It is my privilege to announce that the House of Assembly is today honoured by the presence of Their Excellencies Kgosi L. M. Mangope, President of the Republic of Bophuthatswana, and Mrs. Mangope. On behalf of the members of the House of Assembly I wish to welcome Your Excellencies most sincerely at this important Parliamentary occasion.

†This is the first time that a head of state of another country is officially welcomed in the Parliament of the Republic of South Africa, and in this respect, too, your presence is therefore a significant historic event. May this visit contribute to the further promotion of good relations between the Parliaments of our two countries.

*Because of other engagements President Mangope and his party will be able to attend the proceedings here for approximately half an hour only.

Mr. Speaker, I move—

A national budget is not merely an exercise in accounting. It is a major instrument of economic policy. In introducing the budget for 1980-’81, it is therefore incumbent upon me to present the Government’s assessment of the state of the economy and to set out the official financial policy for the period ahead.

General Domestic Economic Conditions

During the past year domestic economic conditions have continued to improve. The upward phase of the business cycle which began towards the end of 1977, was not only sustained but also gathered further momentum. The real gross domestic product, which had risen by less than ¼% in 1977 and by about 2½% in 1978, increased by about 3¾% in 1979.

The initial impetus for the present upswing came from substantial increases in the value of exports and the net gold output, which in due course also exerted expansionary effects on domestic expenditure and output. While Government consumption expenditure once again showed virtually no increase in real terms in 1979, real private consumption increased moderately by 2,8%. Real gross domestic fixed investment, which had declined during the preceding three years, increased by about 2% in 1979. Although real private fixed investment was no higher in 1979 than in 1978, it did begin to show signs of a modest recovery towards the end of 1979. Real inventory investment, however, still remained negative for the year 1979 as a whole.

The number of registered unemployed Whites, Coloureds and Asians declined to about 1½% of the relevant labour force in December 1979, which is exceptionally low. Black unemployment also declined, though clearly there is scope for further improvement in this respect.

In general, it would appear that, although the present upswing has in recent months shown clear signs of acceleration, it has not yet gathered adequate momentum. The rate of real economic growth, although rising, is still below that of which the South African economy is capable under present circumstances.

In this regard a distinction must be drawn between the financial and the real spheres of the economy. In the financial sphere there has been an exceptional expansion of activity during the past year. But real economic activity has not yet increased to its full potential. This is particularly true of fixed private investment in plant, equipment and construction—the key to our future growth. The same applies to manufacturing output, which has recovered well over the past year but is still only about 6½% higher than four years ago. In addition, real imports— probably the best single indicator of real economic activity in South Africa—were actually somewhat lower in 1979 than in 1978 and have risen only moderately in recent months.

Inflation has remained a serious problem and the consumer price index increased by about 14% between February 1979 and February 1980. I shall return to the nature and the policy implications of this inflation later in this address.

Balance of Payments

South Africa’s balance of payments has gone from strength to strength. The surplus on current account increased to the record figure of R3 107 million in 1979. This was equivalent to 6,5% of gross domestic product.

One reason for this remarkable performance was an increase of 55% in the value of net gold output to just over R6 000 million in 1979, which largely reflected the increase in the average London fixing price of gold from $193 per fine ounce in 1978 to $307 per fine ounce in 1979. In addition, the value of merchandise exports increased by 19% to a total of R8 856 million in 1979.

The value of imports increased in 1979 by about 21% to a total of R9 669 million. As I have already indicated, however, the volume of imports declined somewhat, with the result that the ratio of real imports to real gross domestic product declined in 1979 to the exceptionally low level of 14%, compared with an average of over 18% for the post-war period as a whole.

The remarkable surplus on current account in 1979 was accompanied by an equally remarkable net outflow of capital. Long-term capital showed a net outflow of R755 million, mainly reflecting substantial repayments of foreign loans in response to widening interest rate differentials—the result of declining domestic rates and rising overseas rates. In addition, there was a net outflow of short-term capital of R1 886 million, excluding a decline of R441 million in “reserve-related liabilities”. This was largely the direct result of the “switching” of trade financing from overseas to domestic sources of credit, also in response to the large interest rate differentials. The net result of these various developments was a further increase in the net gold and other foreign reserves of R466 million during 1979.

Monetary and Financial Conditions

These dramatic balance of payments changes were accompanied by important monetary and financial developments. The broadly defined money supply increased by about 13% in 1979, which was once again below the rate of inflation and not excessive in the existing circumstances. Indeed, over the past four years the average annual rate of increase of the broad money supply was only about 10%, by comparison with the excessively high average annual rate of more than 20% between 1973 and 1975.

It is true that, after showing an actual decline during the first half of 1979, the broad money supply increased during the second half of the year at an annual rate of about 30%, which was clearly excessive and in conflict with our overall financial policy. But this excessive increase was largely a temporary aberration and not an indication of a longer-term trend. It partly reflected large net redemptions of government loans and the early repayment in November 1979 of loan levies, which resulted at the time in a sharp decline in the deposits of the government sector with the banking sector.

The more important point is that the excessive rise in money supply during the second half of 1979 has not brought about any undue increase in either investment or consumption. This is not difficult to understand. Most of the excess liquidity held by the non-bank private sector has thus far been concentrated in the hands of the mining houses and other large exporters, and has not yet found its way into the pockets of salary and wage earners in general. It has remained in what economists call a “liquidity trap” and has not yet been spent on either domestically produced or imported goods and services. This does not mean that the rate of increase of money supply requires no further attention. It clearly does, as I shall point out presently.

Another significant monetary development during the past year was the substantial further easing of money market conditions and the resultant sharp decline in interest rates on call money, treasury bills, bank acceptances, trade bills and other money market paper. The treasury bill rate, for example, declined from 7,39% at the beginning of 1979 to its present level of 4,14%. In reaction to these market tendencies, the Reserve Bank reduced its Bank Rate three times in 1979 to its present level of 7%. In terms of the existing understanding between the Reserve Bank and the commercial banks regarding the relationship between Bank rate and prime overdraft rate, this resulted in a decline in the latter rate from 11,5% to its present level of 9,5%.

These adjustments, however, left an abnormally wide gap of more than 5% between the prime overdraft rate and the treasury bill rate and related money market rates, and thereby brought about an upsurge in so-called “nonbank intermediation” or “grey market activities”, i.e. borrowing and lending outside the banking system. In response to interest rate incentives, there has, for example, been an abnormal expansion of the use of endorsed trade bills and other money market paper in substitution for ordinary bank overdrafts. If left unchecked, this process could not only make monetary statistics less meaningful and monetary policy less effective, but also banking practices less sound.

We therefore find ourselves with a liquidity “overhang” and an interest rate dilemma. On the one hand, our entire interest rate structure is abnormally low in relation to rates in the United States and the United Kingdom, resulting in the large net outflow of short-term capital to which I referred earlier. At the same time, within our own interest rate structure, the rates on money market paper are abnormally low in relation to Bank rate and prime overdraft rates, resulting in substantial “non-bank intermediation”.

The main reasons for this abnormal state of affairs are to be found in the unusual combination in South Africa at present of a large current account surplus, exchange control on capital movements and a still sluggish demand for loanable funds in general. Despite the enormous switching of trade credits, the net result has still been an accumulation of excess liquidity and the interest rate distortions I have described. Too much money has, in effect, been chasing not too few goods but too little scrip.

For similar reasons, conditions in the capital market have also eased. The yield on long-term government securities declined from 9,72% in December 1978 to its present level of about 9,23%. During 1979 Stock Exchange turnover rose substantially. Mining share prices increased by 91%, financial share prices by 62% and industrial and commercial share prices by 54%. This high level of activity in the financial sphere of the economy continued in the early months of 1980.

I now turn to the policy implications of the analysis I have presented of the state of the economy.

Recent Financial Policy

In recent years our short-term economic policy has passed through three phases. During Phase I we applied restrictive fiscal and monetary policies in order to improve the balance of payments and to reduce inflationary pressures emanating from excessive spending. The success of these policies, together with other favourable developments, enabled us in Phase II to adopt a policy of “growth with financial discipline”. In last year’s Budget Speech I announced the beginning of Phase III of our broad economic strategy, in which more emphasis was to be placed upon economic growth, but still with the retention of financial discipline. I described this new policy as one of “growth from strength”.

The fiscal policy component of this new strategy was aimed at promoting more rapid economic growth in the private sector. To this end, I kept a tight rein on government spending, reduced and adjusted tax and loan levy rates, and budgeted for an increase of 46,5% in the “deficit before borrowing” to a total of R2 803 million. This increase was designed to have an expansionary impact on private consumption and investment and therefore on the rate of economic growth. Moreover, as part of the proposed financing of this deficit, provision was made for a drawing on the Stabilization Account of R217 million, with a view to ensuring an adequate increase in the broad money supply as part of the growth policy.

During the ensuing months, however, various unexpected developments, including substantial further increases in gold and oil prices, brought about significant changes in both the domestic economic situation and the Budget outturn. In response to these changes, I announced a package of expansionary policy adjustments on 18 September, including new additions to food and transport subsidies and pensions, and the early repayment of a loan levy on individuals in November. Although this package succeeded to a large extent in bringing fiscal policy back on course, tax revenues remained so buoyant that the “deficit before borrowing” for the 1979-’80 fiscal year is now estimated at only R1 683 million, instead of R2 803 million as provided for in the budget. In addition, there has been no need to draw on the Stabilization Account to assist in financing this deficit. In fact, I expect the current financial year to end with a very useful surplus on Monday next.

It must be concluded, therefore, that fiscal policy as a whole has been more conservative and less expansionary than planned in last year’s budget. As far as the monetary effects of the Government’s fiscal operations are concerned, this outcome is to be welcomed, as other factors have provided for an adequate, and at times even excessive increase in the broad money supply. However, the reduced “deficit before borrowing” means that the income generated directly and indirectly by fiscal operations has been smaller than planned. At the same time, the budget did serve to redistribute income in a way which encouraged consumption and investment.

Another component of the “growth from strength” policy was the progress made in the implementation of the Government’s new exchange rate policy of managed floating, as well as the introduction of the financial rand system and improvements in the forward exchange market. By affording the authorities more independence in domestic monetary and fiscal policies, these new exchange rate arrangements facilitated the movement from Phase II to Phase III.

In accordance with the “growth from strength” strategy, there was also a relaxation of domestic monetary policy. Apart from the three reductions in Bank rate, relaxations were made in liquid asset requirements and in bank credit ceilings. As the year progressed, the Reserve Bank also made good use of open-market operations and the issuing of tap treasury bills in an attempt to cope with the marked fluctuations in liquidity.

Disciplined Growth from Strength

Against this background, I have no hesitation in announcing that the Government’s broad economic policy for the period ahead will remain one of “disciplined growth from a position of basic strength” or, more briefly, “growth from strength”. The justification for such a policy is even stronger now than it was a year ago. Indeed, the policy can now justifiably be described as one of “more growth from greater strength”. The events of the past year, together with the favourable effects of our broad financial policy, have increased not only the basic strength of the South African economy but also the scope for more rapid economic growth. Fiscal and monetary policies in the period ahead will therefore be directed towards utilizing this scope to the full and on a sound basis. The economy is clearly moving in the right direction—what is required now is to ensure that this movement is sustained and that it gathers adequate momentum.

This continued emphasis on growth will be accompanied by an equally strong emphasis on the maintenance of strict financial discipline. In present circumstances in South Africa there is no conflict between more rapid growth and continued financial discipline. Indeed, it is a major theme of this budget that, as matters stand at present, growth and discipline form a virtually unbeatable combination.

The question might be asked whether it is still necessary deliberately to promote economic growth. Is the present upswing not already strong enough? What about the danger of demand inflation? Can the balance of payments cope with a higher rate of growth?

The key to the answers to these questions lies, I believe, in the distinction I drew earlier between the upsurge in activity in the financial sphere in South Africa and the relatively sluggish upswing in real economic activity. There is a need to attain a more rapid and sustained increase, in real terms, in such areas of economic activity as production, employment, investment and imports. A mere recovery from a low level is not enough. We can and must break new ground and move ahead.

To count our growth chickens before they are hatched, would therefore be a mistake. We cannot sit back and simply assume that the upswing will gather adequate momentum without appropriate adjustments in fiscal and monetary policies. It must remain a fundamental aim of economic policy to ensure that South Africa will fully utilize its growth potential in 1980. In making this definitive policy statement, I cannot, however, emphasize strongly enough the need to guard against the danger of lapsing into a state of euphoria about the economy simply because the price of gold has risen to record heights in recent months. From the Government side, I can give the absolute and final assurance that the authorities will not base their policies on over-optimistic assumptions about the gold price. While I remain convinced that the gold price will show an upward trend in the long run, the events of the past two weeks have shown once again how widely it can fluctuate in the short term.

At the same time, we must guard against the opposite danger of undue timidity and inertia. To begin with, South Africa’s present economic strength is based upon much more than the increase in the price of gold. This is also the considered view expressed in a favourable report on the South African economy handed to me two weeks ago by a team of experts from the International Monetary Fund, in which particular emphasis is placed on the rewards South Africa is now reaping from what they call “its determined stabilization policies over the past few years”. Moreover, the higher gold price should surely be viewed as a favourable development which, if appropriately dealt with, increases the scope for economic growth in South Africa. We have now been afforded the kind of opportunity for sound economic expansion which comes along very rarely in the life of a nation. We must use it wisely to make South Africa strong and prosperous.

A further point to stress is that restraint on government spending remains a keystone of our strategy. As before, our growth policy will consist essentially of providing the private sector with both the scope and incentive for rapid economic expansion. Excessive increases in government spending at this stage would soon bring us to the point where, in order to avoid living beyond our means as a nation, we might have to impose restrictive measures on private sector expansion. If that happens, the public sector would be guilty of “crowding out the private sector”—a phenomenon which is well known and feared in many countries, but which the Government is determined to avoid in South Africa.

This policy of curbing government spending while promoting economic growth in the private sector is in full accordance with the Government’s total economic strategy and the Prime Minister’s new initiative in regard to the Constellation of States in Southern Africa. The Prime Minister himself made this abundantly clear when he addressed business leaders at the historic meeting in the Carlton Hotel in Johannesburg on 22 November 1979.

Since fiscal policy will form the key element in our policy of encouraging private sector expansion, the full pattern of our strategy for the coming year will only unfold as I present my detailed budget proposals today. As I proceed, it will, I hope, become clear that the expansionary element of our policy is largely aimed at supporting the present recovery in private consumption and investment by increasing the real disposable incomes of individuals—i.e. incomes adjusted for price increases and changes in direct taxes—and by enhancing the financial capacity of companies to expand fixed and inventory investment.

Anti-inflationary Policy

Another major objective of official economic policy in 1980, equal in importance to that of promoting output and employment, is to curb the rate of inflation. Since the evidence shows that our present inflation is mainly of the cost-push kind, it cannot be combated effectively by depressing output and sacrificing sound growth. Moreover, the very existence of a surplus on the current account of the balance of payments equivalent to more than 6% of gross domestic product, means that the scope for imports to rise is so great that it is difficult to envisage the early emergence of a general shortage of goods in relation to aggregate demand.

The inflation of the past year must be attributed in large measure to substantial further increases in fuel prices, “administered” prices or tariffs, and food prices, as well as to the continued application of the official policy of narrowing the gap between White and Black wages. None of these causes would be removed by measures to curb aggregate demand, such as, for example, tax increases. Sight must also not be lost of the fact that, despite salary and wage increases, there was actually a fractional decline in the average real remuneration of workers in the non-agricultural sectors of the economy during the first three quarters of 1979.

What does pose a serious inflationary threat for the year ahead is the virtual certainty that shortages of skilled and semi-skilled labour will develop if the economy grows at the desired rate. These and other “bottlenecks” are bound to create upward pressures on labour and certain other costs. The signs of this are already evident in many directions. But this is a different problem from that of general demand inflation and requires different treatment.

If a reduction in general demand is not the answer in present circumstances, how then must inflation be countered?

First and foremost, we must ensure that government spending and the broad money supply are kept under effective control in order to prevent the emergence of demand inflation at a later stage.

Secondly, we should act on the supply side, by putting greater emphasis on the training and better utilization of labour resources, particularly with a view to preventing or eliminating bottlenecks and raising productivity in general. With this in mind, I shall make certain specific budget proposals today.

Thirdly, if warranted by supply and demand conditions in the foreign exchange market, the commercial rand, which has since January 1979 already appreciated by 7,3% on average against all other currencies and by 7,5% against the United States dollar, should be permitted to float upwards still further. This would reduce the prices of imported goods in terms of rand and thereby counteract cost increases.

Fourthly, we should put no artificial impediments in the way of imports if the demand for goods and services increases as expected.

Fifthly, action should be taken against any form of monopolistic exploitation of the public.

Sixthly, now that most of the large and essential upward adjustments to electricity and railway tariffs and certain other administered prices have been made, strict discipline will have to be applied to prevent any undue further increases in such prices.

Finally, today’s budget will include a specific tax proposal aimed at lowering certain costs or, at least, slowing down their rate of increase.

Apart from these seven ways of tackling the main causes of inflation, I shall also announce steps to alleviate some of the symptoms of inflation and to reduce its burden on those groups least able to bear it.

Monetary Policy in the Broad Sense

I now turn to monetary policy in the broad sense. The importance, particularly under present circumstances, of closely coordinating policies regarding the financing of the Government’s “deficit before borrowing”, the broad money supply, exchange rates and interest rates cannot be stressed enough.

In a nutshell, the main monetary and banking problems requiring attention at present are the fluctuations in the broad money supply, the liquidity “overhang”, the distorted interest rate structure and the resultant abnormal increase in borrowing and lending outside the banking system.

To deal with these problems, I envisage a combination of the following policies:

The first is the promotion of more rapid real economic growth—our basic strategy. If successful, this should in due course result in an increase in the demand for loanable funds and a decline in the current account surplus, which should combine to absorb some of the excess liquidity and to bring about a better alignment of relative interest rates. The best way to absorb “idle money” is to put it to productive use on a sound basis.

Secondly, we shall aim at attaining an adequate but not excessive rate of increase in the broad money supply. What would be “adequate but not excessive” in present circumstances, is difficult to say in advance, particularly in view of the uncertainty surrounding the gold price and overseas economic developments in general. But for the year as a whole, a rate of increase somewhat below that of the rate of inflation would not seem unreasonable. This would accommodate the expected increase in the growth rate while at the same time exerting a restraining influence on inflation.

To this end, I propose to finance the “deficit before borrowing” in the 1980-’81 budget in a manner which will not result in the creation of any money at all. In other words, I propose to avoid any net recourse to the banking system. Indeed, if the net gold and other foreign reserves were to continue rising substantially, we shall go further and actually reduce the net claims of the banking sector on the government sector in order to counteract the expansionary monetary effects of the balance of payments surplus. This would then leave adequate scope for the necessary expansion of bank credit to the private sector. Of course, to the extent that the rise in net foreign reserves was slowed down through a policy of permitting the commercial rand to appreciate, there would be less need for the authorities to exert a negative effect on the money supply through their own financing operations.

As part of the policy of influencing the money supply and interest rates, the Reserve Bank yesterday announced an increase in the credit ceilings of banking institutions of 6% of their base figures at the end of 1975, in addition to the normal increase of ½% per month. At the same time the Bank made various adjustments to the cash reserve and liquid asset requirements of the banks. If necessary, the Bank might also resort to issuing its own securities as a means of mopping up liquidity.

The third component of broad monetary policy will be the further relaxation of exchange control in order to prevent the large current account surplus from “bottling up” excess liquidity in the domestic money market. The speed with which we shall move in this direction will depend on the extent of our overall balance of payments surplus. I have, however, decided upon certain immediate relaxations, the details of which are included in a separate document which I shall table today. The main relaxation is the decision to grant approval more readily for early repayments of certain foreign loans to take advantage of interest rate differentials. In addition, certain relaxations will be made in respect of travel, maintenance and study allowances and transfers of gifts.

Economic Prospects

If we succeed in applying the appropriate combination of fiscal and monetary policies along the lines I have just outlined, I envisage that, in the period ahead, we can simultaneously attain a higher real economic growth rate, increased employment, a further strengthening of the rand, and higher net gold and other foreign reserves. In the absence of unforeseen developments, we might even add to this impressive list a gradual reduction in the rate of inflation—if not in absolute terms, then at least in relation to the inflation rates of our main trading partners. And this in a world which, according to the latest official forecasts, will in 1980 experience a combination of slower growth, higher inflation and serious balance of payments difficulties.

Against this broad policy background, I shall now proceed to deal with the Government’s Accounts. I start with the financial year 1979-’80.

The Financial Year 1979-’80

The current financial year is characterized by the exceptionally favourable outcome of exchequer receipts. Customs and excise collections, at R1 301 million, are by and large consistent with the original estimates, but inland revenue is now estimated at R8 496 million, which is R1 362 million, or 19,1% more than the original estimate. Total revenue receipts for the financial year, as contained in the revised revenue estimates which I shall table today, are expected to run to R9 797 million, compared with the original estimate of R8 416 million, an increase of R1 381 million, or 16,4%.

On the expenditure side, total spending is at present estimated at R11 480 million. This represents a moderate increase of 2,3% on the original estimate and an increase of approximately 15% on actual expenditure during the previous financial year. In real terms there has been at most a nominal increase in government spending and I am satisfied that we have successfully achieved our basic objective of economy in detail in respect of the Government’s Accounts. In this context the old saying seems to be appropriate: “If you don’t get everything you want, think of the things you don’t get that you don’t want.”

Due to the relatively small unforeseen additional expenditure, compared with the relatively large additional revenue receipts, the exchequer deficit before borrowing for the financial year has decreased dramatically in comparison with the original estimate. It will, in consequence, not be necessary to withdraw the R217 million from the Stabilization Account as originally budgeted for. Moreover, the opening balance for the financial year is larger than anticipated, and the amount of loans raised abroad at R277 million, is R77 million more than allowed for. Consequently it is now possible to borrow approximately R612 million less in the domestic market than originally anticipated, and still to close the financial year with an estimated gross surplus of R296 million.

While the opportunity presents itself, I would like specifically to allocate this windfall toward certain expenditure items which, together with further augmentation, to my mind deserve the highest priority. Napoleon said: “As a general rule nobody has money who ought to have it.” We shall see what we can do about that.

Defence

Hon. members will probably agree that in the dangerous world in which we live defence has a very high claim on the exchequer surplus, not only to increase the Defence Force’s preparedness, but also to cope financially with any unfavourable future developments. The situation on our borders requires vigilance and preparedness and increasing costs have also had their effect on defence spending. I therefore propose that an amount of R160 million be transferred from the exchequer surplus to the Special Defence Account.

South West Africa

I need not enlarge on the difficult situation pertaining to South West Africa. It was customary in the past to make good the annual shortfall on the South West Africa Account from the State Revenue Fund surplus. Although the South West Africa Account will be closed down with effect from 1 April 1980, I propose that the new Central Revenue Fund of South West Africa continue to receive a contribution from the exchequer surplus in order to enable the Administrator-General uninterruptedly to continue existing services taken over from South African Government departments, and to tackle essential new projects. I would like to make available an amount of R40 million to the Administrator-General for this purpose.

That leaves a favourable balance of R96 million, which will be carried forward to the new financial year. Before turning to the printed Estimates of the 1980-’81 financial year, I should like to make proposals for the application of this surplus to funds and projects which to my mind should receive a high priority. These expenditure proposals will appear in the Supplementary Estimates for 1980-’81.

Black Urban Areas

Although the general standard of living in South Africa is higher than that of any other African country and of several other parts of the world as well, it is nevertheless the desire of the Government to improve the quality of life of all South Africa’s peoples as far as our financial and other means permit.

Due to the backlogs in housing and other basic infrastructural services which have emerged with the steady increase in population, Black urban residential areas in many instances do not possess adequate taxable community services to cause them to become self sufficient. I wish to propose that an amount of R12 million be set aside in the form of low interest rate loans for development purposes. There is also a growing pressure on hospital facilities, and I propose to make available an amount of R4 million for the renovation of an existing complex to ease the position.

Consolidation of Black States

The Commission for Co-operation and Development is hard at work drafting proposals for the further consolidation of the Black states. An amount of R74 million has been provided for this purpose in the printed Estimates and I wish to propose that a further amount of R15 million be transferred from this year’s exchequer surplus for this purpose. This will result in an increased provision of more than 41% over that of the current year.

Loan Fund for Economic Co-operation

I wish to propose that an additional amount of R10 million be added to the Loan Fund for Economic Co-operation administered by the Department of Foreign Affairs. This Fund finances projects in independent states.

Project Fund for Co-operation and Development

To familiarize dependent Black states more quickly with project financing I wish to set aside a further R15 million for this purpose.

Local Authorities

The Committee of Inquiry into the Finances of Local Authorities has virtually completed its comprehensive report, which is in three volumes. It will receive the serious attention of the Government but, in the meantime and without anticipating the decisions the authorities may take, I wish at this point to set aside an amount of R12 million for future commitments in this respect.

Small Business Enterprises

A further specific matter which I consider justifies an allocation from this year’s surplus funds, concerns the promotion of small business enterprises.

As was emphasized during the Hon. the Prime Minister’s meeting with leading businessmen on 22 November 1979 in Johannesburg, these undertakings provide, directly and indirectly, more employment per unit of capital invested than do larger concerns. In large industrial countries and also in the smaller and more recent industrial countries of the Far East small business enterprises form the backbone of the economy. They serve as a stabilizing factor and help in redressing the imbalance between geographical areas and economic groups as well as in arresting the depopulation of rural areas.

Much is already being done in this area but the Government will welcome proposals as to how to promote, in close co-operation with the private sector, the organizational and financial interests of the small business to best advantage. An amount of R10 million is provisionally being set aside for this purpose.

Food: Contingency Provision

Of the estimated net surplus of R96 million this year, a total of R78 million has already been allocated. This leaves a balance of R18 million. In my proposals for additional expenditures I intend to suggest soon a number of increased subsidies for various food products, but as a precautionary measure I consider it desirable that the R18 million balance be earmarked at this early stage for use later during the year should further relief from food price increases become necessary.

I now wish to turn to a discussion of the 1980-’81 financial year.

The Financial Year 1980-’81

The printed Estimates of Expenditure which I shall table this afternoon make provision for an aggregate of R12 823 million. My budget proposals which I shall come to presently, entail further expenditure of R164 million which, in addition to the amount of R96 million just allocated from the current surplus, means a total additional amount of R260 million. As a result I estimate total expenditure for the new financial year at R13 083 million, that is R1 603 million, or 14%, higher than the revised estimated expenditure for the current financial year. It is interesting to note that total expenditure in 1911-’12 represents only 0,3% of the 1980-’81 total!

Considering the general increase in costs, including salaries and wages, it should immediately be clear that the Government in no way intends to abandon its now well-known stance on financial discipline merely because the situation has eased in respect of revenues and finance in general. Despite Chesterton’s caution, that “there are some statements that no one ever thinks of believing, however often they are made”, I am, determined on grounds of sound finance not to budge on this issue. As usual, full particulars of the Estimates of Expenditure will be tabled today. However, a few expenditure votes deserve special mention.

Defence

An amount of R1 890 million has been included in the printed Estimates of Expenditure in respect of Defence, compared with R1 612,4 million in the current financial year. If account is taken of further amounts expected to be available from the Special Defence Account, Defence will have available no less than R2 074,5 million in cash— including the special R160 million from the 1979-’80 exchequer surplus. I should also like to draw the attention of the House to the fact that the Defence Force has been authorized, if necessary, to incur commitments up to an amount of R2 346 million, compared with R2 074 million this year. Our enemies should take note that the Government is in deadly earnest in pursuing its declared policy of ensuring the safety of the State and of all its inhabitants. Circumstances and threats change continuously and we must ensure that our preparedness remains razor sharp.

In this respect I would like to express my thanks and appreciation to investors in Bonus and National Defence Bonds for their generous support thus far. It facilitated to a large extent the task of financing our high defence expenditures. In spite of the fact that—now also in respect of National Defence Bonds— only natural persons may invest in these bonds, I expect to be able to borrow R200 million from these sources during the next financial year.

Improved Conditions of Service

On behalf of the Government it is my privilege to announce that significant improvements in salaries and other conditions of service will now be granted to all personnel in the public service, provincial administrations, statutory bodies, Black states and incumbents of statutory posts. The total amount involved amounts to R480,5 million—by far the largest amount ever asked for this purpose—but I expect departments and subsidized bodies to absorb a part of this amount from savings. Provision for R434 million has been made in the printed Estimates.

In keeping with the policy previously announced by the hon. the Prime Minister, improvements in respect of all personnel will be implemented from a common date, 1 April 1980. The improvement of conditions of service is a planned process which receives continuous attention. The expenditure involved must be within the financial capacity of the country and improvements are progressively made in accordance with this fundamental criterion.

The proposed improvements entail mainly the following:

1. (i) The substitution of the existing vacation bonus by a service bonus which will be equal to a full month’s salary, less 7%, which deduction, together with a threefold contribution by the State, will be deposited in a stabilization account for the purpose of augmenting the pensions of retired employees as and when necessary. Everyone will receive the service bonus in the month of birth, but officials who have already had their birthdays this year will receive their bonuses in the month in which the salary increases are paid.
2. (ii) A general salary improvement, basically consisting of a notch-for-notch adjustment on an improved key scale, with further increases for personnel who qualify for them in terms of the principle of vocational differentiation.
3. (iii) Nursing personnel will also receive the above-mentioned improvements, with further improvements in the grade of sister and for lecturing staff.
4. (iv) Teachers will, apart from the service bonus, receive salary improvements on a notch-for-notch basis in the grade and on an improved key scale. These salary improvements stem from proposals submitted by the Department of National Education on the basis of recommendations made by a representative education committee which considered how the improvements should be made within the limit imposed by the availability of funds for the purpose. I believe that the improvements confirm the Government’s point of view that education is a distinctive profession and should therefore receive and develop a structure in its own right.
5. (v) Non-White personnel will receive salary improvements in accordance with the pattern for Whites. In the light of existing salary relationships, relatively larger improvements have been granted to them. Last year the Hon. the Prime Minister announced a programme whereby parity of salaries, and a further narrowing of the salary gap between Whites and non-Whites from the top posts downwards, would be brought about. Phases 1 and 2 of this programme were implemented during the 1979-’80 financial year. Phase 3 will now be put into effect from 1 April 1980.

Particulars of all improvements will shortly be made available by the Public Service Commission to departments and other bodies.

As far as conditions of service in general are concerned, the Government and the Public Service Commission are under constant pressure from all sides for the improvement of salaries of one or other specific group of employees. The media join in merrily in this process. However, these representations cannot be acceded to in a haphazard and unco-ordinated manner. With the acceptance of the principle that specific amounts will be budgeted for in order to improve conditions of service, the opportunity now exists to bring about such improvements in a more planned and orderly manner. I would, therefore, wish to appeal to all involved to formulate their representations in future in accordance with the procedures laid down by the Public Service Commission in consultation with the Treasury.

I shall fail in my duty if I do not adjure employees in the private and public sectors to moderate their expectations of salary adjustments with realism. Absolute discipline regarding salary improvements must be applied by all sectors if we are serious in our endeavours to combat inflation.

It is essential that conditions of service in the public and private sectors be seen in toto and with due regard to the incidence of taxation. The influence that tax-relief measures can have on the “take-home” pay of individuals, should not be underestimated. In the prevailing inflationary circumstances, realistic salary adjustments in the private and public sectors, coupled with tax relief, are, from an economic and cost-restraining point of view, far more preferable than excessive salary adjustments without tax relief.

The following representative examples, selected for obvious reasons from the teaching profession, illustrate the point. I must emphasize that I am referring to the take-home pay position, after the deduction of pension contributions and taxes from salaries and service bonuses. The tax reductions involved here will become clear when I deal presently with my taxation proposals for the new financial year.

I am reluctant to furnish these particulars since I regard salaries as a private matter which should preferably not be dealt with in public and because I know that all sorts of comparisons and conclusions, which will not necessarily be complete and relevant, will be drawn. The controversy over teachers’ salaries and the general concern of parents in this regard, however, have led me to provide this limited information.

After thorough investigation and lengthy discussions with the Public Service Commission, the Treasury, the education departments, and other interested parties and individuals, I am satisfied—

1. (a) that the improved conditions of service announced today represent a realistic, fair and favourable dispensation for the Civil Service as a whole and for its different constituent branches and groups; and
2. (b) that the amount provided for this purpose—by far the largest so far in our history—is the maximum which a well-disposed and responsible Government can provide under present circumstances.

As Minister of Finance I accept full responsibility for this.

*Now I should like to turn to proposals for further expenditures to be financed from next year’s revenue. First of all, it is my privilege to attend to the interests of our senior citizens. How true Richter’s words ring: “Nothing is more beautiful than cheerfulness in an old face.”

Social Pensions

I am glad that I am able once again to announce meaningful concessions to pensioners and other social beneficiaries.

Full particulars of the proposed concessions are set out in a document which I shall lay upon the Table this afternoon. The concessions include an increase in social pensions of R12 per month in the case of Whites, which means that the maximum pension will increase to R109 per month. The increase for Coloureds and Indians amounts to R8 per month, and for Blacks to R5,50 per month.

The means test will also be further adjusted by increasing the free assets limit to R10 200 and by raising the means limit for earnings from R984 to R1 392 per year. All these concessions and adjustments take effect on 1 October, 1980.

Initially I indicated last year that the existing differences between consolidated and other pensions payable in terms of the Military Pensions Act, 1976, would gradually be phased out. It is, however, now possible to implement the remaining two phases simultaneously with effect from 1 April 1980. This concession may in certain cases of 100% disability mean an increase of as much as R116 per month.

The total cost of all these concessions will amount to R55 million for 1980-’81 and R110 million for a full financial year. The necessary provision will be included in the Supplementary Estimates.

Last September the Government was in the fortunate position that the Exchequer could afford to grant a special bonus to persons receiving social pensions and allowances. In view of the expected greater buoyancy in revenues in the coming year, it will to my mind be only fair to repeat this exercise now, even though a mere six months have elapsed since the previous bonuses were paid out. I am therefore thankful to be able to announce that the same special bonus benefits as last year, namely R30 for Whites, R24 for Coloureds and Indians, and R18 for Blacks, will be paid out during May 1980 to all persons receiving social pensions and allowances.

The expenditure involved will be approximately R22 million and will, as is customary, be provided for in the Supplementary Estimates.

Civil Pensions

The Government is well aware of the problems experienced by former employees of the State, now retired, who are hard pressed by the cost of living. It has accordingly been decided to grant an increase of 20% to former officials and other civil pensioners who retired prior to 1 April 1969. Those who have retired from 1 April 1969 but prior to or on 30 June 1973, will receive a 15% increase, and those who retired after 30 June 1973 will receive a 10% increase. As was the case last year, a minimum increase will be granted, this time of R30 per month for Whites, R20 per month for Coloureds and Indians, and R17 per month for Blacks.

The expenditure involved in these increases will amount to approximately R40 million and will be borne by the Pensions Stabilization Account, except for an amount of approximately R2 million, which will be financed from the Exchequer in cases where civil pensioners receive their pensions directly from the Exchequer. Provision for the R2 million will be made in the Supplementary Estimates.

Housing

Provision has been made in the printed Estimates to supplement the capital of the National Housing Fund by R215,2 million. Because of the considerable scale on which capital has to be redeemed by the Fund to banks and building and financial concerns, as well as the fact that the special R250 million scheme instituted in November 1977 to stimulate the building industry is coming to an end, it must be accepted that the exceptional pace at which housing has recently been provided, cannot easily be maintained. However, housing still enjoys one of the highest priorities and I should like to propose that a further R10 million be included in the Supplementary Estimates for this purpose. This will raise the total provision for the Housing Fund to R225,2 million, which represents an increase of 20,2% on the appropriation for the current financial year.

I would also like to mention that the Department of Community Development is at present investigating methods by which a part of the mortgage burden of the Housing Fund could be transferred to the Building Society movement in order to enhance the return flow of capital to the Fund itself. I am convinced that it is in the national interest for the Building Society movement to support fully this initiative in order to channel a portion of their available housing funds in this way to the lower income groups.

Agriculture

The Government is particularly aware of certain acute financial problems that exist in the agricultural sector and does much to seek solutions to these problems as they arise.

The appointment of the Jacobs Committee which advises my colleague the Minister of Agriculture and myself on financial matters in the field of agriculture, contributed substantially to the continuous and earlier consideration of these problems and their solutions.

A serious problem is currently developing in the tobacco industry. It relates to the financing of exceptionally large stocks and the inability of the industry itself to bear this burden in full. I have referred this matter urgently to the Jacobs Committee and as soon as we receive the recommendations from the Committee, my colleague the Minister of Agriculture and I will decide how this problem can best be resolved.

Food Subsidies

The subsidy on maize provided for in the printed Estimates was initially reduced from R50 million to R40 million. Due to the detrimental effect that this might have on consumer prices, I propose that an amount of R10 million should be added to the existing R40 million to place the total available subsidy back again at R50 million.

For the same reason it appears to be justifiable to provide an additional subsidy of R1,5 million for dairy products.

In view of the fact that the Republic’s wheat surplus is currently being exported at a considerable loss, ways and means had to be found to supplement the Wheat Board’s stabilization funds. The Government has agreed to the imposition of a levy on millers equal to the total value of their bran sales. This will mean that the price of wheaten meal and flour will have to increase accordingly, but to prevent the consumer having to pay a higher price for the final product, I wish to provide an additional R7,5 million subsidy to neutralize the price effect of the bran levy.

As far as bread subsidies are concerned, an amount of R90 million has been provided for in the printed Estimates. To benefit the consumer, a portion of this, namely R3,6 million, will be used to subsidize the price of brown bread and whole-wheat meal. Brown bread is at present being subsidized by as much as 14 cents and white bread by 9 cents per loaf. Notwithstanding increases in the price of wheat and in bakers’ and millers’ margins, we have, with the aid of subsidies, succeeded in keeping the bread price constant since January 1978.

Should we wish to keep the price fixed for a further 12 months, a total subsidy of as much as R220 million will be required for bread alone. Not only would this amount be disproportionate, but it would make any necessary adjustments subsequently so much the more drastic. The Government has therefore decided, regrettable as it may be, that an increase in the price of bread from 1 April 1980 is inevitable.

I feel, however, that consumers of bread and especially those to whom it is a staple foodstuff, should continue to share in the country’s increased Exchequer revenue and I wish to recommend, accordingly, that an additional amount of R51 million be provided to keep the necessary increases as low as possible.

The price of a brown loaf will then be increased from 1 April 1980 by only 4 cents and that of a white loaf by 5 cents.

Together with the contingent amount of R18 million provided for out of the current surplus, total food subsidies will rise to R221 million in 1980-’81 compared with R172 million this year, an increase of about 28% in one year. As Chesterton puts it, “If a thing is worth doing, it is badly worth doing.”

Labour and Training

Benjamin Franklin had occasion to remark: “When a man empties his purse into his head, no man can take it from him.”

I have already pointed out that with the revival of the economy, skilled manpower will undoubtedly become one of our major bottlenecks. Aware of this challenge, the Government has for some time now been providing funds for the promotion of industrial training, both direct and indirect.

The Department of Education and Training, which plays a key role in the training of Blacks outside the Black states, reflects an increased expenditure, in excess of 32%, to an amount of R240,4 million in the printed Estimates. To this amount I should like to add an additional R4 million for the creation of urgently needed school accommodation on the East Rand, an amount which will be included in the Supplementary Estimates.

It is interesting to note that the total direct expenditure on education for all the peoples by the Central Government alone will increase to R944 million in 1980-’81 compared with a level of R432 million only five years ago. These totals do not include expenditures by the provincial authorities or the Black states, nor any extra tax expenditures allowed as deductions from taxable incomes. If the provinces are included in these calculations, approximately R1 720 million will be spent on education in 1980-’81 as compared to R964 million five years ago.

There exists in the Departments of Manpower Utilization and of Education and Training a number of industrial and other training schemes supported and financed by the authorities and, in addition, tax incentives are granted to industrialists for the in-service training of labour.

Attention is presently also being given to representations to extend the present tax concessions on donations to training colleges and certain secondary educational institutions which do not currently qualify for such concessions. Furthermore, there may also be merit in looking in future to the establishment of a central training fund to ensure that the financing of all training functions is coordinated. It is my intention soon to take up this matter with my colleague, the Minister of Manpower Utilization, and other interested parties.

After taking into account these further concessions and additional expenditures I estimate that aggregate expected expenditure to be financed from 1980-’81 revenue sources will amount to R13 083 million.

Revenue 1980-81

On the basis of the existing taxation, total revenue for the 1980-’81 financial year is expected to amount to R11 765 million, representing an increase of R1 968 million or 20% on the revised estimates for 1979-’80.

Customs and excise duties are expected to show a nominal increase of R29 million to R1 330 million, but inland revenue, by contrast, will increase substantially.

Hon. members will understand that in view of the fluctuations in the price of gold it is particularly difficult to estimate the State’s gold-mining tax and lease revenues for the coming year. However, as I have already emphasized, I am basing my estimates on conservative assumptions. I am no prophet, but even if I were, it would be prudent to listen to Halifax, who said, “The best qualification of a prophet is to have a good memory.” Hence my conservatism. Even so, total revenue from gold mining is expected to amount to no less than R2 485 million, which is R1 630 million in excess of my estimate for the main Budget for the current year.

Due to the upswing in the economy, useful increases in revenue are also expected from a number of other tax sources. Details of these revenue estimates will, as usual, be tabled today.

With total expected expenditure estimated at R13 083 million and total expected revenue on the existing basis of taxation estimated at R11 765 million, I am left at this stage with a deficit before borrowing of R1 318 million.

Before proceeding with my taxation proposals, I wish briefly to touch on two subjects.

Subscription Shares

Firstly, the interest on subscription shares of building societies is currently tax-free on a maximum share investment of R150 000 per person. This concession is out of line when compared with the far more modest amounts which may be invested tax-free in the Post Office, the Treasury and also in the form of tax-free indefinite period building society shares.

I have, therefore, after consultation with the Building Society movement, decided to restrict the concession to a maximum tax-free subscription share investment of R50 000 per taxpayer. To minimize any inconvenience which this measure may cause, this restriction will be phased in in equal amounts over a period of three years.

Fiscal Incentive Measures

Secondly, as I announced in December 1977, the existing initial and investment allowances, which are two of our principal incentive devices, would be extended for a further period of 3 years till 30 June 1982.

These allowances today fulfil a dual function: firstly, they reduce the effective rate of taxation payable by companies and, secondly, they bring relief in cases where depreciation and the write-off of assets is based on historical costs. The view is held in some quarters that these allowances, by encouraging investments, tend to increase industrial capacity, a development which should normally not be curbed, but that it may in certain circumstances be advantageous to pay these allowances in cash especially in decentralized areas because of the more difficult location problems experienced there.

Others, again, express concern about the large amounts foregone in revenue, especially when the allowances are not limited to their original purpose, and feel that it would be better to provide the desired incentive in the form of an appropriation of expenditure.

It is also argued that the possible encouragement of capital-intensive industries in this way is not conducive to the provision of adequate employment opportunities and that a better balance should be sought between incentives for capital and labour-intensive enterprises, also in the mining and agricultural sectors.

The matter has many facets and I feel that we should be cautious before changing the status quo. “Opinions have vested interests just as men have,” said Samuel Butler, and he could be right. I have thus deemed it fit to direct the Standing Commission on Taxation Policy to investigate this whole issue and to submit recommendations to me.

I now turn to my taxation proposals, and would first like to deal with the surcharge on imports.

Surcharge on Imports

This tax was introduced at a level of 15% in 1977 as a temporary measure to provide additional revenue to the Exchequer. After a year it was scaled down to 12,5% and then, last year, to 7,5%. The time is now ripe for us to eliminate this duty entirely. Its abolition is in fact the specific cost-reducing tax proposal to which I referred earlier when I set out our steps against inflation. The net cost to the Exchequer will amount to as much as R260 million in 1980-’81.

Government notices to give effect to this decision will appear tomorrow and will be applicable to all the goods concerned which have not been entered for home consumption before tomorrow. The Government firmly expects that this reduction in effective costs will be passed on without delay by importers and other trade channels to the consumer in the form of reduced prices.

Provision of Housing by Employers

Apart from direct State assistance in the provision of housing, the Government also wishes to encourage participation by employers in the provision of housing for their employees.

I propose, therefore, that the presently existing ceiling on the deduction, for tax purposes, of the building costs of any one dwelling for a farmer’s employee be increased from R4 000 to R5 000. For other employers, it is proposed that the existing allowance of 25% of the expenditure incurred be increased to 50%, with a maximum of R4 000 instead of the present R3 000. The revised allowances will apply to the cost of buildings, the erection of which commences on or after 1 April 1980.

The expected sacrifice of tax revenue will amount to R4 million for a full year and to R2 million for the 1980-’81 financial year.

Transfer Duty

While on the subject of housing, I have considered it advisable further to encourage home ownership by raising the present exemption from liability for transfer duty from the existing limit of R20 000 to R30 000 in respect of a property with a dwelling on it, or a flat under sectional title, and from R8 000 to R12 000 in respect of unimproved land acquired for the purpose of erecting a dwelling. This exemption is restricted to properties acquired by natural persons.

The rates of transfer duty for more expensive properties acquired by natural persons will be adjusted accordingly to 1% on so much of the value as does not exceed R30 000 and 3% on the excess over R30 000. These reductions will apply in respect of all transactions concluded on or after 1 April 1980.

The estimated sacrifice of transfer duty will amount to R21,5 million in a full year and R14,6 million for the 1980-’81 financial year.

Estate Duty

Although I announced last year relief with regard to estate duty, I am of the opinion that further relief is justified due to the increase in the monetary value of assets.

I, therefore, propose that the primary abatements and abatements applicable to children and the surviving spouse of a deceased person be increased to R37 500 each; that the maximum allowable deduction from the total value of an estate in respect of the proceeds of insurance policies, stock and Land Bank investments be increased from R80 000 to R100 000; and that the rate of estate duty be adjusted so that the maximum rate of 35% will henceforth be reached at R400 000 instead of the present R300 000.

These proposals relate to estates of persons who die on or after 1 April 1980. The cost of these concessions is expected to be R8 million in a full year, and R3,2 million for the 1980-’81 financial year.

The Taxation of Black Persons

During my Budget Speech last year I pointed out that the equalization of the tax liability of Whites, Coloureds and Indians, on the one hand, and Blacks on the other, would extend over a period of three years. The first adjustment was made during this financial year and the process will be continued in the new year. As in the case of the other population groups, it is necessary also to grant relief in respect of Black taxpayers. I therefore propose that the threshold of liability for tax be increased from R1 200 to R1 800 per taxpayer and that the tax rate thereafter be reduced by 20%. As was the case last year, the governments of the Black states have been consulted in regard to these measures and have consented to them.

The loss of tax for the 1980-’81 financial year is estimated at R55 million.

Lump Sum Distributions

I wish to propose that the maximum tax-free lump sum benefit paid out of a pension, provident or retirement annuity fund on or after 1 March 1980, be increased from R45 000 to R60 000. A number of other allied adjustments are also being effected as will be evident in more detail from the supplementary memorandum that will be tabled this afternoon.

The tax sacrifice for a full year is estimated at R4 million and for the 1980-’81 financial year at R2 million.

Deduction for Physically Disabled Persons

I wish, furthermore, to propose that the maximum deduction for tax purposes, in respect of expenses incurred by the physically disabled be increased from R600 to R1 200 and that all other income limitations be removed. The loss of income in this case is calculated to amount to R0,4 million in a full year and R0,2 million in 1980-’81.

Married Working Women

I now wish to move another step closer to the pocket of the ordinary taxpayer.

During the past year representations for the separate taxation of working wives have once again been received. I hope I may be forgiven for recalling in a friendly spirit the words here of La Bruyère, when he said, “There are people who so eagerly and insistently desire some one thing that, for fear of missing it, they omit doing nothing that will spoil their chances.”

I have once again considered these representations seriously, but still do not see my way clear, both for reasons advanced by the Standing Commission on Taxation Policy and for practical and logistical considerations, to change over now to a system of separate assessments. I concede that rising costs prejudice the net income of the two-breadwinner family as against the single-breadwinner family and I have deemed it right once more to increase the tax-free portion of married women’s incomes, this time from R900 to R1 200.

The sacrifice of tax revenue is estimated at R31 million for a full year, and R28 million for the 1980-’81 financial year.

Fringe Benefits

Before I take my hand further out of the taxpayer’s pocket, I must first, for a moment, proverbially put it in deeper. George Bernard Shaw once said, “A Government which robs Peter to pay Paul can invariably rely on the support of Paul.” I want to say that we already have the support of Paul and my proposals by no means involve robbing Peter! On no account do I envisage fringe benefits as a new source of revenue, but simply as the correction of an indefensible position which has developed over the years.

A while ago the Standing Commission on Taxation Policy thoroughly investigated the taxation of fringe benefits and submitted their recommendations to me. Thereafter on 27 July 1979, the Commission published a report for comment. From the comments received I was pleasantly surprised that there was a fairly general consensus that income in kind should be liable to tax as cash income is. Obviously certain fringe benefits have always been subject to tax and differences of opinion concerned mainly the method of taxation and the date the tax should be instituted. I wish to express my appreciation to those who took the trouble to furnish the Commission with well-considered comments. The Commission has submitted its revised recommendations which have been accepted by the Government in principle.

The somewhat emotional public debate on a matter which clearly calls for reform calls to mind the remark of Gissing, that “Principles always become a matter of vehement discussion when practice is at an ebb”.

Revised draft proposals as to the taxation of fringe benefits have been made available for comment to organized commerce, industry, agriculture and mining with a view to the drafting of legislation before the end of the session. All interested organizations and individuals will once again be afforded the opportunity to make their ideas known to the Department.

I am convinced that the principles laid down by the Standing Commission, including the elimination of discrimination between the private and public sectors, and the concessions with which I shall deal presently, will effectively remove the main objections, namely, that the proposed tax will induce an inflationary round of salary increases and will tend to have a disincentive effect on the entrepreneur and the professional man. Employers and employees will be afforded sufficient time to determine the effect of my proposals on their take-home earnings, and to adapt to the new approach. To this end I propose that the measure apply from 1 March 1981. Let us in this context recall the words of Valáry: “Our most important thoughts are those which contradict our emotions.”

Financing Requirement

The deficit before borrowing was estimated at R1 318 million. I have now proposed tax concessions totalling R365 million which will increase this deficit to R1 683 million. To this must be added R1 430 million in the form of loan redemptions, which raises the total financing requirement to R3 113 million.

I propose that this amount be financed as follows:

I wish to point out that “non-marketable debt” includes Bonus Bonds, Defence Bonds and Treasury Bonds. This will leave me at this stage with a surplus of R583 million, but with two important differences compared with the current year:

Firstly, it is necessary at this stage to budget for only a moderate R100 million from foreign sources.

South Africa’s creditworthiness abroad is excellent and continues to improve. Much larger loan funds are available, but for reasons of excess domestic liquidity it is preferable rather to borrow in the internal market. Disraeli said, “Next to knowing when to seize an opportunity, the most important thing in life is to know when to forgo an advantage.”

Secondly, and this will affect hon. members more directly, it will be possible to meet our financing requirement without resorting to loan levies as such. There is no reason for the continuation of compulsory loans to the State if these funds can be substituted for on a voluntary basis in the form of Government stock issues in the domestic market. I therefore wish to propose that all loan levies on individuals and companies be abolished as from 1 April 1980.

The amount which the State will forgo in the form of loan levies amounts to R651 million. This amount, as set out above, will largely be replaced by the issue of Government Stock to the extent of an estimated R600 million.

Tax Reform

I have already pointed out that, as part of our continuing policy of growth from strength, we wish to underpin the present recovery in private consumption and investment by raising the real disposable incomes of individuals. Given our policy of maintaining a realistic restraint on State spending, this means that the key contribution of fiscal policy this year should be sought in tax changes.

Apart from these short-term policy issues, it remains my objective to continue purposefully with the longer term process of tax reform which I started in 1976. We have in effect today a “golden” opportunity to make meaningful progress in this field.

I want now to enter the promised land, income tax.

Income Tax

Structural changes and relief measures

To begin with, let us heed Halifax’s warning: “Men should do with their hopes as they do with their tame fowl: cut their wings that they may not fly over the wall.”

As to structural changes I wish, first of all, to propose the introduction of a single basic income tax rate for both married and unmarried persons, and secondly, a return to a system of tax rebates as was in force prior to 1972, in contrast to the system of income abatements applicable at present. The differentiation between unmarried and married will be achieved, firstly, by allowing a smaller rebate to unmarried persons and, secondly, by increasing their tax by means of a 20% surcharge. This will contribute greatly to the simplification of the system.

More details on the change-over as well as the rebates are set out in the supplementary memorandum which I shall lay on the Table today.

I do not wish to elaborate further on this subject except to say that the existing combined abatement for medical expenses and insurance premiums will be separated. Insurance premiums will continue to qualify for rebate purposes, but as far as medical expenses are concerned, I propose that from the 1980-’81 tax year actual medical expenses up to a maximum amount of R1 000 qualify as a deduction.

Mindful of our senior citizens, many of whom are dependent upon limited fixed incomes, I wish to propose further that, in addition to the augmented tax rebates and other concessions for which they qualify, the maximum deductible amount in respect of their medical expenses be increased to R2 000. Hippocrates said, “Wherever a doctor cannot do good, he must be kept from doing harm.”

The effect of the tax rebates will be that a person will only become liable to tax if this taxable income, after deduction of actual medical expenses, exceeds the following thresholds:

Persons over the age of 60 years

Persons under the age of 60 years

As a further structural change and relief measure I should like to propose that the progression of the basic marginal rates of normal income tax be adjusted so that the maximum rate in respect of married persons is only reached at R40 000, and in respect of single persons, inclusive of the surcharge, at R28 000; and that, in addition, the maximum basic marginal rate be decreased from the present 55% to 50%.

Due to technical problems the PAYE tables will, as in the past, reflect these substantial concessions with effect from 1 July. They will, however, be adjusted in such a manner that the taxpayer will, in fact, receive the full benefit of the concessions in the course of the tax year.

A number of examples of how these concessions, including the abolition of the loan levy, will affect the taxpayer, are:

The tax sacrificed as a result of these reforms, including the increased medical deductions, will amount to R600 million in a full year and to R544 million for 1980-’81.

The magnitude of these and other concessions is such that only a small surplus of R39 million remains, an amount I propose to deposit in the Stabilization Account. We must be prepared for contingencies and any eventualities and this modest augmentation of our reserve funds makes good sense to me.

Summary

As is customary, a summary of the Government’s accounts is subjoined in the printed version of the Budget Speech.

COMPARATIVE STATEMENT OF THE STATE REVENUE ACCOUNT

Conclusion

It has been my privilege today to present a budget which, with all its limitations, will, I believe, be judged by many to have been an historic one.

Basically the budget is designed to promote more rapid growth in the private sector and therefore in the economy as a whole. To this end, the increase in government spending is limited to only 14%, which at the present rate of inflation once again implies virtually no increase in real terms. As Gladstone put it, “The first rule of finance is that the Chancellor of the Exchequer shall boldly uphold economy in detail; and it is the mark, gentlemen, of … a chicken-hearted Chancellor of the Exchequer when he shrinks from upholding economy in detail … No Chancellor of the Exchequer is worth his salt who is not ready to save what are meant by candle-ends and cheese-parings in the cause of his country.”

Building on this foundation of spending restraint, the budget provides not only for the abolition of loan levies which would have yielded R651 million, but also for tax concessions of R909 million—a total of R1 560 million. The net effect of the proposed expenditure and revenue changes is an increase in the “deficit before borrowing” of about 32%, namely from R1 683 million, or. about 3,5% of the 1979 gross domestic product, to R2 227 million, or about 3,8% of the estimated 1980 gross domestic product. If realized, this increase will represent an addition to the direct income generated by the Government’s fiscal operations and should have expansionary effects on private consumer and investment spending, and therefore on the rate of economic growth.

In assessing the impact of the budget on the economy, it is important to note that the tax concessions to a large extent represent adjustments needed to prevent the combination of inflation and a progressive tax system-—the so-called “fiscal drag”—from increasing the real tax burden on the community and thereby actually retarding economic growth. The budget therefore promotes growth not through artificial “stimulation” but by freeing the economy from the chains of fiscal drag and thereby providing the scope and incentive for the expansion of output and employment.

The budget combines the encouragement of growth with the maintenance of financial discipline. This discipline is evident not only from the restraint on government spending, but also from the provision made for financing the “deficit before borrowing” without any resort to money creation. Moreover, the budget contains strong elements of “built-in” or automatic stability. Thus, if either the average gold price or the growth rate or the rate of inflation should turn out to be higher than estimated, tax receipts would presumably be higher and the “deficit before borrowing” lower than the estimate given in the budget. This, together with a deliberate policy of borrowing in excess of the Treasury’s requirements and transferring the proceeds to the Stabilization Account, would then place the authorities in a position to offset the expansionary monetary impact of other forces to the extent demanded by the new set of circumstances.

While promoting growth, the budget also contributes to the fight against inflation. It does so not only by maintaining financial discipline and a strong currency, but also by abolishing the import surcharge, providing additional funds for improved training and education, and through increased subsidies on food, transport and housing.

Apart from these elements of short-term economic policy, the budget once again contains important elements of structural tax reform. These include the lowering of and adjustments to income tax scales, the substitution of a new and comprehensive system of rebates for one of abatements, and the further adjustment of income taxes paid by Black persons as a second step in the three-year programme of equalizing taxes on income paid by Blacks and others.

Taking the budget package as a whole, I believe it is fair to say that virtually all groups in the community will derive benefit from it. This applies not only to all income tax and loan levy payers, including married women, but also to pensioners and other social beneficiaries, the aged—many of whom benefit not only from higher pensions but also from significant further tax concessions—employees in the Public Service and statutory bodies, home-owners, farmers, small businesses and, indeed, all consumers. In addition, there are special benefits for Blacks in the form of improved training, education and housing facilities, improvements of the quality of life in Black urban residential areas and the acceleration of homeland development and consolidation.

South Africa is a country confronted by its own unique set of social and political problems—nobody would deny that. But if this budget does one thing, it demonstrates to friend and foe alike the inherent strength of South Africa’s economy and the exhilarating prospects it offers of rising standards of living for all sections of its population.

My last word is for my staff, all of whom have distinguished themselves by their competence, dedication to the task at hand, and integrity. I particularly congratulate Dr. J. H. de Loor, Secretary for Finance, who in a few days from now assumes the important new post of Director-General of Finance. He is admirably equipped for this position.

My warm congratulations and gratitude go also to Mr. S. J. P. du Plessis, Secretary to the Treasury, who on the same date becomes Director-General of Mines and Energy. I shall content myself to say that Mines and Energy have succeeded in taking one of our very best men from the Treasury, if not from the Public Service as a whole. We shall miss him.

Mr. Speaker, I now lay upon the Table—

1. (1) Estimate of Expenditure to be defrayed from State Revenue Account during the financial year ending 31 March 1981 [R.P. 2—’80];
2. (2) Estimate of Revenue for the financial year ending 31 March 1981 [R.P. 3—’80];
3. (3) Statistical/Economic Review [W.P. B.—’80];
4. (4) Comparative figures of Revenue for 1979-’80 and 1980-’81;
5. (5) Taxation proposals [A. 1—’80];
6. (6) Supplementary memorandum on taxation measures—Budget 1980-’81;
7. (7) Proposals for improved social pensions, military pensions and civil pensions;
8. (8) Supplementary memorandum on the relaxation of exchange control—Budget 1980-’81.

Mr. Speaker, may I first congratulate the hon. the Minister of Finance on the budget he has presented. I am quite sure there must be very many people in South Africa who now, at four o’clock, are a little bit richer than they were at 2.15 p.m. Therefore I want to convey to him our congratulations on this budget.

I want to say at the outset that perhaps the most striking characteristic of this budget is that it demonstrates the tremendous strength of the South African economy. I think it also demonstrates in no uncertain manner the benefit our economy has had from exports and, of course, from the increase in the price of gold. It appears to be fairly clear that, as far as those factors are concerned, they have contributed in the main to the ability to make what are very substantial concessions in regard to income tax and the savings levy.

There are of course two major things which are required in the present state of our economy, viz. firstly, the encouragement towards greater growth, and by this I mean not merely greater growth in a general sense, but also in the correct sectors of the economy. There is little doubt that with the injection of further cash into the hands of the consumers, of the taxpayers, there should be a high degree of stimulus given which will enable the growth to take place, certainly if it is orientated from the kind of consumer demand that is likely to be stimulated by these concessions. In that regard the hon. the Minister certainly appears to have taken the correct steps in so far as the stimulation of growth is concerned within the ambit of his own policy of seeking to do it within private enterprise as such. The second major problem is the question of inflation, and in this regard, except for the abolition of the surcharge on imports, one must express some doubt as to whether the steps taken in the budget are adequate in order to fight inflation and to reduce it to manageable levels in the economy. We will have more to say about inflation as the debate proceeds.

It is easy to make concessions when one’s pockets are bulging with money, and therefore we are not ungracious about what has taken place. Many people will have got something from this budget, but there are some people who have been left out and there are some people who have got less than others. There are two particular things that I immediately want to draw attention to. Firstly, I want to express my unhappiness about the increases in the price of brown and white bread. I believe this could have been avoided. [Interjections.] Bread is the staple food of a nation and this increase should not have taken place. There is another thing that one finds strange in the budget and that is why, for example, in a whole list of concessions did the hon. the Minister decide that he is going to tackle the savers by reducing the tax-free benefits in regard to subscription shares in building societies and to tackle the building society movement in that way. At present a person may invest R150 000 between husband and wife to give them an income of R3 000. That is now being reduced to R50 000 between husband and wife. It seems to be a strange thing to do in a budget wherein so many concessions are given.

There is one last question that I want to pose today. We have to examine the budget, not merely in respect of the concessions it is giving or the pleasure that we get as taxpayers, but we have to examine it in regard to the question as to what it is going to do to secure the long-term future and prosperity of South Africa. That is the test of it. The question is how will it help to create jobs and skills and how will it help to improve the quality of life. That is the real test by which this budget has to be judged. There is one other thing that immediately needs to be said and that is that it seems on the face of the budget that not enough is being done in order to encourage the creation of skills, because if we are going to have a great stimulation in consumer demand, the very bottlenecks that the hon. the Minister of Finance was talking about may well be created. Therefore, despite the fact that our initial reaction to this budget is that it is one which will obviously be welcomed in many quarters, it has also to be examined in the context of what it holds for the future of South Africa and we propose to consider the budget in that light in the debate which is to follow.

Mr. Speaker, at this stage I move—

Mr. Speaker, the amendment which is now before us is identical to the amendment that was moved in this House. I moved an amendment during the Committee Stage of this Bill to try to indicate to hon. members how we consider the appointment of a person to the Coloured Persons Council, i.e. that it should be for an interim period. This proviso now provides that such an appointment shall not extend beyond 1 April 1982. Evidently the hon. the Minister, on reflection in the quiet and tranquil atmosphere of the Other Place, decided to accept an amendment along these lines, and we welcome the fact that the hon. the Minister, on such reflection, has brought this amendment before this House for consideration. The proviso states that the period shall not extend to a date beyond 1 April 1982 and in view of the fact that the person to be appointed to this proposed council should be appointed within the next few days— because it is evidently from 1 April that the hon. the Minister intends appointing people to this proposed council—I should be pleased if the hon. the Minister can give some indication whether it is his intention to appoint those persons for the full period, i.e. a period of two years, which is provided for in terms of this amendment, or whether it shall be for a shorter period than the two years as provided for in terms of this proviso.

Mr. Speaker, I am very grateful that the hon. member for Umbilo welcomes this amendment. It was virtually his amendment during the discussion of the Bill in this House. As he said, I have, after mature reflection, and also with further cognizance of certain circumstances, moved the identical amendment in the Other Place, where it was passed. With this amendment I think that he and I both achieved the same object, viz. to stress the fact that this council is not intended to be a permanent institution, but merely an interim body. The hon. member asked me when we proposed to appoint the people. We are receiving so many offers and suggestions from people from all over the country, and from remarkably fine people too, that I do not wish to commit myself to do it on 1 April. However, my intention is to try to dispose of the appointments during the course of April so that we could be certain that the people will serve at least for a period of one year and 11 months.

Mr. Speaker, I move—

The Human Sciences Research Council was established in 1968 in terms of the provisions of the Human Sciences Research Act, No. 23 of 1968, with the object of promoting research in the field of human sciences and also of expanding our knowledge in this respect. Since its establishment the council has found it difficult to find suitable accommodation and up to now it has been necessary to make use of rented accommodation. It is needless to say that apart from the high rentals, it is also not possible, in the confined space of the rented accommodation, which is situated in various buildings, to give the HSRC an identity of its own so that it may function properly.

Consequently the Cabinet has decided to approve in principle that a building be erected for the HSRC and that legislation be introduced to enable the HSRC to enter the capital market.

†The legislation which is now being introduced by me is not contentious, its purpose being merely to empower the Human Sciences Research Council to borrow money from any source for the erection of the proposed building. Such loans will be guaranteed in terms of the recently amended section 35 of the Exchequer and Audit Act, 1975. Any property obtained by means of such a loan will not be alienable without the prior approval of the Minister in consultation with the hon. the Minister of Finance.

Mr. Speaker, it seems to me that if one wants to get legislation through this House quickly, one must reserve it for immediately after the budget, especially when it is a budget such as the one we have heard today leaving everybody in a fairly good mood. I should like to tell the hon. the Minister immediately that we will be supporting this Bill. I really do not think that there is any point in wasting a great deal of the time of this House. However, I must at least say that those of us who have any knowledge at all of the Human Sciences Research Council have been greatly impressed by the work that has been done, and I believe that we are moving in the right direction, as stated by the hon. the Minister in his introductory speech.

With this brief introduction I want to say that we shall support this Bill in all its stages.

Mr. Speaker, on behalf of the NRP I should also like to say that we shall be supporting this amendment Bill. However, in the explanation that the hon. the Minister gave a few minutes ago he mentioned that this particular statutory body has decided to embark upon a course of establishing its own building, for which it will raise certain funds in terms of the amendment Bill, and that it will receive the required guarantee. Apparently the difficulty was that this organization had been caught up in the problem of finding suitable accommodation so as to give itself the proper projected image. I think the hon. the Minister will appreciate there is probably a large number of statutory bodies which are today finding themselves to be in exactly the same position. It is because of the difficulty that so many of these bodies are experiencing in finding proper accommodation, that we in fact encourage and will be supporting this amending legislation. One wonders, however, whether the difficulty which the Human Sciences Research Council have experienced could not possible lead to a considerable demand for this type of facility from other statutory bodies which do not already enjoy this type of facility at the moment. Nevertheless, and because we know that there are so many similar bodies which have this difficulty, we shall be giving our wholehearted support to this legislation.

Mr. Speaker, I am grateful for the support that the official Opposition and the NRP have given to this measure. I merely want to point out in reply to the hon. member who has just sat down that we already have this clause, of course, in respect of many other bodies. The hon. member will recollect that only recently a Bill was discussed in this House whereby section 35 of the Exchequer and Audit Act was amended, and this at least gave the assurance that at all stages the hon. the Minister of Finance and the hon. the Minister concerned with the particular department will have the right either to approve or reject any such application. We do not anticipate any difficulty, because where in the past many other bodies did have the power they used it in a very responsible manner. I thank the hon. members for their support.

Mr. Chairman, I move that this clause be negatived, and now move—

1. (a) let, sell, exchange or otherwise alienate its immovable property;
2. (b) so long as a guarantee furnished in terms of section 35 of the Exchequer and Audit Act, 1975 (Act No. 66 of 1975), is of force and effect in respect of any loan granted to the council—
   1. (i) mortgage or otherwise encumber its immovable property acquired with money obtained by means of that loan;
   2. (ii) let, sell, exchange or otherwise alienate, or hypothecate or otherwise encumber its movable property acquired with money obtained by means of that loan.”.

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

Mr. Speaker, when the affairs of the House were interrupted yesterday to allow the hon. the Prime Minister to throw a tantrum, we were busy …

Order! The hon. member must withdraw that. The business of the House was interrupted for the purpose of proceeding to discuss a motion.

I see, Mr. Speaker. I withdraw that. I was under the wrong impression.

When the business of the House was interrupted, we were discussing the provision that would allow the fixed number of seats as determined by legislation in 1973 to stay like that for another 10 years. At that stage we were dealing with certain aspects of the legislation. I dealt with the attitude of the hon. member for Rissik and commiserated with him because I understood the very embarrassing position in which he found himself in that he was chosen to be the unfortunate one from the Transvaal to show some sort of solidarity. It may very well be that he realizes that his political career in the Transvaal is at an end anyway. However, it may be that somewhere in the Cape a reasonably “verkrampte” seat may be found for him.

What happened in 1966?

The hon. member is gambling very seriously with his political future. I have often had an invitation from the hon. member to speak in his constituency. As a matter of fact, we have appeared on public platforms together on numerous occasions—as opponents of course.

Who won?

Sir, the hon. member always had the audience on his side.

*The next time the hon. member does me the favour of inviting me to come and speak in his constituency again, I shall have to explain to his voters how he left them in the lurch, and how he allowed a measure to pass through Parliament which will mean that the value of the vote of one of his voters is going to be between 50% and 75% of the value of one of the voters in the Cape. Under the leadership of the hon. the Minister of Public Works, of Statistics and of Tourism—the leader of the NP in the Transvaal, a Cabinet Minister, and the leader of the largest and strongest group of the NP in this House—he allowed a step to be taken which will mean that the value of the vote of a Transvaal voter is going to be far less—considerably less—than that of a voter in the Cape.

What is the difference between Bryanston’s and Waterberg’s?

I think the hon. leader of the NP in the Transvaal does not realize that the Cape has got him where they want him. The hon. Minister is going to find in future that he has made a major mistake, viz. that when he had this opportunity of seeing to it that he had an equal chance in the electoral stakes in the future …

*There the hon. the Minister goes again. Every time one quotes the Palm Springs speech made by the hon. the Minister of Co-operation and Development, the hon. the Prime Minister runs away, and if one begins to discuss the Transvaal and the Transvaal leader of the NP, then the Transvaal leader of the NP runs away. However, the fact remains …

What clause in the legislation are you now discussing?

Order! The hon. member must confine himself to the Bill, to the amendments contained in the Bill.

I am confining myself exclusively to that, Sir, and I am trying to indicate what the consequences of the Bill will be. I am trying to indicate that the consequences of the acceptance of the amendment to the Bill will mean that the Transvaal will be placed in what, for it, will be an adverse position in the next election. What does this mean? This simply means that if an election is held on this basis at this stage, the Transvaal will have eight seats fewer than it ought to have. Do hon. members believe this is fair? Does any hon. member of the NP in the Transvaal believe that it is fair that the Transvaal …

Yes.

Oh, the hon. member for Jeppe thinks this is fair. [Interjections.] That hon. member’s constituency has 10 000 or 11 000 voters.

That shows just how uninformed you are.

The hon. member’s constituency is going to disappear in any event as a result of the delimitation.

Are you perhaps the judge of the delimitation commission?

That hon. member’s constituency is going to be one of the constituencies that will most probably disappear. The hon. members for Von Brandis and Pretoria Central do not mind. They concede that it is fair, that it is a good thing, that the Transvaal is to have eight fewer seats. In 10 years’ time, if the situation continues, the Transvaal will have between 17 and 18 seats fewer than it ought to have. This is a gross injustice towards the voters of the Transvaal and it is the Government’s responsibility that this injustice is taking place and it is the representatives of the Transvaal who have allowed the Government to commit this grave injustice against the voters of the Transvaal. In the next 10 years they will have to answer to their voters for what they have allowed to happen.

We shall see to that.

I want to ask only one thing and I want to ask it in all fairness and decency because it is something which affects the different provinces individually, the Transvaal in particular, and because it is a step which affects the different constituencies individually. Consequently it would only be fair if the governing party, by means of its Whips, were to agree that a free vote take place on this issue, that voting should not be in terms of the decisions of party caucuses on this matter, and that as a result, every hon. member should vote in accordance with his own conscience and the interests of his own voters. Consequently I am now asking the hon. the Deputy Minister of the Interior whether he would not perhaps very quickly negotiate with his Whips …

I need not negotiate with my Whips.

Would he just, very quickly, negotiate with his Whips? It would only be fair and reasonable to tell hon. members of his party that this issue will not be dealt with as a caucus matter. I have not even discussed this with my own Whips yet, but even now I can give the assurance that we shall concur on this matter. [Interjections.]

That is news.

The parties on this side of the House will concur on this matter.

That will be the day. [Interjections.]

If the hon. the Deputy Minister negotiates with his Whips, so that agreement can be reached on a free vote, so that every hon. member can vote here according to his own conscience and in the interests of his voters, we shall know whether this step is acceptable to this House as a whole or whether it is acceptable only …

Mr. Speaker, is the hon. member for Bryanston insinuating that hon. members of the NP normally vote against their conscience?

Mr. Speaker, I shall rather not reply to that question because in that case you would most probably rule me out of order.

You are in any event always out of order.

I am putting this request in all fairness and in all decency to the hon. the Deputy Minister. Will he indicate whether he agrees to it? [Interjections.] Does he agree that a free vote should take place on this matter? Does the hon. the Deputy Minister grant his permission for a free vote? Only then will we be able to determine exactly what the decision of the majority of hon. members is. Then there will not be the situation in which that captive group of Transvaal representatives, contrary to their own conviction and their own conscience, have now to vote under the Whip, against the interests of their own voters.

Mr. Speaker, I really do not feel like replying to the hon. member for Bryanston. [Interjections.] I do not know why he goes so far out of his way to incur the wrath and the rancour of his colleagues here in this House. This applies to his own colleagues, as well as to other hon. members of this House. Surely it is after all the practice that we may differ here politically, but that as individuals we make ourselves as acceptable as possible to one another.

Like rhino bulls.

The hon. member for Bryanston would do well to try to do something about his own image in this regard. The hon. member for Bryanston kicked up a tremendous fuss here about the hon. member for Rissik, who was ostensibly the scapegoat who was being led to the slaughter. The hon. member for Rissik is the chairman of the NP’s study group on internal affairs. Thus it is his right and privilege to speak on such an important Bill as this one. Furthermore the hon. member for Rissik is one of the few remaining hon. members who served on the Select Committee of 1973. Therefore he speaks with knowledge of these matters. He does not talk through his hat like the hon. member for Bryanston. [Interjections.] At least he knows what is at issue.

I have never seen hon. members of the Opposition ignore the contents of a Bill so completely as they did with this little Bill. Then to crown it all they set up their own skittles here and knocked them down again. The only member opposite who did at least discuss the legislation itself now and again, was the hon. member for Sandton and it was only to say that it was absolutely essential to have this legislation piloted through this House because it would be a great improvement and was essential for the purposes of meaningful delimitation. Consequently he supported the principle of this Bill. It was the only time he came anywhere near discussing the legislation itself. For the rest he discussed things which had nothing whatsoever to do with the legislation. [Interjections.] The hon. member also made a few other sensible statements which I shall reply to later when I come to the hon. member for Parktown in the course of my speech.

The hon. member for Durban Central summed up the entire contents of this legislation beautifully when he said that its sole purpose was to change the quota which the Delimitation Commission had to use in delimiting constituencies in this country from a Republican quota, which past experience had demonstrated was not an effective quota to use for delimitation in this country, as a result of the circumstances prevailing in this country, to a provincial quota which would make it possible to achieve better results with delimitation. The sole purpose of this legislation is to achieve the object of the legislature more meaningfully by means of the instrument placed in the hands of the Delimitation Commission by the Constitution, i.e. to attain the best results with it. The purpose of this legislation is to establish a provincial quota by means of which there can be more effective delimitation than with a Republican quota. Through lack of discourse and because they did not want to confine themselves to the legislation, those hon. members said all kinds of things and strayed into all kinds of side-issues. A moment ago the hon. member for Bryanston said—and the hon. member for Sea Point was one of the worst culprits in this respect, along with a few other hon. members as well—that we were pegging the number of seats for ten years. Some of them even claimed that the number would be pegged for 17 years. I want to tell those hon. members a secret. If I had not come to this Parliament with this legislation, the Transvaal would have received 76 seats in the next delimitation in terms of the existing Constitution. However, if I change it with this legislation, the Transvaal will still have only 76 constituencies with the next delimitation. The Transvaal will then have just as many constituencies as it would get at present in terms of the existing legislation. So how on earth can hon. members come forward here, over a period of days, with a whole tirade about the fact that I am stealing goodness knows how many seats from the Transvaal, that the Transvalers are leaving one another in the lurch and that they are shutting their eyes to their constituencies being stolen from under their noses? Where does this appear in this legislation?

You are propping up a bad system.

I have now put the case to them very simply. If I had not come to Parliament with this legislation, the number of constituencies in each province would not have changed by one iota. I ask the hon. member for Sandton who is the most important speaker on this aspect on the opposite side, whether this is true or not. Is this legislation going to change in any way the number of constituencies the Transvaal would have received under normal circumstances?

Mr. Speaker, may I reply to that question?

Yes.

If the hon. the Deputy Minister reads our amendment …

No, Mr. Speaker, I do not want to hear the hon. member’s speech again. [Interjections.]

Order! Does the hon. member wish to ask a question?

He wants to answer a question.

No. [Interjections.] The hon. member may tell me whether I am wrong or not. I am asking hon. members opposite whether the fact that I have introduced this legislation is going to make any difference to the number of constituencies a province will receive?

Read the amendment.

That hon. member with the bald head, the member for Sandton, is shaking his head. At least he has the common sense to know that it makes no difference at all. How can the hon. members then deliver a tirade here and say that we are robbing provinces of constituencies which they would have been able to receive? Surely this is not true. Why must such a wrong impression be created so blatantly among the public?

It is a fact that this whole exercise to change the quota has absolutely nothing to do with the number of constituencies a province will receive under normal circumstances. This has already been laid down by section 43 of the Constitution Act and is pegged for 10 years, up to 1983.

The hon. member for Sea Point asked me why there should be a delimitation at this stage. Perhaps that is one of the few questions he put which has some merit. The hon. member for Klip River has already replied to that question. I just want to add something to what he said. The hon. member for Klip River told him that a delimitation of constituencies would normally have had to take place before 1983. But the next general election must take place before 1982. Surely in that case it would be stupid to have an election before 1982, and then have a delimitation in 1983. Can the hon. member not use his head?

Mr. Speaker, may I ask the hon. the Deputy Minister whether it would not be possible to have a delimitation in 1981 for an election in 1982? Secondly, if the present delimitation is completed at the end of this year, is his department going to maintain dual voters’ rolls right through until an election is held in 1983?

The hon. member has not even heard my whole reply yet, but is again asking questions that are uninformed and have no foundation. I told the hon. member that a delimitation would normally have had to take place in 1983 and that an election has to take place before 1982. Surely there is no sense in having a delimitation immediately after an election. But what is more …

But…

The hon. member must wait a bit. In the second place a general registration of voters is in progress at the moment. Under normal circumstances we could have waited until next year before having a delimitation.

Why didn’t you?

Then these constituencies would still have been pegged. It would have made no difference to the number of constituencies the Transvaal would have received.

A Select Committee should be appointed.

I shall come back to that point. The fact of the matter is that we could have waited until next year. At least that is the argument that is being advanced. But the fact of the matter is that we have now had a general registration of voters. We have brand-new voters’ rolls. This has been the best registration ever. [Interjections.] It has been brought up to date by the various parties, and this has been done with the assistance of hon. members.

This is very expensive.

Yes, it is very expensive, but it was a good piece of work.

We did the work.

The voters’ rolls are now as accurate and as up-to-date as we could get them under normal circumstances. [Interjections.] We can discuss general registrations, a voters’ poll, etc., on another occasion. All I can say is that after 31 March this year we shall have the best voters’ rolls, rolls that will be completely up-to-date. What is the point in waiting for a year after these voters’ rolls have just been brought up to date with a view to a delimitation? In a year’s time thousands of people would have moved again and the voters’ rolls would just as inaccurate as they were six months ago. What is the sense then in first waiting for a year before we have a delimitation?

The hon. member should read what the hon. member for Durban Point said in this House in 1973. The hon. member for Durban Point is a far greater expert than he is in the field of the Electoral Laws Act and related matters. I do not want to prolong my reply by quoting everything the hon. member for Durban Point said at the time. But he said, inter alia, that we should for heaven’s sake not base future delimitations on old voters’ rolls that created a distorted picture of the voters in this country. Voters’ rolls can become obsolete very quickly indeed. The hon. member said that we should undertake a delimitation immediately after a survey, and that is why the Government is doing so. Thus it is a practical and well-considered move on the part of the Government to allow a delimitation to take place now which is based on the best and most accurate voters’ rolls available. That is my reply to the hon. member.

How long are the voters’ rolls going to be kept after the delimitation?

As long as is necessary. As soon as the delimitation has been proclaimed. There are no dual voters’ rolls. The bringing up to date of the voters’ rolls is continuing. By the end of April a supplementary voters’ roll will appear.

And after the delimitation?

The delimitation will probably continue until the end of the year, but after the date on which the new delimitation has taken place, the voters’ rolls will be maintained for quite a while.

For how long?

The officials will be able to furnish the hon. member with a reply.

What will happen if there is a by-election?

I told the hon. member that fresh voters’ rolls would appear at the end of each month.

Will this be on the basis of the old delimination?

Vacancies in existing constituencies will be filled on the basis of the old delimitation. If the hon. members do not know this, they should not be sitting here. When a new delimitation is proclaimed an election will be held on the basis of that delimitation, but if vacancies arise in the meantime, they are filled by an election held on the basis of the old electoral division boundaries. However, I do not think we should argue about such trivialities now. These are elementary matters, and the hon. members on the opposite side of the House ought to know this.

The principle of having a delimitation on a Republican quota is an innovation introduced by way of an experiment in 1965. However, from 1910 up to 1965 we did not have such a thing as a Republican quota. We used a Republican quota only for the distribution of the constituencies and subsequently …

[Inaudible.]

The hon. member must not keep on interrupting me. If he has a sensible question to ask he may ask it, but he must not talk continually. A Republican quota is an innovation we introduced in 1965. We did not use anything like that in the past. For 55 years the recognized method of delimiting constituencies in South Africa was based on a provincial quota. In 1965 we came forward with the idea—I think the idea had merit at that stage—that we could determine more or less the same value for voters in the rural constituencies as for those in the urban constituencies in the various provinces by making use of a Republican quota. However, this did not work in practice and for the reasons advanced by the thirteenth Delimitation Commission. It did not work in 1973. Now that this change has been made, and owing to the fact that the constituencies have been established, it has become totally impractical to use this as a method. Hon. members cannot be all there if they say that we must continue to allow an impractical method to remain in the legislation, whereas they know for a fact that another instrument can be created—a tried instrument which was used for 55 years and can be re-introduced. This is now being elevated to a principle. For many years the delimitation on a provincial quota system was the principle, and the hon. member for Sandton conceded that if we were to use the provincial quota during this delimitation, we could apply the purpose of the Constitution, viz. the principle of loading and deloading of constituencies, far more effectively than would have been possible to do by means of a Republican quota. In fact, I go so far as to say that in the larger provinces we would have made a fiasco with a delimitation based on a Republican quota. This is virtually impractical. How can hon. members now say that this is not the actual state of affairs? I do not think this is what is at issue because the hon. member for Sandton conceded to me that this legislation was necessary for these purposes, but then those hon. members began to discuss other matters. And what were those discussions concerned with? They were concerned with a commission report of 1973. Hon. members need not think that we are running away from that commission report. We abide by that commission report. The hon. member for Rissik and I, who were members of the commission, the Government, the NRP, the heir of the Old United Party which was then the official Opposition, and of course the hon. member for Sandton, too, and half of the hon. members opposite who were also members of the United Party at that stage, must abide by that agreement. It was an agreement arrived at by this Parliament. Why must we now run away from it? Why must we now commit breach of faith? That decision that was taken and the recommendation has a history, and I now find it very interesting to see that the legislation which in 1973 led to the appointment of a Select Committee which then came to Parliament with the agreement, was concerned with quite a few principles, inter alia, one pertaining to the holding of simultaneous elections for the provinces and for Parliament.

Section 72 in that legislation contained a principle which the official Opposition rejected at that stage. They did not want to touch it. As a result of that negotiations were conducted and an alternative agreement arrived at, but the principle which was contained in the legislation at that stage and on which negotiations with the official Opposition were conducted, is now receiving the wholehearted support of the hon. member for Sandton and the hon. member for Parktown. I am pleased that this is the case. It is my intention to, and I think that we should re-examine these matters at some stage or other, as the hon. member for Rissik suggested here, since we have the assistance of the official Opposition this time and since they have pledged themselves in advance to this principle here on behalf of their party. Let us now deal with that principle again. The principle was to peg the minimum number of constituencies in a province, and this was what the hon. member for Sandton advocated. The hon. member for Parktown said that he agreed with that. Only one must leave the ceiling at the top open so that the provinces that show legitimate growth are not robbed of their seats.

One vote, one value.

That is what the hon. members are prepared to accept, i.e. what the official Opposition did not want to accept in 1973, and which resulted in the Committee then having to find another formula, which was accepted by all the parties, the hon. members are now accepting on behalf of the official Opposition. This was the intention of the 1973 legislation. At that stage it was incorporated in the legislation by the Government. Hon. members can go and read it for themselves in section 72. It is stated there that the Minister of the Interior, as a result of a decision by the Cabinet, came to Parliament and said: “Let us fix the minimum number of seats for the provinces on the principle of the 1965 delimitation.” The hon. member for Sandton said that this was a principle he endorsed. The hon. member for Parktown said that he supported the other part, viz. that the ceiling should be left open. In other words, the principle for which this Government stood and which it would have preferred in the first place, was that we pegged a minimum number of constituencies for every province on the 1965 basis, and the hon. member for Sea Point says that this is fair. [Interjections.] The ceiling would then be left open, i.e. if one divided the total number of voters by the number of seats and arrived at a Republican quota, and saw that the Cape, for example, would receive one constituency less that it had at such a stage, it would at least have received the number that had been fixed for it. If the Transvaal then showed growth, and had to receive an additional three or four constituencies, it would have received them. This is the principle we wanted in 1973 and in respect of which the hon. members are now supporting us, but which was rejected by the Opposition at that stage.

Because they rejected it and were in that regard more short-sighted than this Opposition—and I shall come back to them again on this principle, because at some time or other, they will have to keep their promises on the principle they have professed so solemnly here—the parties reached an agreement that the constituencies would be fixed for a period of 10 years since certain things were happening in this country at that stage. There were, for example, certain growth points such as Newcastle, Richards Bay, the Sishen-Saldanha project and Secunda. We saw fit at that stage to lay down a specified period to see whether these growth points that had been created would have any real effect on the distribution of voters throughout this country. Consequently we had to re-examine the situation after ten years, and I still adhere to that and so does every hon. member on this side of this House, viz. that the situation will have to be re-examined after ten years. I may also add that I stand by what I said here during the debate in 1973, viz. that we could not continue to allow the political influence and say in this Parliament of some provinces to be continually whittled away and watered down owing to circumstances beyond their control. At some time or other we shall have to do something to come to the aid of rapidly developing areas.

I want to discuss only one other important argument which was advanced here before I conclude. This is the so-called value of the vote. This so-called equal value of the vote is something which is as old as democracy itself. We modelled our parliamentary system on the Westminster system and if hon. members were to take the trouble of ascertaining what the situation in Britain is, they would find that Wales, England, Ulster and Scotland each have a fixed number of constituencies. The average number of voters per constituency differs by thousands. There are cases where the number differs from one country to another by as much as 10 000 or 20 000. So it is not only here where this situation arises. Therefore, to speak of the equal value of a vote in a country such as South Africa with its population distribution, its surface area, its population concentration where the minerals of South Africa are being exploited, is simply wishful thinking.

It is wishful thinking which only the official Opposition could have because they are confined to the slopes of Table Mountain and the mine dumps of Johannesburg. They have no interest in what is happening on the plains of South Africa. The hon. member for Sea Point can sleep comfortably here in his Union Jack pyjamas, because he need not care. He knows that his party will never make any headway beyond the Peninsula complex. That is why he does not care two hoots about what becomes of the vast rural areas of this country.

The fact of the matter is that when the Union of South Africa was established, votes did not have an equal value. Then the Cape Province had to give up seats for the sake of other provinces so that a Union could be established. Since Union and up to 1957 the Cape Province has carried an extra load of voters owing to the fact that the Coloured voters were not included in the union quota when it came to the allocation of constituencies. However, the Cape Province had to carry those voters and was consequently subject to additional loading. How can hon. members now speak of an equality of votes?

Another fact is that the Electoral Act contains a provision to the effect that a constituency in an urban complex may have 30% more voters than a rural area. In the Gordonia constituency there are more than 5 000 fewer voters than in Sea Point. This is the result of our existing system and not the result of this legislation. How can the hon. member for Sea Point now say that we are diminishing the value of the votes? It is a fact that it is an integral facet of our Electoral Act that constituencies in this country are to have different numbers of voters. We extended this aspect with the establishment of area constituencies. For that reason hon. members’ argument that we are further impairing the equality of votes by means of this Bill, is absolute nonsense and cannot be substantiated by the facts.

Mr. Speaker, I move—

Schedule 2 of the Financial Relations Act, 1976, contains those matters in respect of which the provinces may adopt legislation if the matter concerned has been transferred by the State President to a province.

Owing to developments elsewhere in Africa, the demand from abroad for hunting facilities in the Republic has, especially during the last two years, increased drastically. As a result of this, the trophy hunting trade has developed rapidly. The majority of hunters from abroad are influential persons, and a healthy trade will contribute much to better foreign relations with the Republic. Because the fees for this type of hunting are high, many people without the necessary expertise enter this profession and pose as professional hunters or hunting guides, solely to enrich themselves. This type of action leads to large-scale exploitation of the visitors.

At present no legislation exists to protect hunters from such unethical conduct, and owing to the conduct of the so-called hunting guides, not only the image of the trade is being harmed but also that of the country. Legislation to control and place the trade on a sound basis has now become imperative.

The Provincial Administrations, who are at present responsible for the protection of game in their respective provinces, are regarded as the authorities best suited to control the trade. In order to control the hunting trade and thereby prevent the malpractices, it is proposed in clause 1 of the Bill that a new paragraph 2A be inserted in Schedule 2 of the Act.

As the hon. the Deputy Minister quite rightly says, in terms of Schedule 2 of the Financial Relations Act, the provinces have up to now been responsible for the preservation of flora and fauna. They interpreted that fairly widely. Already provinces have set down hunting seasons and issued licences for hunting. I think most of us were probably under the impression that the provinces already had the powers the hon. the Deputy Minister is giving them now.

The hon. the Deputy Minister is quite correct when he sticks to the interpretation of what is included in the schedule, which would make it necessary to include this provision. This Bill has our support. We too, in these benches, have been appalled by what has been going on as far as hunting is concerned. Various people have set up hunting farms where caged lion are released for the sake of visiting hunters, if they can be called that, because all they are murderers. They pick out a lion from a cage, select their lion at random. That lion is then released, shot, stuffed and sent back to the USA or wherever it may be. I see the hon. the Deputy Minister has a newspaper clipping explaining just that very situation. Obviously this has to be stopped.

South Africa, which at one time had a very proud reputation for conservation has been losing that as the result of the despicable conduct of people of this kind.

What do they say there about rhino bulls?

I am very glad indeed that the hon. the Deputy Minister has introduced this measure. It will give more strength to the provinces to regulate hunting. I hope that this sort of thing is going to be rooted out. I hope it is going to be made totally illegal. I also hope the provinces will act quickly as a result of this change in the law and issue regulations at a very early date.

We support the Second Reading of this Bill.

Mr. Speaker, at the outset I wish to thank the hon. the Deputy Minister for the fact that he has come forward with this essential legislation. I am also grateful to know that the official Opposition is prepared to support this measure. I welcome this, because it will now enable the provinces to exercise proper control over the hunting industry and prevent malpractices. This legislation meets a need which has existed for many years. I pleaded for this in this House two years ago. That is why I am so very pleased today that we have reached this stage.

Under existing circumstances, there are many malpractices which the so-called professional hunters perpetrate. Unfortunately the professional hunters accompanying overseas trophy hunters to this country are not always honest and reliable. The dishonest actions of such people not only harm the trade as such, but also the good name of South Africa. South Africa’s animal life, its game reserves, flora, scenic beauty and sunshine are very important assets. It is these assets which we have to sell to overseas tourists and visitors. The principal hunting grounds of Africa are, to a great extent, closed to hunters as a result of Government decisions and owing to the instability prevailing in certain countries. The high risks attached to visits to those places have led to trophy hunters coming to South Africa to practise their sport here. South Africa is virtually the only country in Africa where peace, order and stability prevail, so that hunters can practise their sport unhindered. Consequently a large number of companies have been established here. Those companies bring out overseas hunters and they are then accompanied on hunting safaris. However, there are professional hunters for whom the profit motive is the most important consideration. Consequently many irregularities take place as I have already mentioned, and this does harm to our good name. Overseas trophy hunters are normally rich, important and influential people in society. According to my information, these trophy hunters spend huge sums of money to practise their sport here. It has been calculated that the amount is in the region of R10 million per annum. I have heard that as much as R2 000 is paid to shoot a single lion. In a report in Rapport of 9 September 1979, it was stated that a game farmer had bought a rhinoceros from the Natal Parks Board for an amount of R1 000. The animal was then drugged, captured, and kept under sedation on the long journey to the Transvaal. When the animal was off-loaded there, it was still drugged. A hunter was brought to the spot and he shot the rhinoceros that was still in a drugged state. This netted the owner the handsome amount of R7 000. In the same report it was stated that R220 was paid for the shooting of an impala. In one of the advertising pamphlets it was stated that cheetahs could be shot at R2 000 each. To shoot a lion, a rhinoceros or a leopard, one has to reserve accommodation two weeks in advance at safari camps, at R200 a day. In other words, after one has paid for the two weeks’ accommodation and has shot the lion, the transaction costs R4 800. Transport and accommodation for hunters could cost as much as R350 a day. Incidentally, I just wish to emphasize that trophy hunters are not people who exterminate game or who simply shoot game indiscriminately. That is why it is so essential that professional hunters should be honest and reliable.

I have already pointed out several of these malpractices on a previous occasion. For example, I pointed out that people made use of tape-recordings and loudspeakers to entice lions from the game reserve and shoot them. There was also the case of the old lion that was drugged and shot during the early hours of the morning on the outskirts of Johannesburg. The accommodation and food offered by the safari guides are sometimes shocking, particularly if one takes into account that it could cost a trophy hunter as much as R10 000 to go on such a “safari”. I wish to express the hope that the provincial authorities will co-operate very closely in exercising the necessary control. I also wish to express the hope that the existing professional hunters’ association will, in due course, obtain the necessary recognition and that the professional hunters will be required to become members of this association, submit to its discipline, and be properly licenced so that they could be properly punished and suspended if they were to contravene the rules and regulations.

Tourism has become a major industry in our country. The value of tourism to our country already amounts to something in the region of R300 million to R400 million a year. It is a great earner of foreign currency for us. Overseas trophy hunters are, as I have already stated, mostly millionaires and influential people. If the trophy hunter has been treated fairly, he will come again, and if he does not return, his friends will. The publicity which a satisfied trophy hunter gives us, costs us nothing. But if he is disappointed, he will proclaim his disappointment to his friends in no uncertain terms.

This Bill affords the provinces an opportunity of controlling the hunting industry and eliminating any malpractices. For the sake of hunting, for the sake of the industry, and for the sake of South Africa’s good name, I welcome this Bill.

Mr. Speaker, the NRP will be supporting the Second Reading of this Bill before us today. We shall do so with acclamation. I believe it is fitting that we should acknowledge a possible reason for the fact that we have this legislation before us. I think that almost beyond doubt we have to thank a certain reporter by the name of Ferreira, who ran a campaign in The Star last year, highlighting these problems and insisting that something be done about them. It is not always the case that newspapers come in for praise, but I believe that in this case they have highlighted the situation that existed and the fact that there was an anomaly in the way game, particularly lion, cheetah and leopard, could be hunted in the Transvaal with apparently very few restrictions placed on that hunting. This was being exploited very, very seriously, and the hon. member for Kempton Park has referred to this in his speech. I believe that any newspaper which fulfils that function has made a very important contribution and has met the requirement of being in the public interest.

There has been referred to the farcical way in which some animals are shot. Some are shot in a drugged condition and others are specially reared to be hunted. I do not think that by any stretch of the imagination that could be referred to, as the hon. the Minister may unwittingly have done, as exploitation of hunters. It is exploitation of our priceless natural heritage. It is not an exploitation of a hunter from overseas who has more money than sense: It is an exploitation of a heritage this country has and which no amount of money can buy. If we eradicate, or allow to be eradicated, any of the magnificent animals, no amount of money can ever buy them back for the future generations in this country. I think we should approach this measure with a mind to seeing that, let alone the exploitation of hunters, it is the game as such that must not be exploited. I think it is right to indicate in this debate that we feel very strongly about this, because South Africa is known for its wild animals and for its generally very sensible and very practical method of conserving those animals and preserving them in their natural environment. I think it is important that we state this at a time like this. We should not allow the impression to be created that we are protecting the rights of hunters to come from overseas and wipe out the game, whatever price they may be prepared to pay.

There are some people who think that to hunt is a manly exploit or pastime, but I would say that that may have been the case in the days of bows and arrows when man found himself almost on equal terms with the animals. However, today when fast vehicles, loudspeaker effects, artificial lures, high-powered rifles and other methods are used, I think that the expression used by a previous speaker that this is nothing more or less than murder is far more realistic term than hunting, sport, pleasure or anything else it may be referred to. With these words I want to say that we support this legislation and will vote in favour of the Second Reading.

Mr. Speaker, I fully associate myself with the sentiments expressed by the hon. member for Berea. I agree that it is in effect exploiting our national heritage and I am very glad that he supports this measure. I want to tell the hon. member for Orange Grove that last year at the annual conference of Administrators they specifically asked the Minister for this enabling legislation. Now that we are placing it on the Statute Book, I think they will act immediately. I was really perturbed and shocked when I read in the newspaper the article to which the hon. member referred.

*I wish to thank the hon. member for Kempton Park sincerely for the excellent way in which he has pledged his support for this legislation. It deals of course a matter which he has felt strongly about for a long time, and I know that he has also spoken about it on previous occasions. I am pleased that his ideal is being realized today. I share his joy that we are caring for our heritage and that it is being utilized to the benefit of South Africa. We are not going to allow unscrupulous individuals to exploit this heritage.

Mr. Speaker, I move—

It is common knowledge that the identity document issued to persons 16 years and older is not popular owing to its size as it is too big and inconvenient to carry on one’s person. Experience has also shown that the identity document issued to persons under the age of 16 years at great cost, has not achieved its aim as in practice very little use is made of the document. In the light of foregoing, a departmental committee of inquiry was appointed to inquire into and to make recommendations on how, inter alia, the following decisions of the Cabinet could be implemented—

1. (a) that the size, number of pages and division of the identity document be reduced as deemed fit, after consultation with the departments and instances concerned; and
2. (b) that the identity document for children be substituted.

The committee completed its investigation during October 1979.

After a thorough investigation it was decided—

1. (a) that the existing identity document be reduced in size and that the contents thereof be limited to essential information; and
2. (b) that the existing identity document for children be replaced with a certificate printed by computer to be known as a “certificate of particulars of birth”.

Those recommendations that require amendment of the Population Registration Act are contained in this Bill.

*To make it practicable and convenient to carry the identity document on one’s person, it has been found that the size of the existing document should be reduced from 130 mm x 100 mm to 110 mm x 80 mm, which would still make it possible for the information it contains to be printed by means of a computer. With regard to the essential information that has to be contained in this document, it has also been decided that the present number of inner pages should be reduced from 48 to 16. Particulars appearing in the identity document at present and which have to be omitted, as proposed in the Bill, are for example miscellaneous immunizations, blood group, illnesses or complaints, allergies, and the removal of the name of the holder from the population register after death.

The proposed smaller identity document would offer sufficient space to contain particulars of identity, photograph, six fire-arm licences, marriage certificate and change in marital state, explanation of identity number and particulars with regard to the reporting of any changes of address, driver’s licence and restrictions, as well as endorsements to licences, codes and classes of vehicles in drivers’ licences, birth certificate, as well as a blank page which would be reserved for official use.

Since the existing document will continue to remain in use after the introduction of the smaller identity document, the latter would only be issued to persons under the following circumstances—

1. (a) to all new applicants;
2. (b) only when an important fact in the identity document changes—for example, marital state, driver’s licence, etc.—and
3. (c) whenever a person has lost his identity document.

Approximately 243 000 children’s identity documents are issued annually on the registration of the birth of children. Taking into account the fact that the children’s identity document is not used as an identification medium in practice, because in the first place no need for it exists, and in the second place because it is not really a means of identification, because it could not be linked to a specific person by means of a photograph, the continued existence of this document is not warranted.

Apart from the recording of details of immunization, the use of the children’s identity document is limited in practice to the verification of the date of birth of a child, population group and spelling of names on admission to a school.

With regard to information on compulsory immunization against small-pox and poliomyelitis, the position is at present that the Department of Health, for various reasons, undertakes no follow-up work with regard to cases brought to their notice of children who have not been immunized. It is also known that if an epidemic were to break out in a particular area, all the inhabitants of that area would have to be immunized without exception, without consulting the record of immunization in the identity documents. It is therefore obvious that the entire system of control over immunizations in the identity document as well as on the computer, serves no real purpose. Because it has also been ascertained that virtually no child, and also very few persons of 16 years and older, carry their identity documents on their person, the recording of various immunizations, blood group, illnesses and allergies in the document are of no value at all. In any event, the indications are that very few people have their blood group, etc., recorded. The Department of Health agrees that details of immunization and other medical information in the identity document could be dispensed with.

Mr. Speaker, I was very interested to listen to the hon. the Deputy Minister’s speech and particularly in regard to the statements he made relating to the future ideas that his department has in regard to the identity document, for example, its size and the sort of details that are going to be contained in it. I am sure, and we have seen specimens of the new identity document, that it is going to be a far more efficient system and document than we have had in the past. On what we have seen at the present time, we should congratulate the hon. the Deputy Minister and the Secretary of the department, who has had a lot to do with the revamping of the document. I have one of those which the hon. the Deputy Minister has in his hand. However, much of what was contained in the hon. the Deputy Minister’s speech is in fact not contained in the Bill at all in that the question of the size of the document and future projections of information to be contained therein are not relevant to the Bill.

In fact, this Bill deals only with the question of identity documents being issued to children, to people under the age of 16. I have often wondered why babies had to have identity documents. I have looked at the details inside the documents which are issued to children as they are born by which children are required to notify the Secretary for the Interior of changes of address for electoral purposes, and, quite frankly, the old document, that is the little grey book which was given to children, was an absolute mine of useless information. I think it is a good thing that it be abolished in favour of the form in which we now have it. The certificate of birth is going to be issued in the place of that document and very limited information will be required. The hon. the Deputy Minister set out the details of the information which is going to be required on a certificate of birth, and I think that we should just say at this stage that we are looking forward to the day when the “bevolkingsgroep”, as the hon. the Deputy Minister mentioned, could also be deleted from such details and that a person can only be described as a South African and not as a Black, Coloured, Indian, Tswana or Sotho South African. I think that that ought to be the trend for the future, and I hope that the hon. the Deputy Minister will use his “ver-ligte” influence in the Cabinet to bring this about. Much of the information in the old document which babies had to carry was never referred to. That information was very seldom, if ever, up-dated, and one now asks the question why a book like that was ever brought out in the first instance. Who was responsible for bringing out that old document, which has become so useless and which is sent to fathers a few months after the birth of their sons and daughters, put away in a filing cabinet and never seen again?

With these few words I should like to say that I am glad to see the department under the present Secretary and the present hon. the Deputy Minister is becoming a little more efficient than it has been in the past and I hope that that will be the trend for the future. We will support this Bill.

Mr. Speaker, we on this side of the House also wish to thank the hon. the Deputy Minister sincerely for at last reducing the size of the population registration document. In that connection I wish to associate myself with what the hon. member for Sandton said. The fact of the matter is that this little book has nevertheless served its purpose. It was a wonderful product which the Government created, particularly in respect of identification during elections. This little book has already played a role in that regard, and the fact of the matter is that everyone over the age of 16 years does, after all, find it necessary to carry this little book.

We shall still see in future that it is in fact going to be a great improvement, as time has also taught us, that the Department of the Interior need no longer send a reminder to 15-year-olds. As the hon. the Deputy Minister said, a vast number of notifications went astray. In many cases the notifications did not reach the people concerned and now the obligation is being imposed on parents and guardians to see to it that their children apply for registration at the age of 16. It is also being envisaged with this legislation that it has to be arranged with the principals of high schools in every town or city that when pupils reach the age of 16 years, they should apply for registration, even though it is not always so clearly defined.

As the hon. the Deputy Minister also pointed out, 243 000 identity documents for children are issued every year on registration of births, at a cost of 25c each. Since the obligation is now being imposed on the parents, this entails an annual saving of R60 000 for the State. After all, there could be no justification for all these things to be done, since the identity document as it exists at present, is only used as a medium of identification when it appears to be necessary to enrol a child at a school. It is limited to the verification of the date of birth of the child. It is also used for the indication of a specific population group. I wish to tell the hon. member for Sandton that it is obvious that there should be a clear indication of the various population groups. It should be clearly indicated, and we on this side of the House will insist that it should only remain applicable to the population group to which it is applicable at present. In the past, these certificates were often used only for reference in connection with the spelling of names and for the admission of the particular pupils to schools.

As far as compulsory immunizations are concerned, this document has never really been used. The fact of the matter is that the Department of Health was requested to follow up certain cases. In practice, however, the Department of Health was unable to undertake any follow-up work. The control function rested with the Department of the Interior. So this information was worthless. If an epidemic were to break out in a particular area, all the inhabitants of that area would have to immunized in any case. But it would not first be ascertained who had been immunized and who not, and in that respect too, the little book served no purpose.

Furthermore, very few people ever knew to which blood group they belonged. In the event of an accident, a doctor could not ascertain what particular blood group had to be used in a transfusion until the blood of the person concerned had been tested. For this reason, the entry space with regard to the blood group did not serve any purpose either.

As far as the recording of illnesses, allergies, etc. are concerned, this document was also of very little value. The same applied to deaths. Since 1 February 1972, when this system was introduced, only 65 death certificates have been issued that have been pasted into identity documents. Hon. members will therefore see that here, too, it served no purpose.

Life is difficult enough without being burdened with keeping an account of illnesses such as tetanus, and illness for which the document also makes provision. This is an illness which already occurred 400 years before Christ. It is very obvious that if every person were to be immunized against that, it would not be necessary to record this in the little book. The same applies to another illness, namely porphyria, for which provision is also made in this document. This is a metabolic illness in which heredity plays a major role. It appeared in the Cape for the first time in 1688, when two Hollanders got married.

After a historic review of all these matters, it is patently obvious that all these things need not be recorded in the little book. I therefore pledge my full support to the hon. the Minister and the Government with regard to this Bill.

Mr. Speaker …

Now is your big moment.

It may be a big moment, but it is a small document. We welcome this new identity document. We think it is a far handier booklet than the one we have been using up till now. However, there are a few points about it that we should like to comment on. Firstly it allows one page for endorsements regarding the change of one’s marital status, but two pages regarding additional fire-arms. Also it only allows one page for any additional driver’s licences. It appears to me that this document has almost been designed for a State which is going to consist of people who are going to be armed to the teeth.

There is one point that disturbs us somewhat. It concerns the ever-present problem of the falsification of this type of document. We wonder if consideration has been given to a type of dye beneath the photograph. The dye is released and then spoils that page the minute one tries to lift the covering on the photograph. I do not know whether this has been embodied in this document, but I have seen it on similar documents overseas. It is a very clever way of stopping any possible attempt at forgery or falsification, because that particular page of the document which contains the particulars of the holder is immediately spoiled. It can therefore not be tampered with. We believe that the Government must have spent many, many thousands of rand over the years on the finalization of an identity document. It is sad that we have to learn through experience, always at the expense of the taxpayer. Although it is history now, we do not believe that sufficient thought was given to the earlier document and we are therefore certainly not sorry to see that go. Neither are we sorry to see it being replaced by this document which we have had exhibited to us in the House today.

We welcome the provisions as far as children are concerned. In fact, we have nothing but praise for all the measures contained in the Bill. We shall therefore support it through all its stages.

Mr. Speaker, I wish to tell the hon. member for Rosettenville that as usual, he was on the right track. The hon. member gave the House a very clear explanation of the things we found redundant and which were not necessary to include in the document. We originally thought they could serve a purpose, but it has become apparent over the years that this information is not used, and for that reason it is not being included in the new book again. I can therefore tell the hon. member for Sandton that the officials of the department are very resourceful. They did conduct experiments in connection with the identity document for children, but all of us learn by experience. The department is particularly resourceful in connection with these things, and they are continually investigating other aspects in connection with the identity document. When finality has been reached, we shall again have a debate on it in the House, as well as on the matters the hon. member suggested. I wish to tell the hon. member for Umhlanga that we have ascertained that the average number of fire-arms which an adult male person in South Africa possesses, is six. So, we do not wish to arm the country to the teeth. It seems to me that all of us have sufficient ammunition for use when necessary.

With regard to the prevention of forgery, that has received ample attention. The hon. member will notice that provision is made in the document for a possible thumb print later on, if we can agree on that. But we first have to do some more thinking about these things. At the moment the idea is to print it on the same paper as that on which bonus bonds are printed. This is a special paper which makes forgery impossible. They are being printed with an intaglio machine, a special machine which we imported, in such a way that one cannot erase anything. The hon. member also referred to a type of dye. In the department, we call this “lamination”. The idea is that certain parts of the inscription are laminated to protect them against forgery. So attention was given to those aspects as well.

Mr. Speaker, I move—

This Bill has a double purpose. Firstly, it proposes to amend and extend the objects of the S.A. Defence Force Fund. Secondly, it proposes to effect certain improvements to the text of the Act.

As hon. members know, the Fund-raising Act, 1978, came into effect on 1 September 1979. Since that date, the S.A. Defence Force Fund has been a statutory fund, under the control of a board, which is appointed by the Minister of Defence. The board of the S.A. Defence Force Fund requested me to extend the objects of the fund as regards the circumstances in which, and the people to whom the fund may lend assistance. Clauses 3 and 4 of the Bill will give effect to this request.

As the Act now reads the S.A. Defence Force Fund may offer financial assistance to members and former members of the Defence Force and their dependents who are suffering financially as a result of active service which members are performing or have performed. The word “active service” has a very limited meaning, however, because it only relates to service performed in wartime or in the suppression of armed violence. At present our Defence Force is not being used for that purpose, and the chances that our Defence Force will be used for that in future, are rather slim.

However, since the inception of the Fund, it has been the intention that the Fund should grant financial assistance to members and their dependents who are suffering financial hardship due to service in terms of the Defence Act. These services are, inter alia, service in defence of the Republic, the prevention and suppression of terrorism and internal disorder, for the protection of lives, property and essential services, as well as service in connection with certain Police duties.

†Secondly, as I have said earlier, the council asked me to amend and extend the Fund’s objectives in respect of the persons to whom the Fund may render assistance. As the Fund’s objectives read at present, it is unable to render any assistance to members of the auxiliary services of the Defence Force. Since these members may also be used in a fighting capacity the board submits that these members should also be entitled to assistance should they suffer hardship as a result of military service. I agree wholeheartedly with the board’s submission.

*Of the remaining clauses it is probably only clause 7 which needs further elucidation. Clause 34 of the Act, inter alia, prescribes the penalties for all offences in terms of the Act, except offences in terms of clause 27. Clause 7 merely rectifies this shortcoming.

Mr. Speaker, we are dealing again with a fund-raising measure. Many hon. members will remember the bitter dispute in this House when the original Bill was introduced here, followed by another similar measure in connection with national welfare. As a background to this I should like to remind hon. members of the support given by hon. members on this side when the original measure was introduced here. We supported it because we recognized the need for control over fund-raising in order to prevent exploitation of the public in general. We want to see that the public is protected when donations are requested from them. In terms of this provision there will be a contract which will be disclosed to the public. People receiving commissions will also have to disclose what they receive. The purpose for which the money is raised will also have to be disclosed.

We earlier stated the need for this. We did that in view of the fact that there are something like 4 000 welfare organizations operating in South Africa, collecting something like R135 million a year for welfare in general. Hon. members will also recall that there was a two-year moratorium granted to all welfare organizations in South Africa to register. Similarly the welfare boards will now be set up. From a Government Gazette of 31 August 1979 I see that this also applies to Indians for whom welfare boards have also been set up. This is the background, and the hon. the Minister might now tell us whether these welfare organizations are waiting the two-year period or whether they are, in fact, going ahead with registration now, because I see, in the Government Gazette and the Press from time to time, adverts which have to be placed, by regulation, in applying for registration.

Hon. members will also recall that in a previous debate the hon. the Minister told us that the fund-raising aspect would be a mere formality as far as he was concerned. Perhaps this hon. Minister will tell us if it is, in fact, a mere formality and whether the people are registering or are waiting the period of two years.

That does not have anything to do with this Bill.

No, I am merely giving a Second Reading introduction to the whole subject. [Interjections.]

Is that your Second Reading introduction?

The Bill itself contains a number of provisions that are acceptable, but there is one provision in the Bill that is so unacceptable that we are going to oppose the Second Reading of the Bill. I shall come to that aspect in a moment.

I hope you are not going to oppose the first part because that has nothing to do with the Bill.

I am merely motivating my case. Clause 1 refers to the substitution of the word “goods” by the word “property”. We have no problem with that. It is merely a question of grammar. The proposed new section 1(b) provides for the substitution of the expression “21” by the expression “23”. We do not have any objection to that either.

I now come to clause 2 which refers to section 10 of the principal Act. This deals with the question of appeal. In the original draft, appeal only related to a “decision” and not to a “direction”. We think it important enough also to have an appeal in regard to a “direction”. In fact, we find this as important as an appeal in regard to a “decision”. The proposed new section 10(3) proposes to omit the word “holder”. This should be read in conjunction with the proposed new-section 10(1). The proposed new subsection (3) amends the provision involving the appellant appearing before the appeal committee “in person (in the case of a holder)”. This refers to the holder of a temporary authority. This is to grant such holder a right, because obviously a temporary authority is very important in the whole question of fundraising. So if that temporary authority is refused, there should be a measure of relief, and provision should be made for it. So we accept that.

This brings me to clause 3 which refers to section 15 of the principal Act. This provides for the deletion of the definition of “active service”. I do not want to argue the toss at this stage and say to what extent I think South Africans are on active service. I should like to think, as many have done in the past, that until there has been a formal declaration of war, we are not on active service. I am prepared to accept that and to regard the service mentioned as being merely a service contemplated in terms of the provisions of the Defence Act.

I now come to clause 4 which deals with section 18 of the principal Act. The reference to “auxiliary services” here includes the Cape Corps. Obviously it is only fair and proper for auxiliary services to include the Cape Corps. I think this was a gap in the original legislation, and I therefore support this provision.

I now come to the contentious clause, clause 5, which refers to the proposed new section 27. Here mention is made of a little word, and that is “knowingly”. I quote the provision as it stood originally—

The intention, however, is to omit the word “knowingly”. We, however, are against the omission of this word. We should like it retained. I think that all lawyers will support me when I say that to be guilty of an offence there must be meas rea, in other words there must be intention. When one commits an offence, it is assumed that one commits it knowingly because ignorance of the law is no excuse. As I have said, there are some 4 000 welfare organizations in South Africa. True enough, in most cases there are full-time organizers involved, which is fine. There are, however, thousands of people in South Africa who have their own professions or businesses but who lend their time to certain welfare organizations because they have a particular interest in a certain type of welfare work. They do so on a part-time basis. The law at present provides that where “any person who, in any way, participates in the management of control of a fund-raising organization … knowingly” contravenes the Act, a certain situation arises. Let us say that I, though engaged in my own profession, am also a member of a national organization which calls me to a meeting two or three times a year. Then one day it is found that the national organization has committed a contravention of the Act. If I had been elected chairman, I would be charged and, whether I knew about the contravention or not, I would be guilty in terms of this provision because I did not have to know that an offence had been committed. This will act as a deterrent to the thousands of people who lend their services and give of their time.

But an organization is not a living person.

I shall come to that in a moment. I do not believe we should try to put people off giving of their time, their energy and their influence. Influence is a very important factor in a welfare organization, since welfare organizations are always seeking funds and know through that influence where funds can possibly be obtained in order to further the objects and aims of the organizations concerned.

To get back to the legal point, a series of situations can arise. Firstly, who can commit the offence? In the first instance “any person”. Mr. Speaker, that includes you and me and the man in the street. It also includes a corporation or a body corporate. The provision furthermore contains the following words: “… or registered branch or an authorized or other organization which contravenes …”. I think the hon. the Minister wants to make the point that, while the provision contains the words “or other organizations”, an organization cannot knowingly commit an offence. I think that is going to be his argument.

That is right.

Surely we apply the principles of the Companies Act.

Why would the Companies Act apply to an organization?

I said the principles of the Companies Act would apply.

Why?

If a company commits an offence, the directors are charged. There is the law of vicarious liability. The directors of companies can therefore be held liable. What is being said here in effect means that, even though I should be a director of X (Pty.) Ltd. and the company has committed an offence, I need not have know that an offence was committed. We are dealing here with welfare, with charitable organizations. We are dealing with people who voluntarily give of their time to render assistance. Why expose them to the risk of being charged for a criminal contravention? We will be putting people off, while we want to encourage them. In the circumstances we feel quite strongly about this. I think it was the old section 16(3) of the 1965 Act which placed the responsibility on directors in respect of criminal offences, but I believe that the legislation as it is worded at present should not be altered. I checked through the Committee Stage of the debate in 1978 but I could not find any discussion on the relevant clause at that stage. In other words, no argument was raised in the Committee Stage at the time about the word “knowingly”. We believe this provision should remain unaltered.

Clause 6 seeks to amend section 30 of the principal Act and relates to the addition of the word “therefrom”, which was obviously an omission previously. The same applies to the words “nadat hy ’n ontvangsbewys daarvoor uitgereik het” in the Afrikaans text. We have no objection to that.

Clause 7 serves to amend section 34 of the principal Act and relates to the contravention of section 27 of the Act. We accept that there is a gap in the law in that it provides for a contravention but not for a penalty. Obviously we accept the provisions of the clause. It is no good stating that a certain action constitutes a contravention unless one also provides for a penalty.

Except for the one clause, there are therefore fairly good provisions contained in the Bill. If the hon. the Minister can tell us now that he is prepared to retain the word “knowingly”, we shall support the Bill. If however he insists on deleting it, we shall oppose the Bill.

Mr. Speaker, unlike the hon. member for Hillbrow, I should prefer to confine myself to the most important principle which the hon. the Minister has incorporated in the Bill. It concerns the extending of the objectives of the S.A. Defence Force Fund to certain other auxiliary services. We are at present engaged in a war of low intensity which threatens our existence. We are therefore steeling and strengthening our country in every component of a total national strategy. With that in view, we are dealing here with the morale of our national servicemen, their dependants and certain people who are performing other auxiliary services in order to keep the morale of those people at the optimum level.

The idea of moral and physical assistance on the home front originated and found expression in the Central Defence Force Fund so as to assure the essential feeling of security among our men on the border. They must know that we here on the home front are thinking of them on the border where they, through their hardship and sacrifices, are rendering a service to us, too. We want to have compassion on them at a time of need, which could arise as a result of the broad defence strategy aimed at those who seek our downfall in this country. That is why this amendment of the legislation is being introduced, so as to include the dependants, too, of our men engaged in any facet of this defence action.

The Central Defence Force Fund’s most important sources of revenue are, first of all, the Southern Cross Fund, which has 250 branches throughout the country; secondly, the Women’s Association of the S.A. Defence Force; and thirdly, individual contributions by the public and donations from estates. Apart from recreational facilities like sporting gear, record players, television sets and swimming pools to make the lives of our men on the border more pleasant, certain welfare services are also being rendered in the form of equipment for the injured, reading apparatus for the blind and financial aid in all kinds of emergency situations which may arise and for which specific provision is being made in the legislation. In this way, for example, more than R345 000 in respect of welfare services and more than R210 000 in respect of donations and amenities were provided from the S.A. Defence Force Fund in the year which ended on 31 December 1979.

In our present situation we are often dealing with a fellow-countryman who, after two years of military service, returns home with financial, family or household problems or even with a physical handicap or possible psychological problems. He and his dependants need our moral and financial help and support to rehabilitate and to reorientate themselves in order to find a decent place in our society again. That is why it is so essential that we support, generously and with the necessary compassion in our hearts, this defence action being conducted by the Southern Cross Fund and indeed to help to develop it further in order to do something about the need which really exists. If there is still any misapprehension about this, it should now be removed once and for all, because this fund is being used to good effect as part of our national defence effort. It can happen that large amounts of money are sometimes needed for a single person, sums far beyond the means of any welfare organization or any church, in order to assist a returning serviceman, who may come back as an unemployed person, to find a place for himself and his family in our society. We must bear in mind that if this kind of financial support is not available, the terrorist, the treacherous murderer on our border who seeks the downfall of us all, has not only wounded a son of South Africa, but has also shaken the whole structure of family life, which is the cornerstone of a nation, and caused it to tremble before the onslaught of Russian imperialism. This we cannot and may not allow. Therefore, in our struggle for survival here at the southern tip of Africa we need not only the best and most sophisticated arms, but also physically and spiritually prepared men who must be aware of and experience the fact that the whole population of South Africa is behind them in word and deed, that we shall support and protect them with compassion and affection, because we are all bound together by one bond, a common bond, the bond of love and loyalty towards our common fatherland, South Africa. For that reason I should like to support the amendment moved by the hon. the Minister.

Mr. Speaker, the hon. member for Pietersburg dealt with a very important aspect of this Bill, namely the question of the S.A. Defence Force Fund and the extension of the objects of that Fund. We agree with the hon. member in his contention that this Fund has to play a very important role in bringing relief to those who require financial assistance. We in these benches intend supporting the Second Reading of the Bill because we believe it is an improvement. In dealing with the question of the S.A. Defence Force Fund we know that the confidence which the public have expressed in the administration of this Fund is indeed a very real one. When we look at the contents of the Bill before us, we see that this is to be extended by incorporating aid that can be rendered to auxiliary services, such as the Cape Corps, and the overall assistance and relief that can be afforded by this Fund. It is important, too, to feel that the public continue to support a worthy cause. The hon. the Minister has indicated that the board of the S.A. Defence Force Fund have come forward with these suggestions to alter the objects and to extend the objects of that Fund. I think the time is now opportune for the hon. the Minister to give us some indication of the state of the Fund, because obviously if there is going to be additional expenditure incurred by the Fund, one must realize that they must receive substantial financial support so as to meet that increased expenditure. I feel that the board itself, and the Government for that matter as well, can perhaps take further steps in publicizing the good work that is being done by the Fund. I mention this because in recent times I know of cases where the Fund has been able to benefit quite considerably as a result of bequests that have been made. Accumulating funds by means of bequests is indeed a very important aspect and one hears of many cases where people who have no dependants at all look for a worthy cause to which they can bequest their estates. I know of a case in Durban where, in recent times, the S.A. Defence Force Fund has received a substantial sum of money as a result of a bequest by a spinster who died and who had felt that she should leave her money for the benefit of those who are defending what we believe is the freedom in this country and for the cause of South Africa. I think this is an important aspect when one considers the extension of the objects of the S.A. Defence Force Fund.

The other matter to which I wish to refer appertains to textual amendments that have become necessary. I do not intend doing what the hon. member for Hillbrow did by going through the Bill clause by clause, but he did draw attention to the provisions contained in clause 5. Clause 5 refers to a person who may contravene any section, but particularly with reference to the responsibility referred to in section 27 of the principal Act which relates to the “responsibility of members of fundraising organizations, registered branches and authorized and other organizations”. Here I was hoping that the hon. the Minister would be able perhaps to give some further information as to why it was deemed necessary to delete the word “knowingly”. We can see that in terms of the principal Act it was already an offence if a person should contravene or fail to comply with any of the provisions of the Act relating to the responsibility that is placed on the office-bearers of such organizations. We know, too, that a degree of concern was expressed by a number of welfare organizations when the 1978 legislation was passed. We know that the office-bearers of these organizations could in some measure be discouraged knowing what provisions exist should they contravene any sections of the Fund-raising Act as such. Therefore it is important to have further clarity from the hon. the Minister as to why it is necessary to delete the word “knowingly” as far as this particular offence is concerned and the responsibility of members of a fund-raising organization. The question of the penalty to be imposed in terms of section 27 of the Act, included in clause 7 of the Bill, up to a maximum of R500 or imprisonment not exceeding six months, obviously is a consequential amendment in terms of the provisions that have been made and the amendments that are before the House.

We on these benches therefore believe that the Bill does extend the South African Defence Force Fund and the objects of that Fund, and we believe that the principle that is involved is to bring about a better situation in terms of which more people will be able to receive benefit from that particular Fund and, at the same time, to carry out various textual amendments to the principal Act itself. The position as far as welfare organizations are concerned—the hon. member for Hillbrow dealt with this matter as a way of introduction to his speech—there have not been any serious difficulties, as far as I am aware, for welfare organizations in obtaining registration in terms of the Fund-raising Act, but I certainly hope that if the hon. the Minister does find that there are such difficulties, he will not hesitate to come again to this House to try to eliminate some of those difficulties and further improve the Act which is here being amended. We will support the Second Reading of the Bill.

Mr. Speaker, I just want to state that I gladly support this Bill because it is a very important Bill on fund-raising and deals primarily with the South African Defence Force in this regard. It is important that the specific penalties for contraventions in this regard be indicated in this Bill. Malpractices could occur, particularly in respect of the fund-raising bodies of the South African Defence Force, because people know that there is particular goodwill towards the Defence Force Fund among the public. There is one thing which I should very much like to put straight this afternoon, and that is this very important provision that auxiliary services, too, will now be taken into account. Both speakers on that side of the House made the statement that his was being done so that Coloureds could also be included and derive certain benefits. Do those hon. member not know that the Coloured Corps is an integral part of the Defence Force and that they have in fact in terms of the old provisions qualified for assistance in this regard. These auxiliary services actually involve people who are not trainable, in other words, those persons who do not qualify academically, and I take particular pity on them and I am glad that they are also being cared for now, because they are people who, if they should become physically immobile, would be completely vulnerable, because their physical strength is their only means of making a living. In the short time still available to me, I should like to make an appeal to the South African Defence Force Fund. I know it is not being administered by this particular hon. Minister, but I should like him to convey this to the Department of Defence. My appeal is that definite standard norms or criteria should be laid down by the South African Defence Force Fund according to which assistance will be given to people. I know of people in my constituency, young men who were injured during their period of national service and who really suffered financially because the allowances were not adequate to enable them to meet their obligations. I should like to suggest that a person’s civil income, or as an alternative his commitments, if there is a sound proportion between that and his income, be used as the norm for rendering assistance to him. I believe this is the only sound norm and it is only logical to do it in this way. It is not charity which we are giving these people in our security services; it is an absolute debt of honour which the nation must pay them in order to afford them the peace of mind that they and their dependants will be taken care of if they should be injured on the border.

Mr. Speaker, I want to reply briefly to a few matters which were raised here. I shall deal with the hon. member for Hillbrow’s speech last.

First of all, I want to thank the hon. member for Pietersburg for his contribution. I believe he has sketched the whole object of this Bill, viz. to assist those people whom the Defence Force Fund seeks to assist. The amendment has been effected at their request because they want to do better. He referred to people who make sacrifices for the country and who cannot under the present circumstances acquire assistance when they are injured or when members of their families suddenly need something, and in whose case there is no form of assistance if they should die. I want to thank him very much for his contribution. I believe he stated the essence of the whole matter here.

I also want to thank the hon. member for Sasolburg, for his contribution. I shall convey the points which he raised, to the board of the Defence Force Fund. I believe the decision as to what the civil income of people should be before the board can assist them, should in fact rest with the board.

†The hon. member for Umbilo raised a few points. He asked me to give an indication of the financial state of the Fund. I do not think that is relevant to this discussion. We are actually only dealing with the administrative aspects of this Fund and with the question of how people can be helped. It is obvious that if the Fund is not strong, people cannot be helped.

This will result in additional expenditure.

Yes. At a later stage, perhaps in the Committee Stage, I shall explain to the hon. member how the Fund is run.

The hon. member dealt with a few points similar to those dealt with by the hon. member for Hillbrow.

*I should now like to refer to the speech by that hon. member. Section 27 is being amended in order to bring the Afrikaans text into line with the English text. The intention in this provision is that if an organization contravenes the Act, the people running the organization should be called to account and punished, not the organization. An organization is in itself an inanimate entity which cannot have a wish or a motive. So it would be senseless to punish an organization. For this reason it is better to bring the committee members to book in terms of section 27. The word “en” in the Afrikaans text, a word which is to be deleted now, is causing confusion, for that implies that a committee member who contravenes the Act shall be punished. The equivalent of this word does not appear in the English text. I do not want to rake up the whole history of the matter. An amendment in terms of which the word “knowingly” was incorporated into this section, was accepted in the House at the time. However, our legal advisers had problems with the insertion and the amendment to the Act. As I told the hon. member by way of interjection earlier on, an organization is an inanimate entity which cannot do anything knowingly and consequently it is intended to delete the word “knowlingly”. However, this puts us in a bit of a dilemma, because the word “knowingly” did not appear in the original text of the Act. At the time, during the Committee Stage, it was inserted in this section as a result of an amendment by the hon. member for Houghton which the then Minister accepted. But the word creates a problem for legal advisers. Without being a lawyer myself, I can—one need not have much intelligence to be a lawyer … [Interjections.] Mr. Speaker, I withdraw that remark without your having asked me to do so for it seems to me some of my colleagues are very upset by my remark. [Interjections.] What I want to indicate, is that even a person like me can see that there is a problem. [Interjections.] Actually the amendment is being effected on the advice of our legal advisers. Organizations which contravene the Act cannot knowingly do something. Only a person can knowingly do something. The principle of liability has been laid down in penal law. We need not duplicate it in this law. I believe this is where the problem arose when the amendment was originally accepted.

The hon. member raised a number of other matters which, as he said, he was merely raising by way of an introduction. I think that all those other matters had nothing at all to do with the amendment and the principle at issue here. The hon. member wanted to know whether this Act had come into operation yet, whether the two year period of grace was over and whether the organization was registered. I do not believe that that has anything to do with the Bill, and he will excuse me if I do not reply to it at this stage. What I can tell him in reply to his question as to whether I would be prepared to leave clause 5 as it is, is that I am not prepared to leave it as it is. So if the hon. members feel obliged to oppose me at this stage, they must do so.

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

Yes.

I want to refer to clause 5 of the Bill. In the first place there are the words “any person”, then “or registered branch” and then “or other organization”. If the “knowingly” only applied to organizations, I would support the hon. the Minister’s argument, but does the hon. the Minister not think that the word “or” actually relates to “any person” as well? Those three categories, viz. “any person”, “or registered branch” and “or other organization” have to do it “knowingly”. The “knowingly” does not only apply to organizations, but also to “any person” as well. That means that I, as “any person”, and if I do not “knowingly” do it, am guilty. [Interjections.]

Order! The hon. member is not permitted to make a speech when asking a question.

The answer is simple. It is “no”. [Interjections.]

Mr. Speaker, I move—

The Trade Practices Act came into operation on 1 April 1977. As the hon. members probably know, this legislation heralded a completely new era in South Africa in respect of the combating of undesirable trade practices in order to protect the consumer. It is understandable, therefore, that as more practical experience is gained of the implementation of the Act, it may be necessary from time to time to introduce appropriate amendments to it.

The Act was amended during the 1978 Parliamentary session, but it has since appeared that further amendments to the Act are essential, especially with a view to extending the powers of the Minister of Commerce and Consumer Affairs and the Trade Practices Advisory Committee, and also in order to improve the procedure in connection with the finalizing and announcement of notices in terms of which certain trade practices are prohibited or regulated under this Act. In this connection I want to say that the implementation of the Act is largely in the hands of the Trade Practices Advisory Committee, which was established by this Act. This committee consists of representatives of commerce, industry, the motor vehicle industry, the Press, the Indian and Coloured communities, the trade unions and the consumers in the country.

The amendments to the Act which I am now proposing were all suggested by the Trade Practices Advisory Committee with a view to improving the operation of the Act.

In the first place, it is proposed that the definition of the expression “trade practice” be amended by replacing the reference in this definition to “monopolistic condition” in terms of the Regulation of Monopolistic Conditions Act, 1955, by a reference to “restrictive practice” as defined in the Maintenance and Promotion of Competition Act of 1979. The reason for this substitution is that the latter Act, which came into operation on 1 January 1980, repeals the Regulation of Monopolistic Conditions Act of 1955.

In terms of the present provisions of the Trade Practices Act, the Trade Practices Advisory Committee actually has no power to undertake any meaningful inquiry, on its own initiative or otherwise, into any undesirable trade practice and to submit recommendations in this connection to the hon. the Minister for his consideration. A proposed 4C is being added to provide that this committee may, at the request of the Minister concerned, investigate any matter covered by the Act, and furthermore, that the Trade Practices Advisory Committee may of its own accord recommend that certain steps be taken by the Minister in connection with certain provisions of the Act. What is important here is that the committee is being authorized in terms of this amendment to investigate matters relating to the Act of its own accord and then to make recommendations to the Minister. In addition, the proposed section 4C provides for witnesses to be subpoenaed and evidence to be heard by the committee, which will mean that it will be easier for the committee in practice to conduct investigations. The subpoena procedure is explained in the proposed 4D.

Mr. Speaker, I shall continue my speech where I left off before business was suspended for dinner.

Section 10 of the Act prohibits the giving, delivery, sale or publication of trade coupons in connection with the sale of goods or the rendering or provision of services.

However, section 11(1) of the Act presently contains seven exceptions to the prohibitions regarding the sale, delivery or giving of a trade coupon, as contained in section 10. Only with regard to three of these qualifying provisions, however, is the Minister authorized to prohibit the acts in respect of a trade coupon mentioned in section 11(1) or to impose conditions in this connection.

Since the Act came into operation, several matters with regard to the above-mentioned exceptions have been submitted to the Trade Practices Advisory Committee for its consideration. During the investigations of these matters undertaken by the committee, it appeared that the exceptions which appear to fall under paragraphs (c), (e) and (f) of section 11(1), and which may therefore be investigated by the committee, often had a bearing also on those paragraphs of section 11(1) which cannot be investigated. Of course, this state of affairs often made meaningful investigations by the committee in connection with trade coupons almost impossible. The committee has therefore urgently requested that it be authorized to investigate all the exceptions to the prohibition in terms of section 10 and to submit recommendations to the Minister with regard to possible action to be taken.

In its representations, the committee points out that its members are representative of the private sector, and therefore remain in close contact with those sectors of the country’s economic activities in which this kind of conduct occurs. In addition, every act in connection with section 11 is in any event subject to the provisions of section 16 of the Act.

Section 11(2) is therefore being amended to provide that the above-mentioned powers of the Minister will henceforth apply to all seven provisions of section 11(1).

†Section 14 of the Act is amended to the effect that, in addition to the powers to issue certain regulations in connection with advertisements, the Minister is empowered to prohibit any advertisement subject to the provisions of section 16.

The extension of the Minister’s powers also to enable him to prohibit an advertisement, results from investigations which have been conducted by the Trade Practices Advisory Committee pursuant to representations about and objections against advertisements. These investigations have revealed that it is often not possible to achieve the desired result by merely prescribing conditions as is at present intended in section 14 of the Act. In this connection the committee has pointed out that advertisements are often in their essence unacceptable and that such advertisements can only be combated by means of a total prohibition.

The present wording of section 16 of the Act causes difficulties in practice in regard to co-ordination between the functions which the Minister performs and the activities of the Trade Practices Advisory Committee.

The amendment of this section establishes a meaningful sequence of the steps which have to be taken in order to enable the Minister to regulate effectively or to prohibit a particular trade practice. The present wording of section 17 empowers the Secretary for Commerce and Consumer Affairs to prohibit or impose, on the recommendation of the Trade Practices Advisory Committee, conditions for a period not exceeding six months in respect of certain practices mentioned in this section. Whereas the Minister is designated as the functionary in other sections of the Act, subsection (1) is being amended to empower the Minister, on the recommendation of the Trade Practices Advisory Committee, to impose conditions in respect of, or to prohibit, certain trade practices or advertisements on a temporary basis.

Tie practical application of the provisions of section 17 has proved that the period of six months provided for in this section is inadequate, and in order to rectify the position this period is being extended to nine months.

Section 18 of the Trade Practices Act provides for a number of defences which can be raised by anybody being prosecuted as a result of a contravention of any of the stipulations of the Act. Due to the wide scope of these defences, any prosecution in respect of contraventions of the provisions of the Act, as it now reads, has a very slight chance indeed of succeeding. The result is that virtually all the provisions of the Act are, to a large extent, nullified by these defences.

Section 18 has therefore been amended with the object of narrowing the scope of these defences, to a certain extent, to facilitate legal proceedings in terms of the Act.

Mr. Speaker, we shall support the Second Reading of this measure. The main reason why we shall support it is that we are concerned about the degree of exploitation that is still taking place in the community. We would like to see equality in the market-place, and in our view this measure will help to achieve that. Even though some of the provisions are such that we might not normally support them, in the particular situation in which the Trade Practices Advisory Committee and the hon. the Minister find themselves, we believe that these powers should at least be given to them on a trial basis.

One of the matters which concerns us, and which we feel the hon. the Minister should deal with in this particular debate, is the degree to which this law has actually been effective since it came into operation in April 1977. Some of us have very serious doubts about whether the law has, in fact, proved as effective as was held out when the measure was introduced. I think that the hon. the Minister might well tell us whether this law has, in fact, been brought into operation in the appropriate number of cases, because the impression one gets from what has appeared in the Government Gazette is that so far the scope of operation of this Act has been very limited indeed. One of the things one finds disturbing is the fact that one sees certain activities afoot, one sees certain advertisements placed and one sees a whole variety of problems arise, but nothing appears to be done about this. Let me give the hon. the Minister an example.

I am sure he has seen many of the advertisements and activities relating to the sale of carpets in South Africa. I am not referring to the ordinary, legitimate businessman who sells carpets in the normal way, but to the fly-by-night individual, the man who places advertisements in newspapers from an address which, one finds, is a temporary accommodation address, or the man who sells carpets to the unsuspecting housewife, very often out on the platteland where these individuals use whatever modern selling techniques they have developed. To my mind the whole of this carpet business, outside of the sphere of the ordinary businessman in his shop, needs looking into very carefully. On the face of it, instead of it being dealt with, it seems to us as if this kind of activity is increasing. Let me give the hon. the Minister another example. We are told there is a new trading stamp activity which is going to commence in South Africa and which has been written about in the newspapers and spoken about. On the face of it, with the wording used, it appears to be directly in conflict with the spirit of the Act. What is being done about this? Then there has been a series of smaller trading stamp activities, which have been within the ambit of the law, and which come up like mushrooms and then disappear and, with them, the money of the unsuspecting public. I can mention another example. There are many perfectly legitimate and proper executive placement services, job placement services, but not another series of rackets appears to have developed in regard to job placement in South Africa. A whole series of activities of the get-rich-quick type are springing up. All sorts of strange business methods are used and on the face of it appears as if very little is being done to control this.

Let me say what my reason is for pointing this out to the hon. the Minister. When the legislation was introduced we were told that we were going to see action, that we were going to see things developing which would put an end to the exploitation of the consumer. With regret I have to say that now, in 1980, we stand here with a high degree of disappointment that in the almost three years during which this particular law has been in force the results have been very, very few. If there have been results, they certainly have not been clearly apparent to the public.

Just like the monopolies legislation.

It appears to us that something urgent needs to be done in this regard. That is why in this particular instance we will give the hon. the Minister the power. We do not want any suggestion or any argument that there is anything hindering the action against exploitation. The fact is that exploitation should be eliminated. Due to the race situation in South Africa, exploitation can have far wider implications here than in any other country in the world. That is why I should like to see the hon. the Minister react to this and tell us what has actually been done pursuant to this statute, what has been done of which we can see the results after almost three years of operation of this law.

Dealing specifically with the individual provisions of the Bill, I want to draw attention to a number of them. As regards clause 2, which in my opinion contains the main provision of the Bill, the powers of the committee in these circumstances appear to be not only desirable but also necessary. It seems to me that without these powers there are very real restrictions on the activities of the committee. As far as we are concerned, it is fundamental that the committee should have the power to interrogate, undertake this form of investigation and bring before it the people who need to be brought before it for purposes of its investigation.

The other provision which gives one some concern is that contained in clause 5. In terms of it the Minister is asking for the power completely to prohibit and advertisement. It is therefore not just a question of prescribing what can be advertised but of prohibiting an advertisement or a kind of advertisement in toto. It seems, again, that before the Minister can exercise these powers, the harm will in the main already have been done. What normally happens? The advertisement appears. There is no obligation to submit the advertisement. Nobody knows what kind of advertisements are going to appear. The Minister can only come into the picture after the event. In other words, only after the advertisement has appeared and people have responded to it can action be expected on the part of the Minister. If it is the intention to use this provision to lay down a series of guidelines to prohibit certain types of advertisements which embody certain selling mechanisms or other misleading activities, so that newspapers can know that these advertisements should not be accepted, we would be getting somewhere. Unless those guidelines are laid down, so that one can prevent the evil before it takes place, this provision will serve no purpose because it can really only come into operation after the event.

I now want to direct my attention to clause 8 of the Bill whereby there is an obligation upon a person who is accused to state in advance that he relied upon information given to him by a person whom he names. The obvious reason why this has been inserted is to enable the State, in prosecuting, to verify whether the information was given and so that the State can prepare a case in proper fashion, but it may well happen that an accused person cannot name the person from whom he obtained the information, because the clause reads that he must prove “that the act or omission with which he is charged and which constitutes such offence is due to the fact that he relied reasonably upon any information given to him by a person named by him.” The accused may well, for example, have relied upon a publication, or on information given to him by a person who held a certain office in a certain firm or was employed in a certain firm. The way the clause is now worded, if the accused cannot actually name the person he has no defence. That does not appear to us to be a satisfactory provision because it can create a problem for an accused who may be quite innocent but who may not be able to name the person involved. Those are the points I wanted to raise, but we will support the hon. the Minister in order to give strength to the campaign against exploitation.

Mr. Speaker, I agree that there were indeed certain inadequacies in the principal Act, as the hon. member for Yeoville quite correctly said. He wanted the hon. the Minister to tell him how efficient the legislation was. After all, I think that in any event it is clear that the hon. the Minister introduced an amending Bill here because there are in fact certain inadequacies in the legislation. Consequently, I cannot understand exactly what the hon. member meant by his question, because the fact is that when the principal Act was debated in the House in 1976, one of the most important characteristics of the debate was that the hon. the Minister said that the legislation should be introduced in a specific way in order to see how effective it would be, and he declared that he was prepared to take another look at certain aspects.

If the hon. member were to read that debate, he would see that this specific point was stressed and that the hon. the Minister actually gave certain undertakings in the debate, particularly with regard to the coupon system. The hon. member for Yeoville made a great deal of fuss about the coupon system in that debate, and the hon. the Minister gave the undertaking that he would look at that very matter. I think that the hon. the Minister also referred specifically to this matter in the course of his Second Reading speech. Consequently, the true reason for introducing the legislation has already been furnished in the replies which the hon. member for Yeoville received to those questions which he put in this regard.

However, before we look at the details of the legislation, I think it is nevertheless necessary to make a few remarks about the basic philosophy which underlies the control of trade practices. Although the legislation before the House does not affect the principle, there is nevertheless a slight extension of the principle by means of which the hon. the Minister receives greater powers.

What we should actually stress, is the golden rule that too much control is not a good thing. But on the other hand, too little control paves the way for exploitation within the framework of the free enterprise system. The Bill is not necessarily about more or less control, but it is actually about more efficient control, and this is exactly what the hon. member for Yeoville asked for. No one can have any objections any longer to the State exercising a regulative function in regard to trade practices. If we do not protect the consumer by means of legislation such as this, we may in fact lose the struggle against socialism in South Africa, because then the peoples of South Africa will reject the system.

The Bill must be read along with a number of other Acts which also deal with the same subject, viz. the Price Control Act, Weights, Measures and Standards, the Sale of Land on Instalments Act, the Merchandise Marks Act and the Maintenance and Promotion of Competition Act. This tends to create the impression that there is too much State control in this regard. However, this is not the case. Every piece of legislation that I have mentioned deals with one or more facets of the total problem which may arise within the framework of the free enterprise system.

However, it remains preferable—and I should like to stress this tonight, because I think the hon. member for Yeoville made a specific point of it on a previous occasion—to have a self-imposed code of conduct in business instead of enforcing it by legislation. Such codes do in fact already exist in certain spheres of business, but they do not cover the entire spectrum. The question arose earlier whether we should not perhaps embody a consumer protection code in legislation. I do not think so. I think the existing laws suffice. We also have the Consumers Board which plays an important role in this regard.

Of course, one could hold a long debate on this specific subject, but this legislation—and I think this ought to be a consolation to the hon. member for Yeoville and to the Opposition—will in fact contribute towards better order in business as well as to improving consumer protection.

In conclusion, I want to agree with the hon. member for Yeoville on one point at least, and this is that I am not completely happy with the clause in connection with the so-called pleas. I think that this takes the teeth out of the legislation, but it may be a good thing for us to test it in practice first.

I support the Second Reading of the Bill enthusiastically.

What clause are you talking about now?

The clause in connection with pleas which can be made.

Mr. Speaker, I rise on behalf of the NRP to say that we shall be supporting the hon. the Minister in this particular Bill. I have very little to say other than to say …

On behalf of the NRP.

That hon. member has had an awful lot to say this week and at the present time I think he is directing his interjections in the wrong direction.

I am just helping you.

If my memory serves me correctly, I would just like to say that when this legislation first came before Parliament in 1977, it was in the form of an extremely thick Bill which required an awful lot of study and quite a bit of debate at the time. As the hon. member for Yeoville said, it was hoped that this would help the hon. the Minister, and in fact the private sector, to ensure that good trade practices would be the order of the day in South Africa. I think that the hon. member for Yeoville had a valid point when he questioned the hon. the Minister and asked him just how effective this legislation has been. I think that this is something all of us had in mind after having seen this amendment. What is very clear, however, is that despite the efforts of all of us who were involved in that debate at that time to ensure that this piece of legislation would, in fact, achieve the objectives we have hoped it would, it is clear that this has not been the case. This is something which also points out just how effective the free-enterprise system is in that there will always be some people within that system who will be trying to find loopholes in the legislation and to see what they can get away with. It is very clear that there are two sides to capitalism. As someone said, there is the ugly face of capitalism, to which the hon. member has already referred, namely those people who try to exploit the public, and it was our original hope that this Act would prevent this. It is clear that the hon. the Minister has had to come to us to ask for these amending provisions that we in these benches are only too pleased to support, but I should just like to conclude by saying that there has to be this need for constant vigilance, on the behalf of the private sector and the Government, to ensure that these practices, which do not do credit to free enterprise or the private sector, are controlled. I should like to record here that we in this House owe a debt of gratitude to those people who serve on the Trade Practices Advisory Committee because, after all, they are the people who have advised and requested the hon. the Minister to introduce this amendment Bill. As I have said, I think that we owe them a debt of gratitude for the amount of work they have done, on behalf of society and the private sector, and I think that we should give these people and the hon. the Minister our full support in this regard. As I have said, we will be supporting this Bill.

Mr. Speaker, I want to thank hon. members very sincerely for their support of the Bill.

†As far as the hon. member for Yeoville is concerned, I must tell him at the start that this is perhaps one of the few Acts of the past few years in terms of which we govern with the advice of ordinary people who are involved in these practices and who know what is happening all around them in the business world. I think that the Trade Practices Advisory Committee has, in this instance, done a very good job. It has aided us by specifically pointing out the various problems that we have with this Act. Those individuals have asked the Government to look into certain aspects of the Act, because they found that it was virtually impossible, in some cases, to obtain indictments under this Act. The degree of the effectiveness of this legislation, as the hon. member very easily derived from what I have said, is something which I think all of us agree about. It was not as effective as it should have been, because of some defences and because of the way in which the Act was worded, and that is why we had to effect these amendments.

I am glad that those hon. members actually support us, because members of the Trade Practices Advisory Committee are the real representatives of the people, and it is inherent in the principle of this Act that the Minister must confine himself to what the Trade Practices Advisory Committee actually recommends. He is almost forced to act according to what they want.

Mr. Speaker, may I ask the hon. the Minister whether he can perhaps tell us how many notices have in terms of the Act actually been published prohibiting a trade practice?

I do not know. I can obtain the figure for the hon. member, but right now I do not know.

We have, of course, taken cognizance of the fact that there have been problems in connection with the advertising of carpets and hosiery. We have also taken cognizance of the fact that there have been problems with trade coupons. I have seen the report in the paper about trade coupons, “trade stamps” as they call them, in Afrikaans “handelskoe-pons”. It did not escape my attention. That is why the Trade Practices Advisory Committee felt that in terms of section 10 the Minister should at least have the right to prohibit all the various practices as stipulated in section 10. We are just as concerned as the hon. member about exploitation. I feel that as our actions as far as this Act is concerned, and the various cases which have come about as a result of this Act, have not turned out as expected and people have not been indicted, fined or punished as they should have been, it is high time that we change the provisions of the Act, including the provisions regarding advertisements. The hon. member is a little bit worried about the question of advertisements. I want to refer to specific types of advertisements, some of which I think he has seen already. I might perhaps be allowed to refer to some sex advertisements. Some advertisements are really repulsive. I think that in that case this Act should empower the Minister to exercise effective power to prevent it. It is difficult to know about it and to do something about it before the event. We can only take recourse to the Act after the event.

*As far as clause 8, relating to publications and companies, etc., is concerned, I want to tell hon. members that if a person, wants to raise a defence, he must also have the right to prove within a certain period of time that his actions were based on information which was given to him by someone else and which he believed. This can be condoned if he can advance good reasons for not being able to furnish the person’s name. If hon. members read the clause, they will see that.

I am very grateful for the co-operation and support of the hon. member for Amanzimtoti, as well as the hon. member for Newcastle, on this side of the House. Since all hon. members agree with the measure in principle, I should like to leave it at that.

Mr. Chairman, the present Act says—

That is to be replaced by the words—

Can the hon. the Minister actually tell us what he has in mind as being the “act, conduct or practice” which is not a sale, delivery or a rendering of a service? What reason has the hon. the Minister for wanting to change this?

Mr. Chairman, I cannot tell the hon. member exactly what I have in mind. I just want to say that “the sale, delivery or giving” of trade coupons are specific descriptions of actions. People can act in a way that one cannot describe as a specific action. That is why the Trade Practices Advisory Committee said that we should frame it in wider terms so that, even if it may simply be an oral communication or whatever, we can now clamp down on their conduct within this framework. If it becomes apparent that it is much too broad and too vague, then it is well and good. Then in future we will see whether the abuses will occur in the Trade Practices Advisory Committee or whether it will be the person who, by his conduct, has dodged the provisions of section 11(1). Then we will very soon see who the people are who are in fact being wronged. It is a question here of a broader action which one wants to describe without being specific as regards “sale, delivery or giving”, which are all specific acts.

Mr. Chairman, unfortunately, with respect, the hon. the Minister has not really answered my question, regarding someone having it in mind to do something going beyond “the sale, delivery or giving”, as set out in the Act. The hon. the Minister has not answered that question. The conduct in the broad sense is not really what we are dealing with. We are dealing with trade practices, with trade coupons, and those sort of things, and I think one would enter a very vague and dangerous field if one now wanted to deal with conduct in the sense of merely verbal conduct, words or things of that sort I think the hon. the Minister should take us into his confidence and tell us what the Trade Practices Advisory Committee actually has in mind.

Mr. Chairman, it is very difficult for me to tell the hon. member now exactly what the committee has in mind. They have informed me that they are the members who are representative of the private sector. They are in close contact with the people who carry out our economic activities on that level. They want any action, not necessarily “sale, delivery or giving”, but any action which is even a mere suggestion of other actions which could lead to people being misled, to be defined in such a way that one could deal with such a person in terms of this legislation.

Mr. Chairman, if I might be permitted to try to assist in defining what our problem is, the hon. the Minister, if I may say so, has been perfectly charming in his readiness to answer every question we have put, but we have some difficulty in getting precisely the answer we want Perhaps one should go back to a consideration of what the purpose of this Act is. As we understand it, it is a Trade Practices Act. It is an Act which is there to protect the consumer against exploitation by unscrupulous business people. It has as such to do with misleading material which may be put out in advertisements or possibly packaging, or misleading claims which may be made in connection with a product, or offers of incentives to buy which may be made and which turn out to be less effective than the consumer is led to believe. When the hon. the Minister says that his committee advises him in general terms that people may do something which is not a sale, not a delivery or a giving of a service, but maybe something else, some other act or conduct which may in general terms be reprehensible, and that he wants to have the power to deal with it, I honestly think that Parliament should not be asked just to approve of a provision of this kind without something more specific, as I am sure hon. members will agree, in regard to what it is that we are being asked to do. The hon. the Minister refers to his committee and says that this clause, like other measures in the Bill, comes forward because he has received this advice from his committee. The hon. the Minister must however appreciate that to us this committee consists of reasonably faceless people. We have to deal with the hon. the Minister, and much as I regret causing him any discomfort, we have to press the hon. the Minister to reply to us what it is that his committee has in mind. I think as responsible legislators we are really entitled to ask a question such as this. An amendment is proposed in this specific clause, but we do not know what it means. That is the long and the short of our problem.

Mr. Chairman, I should like to reassure the hon. member for Parktown. He does not have to worry about the possibility of embarrassing me. When I do not know something, I say frankly that I do not know it, and there’s an end to it. In this case, however, it actually concerns the concept of certain prohibitions with regard to certain acts. These acts are defined in section 10 of the principal Act. However, they are defined in greater detail in section 11 of the same Act. This is more concerned with a sign that is given or a specific document or whatever.

Now it happened that the committee informed me of a case in which the Arwa Company, a business which manufactures silk stockings amongst other things, sold silk stockings at a filling station. Anyone who purchased petrol there, could also buy a pair of silk stockings, with which he received a coupon entitling him to a 50% discount on service at certain hotels. Another company objected to this and alleged that this was a transgression of paragraphs (c), (e) and (f) of section II(1) of the Trade Practices Act.

The Arwa Company was then charged and found guilty. However, they appealed and while their appeal was pending, they simply continued to do as they had done. However, this does not amount to selling or delivering goods, or any other action defined in the Act. It is merely a way of acting. While the appeal was still pending, the company that had instituted legal proceedings applied for a court order against Arwa. Shortly after that, the Arwa Company decided to return to its former modus operandi, without misusing trade coupons or anything of the kind. Therefore, it amounts to there being insecurity of justice in this case, when specific definitions are added to a piece of legislation like this.

In paragraphs (c), (e) and (f) too, there are facets which, when objections are made, also concern other subsections of section 11 of the principal Act. This creates problems for the Trade Practices Advisory Committee because it causes insecurity of justice. That is the problem.

Mr. Chairman, the hon. the Minister must forgive me, but I was a little concerned about his explanation concerning what he had in mind in terms of this amendment, because I was not aware of the fact that we are now attempting to pass legislation in terms of which one could prohibit sex adverts. There are hon. members sitting quite close to me in this House who are very upset about that.

What about Outspan oranges?

It is certainly not contemplated here at all. The hon. the Minister also said that he wanted to be able to prohibit repulsive advertisement. The concept “repulsive” in relation to an advertisement is a rather subjective one. So can we actually look at the Act to see exactly what we are dealing with, because in terms of the Act, as we understand it, the hon. the Minister has nothing to do with sex adverts, nor with repulsive adverts.

Nor with pornography.

Nor with pornography.

Nor sex.

That all falls under a different law.

And a different department.

Here we are dealing with a section that states that the Minister may—

1. (a) the nature, properties, advantages or uses of any goods or service; or
2. (b) the manner in, conditions on or prices at which goods may be purchased, hired or otherwise acquired or any service is rendered or provided,

That is the section as it was. In terms of this amendment we are only substituting for the words preceding paragraph (a) the following words—

The two aspects previously mentioned do, however, remain. So with due respect I think the hon. the Minister is going a lot further than the Act would permit him to do. What I am referring to here, and what I was referring to during the Second Reading debate, is that if one prescribes the nature of advertisement one can, to some extent, prevent the publication of advertisements that contravene this section. If, however, one only prohibits an advert after the event, all one would then be doing is allowing the advertising campaign to go on and the business to be conducted. Then, after the event, when all the business has been done, a prohibition is suddenly imposed. What we really want here is a provision prescribing what should be in the advertisement, so that if there are advertisements that are contrary to that prescription, firstly they are contravening the law and, secondly, they may then be prohibited. That is really what we should like to see. I know the hon. the Minister has other portfolios, but will he please try to keep sex out of this debate.

Mr. Chairman, I have listened carefully to the hon. member. He need not worry so much about sex. After all, we are all getting old.

Let me sketch what the problem actually is. It is very difficult to prescribe the nature of an undesirable advertisement. It is very difficult indeed to do so. The people who have to do with advertisements feel that we cannot, by law, really pinpoint individual cases. It is impossible to do so.

*They feel that, by their nature, some advertisements are unacceptable. Now we come back once again to my experience of life. That hon. member may speak of his legal knowledge, but I must speak of my knowledge of life. If a person places an advertisement which says: “Come and see So-and-so at this or that address. I can cure cancer,” it is, in the nature of things, an advertisement that should not be placed because it is misleading the public completely, without specification. Perhaps I cannot satisfy the hon. member with a single example, but my common sense tells me that if I must have a description of every advertisement, and that if I have to give a description of the type of advertisement—apart from sex advertisements—then I am in for it, because then I am really on the defensive.

That is why I think we should give the Trade Practices Advisory Committee the benefit of the doubt here and we must see whether the Act does not work better in this way than it did before. The issue is not whether hon. members objected to the Publications Board at the time. We are dealing here with people who are really involved in business, business of all kinds. Even the man who places an advertisement to the effect that he can cure cancer, is involved in business. Therefore I am very sorry, but as far as I am concerned, there are advertisements that are essentially unacceptable. Since the Trade Practices Advisory Committee prefers it like this, I think that we should assist them in that regard.

Mr. Chairman, since we are all speaking from the bit of experience that we have now, perhaps I should try to make a contribution since I made a living as an advertising agent for six years, and therefore gained some experience of the problems facing one in this regard.

The problem that I have with the proposed provision, is simply that it has been stated or formulated in extremely wide terms. The Minister can “prohibit any advertisement or kind of advertisement”. I want to come back to what I was dealing with a few minutes ago. Should we not bear in mind the object of this legislation? As I understand it, the whole purpose of the Trade Practices Act is to protect the consumer from the possibility of being economically exploited. An advertisement may appear which claims, on behalf of a product, that it can do something, that it has a characteristic, that it offers the consumer something, whereas in actual fact this is not true.

It seems to me that, according to the way in which the clause stands at the moment, any advertisement or kind of advertisement can be prohibited. If on an unfortunate day in the future, another Minister is appointed to the hon. the Minister’s post, a Minister who is somewhat less reasonable, somewhat less balanced in his outlook on life than the present hon. Minister, he can use this provision to prohibit advertisements on an entirely different basis. There could be a Minister, who as my hon. friend said, does not like any sexual content in an advertisement. Yet, this in itself has nothing to do with whether the consumer is being exploited on a commercial basis. There could be a Minister who does not like advertisements using photographs of the Mediterranean Sea—I cannot think of a better example at the moment. Are these provisions not being framed too widely? Is it not necessary to have words somewhere in this clause stating clearly that it is merely to protect the consumer from a trade practice that may cause him to spend money, because it is economically deceptive?

Mr. Chairman, this is the problem of the whole Act I am enjoying this conversation that we are having, but I should like hon. members—we must conclude it now, if we can—to look at section 16 only. In any event, the Trade Practices Advisory Committee must make a recommendation. There is ample opportunity for the public to lodge their objections. After that the matter is sifted and the Minister is the person who makes the final decision. He cannot simply act as he wishes. Consequently, I think that the provisos which the hon. members did not have in mind, are in fact present. That is why I want to ask them please to discontinue this conversation between us for the moment.

Mr. Chairman, I want to ask the hon. the Minister just one question with regard to this clause. In terms of the provisions of clause 2 we dealt with oral evidence. In this clause the representations are limited to written representation, in other words one cannot come and give evidence. The difficulty that I have here—I made the same point when we debated this issue in 1976—is that if somebody submits written representations nobody knows about them, whether they are true, whether they can be substantiated in evidence, and if one cannot test what has been said in writing by interrogating the people concerned, the validity of the argument cannot really be tested. One may find that somebody submits written representations and makes out a tremendously good case, but on this being examined it may well be found that there is no substance in it at all, because as any lawyer will confirm, it is much easier to put things down on paper than it is to substantiate them by way of evidence. Why is it limited to written representations in this clause?

Mr. Chairman, I cannot understand the hon. member’s argument properly. The committee must make further recommendations to the Minister in writing.

I was referring to the people who lodge objections and not to the committee.

The hon. member is talking about clause 6 …

I think the hon. the Minister has misunderstood me. I am talking about clause 6 and I referred to …

Yes, clause 6.

Mr. Chairman, may I explain what I meant? I was referring to subsection (2)(b), part of which reads—

I am not talking about what the committee has to do now, but what the interested persons have to do.

In actual fact, the proof of a real objection which anyone has is not the oral evidence. To my mind, the hon. member’s argument does not hold water. After all, there must be written representations because all the committee’s business must be in writing. As far as I am concerned, in a certain sense the aspect that the hon. member has just raised now, is actually splitting hairs to a certain extent. There is nothing wrong with saying that representations must be made in writing, because this is proof of the fact that something is in fact being done. If written representations are not lodged, then what proof is there, unless he gives evidence.

Mr. Chairman, I think it is very fortunate that the hon. the Minister is not the Minister of Justice, because then we would get into terrible trouble. I want to explain my point again. If one looks at clause 2 one will see that where an investigation is made the committee actually interrogates people, hears evidence and can test the validity of what people are saying by questioning and interrogating them. So one actually has oral evidence. Clause 6 provides that a notice is published, and in that notice one calls on people to lodge their objections and to put their case. All that is permitted is for the committee to receive written representations, and if only written representations are received I suggest to the hon. the Minister that one cannot then test the truthfulness and validity of the representations, because people cannot be examined. There is no evidence as evidence is not heard. There is only a piece of paper on which somebody’s case is presented. That is why I say the validity of the representations cannot be tested if the representations are only in writing. There should be power also to hear evidence. That is the simple point I am making.

Surely the person can be called to give evidence.

He cannot.

Mr. Chairman, if the hon. member feels that this is such a terrible deficiency, I want to refer him to subsection (3) which reads as follows—

We must see to it that the whole matter is conducted in writing. The hon. member wants people to come and give evidence.

That is what I said.

What can the hon. member suggest in this regard that will be better than what has been proposed by the Trade Practices Advisory Committee? They say that representations must be made in writing. I do not think the proposed section states that the committee may not hear oral representations. One does not exactly have to be an advocate to know that I do not think the proposed section prohibits oral representations, but it definitely requires written representations. However, I do not think that it excludes oral representations.

Mr. Chairman, there does not appear to be a difference in regard to the principle between us. The hon. the Minister has just said that he does not think that this clause excludes the possibility of interested parties who have put in representations in writing being asked to appear before the committee and be cross-examined. If that is the hon. the Minister’s interpretation, perhaps he will give us the assurance now that he will think seriously about this, that he will refer to his advisers and, if necessary, or if he finds it advisable, introduce a suitable amendment in the Other Place in order to provide that the interested parties who submit written representations may also be allowed to appear before the committee and to be cross-examined if that is desirable.

Mr. Chairman, I do not want to waste the House’s time, but tonight I am receiving a very good training in legal practice and in how to argue. I recall that in any event the committee has the right to call for evidence for the purpose of examination in terms of section 4(D).

No, that is not right.

We shall have to look it up, but as far as I am concerned, they have that right. The hon. member should take a look at it.

Not for this purpose.

I do not want to disagree with the hon. member there, but if this is true, there is nothing wrong with introducing it elsewhere, if we can bring about an improvement. However, I cannot promise it. All I can promise the hon. member, is that I shall look at it. As far as I can recall, the committee has the right in any event to summon people, to hear requests and to take evidence.

Not for this purpose, but for other circumstances.

The committee has the right. In any event it is not being excluded. However, I shall look at it If I find that there is a deficiency in this regard, I shall make sure that it is rectified. We are not disagreeing on the principle; we are simply disagreeing on the question of whether the efficiency is there.

Mr. Chairman, I raised the question with the hon. the Minister in the Second Reading as to what would happen if the person could not name somebody. He did not deal with this matter in his reply. What I would like to suggest to him is that after the words “a person named by him” we insert the words “if he is able to give such name”. That would then apply both in lines 60 on page 9 and line 6 on page 11. Therefore I should like to move the following amendments—

1. (1) On page 9, in line 60, after “him” to insert:
   if he is able to give such name
2. (2) on page 11, in line 6, after “him” to insert:
   if he is able to give such name

It seems to be ridiculous that one should convict him merely because he cannot legitimately give a name.

Mr. Chairman, I do not have the hon. member’s amendment in front of me and I shall have to look at it first. The question is: Who decides whether he is able to give the name or not?

The magistrate.

If the magistrate is satisfied that he cannot give the name, then the magistrate can condone it. If the hon. member reads on, he will see at the end of subsection (2) that—

Only seven days.

In other words, if the hon. member says now that the magistrate must decide, surely there is the opportunity for him to decide that the circumstances are such that that person cannot identify the person. Consequently, provision is being made for this. I took a specific look at it because I was of the opinion that there could in fact be such cases, and also because that hon. member mentioned it during his Second Reading speech. I see that provision is in fact being made for it. It seems to me that it is not necessary to insert what the hon. member is moving here, because I think the magistrate must decide on it. He can condone it, and consequently I do not think that the hon. member should insist on this.

Mr. Chairman, it is made clear in section 18(1) that in relation to the conviction, if he actually relies upon any information given to him, he must be able to name that person. That is the provision in terms of which it is decided whether he has committed an offence or not. The portion which the hon. the Minister read, the proviso, relates to the court’s right to condone the failure to give the notice to the prosecutor. In other words, if he does not give the notice to the prosecutor seven days in advance, the court can condone it in terms of the proviso to subsection (2). However, there is no proviso to subsection (1), which is the subsection the magistrate has to apply when he convicts or does not convict a person. Therefore the proviso does not relate to that, and the proviso will only allow the accused to escape if he has not given the seven days’ notice. The proviso does not allow the accuse to escape if in fact he has not given the name at all. The hon. the Minister may shake his head, but that is the real issue, the real interpretation. I suggest, with respect, that the hon. the Minister should obtain some independent advice.

Mr. Chairman, I suggest that the hon. member and I have a difference of opinion.

*The Act states it very clearly. In a moment I shall read subsection (1). The Act reads—

The “advise” refers to the identification as well. It also refers to advising the person.

It simply says that the prosecutor must be advised.

I am sorry, but in spite of whatever that hon. member has said, I must disagree with him. If we were to insert the hon. member’s amendment, we would be weakening that clause once again. I think the question of condonation is at issue here. It is not simply a question of that hon. member being able to come here and tell me in an absolutist way in legal terms, that this is what he thinks. It is that hon. member’s opinion and he stands by it. However, I must tell him that unfortunately I disagree with him. As far as I am concerned, it can be condoned, because in his wisdom the magistrate should know when a person is not in a position to identify a person. [Interjections.]

Mr. Chairman, in spite of all the hon. the Minister’s patience and courtesy one cannot but point out the clear wording of what we have before us. Clause 8(2) reads as follows—

It is the failure that can be condoned and nothing else. We can compare it with the proposed section 18(1) which provides—

Consequently, it is quite clear that the only way he can escape conviction is to name the person who gave him the information. It is just as clear from the proposed section 18(2) that the court has the right to condone the omission of advising the prosecutor seven days in advance. In one case it is the offence and in the other case it is merely the failure which is at issue. We want the offence or crime too, if one can call it that, to be able to be condoned if the court is satisfied that the person really cannot provide the name. That is what we want. With the best of intentions I want to say that it is clear from this wording that all the court can condone, is the failure to advise the court of the circumstances seven days in advance.

Mr. Chairman, the question of the period of seven days is not the only matter at issue. There is a complete difference of opinion in this regard. The proposed section 18(1) deals with an offence and information which has to be provided within a certain period. The words “the failure to advise the prosecutor in the said manner” in the proposed section 18(2) concern the passage of time as well as the requirement that the person must be identified. Perhaps I understand Afrikaans better and the hon. member understands English better, but we disagree completely on this. [Interjections.] Let us vote on it then, if we must.

Mr. Speaker, I move—

Since the Copyright Bill, 1978, Act No. 98 of 1978, which came into operation on January 1979, was passed by Parliament, the Copyright Advisory Committee appointed in terms of section 40 of the Act has received representations from a large number of interested parties concerning matters arising out of certain provisions of the Act which have caused difficulties in practice. One of the problems experienced is that there is doubt as to the interpretation of certain sections or subsections of the Act. The necessary amendments are now being effected in order to eliminate this doubt.

The amending Bill does away with the requirement that sufficient effort or skill must have been expended on making a literary, musical or artistic work before it is eligible for copyright. The reason for this amendment is that the requirement as stated in the existing Act causes confusion because it is virtually possible to determine what constitutes sufficient effort or skill in any particular case.

Then, too, problems have been experienced particularly with regard to the provision in the Act that copyright vests in the author, subject to the proviso that an author can transfer his copyright wholly or in part to any other person. Section 5 of the Copyright Act, 1965, contained a similar provision, but provision was made for certain exceptions as in the case of an employer-employee relationship where the copyright in a work undertaken by an employee in terms of a contract of service or apprenticeship or in terms of a commission from another person, vests in the employer or the person who commissioned the work.

The fact that the existing Act does not make provision for the exceptions just mentioned has lead to employers having to conclude agreements with their employees in order to ensure that copyright which would vest in the employee in terms of the Act, is transferred to the employer. Particularly among the larger private organizations and statutory bodies it was an enormous task to conclude all these agreements.

†In view of the importance of the matter, the advisory committee thought it advisable to call for further representations. For this purpose a Press statement was released and a suitable notice published in the Government Gazette. In addition the committee also heard oral evidence on 18 and 19 June 1979.

After completion of its investigation the members of the advisory committee were unanimous in their decision to recommend that provision be made in the Act for the vesting of copyright in a person other than the author in certain circumstances on the same basis as the provisions which were contained in section 5 of the Copyright Act, 1965.

A draft amending Bill containing the proposed amendments was published in the Government Gazette of 30 November 1979, for general information and comment. The draft Bill was well received, and the proposed amendment of section 21 of the Act, providing for the re-introduction of the provisions which were contained in section 5 of the Copyright Act, 1965, was, with two exceptions, particularly welcomed.

It should be noted that the Bill does not make provision for all the recommendations for the amendment of the Act which have been received. This is due to the fact that they are still being considered by the advisory committee and the relevant subcommittees. Some of these matters are not only very complex, but solutions to the problems are being further complicated as a result of conflicting interests and diversity of opinions.

Mr. Speaker, we very much welcome the fact that the advisory committee, which was constituted on the recommendations of a Select Committee which sat in 1978, has been looking at some of the problems which arise out of the complexities of the Copyright Act as it stands, in relation also to the Patents Act and the provisions for the protection of designers. We have some difficulty in dealing with this Bill because, as the hon. the Minister has just said, the advisory committee has made recommendations in order to bring about certain improvements in the existing Act, while leaving aside other matters which have not yet been resolved or which are still points of controversy. Therefore, in criticizing this Bill at the Second Reading, we have some difficulty knowing precisely what matters we may deal with legitimately as having been disposed of by the advisory committee, and which other matters may or may not still be under discussion by the advisory committee, and possibly the subject of further amendments in the future. I should like to illustrate my point by referring first of all to the amendment proposed in clause 2 of the Bill. The hon. the Minister will know that one of the major difficulties in the existing Act—as it also was in the previous Act—was to draw a clear distinction between the copyright of an artistic work on the one hand and a design entitled to patent protection on the other hand. There did exist in the original Act a definition of a kind which sought to separate the two. In the Act of 1978 an attempt was made again to define the difference between the two. That was an important difference. In the Act of 1978 it is laid down—in section 2—that—

1. (a) literary works;
2. (b) musical works;
3. (c) artistic works;
4. (d) cinematograph films, to which are assimilated works expressed by a process analagous to cinematography …

I specifically want to refer to artistic works, because that is what we are talking about in this particular instance. Section 2 of the Act lays down that an artistic work or artistic works, subject to the provisions of the Act, of course, shall be eligible for copyright. It then goes on, in the second part of the same section, to stipulate what shall not be eligible for copyright and under what conditions it will not be eligible for copyright. Section 2(2) of the Act reads as follows—

1. (a) sufficient effort or skill has been expended on making the work to give it a new and original character; and
2. (b) the work has been written down, recorded or otherwise reduced to material form.

We now know what it has to be, and we also know what it is not to be. We have to go further, however. We have to look at the definition to see what is in fact an artistic work. In terms of the definition in the Act an “artistic work”, irrespective of the artistic quality thereof, means—

1. (a) paintings, sculptures, drawings, engravings and photographs;
2. (b) works of architecture, being either buildings or models of buildings; or
3. (c) works of artistic craftsmanship, not falling within either paragraph (a) or (b).

Now the problem begins to become clearer. Let us assume there is a drawing of an engineering nature; an engineering design, for instance. I mention this in particular because there has been a case before the Transvaal Provincial Division arising out of just such a difficulty, and it may even be going on appeal to Bloemfontein. Let us assume now that we are dealing with an engineering design the patent on which has in fact expired. The person who has that drawing or design in his possession is using that design or drawing to manufacture a product on the basis thereof. Legal action is then brought against him to sue for damages on the grounds that the man is infringing not the engineering design but a copyright. Immediately one has a problem of definition. Is this engineering design in fact a “model” with a patent which is entitled to 15 years’ protection, or is it in fact a copyright which is entitled to protection for the lifetime of the designer plus 50 years?

Here we have a real problem because the drawing, by definition, could well be an artistic work entitled to protection of 50 years plus the lifetime of the author or artist. The hon. the Minister will readily concede that this makes an enormous difference in law.

This brings me to the amendment in the Bill before us this evening. The hon. the Minister has said that the Advisory Committee in Pretoria has had a look at this and has, in fact, made recommendations for the improvement of the existing legislation, i.e. the Act of 1978. What has it done, however, about this particular point of definition? It has, in fact, taken section 2 of the principal Act and amended it by the substitution of the following words—

1. (1) Subject to the provisions of this Act, the following works, if they are original, shall be eligible for copyright…

So far we are not helped in this particular case, because the engineering drawing could also have been an original drawing. The fact that it therefore has to be original to be copyrighted does not help us because the design can also be original. This does not separate the two aspects. I quote further—

1. (b) By the substitution for subsection (2) of the following subsection—
   1. (2) A literary, musical or artistic work shall not be eligible for copyright unless

Now we come to a deletion, and I quote—

We have removed a qualification which might conceivably have helped us to separate the artistic work from the design, but not necessarily so. It is further stated that a work shall not be eligible for copyright unless—

I think the hon. the Minister will agree that the fact that it has to be written down is no doubt an important aspect, but it does not help us to separate a design, which is entitled to 15 years’ protection, from an artistic work which is entitled to protection of 50 years plus the lifetime of the author. This is the problem before us. When we discussed this in the House two years ago, I spoke on the Bill on this side of the House and attempted to deal with this very matter which I contend remains a very difficult and contentious matter, is still the subject of law suits in spite of the new legislation, and which I contend will continue to be a matter of dispute and of law suits, despite the further amendment being introduced here tonight. This is my problem. In an attempt to draw this vital distinction between copyright on the one hand and the patenting of a design on the other, I said (Hansard, Vol. 74, col. 9161)—

I think this is also imperfect. I do not think it actually solves the problem. My difficulty with the Bill this evening, however, is that in connection with this very vital definition we are faced with an amendment which I think the hon. the Minister has indicated, by his nod of agreement, he also finds difficult to accept as a really satisfactory definition capable of separating two concepts which, in law, it is so very important to separate. I think that the hon. the Minister may well be aware that there has been a law suit, and that law suits are pending, in connection with this very matter. So unless the hon. the Minister can give us the assurance that the Advisory Committee is, in fact, able to satisfy him, and he is able to satisfy us, that the amendments proposed in the Bill before us this evening do resolve that problem, we would find it very difficult to support the amendments because they appear to us to be wholly inadequate for that purpose.

There is merely one other matter I want to refer to at this stage. There are a number of clauses that could perhaps be dealt with during the Committee Stage, but I wish to draw the attention of the hon. the Minister to one further clause, i.e. clause 9 which amends section 21 of the principal Act.

Clause 9, which amends section 21 of the principal Act, in fact sets out to do what the Select Committee anticipated might have to be done, i.e. to define the subject matter of section 21 more closely, to expand the provision and produce greater clarity about it. It was for precisely that reason, again, that the Select Committee asked the Minister in charge of the Bill which produced the Act of 1978 to agree that there should be an advisory committee. It is because of the difficulties and complications arising out of section 21 that he agreed to propose in the Other Place the addition of section 40 providing for this advisory committee.

The advisory committee has now done its work. In the case, for example, of paragraph (d) it is provided that—

That was deliberately done to overcome difficulties which arose in South Africa out of the local practice in regard to patents which somehow prevented South Africans from fully accepting the international practice, which it was the purpose of the commission to adopt on behalf of South Africa. However, if it has served its declared purpose, if it has helped to facilitate the work of the registration of copyrights and patents, then no doubt it is useful, and we have no objection to it. The difficulty is that the Act we are amending came into effect on, I think, 1 January 1979 and in terms of that Act a different situation existed. The apprentice was protected and the employer of the apprentice had no rights in the work done by the apprentice. Now we say the situation changes. Now in fact the employer of the apprentice has the primary right in the work done by the apprentice. So there is a direct reversal of rights. What about the intervening period? If this Bill becomes law, no doubt it will be promulgated in two, three or four months’ time. That will be in, shall we say, mid-1980. Between 1 January 1979 and mid-1980 there is a period of 18 months during which we will have the old position living side by side with the new. I believe that if the amendment proposed in clause 9 is a valid one and is needed in order to protect South African users of these copyrights, it is necessary to make this effective from 1 January 1979 in order to make the protection complete and not to leave a hiatus between the situation that was created on that date and the situation we are now attempting to create by means of this amendment. I believe it would be as well, if the hon. the Minister means what he says in introducing this amendment, to make it effective as from the date on which the difficulty was first created.

I will say no more about the Bill at the Second Reading. We look forward, though, to dealing with the matter in greater detail because, as the hon. the Minister will have seen, we are generally in favour of the clarifications which it is attempted to make in this Bill. We are not sure that the attempt has yet succeeded. We would like to have further assurances before we decide precisely how we will proceed in regard to this legislation.

Mr. Speaker, we on this side of the House have rather a problem, because if we do not listen to several extremely ingenious arguments, we reach the stage when we do not know whether the Opposition supports or opposes the Bill. The hon. member for Constantia again referred to the problems being experienced with models. I can only point out that he raised the same problems before the Select Committee at the time. The second report published by that Select Committee dealt specifically with this aspect and suggested that it be further considered and discussed by the Advisory Committee. The hon. the Minister informed us that the amendments contained in the legislation had not only been considered specifically by the Advisory Committee, but also carried their approval, and that all other interested bodies had been approached. It seems therefore as if the matter has been given sufficient attention.

Do you know that a court case is in progress at the moment?

There will probably always be court cases.

The Bill deals with certain aspects affecting copyright. The hon. member for Constantia also dealt with certain aspects, but he had more to say about matters which do not form part of the Bill than about the provisions of the Bill itself. I think that at this stage it is really expected of us to consider the provisions of the Bill. We can confidently assume that the Advisory Committee that was appointed will give further consideration to the legislation as it develops.

The original Copyright Act was a highly technical measure and it could be expected that as the implementation of the measure developed in practice, certain amendments would be required. This is indeed what has happened. The people who are directly concerned with the legislation ascertained that certain problems cropped up in practice, and the result of these problems is the amending Bill at present before the House. The fact that so few amendments to the original legislation are being proposed indicates that the original Act was indeed a sound piece of legislation. If not, one could probably have expected more amendments at this stage.

Some of the amendments contained in the Bill are in fact formal amendments confirming principles already contained in the legislation, but putting them in a different way. Let me refer to the following example: The provision that the legislation will also be applicable to a substantial part of a work, has already been set out in separate sections but the order is now being changed by inserting a general clause in this regard and deleting the separate references in the various subsections.

I agree—and the hon. member for Constantia has also referred to this—that the most important provision in the Bill is undoubtedly the principle that ownership is now being changed. Whereas formerly it was provided that the author was per se the owner of a copyright, this is now being altered to read that a separate or other person who is not necessarily the author may be the owner of the copyright. This is an important amendment, and as the hon. member for Constantia said, there may be certain aspects involved here which we could discuss further during the Committee Stage. However, at this stage I am quite satisfied that the amendments at present being proposed are fully in accordance with the spirit of the committee’s report when the Act was introduced in 1978. I therefore have no hesitation in stating very clearly on behalf of this side of the House that we support the legislation.

Mr. Speaker, the three previous speakers, the hon. the Minister and the hon. members for Constantia and Albany, have clearly indicated the reason for the introduction of this Bill and to dwell on it at great length. I want to tell the hon. member for Albany that the hon. member for Constantia has raised a technical matter here which I am sure the hon. the Minister will take cognizance of and no doubt he will reply to this in due course.

The subject of the ownership of copyright can be a very complex subject and it is often the subject of much litigation and argument. As the hon. member for Constantia pointed out, there is a case before the court at the present time. I do not believe that I am in a position to discuss the technicalities of that. However, it is clear from what the hon. the Minister has said that the run-up to this Bill has gone through many phases, dating as far back as June of last year when the Advisory Committee published a notice in the Gazette that the Copyright Act was going to be amended and called for comment and submissions from affected and interested parties. A draft Amendment Bill was then published and again there was a debate on it. Now we have before us the amending Bill which the hon. the Minister has introduced. We are prepared to accept the necessity of especially clause 9 which more clearly defines the ownership of copyright. Therefore we are prepared to support the hon. the Minister in this and we shall be voting in favour of the Second Reading of the Bill.

Mr. Speaker, I rise essentially to support the points made by the hon. member for Constantia. There are really two points, and these are the defects that we are aware of in the legislation as it now exists. Both of them, be it noted, concern difficulties which arose in 1978.

On the one I can be reasonably brief. I want to speak to the point raised by the hon. member for Constantia that, whereas we strongly welcome the amendment to section 21, which is contained in clause 9 of the Bill before us, it seems to us that it is in the very logic of the fact that the hon. the Minister comes with this amendment that it really is necessary for him to make it retroactive. Under the earlier legislation, i.e. the pre-1978 legislation, when somebody was paid to do a certain artistic work, as defined, or did it in the course of his employment, the owner of the copyright was without any doubt his employer. Of course what this means in practice is that in many large companies jobs are done by draughtsmen who create designs for machinery, which is then developed on the basis of those designs, or articles of commercial use and commercial value, which are then manufactured on the basis of those designs. This was omitted from the 1978 Bill, despite some objections which were made at the time, and that made industrialists and commercial firms potential blackmailees, if there is such a word, in all cases where they had forgotten or omitted to obtain assignment in writing from their employees who were doing these drafts. Because copyright subsists during the life of the author and for 50 years thereafter, it means that if a young man of 20 does a drawing today for a commercial firm and the commercial firm fails to get an assignment from him, and he lives to be 80, the copyright will subsist for 50 years after his death, i.e. until the year 2090 the firm which employs him today is going to be afraid to make use of those drawings which he did lest it be faced with a prosecution. This is a very severe thing. I do not want to press the point because it is evident from the inclusion of clause 9 in the Bill now before us that the hon. the Minister has seen the validity of what I have just said. He is putting it right with this clause, but I do want to urge him strongly to let us know in his reply this evening what intentions he has in regard to closing the gap between 1 January 1979—that is the date of coming into operation of the Act of 1978—and the date when this amending Bill, if it becomes law, will come into operation. So much for that point.

The hon. member for Constantia also talked about the very great difficulty which we should very much like to see looked after and which arises from the overlapping and the potential confusion between design and copyright. The fact is that a design, which is in effect a kind of patent, if I may speak as a layman, is something which subsists for 15 years and in terms of section 11 of the Act of 1965, which was the old legislation, then ended, and once it had ended, there could be no question of copyright in that same drawing which had been the subject of the design. But, now, as the hon. member has said, there has been a case before the Pretoria Supreme Court in connection with this, and hon. members may be interested to know just what the outline of this case was. It started with a British patent registered in 1980 for a jack for tree-stumping. That patent expired after 15 years in 1922—there seems to be one year missing—and in that year a director of the company manufacturing the jack made a set of working drawings. Jacks made in accordance with these drawings continuously since then by a British firm were extensively sold in South Africa. In or about 1975 a South African manufacturer decided to enter the market. He made a jack which for all practical purposes was a copy of the original jack which had then been on the market for some 55 years and in which one would have thought that any patent or design right would have expired. In 1979 he found himself the defendant in an infringement-of-copyright action, brought against him by the British firm, because under the 1978 copyright law, the law which we are amending this evening, copyright existed in the drawings. The draughtsman was still alive—he was 94, as a matter of interest—and the making of a three-dimensional article from a two-dimensional drawing in three-dimensional embodiment was an infringement to the copyright of the drawing.

This action was dismissed on quite a different legal technical ground, but it may well go on appeal and may yet succeed. This has the gravest possible implications of a practical kind for industry in this country. I have information of three firms in South Africa which manufacture excavator teeth for earth-moving equipment such as shovels. There is no patent protection on the teeth, which have been freely made in this country for years. However, last year, following the coming into operation of the Act of 1978, all three firms received letters of demand from a certain company in Sweden in terms of the Copyright Act and these three firms all decided that, rather than face an appeal court action against a large foreign company, they would desist from manufacturing the teeth. The cost of the so-called genuine teeth, the imported teeth, is R47 per tooth, and the cost for which those firms could manufacture them here is, on my information, R14. Yet, because of this extraordinary copyright protection, which I am sure was not the intention of the drafters of the Act, they could be in this kind of trouble. It is for these reasons, and not because we want to quibble, that we are urging the hon. the Minister to give the matter his urgent attention. At any rate, even if there is a doubt about the interpretation— and I believe that there are authorities who do not take the view I have just put forward—it is surely our wish that the law should be made clear and unambiguous and that there should be no doubt about exactly where the dividing line is between design on the one hand and copyright on the other. That is an important general point which I raise now in the Second Reading.

I conclude by returning to my first point that, if the hon. the Minister is serious about clause 9, it would seem to us to be absolutely axiomatic that he should also be serious about making it retroactive to 1 January 1979.

Mr. Speaker, this has been an interesting discussion. I did of course say at the outset that this amending Bill would clearly not rectify everything. We are dealing here with a matter that gives rise to ongoing problems, but with the aid of this advisory committee we have at least succeeded in outlining a few deficiencies in this Act, which it has only been possible to test for two years now. I realize that in that regard we definitely have a deficiency.

†I must tell the hon. member for Constantia that I have no list of the specific matters to which the advisory committee is still attending. I can, of course, bring to their attention the matters that were raised by the hon. member, because I want to make it very clear that, as far as legislation of this kind is concerned, we must all try to find the best ways and means of providing good legislation. It is not a question of politics in any way whatsoever. We must try, by helping each other—some of the hon. members are perhaps technically more adept and thus better able to guide others, like me—to find the right answers. We shall try, sometimes even by trial and error, to fill the gaps to see whether we cannot find the kind of Act that will eventually close as many of these loopholes as possible. I have to grant the hon. member for Constantia, as well as the hon. member for Parktown, the argument that there is a problem in respect of inserting this retroactive clause. I cannot visualize what kind of confusion there might be if I should agree to that point. Nevertheless I think it might perhaps be a good thing if in the meantime I found out what the advisory committee thinks of this. They have not advised that this legislation, clause 9, should be made retrospective to 1 January 1979. As far as that is concerned, I agree with the hon. member that we have a problem, and I shall give attention to it before we discuss this in the Other Place.

*A problem is also being experienced with regard to the issue of copyright and design. This is really one of the problems that has not yet been solved. Indeed, the hon. member for Parktown has been telling about legal actions and disputes that have occurred over the years with regard to this matter. This is a complex issue to resolve. Up to now the advisory committee has not yet felt that it is able to resolve the issue, and accordingly it has not yet been resolved. In my opinion it has indeed brought about an improvement in that it prefers originality as the only criterion. It has not tried to create confusion by stressing vague aspects such as sufficient skill, etc.

Mr. Speaker, I should like to say to the hon. the Minister that we appreciate the modesty with which he replies. This is a problem, and not one of us has yet found the answer in this regard. I now just want to ask the hon. the Minister whether the advisory committee has yet given him an indication that in this amendment they have found a solution or are closer to a solution, because it seems to us that a solution to the problem has not yet been found.

I just want to remind the hon. member that in the final sentence of my Second Reading speech I said that some of these matters were very complex and that solutions to the problems would be further complicated as a result of conflicting interests and diversity of opinions.

*That is the problem which the advisory committee still has to contend with. However, I think that they are really doing their best to solve problems of this nature and to formulate some definition or qualifying stipulation as to what action is to be taken in such a case.

Since hon. members must still discuss these matters during the Committee Stage I want to say at this point that the advisory committee has drafted this amending Bill specifically to facilitate matters at this stage. It is an improvement on the legislation which was only introduced very recently and which still contains a number of loopholes.

I do not know what else I can say during this Second Reading debate to satisfy hon. members. I think that everyone agrees that the principle is in order in this regard. I think that the hon. member for Albany was right when he said that there would always be problems in this regard and I recognize that the hon. member for Amanzimtoti understands the problems we are experiencing with this type of technical Bill. One of the problems we are experiencing is that we must take into account people’s interpretations of the law, interpretations which may be in conflict with one another. I suggest that at this stage we let what we have already said in the course of the debate, suffice, and that the hon. members raise the further aspects of this matter which they want to raise, during the Committee Stage. In the meantime I shall take into account what the hon. members have said to me with regard to giving the Act a retrospective effective date. I shall investigate the matter.

In the second place, I shall also attempt to obtain information with regard to the matters that the advisory committee is dealing with and which they still find problematic at this stage. I shall have to let this suffice; that is as far as I can go.

Mr. Speaker, I move—

Ever since the Estate Agents Act, 1976 came into operation on 1 August 1977, the Estate Agents Board has from time to time experienced certain difficulties in the application of the Act, and this has necessitated certain amendments to the legislation.

The Estate Agents Act provides that audit reports in respect of the trust accounts of estate agents should be submitted annually to the Estate Agents Board. In the past, however, as a result of the absence of definition of “auditor”, the board has received certain reports prepared by the internal auditors of estate agents. A suitable definition is therefore being inserted in the Act by means of clause 1 of the amending Bill to define an auditor as any person registered in terms of the Public Accountants’ and Auditors’ Act, 1951 and functioning as such.

As will appear from the discussion of the further clauses of this Bill, it is proposed that the Estate Agents Board shall be authorized to appoint inspectors and also to appoint an executive committee from its own members. Consequently it is necessary to insert definitions for “inspector” and “executive committee” in section 1 of the Act. These definitions are contained in clause 1 of the amending Bill.

Section 6 of the Estate Agents Act authorizes the Estate Agents Board to appoint personnel for the performance of certain functions on instructions from and under the control of the board. However, shortly after the constitution of the board it also appointed inspectors, apart from its normal office staff, who were vested with relatively extensive powers such as powers of inspection and powers of seizure to ensure that the Estate Agents Act was being effectively applied. However, doubt exists as to whether the Act does indeed give the necessary authority for these particular appointments and furthermore, as to whether the authority vested in these inspectors could indeed be inferred from the provisions of section 6. To effect legal certainty in this respect, it is being proposed in clause 2 of the amending Bill that provision should be made in section 6 of the principal Act that apart from the appointment of ordinary office staff, the board shall also be authorized to appoint inspectors. The powers of these inspectors are set out in an additional section 32A and will be dealt with more fully under that section.

Because the members of the Estate Agents Board reside in various parts of the country, it is very difficult in practice to convene the full board at short notice to give attention to urgent matters that could not stand over until a subsequent scheduled board meeting. So, for example, the Estate Agents Board experienced considerable difficulties in connection with the adopting of urgent resolutions on applications for court orders to interdict estate agents from operating their trust accounts in cases where they had committed offences. The Act is therefore being amended now by means of clause 3 of the amending Bill by the insertion of a new section 8A to provide that the Estate Agents Board may appoint an executive committee from among its members which, subject to the authority of the board, to attend to urgent matters pertaining of to the board. Whenever the Estate Agents Board has reason to believe that estate agents are not complying with the provisions of the Act, they may investigate the matter. In certain of these cases, for example, the board is obliged to appoint accountants at considerable cost to bring up to date the accounting records of estate agents, which are often not kept up to date, before any meaningful conclusions can be drawn from them. At present, the costs of such an investigation have to be paid by the board from its own funds.

Clause 4 of the amending Bill provides that section 9 of the Act should be amended to empower the board to recover the costs of such investigation from any estate agent who has failed to comply with the provisions of the Act and with regard to whom the investigation was therefore justified.

†In terms of section 18 of the Act the Estate Agents Fidelity Fund is only liable to reimburse persons who suffer pecuniary loss by reason of theft by an estate agent of money and other property entrusted to him in his capacity as an estate agent. Clause 5 of the amendment Bill provides for the amendment of this section to extend the liability of the Fund in order also to reimburse those persons who suffer pecuniary loss arising from the failure by an estate agent to deposit moneys entrusted to him into a trust account. In order to ensure absolute certainty in law I intend to introduce an amendment to section 18 of the principal Act during the Committee Stage. This proposed amendment will provide for the inclusion of the words “or failure” after the word “theft”, where the latter appears in subsection (3) of section 18 of the principal Act in order to bring the wording of this section into line with para, (b) of section 18 of the Act. Owing to the amendment to section 18 of the principal Act clause 6 contains a consequential amendment to section 19 of the Act.

In the case of an estate agency company being wound up or where the Fidelity Fund certificates of the company and its directors have been withdrawn by the board or where the company has been prohibited by a court of law to operate in any way on its trust, savings or other interest-bearing account, the directors of such a company often apply for Fidelity Fund certificates in their personal capacities in order to carry on business as estate agents. The Estate Agents Board has no power under the Act, apart from certain disqualifications contained therein, to refuse such applications, even where the directors involved are suspected of fraudulent behaviour or improper conduct. This serious shortcoming in the Act is now being suitably rectified by granting to the board such power of refusal by way of an amendment to section 27 of the Act, as embodied in clause 7 of the amendment Bill.

It has been strongly advocated that estate agents should be qualified or experienced to some extent to be able to perform the wide variety of functions of an estate agent properly. The Act is now also being amended to the effect that a person could be prohibited from acquiring a Fidelity Fund certificate should he not be in possession of the minimum educational standard or practical experience which will henceforth be determined by the Minister from time to time. The necessary additions to section 27 of the Act, to give effect to this requirement, is also embodied in clause 7 of the amendment Bill.

By way of an amendment proposed in clause 8, courts are now empowered to withdraw Fidelity Fund certificates on application by the Estate Agents Board or any other competent person. This amendment will have the effect that estate agents who are guilty of serious improper conduct can be prevented within a short period of time to continue with their estate agency business.

At present it is uncertain whether a director of an estate agent company is liable in terms of the Act should such company not comply with the requirements of the Act as far as the keeping of accounting records and the opening and keeping of a trust account are concerned.

The amendment of section 30 of the Act, as contained in clause 9 of the Bill, will render a director of a company liable to a charge of improper conduct should he fail to ensure that the company complies with the said requirements. At the same time it is proposed that the fine which can be imposed by the Estate Agents Board for non-compliance with this requirement be increased from R500 to R1 000.

Clause 10 of the Bill deals with the proposed amendment to section 31 of the Act to expedite the process of appeal by an estate agent against a decision of the Estate Agents Board and provides that an appeal may be lodged even before the Board has furnished the reasons for such decision.

In terms of section 32 of the Act estate agents are at present obliged to pay all interest, earned on the investment of trust moneys not immediately required for any particular purpose, to the Estate Agents Fidelity Fund in those cases where no mandate has been given by the owners in regard to the allocation of such interest. In view of the fact that costs have to be incurred to invest money, and especially because estate agents are not entitled to any portion of the interest earned on trust money invested by estate agents, they are understandably reluctant to arrange for the investment of trust money. In order to encourage estate agents in this respect, clause 11 of the Bill contains an amendment to section 32 of the Act. The amendment provides for an estate agent to be refunded by the Estate Agents Board to the tune of the prescribed portion of the interest earned on such investment and paid by an estate agent to the Estate Agents Fidelity Fund.

When I dealt with clause 2 of the Bill I mentioned the proposed amendment to section 6 of the Act to make provision for the appointment of inspectors by the Estate Agents Board. Clause 12 of the Bill sets out the powers of these inspectors. The powers are substantially similar to the powers of inspectors appointed in terms of the Trade Practices Act, 1976 (Act 76 of 1976). Clause 13 sets out the amendments to section 33 of the Act in terms of which the Minister is also empowered to prescribe the minimum standard of training and the level of practical experience of estate agents, the intervals at which accounting records are to be audited, the portion of the interest earned on trust money invested by estate agents, which may be refunded by the Estate Agents Board to such estate agents, as well as the conditions under which any person may carry on his business as an estate agent from any residential premises.

The amendment to section 34, dealt with in clause 14 of the Bill, provides for an increase in the maximum fine, in the event of a conviction of an estate agent due to a contravention of the provisions of the Act, from R2 000 to R5 000. At the same time it provides for an increase in the term of imprisonment from two years to five years. In view of the fact that estate agents normally handle large amounts of money, and experience has shown that substantial amounts have in the past been involved in cases of theft or the misappropriation of such moneys by estate agents, it is felt that the higher fine and more severe term of imprisonment are essential to serve as a deterrent for potential contraveners of the Act.

Clause 15 deals with the short title of the Act, and I intend introducing an amendment to this clause during the Committee Stage in the Other Place to make provision for clause 12 of this Bill to come into operation on a date to be fixed by the State President by proclamation in the Gazette. All the other clauses of this proposed legislation will come into effect on the date of promulgation of the Estate Agents Amendment Act, 1981. The reason for this amendment is that negotiations between the Estate Agents Board and the Association of Law Societies of South Africa, in regard to the position of solicitors in terms of the Act, have not yet been finalized. As soon as finality has been reached, the provisions of section 12 will be brought into operation.

Mr. Speaker, the hon. the Minister has, I think very sensibly, dealt with this Bill clause by clause, because it is that sort of Bill. It contains a number of provisions that are not closely related and I think that that is the right way to deal with the matter and I shall presently do so too.

I should like to refer, first, to one matter of general interest to which the hon. the Minister has not referred, in the hope that he will do so in his reply. We have been made aware that there is a certain amount of anxiety among the members of the legal profession, the attorneys’ profession, some of whom do, as is well-known, conduct activities which are the same as those of estate agents and who were excluded by the definition of “estate agent” in the original Act. On that exclusion some doubt has since been cast. There appears to be a difficulty as to whether an attorney carries out estate agent activities as part of his own practice or as something separate, and whether in these circumstances the provisions of the Act should apply. As we understand it, at the time of the introduction of the principal Act the legal profession saw no real objection to having its own members regarded as estate agents for purposes of the law. However, this legislation, rightly I think, tightens up considerably the control mechanisms which are applied to estate agents, particularly the provisions in regard to inspection.

That relates to the clause which, I notice, the hon. the Minister says is only going to come into operation on a date to be fixed. It is that clause in particular, I believe, which is worrying members of the legal profession because, as the hon. the Minister will know better than I, they are already subject to very considerable disciplines and very effective control within their own profession. I am not going to take this matter any further. It may be that some of my colleagues who know more about it than I do will wish to do so.

In the main this Bill, as the hon. the Minister has said, flows from experience and tightens up provisions which are desirable and which may take the occupation of estate agent somewhat nearer to the status of a recognized profession. The hon. the Minister has explained why it is necessary to insist that public auditors do audit the books once a year. I think that that is perfectly understandable. He has told us why he needs an executive committee and he did not have to refer to the alteration of the definition of “Minister”. As for clause 2 of the Bill, which amends section 6 of the Act, this makes provision for the appointment of members of staff or others as inspectors, and we shall talk about inspectors when we get to clause 12 later on.

Clause 3 provides for the appointment of an executive committee. This is a practical matter. It is always necessary, I think, to look closely to see whether the rights and prerogatives of a board are going to be undermined when a small executive committee of this kind is appointed. Since the hon. the Minister is appointing all the members of the board anyway, I think it will be unreasonable to object to the delegation of powers to an executive committee. While I am on the subject of the appointment of the executive committee, perhaps I will be allowed to raise with the hon. the Minister the question of what his policy is in appointing the executive committee. I know the Act provides that he must select its members from a list submitted to him by members of the estate agents profession or by the council which represents the estate agents, but would the hon. the Minister mind telling us whether that council, in making recommendations to him, puts the recommended names in its order of preference and whether he makes it a practice to accept the names in that order of preference or not? If he does not, if it is not the Minister’s policy to accept the preferential order submitted to him by the estate agents themselves, would he mind telling us what sort of criteria he applies in selecting members of the board and, through them, possibly members of the executive committee?

Clause 4 serves to enable the board to recoup its expenses from an estate agent when they have been investigating him if he has failed to comply with any duty imposed on him in terms of this legislation. The thought goes through one’s mind that this might lend itself to a victimization of a kind in that an estate agent who has committed a very minor malfeasance might become the subject of an expensive investigation and, having been found guilty of this very small offence, might then find himself with a very big bill to pay. However, on reflection this is probably not a very serious risk, and since these funds cannot be recouped from the person concerned unless he has been guilty of an error of some kind, I think this can be accepted. There is really nothing of importance in clause 5, and clause 6 is consequential thereto.

In clause 7 we have the important new provisions to the effect that an estate agent may be deprived of his infidelity fund certificate if he does not comply with the prescribe standard of training and if he does not have the prescribed practical experience. I only pause for a moment to say that I think that these are extremely important provisions, perhaps the most important provisions in the Bill, and I think they are very good ones indeed. If what we are trying to do here is to develop a state of affairs where people who practise this important occupation will be properly qualified and responsible, is that the public can have greater faith in estate agents than perhaps they have hitherto had, these provisions are strongly to be welcomed.

Clause 8 provides for a court, under certain circumstances, to withdraw a fidelity fund certificate on good cause. I take it that the words “on good cause” are regarded as being adequate by the hon. the Minister’s legal advisers and that it is not necessary to refer more specifically to the sort of reasons for which a court can do this. Perhaps in his reply the hon. the Minister could give us this assurance.

Clause 9 concerns directors of a company who do not take reasonable steps to prevent certain failures. I think the clause is fairly drafted and does not call for objection. It also provides for an increase in the fine to R1 000, and this also seems reasonable. Clause 10 brings about an improvement for the reasons given by the hon. the Minister. Clause 11 provides for the refund of some interest in certain circumstances as an incentive to the estate agents, as I understand it, to be sure that he gets interest on the funds that he invests. It also tightens up the bookkeeping and auditing provisions, and again I think this is to be welcomed.

Zac, get out of low-gear, man!

Clause 12, which the hon. the Minister referred to at some length, provides the powers for inspection. These are far-reaching powers and may be regarded as fairly severe powers. I do not know why the hon. the Minister is holding this over to come into operation at a later date, but if he is doing that in order to have a good look at these provisions, we would welcome that. One should not impose wider powers of inspection on people who have a job to do than one has to. The visit by inspectors to estate agents can cause difficulty, can be obstructive to them in the carrying out of their duties and should be limited to occasions on which it is necessary, and then should extend only as far as is absolutely necessary for the purposes of proper supervision.

Clause 13 contains nothing with which we want to take issue. Clause 14 provides for the penalties to be increased by two-and-a-half times. I think this is fairly severe, and one hopes that in the application thereof there will not be any undue strictness. With those comments we, on this side of the House, will be happy to support the Second Reading of the Bill, and if there are any matters that have to be taken further, this can be done during the Committee Stage.

Mr. Speaker, the hon. member for Parktown and his party have kept us busy until late at night. I believe they could have been a lot briefer with regard to this Bill and with the previous ones too. Basically I can agree with everything that the hon. member said except that he tried to repeat the Second Reading speech of the hon. the Minister in respect of every clause. The hon. Minister stated very clearly with regard to the specific issue of clause 12, which relates to inspectors, that it was being withheld due to the negotiations being conducted between the Estate Agents Board and the Association of Law Societies. For my part, I, too, should like to say that we welcome the announcement by the hon. Minister. I have every confidence that the negotiations will in fact be successful because the ultimate aim of both the Association of Law Societies and the Estate Agents Board is only to act in such a way as to protect the interests of the public, and with that as their goal I believe that they will in fact reach agreement with one another in regard to the issue of the inspectors.

On the one hand, the Estate Agents Board is seeking to improve its own efficiency by way of this legislation, and that is why provision is being made, among other things, for an executive committee to enable them to take decisions more promptly in instances of, inter alia, urgent steps against members. On the other hand, the Estate Agents Board wants to strengthen the position of its members and introduce a greater degree of discipline, for example, with regard to the supervision and verification of the trust account of an estate agent.

The hon. member for Parktown has referred to the increasing of fines. If one takes into account the size of trust accounts handled by these people and the abuses that could arise in the case of a person lacking strong moral principles, then this is not an excessive increase.

An improvement in the standard of the profession is being envisaged, and in my humble opinion it is to be welcomed that these steps towards improving the standard are being taken. It is essential that training be given, particularly to new entrants to the profession. I do not know what the Estate Agents Board has in mind, but I should like to point out that for estate agents a thorough knowledge of the legislation relating to the sale of properties, the formalities to be complied with and the conditions contained in a contract, is indispensable. This is complicated legislation, and one is justified in expecting an estate agent to be able to inform a seller and to be in a position to put parties in the picture in regard to the conditions and requirements incorporated in a contract of sale, and here I have in mind the Sale of Land on Instalments Act in particular.

What often happens in practice is that an offer is signed by a prospective purchaser. The offer form provides that a contract of sale will be drawn up if the seller accepts the purchase, and all the conditions applicable to the sale will be embodied therein. To my mind this is an unsatisfactory practice. Such an offer form ought already to contain the full conditions of sale as they will apply, for example, in the case of land being sold on instalments.

I note that the hon. member for Hillbrow is listening to me with attention. I assume that he, too, is going to speak and therefore I should be obliged if he would tell me later whether he agrees with what I am now going to say. A great deal of confidence is placed in estate agents by the public, both as regards advice relating to the value aspect of the property sold—that is the ethical aspect—and as regards the conditions of sale and the security involved in the transaction. Confidence is also placed in estate agents, and in the organization and administration of estate agent practises, by other bodies and persons.

I refer for example to the fourth interim report of the Commission of Investigation into the Development Schemes Bill in which the commission recommends that share block companies be permitted to entrust moneys contributed by their members to the loan commitments of the companies, to a legal practitioner or an estate agent in that capacity. Therefore, if the proposed Share Block Companies Bill becomes law, there will be an additional specific field in which the estate agent will operate and where his services will be indispensable. However, what is important is that the estate agent should be abreast of this highly technical and complicated legislation and they should have an important share in the development and success or otherwise of the proposed share block schemes.

I wish to suggest that the profession consider introducing a period of training with a view to the specific qualifications and standards of the estate agents’ profession, before an estate agent is qualified to practise in the profession. I am convinced that in view of the increasing scope of the role of the estate agent in his specific sector of the economy, it is essential that those who enter the profession should undergo a specific period of apprenticeship in order to acquire knowledge and experience and, in particular, to become acquainted with the ethics involved.

It is true that this industry does not exist to serve only a sophisticated buying and selling public, but specifically to serve the vast majority of people who only purchase a dwelling once in their lifetime. For that reason it is important that the services offered by this profession in particular, be of the highest possible standard. At present there is a major boom in the property industry, and therefore I believe that this is very timely. Every effort of this nature to develop and stabilize the profession must be welcomed.

Mr. Speaker, we have just heard the hon. member for Klerksdorp discuss this Bill in detail, and it has been suggested to me that, seeing that the hon. the Minister and the hon. member for Parktown have dealt with every clause very thoroughly, I should perhaps only discuss the first page of the Bill, viz. the title. [Interjections.]

I should like to say that the purchase of a property is probably the biggest investment the average South African ever makes. For this reason-it is extremely important that the people who deal with the citizens of South Africa who are purchasing property, should be people of the highest calibre and should conduct their business at the highest level. [Interjections.] I therefore think that it is extremely important that this amending legislation has been introduced in the House. Our newspapers and the court records of South Africa are full of the names of people who have been defrauded of their hard-earned money, and therefore I think that these clauses which are now being introduced are extremely important.

I think one of the most important clauses is clause 13, in terms of which the level of training of estate agents is now going to be monitored by the estate agents’ organization itself. One also sees that the Estate Agents Board and the Minister will now have the power, in terms of the proposed section 27, to refuse applications for Fidelity Fund certificates if the applicants have been guilty of some fraudulent act or improper conduct. I think it is important that the hon. the Minister has included this clause, in terms of which he can now clamp down on these individuals. But more important is the proposed appointment of inspectors, as has been clearly stated by the hon. the Minister. These inspectors will have the power to enter the offices of estate agents to examine their books and, if necessary, to take their books away for more intensive examination at the authority’s offices.

There is one clause to which I want to refer which I think vindicates the attitude of the former member for Berea, who many times in the past rose in debate after debate to ask that the Minister concerned should insert a clause which would provide that Government inspectors who exercised power under the Act, should show some form of identification on entering any person’s home.

Hear, hear!

I hear my colleagues saying “Hear, hear”.