Railways reduced deficit by $5M

Press, 19 August 1981, Page 3

Railways reduced deficit by $5M

Parliamentary reporter

The Railways Department cut its working deficit by about $5 million last year in spite of rising costs and a drop in passenger and freight loadings.

This is shown in the department's annual report, tabled in Parliament yesterday by the Minister of Railways (Mr McLachlan). The drop in loadings was offset by increases in charges, which provided an increase in revenue of $71.3 million, or 20.4 per cent, to a record total revenue of $420.5 million.

Freight volumes dropped by 3.1 per cent to 11.39 million tonnes, but the average distance hauled increased by 3km to 277 km. Commodities to record increased tonnages during the year included meat, coal, milk powder, and wood pulp, but these increases were offset by a decline in the tonnages of general goods, butter and cheese, steel, artificial manures and lime, and logs for overseas shipment. The loss of log traffic is traceable to the Mount St Helens eruption in the United States which, by causing widespread forest devastation. resulted in an abnormally large supply of logs on the world market and made New Zealand log exports uneconomic.

Coal shipments from the West Coast to Lyttelton helped to hold the decline in tonnages in the South Island. Continuing budget reviews and tight controls on expenditure resulted in the department’s expenditure being $471.5 million, or only 16.4 per cent more than the previous year's figure. “Railways has managed a worth-while achievement by holding the deficit during a very difficult year." said Mr McLachlan. ';

“At a time of inflation and generally rising prices — the cost of locomotive diesel fuel alone increased by 58 per cent — the Railways has achieved the very creditable result of holding expenditure to $2.9 million below budget," he said.

As a result, the working deficit for the department was $51,036,845 (recovered from the stabilisation vote), or $4,767,710 less than the previous year.

Rising interest charges continued to be a big problem, and for the year they amounted to $33.1 million. In addition exchange losses from overseas currency transactions amounted to $3.95 million, an increase of 29.3 per cent on the previous year.

The resulting over-all deficit of the department was $BB.l million, compared with $89.9 million last year. The report makes special mention of a successful promotional campaign in Christchurch by a Railways sales team, with the aim of generating new business and promoting a better understanding between local customers and the department. During the seven-day campaign, more than-a thousand visits were made to customers throughout Christchurch.

Passenger traffic continued to decline in line with the trend of recent years, the total number of passenger journeys being 14.9 million, compared with 16 million in the previous year. (In 1977, there were 18.5 million passenger journeys.) Goods loadings, at 11.4 million tonnes, again showed a slight decrease from 11.7 million tonnes in the previous year. Revenue-earning train kilometres travelled increased by about 300,000.

Over the \vhole of the A

department's undertakings, expenditure increased by $66.6 million, of which $42 million was attributable to wages and other staff costs, such as superannuation and welfare payments. Fuel charges increased in line with higher prices for petroleum products and electicity. The cost of diesel fuel for locomotives increased to $24.9 million, and the cost of fuel used by the Cook Strait ferries increased by 51.6 per cent.

As a proportion of the department's total expenditure, wages and staff costs represent 62.8 per cent, and fuel 8.1 per cent. Stores and materials account for 13.4 per cent.

In comparison with the rail services (a loss of $52.7 million over the year), and Railways road services (a loss of $3.6 million), the Cook Strait ferries returned a profit.

Gross revenue from the ferries amounted to $49 million, an increase of $8.4 million, or 20.8 per cent, and expenditure totalled $45.6 million, an increase of $7.3 million, or 19 per cent. This

resulted'in a profit from the ferries of $3.4 million compared with ,'i the previous year's profit of $2.2 million.