THE PRESS SATURDAY, SEPTEMBER 4, 1982. A future for railways

Press, 4 September 1982, Page 14

THE PRESS SATURDAY, SEPTEMBER 4, 1982. A future for railways

“The best answer to our critics is a railway which is operating efficiently and reliably,’’ the General Manager of Railways, Mr T. M. Hayward, told his staff this week. He was commenting on the discussion paper, “Land Transport Licensing and Regulation,” issued by the Ministry of Transport. Mr Hayward reacted angrily to the suggestion that road transport should be permitted to compete more widely with the railways. The reaction is not surprising; the paper raises far-reaching questions about the future of the railways in New Zealand's transport system. For many years the railways have not wanted for critics. Almost anyone who has attempted to travel by rail, or who has used the railway freight services, has a “horror story” to tell. On the face of it, the railways have been inefficient and, sometimes, downright careless. The system appears to many to be over-staffed and to depend on an enormous subsidy from taxpayers to pav for its operations, even though it enjoys a degree of protection from competition and a monopoly on the movement of some freight.

Those with something to move have, for more than 30 years, turned increasingly to other forms of transport, and especially to road transport. Road operators have been able to extend their competition with the railways to distances up to 150 kilometres. The Government, and a good many of the railways’ customers, have indicated they would like to see that competition extended. The reality is not quite so simple. For more than a century the community has been investing large sums in building and maintaining the railway system. The system exists as a going concern; sometimes it shows signs of vigorous life; those signs can be expected to increase as the new Railways. Corporation gets into its stride. The corporation will be off to a bad and even unfair start if it has to accept more competition from road transport before it has shown what it can do. Under the new arrangements the railways have an opportunity to demonstrate more clearly which of their services are economic, and which are so-called social services that require subsidies. Less regulation of road transport will mean fewer economic railway services. The result will be a higher subsidy from taxpayers, or a significant decline in the railways. Although the Ministry of Transport’s report suggests that important savings might be made by a further switch to road transport, the degree of those savings needs consideration. The railways employ 20,000 people. At a time of high unemployment the country may be better off with a railways system that is somewhat over-staffed than with a smaller, more efficient system that throws many

more people out of work. The efficiency of the road transport system can be something of an illusion. Although attempts have been made to ensure that road transport operators pay a fair share of the cost of building and maintaining roads, a significant increase in road transport would require substantial expenditure by taxpayers on the roads. The social costs of road transport — the comfort and safety of all road users, and of those who live and work near main roads - are difficult to measure. They still deserve a place in any calculations that compare road and rail transport. Fuel has become an increasingly important element in transport costs. Road transport is much less efficient than the railways in the' quantity of freight that can be moved by a given amount of imported fuel. From the taxpayers’ point of view, nothing much is gained if more State expenditure has to be put- into maintaining roads and, at the same time, the subsidies to the railways are maintained, or worse, increased to make good further loss of railway business. Freight costs play a very large part in many New Zealand enterprises, especially those in the South Island, not least because of the country’s geography and the scattering of a small population. A balance has to be struck between ways to hold down the cost of transport, to the benefit of consumers and manufacturers, while reducing the burden on taxpayers. At the same time, jobs should be preserved as far as possible. Even this consideration raises a serious problem. Keeping people at work in the railways may be keeping other people out of work in the manufacturing industries that are made marginal, or unprofitable, by high transport costs. On balance, increasing . production and productivity is the more important consideration. For the transport industry it should mean more goods to be moved. The Ministry of Transport’s proposals have, so far, been offered for discussion. This is more likely to be a fierce debate. Critics have been quick to see in the proposals the decided direction for the legislation on transport that has been promised before the end of the year. For the next two months the proposals should be treated as “open for discussion.” Once legislation is drafted there should still be ample opportunity for interested parties to make submissions. Reasoned discussion on the proposals will serve the community best, not an assumption that minds have already been made up. In the meantime, the railways can best demonstrate that they deserve to be heard by concentrating on the quality of the services they provide. An efficient and reliable railway system would have a strong case to fend off challenges. Like the rest of the transport industry, the railways are part of the service sector; the goal is to ensure that a service industry serves rather than burdens its customers.