The Press MONDAY, AUGUST 27, 1962. The Railways

Press, Volume CI, Issue 29911, 27 August 1962, Page 8

The Press MONDAY, AUGUST 27, 1962. The Railways

Once again the railways’ failure to pay any interest on capital is ignored by the Minister and the department in the annual report to Parliament. The sum that is disregarded is a not inconsiderable £ 5,725,353 — £ 168,022 more than the interest bill that was unpaid last year. The Minister and the department have some hardihood, therefore, when they put revenue and expenditure side by side, subtract the smaller from the greater, and declare that the working results on the whole undertaking were the loss of a modest £161,924 in the year under review, compared with a loss of £62,759 the year before. The question of paying interest on capital assumes greater importance now the Aramoana is in service. In the year ended March 31, 1962, the department’s indebtedness to the National Development Loans Account increased by £5,016,298; and of this capital expenditure £954,357 went to the rail-road ferry. With expenditure during the previous year, the capital account shows £ 1,215,719 spent up to March 31 on the railroad ferry. Next year’s report will disclose the department’s method of dealing with the capital sum involved in buying the Aramoana. Presumably, the ferry will be treated similarly to the department’s road services which, the report notes, this year made a profit of £67,558, a figure which “ makes full “allowance for interest on “ capital and depreciation “on plant, etc”. It would surely be an extraordinary extension of the department’s trading privileges if the duty to earn interest on capital were disregarded in the case of the Aramoana—as it is with the bulk of the railway system. In the last financial year the railways achieved a record gross revenue. There is a crumb of comfort in the increase of revenue

in the South Island by £33,859; but the crumb is small, indeed, when it is

noticed that expenditure in the South Island increased by £103,519. In the result, the loss on the South Island part of the system was a little over £2 million; the North Island lines showed a profit of nearly £2 million. The problem in the South Island, as the report notes, is that the over-all volume of traffic is too small relative to the expenditure necessary to operate this part of the system. On the one hand a much greater volume of business could be handled without any appreciable increase in expenditure; on the other hand there are limits to the possible reduction of expenditure to match the low volume of traffic. Wages last year reached the very high proportion of 60.3 per cent, of the whole expenditure, leaving correspondingly little scope for economies in other directions. Conversion to diesel engines will lead to more economic working in the South Island. Diesel locomotives are now hauling 66.9 per cent, of the North Island goods traffic, and new locomotives being introduced this year will enable main trunk limited express trains to be dieselhauled to an improved time table. As one. consequence of this, six more diesel locomotives will be transferred to improve freight services between Christchurch and| Picton. Even so, diesel locomotives in the South Island will number only 17, compared with more than 100 in the North Island. Thej report notes that the diesels have conclusively proved their worth by substantial savings in day-to-day operation. The South Island system will now share some of these benefits; but better financial results in the South Island must depend chiefly upon increasing business. The department is making two special efforts which, it says, offer distinct promise: the promotion of new industries alongside rails and inter-island business via the Aramoana. Both will be watched with interest by the taxpayers.