Supporting the railways

Press, 24 December 1980, Page 12

Supporting the railways

Air New Zealand is proof enough that having a major national enterprise run by a State-owned corporation is no guarantee of profitability. Benefits may come from setting up a railways corporation, but such a corporation cannot be expected magically to turn the railways’ loss into a profit, even if some services, which are deemed to be services that are essential for the welfare of the community, are subsidised by the taxpayer and are no longer additions to the losses of the railway system. A preoccupation with eliminating the loss on the railways, when any proposal for reorganising them is being assessed, is misplaced. Making a profit in running the railways is not necessarily a reliable indication that the railways are being run in the best interests of the country as a whole. Whether- the railways are run by a department or a corporation, a loss is acceptable if other advantages are produced. Making the best use of past and durable investments is among the benefits of ensuring that, the railways survive. Economising on -fuel in meeting certain transport needs, encouraging regional development, and avoiding the need-for heavy investment in new roads or vehicles may be counted as other benefits. Losses by the railways are acceptable if the genuine costs of alternative transport are greater. The true cost of road transport is not necessarily represented-by the charges laid on its users: 'The chances are that the taxpayer is subsidising the heavy vehicles on thejroads^by- .much as,, or more than, the losses incurred by the beyond: the limits set-'for road transport. , y .

There' are arguments in favour of continuing to. allow the railways to run at a loss, or at least to be subsidised for specific 1 ? purposes; There are no arguments to justify not rationalising and the..system so as to reduce costs; to, the lowest possible level that is.. consistent with providing an adequate service, especially in long distance <heavy haulage, This is the point at which establishing a corporation makes sense. ■

The main effect of transferring control to a corporation will be that ’thejpladb of the Minister of Railways, will be taken by a board. Such a board 1 jshould find it; easier than the Minister, subject as he is to the exigencies of his party’s standing and to the iniportunings of pro-road and prorail lobbyists, to make the innovative and possibly unpopular decisions that are needed to, make the railways as effi-

cient as possible. The opposition of the rail unions to the setting up of a railways corporation suggests that some of these hard, but necessary, decisions will indeed be unpopular and more difficult for a Minister to make than a board. The expressed contempt for political decisions and capabilities has been offered as a reason by a union spokesman for making no change to corporation control. If the union spokesman had any regard for logic, he would have preferred to be rid of Ministerial control and would have applauded the idea of both the Government and the Opposition that corporation control is desirable. The spokesman’s statement suggests that the union view is of little consequence. The employees of the railways at all levels would probably be a great deal more inspired if the system were not nagged by continuing and dispiriting losses. If new control and freedom from the burden of “socially necessary” services were accorded to the railways, the whole system might buck up and enjoy a new vigour. Even if a corporation is set up to make detailed decisions about the running of the railways, important policy decisions on such topics as the level of public investment in the railways and the road haulage limits will still have, to be made by a Minister or Cabinet. Setting the broad conditions within which the railways can do what they do well will still require adjustments of public policy by a government.

If the Government confines itself to making decisions to ensure that the railways have the business which the national interest requires; -them to have,, other decisions can be given to a board which will be less susceptible to immediate, perhaps even parochial, political influences. A board should be better able, to make decisions which may not be popular, but which will offer the best prospect of an efficient rail system. If it is asked to do more .than this, the Government — not the corporation — will be answerable to the taxpayer.

By retaining the restriction on road transport, but allowing the possibility of considered exceptions, . the Government has concluded that the cost of transferring long-distance railway business to the roads would; be so costly; to the country in vehicles, fuel, road; maintenance and manpower that it cannot be entertained. ■ Bleeding the railways of yet more business would not, by itself, reduce railway staff. A minimum number is needed to keep any railway system going. To make, more efficient use of the railways the need is for more business, not less.