Mr McAlpine On Interest Payments By Railways

Press, Volume C, Issue 29599, 23 August 1961, Page 10

Mr McAlpine On Interest Payments By Railways

(From Our Parliamentary Reporter)

WELLINGTON, August 22. "The Government certainly supports the suggestions that the Railways Department should make a reasonable contribution to the interest charges on the capital invested in its transport facilities.” said the Minister of Railways (Mr McAlpine) tonight, commenting on a leading article published in “The Press” this morning. It was true, he said, that the railways had made no contribution to interest charges since 1955. At the same time, it was indeed gratifying that the department’s working deficit had been reduced last year by more than £500.000 to the relatively small figure of £62,759.

It was the Government's aim that this improvement should continue so that a reasonable contribution to interest charges could be made. “Having regard to the value of the railway system over the years in developing the economy of the country, the Government considers that a return of about li per cent, on the investment would be reasonable,” said Mr McAlpine. “It may be noted that the Railways Department has practically never derived any direct benefit from the enhanced value of land and property resulting from the introduction of railway communication. “I have stated in the House, and out of it, several times that the Cook Strait ferry will be expected to meet the interest charges, depreciation and sinking funds, on its cost in the same way that the department’s

road services are expected to do.

"The cost of the ferry will be added to the department's capital account, but the scale of charges for traffic using the ferry will be so fixed as to return the full cost of operation, including interest charges plus an operating profit” Mr McAlpine also commented on the need for the department to make adequate provision tot depreciation and obsolescence before making any contribution to interest charges. He said that last year, as shown in a statement appended to the .recent annual report, contributions from revenue to reserve funds exceeded expenditure from those funds by £981,000.

“Thus,” he said, "it would have been possible by reducing those contributions, to have shown a working profit for 1966-61. but this would have been far from prudent, having regard to the expenditure that will be necessary on replacement of old equipment in the next few years.”

Commenting on the continued use of coal-fired steam locomotives in tlie South Island and the conseqlent high operating costs, Mr McAlpine said it was intended to introduce more diesel units there as soon as it was possible to do so. Shortage of overseas funds, however, made it impossible to order more locomotives of this type at present. “It is the policy of the Government tor the railways system to be operated as economically as possible, having regard to all prevailing circumstances." he said.