TRAMWAY RETURNS.

Dominion, Volume 1, Issue 232, 24 June 1908, Page 7

TRAMWAY RETURNS.

EXPLANATION BY THE MAYOR. A REPLY TO CRITICISMS. ; "COMPARISONWITH GLASGOW. The' Mayor (tho Hon. T. W.'.Hislop) jhowed much' anxiety at/ tho meeting, of the City' Council last' evening to reply to criticisms which have heen passed on the working of tho tramways system. ' Councillor .Biss's motions to obtain reports on tramway and other schemes in contemplation gave him his opportunity. •' /In; the course .of a preliminary discussion as to when these motions, should be taken, tho Mayor, stated that ho wished to make some; observations on Councillor Biss's motions, because he found that lie had omitted to reply to certain statements affecting tho tramways at the last meeting of tho Council, and he wished to do so on tho present occa- ■ si-on. ■ •During' tho discusion on the motions, tho Mayor said that' it was particularly- incumbent to seo that there ,was no misunderstanding }in regard to _ undertakings 'which .the; Council was carrying on. There had been f a ' discussion on tho previous Council night which was unexpected to some extent— he had.boen somewhat unprepared for it him-self-ron tho question of tho tramways, and he . Had rather omitted v to_ mention certain • itemi* which .were o{ some importance. Some of ..these, had been >referred to, isince. Ho thought that 'they; should have placed on reoord the. absolute condition of the tramway balance-sheet. "AN .EXTRAORDINARY DOCTRINE." During , tho . .previous.. , discussion on . the „ balance-sheet,- - and ' since then, the "profits had been quoted at. £4000 odd. He had' corrected-this by pointing out that tho; balance-sheet showod a profit of £5568, and that the difference between :the amount quoted'-.by himself and other, persons was an; amount appropriated out of profits towards " preliminary' expenses" standing in capital account. Tho Council was not ;obliged: to credit that, sum- for the purpose . Ho .' had .. doubts whether it was a proper thing to do, because preliminary expenses were-as milch a part'of the cost of any undertaking a3 any other expenses. However, a ; sumgof-£I4OO was appropriated-out of profits to reduco preliminary expenses on tho books. ; Now there had been invented the novel and' extraordinary doctrine that because the sum / was so appropriated it ceased to be part-of the profits of the year. Tho writer of the criticism in question did not distinguish between a chargo on-pearly income; such as Sinking Fund, interest, depreciation, etc., and out'of profit after ' all non-recurring charges had In ; order ,to show that the Council had charged everything to revenue he "explained that the purchase money for band instruments-was charged,'although a non-recurring item.'..; This "..was 'a charge whicji could fairly be made to capital. INTEREST ON DEPRECIATION. Another extraordinary statement had been made that,tho item "Profit" should have beeri :: reduced ; by' £713 interest on depreciation fund. ' His'answer to that was that the sum?set''aside for depreciation was ample, and if, there was an appropriation of interest on- that sum,- ;then the sum deducted for depreciation ought to be reduced by a sum equivalent to* the interest. Glasgow not only (lid not chargo interest upon depreciation; fund, but; it .'actually charged against-: v such/.' fund replacements. Last year,,,for'instance, the sum of £38,000 was';so ;charged." The net sum, therefore, set ,aside tor depreciation in Glasgow varied acording , J to tho amount which was so appropriated out of the funds set aside. Last year,the net appropriation for depreciation Glasgow;' was 4.3// but let them consider for a moment What the outcome of this had " been. J Tho last balance-sheet : shotted ■ that the. depreciation fund stood at £1,070,000, or one-third of the tot il capital expenditure and it had become a question with th'q Glasgowvpeople what to do with these depreciation fiiiids,; ( as they could find no further, outlet for/them in the undertaking itself. The appropriation also of sinking fund in Glasgow in respect of: the permanent line was nilich,;greater than here, because,, of the cqrit\iiual wear and tear, which was very ynucli greater.- • , >

' GLASCOW. PERCENTAGES. - He would quote wliat-tho percentages applied to .profit /and other items of the Glasgow and Wellington systems wer.e last year. i; Glasgow' Wellington Net surplus ... ... 2.32 1.11 Interest ... ... ... 1;94 3.90 Sinking fund ... ...1165 .93 , Contribution to common ogood ... ... ... 1.16 i — Depreciation . &.35 2;'46 Totals ; ... ..: 11.4 8.4 . In the Wellington amount's, he was nottaking credit for such items as the payment for band instruments and others which, might be brought in. The statement had beon made that the profits, should have been tc : duced by £715 interest on depreciation fund, He,- would liko to__know wlib had the right to create a now. rule wi%' regard to such a matter.' Ho had alrbady mentioned that Glasgow did not charge interest nor did any. other authority that' J'o knew of. Tho Wellington Harbour Board did not charge against its profits interest''on the depreciation fund, and no good reason could be given for so doing. The principle actcd on was this: A sufficient amount was set aside ericli year to cover depreciation; If they chargcd interest on that sum, arlcl set aside the interest for depreciation, ; 'tßen tho amount of eucli; interest should be! .deductod, from the amount; taken out of profits, otherwise they were, making a greatof 'provision than had been deemed necessary? c j Tho ingenious way in which, some persons -used their brains to prove »that the system'#as not'being, worked to a profit was rathor'.romarkable to him.

,- V SALE OF CURRENT/ ■With' regard to t)ie'°item of £3355, gross profit from , the saloj-of current, The Do. minion had stated'htbat * morning:—"Mr. Hislop does not public that its share of sinking fund and interest has already beon charged in the. gross appropriations for theso payments.. Ho,w?.s glad to admit that he had not : told th,e public so. If he had done so, ho would have told them what was" uu» true. The amount' which bad been deducted from, tho , tot4l. amount, received from conBurners and was tho baro proportion of pbwor'expenses, which amount was .67 of Id. ,T'he amount which ought to bo deducted off; tlyVsum of £3575 was the sinking fund and interest upon the special loan expended ior distributing tho power.. This had boon included in,the charge in "interest on loan and jinking ,fund " against tho whole profits, • which wore, as councillors knew, £42,172.'; ,i]o fin,d, howover, the amount which had bfien added to the net surplus by the .revaiue.from power sale, they required to,deduct tte amounts of sinking' fund and interest, on. tho Joan specially raised and exponded on this work. . As he had pointed out before, whon. tliis was done, tho net revonuo was £1680. In other words, if the sale of power edrffed" to-morroiv, and they had no apecial: charges in respect -of it- for tho loan .raised for the purpose- of carrying out tho undertaking, the net revenue would bo £5560 15s. 5d., less £1680. He need not point out to Councillors that it was not usual or good business to regard such undertakings as tramways and powor ss separate from ono another, as they wero not ncccssarily inter-dependent. He 'wished to s;ty • that in this rcspect' they followed tho.Vory good example of Glasgow. In conside'rjng tho amount which had been set aside (by Wellington it had to be remember?!.that tho depreciation fund in Glasgow -was- iTow-'about £1,100,000, and that was tho "aggregation of practically eight years. Their .'depreciation fund had aggregated in eight yiaA to a sum .of £1.070,000, equal to a third part of their total capital outlay. Ho emphasised ' the fact that tho Council,Midid ' all' replacements as well as repairs.. out. -of revenue beforo arriving at: the gross profit. Even Glasgow paid some of its' replacements out of . deprccia- ; tion- fund. Thus, last year Glasgow cxperided the sum of £39,000 out of this fund in'.renewing part of its line.

A SUFFICIENT. SINKING FUND. Tho Mayor further stated that when the City Council fixed ' its sinking fund they fixod an~amount which would absolutely onsuro them against any loss, and onablo them from year to year to spend a very largo sum from depreciation fund on capital works. Ho had mado tho present statement because a set had been made upon tho tramway bal-ance-sheet-for tho purpose—well, ho hoped that it was for a patriotic pui'pose. ' Ho thought that every item on which tho bal-ance-sheet had been attacked could bo not only defended, but shown to be absolutely free from any of the objections ,that had boen made to it. He thought the' members of tho Tramways Committee would agrco.that ovory consideration was givon to ovcrv proposition that was made for lessening the expenditure or increasing tho utility ot tho servico. The' Council wero pursuing an extromcly careful course. ■ DISCUSSION ADJOURNED. Councillor Luko was understood to suggest a difficulty in comparing, on a short acquaintance," tho Glasgow balanco-shcet with that of Wellington. Ho moved that the discussion bo adjourned till the next meeting of the Council. , ■ " Tho motion was adopted. ■