RAIL AND MOTOR.

Auckland Star, Volume LX, Issue 181, 2 August 1929, Page 9

RAIL AND MOTOR.

CO-ORDINATION VITAL . GOVERNMENT'S PROPOSALS. RAILWAYS' GRAVE POSITION. DEFICITS MOUNTING UP. (By Telegraph—Parliamentary Reporter.? WELLINGTON, this day. The Prime Minister's references to the Dominion's transport problem in his Budget speech last night showed that it has caused him grave concern, and he remarked that he doubted if the people generally appreciated its importance. "I am satisfied," he declared, "that if the present drift is allowed to go on only a few years longer the taxpayers of this Dominion will have to find not less than £2,000,000 a year to meet railway deficits. That is what we are laced with." The loss on the railways last year, he said, was disclosed as £930,000, but it was even greater, for the Department had not been asked to carry certain capital charges. The average capital cost per open mile of line had increased from £12,106 in 1920 to £17,210 m 1929, and this had meant increased interest charges. Against this, net earnings per fallen from £551 in 1920 to £353 in 1929! "Pure Waste" of Competition. The seat of the trouble lay in the decrease in revenue from passenger traffic, caused by the development of motor transport. The two forms of transport must be co-ordinated. Sir Joseph declared that long-distance motor competition with the railways amounts to pure economic waste, which the country could ill afford. "The irony of. the situation is that the heavy losses on the publicly owned railways aie being largely brought about by good motor roads being built, also with public money, to facilitate direct competition with the railways. In other words, State capital is being provided to assist in the direct undermining of the earning-power of £57,500,000 of State capital already invested in railways." He added that roads away from the railways should be the first consideration of main highways policy, in the interests of trade and production.

Sir Joseph recalled that the Government had already set up a Ministry of Transport and an advisory council. It was proposed to broaden the basis of the council by giving the railways adequate representation thereon, and by adding representatives of the commercial and farming interests, who were also directly interested, in that unnecessary and wasteful duplication of transport facilities can only lead to higher transport costs all "round. This council, representative of all interests concerned, would be asked to fully investigate the whole complex problem and report to the Government as to the best means of eliminating wasteful competition and promoting co-ordination. The Prime Minister reiterated the Government's policy of pushing on with the completion of trunk railway lines and said that with a view to speeding up the construction work all round, the vote for railways construction for this year would show an increase of more than 60 per cent over the amount spent last year.

Branch Railway Lines. Some of the branch railway lines, such as the Otago Central line, "must remain as an integral part of the railway system," Sir Joseph said, "but some of the short lengths of line merely tacked on to the main lines have clearly served their purpose from a developmental point of view, and with the development of motor transport such lines have becomo obsolescent. In such cases any private concern would probably tear up the railway lines, and it is a matter for consideration as to whether the Government should not do likewise. Clearly it is necessary to have all the facts before us in each case, and this is one of the matters where the proposed council might do good work. The matter will be referred to the council accordingly. In any such case where private enterprise has already established adequate motor services no further action by the Government would be necessary, but in other cases it might be necessary for the Railway Department to run a motor service. ' Either way the Government would see to it that the residents of the districts concerned have adequate transport facilities." Writing Down Railway Capital. Sir Joseph's final proposal was a writing down of capital invested in the railways. He said he had found that approximately £8,100,000 of the total railway capital had come from surplus revenue. "Thus the capital sunk in lines that are done away with can be written off. without impairing the total of assets representing loan capital. In any case the Government has decided to go further than this and write down the capital of the railways. At the same time the present subsidy out of the Consolidated Fund will be abolished. The present arrangement is unbusiness-like and confusing, and. the proper thing to do (assuming it can be done) if the assets are not worth their cost from the pojnt of view of earning-power, is to write down the capital. That is what any commercial concern would do. The capital cost of track and buildings of the branch lines at present covered by the subsidy arrangement is approximately £6,250,000. Thus when the railways have been relieved from payment of interest on £8,100,000 of their capital, not only will there be no interest payable by the railways on account of branch lines, but there will be an additional saving of interest to them to be set off against the working loss on those branch lines which after investigation it is decided to retain. "Writing off the capital in . this way will not involve any additional loss .to the Consolidated Fund, as at present the inter.est received on branch line capital is handed back to the railways through the subsidy. On the other hand, the Consolidated Fund will not be relieved of any . interest charge through the cancellation of. the subsidy. The proposals simply mean that the capital derived from surplus revenue will be written off, and that will be the end of it so far aa interest is concerned."