts. Firstly there is the part played by the central Government with capital bled from the taxpayer through excessively high taxation. We sincerely hope that, when the hon. the Minister of Finance comes with his budget, he is going to be far more kind to the South African consumer/taxpayer than this hon. Minister has been. Secondly, the Government contributes to inflation through its State Corporations like Escom, Sasol, the Railways and others, again with capital bled from the consumer through excessively high tariffs. I believe this is resulting in excessively high profits. We can say that they are not profits. In fact, I even question whether the hon. the Minister is allowed to do this if one bears in mind section 103 of the Republic of South Africa Constitution Act, which the hon. member for Bellville mentioned earlier on. That provision says that the Railways are not really a profit-making organization. The Administration have, however, come to the Select Committee with all kinds of sob stories that they need extra capital and higher depreciation rates to meet future costs of equipment and capital goods. They have slowly put into the whole cost structure of the Railways …

That is not clever.

I should jolly well think not: It is not very clever that the Railways have done this, because it is causing inflation in South Africa.

This money is in these various funds and, as I say, the hon. the Minister could contain inflation, but this requires a commitment on the part of the Government to leave as much wealth earned annually as possible in the hands of the people who earned it, namely the employees and also the businessmen, the people who are investing their money to create new wealth. If wage increases and company profit increases are not net increases after inflation and before taxation, then there is no real increase in consumption and therefore there can be no real growth in the economy of South Africa. This is a basic problem in South Africa today. The Government is bleeding off so much capital from the consumer in one way or another that by so doing it is restricting consumption expenditure and thereby retarding growth. Much of this capital is presently sitting in Government Funds. In fact, today South Africa is awash with money. Our foreign exchange and gold reserves are approaching R6 000 million. A few years ago we would have considered ourselves lucky if we had R600 million in these coffers. Not only that. There is a total of R2 000 million in the Capital Fund of the Railways Administration. What have the SOF and the SFF got?

The Government has bled this money off the consumer, shoved it into Funds and there has been no real increase in consumer spending. Neither has the manufacturing industry made a reasonable profit after taking into consideration the inflation rate. As a result of this there has been a lower demand and a reluctance to invest because high inflation is eroding profits. The final result of this is that South Africa is not growing at the rate which it is capable of and at a rate at which it should in order to meet the increasing demand and needs of our people. In fact, South Africa has so much money floating around today that we are now even exporting our capital overseas. We are now in league with Switzerland, West Germany and the United States of America.

Are you ashamed of it?

That hon. member, who is a senior member of the Select Committee wants to know whether I am ashamed of it. It shows that he does not really understand what I am getting at. It is ridiculous that we should be exporting capital, because we are still an underdeveloped country. We still have plenty of labour that can be employed and we have many unemployed people who need jobs. Therefore, because of the reasons which I have submitted, I believe that we in these benches have been justified in moving the amendment which stands in my name.

Mr. Speaker, before proceeding with what I would like to say in this budget debate I wonder if the hon. member for Amanzimtoti, who has just sat down, would be good enough to answer a question across the floor. The hon. gentleman indicated that he, as a member of the Select Committee, thought that all members of the Select Committee should have a professional adviser behind them when they attend meetings of the Select Committee. Having listened for a full half-hour to the hon. member, I came to the conclusion that as a member of the Select Committee his knowledge of the working of Railway finances and the operation of the various Funds of the Railways can be described as being very negligible indeed.

Can you tell me why?

I want to ask the hon. member whether, if I can use my influence with the hon. the Minister, who in turn could speak to the General Manager of the S.A. Railways, to make a professional assistant available to give certain lessons to the hon. member for Amanzimtoti so that he can make a speech in the House on Railway finances in a more authoritative manner, he would accept the invitation to attend private lessons, because I think the hon. gentleman needs it.

You tell me where I am wrong.

I am not going to use my time here in this House to educate the hon. member on the basic fundamentals of Railways finance. As a member of the Select Committee he should come to this House with a better and fuller understanding of the situation.

Another surprising thing about the debate at this stage is that we are all sitting here with tears in our eyes because of the extreme expressions, used by the hon. member sitting on that side, of the punishing of consumers and the exploitation of consumers that we have listened to with regard to the tariff increases. At no time up until now have we had from the Opposition any solid description or analysis of the budget as it has been presented by the hon. the Minister.

I should like to say that I view the budget of the hon. the Minister, in regard to all the aspects that he dealt with, together with the supporting documentation that hon. members have had placed in their possession, and in spite of the tariff increases, as a budget which can only inspire a feeling of confidence amongst all sectors of the South African economy. This is very well evidenced by the little comment we have seen in newspapers to date on the budget, and even by the special analysis of the Rand Afrikaans University which was produced at the request of the Association of Chambers of Commerce and to which the hon. member for Orange Grove has referred. I shall come back to that in a minute.

This budget has been accepted as a business budget presented by a well-managed company. It is an example to any other well-run corporation in our country. It shows a highly developed management function in the operation of the Railways. It shows efficiency in the high productive levels that have been attained. It shows a cost consciousness on all aspects of Railway operations. It shows also responsibility towards the rest of the economy, but, perhaps most important of all, it shows continuing endeavours to achieve greater improvements in all spheres of its operations and that the Administration is not content to sit back and rest on its laurels for its achievements to date. Finally, I think this budget shows that, in spite of all the engineering and technical advances, in the final analysis all achievements of the Railways Administration rest on a job happy and contented multi-national staff. No wonder, therefore, that the analysis made by the Rand Afrikaans University is relatively bland and mild, as it was described in the newspapers.

I want to ask the hon. member for Orange Grove: If he wants us in the House to accept his criticisms as being authoritative, why does he quote the analysis that was published in the Sunday Times out of context? The hon. member makes a case about the high inflationary rates of this budget and he quotes the part of the report dealing with an increase of 0,9% on the overall national inflation rate in regard to the gross domestic product. Then he extracts the other part of the report and makes a silly comparison, viz. that if two people travel in a motor-car from Johannesburg to Durban it is cheaper than one seat on an air flight from Johannesburg to Durban with the 20% increase in tariffs. Why does the hon. gentleman not show the real essence of this analysis in regard to the budget—and I want to quote it. I shall quote it in full and I shall not quote it out of context. It says—

And what does this say? I quote further—

The hon. gentleman comes here and delivers a long harangue about the inflationary effects of this budget which, according to the report, will in any event barely reach 1% as far as the cost-of-living index is concerned. I repeat that this is a budget designed to inspire confidence and to ensure the continued growth of the economy in which all sections of the population will receive a dividend. Therefore, it is no wonder—and I draw the House’s attention to it—that the hon. member for Orange Grove concluded his speech with these words—

We know of past debates with his over-dramatic utterances here of good news budgets and bad news budgets, bad budgets, inflationary budgets and all the rest. Today, at least, the hon. member had the political honesty to say that he hesitates about being over-dramatic about the budget, because he recognizes that basically it is a good budget which will instil confidence in the economy of South Africa.

I have said before in debates, and I say again, that the speeches of the two hon. gentlemen, the hon. member for Orange Grove and the hon. member for Amanzimtoti, as the two main speakers in the Opposition benches, starkly reveal the negative and futile thinking of the Opposition parties towards the most important and largest single undertaking, the biggest employer of labour and the main artery of our economy, namely the S.A. Railways. Not only is it the base of our own economy, but our Railway system is the transport base for Southern Africa [Interjections.] This is the foundation on which the economic welfare of millions of Black, Coloured and White Africans is dependent in Southern Africa It is not an economic parasite, as it was once described by the hon. member for Amanzimtoti—I think it was in the debate of 1978. If hon. members in the Opposition benches could, before participating in these debates, ask themselves the single question of what the goal of this vast undertaking is, we would have a far more constructive debate in this House. Instead, we have their carping little criticisms which go largely unnoticed by leaders in our economic life, and also, I may add, by the men and women who, by their sweat, diligence and dedication to their job, make of our transportation system one of the best in the world. Let me tell these hon. members what that goal is. The goal of the Railways is to provide an efficient transport service which will satisfy the total transport needs of the country, not only for today, but for the future. It is with this criterion in mind that the budget which was introduced by the hon. the Minister, together with all the relevant documentation laid before the House, should be assessed. Factors such as estimated revenue and working costs, capital expenditure, tariff increases and incentives granted with these tariff increases, coupled with additional remuneration to a staff of more than 250 000 people, should all be assessed on the criterion I have mentioned just now, viz. the provision of an efficient transportation system for our country. The hon. member for Amanzimtoti has again this year, as in former years, made himself guilty of carping criticism of the capital works programme and other financial aspects of the Railways, and also of the methods of providing the required finance of R1 600 million, of which R965 million in this budget is for works and acquisitions already approved by the House. Hon. members in the Opposition benches should realize that the capital works programme budget is not only to meet the requirements of today, but also to meet the transport needs of the Railways tomorrow and years ahead in our expanding economy.

One may well ask whether a growth rate of 5% in the economy could be anticipated if the Railways did not have the capacity, the rolling stock and the tractive force to transport the freight that will be on offer in this growing economy of ours. The fact is that the Railways is in a position to cope, directly as a result of the forward planning by the Administration and the capital expenditure incurred in former years. It is even more laudible when, like any other public sector of the economy, the Administration has had to comply with the strict application of a policy of financial discipline laid down by the hon. the Minister of Finance.

Forward planning involves a wide spectrum of Railway operations. It does not only embrace the building of a new station or the building of an additional railway line, but also improvements to existing services such as signals and communication, greater mechanization and automation in goods handling, etc. What is more interesting to note, is that in improvements made the cost factor is also borne in mind in forward planning.

I think that if I give three examples of this the hon. members who have just spoken, will accept what I have just said. If they study the General Manager’s report, they will find that savings that have been effected in new working operations in our harbours will exceed at least 30%, and that with the new systems that have been evolved in the new aircraft of the S.A. Airways, whose fuel bill constitutes one third of the total working expenditure, savings of up to 13% are being realized. In the development of the central marshalling yard at Bapsfontein, it is estimated, at present-day rates, that a saving of R35 million a year will be effected while at the same time the transport service of South Africa will be improved. To prove my point it is easy for me to quote reams of figures from the General Manager’s reports and other relevant papers, but I have no intention of doing the homework of the hon. members who have just spoken. They talk and talk and never arrive at a constructive argument or proposal. The hon. member for Amanzimtoti’s conception of constructive capital expenditure by the Railways is possibly to ask for a new pot-plant case on Amanzimtoti’s station. The hon. member for Orange Grove has said that in dealing with expenditure he would rather ask for the issuing of more nuts and raisins on the S.A. Airways.

Having dealt with the speeches of these two hon. members, I should like to say a few words in regard to the staff. In these debates it is always very noteworthy—and the House will substantiate what I am about to say—that these two hon. gentlemen, the Opposition’s two chief speakers on the Railways, say nothing or very little about the interests of Railwaymen and the part they have to play in this vast organization. I find it very hard indeed to find a single word of praise, thanks or congratulations by either of those two Opposition speakers in their Hansard of the past years. All one hears is the criticism by the hon. member for Amanzimtoti about capital expenditure for better housing for Railway workers, or the remarks of the hon. member for Orange Grove …

No, I never criticized that.

Oh, yes, the hon. member has. He must go and study his Hansard. It was the hon. member for Orange Grove who once remarked that Railwaymen carried the stigma of being part and parcel of an organization that loses money.

[Inaudible.]

Oh, yes, he said it. I want to ask the hon. member whether he is still of that opinion with respect to this budget.

You know perfectly well … [Interjections.]

Is the hon. member still of that opinion, viz. that railwaymen still carry a stigma because the books reflected in this budget have not balanced?

Mr. Speaker, may I rise on a point of personal explanation?

Order! Will the hon. member for Von Brandis give the hon. member for Orange Grove an opportunity to make a personal explanation?

Mr. Speaker, on a previous occasion that hon. member quoted the same thing out of context. In a later speech I drew his attention to the fact that he had quoted it out of context, giving a very erroneous interpretation of what I had said. I proved that his interpretation was wrong. My personal explanation is therefore that the hon. member is again doing that. He is not acknowledging the true facts and is therefore misrepresenting the situation.

Mr. Speaker, I quoted the hon. member’s words out of Hansard.

Order! Does the hon. member for Orange Grove want to tell the House that the hon. member for Von Brandis is wilfully misleading the House?

Mr. Speaker, I am referring specifically to the hon. member for Von Brandis having been told before of his misinterpretation, and he is doing exactly the same thing again, which must indicate that he has not accepted my word and is accusing me of dishonest conduct.

Order! The hon. member for Von Brandis will have to accept the word of the hon. member for Orange Grove. The hon. member for Von Brandis may proceed.

Mr. Speaker, with respect, the hon. member for Orange Grove states that I am misinterpreting his words. I quote his words as they appear in Hansard—

That is what the hon. member stated in the House. The definition of “stigma” in the Oxford dictionary is—

The hon. member cannot run away from the attitude he has adopted in the past, which was his general attitude towards railwaymen. [Interjections.]

Mr. Speaker, on a point of order! The hon. member for Amanzimtoti has accused the hon. member for Von Brandis of dishonesty.

Order! Has the hon. member for Amanzimtoti said anything of that nature?

Mr. Speaker, if I may come in at this stage, it was I.

Order! The hon. member must please withdraw his comment.

I withdraw it.

If I may continue, the fact is that there are few organizations in the country that have such a dedicated staff as the Railways organization. In my view, the railwaymen are entitled, in the budget, to the increases in wage and salary scales as outlined. The workers are to be congratulated on the restraint they have exercised in their demands, and this was largely the result of an appeal made by the Management as far back as March 1978. I hope the hon. the Minister of Transport Affairs will not take it amiss if I say I do not entirely agree with the statement made during the budget speech when he dealt with management, manpower and staff. The hon. the Minister stated—

I think the hon. the Minister will agree with me that this is only partly true. It would be wholly true if it were also attributed to the motivation and dedication of personnel.

I said so in another part of my speech.

I am referring to the axiomatic portion only. I consider that the railwaymen in South Africa, at all levels, have a natural pride in their vocation. This is very much evidenced in Railwaymen’s families, where sons follow fathers in their occupations. Without this job satisfaction, and pride in the occupation, management could not achieve, as it has done in recent years, an average annual increase of almost 3% in productivity, the exact figure being 2,11%. I think the Management, in fact the whole Administration, is to be congratulated on motivating the staff into realizing that the only effective way to combat higher costs, with inflation running at 13%, is to absorb these costs by increasing productivity. In the three years until December 1979 White staff in all capacities—graded, casuals and rail-workers—declined in numbers by 1 900. While there has been a small decline in the number of casuals and railworkers the drop has mainly been in the graded positions of personnel. Over the same period there has, been an increase of over 6 000 in the number of non-White staff employed. I believe it can be stated that the S.A. Railways were the first to abolish job reservation and to follow a policy of equal opportunity for a non-White filling a position formerly held by a White. I believe that with the expansion of our population and of their transport needs it is inevitable that more non-Whites will be and will have to be appointed to graded positions.

The hon. the Minister, in his budget speech, indicated the increase in the numbers of White and non-White staff in order to keep pace with expected demands on the Railway services. The figure mentioned by the hon. the Minister shows no increase in the case of Whites since 1977, but shows an increase of over 9 400 in the case of non-Whites over the same period. The hon. the Minister also stated that it was intended to double the figure of the apprenticeship intake for 1980. I should like to ask whether this will include a further training of non-Whites in order to enable them to occupy positions of a more skilled nature.

I believe the S.A. Railways are showing the way to the rest of the country in this regard. There are undoubtedly non-White Railwaymen who are and will be as proud of their jobs as their fellow White railwaymen. I also believe that discriminatory wage rates will disappear completely in the long run. The continuance of any discriminatory practices, where for instance a Coloured worker can only advance to a certain level, will, in my opinion, ultimately cause bad staff morale and bad staff relationships. It is to me very obvious that in the next decade or two the non-White staff complement of the Railways will far exceed that of Whites, and for this reason there should be full opportunity of advancement given to the non-White personnel of the S.A. Railways. We have trained Transkei citizens to take over practically all aspects of Railway tasks in that country. I believe we can also do the same for our own people and offer greater opportunity to our own non-White people in our own country.

The hon. the Minister stated—and the hon. member for Amanzimtoti also quoted these words—that there should be a complete synchronization of policy directions between State and Railways. I believe this does not only apply to the development of our own economic infrastructure, but also to those aspects of national policy dealing with our security and with our status as a nation in Southern Africa. In this development of a national strategy announced by the hon. the Prime Minister, in his placing before us of the concept of the development of a constellation of States of Southern Africa, success depends on the most powerful instrument we have, which is, in my opinion, the strength of our transport system. When one looks at the number of land-locked States in Southern Africa, and at countries with a seaboard, the harbour facilities of which can hardly be described as adequate, one realizes the tremendous importance of our modern transport system in assisting to achieve this goal. In my opinion it is the most powerful instrument which we have to achieve the goal of the formation of a constellation of Southern African States. None of these African States can become or remain a viable entity without adequate transport facilities. The transport system of our country, with its technological know-how, can be the foundation on which the rest of Southern Africa can build. We have one great factor to our advantage, in rendering such aid, and that is the common gauge in all countries south of the equator, so rolling stock is completely interchangeable on any system. Let me say, however, that we seem to have a natural hesitancy to make offers. As a country we always wait until we are asked. If our concept of a constellation of Southern African States is to be achieved, we have to be prepared to make positive gestures and not only loud noises of good intent. We have to act to be believed, and it will take planning, research and money to find out where we can assist neighbouring States. The Railway Management has realized this, and I think it is the first time that a full four pages of the General Manager’s report have been devoted to dealing with the Railways’ relations with, and assistance to, neighbouring States. To emphasize my point that we have to act positively, let me say that the Botswana Government called in a British Railways team to make a feasibility study for taking over the Botswana line. That is a job that we could have done, because in the end this British team, in the words of the General Manager, had numerous meetings and discussions with officials of the S.A. Railways on railway problems as experienced in Southern Africa. In other words, this British team could not make any recommendations without consulting the S.A. Railways.

Last year I made a proposal for the establishment of a special section, in the General Manager’s office, to develop and direct programmes in the field of transport to neighbouring countries. The hon. the Minister was kind enough to write to me afterwards about the proposals I made in that debate. The reply of the hon. the Minister was—

Now comes the telling part—

Mr. Speaker, it was a pleasure for me to listen to the hon. member for Von Brandis, as well as to the hon. member for Witwatersberg. I say it was a pleasure, because when one listens to these speakers, one is deeply impressed by their positive approach towards the Railways. On the other hand, it was once again an eye-opener for me that one speaker after the other on the other side of the House displayed a negative attitude. I do not want to cross swords with the hon. member for Amanzimtoti on Railway financing, but it is very clear to me that I know as much as certain hon. members on that side of the House do on the subject.

I want to avail myself of this moment to devote some time to the hon. the Minister himself. I have been particularly impressed by the fact that since he took over as Minister of Transport Affairs, he has displayed vision, understanding and insight in regard to the problems and needs of the railwayman. I can give the assurance that, in the short while that the hon. the Minister has been Minister of Transport Affairs, a great deal of optimism has developed amongst those railwaymen who may possibly have questioned his appointment to begin with. One contributory factor was the inspection of the suburban trains in the Cape Peninsula and the promise that the urban services of the Witwatersrand and Durban would also be inspected in order to take a closer look at and to investigate the problems of commuters. Another contributory factor was the visit which the hon. the Minister paid together with the hon. the Prime Minister and others to the workshops at Salt River. This shows that the Minister is serious about meeting the railwayman at his place of employment and also becoming familiar with the circumstances in which he is working. That gesture was tangible proof on the part of the hon. the Prime Minister and the hon. the Minister of Transport Affairs of the fact that the Government is not only the friend of the railwayman, but that the Government is also extremely interested in all the people in its employ. Allow me to quote from the hon. the Minister’s speech. In my view, this quotation contains his credo—

If the Minister continues in this way, I have no doubt that he will find a place in the heart of every railwayman. I wish him the best of luck. May he, together with the General Manager and his team, reap nothing but rewards from their labour in future.

Mr. Speaker, in the short while that has been allocated to me, I should like to dwell for a moment, as I did last year too, on the energy crisis which is being experienced not only in South Africa, but throughout the world. I want to dwell on the part that the Railways plays in energy and fuel conservation. To my mind, this is a wonderful story that can be told and retold and in respect of which South Africa can be held up to the world as an example of what can be done in a department. People are talking about an inflationary budget. This is a world-wide problem. I think that the conservation measures which have been taken in this budget, as several speakers on this side of the House have already pointed out, mean, quite simply, that the Railways are counteracting inflation with their energy and fuel conservation policy.

It is a well-known fact that the diesel consumption in the various sectors in South Africa, is as follows: Agriculture, 20%, commerce 19% and the Railways 11%. This makes the Railways the third-largest consumer of diesel fuel. Since the price of diesel is increasing so rapidly, in fact much more rapidly than the price of coal, the Railways in their wisdom have decided to retain steam locomotives on some railway lines where they had intended to use diesel traction. This means that steam traction must be retained where practical and economically justifiable. Due to the increasing costs of liquid fuel and particularly due to the uncertainty of its availability, electrical power has once again become cost-competitive. Consequently it was decided to speed up electrification in all areas. It was also decided to change over to alternating current instead of continuous current. It is now possible to run longer, heavier trains by utilizing the existing alternating current technology and in this way the carrying capacity of the lines is increased too.

Once this programme has reached completion, the Railways will obtain 85% of its gross ton kilometres from energy derived from coal. This will mean that the Railways will save South Africa many millions of rands in foreign currency annually, but even more important, the Railways will become increasingly independent of liquid fuel. From a strategic viewpoint, it is absolutely vitally important for the Railways to be independent of countries abroad for the supply of liquid fuel.

I think the hon. member for Von Brandis referred in his speech to the important role that the S.A. Railways plays in the constellation of Southern African States which stands to be established. It can only play that role if it is economically sound to the core. It can only play that role if it is independent of liquid fuel to a large extent. I think the S.A. Railways could be a greater leader in Africa in this regard than it is at present. Can any hon. member in the House imagine what the position would have been if South Africa had not had a Sasol 1; in other words, if the Government had not had the wisdom and foresight to launch the Sasol project? Sasol 2 and Sasol 3 will make South Africa almost 60% independent of importing liquid fuel within the next few years. If it were not for this Government, South Africa would have been a helpless captive of foreign forces.

Apart from the electrification programme, the Railways, in collaboration with the CSIR, is also in the process of testing alternative internal combustion mixtures for locomotives and road vehicles. Very interesting experiments are being carried out with naphta-and-diesel mixtures on diesel locomotives. It would not be fair to draw any conclusions worth mentioning at this stage, because these experiments cover a very long period. Some of them take more than six months to carry out. Other experiments are being carried out with alcohol and diesel mixtures. There are also interesting experiments in progress in regard to road vehicles. Naphta-and-diesel mixtures are being tested in this regard. Other experiments are being carried out with ethanol and diesel, methanol and petrol, methanol and diesel, pure methanol in a diesel engine, propanol and diesel, etc. All these experiments are already at a very advanced stage and will probably bring about exciting savings. Experiments are also being carried out with regard to battery-driven vehicles.

One of the more noteworthy instances of the petroleum fuel conservation is the provision of gas producers. Before I carry on, perhaps I should explain what a gas producer is. It is an apparatus which manufactures gas from coal. The gas is used for industrial and domestic heating. At the moment gas production takes place at the workshops in Bloemfontein. In the Brown Book we see that provision is also being made for this at Salt River. With your permission, Mr. Speaker, I want to quote the amounts here. The total budget for the installation of a gas producer at Salt River is R2,99 million and R299 000 will be spent on it during the present financial year. In Bayhead the total estimate for this is R2,860 million and this year’s expenditure, R143 000. Pietermaritzburg’s total estimate for this is R3,25 million and this year’s expenditure, R162 500. Germiston’s total estimate is R3,9 million and this year’s expenditure, R195 000. East London’s total estimate is R2,73 million and this year’s expenditure, R136 000. Koedoespoort’s total estimate is R4,68 million and this year’s expenditure, R234 000. It has been calculated that the total sum that will be spent in this regard this year, will amount to R1,17 million. This means an expenditure of R20,41 million spread over a number of years.

One can rightfully ask: What is the point of this tremendous total capital outlay? It is true that this is not an inflationary budget. I see it rather as an anti-inflationary budget. Once the gas producers have all been installed and are in operation, we will save five million litres of petroleum fuel every year.

Another success story which may perhaps be rather less dramatic is the oil reclamation installation at Bloemfontein, an installation which was established in 1977 and came into operation at a cost of R21 000. Its monthly reclamation of oil is 32 000 litres, which is actually quite dramatic. Working costs of the installation amount to R200 per month. This means that apart from the saving of 32 000 litres of oil per month, the department shows a cash saving of no less than R14 500 every month.

Solar energy is also being utilized to a much greater extent to the benefit of the Railways. One of the more well-known uses of solar energy is water heating. In Kimberley, the heating of water at the apprentice school works very well, particularly if one bears in mind that 32 young men are using hot water every day. A similar system of heating water through solar energy has already been practically completed at Cambridge. Other systems are envisaged for Beaconsfield, Richards Bay, Elandsfontein and Mitchell’s Plain.

At this point one wonders whether it has not perhaps become necessary to ask the hon. the Minister that, when Railway officials apply for loans for building new houses, a clause should be included, where possible, for a solar heating system to be installed. This will bring about tremendous savings, not only for the country, but indirectly for the house-owner, because electrical power is a spiralling cost item.

I have not even discussed our harbours yet. The hon. member for Von Brandis referred to the fact that an annual saving of 30% was shown in that sphere.

I want to dwell briefly on the S. A. Airways and say that, as far as the S.A. Airways is concerned, we have realized that fuel conservation is much more important to an airline than a favourable balance of trade. It is, in fact an everlasting struggle for survival, with the ever-increasing cost of fuel, particularly if one bears in mind that, as we have already said, fuel comprises one-third of the working costs of an airline. Consequently, it has become vitally important to obtain the maximum benefit from every litre of fuel. Fuel conservation has forced the S.A. Airways gradually to withdraw the old Boeing 707 in favour of the more economical wide-bodied Airbus with its 263 seats. If we take a closer look at this, it means that the S.A. Airways made 534 flights per week in 1976, which provided 63 196 seats per week, but after the introduction of the four wide-bodied Airbuses, the weekly services decreased to 463, but the seating accommodation increased to 64 988, which meant a total saving of 13%.

This also means that there is additional seating accommodation of 93 184 per annum. If this is not conservation at the highest level, I do not know what conservation is. Other conservation methods are the efficient maintenance of aircraft. All flights are made at the speed and height which is most economical for the various types of aircraft. After take-off we have a more rapid rate of climb, slightly lower speed and steeper landings. Idling is eliminated or limited to an absolute minimum. All these precautions are being taken with a single objective in mind, viz. to obtain the maximum energy from every litre of fuel. I want to let that suffice. We all have electricity in our homes and drive cars from time to time, but so many of us are not geared to saving power and fuel. Once again I want to hold the Railways up to South Africa as an example of the one department that really goes out of its way to save fuel in all spheres in every possible way, and I pay tribute to them for that reason.

Mr. Speaker, I shall not for the moment follow on what the hon. member Kimberley South has had to say because I shall deal with the question of energy saving in general later on in my speech. Allow me just to refer very briefly to some of the things which the hon. member for Bellville said earlier on in reaction to the speech of the hon. member for Orange Grove. I am sorry that the hon. member is not here, but he referred, by way of criticism, to the hon. member for Orange Grove and said that the hon. members on this side of the House did not make any positive suggestions on how higher tariffs could have been avoided while at the same time making allowance for higher salaries for Railway staff and for the level of profitability which may exist at the moment to be maintained. I just want to indicate very briefly that I thought that that was an unfair criticism, and I should just like to mention two positive suggestions the hon. member for Orange Grove made. One was the question of inflation accounting to which he referred at some length. Very positive and negative arguments may be advanced for inflation accounting or the more conventional system of accounting. But there is no doubt about it that inflation accounting does tend to bring forward possible increases in rail and air tariffs and so forth. Certainly this is a factor to be kept in mind in this regard.

The second question to which the hon. member for Orange Grove referred was the question of segregation on the Railways. In this respect it need not be stressed any further that there is great potential for further savings to be brought about and greater economy to be introduced in Railway budgeting and in our entire transport system.

In my view the most significant aspect of the Railway budget is without any doubt the very substantial increases in fares particularly in respect of travel by train and by air. I refer to the significance of passenger fare increases specifically because I believe it represents a loss of an unique opportunity to stimulate a further move towards the use of public transport. Every since I can remember, those who provide public transport in South Africa have had to contend with the very serious problem that unless they can afford to improve their services dramatically, they cannot increase demand for their services sufficiently to yield a satisfactory profit This created a huge vicious circle, as underutilization of public transport made it more and more impossible for the transport bosses to improve their services. This state of affairs is rendered even more hopeless by the fact that everybody in South Africa wants to own a private motor-car and that South Africa is such a vast country that it is extremely costly to provide an efficient transport infrastructure. Such was the position that in my view only a completely new and virtually outside factor would be able to reverse this vicious circle so that public transport could obtain some room within which to manoeuvre to turn the vicious circle into a beneficial one.

In my view this new factor was provided by the sharp rises in petrol prices over the last few years, particularly in the first half of 1979. During the debate on the Railway budget that year, I asked the then Minister to consider some special measures to generate a move towards the greater use of public transport. Similarly, many other people made this same suggestion. I indicated at the time that I thought that whatever megative aspects the increased fuel prices created, it did create a favourable climate for the generation of a move towards the use of public transport. Since then not much has been done. So painful was the pinch of these increased oil prices that according to every observer—and this has been confirmed by the figures given by the hon. the Minister—the demand for public transport, particularly air transport, has increased very significantly. This trend, in air travel particularly, has enabled the S.A. Airways to order a number of new aircraft, and this in turn will no doubt make it possible to provide a more extended service whilst still maintaining the same level of profitability. Every possible effort must obviously be made to encourage this trend towards the increased use of public transport, for a number of reasons, not the least being the all important consideration that South Africa needs to use its energy supplies in the most economical way possible. The disappointment, therefore, was great in learning that the hon. the Minister has seen fit at this delicate stage, and I say very specifically “this very delicate stage” to increase the fares for air and rail transport as sharply as he did. This step may serve to turn what has recently become a beneficial circle, into a vicious circle once more, away from the use of public transport.

I would like to dwell particularly for a moment on air travel. I do not believe that in a country as large as South Africa, with its enormous distances, air travel should be considered a luxury and within the financial reach only of the high-income group. However, this is unfortunately the case. If the sort of money South Africans have to pay on the domestic routes of the SAA are maintained, then certainly the SAA forfeits its justification for enjoying the monopoly it does.

Should one not try to recover operational costs through fares?

Certainly, one should, but the SAA has over a number of years shown a profit. Therefore I believe there is room in which to manoeuvre, particularly with the greater move towards the use of air travel. I think there was therefore room for the hon. the Minister to have kept these increases at a lower level or to have avoided them altogether. In my view, the 20% increase in domestic air travel is an extremely unwise step, because it will make air travel even more difficult to afford and will force many South Africans back to their motor-cars with the short-term disadvantage of an increased national energy consumption and the long-term disadvantage of increased expenditure on road-building and traffic services. It is difficult to see why it was deemed necessary to increase air fares to this extent, because the SAA has shown a substantial profit over a number of years, and the fuller use of existing flights which, as I have indicated, has come about in the last year must have made the SAA even more profitable as a service on its own. However, I am sure the hon. the Minister will produce a number of reasons why he thought an increase was necessary. However, I feel so strongly about this question, that I would like to suggest that the Administration should take a close look at some aspects of the Airways, aspects which could be considered non-essential and which could possibly be eliminated in order to bring costs down. To an extent this has already been referred to by other members of the House during this debate.

Just do not take those mushrooms away.

One such aspect is the provision of meals by the Airways, as an hon. member has already mentioned. Food must cost a substantial amount and add considerably to the cost of air travel. If this service can be eliminated, the on board staff can be cut by half, and this may mean an even bigger saving. I suppose there is something to be said for having snacks on an airtrip, but surely the service can be scaled down sufficiently to bring about a substantial saving, both in terms of serving the food and in the cost of the food. It may well be possible to provide food to first-class passengers only in order that the economy-class fare might be lowered. I have not the slightest doubt a great number of South Africans would happily forfeit the privilege of having drinks or food served to them during a flight, in order to bring down the cost of a flight a little or at least to maintain it at the present level. The duration of domestic flights in South Africa is not such that anybody will become desperately hungry.

What?

While I am on the matter of food and wine—and this has been mentioned before—I should also like to add my plea to that made by other hon. members that the hon. the Minister should really do something about the breakfasts served on flights of the S.A. Airways. These breakfasts are a disgrace to an otherwise excellent service. In my opinion such a breakfast produces the most protracted and uninterrupted indigestion I have ever experienced.

That is quite true.

The hon. member for Bellville mentioned some very interesting and thought-provoking ideas. He spoke about the cross-subsidization of services within the S.A. Railways Administration. I certainly believe that a good argument can be put forward for some degree of cross-subsidization among the different services of the S.A. Railways Administration, particularly where these services have to provide for a national need and where national priorities are involved. This is certainly the case as far as air travel is concerned, and even more so in the case of rail passenger services. In one instance, however, I believe there may be justification for looking into the matter. That is where one such service, which could be considered a national priority, such as the S.A. Airways, finds itself in a position in which it has to subsidize another service which could also be considered a national priority, such as the sub-economic passenger train service.

Regarding the passenger train services I must also express my disappointment at the sharp tariff increases. Passenger figures have also shown an encouraging upswing lately. This trend, in my opinion, requires stimulation rather than the deterrent effect these increases are no doubt going to have. The special grant made by the Treasury for the provision of socio-economic passenger services must surely have brought about some relief in this respect, and I believe it would have been wise to rely on this rather heavily instead of increasing rail tariffs to the extent it has been done now.

*The hon. member for Kimberley South also referred briefly to the question of fuel conservation. He said the S.A. Railways could be proud of its achievements in this field. I agree with that. As a service in itself, the S.A. Railways has a proud record as far as fuel conservation is concerned. However, unless the Railways Administration also interprets its role within the national totality 100% correctly and tries to encourage the public as far as possible to make more extensive use of public transport, the criticism may perhaps be levelled at the Railways Administration that it does not go quite as far as it could do in the overall strategy of fuel conservation.

In conclusion, I wish just to appeal to the hon. the Minister again to look into the catering facilities at airports. I think that the standard of service, and particularly the standard of the food, at quite a number of those restaurants is sometimes shocking.

That is a matter that should be dealt with under the “Transport” Vote.

Yes, but change this.

I believe only the hon. the Minister can institute a meaningful inquiry into this. Unfortunately this is something that reflects on the S.A. Airways itself. It is something that can do us no good and that may simply cause the S.A. Airways to be criticized. Not everybody realizes who is actually responsible for it.

It is damaging to our image.

I think those contractors should be placed under a greater measure of control in order to ensure higher standards in future.

Mr. Speaker, listening to hon. members of the Opposition, one gets the impression that they make more or less the same attacks year after year. They always boil down to rather ill-considered statements about inflation and about why, for example, the salaries of Railway officials should be increased. This year they are again opposing the Railway budget. The hon. member for Amanzimtoti, for example, says that he cannot agree with some of the salary increases. However, he does not say why he cannot agree with them. In my constituency there are a large number of Railway officials, and anyone who comes into contact with these people is impressed by their dedication to their work. Talking to the people who are in charge of Railway finance is a revelation. It is a revelation to see their purposeful and systematic approach and the way in which these people compete on an equal footing with any business enterprise. Then we come to the cost aspect. There are the investigations into over-expenditure, as well as the reduction and elimination of excess capacity. It is a revelation to see how these people are able to administer an enormous, country-wide organization successfully. It was really wonderful to see how the engine-drivers and conductors braved the 1976 riots in Soweto and elsewhere. Now some of those people are travelling long distances in South West Africa They are sometimes travelling long distances through the Namib, for example, but in spite of that, there are still hon. members in this House who say that those people should not be given the 16%. However those hon. Opposition members are the ones who clamour: Give us the gold of the country and let us pay the poor people. When one wants to pay them, however, those hon. members object.

I come now to another matter. The hon. member for Green Point says he does not want any meals to be served during flights. He says the meals should be discontinued and the price of the ticket should be reduced accordingly. He also says that no drinks should be sold during flights, so that the price of a flight ticket can be reduced. However, I wonder whether he knows what the price of such a meal is? I know it is a very good meal, but after all, the Railways do things as they should be done. I do not think it costs the Railways R1 per meal. That hon. member now wants to pay R119 instead of R120 for his flight, for example, but then he wants to fly on an empty stomach. If the hon. member wants to use that kind of argument, he may as well tell his group that no meals should be served in Parliament. Then the unit cost per member in their party may also drop. [Interjections.] That hon. member should examine his own argument carefully. It is a stupid argument which he is advancing. He should not advance such arguments in a parliamentary debate. Having advanced that argument, however, he says that he once had a poor breakfast during a flight. He says the breakfast is a poor one. In fact, he is still upset about it It did not agree with him. One moment he attacks the meals, the next moment he does not want any meals to be served, and then he says that better meals should be served.

I now want to come to the argument of the hon. member for Amanzimtoti, because I do not think one should devote very much attention to the hon. member for Orange Grove at this time of day. I think one should rather leave him alone. The fact that he votes against certain things does not mean that he understands them. It is just his usual way of doing things. I still remember the years when he and I were in the Ossewa-brandwag. [Interjections.] He opposed everything. The hon. member for Amanzimtoti raised a matter here. He said there was R2 000 million. Am I right? [Interjections.] Now he is not sure. That is the amount that has been accumulated in funds.

R2 046 million.

He says it is R2 046 million. [Interjections.] Very well, plus a few cents. In recent times, the Railways has raised loans amounting to R6 000 million. Does the hon. member know that the Treasury sometimes rolls over a loan of 20 years and that they now pay 9½% on a loan raised at 4½% Has the hon. member consulted the budget to see what we are paying out in interest every year?

[Inaudible.]

Sir, the hon. member for Mooi River should please not interfere in these matters. Do you know what is that hon. member’s problem with the balls which he brings to this House? He is still in orbit. He does not understand budgeting at all and I do not expect him to. I do want to ask him please to keep out of this kind of debate. One does need a little grey matter.

Well, you do not have any.

Mention is made of “inflation budgeting”. What do we mean by that? Suppose one raises a loan to buy an article which costs R100. The inflation rate today is 10%.

It is actually over 14%.

I grant the hon. member that. However, I shall omit the 4%. Let us say the inflation rate is 10%—I should like the hon. member for Mooi River to understand this as well. In order to be able to replace the asset in five years, one has to add 10% to the R100 during the first year, doesn’t one? That gives one R110. Am I right? The following year it will be R121. If one does not make provision for it in this way, it will mean that in five years’ time, R61 of one’s capital for which one has not made provision will already have been swallowed up. When the asset then has to be replaced in five or ten years’ time, how will one do it if one discovers that one has used up one’s capital because one has not provided for this? Then people complain, as they have done in the case of Iscor, that the necessary provision has not been made in recent years for higher replacement values. Then hon. members attack the Government.

What happens if we do not make the necessary provision? Suppose we have to replace a locomotive. If one buys a locomotive at Rx today, it may easily happen that five years hence, the price may have increased by 30%, 40% or even 50%.

It can even be a lot more than that.

Yes, it can be a lot more than that. How does one counter that? Does one wait until the machine one has is completely out of order before one goes overseas to buy stock?

*Just see how much money we are already borrowing every year. I have already said that our loans amount to R6 000 million. A good company should be approximately 70% self-financing, should it not? To what extent does the Railways finance itself today? Come on, bright boys.

First complete your argument.

Is it perhaps 29%? The hon. members do not know, but day after day they advance arguments concerning matters which they have not examined in depth. The hon. the Minister does not have any problems. A good brain can master any problem. This is proved by the way in which the Minister has handled this budget. The hon. the Minister has been personally attacked here by being called “Minister of Inflation”, and so on. However, I am a member of the Railway Committee and I am proud to be associated with this hon. Minister. He understands the workings of the economy.

The hon. member for Amanzimtoti also talked about synchronization. He says there should be synchronization. What should be synchronized with what? The Railways is the biggest organization in the country. For a year they announced no tariff increases and excellent work was done. The national economy was at a low level, and bearing in mind the economic situation of South Africa and because the economy had to be stimulated, the Railways did not increase its tariffs. During that time, they bore all these high costs themselves, and since the economy is now showing an upswing, surely the Railways should finance itself to a greater extent. Hon. members have said terrible things about the increases. However, it is all simply a part of the cost structure.

It is not the aim of the Railway Administration to make large profits. It is not the aim of the Railways to invest elsewhere the surpluses they do make, but only to ensure that they have some capital to be able to afford the replacements which will be necessary in the future. If one wants to stay in business, one has to provide for capital with a view to future replacements. The method the Railways uses today will determine its future success. One cannot concentrate on the present situation to the exclusion of all else and then say that the tariffs are too high. One must also think of costs. These are the things one must look at when one is running a business.

Let us consider the annual loans. There is an internal loan from the Treasury amounting to R871 million, on which interest has to be paid. Foreign loans amount to R150 million, and for internal funds an amount of R579 million is required. If the tariffs are not increased, where is the money to come from? Hon. members have proposed that we raise loans. The Government was attacked three years ago because foreign loans could not be raised at low interest rates. However, should we not prevent the situation that the Railways may one day have to raise a loan abroad, only to be told: “But your loan is much more than your investment in your own company”? They will want to know why we want to borrow 90%, while our investment of our own capital is only 10%. Who lends money to such a company? No one. We must not try to score debating points when it comes to an organization like the Railways. A situation must not be created in which the extremely good work done by the Railway officials is destroyed. Let us be fair. We have agreed in the Select Committee about the way in which new assets will be replaced. Almost all of us agreed with that. Only one person voted against it. There we were able to discuss the matter at length, and almost everyone agreed that we had to allow a higher replacement percentage. Today we are certain that we must add not only the 10%, but interest on that 10% too. Only then we have really replaced a part of the capital we need, and not even all of it.

What is the average interest rate payable?

The hon. member asks me what the average interest rate is. There are various rates. I shall work it out presently and let him have it. I think he is interested in this and it is very important that he should be interested. It is also important that he should acquire some knowledge of these matters.

It is gratifying to see that we have a new will in this country, that the Railways showed us that they could allow the country a breathing space last year by carrying on transportation in the country without any increases. Under all circumstances, the Railways comply with South Africa’s transport requirements.

Now we are faced with a period in which we shall have to examine our overall planning. We shall have to examine the location of new factories, because energy is much more expensive than land. For this reason, I repeat my plea that we should re-examine the situation of the Soweto region, the industrial areas of Benrose and other places where 2 000 to 3 000 acres of land are still available and zoned for industrial purposes. I also believe it would serve a better purpose if that strip around Soweto were used for industrial purposes, as I have suggested, because transport from both directions could then be fully utilized. The roads approaching the city centre from the south are being utilized at a rate of 120% to 130% in the mornings. During the morning rush hour the roads leaving the city in a southerly direction are less than 40% utilized. This is something we shall have to eliminate. Energy is becoming more expensive year after year. The influx to the city from the same direction, from Soweto and the southern suburbs, is causing great delays on those roads.

The time it takes a man to travel from his house to his work is something that has to be taken into consideration. In this connection the Railways are rendering a great service. They are transporting these people and they are transporting them in a way we can all be proud of. As a committee, we went to visit those trains, and everyone expressed appreciation for what was being done with regard to railway traffic.

However, I still ask whether it is necessary that places such as the City Deep and others, which are required on a large scale for White housing, should be zoned for industrial purposes. Should we not consider developing the industrial areas closer to Soweto? We should take the initiative in giving benefits to people there, even if it means relaxing section 3 of the Planning Act Then we shall find that we are making progress there. The subsidies which are paid today to convey people to their places of work can perhaps be converted and used more productively.

The task of the Railways is being performed very effectively. We express our sincere thanks for the increases that are going to be paid to Railway people. They were badly needed. There are some of the pensioners, especially the one group that retired in or before 1973, who were paid in gold for three or four years during their period of service. Therefore their contributions to the pension fund were also in gold. What is the position today, especially if we remember that there has been an enormous inflation rate since then? If one had to replace their pension contributions at today’s monetary values, of course, it would come to a large amount. Therefore I urge that we should give consideration every year to the group of pensioners that retired in or before 1973.

Mr. Speaker, the hon. Opposition has sent a few stokers into this debate, but they have not been able to build up any steam for their train. All we have got from them up to now is black smoke, the stoker’s nightmare, because it shows that he is pouring in too much coal. This is one of the feeblest Railway debates we have had from the other side in a long time, and the reason is obvious. The Opposition does not have any arguments or criticism to level against this good budget of the hon. the Minister. We want to congratulate the hon. the Minister on his first budget and to tell him that it is a sound and constructive budget, a budget which inspires fresh confidence and which testifies to the competence of the mind that drafted it. It not only inspires confidence with regard to Railway matters as such, but it also inspires confidence in the future of South Africa. We extend our sincere congratulations to him on this budget. Transport is one of the cornerstones of any vigorous economy, and for economic growth and prosperity a country needs an effective transport system. If that transport system cannot meet the growing needs of a country, it has a harmful effect on that country’s economy. If one wants an effective transport system, a system which will be able to keep pace with the upswing which is now being experienced in this country, a transport system which will best be able to serve this growing country and which will always be fully prepared to do the work that is expected of it, one has to ensure that it will have sufficient revenue to enable it to render the services expected of it The hon. Opposition is being shortsighted in criticizing the hon. the Minister about the increased tariffs. Do those hon. members of the Opposition, who are so quick to criticize, want the Railways to find itself in a position where it will not be able to meet the challenges of this country because of financial impediments? Surely it would be foolish to handicap the Railways by withholding from it the money it needs to remain in full operation and to implement the important socio-economic development plans of the Government, including the provision of better transport services to Soweto and other places. If the hon. the Minister had not increased the tariffs, it would have been necessary to delay or even discontinue important extensions. In addition, the hon. the Minister would not have been able to increase the salaries, the wages and pensions of the Railway people, as he has in fact done. Surely it would be unthinkable not to afford relief to the Railway worker, especially when we think of his need, but also when we consider his goodwill, loyalty and sacrifices when he has to help the Railways to get the job done under difficult circumstances.

That is the trouble with this Opposition. They always want the best of both worlds. They want heaven on earth. The hon. member for Orange Grove said here today that the hon. the Minister should have been more accommodating in respect of Railway pensions. We would agree with that if it were possible, but where is the money to come from? One moment they say “Give more”, and the next moment they say “Do not increase the tariffs.” They are extremely shortsighted in their arguments and in their standpoint, and they really cannot be taken seriously.

The Opposition has no real criticism to level against this budget, but then, they cannot really criticize it. I shall now indicate why they do not have any criticisms to make.

Paging through the latest annual report of the S.A. Railways, one reads a remarkable story of success achieved through economic discipline, efficiency, self-sufficiency and high productivity in the Railways, and one cannot help getting the impression that in many respects, the S.A. Railways is setting an example in this country. In these times of urgent need, with one onslaught after another being made on South Africa, and with threats of boycotts and sanctions against us, the Railways is an example of commendable attempts at preparedness and self-sufficiency. The hon. the Minister, the General Manager and the almost 265 000 men and women in the service of the Railways deserve the thanks of South Africa for the successful and well-prepared transport system, the transport instrument, they have created to serve this rapidly developing country.

However, the Opposition does not notice these things. They do not talk about them. Not once in all the years I have been taking part in this debate has anything positive been said by them about the achievements of the Railways. One is struck by the fact that the Railways never stops breaking records and attaining new heights. The tonnage carried by them increases year after year, and the number of passengers transported keeps increasing; all this against the background of the remarkable fact that all these things are being done with a smaller number of employees. In other words, the Railways is doing more and more with fewer and fewer employees, because its employees are becoming more and more productive; in an Administration where there is purposeful management, efficiency, rationalization and optimum utilization of man and machine. Year after year the Railways raises its productivity level. Over the past 15 years, the Railways has raised its productivity level by at least 30%. This is no mean achievement. It was made possible through the effective utilization of the major production factors, i.e. labour and capital. This is the very best remedy against inflation. The Railways is ensuring greater productivity, something about which hon. members have had so much to say this afternoon.

As far as productivity is concerned, the Railways is setting an example to the country. When one looks at the productivity level of the Railways and one compares it with that of the country as a whole, only then does one realize how great the achievements of the Railways are. The productivity level of the Railways shows a rising tendency, while that of the country is negative, according to figures provided by the Productivity Institute. The average annual increase in the productivity of the Railways between 1971 and last year was 2,11%, while the labour productivity in the country as a whole declined by 1,6% in 1976, 2,6% in 1977 and 0,5% in 1978. In respect of capital, the country’s productivity declined by 4,6% in 1976, by 4,5% in 1977 and by 1,5% in 1978. So hon. members see how the productivity level in the country as a whole has been negative in recent years, while that of the Railways has constantly risen. When one studies the fine and effective report of the General Manager of the Railways—it is a very beautiful report on which we should like to congratulate them—there is one facet that strikes one in particular. This is the splendid attempts made by the Railways to conserve fuel. I should like to quote these things because the Opposition so deliberately fails to mention them. The Railways has not only taken emergency measures to combat the periodic oil shortages in the country and to minimize the effect of constant price increases. They have even gone so far as to develop long-term changes in transport techniques in order to counter these problems.

The Railways is making a valuable contribution to optimum energy utilization, because the organization is in a favourable position to rationalize rail, air and pipeline transport, and to some extent road and sea transport as well, on an on-going basis in order to use it in the best interests of the country. Extensive research has shown that the steel wheel on the steel rail is still the means of transport which uses by far the smallest amount of energy. According to a study of a representative fleet of vehicles undertaken by the Department of Environmental Planning and Energy, rail transport is approximately 9,6% more effective than road transport as far as fuel consumption is concerned. It is estimated that 17% of the total freight in the Western world is carried by rail. This consumes only 3% of the total energy used by the transport sector as a whole. As against this, road transportation carries 16% of the total freight, and for this it requires 78% of the total amount of energy used for the transportation of freight. Hon. members can see, therefore, how important it is from the point of view of energy conservation that South Africans should make more use of rail transportation. Therefore every South African can help to combat the energy crisis by supporting the Railways. Moreover, the Railways has taken such a multitude of conservation measures that literally every drop of energy is taken from every drop of fuel and every drop of energy is used to the full. In fact, the steps taken by the Railways to save fuel can serve as a useful guide to the entire country. In addition, the Railways is doing a great deal to promote preparedness in its own ranks. In spite of rising prices, the Railways has succeeded in keeping its own inflation rate more or less at the same level, which is somewhat lower than that of the country. The safety measures of the Railways were so effective that no passengers were killed in train accidents during the year under discussion and only two were injured. As a result of an intensified campaign to prevent claims, the claims against the Railways have dropped by more than 25%. In fact, the Railways has achieved such a degree of self-sufficiency that we have reason to boast about it. Recently the hon. the Minister visited the Railway workshop at Bloemfontein. We had the honour of accompanying him on that day. I just wanted to congratulate the hon. the Minister in passing on the way in which he won the hearts of the railwaymen that day. He succeeded in doing this because he was prepared to communicate with them on their own level. During that visit by the hon. the Minister we were all impressed with the way in which diesel electric locomotives that had been damaged in derailments or accidents were being repaired. Locomotives which would cost about R500 000 to replace today are being repaired there at a cost of between R24 000 and R26 000, and then they are as good as new. Surely this is an achievement. American visitors who toured that workshop recently expressed their admiration for the success our people are achieving in this field through their own ingenuity.

Having said all this about the Railways, I want to turn to those who make use of the Railways. I wish to address a request to them all today, from the passenger up to the great industrialist, to stop their constant criticism of the Railways, criticism which is usually unjustified. People want to get everything out of the Railways, but they are not prepared to put anything back. Such people would be serving their own interests by taking the Railways under their protection for a change. The task of the Railways is a very complex one. In many ways, the Railways resembles the donkey that may get a whole bale of feed the one day and nothing the next. During the seven good years, the Railways is inundated with work, but during the lean years, it has to make do with much less. In this way it has to keep adapting itself to the needs of the moment and it has to be ready for any task which may arise. What we need in this country is pride in our national transport organization.

For this reason, one is appalled to see how many cases there are of malicious damage to Railway property, and with what contempt Railway property is sometimes treated. Apart from cases of sabotage of Railway property, as well as of arson, which occur from time to time, there are hundreds of cases of malicious damage to Railway property every year. Over the past five years there have been more than 2 000 cases of this nature. Train windows are broken, train seats are slashed open, signals are damaged and cables are cut through. This is disgraceful vandalism. I have seen signboards that had been shot full of holes by people who were evidently using them for target practice. This is an ugly phenomenon in South Africa, which makes us compare very poorly with the other civilized countries of the world.

If we want the Railways and the S.A. Airways to operate profitably, the man in the street must be prepared to support the Railways and the Airways. The Airways has a proud record of security and of service. The flying Springbok has always been an emblem to be proud of, and has always been a good ambassador for South Africa as well. However, there are still too many South Africans who use the services of other airlines on international flights instead of using the S.A. Airways. Over the past 10 years, the number of South Africans flying to and from foreign destinations with all carriers has increased from 260 000 to 814 000. Over the same period, the number of international passengers conveyed by the S.A. Airways has increased from 134 000 to 565 000 a year. Not all these passengers carried by the S.A. Airways have been South Africans either. From this we may infer, therefore, that hundreds of thousands of South Africans who go overseas do not fly with the S.A. Airways. Obviously, not everyone can use the flights of the S.A. Airways. However, one does get the impression that the S.A. Airways is too easily overlooked. Using S.A. Airways flights from Jan Smuts and D. F. Malan Airports, one can now fly to 21 of the major cities of the world, as well as 11 cities and towns in Southern Africa. So people can no longer justify themselves by saying that there was no S.A. Airways flight which they could use. If the schedules are not so convenient, one may as well make the sacrifice of waiting for another flight, or one may depart a day earlier or a day later. If the loyalty is there, one can always contrive to fly with the S.A. Airways. In this country we can indeed be proud of an organization such as this one. There is much more that could be said about it in this debate, but I think that what I have said is enough. Hon. members of the Opposition would do well to page through the annual report. If they did that, they might also become more positive in their attitude towards the S.A. Railways, instead of reacting in such a hopelessly negative way as they have been doing this year and all the years I have been listening to them in this House. During all those years, they have never been able to come up with any positive idea.

Mr. Speaker, there were moments, though almost fleeting, when both the hon. member for Langlaagte and the hon. member for Bloemfontein North almost achieved the impossible by getting a little excited about the hon. the Minister’s budget. I say “almost the impossible” because whatever else anyone may say about this budget, no one can say it is an exciting one. It is, in fact, a very dull budget.

It is a very good budget.

Its effect on the overall economy of the country cannot accurately be measured at this stage, but must be seen, and will emerge, against the background of the main budget when that is introduced later this month. Taking this budget by itself, however, I believe that it reflects—probably accurately—the dilemma in which the hon. the Minister finds himself in balancing his books for the ensuing year. It could be said—and I do not want to say this unkindly to the hon. the Minister—that in his first budget he has shown a Jekyll and Hyde split budgetary personality. On the one hand he has had to be aware of the plight of the Railways’ staff, who have suffered under rising inflation and living costs, without real compensation for two years. So it would have been totally unrealistic, from the point of view of the Administration, as the greatest single employer of manpower in South Africa, for the hon. the Minister to have ignored the claims and the needs of the staff for salary and wage increments. The hon. the Minister has therefore taken the predictable and inevitable step of providing for their needs. In this regard we welcome this step, which will mean an annual wage increase bill of approximately R300 million, something which will certainly make life for the Railways staff very much easier and which should, in general terms, raise consumer spending in South Africa to the general benefit of the economy as a whole. So we welcome that step from each of those three points of view.

Whilst we applaud the hon. the Minister when he comes along in the guise of the good Dr. Jekyll, however, and does good things, it is when he finds himself compelled to adopt the guise of Mr. Hyde by adding to the inflation rate by widespread and extensive tariff increases, that we must question his wisdom and the effectiveness of the budget. What he has done is to give with the one hand and take with the other. It is not simply a question of robbing Peter to pay Paul. It might even be a case of robbing Peter to pay Peter, because unless there is good news in the main budget for the ordinary taxpayer, even the benefits now given to Railway staff may well be offset by the effect of the tariff increases when Railway staff members come to try to balance their household budgets. I think this has been the hon. the Minister’s dilemma, i.e. trying to perform a delicate balancing act between making concessions to the staff and meeting increased Railway expenditure and costs.

What are the reasons given for the tariff increases? We have been told, and correctly so, that one of the reasons is the fact that we are operating in an inflationary situation. We have also been told that the energy crisis has made things difficult for the Administration. It had a mixed effect. It had a good effect in a way as far as passenger services are concerned, but it had a very bad effect as far as air services are concerned. Then we were also told that it has been necessary—and this is quite clear from the Minister’s budget—in order to provide for the increased wages of Railways personnel. We in these benches concede that all these factors are real factors and that in the circumstances tariff increases are necessary. But I question whether the extent of the increases is wise and whether they will have the required effect of maintaining the growth envisaged by the Minister and giving the Railways the revenue they expect to receive.

In his budget speech the hon. the Minister has given some impressive growth figures for the period from April to December 1979. We were told that as far as passenger services are concerned the overall increase on main line journeys was approximately 13% and on suburban journeys 14,9% and 9,3% for first and third class journeys respectively. We were told that in respect of goods services there had been an increase of 13,6% and in road transport services an increase of 31,6%. As regards harbour services, we were told that the tonnage of bulk cargo landed increased by 59,5% and bulk cargo shipped increased by 32%. The Airways, as I have said, showed a loss. Although revenue was up by R39 million, expenditure was over R79 million above the estimated expenditure. The reason given for that was fuel prices.

Then the hon. the Minister in his speech set out prospects for 1980-’81, again showing a healthy growth expectation. He said that in general terms it was believed that the South African economy could be expected to show a growth rate of some 5%. Then he set out some of the growth figures anticipated by the Railways Administration. He told us that goods traffic should be up by 5%, commuter traffic 5%, main line traffic 6% to 7%, harbour imports 10%, harbour exports 5% and air traffic 7,5% to 10%. Again, this is an optimistic estimate. In the interests of the Railways Administration and of the country generally, I hope these estimates will prove accurate.

It is of course very difficult to have them accurate. I am sure you understand that.

I realize that, but I hope they will be reasonably accurate. My reason for participating in this debate is to seek an assurance from the hon. the Minister that the extent of the tariff increases will not be counter-productive as far as projected growth is concerned. This was my concern when I listened to the hon. the Minister the other day and studied his budget speech. In other words, I fear that the hon. the Minister, in his quest for higher revenue, by the extent of the tariff increases he has set may have been guilty of an overkill. I want the hon. the Minister to apply his mind to this and I would seek a reassurance on this.

In this regard I want to deal with a number of specific items and particularly the question of harbours in South Africa. I particularly want to deal with harbour services because, when one looks at the tariff increases, it would appear that the harbours of South Africa have been over-penalized compared with other services. There is concern in business circles about this, particularly in the harbour cities in South Africa. In terms of the Minister’s budget port dues are up by 18%, tug charges 18,7%, wharf and floating-crane charges 22,5% and light dues 7,1%. These are substantial increases which could have an adverse effect on the growth of some of our imports and exports. This is my concern. In his speech the hon. the Minister spent some time dealing with the export promotion drive and the part played by our harbours in that drive. I want to refer to some of the comments the hon. the Minister made in this regard. I quote—

He concluded this part of his speech by giving a very encouraging report again on the whole success of the export drive. He said—

This was certainly encouraging but, if the exports are to be maintained at this level, one must say that it is important that cargo handling and harbour charges should not place our exporters at a disadvantage. I want to ask the hon. the Minister to deal with this aspect in his reply and I hope he will be able to indicate that in relation to harbour charges and related matters the Administration will show some flexibility in the application of these tariffs and will be prepared, where necessary, to review them from time to time.

It is perhaps too early to assess the extent of the hardships which will be experienced in respect of particular export items. No doubt representations will be made by the interests concerned. However, I want to deal with one specific matter which has already come to my notice. I have already been advised that the people responsible for exporting granite view the increased harbour charges with alarm and fear that these charges might well ease them right out of the export market This is obviously a matter which the Administration will have to take into account. There is no doubt that people responsible for other export commodities will have similar problems. Therefore, I make a special plea that, with regard to harbours, the effect of these tariffs be constantly reviewed in the interests of their profitability and of our export market.

The same principle applies in respect of increased air fares, which have already been dealt with by other speakers. The hon. the Minister must again assess whether the increase in air fares is not going to have an adverse effect on the growth rate. I have heard the fear expressed by businessmen in South Africa’s most important business centre, the city of Durban, that the increased air fare for flying to Johannesburg—I understand that the air fare is going to go up from R80 to R100, which in fact is a 25% increase—may well have the effect amongst businessmen that where two representatives of a particular company would fly from Durban to Johannesburg, only one will fly in future, or where they went twice a month they will go once a month. This could well be counterproductive if the hon. the Minister is seeking increased revenue from S.A. Airways. The point has been made that this matter should be dealt with further.

Another matter I want to refer to is the question of the subsidy now being received in respect of the communter services as a result of the recommendations of the Franzsen Commission.

It is not a subsidy but a payment.

Very well, the payment. This is a new departure in Railway budgeting. In the circumstances which exist in South Africa we find it a healthy and a welcome departure that the Railways should be compensated from external sources for the rendering of uneconomic but essential passenger services.

In his budget speech the hon. the Minister dealt with two particular items. He dealt with what he termed short-term recommendations and long-term recommendations. I am concerned that there seems to be some doubt as to what is involved in the long-term recommendations. I want to ask the hon. the Minister to give us further information regarding these long-term arrangements. I want to make mention of the hon. the Minister’s significant warning. He said—

I want to echo that concern because clearly the situation which has arisen in regard to these services is not something which is here for this year only; it is a departure, as I have said, from Railway budgeting, but it is here to stay. One wants to be reasonably sure that at some stage in the future the Treasury, the Government, is not going to say to the Railways Administration that these are Railway services, and back into their lap it goes. I am trying to help the hon. the Minister in this respect and I hope that he can give me some reassurance on this because, as I listened to his budget speech, there is some doubt as to what the future holds in regard to this matter.

I shall keep up the good fight.

Well, I am glad to hear that. However, as I say, this is a situation which is here to stay, and one wants some reassurance on this.

My time is almost up, and the hon. the Minister will forgive me if I raise what might appear to be a parochial matter. I am going to do it in this debate because I think it is of interest to the S.A. Railways, and to South Africa as a whole, viz. the question of the old Durban railway station. I make no excuse for raising it at this stage in the debate, because it is a matter which is the subject of considerable public sentiment at the present time in the city of Durban. It is not confined simply to Durban, because, as has been pointed out, one is dealing here with a building of great historical significance to South Africa I think it was the centre of South Africa’s first railway service, and the first railway lines operated from that railway station. This building is under threat in Durban. There is an ever-growing body of public opinion, representative of all political parties and all shades of political opinion, who would like to see that railway station restored in some form or another. I hope the hon. the Minister is simply not going to say that the S.A. Railways are building a nice new railway station for Durban and this old building is no longer the responsibility of the S.A. Railways, because from the point of view of tradition, of sentimentality, of history, the Railways Administration should simply not be neutral and play no part in deciding what the future of this railway station is going to be. I therefore hope the hon. the Minister and the Administration will indicate some support for those who are trying to retain this as a very important part of the history of the Railways Administration.

Mr. Speaker, the hon. member for Musgrave made quite a balanced speech today. On the one hand he welcomed the increased salaries and wages, and on the other he perceived the need for tariff increases, although he questioned the extent of the increases in certain respects. He also addressed the Minister with regard to other specific matters and therefore I shall not discuss his speech any further.

What amazed me today was that the hon. member for Orange Grove deemed it necessary to ask, at great length, that the S.A. Airways be subjected to competition on the part of the private sector. We have had the experience that where this is done in other countries, people are not sure whether the flight for which they have purchased a ticket will in fact turn up. Moreover, we are aware of South Africans who have been stranded at airports in countries overseas because they have relied on charter flights and private flights, and this has caused them a great deal of hardship. If we want the fine standard maintained in South Africa by our airline to deteriorate, we must introduce that type of competition. The result will be that we in South Africa will have an airline which will not be able to maintain the standard it maintains today.

The hon. member for Green Point really came up with a very ridiculous argument when he asked that the meals provided by our Airways be done away with. I think that the standard maintained by our airline and the quality of the service is one of the most important characteristics of our airline. Last year in the budget debate I made a speech about the refreshment services. I believe that the hon. member could learn a great deal by reading it. We gained the impression today that, just like last year, the hon. Opposition did not know where to direct their attack. The efforts made to criticize this budget have been very weak.

In the short time at my disposal I want to turn once again to that important division of our transport services, namely the S.A. Airways. I shall try to show how due to thorough planning, training and productivity, the S.A. Airways is in a position to comply with all the demands that can be set an air service. In my speech I want to emphasize the role of the S.A. Airways and its achievements. The achievements of the S.A. Airways always fill one with pride. Our airline is highly regarded abroad. Our airline staff, here and abroad, deserve our gratitude for the good work they do, sometimes in very difficult circumstances. Sometimes the SAA is also the victim of politically motivated attacks on South Africa Our offices abroad have been the target of agitators in Paris, New York, Amsterdam, etc. but our people working there have consistently conducted themselves in a praiseworthy and dignified fashion and held our name high. Our airline not only plays an important role as ambassador, but also has an exceptional safety record, a record which at present is one of the best in the world. This degree of safety is being taken even further by special programmes and courses that are available to our crew captains to ensure that that proud record may be maintained so as to inspire still greater confidence. Our pilots are really distinguished by the fact that they do not take chances, if hon. members will excuse my using that expression. The SAA, as the national airline, operates a very wide network of domestic, regional and international services. Due to a lack of time I am not going to dwell on that. The SAA also plays a very important role in the development of our country’s economy. It forms a very important part of the infrastructure which assists the other sectors, for example agriculture, mining, the manufacturing industry, etc. to expand their contribution to the economy. The SAA provides employment opportunities to a large number of employees. The Airways’ staff, the pilots and other crew, maintenance staff and technicians comprise altogether 8 815 Whites and 2 123 non-Whites. Moreover the Airways is also a valuable earner of foreign exchange and is involved to a large extent in the tourist industry and in trade with the outside world.

The SAA serves the businessman and the tourist directly and is a very important link in good relations. The SAA also conveys mail and other freight rapidly and efficiently to virtually every outpost of the world. In the face of fierce competition the SAA has achieved notable success. Let me furnish a few figures to reflect that success. In 1969-’70, a total of 1 112617 passengers were conveyed on domestic flights. In the year 1978-’79 the number of passengers on domestic flights amounted to 2 450 760 and the total number of passengers on domestic, regional and international flights amounted to 3 225 124. There has also been a tremendous increase in freight transport. In the year 1969-’70, only 11 449 tons were conveyed on domestic flights. At present, 32 000 tons are conveyed on domestic flights.

As far as the regional services are concerned there has been a tremendous increase from 531 tons in 1969-’70 to 10 640 tons over the past year. As regards the international services, too, there has been a notable increase to a total of 60 603 tons.

The results of working of the S.A. Airways have shown a deficit of R36,3 million during the period April to December, as against an estimated surplus of R14,l million, viz. a deterioration of R50,4 million. This dramatic result can only be ascribed to the vast increase in fuel prices during the present financial year. Apart from that, the international operations of the SAA have also been adversely affected by developments in the most important trading countries, which have been experiencing a downturn in their economic activity. Instability in exchange markets has also had an adverse effect. However, conditions are still satisfactory for expansion. On the domestic scene the prospects are promising and a strong demand for airfreight ought to develop. The SAA’s biggest single problem is, as has already been indicated, the rising fuel prices. In 1972 and 1973, the years of the oil crisis, the cost of fuel represented only approximately 12% of the expenditure of the SAA. Today it represents more than a third of the SAA’s expenditure. It is interesting to note that in the period April to December, it represented 34% of the total expenditure of R442 685 403. During this period the expenditure on fuel was R150 308 073, viz. 34%. Nor is that all. It is also true that the SAA has to undertake long flights from South Africa to places where fuel is also exceptionally expensive. Then, too, we cannot fly the shortest route either, with the result that it is difficult to compete with airlines following shorter routes. Nor can price adjustments always be made immediately when fuel prices increase. It takes a long time to make up the backlog, and in this way the deficit accumulates. Increasing travelling expenses, as has already been said here today, can cause resistance, which may in turn lead to negative growth.

Another problem being experienced at present is the acute shortage of hotel accommodation in South Africa, particularly in Cape Town and Johannesburg. This in turn handicaps the tourist traffic, since tour groups are unable to obtain accommodation. Because tourism is a major earner of foreign exchange and tourists fill our flights, I want to ask the hon. the Minister to discuss this problem with the bodies and persons concerned because every tourist who visits South Africa returns to his country with a more positive attitude towards the country and its problems. Our airways always succeeds in cultivating and maintaining good relations with the people and the authorities of other countries where we render services. Where the SAA renders services, we have and we make good friends.

Therefore the SAA accepts the challenge to face its problems. The Airways is geared to high productivity with regard to equipment and manpower. Our aircraft are very well utilized and our manpower is utilized to best effect to render service of a high standard in order to compensate for longer flying times. We have introduced non-stop services from London to Johannesburg and Cape Town and from Frankfurt, Paris, Lisbon and Madrid to Johannesburg. Moreover, the Airways has rapidly extended its flights to New York by increasing the number of flights per week from two to four.

Good progress is also being made on the other routes to Australia and Argentina. To keep our fleet modern, two new Boeing 747 aircraft have been ordered, and will be delivered by the end of the year. They will be equipped to convey still more freight and will therefore be able to meet the growing demand. The purchase of an additional Airbus and additional 737s will also keep the Airways’ account low.

Having said all this, it is clear that we have succeeded and will again succeed in saving in the purchase of new aircraft. This is a sign of good planning and will enable us to achieve higher productivity. A number of steps are being taken to bring about savings and I am going to mention a few. Where necessary, modifications to aircraft are being effected to make the aircraft safer, more efficient and more economically effective. Flying techniques and routes are being adapted to conserve fuel. My hon. colleagues on this side of the House have already pointed out today that account is taken of speed and that techniques of taking off and landing are being altered in order to be more economical. Delays on the ground and in the air are being combated in co-operation with traffic control. The Airways is purchasing the most modern aircraft; the Airbus is an eloquent example of this. They are operated at a low cost. The 737 aircraft were also ordered for those reasons, after due consideration. The 737 provides optimum seating capacity at a frequency at 110 to 120. They give a high aircraft utilitization figure, a low technical training cost, low maintenance costs, and require a smaller supply of parts, while the general operating costs, particularly with regard to fuel economy, are low. As a result of heavy air traffic at Jan Smuts airport, aircraft in which flight training is carried out waste a lot of time and fuel. Accordingly, flight training is now also carried out at other airports, for example Port Elizabeth, where the pressure of air traffic is not so heavy. Flight training in actual aircraft is restricted to a minimum and we make full use of flight simulators. This is another form of saving. The Airways is geared to purchasing the best and most modern aircraft as technology develops and is utilized. The growth in the number of passengers per kilometre per litre of fuel achieved in the past will continue accordingly. Time does not permit me to dwell on this any further.

In conclusion I just want to discuss one cause for concern, viz. the availability of pilots in the future. The situation is that pilots have to serve with the SAA for 10 years before being exempted. In the private sector, too, the training of pilots is scarce, due to the high fuel prices. I should like to suggest that serious attention be given to subsidizing the fuel of private flying schools to enable them to assist in the training of more pilots.