RATE TO COVER DEFICIT

Press, Volume LXX, Issue 21147, 24 April 1934, Page 12

RATE TO COVER DEFICIT

♦ Tramway Board's Finances ACCOUNTANTS' REPORT Taking into consideration all aspects of the intricate problem before the board we regretfully have to advise that in our opinion there is no alternative but to levy a rate to cover the deficiency at March 31, 1934. This was the conclusion arrived at by Messrs James Anderson and H. A. C. North, who were appointed by the Christchureh Tramway Board to investigate the financial position of the board, and whose report was presented to the meeting of the board yesterday afternoon. The report states that the board is faced with a large deficit for 1934, together with a large prospective deficit for 1935, with no reserves in hand except £2550 which it is not recommended that it should use. "It seems to us that it is going to take some considerable time to get the undertaking off the rates, but we are sure that it should be the aim of the board to work with this end in view." The investigators state that if their proposals are'agreed to the deficit for the year ended March 31, 1934, will be: «£

Task of the IJourd "The estimated deficit for the year ending March 31. 1935, is £18,072, in accordance with the general manager's statement. This estimated deficiency would have been greater except that I lie interest amounting to £5543 due to the sinking fund commissioners in October, 1i)34, has been taken credit for as a rebate of interest under the expectation that a further allowance will be made by the commissioners, with which course we do not agree. "Renewals: also are on an entirely new basis and seem to Us to be most inadequate. "Tiie mvat task of the board in facing the estimated deficit, for 1935 is to use every endeavour to get the undertaking back tin a satisfactory basis from the point of view of revenue and expenditure—that is to build up the revenue or reduce the operating expenses, if at all possible, or both. ijuildin:,' up Kcvenuc

"Hegardmg tin: first matter —buildin .l; up revenue —two alternatives will i be before the board—namely, to i~ai.se j I lie fares or. alternatively, to lower ! them. We have been through numeri mis returns in this regard and have | made careful enquiries, j "Dealing iirst with lowering fares, i all the returns that, we have seen do i not support the view that lowering } Ihe lares will raise the revenue: in i fact, in every ease, it seems that while j the passengers are likely to increase ! there is a strong probability this in- ! erease will not be sufficient to offset j Ihe lower fares, and revenue would ! tend to lie lower. However, this i matter eould be tested only by ac- ; tual experiment, and considering that 1 the passengers carried have dropped I from 25.500.000 in 1927 to fewer than i 17.000,000 in 1933, it is just possible I I hat sufficient. traffic may be won back to the trams by lowering the fares to increase the revenue. "If raising the fares is considered as a way out. here again, of course, if dues nol follow that a rise of a cer- : tain percentage in the fares will be followed by a similar rise in revenue, and, as has already been pointed out, (he natural conditions in Christchurch make it easy for the users of the : trams to make other transport arrangements. The whole position appears to us most difficult, and what- ' ever course is adopted would have to | be (liven most careful consideration. I "Concerning the reduction of exj penses. as has been pointed out, the ; operating expenses a mile are lower in 1 Christchurch than in the other centres, but it does nol. necessarily follow that i they cannot be still further lowered. I One-man Trams "The extension of the one-man tram . system seems to us to be in the right ! direction in this matter, but apart I from this all items of expenditure | should be carefully cheeked over, and 1 if economies are possible tliey should | be instituted. I "In discussing this question we ; would say that we quite agree with ; the sla'.enient that 'the users of the 'trams should pay for them,' and every . elforf to get the system off the rates ;at as early a date as possible should ibe made. We feel strongly, however, llliat this should be done on the basis j of building up the revenue and re- | dueing the expenditure, and not by i the continuation of various expedients j we have discussed in this report, i "It is fully realised by us that the board is in a position of the greatest | diliieulty, and just how difficult Ibe position is can be seen by comparing i certain figures at J919 with the 1933 (figures:—

"The figures in our opinion show in summarised form the whole unfortunate position that has arisen—namely, that the debt has greatly increased, the learnings have increased but slightly, | while the passengers carried have ; shown a substantial falling-ofl". | Lines J'aying: Expenses • "All lines except possibly that to North Beach pay operating expenses and contribute something to the stand- | ing charges. There can, therefore, be ; no financial benefit in any discontinu- ! ance of existing services. The omnibuses have, of course, been a con- ; tinual source of loss to the board." I The report then sets out the estimated " deficit for 1935, if its recommendations were adopted, as under:— As by general manager's statement, £18.0(2: add interest due to sinking fund commissioners, £5543,* add appropriations for renewals, say on old basis as last year, £46,576. From this is deducted: Sinking fund £8978, in-tere.-'i on .sinking uind £5700, provision on new basis provided for in 1935 accounts .c 18,167, and interest added above. £ss43—total £38,388; leaving in round figures, £BOOO. This, added to .the first two figures, totals £31,615. We have to say, therefore, in answering this question, that we can , see no alternative but to lew a rate for the deficiency that is estimated for i the year ending March 31, 1935," the report concludes.

Delimit on trams, trackless trams, and buses ■ • 19,978 Balance of the proposed transfer of the non-statutory reserve:; • • ■ • -.550 Interest, short-paid to commissioners • ■ • • 5,543 Depreciation charge on assets purchased by revenue . . 'J,072 Total .. . £32,143

1033. 1919. £ £ Loan liability .. 1,170.750 569,250 Earnings 184,833 166,446 Passengers carried 16,913,075 21,623,692