Losses On Suburban Rail Services ‘lnevitable’

Press, Volume CIX, Issue 31942, 20 March 1969, Page 26

Losses On Suburban Rail Services ‘lnevitable ’

(New Zealand Press Association)

WELLINGTON, March 19.

The Railways Department had come to the conclusion that losses on suburban services were inevitable and that there was no realistic solution to them, the department said today in submissions to the Committee of Inquiry into urban passenger transport.

“No suburban passenger transport operation in the world produces an adequate return on the capital invested, and very few do better than amass a substantial annual operating loss. New Zealand [is no exception.

profits for ploughing back into the industry is the burden of losses on suburban passenger transport. FREIGHT PROFIT

pendent on ready access, the essential road user who gets a quicker road journey because the congestion on roads is eased, the roading authorities whose roading investment is decreased, and local authorities who benefit in rates from increased property values.

only by high, and probably unacceptable, fares. It was obvious, Mr Thomas said, that suburban transport was a reclining business. LOSS OF PASSENGERS

“On the road service side, long-distance services show adequate economic returns, but these have to carry $500,000 losses in suburban bus operations. “Over a period of years, too, freight increases in goods traffic have had to be at a higher level than would otherwise have been the case, in order to try to recoup the passenger losses of suburban activities,” Mr Thomas said.

Since World War II suburban transport had become increasingly complex, with more inter-suburban and crosssuburban travel. As people continued to build homes further away from railways a continued rise in the patronage of commuters using transport other than rail must be accepted. With the development of suburban shopping centres and the great drawing power of television, practically all the off-peak patronage which used to be available was now gone, he said. Most of the suburban passenger services, both road and rail, were now used almost entirely for transport to and from work. It did not seem possible to attract enough off-peak traffic to make any impact on the situation. “The difficulties encountered by those organisations which supply suburban transport are aggravated by the phenomenal rise in the use of the private motor car. “The tendency which has been noticed both in New Zealand and overseas is for the commuter who uses public transport to carefully note whatever sums are expended, but the commuter who uses his own car regards the cost involved as being inevitable and therefore acceptable,” Mr Thomas said. The Railways Department made an over-all profit of $1.17m last financial year.

“There is no clear-cut pattern of approach to the allocation of these costs,” Mr Thomas said.

“In the present-day world of intense competition and steadily rising costs, cross subsidisation from the remaining activities of the railways can no longer be sustained and yet the railways complex still remains a totally viable concern," the department’s general manager, Mr I. Thomas, said in the submissions: •

There was also the question of who should be responsible for the provision and operation of the services. “In the past there seems to have been implicit acceptance of the view that the organisation best equipped to provide urban passenger transport was also best equipped to accept the concomitant losses. This view is incorrect.

“This has worsened the railways activities in competition with other forms of transport, and has lost valuable good will.

There w.ere two ways in which the suburban services could alleviate their loss, neither of which was realistic nor in the national interest.

“It is imperative that profit derived from freight be no longer used to defray expenses incurred in the provision of suburban passenger transport.” Mr Thomas said that if nothing was done, the services would gradually be eliminated, if for no other reason than the lack of funds for replacing equipment. .If services were to continue, or to be improved, in spite of losses, then the question was who should pay the running costs, and in what proportions. “NO CLEAR PATTERN”

“One thing is clear, and that is that an approach will have to be made on a regional basis with some integrated machinery covering appropriate areas and involving the planning of all aspects which have a bearing on all traffic and transport,” he said. One of the major problems confronting the railways in the running of suburban services was the low use of substantial capital equipment because of two brief periods of work each day for five days of the week.

“Our first assumption is that those who receive immediate benefits should pay the bulk of the costs—the user, the employer because of mobility of labour, the shopkeeper whose trade is de-

In Wellington, about 70 per cent of the railway suburban rolling stock was revenueearning for less than two hours a day.

This ensured that satisfactory profit could be gained

FARES RESTRICTED

The department could increase its fares, but for it merely to break even the rise would have to be by 70 per cent. It could continue to raise its fares and curtail services, but eventually would price the services out of the market.

There was, however, scope for increases in fares without any hardship on commuters. It had tried to reduce losses by curtailing the most uneconomic suburban rail services, and even more reductions would be necessary in the interests of efficiency, Mr Thomas said. Profits from freight services should have been used for improvements to freight facilities, not to subsidise suburban passenger transport. “Unless reasonable profits are made, and this is going to be a challenging task, either capital works will not be done and the railways will be run down, or we shall have to borrow money from the National Development Loans Account or some other source.

“One of the major obstacles to the establishment of the railways as a viable concern making reasonable