Comment From The Capital NOTIONAL RAILWAY PAYOUT NOW INTO SECOND MILLION

Press, Volume CVI, Issue 31090, 20 June 1966, Page 12

Comment From The Capital NOTIONAL RAILWAY PAYOUT NOW INTO SECOND MILLION

(From Out Own Reporter) WELLINGTON, June 19. More than £1,000,000 has now be®n paid out by the Government in subsidies over the Nelson-Blenheim “notional railway” system. Figures in this year’s Estimates show that the total paid out since the system came into operation in November 1957 has been £1,097,922.

A sum of £195,000 has been set aside in this year’s Estimates for the continuance of payments, which may be expected to exceed £200,000 next year—nearly three times the estimate made by the Government in 1957.

Questions likely to be asked in this Election Year may well include:

1. Why do Nelson people have this special treatment, while people in other districts which do not have a railway system have to pay the costs of their own transport to railhead?

2. Why has the National Party’s “Let the user pay” policy been discarded in this instance?

3. As the successful operation of the rail ferries Aramoana and Aranui continues to increase the volume of business in the area, why is the “notional railway” system allowed to continue to subsidise this service? As the “notional railway” Is not really a railway, but a subsidy system, it no longer achieves mention in either the Railways Department annual report or the Railways Estimates. For several years it has been listed in the Internal Affairs Estimates, under Subdivision IV Miscellaneous Services. Advent of Rail Ferry The advent of the railferry Aramoana three and a half years ago made a notable difference to the amounts paid out under the “notional railway” scheme. Aramoana (“Pathway Across the Sea”) is another “notional railway” in her own right but the £2,600,000 earned by her as clear profit is held in an account even separate from that of the Railways Account. Nelson has never been connected with the main South Island railway system, but there was strong pressure for this to be done some years ago, particularly after a branch railway-line was closed down for lack of freight.

The Holland Government carried out an intensive survey of several routes, but decided finally that the cost of the line would be prohibitive. It was alleged that apart from the capital expenditure involved, the line Would show an annual operational loss. Accordingly, the “notional railway” system was introduced on November 4, 1957. By it, the Nelson-Blenheim main road was treated as a railway, certain, points were designated “stations,” and freights, parcel rates and fares were worked out accordingly. During its short term of office (1957-60) the Labour Party revived the idea of building a proper railway. This became a strong political issue in the 1960 General Election—-but the true railway project was lost again when the National Party regained the Treasury benches.

Estimates Exceeded When the notional system was introduced in 1957, it was estimated that the scheme would cost £75,000 yearly (goods £67,000, passengers £8000). In fact, the payments have always been higher than that.

The complete list of Government subsidies paid to the notional system is:. 1957-8 (5 months), £31,000; 1958-9, £103,105; 1959-60, £101,183; 1960-61, £107,538; 1961-62, £114,000; 1962-63, £121,574; 1963-64, £166.381; 1964-65, £180,858: 1965-66. £172,283; 1966-67 (Est.), £195,000. The road operators carrying goods and parcels are paid according to the schedule of road rates operating at the time. The subsidy arises from the fact that railway goods charges taper with distance—that is, they increase less than proportionately to the increase in the length of haul. All passengers carried on the Nelson-Blenheim route are subsidised, whether proceeding through to Christchurch, to Picton to catch the rail ferries, or on a purely local journey. Cost of Loan In 1964, when the cost of the notional scheme to the taxpayer had already totalled £744,781, the Minister of Railways (Mr McAlpine) said in Parliament that the notional scheme had cost “a very great deal less” than the interest

on a loan for a real railway. Mr McAlpine was answering a question by Mr H. E. L. Pickering (Govt., Rangiora), who quoted a letter published in “The Press.” In a supplementary question, a former Minister of Railways, Mr M. Moohan (Opp., Petone) asked for further details on costs. In the course of his reply, Mr McAlpine said: “I do know that the physical railway would have had an annual loss of £590,000 by 1967.”

In giving the subsidy figure of £404,000 paid over the last three years, Mr McAlpine commented: “I can only say that the losses on a physical railway would have been much greater.” This view was expressed before the rail-ferry service had developed to its present proportions. It could be that by now the expected loss of a physical railway would be considerably less. •It might also be argued that, if the “notional railway” had not been in operation throughout the Aramoana’s service, her charges would have had to be lowered earlier in order to keep her service competitive with other transport means. One source suggests that the whole matter of transport charges in the Nelson-Marl-borough-Cook Strait area should be placed in the hands of an independent Commission. It is not likely that the Government would be sympathetic to this idea.