Mr Speaker, overspending will remain a common occurrence in our country as long as the NP policy continues to be implemented. The Cape Province needs R930 million and Natal R670 million to meet their interim obligations between the end of the current financial year and the promulgation of the next Appropriation Act. A large amount of this money is needed to finance the Reservation of Separate Amenities Act. [Interjections.]

Millions and millions of rands have been allocated to divisional councils and municipalities in order to establish and maintain separate amenities on beaches. Millions and millions of rands will, in future be allocated to develop free settlement areas. This unnecessary expenditure can no longer be tolerated and must be stopped. [Interjections.]

How can we put an end to this overspending? Very easily, Mr Speaker. We can do so simply by getting rid of all the hurtful laws. The duplication and even triplication of facilities must be completely eliminated. The Group Areas Act, the Population Registration Act and the Reservation of Separate Amenities Act must be deleted from the Statute Book in their entirety. [Interjections.]

In this main Chamber the hon the Acting State President told the whole of South Africa that the Government was committed to the elimination of discrimination since it could in no way be justified and was in no way acceptable. The Group Areas Act, the Population Registration Act and the Reservation of Separate Amenities Act are the major obstacles in the way of reconciliation.

If these Acts are the most significant stumbling blocks, why then does the NP still want to look at these Acts? We have looked long enough at these restrictive Acts. If they are stumbling blocks, get rid of them. Abolish them in their entirety.

The NP has had the opportunity to implement its policy for more than 40 years now. What has happened in these 40 years? We have become the polecat of the world. Sanctions and disinvestment are being applied against us. We are isolated in the fields of economics and sport. Unrest, intimidation and strikes are the order of the day. At present we are without an international banker, as the hon the Minister of Finance informed us last week.

Is it really necessary for us to be a struggling country? No, Mr Speaker, the Government must just get rid of all the discriminatory laws and, in particular, those three restrictive and hurtful laws.

The NP does not need to be afraid of the CP, because the CP is too scared to implement its policy further afield than Boksburg. The CP has also found out that its policy promotes White poverty and bankruptcy. The CP has found out that if one gets at a man through his pocket, one is hitting him where it really hurts. White voters are clever enough to know that they can never vote for the CP. [Interjections.] Those who would vote for the CP are the very opposite of clever, and they would be in the minority. The solution to South Africa’s problems is to be found in the LP’s policy. Hon members of this Parliament must surely have noticed that no political party in South Africa, or any radical organisation, criticises or finds fault with our policy. They criticise only individual personalities and our participation in the tricameral system, but not our party’s policy. My party’s policy is acceptable to the majority of South Africans. My party’s policy is acceptable to the Western World. My party’s policy will bring harmony and peace to South Africa. My party’s policy is a measure against boycotts, sanctions and disinvestment. My party’s policy will bring an end to the politics of invective and reproach.

I want to assure the hon the Acting State President and the NP that the LP’s policy calls on every one in the country to serve South Africa with greater zeal and to negotiate the best possible deal for all its people.

Mr Speaker, usually when we near the end of a debate such as this a speaker at this stage struggles to find matters left for discussion. This debate however is different in that the hon members in the NP have been possessed by almost a lame duck approach to this whole debate. Is this so because they are beginning to realise that they should no longer even believe their own propaganda and that the chickens are finally coming home to roost?

In spite of expert advice this Government continues to make mistake after mistake as far as the management of the country is concerned. I refer specifically to a report presented in 1986 by the Central Economic Advisory Service under the heading of A National Economic Strategy. In that report the CEAS stated that their strategy was aimed at an increase in the long-term economic growth capacity and actual performance, as well as the job creation capacity. They also stated that considerable emphasis was placed on the expansion of the supply of and the better utilisation of skilled manpower and capital. They also stated that the strategy was aimed at a decrease in the inflation rate.

The point of departure for these recommendations is that the question of income distribution in South Africa has to be addressed in such a way as to ensure that all the members of the community share permanently in the advantages of growth and development. They say further that this can best be achieved by means of productive participation in the economic development process and not by means of a redistribution of wealth. Yet this Government continues with the disastrous policy of the redistribution of wealth as is contained in tax proposal and budget after budget. [Interjections.]

They state further that in view of the fact that more than 40% of the population of South Africa, including the national states …

[Interjections.]

Order! Hon members must really speak a little softer. The hon member may proceed.

Thank you, Mr Speaker. They say that in view of the fact that more than 40% of the population of South Africa, including the national states are not yet urbanised, it is recommended that development of rural areas as an integral part of the regional development strategy be continued. Instead in South Africa under a NP Government we have disorderly urbanisation and deregulation leading to a decline in our First World standards. [Interjections.] Once again the CEAS has been consulted, this time to present an anti-inflation strategy. I wonder whether that too is destined to go into file 13.

Talking about sanctions, which is regularly grabbed by the Government as an excuse for our bad economic performance—the Board of Trade and Industry’s chairman, Lawrence McCrystal, said that Government should look at the damage it inflicts on the economy instead of blaming others. He goes on to say that he does not believe that the trade sanctions are unique, and the sooner South Africa learns to live with this type of procedure in the world, the better. He says:

Hon members will pardon me if I say that I think this applies to the vast majority of hon members sitting in the Government benches in this House.

It is not as though it is just from today that we have discovered these problems. I refer to a report in the Sunday Star of July last year under the heading “Why alarm bells are ringing for sick rand” which refers to the rand’s collapse, and it is stated quite clearly:

This has been going on for seven or eight years, and we are still faced with the lack of action or the lack of will to act on the part of the Government. The report goes on to say the following, with which I fully agree and which is one of the things to which the CP will take South Africa back when we take over the Government:

Would it not be nice to go back to that stage? [Interjections.] There seems to be a bit of confusion in this Chamber, because there seem to be elements here who believe that I originate from the former Rhodesia. I want to tell them that my forebears arrived in this country in 1792 and that I have never been in Rhodesia. [Interjections.]

I want to continue by referring to the part appropriation budget presented by the hon the Minister of Finance in which it is clear that there is a 17% increase in the State requirements when compared with the same period last year. The allocation to provinces has only increased by R100 million. My question to the hon the Minister is this: Has this amount been reduced primarily because of the additional taxes which are now being reaped by the regional services councils, or has expenditure by the provincial councils genuinely been reduced?

I want to move on to the question of taxes, and I make this statement: Tax systems are designed to achieve a fair distribution of the tax burden. In South Africa, it is used to redistribute wealth from the productive without any attempt at ensuring a fair distribution of the tax burden. The redistribution could be described by adjusting slightly the words of the late Sir Winston Churchill, as follows: “Never before in the field of human endeavour has so much been paid by so few for so many.” [Interjections.] Perhaps this is apt: “Never before in the field of human endeavour has so much been done by so few for so many”. [Interjections.] One could even say this: “Never before in the field of human endeavour has so much been taken from so few and given to so many.” [Interjections.]

Order! I am quite sure that the hon member is quite capable of making his own speech without the particular support of hon members on my left. The hon member Mr Derby-Lewis may proceed.

Thank you, Mr Speaker. I notice a noise here on my left, but that is what usually happens. The noise always comes from the left. [Interjections.] We will just continue without taking notice of these insignificant little noises. [Interjections.]

†Whichever version one prefers, there is no getting away from the fact that in spite of reports which appeared after the elections on 6 May 1987 saying that the CP’s support had peaked and further similar reports which appeared after the municipal elections on 26 October last year, the realities reflect a totally opposite picture.

In presenting the results of the municipal elections in the Transvaal I must say that these figures were obtained with extreme difficulty and up until now we have been totally unable to obtain from the provinces of the Orange Free State and the Cape any idea of which candidates stood where and how many votes they got.

I can understand the difficulty because what has occurred in the Transvaal has also occurred in the Free State and the Cape. I can understand that supporters of hon members on this side of the House are reluctant to have those figures made known. Nevertheless we shall persevere and we shall arrive at those figures.

Let me give the House some of the interesting figures which we have so far managed to deduce. Hon members of the NP are regularly on record as saying that the CP is a party restricted to the rural areas. That is where its support lies—in the rural areas, the blue collar areas etc. We know of course that in the municipal elections last year people in the rural areas were excluded from voting in these elections by virtue of the fact that they did not reside in a municipal area. In spite of that the CP did exceptionally well in the “groot stede”.

As we know there are four of them in the Transvaal namely Pretoria, Johannesburg, Germiston and Roodepoort. In those areas the votes obtained by the CP reflect that we obtained three votes for every four votes cast for the NP in the municipal elections in the big cities.

In fact in Pretoria we managed to reduce the majority of the NP in the constituencies in Pretoria from 38 000 to 8 000. I am sure that even hon members in the governing party will agree that this is quite an achievement.

When talking to hon members of the NP—I must make it clear that I am addressing my remarks to them—I must once again remind them that in those areas it was only in the four large cities that the support for the NP managed to exceed that of the CP when it came to the actual votes cast for the official candidates of the parties.

Of the 65 town councils the CP now controls 43 and the official votes cast reflect that the CP gained 40,8% of the support, the NP gained 19,2% and the PFP 2%. The CP obtained two votes for every one vote cast for the NP. I can see hon members on that side becoming more and more depressed as I pack out these figures. [Interjections.] I can understand their dismay because I think there must be many hon members looking at me now and wondering where they are going to stand. They are always referring to the hon member for Overvaal as having left his constituency but I think we are going to see a lot of that on the NP side of the House before the next election.

The CP now controls more than 100 of the 150 local authorities in the Transvaal. If that was not a thrashing—one must remember that we did not have the support of the people in rural areas— then they will never understand what a thrashing is!

I would like to get to the hon member Mr J M Aucamp. I am not sure whether he is in the House. I did not ask him to be here. I did not think it was necessary because his presence is academic. I am not going to attack him. I just want to tell him that in his recent speech before the House, he mentioned that the CP had won 16 municipalities in the Orange Free State. I have news for him; it is actually 22. What I would like to do to solve the whole problem is to challenge him. I would like to challenge the hon member to present this House with a list containing the names of the towns and villages they profess the NP won. Furthermore, he must distinguish between those that were won officially and those that were won by ratepayers’ association candidates. I think we will then get an even more disastrously different picture—even in the liberal Cape, which I describe as the apartheid province of South Africa. I do not think there is more apartheid anywhere else in the RSA than in the Cape Province and that is the reason why people still cling to the NP. They do not really understand what is happening because they have not experienced it yet. However, their time will come when hon members on this side are left to govern the country.

We have dealt with the election results. I would, however, like to mention that the NP did exceptionally well in the area where the opposition always used to succeed, namely Johannesburg. Yet they did not do as well as they claimed because the support for the NP dropped from 50% on 6 May to 40,1% in the municipal elections on 26 October. That is the kind of growth we like to see for the NP because at that rate they are going to grow themselves right out of government.

I should now like to come back to the unfair tax burden in this country. I should like to refer to the Bill presented by the hon the Minister where he reflects figures for the various provinces, viz R930 million for the Cape Province, R670 million for Natal, R300 million for the Orange Free State and R1 200 million for the Transvaal. I have made a few calculations, and the Transvaal receives 38,7% of the total amount allocated to provinces despite the fact that this province carries 58,1% of the total tax burden.

The Cape Province receives 30,0% and pays 23,9% of the taxes, Natal receives 21,6% and pays 12,8%—that is for the massive contribution from the moderate leader Chief Buthelezi—and the Orange Free State receives 9,7% while paying 5,2% in taxes.

An interesting article appeared in Finansies en Tegniek of September 1988.

*The article reads inter alia as follows: “Persoonlike belasting 90% van Blankes.” The article was submitted by Prof Jan Sadie, a well-known demographer of Stellenbosch. According to his estimates, if this unfair allocation of the tax burden in South Africa and the amounts contributed by the Coloured, Black and Indian people remain constant, 10% of the population will have to pay for the needs of 90% of the population in terms of Government services by the year 2005. Sir, I think you would agree with me—and now I am not talking about White money and Black money, which is the hon member’s favourite subject—we have to face the truth.

†We realise that there are reasons for the fact that we contribute the bulk of the tax. However, we cannot see how the Government can justify the unfair allocation in terms of that tax, particularly when it comes to the care of people in our own communities who are needy in terms of housing, employment, pension or whatever.

There are the prophets who keep on harping on the question of the labour. I want to remind this House that the labour provided in this country is not available in Australia, and that country has a thriving economy and has expanded extremely well without the so-called benefit of the labour that we have.

I want to carry on referring to the question of the contributions made by the regional services council. In the South Coast Sun of 25 November, there is a report, stating that South Coast industry have asked the Demarcation Board to exclude them from a regional services council.

If this is going to be allowed, I hope the same privilege will be given to the Transvaal areas which would also like to withdraw from the regional services councils. I would like to know whether the hon the Minister intends to make this concession. [Time expired.]

Mr Speaker, it is indeed a joyous occasion for me this afternoon to be able to follow directly on the hon member Mr Derby-Lewis. Most of his speech consisted of slogans and cliches. I want to argue with him this afternoon on the basis of facts. He referred to some statistics and claimed that there was a possibility that very soon something like 10% of the population would pay 90% of the taxes.

I will argue—and I will prove this afternoon— that the hon member Mr Derby-Lewis is on record as in fact being against increased income for Black people. As far as he is concerned their income should not increase. He is on record as saying that. Where must the tax base then come from? I want to debate with the hon member his economic policy. I am saying “his” economic policy, because I am not sure whether he actually represents the economic policy of the CP, if something like that does exist.

On 29 June last year the hon member Mr Derby-Lewis sent out a letter to the members and trustees of the Stallard Foundation. In this letter he refers to a journal of the Stallard Foundation about to be published, saying, and I quote:

There are other aspects of this letter which I would like to debate with him on another occasion, but it is not clear to me whether he is referring here to the CP’s economic policy, his policy or that of the Stallard Foundation.

However, let us look at the economic approach of that hon member in a letter to the Krugersdorp News of 3 February 1989. The hon member refers to Boksburg and the events in Boksburg and I quote directly:

Listen to this very important statement—

That hon member said that Black buying power is a myth. What are the facts? There is very good research that proves that already at this point in time Black spending makes up 55% of national consumer spending. That is the myth—55%!

There can be little doubt that the major share of future economic growth in South Africa, especially concerning consumer spending, will come from the Black population if one looks at the trends in terms of population growth. What sort of economic logic leads the hon member to believe that it is to the detriment of the South African economy if the spendable income of Blacks increases? It makes no sense whatsoever.

To that one can add factors such as the economies of scale and so forth. However, it is also very important that the CP tell us whether they agree with the statement that these people should transfer their businesses to Black areas. He is advocating that people who are not happy with the steps taken by the municipality of Boksburg should move their businesses to Black areas. Does that hon member realise that job opportunities, also for Whites, will go with that move? [Interjections.] Take for instance rates, the tax base of the Boksburg municipality. It is absolute economic madness. [Interjections.] The hon member apparently does not believe in capitalism for the Black sector of our community. Capitalism is fine as long as Whites alone benefit from it. If Blacks are not put in a position to generate their own wealth, who will have to fund the social services for that sector of our population? No, Sir, the future prosperity and increased living standards of White people depend also on the extent to which we can bring in Black people in the fullest sense possible into the modern market economy.

Let us take a look at something else. There are elements in this letter that ooze naked racism. After he had said Black buying power was a myth, he went on to say:

He also said that Blacks would not have jobs without Whites and then he referred again to the matter of redistribution.

Further on in this letter he claims that while Whites would spend a R100 in a departmental store, Blacks would only spend R5 and then steal to fill the rest of their trolleys. That is the kind of statement we get from one of the chief spokesmen on economic affairs from that party.

The hon member agrees with the leader of his party at least on one point when the latter, in his now famous—or infamous—interview with Leadership referred to boycotts and sanctions as a “propaganda spook”. What are the facts as far as Boksburg is concerned? In one of the biggest departmental stores in Boksburg, sales for December were down by 48% while in the rest of the country sales went up. In terms of consumer goods for the grouping clothing, linen and related items, shops in Boksburg were just short of 60% under target in December.

The hon leader of that party says that this is a phase that will pass—that the boycott will end and that it will pass. I am afraid that also there I have a surprise for them. If one looks at new credit business in Boksburg—that is long-term business when people open an account at a shop and bind themselves to that shop in the future— in Boksburg in some cases new credit business went down by 75%. [Interjections.] Whether the hon members like it or not, they are ruining places like Boksburg.

Let me say immediately that I do not agree with boycotts.

I am against boycotts. I am very thankful that the town council in my own town, Springs, is so reluctant to implement CP policy because we cannot afford that sort of thing.

I want to put another fact concerning Boksburg straight. Members of the CP have made a number of references to Mr Issy Kramer. They say that he is an old Prog. The following was written in the latest issue of the Patriot:

In die spesifieke wyk waar die tussenverkiesing gehou moes word, was mnr Issy Kramer, ’n oud-PFP-LPR …

*That is a flagrant lie. Mr Issy Kramer was never a member of the PFP. He is like the hon member Mr Clive Derby-Lewis, a former UP supporter. He was at no time whatsoever a member of the PFP. Hon members attempt to distort facts, but they cannot avoid the fact that they have done Boksburg an enormous disfavour. The electorate of Boksburg, amongst others will deal with them about that.

Tell us more about the blonde spy.

Finally I should like to broach a matter in connection with the blonde spy. It is a similar case, and I quickly want to read to hon members a paragraph out of the Patriot of 13 January this year as follows:

Mr Speaker, I should like to take this opportunity to convey my sincere thanks to all the hon members who participated in this debate. It was the first time we conducted this kind of debate in this way and I think it was a golden opportunity to ascertain whether or not and to what extent financial debates could be debated better jointly rather than separately. Personally I am very grateful because it affords one an opportunity of hearing a very wide spectrum of ideas in the same debate and then of utilising our own time far more economically.

In particular I want to thank all those hon members dealing with economic and financial matters for having prepared themselves very well indeed, because it is a difficult task, and one must acquaint oneself thoroughly with the facts of these matters before one can make a meaningful contribution in this esteemed place. In particular I thank my colleague, the hon the Deputy Minister, Dr Org Marais, the hon member for Waterkloof, for the contribution he made.

Today we are four weeks away from the Main Budget and we really do not yet have any firm figures that we could have used in this debate to make a thorough evaluation of the economic conditions in South Africa. Consequently this traditional function of Parliament, namely to agree to a Part Appropriation, one which we must, very beneficially, first discuss among ourselves behind closed doors because we have just had a political debate.

We are literally on the eve of a very penetrating analysis of the economy by the various committees of Parliament and of a very penetrating debate—it will last for hours—on the Main Budget.

I do not want to insinuate for a moment that one may not conduct any debate on this measure, but I do not think it will be possible for us, owing to the particular timing of this particular budget and also in view of the other circumstances in respect of data, etc, to conduct a meaningful discussion among ourselves.

I should like to refer to only a few of the main characteristics of this debate, and I want to express a few words of sincere appreciation in this connection because during the time I spent here listening carefully to hon members’ contributions I really got the impression that in certain parties and even in certain Houses there is a growing understanding for the limitations within which this economy has to function. I want to thank hon members very sincerely for having, in spite of their political standpoints, nevertheless displayed appreciation for this verifiable and quantifiable fact. These hon members who perceived this, even though there was complete unanimity in this House that 3% was completely insufficient, nevertheless displayed appreciation for the fact that it had nevertheless been possible, albeit inadequate, to have achieved this within the enormous limitations within which we have to function.

It is also a verifiable fact, because econometric models, as I said on a previous occasion approximately a week or two ago in this Chamber, demonstrated to us that there was an ascertainable maximum growth rate which we could achieve under our present set of circumstances. No matter what measures we adopt under this present reality our growth cannot exceed that level, unless we are prepared to run enormous risks in the sphere of our balance of payments, inflation and ultimately in the volume of very high interest rates and a very low value of our currency. In this respect I wish to point out that these verifiable facts would be clear to any honest, impartial observer making an analysis of the economy, with the necessary skill of course. Everyone who complies with these qualifications ought to concede that.

†Mr Speaker, I wish to express a word of appreciation to the hon the leader of Solidarity, the first speaker in this debate, for having made reference to these issues and for having acknowledged the particular circumstances within which we are forced to operate and to the modicum of growth that we were nevertheless able to achieve.

*I also want to thank the main speaker of the LP, the hon member Mr Douw, who also referred to this. In this way there are several other hon members, particularly on the NP side, who did the same. On behalf of our Ministry and our advisers who struggle with these things every day and who have to skate on thin ice, I want to say thank you. We appreciate it. We interpret it as an encouragement and we shall certainly use it as an inspiration in the days which lie ahead.

In the nature of things the CP did not pay any heed to these verifiable facts, because they live in a different world to the one we live in. In their world one need only adopt a few measures and one will have the economy functioning on a high level of growth and keep it there, and everything will come right. The dollars will flow in, the interest rates will remain low, the inflation rate will drop, and so on.

There was not a single word from the CP side which was worth quoting in regard to the times in which we are living, economically speaking. There was not a single fact which testified to anything but a political exploitation of the present conditions. Economic mismanagement and maladministration was the terminology that was hurled at us.

Corruption!

That too, before I forget it. We are referring of course to the way of thinking of the hon member for Brakpan that has been so corrupted by party-political nonsense that it can no longer make a contribution to the solution of South Africa’s political problems. The hon member for Brakpan is one of the most typical examples of a person who has allowed himself to deteriorate into a total corruption of his capabilities, intellectual and political, since he left the NP. In our ranks we looked up to the hon member as a person who was really going to play a guiding role in our party one day. The only guidance the hon member is giving at the moment is misguidance.

Tell us about the management of the Reserve Bank.

I shall do that, I have nothing to hide. I have nothing to hide in regard to our policies. I shall come to a few matters. It so happens that I heard what the hon member said, but I am not going to allow myself to be permanently interrupted by the hon member.

The hon member asked me what I am doing about the Reserve Bank management. If I have ever heard an oppressive remark in my life then that is it, because the Reserve Bank in its entirety is part of the private sector. [Interjections.] The State does not own a single share in the Reserve Bank. It is true that the four executive directors of the Reserve Bank are appointed by the State President, but the Reserve Bank also has two other directors and six directors from the private sector to whom all the shares belong and under very strict conditions too. The Reserve Bank has also been charged with administering monetary policy. I want to state categorically to the House that the greater the distance between us and the Reserve Bank when it comes to the implementation of monetary policy, the better for this country.

Since my first day in this post, I have been striving to put a greater distance between myself and the Reserve Bank. Although it exists statutorily, I wanted to gain distance so that the Reserve Bank could implement their own policy as freely and as far as possible. I make use of their talents and their advice. I have created structures in order to achieve this, but I shall have more to say about this later.

Neither the Treasury, the Ministry of Finance nor, for that matter, the Government, has a direct say, not even with regard to those tasks that have been delegated. Ultimately, we have to account for it in Parliament, but the Reserve Bank manages itself and pays its own salaries. The Reserve Bank manages its responsibilities to the best of its ability without daily intervention from us. We have, however, created liaison structures which we are maintaining so that, when it comes to policy, we will be able to keep our finger on the pulse as far as possible.

The illusion exists that the Minister of Finance and his Cabinet colleagues orchestrate every move the Reserve Bank makes. That is a spectre that is being conjured up by the CP in the country, and I hope that people who are interested in the truth will take note of this.

Another feature of this debate has been that of conflicting standpoints. I found conflicting implications in the same speech—in fact, almost in the same sentence. I am thinking particularly of the hon member for Barberton and the hon member for Delmas, but I will come to that just now. However, in the meantime I just want to give them some examples so that they will be able to orientate themselves with regard to the discussion which we will hopefully be able to conduct with one another at a reasonable level just now. The main issue is that of the interaction between the money supply and interest rates. That is one little matter. The other one is old news, and has become a cliche on all sides of the House, namely that Government expenditure must be curtailed. Yes, Government expenditure must be curtailed, and we agree with that, but we received a mandate from the voters and we are struggling to fit Government expenditure into our priority framework, in terms of what is affordable.

It is logical that the LP, Solidarity, the CP, the PFP and the NP will all have different views about what their priorities are, but is it not possible, when we are talking about Government expenditure and the extent of it, to be more specific for a change? Can we not say for a change, “Mr Government, I want to tell you that as far as my party is concerned, you should spend less on this, and I will accept joint responsibility if you then have to spend less on the police, the defence force, education, housing or whatever. But, Mr Government, in view of my priority, I ’should like to see you spend more on the following things.”

However, we cannot spend money on everything. The determining of priorities within the limits of what this country can afford, is the largest single political challenge to any political party. I look forward eagerly to the day when we will be able to debate with one another on that basis.

A further feature of this debate—we all agree on this—was the emphasis placed on the decisive role that the attainment of political stability and political solutions in South Africa would play in the motivation or the stimulation of the economy to reach its maximum potential or to come as close to it as possible, and not necessarily the attainment of that political stability or the attainment of those political solutions. I venture to argue that the day—I pray that it will come soon—we have the prospect that we are moving towards the solution to our political problems, the day we agree to work towards that prospect, things will begin to go better for us, economically speaking.

With all due respect to my hon colleagues in the LP, and without wishing to sound impolite, I also want to say that the removal of so-called apartheid, about which we can debate at length, and for which hon members have my sympathy, is not going to solve all our problems. That that will be the case, as a large number of hon members have suggested in as many words, is just not true. I want to argue, with all due respect, and we can take the matter further when we debate it in the separate Houses—in fact, we have often discussed it—that in the rest of the Third World, of which we form part and parcel insofar as many crucial aspects of our economy are concerned, apartheid does not exist. Yet they have their problems.

There are duplications. However, even if we eliminate those duplications, not everything is going to work, because those countries that do not have apartheid, do not have the duplications, and yet they are still having economic problems. In other words, there is far more to it, and in this regard I want to concede to hon members that when we eventually agree that we are on the way to solving our problems, we will ignore those things that we have done in the past. The tension will then be a thing of the past. We will then be a team and we must work towards that, and we must all look forward eagerly to it.

†That brings me to the hon member for Yeoville, very specifically. The hon member and I have in the past had very sound reasons to differ with each other. In fact I can recall many an opportunity and occasion where we had to do battle with each other rather violently. But I listened very carefully to his speech and I took a copy home and I studied it with great interest.

I would like to say to him today that that contribution was absolutely outstanding, not only from an economic point of view but because it was an honest effort to cut through to what is fundamentally important in this country. It was an effort to try to begin to work towards reconciliation and to do it on the basis of what we agree upon; to do it on the basis of honest policy analysis and to do it on the basis of finding those areas of common ground in terms of policies, in terms of fundamental principles on which we can build a firmer and more stable future. I would like to pay tribute to the hon member for that very reason.

It is a lesson to all of us. It is a lesson to me as I stand here addressing this House. If each of us does not use this opportunity to address a meeting such as this one, to try to make a contribution to the prevailing knowledge in terms of solving certain problems, if we do not use the opportunity for that purpose, then we are wasting our own time and we are wasting the time of this country.

*Each one of us must make use of an opportunity like this to contribute to the knowledge that is necessary to solve South Africa’s problems, and it is in this regard that I want to thank the hon member for the contribution he made.

†Another feature of this debate has been the fact that deregulation and privatization have received such a tremendous emphasis. I think that the hon the member for Rosettenville’s contribution on deregulation is something which I think is a document of reference and I certainly think that all policy makers at all levels of government should avail themselves of the wisdom that she has managed to include in that particular contribution, and I would like to thank her for it.

While I am on the topic—I want to come back to certain aspects of privatization later on—the hon the member for Yeoville said something which I also analysed and that is that we should not sell the family silver in the process of privatization. There is no possibility of being tempted to do that because I said to him by way of an interjection: “What about the redemption of public debt?” The only way in which privatization can make a contribution towards a lower tax burden will eventually be through redeeming some public debt and then saving the interest and not having to pay for it out of the taxpayer’s pocket. Secondly, in our reapplication of the capital that has been lying there bound up in the institutions to be privatized, by utilising that capital to capitalise another institution which up to now has had to be capitalised from the taxpayer’s pocket, in that respect it will also make a saving and I would like to submit that to the hon the member.

For instance, using capital generated from the transaction—past and future—to properly capitalise the Development Bank of Southern Africa, is certainly a proper way of doing it which ultimately will also translate into some tax relief.

*Many other aspects which included greater details were also mentioned. I made a note and some of my hon colleagues also made notes. I will not be able to refer to those aspects during the rest of my reply, but I just want to say that we have taken note of them and will introduce them in those instances in which matters of policy are dealt with.

†I would like hon members to be patient with me as this was a very long debate in which a very large amount of speakers participated. It would be literally and logistically impossible for me to refer to each and every one, save to say that I believe we have also had some outstanding political contributions. In that respect in particular I will not be in a position to respond today.

*There really are quite a number of economic-financial matters that I should like to address with a view to the coming Budget. I am also sorely tempted to discuss politics like so many of our hon colleagues, but that will not be possible. I trust that hon members will understand that I shall not be able to refer to everyone.

†First of all I would like to refer to something which was mentioned in quite a number of speeches, relating to the whole question of foreign exchange and the fraudulent applications of the financial and commercial rand, which have been in the news of late. The hon member for Yeoville in fact made a dramatic statement when he said that the financial rand was a most abused item. He referred to round-tripping etc. Yes, it is abused like double parking is an abuse of road space. Similarly theft is an abuse of another person’s property, and murder is an abuse of another person’s right to live. However, ever since man has walked the earth the laws which are meant to prevent all these things I have just mentioned, have never been able to prevent him from doing those things. Similarly there is no way I can foresee our laws, regulations and procedures ever being able to stop people completely from committing fraudulent acts. To do financial/commercial rand round-tripping is fundamentally a fraudulent act, which I will address in a moment. I have often heard even my own colleagues say that we should abolish the financial rand because it lends itself to abuse.

If the financial rand could be abolished today I would be the first one to support it. Unfortunately, however, we are in a debt standstill situation and that forced us to implement the financial rand system. If our foreign obligations could be met tomorrow we could abolish it. As long as the international debt standstill prevails, however, it will be impossible for us to do away with it. While it exists it is incumbent on us to discharge that responsibility as well and as accurately as we possibly can in order to make it as difficult as as we possibly can for people to commit these acts.

Let me explain how it works. A person inside South Africa decides to do some round tripping and make himself a packet of money. He goes to a bank and asks for R1 million in foreign exchange to go overseas to the United States, United Kingdom or wherever to buy a textile machine for instance. In the meantime he knows that the textile machine he plans to buy may cost him only R250 000 or R500 000. However, he has requested R1 million worth of foreign exchange to be made available to him.

On the other side he has already arranged a little company for himself—a trust in most cases— because all the sins are now being committed under the sanctions busting cloak. Having started a little trust belonging to him on the other side he has already committed his first fraudulent act because nobody in South Africa may own any asset—a company is also an asset—overseas without the Reserve Bank’s permission.

That particular company is now in a position to produce fraudulent invoices. He goes overseas and he buys this particular machine through his little company there for the equivalent of, say, R250 000. He does this through the trust and motivates it with his bank on this side by saying that the particular factory did not want to sell to him because they do not want boycotts and therefore do not want to sell directly to South Africa.

Fortunately, however, he was able to obtain the services of this trust company—this particular intermediary—that made it possible for him to buy it. In other words, he brings back fraudulent invoices and letterheads. No person on this side of the Atlantic is able, on the face value of those documents, to say that they are fraudulent—not the bank dealing in foreign exchange, and certainly not the Reserve Bank. Now he has R750 000 on the other side, and he brings in his machine. It is all a fraudulent transaction, done secretly. He approaches the authorities here and says: “Look, I have been fortunate enough to get myself a foreign partner.” He has a family member or somebody else over there. He brings the R750 000 that he now has overseas, into South Africa by way of the financial rand, and he doubles it.

Thus his investment on this side is now completely free. This is unfair to his competitors. Most of them have the temerity not even to open the box of that machine. It just stands there, because he has already made part of his packet. In this fashion he repeats this round trip a few times. He builds himself a nice bank balance on the other side, and here on this side he also accumulates quite a fortune.

I want to repeat that in no reserve bank, either in this country or anywhere else in the world, does one find the kind of expertise to identify that. In our liaison structures we have been extremely concerned about this whole affair. We have been looking into this. Dr Jan Lombard, Vice President of the Reserve Bank, went to the United Kingdom last year—I think it was the first half of the year—as the result of the concern expressed in our liaison committee meetings. He consulted an international firm with a view to enlisting their services to help us in this regard. To cut a long story short, in December I wrote a letter to the Reserve Bank requesting them to set up a specialist task force to do the following. Firstly, to enlist the services of people with expertise not previously available in the Reserve Bank, such as a senior police officer and a senior person from the Industrial Development Corporation who could look at an invoice and say: “This machine is totally overpriced.”

One cannot expect a bank official to do that. Furthermore, the Commissioner for Inland Revenue and the Commissioner of Customs and Excise are also making their contributions. I would like to thank my colleague, the hon the Minister of Law and Order, for having made available the services of a very senior and very capable police officer to help in this regard.

The way this was reported after the testimony before the Harms Commission was completely distorted. The reports created the impression that this task force that I had set up was investigating the actions of Dr Jan Lombard and the staff of the Reserve Bank. That is utter rubbish! We said that they would enlist the services of specialists not previously available to them and that we would have some people from the private sector also taking part and sharing their expertise. Secondly, we said that they would work through already finalized documentation to see if we could catch a few big fish. If we do catch them we are going to nail them and nail them hard because they have been stealing and robbing this country of valuable assets. They have been enriching themselves at the expense of the ordinary man and have been doing so in a fraudulent manner which is so difficult to pin down.

This task force and the people in the Reserve Bank who are also experts in this field are working together going through all this old documentation in order to find the culprits. At the same time they will also try to identify new procedures and new regulations which we can promulgate in order to make it difficult for people to make use of these fraudulent methods.

*It is said that this is happening on a huge scale. However, let me explain the situation to hon members. If it were happening on such a scale, the difference between the financial rand and the commercial rand would be far smaller than it is today. Let us say that a commercial rand is worth 45 American cents and a financial rand is worth 28c. If there were so much activity in this area, the demand for dollars in South Africa would have been so great that it would have placed downward pressure on the financial rand, because one would eventually be prepared to offer a number of rands for a dollar because they could be recovered through the round tripping.

On the other hand a member of one’s family participates in the financial rand market, which is a narrow, restricted and small market. The demand for financial rands will therefore be greater there and will increase. The differential will be considerably smaller than the 40% it has been up to now. When I last worked this out, it was 38%. It fluctuates like that from time to time. Naturally there is a similar phenomenon in the case of disinvestment.

Obtaining a conviction under these circumstances is incredibly difficult. It took two years to get the African Bank case settled. Some of the senior people such as Dr Japie Jacobs, Senior Vice-President, devoted practically all their time to the case. Each time there was a court order aimed at reversing the entire process! It is an incredibly difficult matter! Let me be quite frank, Mr Speaker. At the end of the day, when the man who committed the fraud stands before the judge, he says he thought he had found a bargain when he purchased the textile machine for R1 million, but then found out that he could have purchased it for R250 000! He says the judge should put him in jail because he is a useless businessman!

How is one going to prove intent—I think that is the right term? All I am saying is that we must careful about simply thinking that the introduction of a few small measures is likely to put an end to this permanently.

†As far as over and under-invoicing are concerned there has never been a perfect solution to this particular problem anywhere in the world! Here again the commissioners that I have mentioned before are now giving their full co-operation on this particular committee chaired by Dr Lombard in order to try to see if something can be done. Another action which is fleecing this country, although it is completely legal, is transferpricing.

*If a pharmaceutical company which was started in Switzerland has a wholly-owned subsidiary in South Africa, we cannot tell that company that it must make its profit here, when our company tax is 50%. It will make most of its profits in Switzerland, because there it pays 30% or less in company tax. It is a perfectly normal legal process, and we cannot prescribe to people what their prices must be over here. All we can do— and this is my last point on this complex subject— is to make South Africa a country in which people will gladly want to invest their money. We must make South Africa a country in which people will gladly want to retain their investments because it is a stable and safe country, and because it is a country where one will be able to make a profit in the future as well. We must all work on this political and economic solution. This is all I can say on the matter.

The hon member Mr Douw mentioned a few interesting points. He referred to the alarming proportions that unemployment is assuming. We are at least grateful for the fairly dramatic decrease in unemployment. There are ten thousand fewer unemployed, in the three population groups represented here, for the period December 1987 to 31 July 1988. During that same period there were 100 000 fewer registered Blacks unemployed.

†The hon member for Yeoville asked me about the Iscor transaction. All I can say in this regard is that that transaction is not to be viewed as a privatisation transaction. When the shares are eventually offered this R600 million will also be converted into the number of shares according to the share price determined at that stage. We have not calculated a share price at this stage. It has not yet been converted into shares. Since we are committed to selling as many of these shares as possible, those shares that will ultimately formally become the property of the IDC will most probably also at that stage or as soon as possible thereafter be offered to the public.

I just want to ask the hon member if he is happy with my answer.

[Inaudible.]

I want to talk about something else. The hon member for Yeoville spoke about tax evasion and tax avoidance. He said we should not legislate retrospectively. Parliament sits the first six months of the year. We have one go at the Budget and we have one go as far as tax legislation is concerned. I want to state categorically that the best brains this country’s business community can muster have teamed up against the tax system of South Africa. Our solution is to lower our taxes. That is the ultimate solution, and I completely concur with that. However, until that becomes possible we have to face certain realities.

I want to tell the hon member for Yeoville what happened the other day. The Commissioner for Inland Revenue came to my office and said to me—he was very upset—that he had discovered another kind of round-tripping in one of the insurance companies. He did not tell me the company’s name and I did not ask him, because the law prohibits him from telling me.

This is what happened. This particular insurance company owns a subsidiary, which is not an operating company. It does not even have its own banking account. So we have a bank which takes, for instance, an amount of R100 million in the form of redeemable preference shares in this subsidiary. It is not a loan, because interest would then be payable and it would be taxable in the hands of the bank. No, this bank takes up redeemable preference shares to the value of R100 million because the proceeds are then dividends and not taxable in the hands of the bank, but eventually taxable in the hands of the shareholders of the bank.

This company is merely a conduit and the R100 million flows through this company into the hands of the insurance company. The insurance company then takes the money and invests it with the very same bank and because the insurance company has a good tax rate they can take 15% because it is the equivalent of 18% or more.

So the R100 million started off with the bank, made a round trip during which two parties made money out of it and then ended up back from where it started. Billions of rand are circulating in this country through so-called reputable institutions.

I want to ask the hon member for Yeoville who is the shadow Minister of Finance to imagine himself in my position when the first news of this newly designed scheme came to my ears in December last year. On 22 December I issued a press statement. I was lambasted in every newspaper and all the financial magazines jumped down my throat with their mine boots. Why? Because I did not at that stage publish the alternative. I wanted to put it on record then that when the time came during this session and we had only one go we would have to pass a piece of legislation that would be operational as from 22 December last year. If I had not done that I would have been abrogating my own responsibility. That is not retrospective legislation. We gave due notice at that stage.

However, on account of the fact that redeemable preference shares play an important role in the capitalisation of certain companies we cannot merely say that we now obliterate the existence of redeemable preference shares. We simply cannot do that.

How does one distinguish between the person who bona fide uses redeemable preference shares to capitalise his company and the person who does it for fraudulent tax-evasion reasons? How does one make that distinction in a piece of legislation? That hon member being versed in these things will certainly appreciate the implications of what I have said now.

I want to come to another point made by the hon member. I want to tell him that my colleagues can testify to the fact that I have been advocating what he said regarding the “fruits of negotiation” for a long time.

This is the ironic and frustrating part of our economic problems at present. All I want to say is, unless we are able to underpin the negotiation process with material benefits for the people whose leaders are participating in the negotiation process, we shall not succeed. This is the gravest problem we face with regard to our inability to finance our economy and these development projects properly. It must be seen that the system, not the promises of the ANC’s socialism, delivers the goods. So I fully agree with the hon member as far as that point is concerned because unless those leaders who take part in the negotiation process can show their people that they have brought material improvement, they will lose their credibility and live in fear of their own lives. The sooner we can get around to supporting that kind of action with material fruits, as the hon member put it, the better for all of us.

The hon member for Laudium talked about the poor motorists who have to pay 10 cents more. Other hon members also referred to it.

*The hon member for Barberton said that the increase of 10 cents in the fuel price was unacceptable. In this country there must be a move towards indirect taxation.

By the way, for the information of the hon member for Barberton, the Margo Commission did not come to the conclusion that South Africa was paying too much tax. These were not their terms of reference. Their terms of reference were to keep the amount of tax the same, and to give us a tax system which would distribute the burden more evenly and achieve certain other objectives as well.

The main problem with the implementation of the recommendations of the Margo Commission Report is the fact that the comprehensive business tax could not be implemented, because the revenue which was to have resulted from this tax, together with the remaining GST, would have enabled us to do certain other things, such as the virtually immediate separate taxation of husband and wife. However, since after discussions with the private sector, we cannot implement the comprehensive business tax, we have a problem with the rate at which we can implement it.

One vital principle of the Margo Commission Report is that we must move in the direction of indirect taxation. What does indirect taxation mean? It is a consumer tax—a person who incurs certain expenditure pays tax linked to that expenditure.

In comparison with other countries our fuel is hopelessly under-taxed. The hon the Deputy Minister also referred to this. A total of 67,5% of the fuel price in Britain, an oil-producing country, is tax. There are also other oil-producing countries which obtain vast amounts from taxing fuel. What is South Africa’s position with regard to fuel? Our fuel consumption has increased by no less than 8%. In other words it has grown much more rapidly than the economy. An undesirable structural change is taking place in the transport pattern in South Africa.

Furthermore, this country is not an oil-producing country to the same extent as other countries. Our country is on the oil-embargo list. We have a balance of payments problem, and it would be an irresponsible Government that did not devise a scheme to cut down on the increase in fuel consumption. There is only one way to do this, and that is to use the market mechanism. We are fully aware of the devastating effect of such a price increase on inflation. However, we must do so in the interests of South Africa. We have a highly developed rail system and must utilise it to the full.

We have a balance of payments problem, and every year it is a tight squeeze for us to make ends meet. That is why we put up the price of fuel by 10 cents per litre.

†I want to give the hon member for Yeoville the assurance that the problem with regard to lost cheques does not lie with the department. I have several details here, which I will let him have. It is a long explanation of the success that the department has had with the retrieval of certain of these cheques as well as the arrest of a person with more than 40 of them in his possession. I do not think it is of such relevance that I should put it on record now. If I am afforded the opportunity to do so, I will let him, and other hon members who may be interested, have it in writing.

I have referred to the hon member for Rosettenville concerning the deregulation speech. I think we should pay much more attention to that. The hon member for Gelvandale welcomed the HP control measures. Let me say something about HP control measures. I think we must make the public aware of the fact that the Usury Act determines the maximum rates, not the Government.

*If we make hire purchases, we must shop around and refuse to pay the highest interest rates. We must support the places asking less than the maximum. I thank the hon member for Vasco for several interesting points he made. I do not have the time now to refer to them in detail.

†The hon the Minister of the Budget in the House of Delegates made reference to the spending spree. However, then he also mentioned the fact that there was a dearth of professional people and that we needed them desperately, not only in the country as such, but also in the public service.

I would like to place on record here my Ministry’s and my department’s appreciation for the sterling work that Dr L T Links is doing.

*He is a man from the West Coast. He graduated in New York …

Namaqualand.

He comes from Namaqualand.

†That man is doing an outstanding job for South Africa as our permanent representative at the IMF and the World Bank. I hesitate to say this, but I think I must say it: Coming from South Africa, he was regarded in certain circles overseas as a token Black. He has astonished all his critics, because he is a man of extremely sound mind who is very well versed in his subject. Therefore I do believe that the background he is now receiving in international finance will stand him in good stead when he returns to South Africa.

*The hon member for Diamant made a valid point. He said the building societies or someone should make lower rates available for housing. The problem is just that. Somebody must pay for those lower rates, because he and I are not specially going to invest at lower rates so that others can build cheaper houses. It does not work like that. When a person invests, he wants to have the maximum rate, and if person wants to pay less, the State or someone else must subsidise the difference between those interest rates. I accept what the hon member says, namely that there is an enormous need, but we must try to solve this in other ways. We cannot do so at this stage by going through the building societies again. At this stage that would get us nowhere. I hope the hon member understands this and concedes the point.

I wish I could refer to the nice political speeches hon members made. However, I now come to the hon member for Delmas. He made a few astonishing yet interesting statements. The hon member complained, inter alia, about both the interest rates and the money supply, as did the hon member for Barberton.

Let us see what the money supply is. The money supply is the total amount of available money and near-money. It is the total creation of credit, if I may call it that, which is available and the size of the money supply. It is just as good as bidding on a maize surplus, resulting in low prices.

I cannot understand the two hon members. They complain that the money supply has exceeded its limits, but this was done specifically to keep interest rates as low as possible. One cannot complain that the money supply has exceeded its limits and complain at the same time that the interest rates are too high. One cannot do that in one speech. Both hon members are shaking their heads.

How can we progress in a debate if we cannot understand a fundamental and verifiable truth with regard to the economy? I say it again. The Reserve Bank’s policy of accommodation, which sometimes causes those of us in Government grave concern, because in the broad economic interest we should like the restrictive policy to be implemented to a greater extent, and which amounts to money creation and is converted into an increase in the money supply, keeps interest rates low. That is a fact. Heaven knows I cannot change that fact.

I cannot understand how anyone can have me up and say: “You stupid blockhead, …

Hear, hear!

… why do you permit …”—a beautiful echo, is it not?—“…the money supply and the interest rates to increase at the same time?” I want to ask the two hon members to help us to understand their kind of economy, because if it is going to be possible for us to manage what they say, we will have discovered an exceptional kind of new economy in South Africa.

The hon member for Delmas said we were buying the favour of the outside world and consequently were heading for Black majority rule. I want to remind him of something that happened in South Africa. A number of foreign companies withdrew from South Africa. The hon the State President said repeatedly, when they came to see him in person as well as from public platforms: “Take your money and leave South Africa if you want to, but then please invest that money in our neighbouring states or in other African states that have Black majority rule.” Not one of those companies did that, however. In other words, disinvestment in South Africa was disinvestment in Africa. [Interjections.] That is a fact.

I want to ask the hon member once again how he can say we are buying the favour of the outside world by offering them Black majority rule in an underhand way so that they will come and invest with us and keep their investments here. I do not understand that. He must explain it to us. How then does he understand disinvestment, and how does he understand the question of Black majority rule? I have said this before and I repeat that various foreign businessmen have told me that they will withdraw their money if we are going to take the course of a typical African state, never to invest here again. This is not Black majority rule. What is Black majority rule in any case? That is a racist statement, because in this context Black means race. There are peoples in South Africa, after all. [Interjections.] A government can never take that kind of course. How many times have we said that? This is not a political solution for South Africa. It is definitely no economic solution for South Africa either. I now want to ask the hon member, if he makes that statement again, to make it in a closed CP meeting, because really, one is ashamed to hear that kind of thing being said in public. It is stupid to say that kind of thing. [Interjections.]

I want to refer to the hon member for Witbank. This hon member availed us of a CP approach to taxation and to money, which we were confident, after what the hon the leader of the CP had said the other day, had finally been removed from the CP’s policy. The hon member for Witbank—I did not hear much reaction; it seems to me that hon members did not quite hear what he said, but I wrote it down—said the Treasury spent too much, and that was why there was too much taxation and why the Whites were bearing the brunt.

Let me tell that hon member a brutal truth about taxation, and I want to ask him how he would resolve this. Every year my advisers and I sit around that table and ask ourselves what we are going to do about the aged—of all colours—in South Africa who have made provision for their old age.

They are valuable to us, because they are not guests of the State. We need not take money out of our pockets to keep them alive, because that is what a social pension is. A social pension means that someone takes money from those of us sitting here and from the taxpayers at large. He takes real money; we do not print it somewhere in Pretoria. Someone takes money from someone else’s pocket and gives it to the pensioners and says: “I am giving you the money—use it to take care of yourself.” The aged person who has made provision for himself is valuable, however.

With regard to our tax system, we in South Africa have a White community of which the average age is increasing. It mercifully seems as if the majority of Whites are beginning to make provision for their old age. If I remember correctly, half the Black community is under the age of 16 years. In an integrated economy there is actually no system of taxation that can properly deal with this type of situation.

What happens in the case of those aged who made provision for themselves? I remember, as if it were yesterday, that day in 1985 when I wanted to know from my advisers what we could do for them. There is only one thing one can do for them, and that is to raise the tax threshold at which the aged start to pay tax. The tax threshold was below R6 000 when I first encountered it, and it is now R12 000.

What does that mean? It means that every time one raises the tax threshold, hundreds and thousands of people of colour, who only reached that taxable income at that stage, tumble off the taxation ladder.

I now want to know from that hon member—he owes the House an answer—whether he would have separate taxation tables for Whites and people of colour if the CP were to come to power. [Interjections.] The hon member is being instructed not to reply. This Government has said that however difficult it may be, everyone will function within the same tax system. We raise that tax threshold every year and hundreds and thousands of Black people tumble off the taxation ladder.

They make their contribution by way of the extra 10 cents per litre they have to pay for fuel for their kombi-taxis. The hon member asked me about that. The informal sector makes its contribution by paying for services and also by paying tax on the services. It makes a further contribution by paying GST. The whole question of the informal sector will be dealt with brilliantly, by way of indirect taxation, when we implement the system of value-added tax.

I want to know from the hon member for Witbank if he would support me if I asked, in this House, to have taxes levied on water and electricity. [Interjections.] The hon member just sits there. He has been “zipped”. He cannot reply to me. Why does the hon member not reply to me? [Interjections.] May I ask the hon member for Barberton? [Interjections.] He says he will never support me. Then those two hon members are in conflict, however, because how is the shift to indirect taxation in regard to the informal sector ever going to take place in this country if we do not start including services in the tax base.

Those are the questions involved in the taxation issue, but then the hon member says that the Whites bear the brunt. I want to tell him quite frankly that that statement is fundamentally immoral and untrue.

What about GST? What about the enormous purchasing power of the Blacks? The hon member Mr Derby-Lewis says it is a myth. We know what he is like and we know what to think of his assessment of the economy, but without rhyme or reason the hon member for Witbank, in terms of CP policy, speaks about White money. He does not listen to his hon leader. His hon leader told him to stop talking about White money, because there was no such thing. The CP, however, says it will use so-called White money to help Black people.

This is exactly like their definition of socialism— “excessive redistribution of income”. One is only slightly married. No, that is the biggest lot of rubbish that hon member has ever thought up in his life.

The hon member speaks of Boksburg. The last word has not yet been spoken. There is something I want to tell that hon member about Boksburg. My colleagues over here and I, and particularly colleagues sitting on the sanctions committee—for a few years now there has been such a committee—sometimes report via the State Security Council, but ultimately we report to the Cabinet. Let me tell him that the countries abroad wanted to make a Boksburg out of South Africa, but if the CP were to govern, countries abroad need not make any further contribution. The CP would turn the whole of South Africa into a place like Boksburg.

In principle I express myself opposed to boycotts, but if one makes people mad and they resort to boycotts as a defence, then that is a reality. The hon member for Delmas spoke about countries abroad. He is, of course, under the influence of his hon leader, who proclaims that this country can stand alone.

I want to tell the hon member for Witbank that if he thinks that South Africa can go it alone and that boycotts cannot devastate this country, he must go and have a look at what has already happened to some of the firms in Boksburg. I also have my information. I know what is happening there. I do not support the principle of boycotts, but that is the reality.

I want to tell the CP that my experience of countries abroad—since we are trying our level best to keep this country on an even keel in an international world which is hostile towards South Africa and which can turn off our water supply overnight—makes me wonder what would happen if the CP were to govern this country. What did the CP do in Boksburg? It dealt the prospect of peaceful coexistence a severe blow.

Internally, on both the political and the economic fronts, and also internationally, South Africa must be built on the prospect that we are going to live together in peace, because we cannot stand alone. That is the devastation they have caused. Let me also just add, and get this off my conscience, that countries abroad—which are now making such a fuss about Boksburg—have conveniently forgotten one thing. They did not say a word when those signboards were taken down.

Not a word. But now that the signboards have been put up again, they have created a terrible rumpus. In other words, in South Africa we do not get any recognition for the prospect of living together in peace, or for the steps we take in the process.

I want to make a formal request to the hon member for Witbank, a request I want to have recorded in Hansard. I am going to send a copy of that Hansard to Mr Justice Harms, because the hon member made a statement about the big companies abusing the financial rand. I accept the fact of an hon member of this House making such a statement with the utmost sense of responsibility, particularly if he is a clergyman to boot and can morally justify himself more, I suppose, than others could. I formally want to ask him to make a sworn statement before the Harms Commission, because I accept the fact that he has reason to say that there are big companies which are abusing the financial rand, and I should like to have the Harms Commission investigate this matter very thoroughly.

I shall request of my colleague the hon the Minister of Justice that if that hon member is not prepared to go and make that statement and to give the facts, the Harms Commission should advise me on how to go about it, and that they should consider summonsing the hon member to come and declare under oath before the commission how he was able to make such a statement in this House. [Interjections.]

He went on to say that certain small countries were ahead of us because their monetary units were stronger than ours. He probably had Botswana in mind. Botswana’s foreign trade is very small in comparison to an enormous economy. One does not gauge a country’s strength or weakness by the state of its exchange rate. That is but one of a whole series of parameters. The hon member Mr Derby-Lewis, who made such a great fuss earlier about the exchange rate, said that the CP would take our country back, presumably to the days of a tremendously strong rand. [Interjections.]

I wonder what would become of South Africa’s exports. South Africa is a country that is living under sanctions. One has to break into new markets in the world with a product at a good price which is delivered regularly and is of high quality. We have achieved a good price for our export products by allowing our exchange rate to drop slowly. This is, in any event, an unavoidable process because our inflation rate is relatively higher than that of other countries. [Interjections.] I am pleased about all the dollars that our exports are earning, but I wonder what the hon member would do if he were in our position, a position in which he would continually have to produce more dollars than he was spending. He thinks he can raise the value of the rand in an unnatural fashion and do South Africa a favour by so doing.

Let me tell the hon members something. This may be popular third-rate platform politics, but the truth is that in misleading the people of South Africa, that kind of politics is doing this country a disservice. That is why I agree with my national leader that the CP represents the greatest single danger, not only to the Whites in South Africa, but to the country as a whole. [Interjections.]

The hon member spoke about the exchange rate. He said that certain small countries were ahead of us. I want to challenge the hon member Mr Clive Derby-Lewis to stand up in this House and to tell us, with reference to the facts that I am about to furnish, what was wrong with the German economy. I want to tell hon members this. In March 1985 one needed DM3,305 to buy $1,00, and in 1985 the West German inflation rate was 2,2%, and their growth rate 2%, which represented substantial growth in relation to their population growth rate. I want to ask the hon member what was wrong with the German economy when one required so many DM to buy a single dollar.

The hon member for Witbank says that a little country is running rings around us. I want to ask the hon member what was wrong with this large country in this instance which resulted in it having to pay so much for a dollar. That is fallacious economics, upon which one can place no reliance whatsoever.

The hon member for Barberton spoke about this Government having engaged vigorously in dissaving. What is dissaving? Dissaving means that one makes use of the savings of the country, which are longer term funds, for the purpose of short-term expenditure. The hon member said that we had engaged vigorously in this. I have argued on previous occasions in this House that in these times of crisis in which we are moving— through which, mercifully, we are moving—it is necessary for us as the Government not to increase the tax burden. The deficit before borrowing which we formerly had, was fairly large and that proportion of the deficit before borrowing that was made up of capital, was relatively small, and therefore what remains is dissaving in the true sense of the word.

I have here in my hand the Economic Report of the President: “Transmitted to the Congress January 1989”. I am referring to the American President and the American Congress.

†This is The Annual Report of the Council of Economic Advisers. I wish to keep it short and I will therefore read just one sentence from the report. Mr Speaker, I quote:

*The point I want to make, therefore, relates to that portion which represents our dissaving. I have not had a chance to check up on this, but we could make a few calculations. The point I want to make, is that my intuition tells me that if it is not greater, it is jolly close to the equivalent of what we spend on education. It is very close to what we spend on education.

It was on the basis of the pure IMF definition that the hon member made the statement that we had engaged vigorously in this, but that hard and fast definition is not a definition which takes all our circumstances into account. If a developed country like the USA is prepared to declare that an investment in education and training is an investment in human capital, then it is all the more true in our case. I therefore reject the statement that we are engaging vigorously in this. In my view, we dealt with that matter in an extremely responsible manner. I am not afraid to defend that action on any platform, provided one is given an opportunity to debate the matter in its full perspective and context. I am very highly appreciative of the hon member’s intelligence, but he certainly did not take this particular aspect into account when he made that statement.

The hon member for Barberton made the statement that the exceeding of money-market targets had resulted in the man in the street having to pay the price in the form of high interest rates. Here is the statement I made earlier. It simply is not true! If the man in the street had had to be fully protected against increases and interest rates, there would have had to be a far greater increase in the money supply.

The hon member asked a reasonable question, namely what was going to happen in regard to value added tax. I want to tell him frankly that so far we still have major problems with our definitions of what is included with regard to capital goods, for example. Capital and intermediary goods are usually excluded, but at the moment GST applies to capital goods. It is not that easy to effect that changeover. In our specific case we therefore have a set of circumstances which do not make it all that easy simply to take the New Zealand Act and apply it here. We must be very sure how we are going to deal with the change-over and several other matters. I concede at once—I want to tell him I was not over-optimistic—that I did say 1 April 1989, without bringing extra pressure to bear on my already overworked staff. I was actually doing them a disservice. The truth is that it is far more realistic to say that we are hoping to do this by the end of the year. We will make a formal announcement in the near future. Perhaps it would be worth our while only to introduce it from the beginning of the next financial year.

The hon member is right. There must be exhaustive discussions on the question of how this is going to affect farming, capital goods, intermediary goods, services, etc. We must discuss organised agriculture and organised industry thoroughly, and I think he must give me a chance. We must be patient about this.

In conclusion I want to react to the hon member Comdt C J Derby-Lewis’s “redistribution of wealth”. We have already discussed this matter. I want to ask him—if he will show me the courtesy of at least listening when I reply, because I listened when he spoke—whether he is opposed to a progressive tax system. This means that the more prosperous people pay relatively more tax than the less prosperous people. He need only nod his head. Is he in favour of that?

[Inaudible.]

Oh no, now he wants to give me a hundred words again. Let me get to the point instead. The hon member is confusing two fundamental concepts. “Redistribution of wealth” refers to existing wealth, existing assets. A redistribution of income is what happens in a progressive tax system in which one pays a higher tariff on every additional R1 000 one earns. But the hon member does not differentiate between the two. After all, he is in favour of partition. Now I want to tell him this.

†The single most dramatic redistribution of wealth in the recent history, at least of Africa, was the policy of separate development. The most dramatic example of a redistribution of wealth in Africa was the implementation of the policy of separate development because this Government bought land which belonged to Black groups centuries or more ago and gave it back to them. Basically and fundamentally the source of wealth is land.

*In other words, if one adopts a fundamental standpoint against the redistribution of wealth, then one cannot support partition, and if one adopts a standpoint against a redistribution of income, one cannot support the policy that poor people and rich people are taxed differently as regards income tax. This is the kind of specious argument which I really cannot understand.

I should like formally to put a question to the hon the member on behalf of my colleague and benchfellow, the hon the Minister of Economic Affairs and Technology. The hon member quoted Dr McCrystal, the chairman of the Board of Trade and Industry, who was supposed to have said something which was very critical of the Government. I am requesting the hon member formally please to put in writing for this hon Minister what the quote is, when Dr McCrystal said it and where he said it so that we can check up on this; so that we can quote Dr McCrystal in the right context because Dr McCrystal is a respected economist, a person who cannot defend himself here, and I think we must do the right thing by him. If he did say this, we must quote it in the right context so that hon members of this Parliament can understand it correctly.

The hon member asked me a question about regional services councils, and I merely want to tell him that this Part Appropriation Bill does not take regional services councils and aspects of this nature into account at all.

In conclusion I want to mention that the hon member says that Australia “is a thriving country”. Is he aware of Australia’s foreign debt? If Australia, with its foreign debt, is “a thriving country”, then we are as rich as Croesus. Australia has a tremendous foreign debt. I also want to tell him that in 1987—two years ago—Australia had an inflation rate of 8,6%. Not anywhere near the problems we have! Is that “a thriving country” if one wants to start using inflation as the only criterion, as he did a few sentences before?

In conclusion I want to tell hon members that I am grateful in advance for the support this measure is receiving. It is not a contentious measure, but merely a measure to set the machinery of the State in motion and I thank them for their contributions, to the extent to which we are still debating this matter, towards making this a meaningful debate.

Debate concluded.

Question put to the House of Assembly: That the Bill be now read a first time.

Division demanded.

Declarations of vote:

Mr Speaker, the CP will vote against the adoption of the Bill for the following reasons. We shall vote against it because the Government and the monetary authorities have exercised insufficient control over the rising money supply, as a result of which increased interest rates have had to be used to bring the situation under control, to the disadvantage of the helpless ordinary citizen; as a result of the unacceptable increase in the petrol tax, which will, in turn, bring about an increase in the inflation rate; as a result of the Government’s inability to stem the growing tide of corruption; as a result of the Government’s inability and/or reluctance to make public its plans with regard to the constitutional and social future of South Africa, which has caused it to lose all political credibility.

Mr Speaker, the PFP will vote against the question and we submit the following declaration in regard thereto:

The present procedures do not allow for the moving of amendments and in such amendments to ask for undertakings before the voting of supplies. This has been a traditional method of dealing with the voting of supplies and we would have preferred to be able to follow the tradition and ask the hon the Minister to give particular undertakings in regard to matters which we regard as being of importance to the country and its people before the money is voted.

As we cannot move such an amendment under the present circumstances we must therefore state specifically why we will vote against the question and what undertakings we would have asked for if the traditional, tried-and-true method had been open to us.

Firstly, the Government has failed to address itself adequately to the relief of poverty both in its failure to give sufficient encouragement to job creation activities, including a policy of inward industrialisation, and also by not providing adequate direct relief for the needy and the impoverished.

Secondly, the Government has failed to deal effectively with discriminatory levels of social services provided by the State and has also failed to deal effectively with the problems which arise from existing income and wealth gaps which contribute to instability in our country.

We will therefore vote against the question.

Mr Speaker, it is a particular privilege for me to place on record the fact that the NP will support this measure for the following reasons. The approach which the hon the Minister explained to hon members in the House today, and in particular the explanations he gave us after the debate which took place here over the past few days, leave us with no alternative. As the hon the Minister said in his explanation, the other parties offered no alternatives.

If one looks at the positive way in which the hon the Minister and the Government are approaching the question of all the different sectors of the country, as well as that of the various population groups, I believe we have here an excellent example of good government.

I could not find any alternative solutions incorporated in the criticism offered by the hon members for Yeoville and Barberton. As far as I am concerned, that is the criterion that should be used to judge this debate. It is not merely a question of the criticism that can be levelled at the actions of the hon the Minister. It is very easy to criticise any action, and it is especially easy for anyone to criticise financial action. In the country in which we live, with the various priorities that we all set for ourselves, we must, in my opinion, be able to air our various points of criticism to one another. However, if one merely criticises without offering alternative solutions, one cannot expect this measure to be rejected.

Under the circumstances, it is a privilege for me to support this measure, and I am sure that my party will support it unanimously.

Question put to House of Representatives: That the Bill be now read a first time.

Question agreed to.

Question put to House of Delegates: That the Bill be now read a first time.

Question agreed to (Progressive Federal Party dissenting).

The House of Assembly divided:

AYES—104: Alant, TG; Aucamp, JM; Badenhorst, CJW; Badenhorst, PJ; Bartlett, GS; Blanché, JPI; Bloomberg, SG; Botha, JCG; Botma, MC; Brazelie, JA; Camerer, SM; Chait, EJ; Christophers, D; Coetsee, HJ; Coetzer, PW; Cunningham, JH; De Beer, SJ; De Klerk, FW; De Villiers, DJ; Delport, JT; Dilley, LHM; Du Plessis, BJ; Edwards, BV; Farrell, PJ; Fick, LH; Fismer, CL; Fourie, A; Geldenhuys, BL; Golden, SGA; Graaff, D de V; Grobler, ACAC; Heunis, JC; Heyns, JH; Hugo, PF; Hunter, JEL; Jager, R; Jordaan, AL; King, TJ; Koornhof, NJJvR; Kotze, GJ; Kriel, HJ; Kritzinger, WT; Kruger, TAP; Le Roux, DET; Lemmer, JJ; Ligthelm, CJ; Louw, EvdM; Louw, I; Louw, MH; Malherbe, GJ; Marais, G; Marais, PG; Mare, PL; Maree, JW; Maree, MD; Matthee, JC; Matthee, PA; Meiring, JWH; Mentz, JHW; Meyer, RP; Meyer, WD; Myburgh, GB; Nel, PJC; Niemann, JJ; Nothnagel, AE; Olivier, PJS; Oosthuizen, GC; Pretorius, JF; Pretorius, PH; Rabie, J; Radue, RJ; Redinger, RE; Retief, JL; Scheepers, JHL; Schoeman, RS; Schoeman, SJ; Schoeman, WJ; Smit, FP; Smit, HA; Smith, HJ; Snyman, AJJ; Steyn, DW; Steyn, PT; Streicher, DM; Swanepoel, JJ; Swanepoel, KD; Swanepoel, PJ; Terblanche, AJWPS; Thompson, AG; Van Breda, A; Van Heerden, FJ; Van Niekerk, AI; Van Rensburg, HMJ; Van Vuuren, LMJ; Van Wyk, JA; Van Zyl, JG; Van der Merwe, AS; Van der Merwe, CJ; Veldman, MH; Venter, AA; Viljoen, GvN; Vilonel, JJ; Welgemoed, PJ; Wentzel, JJG.

NOES—43: Andrew, KM; Barnard, MS; Burrows, RM; Coetzee, HJ.; Cronjé, PC; Dalling, DJ; De Beer, ZJ; De Jager, CD; De Ville, JR; Derby-Lewis, CJ; Eglin, CW; Ellis, MJ; Gastrow, PHP; Gerber, A; Hardingham, RW; Hartzenberg, F; Jacobs, SC; Langley, T; Le Roux, FJ; Lorimer, RJ; Malan, WC; Malcomess, DJN; Mentz, MJ; Mulder, CP; Mulder, PWA; Nolte, DGH; Paulus, PJ; Pienaar, DS; Prinsloo, JJS; Schoeman, CB; Schwarz, HH; Snyman, WJ; Soal, PG; Suzman, H; Swart, RAF; Treurnicht, AP; Uys, C; Van Gend, JBdeR; Van Vuuren, SP; Van Wyk, WJD; Van der Merwe, JH; Van der Merwe, SS; Walsh, JJ.

Question agreed to.

Bill accordingly read a first time.