TURNING LOSSES TO SERVICES

Press, Volume LXXII, Issue 21867, 21 August 1936, Page 12

TURNING LOSSES TO SERVICES

Construction Of Railways . \ MINISTER EXPLAINS POLICY [From Our Parliamentary Reporter.l WELLINGTON, August 20. The reason behind the Government’s decision to complete certain railway lines were outlined by the Minister for Public Works, the Hon. R, Semple, during the.lmprest Supply Debate in the House of Representatives to-day. The Minister made it clear, in answer to an enquiry by the leader of the Opposition, the Rt. Hon. G. W. Forbes, that it had obtained reports from both the Railways and Public Works Departments before deciding to complete the lines, and he was prepared to lay those reports on the table of the House for the information of members. “When we set out to consider the position of the uncompleted railway lines we had a pretty difficult task before us,” said Mr Semple. “A total of £3,565,000 had been spent on the Napier-Gisborne line, the interest bill was £1,484,000, tad it was estimated that completion would involve an expenditure of an additional £1,593,000. That interest bill was a dead charge on the community and we had to decide whether we could turn that loss into some form of service. The line may not pay at the outset—very few lines do—but there is a good deal of room for develpment in that district. The lands around and beyond Gisborne are as fertile as any in New Zealand.” . Referring to the South Island main trunk line, the Minister said that a total of £535,000 had been spent on its construction before it was stopped. The interest bill amounted to £434,000, and it was estimated that the completion of the line would cost £2,300,000. The report he had received from the Railways Department suggested that the possible loss on the line would be £40,000 a year, whereas the Railways Board’s report had estimated the loss at more than £IOO,OOO a year. He understood that there were rich lands along the route of the line.

New Development “The construction of railway lines, except over barren country, automatically creates! new developmeht,” said Mr Semple, “and when that factor is taken into consideration some of the estimated losses suggested by the Railways Board will probably be reduced by half. I admit there is a risk in the thing, but that is bound to be present with the construction of any line passing over undeveloped land.” The Westport-lnangahua line was nearer to completion than any of the others, Mr Semple said. A sum of £627,329 had been spent on it. The interest charge was £.287,456, and the estimated cost of completion was £750,000. In this case also, the estimated loss was much lower than the estimate of the Railways Board. A total of £444,000 had been spent on. the Dargaville line. The interest bill was £22,000 and the cost of completion was estimated at £60,000. It seemed to him that the only thing to do in that case was to complete the line, although he was not in any way committing the Government.

“Someone else started these lines,” added the Minister, “and we had to decide whether we would go on paying £1,000,000 a year in interest with no return or turn that loss into services which one day would be profitable to New Zealand. If we were going to stop every line in New Zealand that would not pay we would have to stop the lot, because our railways show an annual loss of about £1,000,000.” Mr S. G. Holland (Nat., Christchurch North): Most of them pay operating expenses. Not Expected to Pay “When we build a highway we don’t expect it to pay,” Mr Semple said. “We build it for service to the people. I think time will prove that the policy the Government has adopted with these railway lines is right, notwithstanding the fact that we were faced with tremendous disadvantages. A sum of £IOO,OOO will be required to put the Napier-Gisborne line in thesame condition as when it was stopped, in addition to which we are faced with the necessity of providing accommodation for men at Westport. Lcrry loads of tools were dumped into the river. In fact, everything that could be stripped from that line was stripped lock, stock and barrel.”