THE HOUSE.

Dominion, Volume 1, Issue 300, 12 September 1908, Page 7

THE HOUSE.

THE ARBITRATION BILL. The Houso met at 2.30 p.m. The Industrial Conciliation and Arbitration Bill was reported from tbo Labour Bills Committee by the chairman (Mr. Tanner). Mr. MA6SEY: When does the Minister propose to takfe the debato on the Bill? Tno Hon. J. A. MILLAR: I hope to be able to take it some time noxt week. Mr. JAMES ALLEN asked; that the evi- • denco taken' before tbo Committee be presented to the House and circulated; The PRIME MINISTER said tho Bill could not be taken very well before Wednesday next, and, therefore,. members would have time to familiarise themselves with the' ovidenoe. Whon the' Bill came'down its passago would, be expedited as much as possible. The provisions of the Bill are printed elsewhere in this issue. MANAWATU RAILWAY. THE PURCHASE BILL. DEBATE ON THE SECOND READING. The PRIME MINISTER, in moving the second reading of the Wellington and Manawatu Railway Purchase. Bill, gave a brief sketch of tho history of the inception and construction of tho lino. It had, he said, been begun in 1882 and completed in 1886. The agreement with tho company gave tho Government power to take, oyer the railway at the end of 21 years, and on December 7 last notice, was given by the Government to the company of its intention to acquire the line, and the. company was invited to appoint an arbitrator for tho purposo of deciding upon the prico to be paid. The terms of tho purchase, however,' had been subsequently amicably agreed upon' without recourse to arbitration proceedings, which would have probably been followed by appeals to tho Supremo Court,' the Appeal Court, and in all probability even to. the Privy Council by ono side or the other. The matter was fully discussed lat an interview between himself, representing tho Government, arid Mi. Kirkcaldie, chairman of directors of the Manawatu Compauy. Ho (tho Prime Minister) had the assistance of. Mr. H. J. H. Blow (Under-Secretary for Public Works), whilst Mr. Kirkcaldio had tho assistance of Mr. W. M. Hannay, general manager of tho Manawatu Company. First Proceedings. At first there was'a considerable disparity between the .respective figures quoted on behalf of the, two ipartios, but'it was finally agreed that the' purchase prico of the railway,, exclusive of stores in hand, should be' £900,000. It was agreed, that tho sum of £10,000 should bo paid for tho stores," and. that in consideration of tho company giving up possession of tho line on Decembor 7 next (instead of holding on until February 28, which they were entitled to'do) a sum of £15,000 should be paid to tho company out of the earnings of the lino until that period. The total purchase price to bo paid was therefore £925,000, or thereabouts. > It was arranged that £500,000 should bo paid to the company at tho end. of last month, the company to pay'interest on this amount at the rato of 4 per cent, until Decombor 7; and that the remainder bo paid on Fobruary 28, the. Government to pay interest at tho rato of 4 per cent, on that sum from December 7. Tho Primo Minister entered into further details on this matter to elucidate the position, and ho read Correspondence that had passed between himself and Mr. Hannay. As to the outstanding debentures that had not come into tbe possession of tho bank in London, the Bill contained a clause guaranteeing tho country for tho oxtremo amount. Tho House was also cognisant of the fact that the company bad fully redeemed their promise'regarding tho payment of £5000 in connection with tbo superannuation arrange-, ments of tho employees. Any. monoy owing by cither side to tho other would bo mutually interest-bearing at 4 >per ccnt. vstil ail accounts wore clear?;! uq,.

Tha price, he thought; bad been, very reasonable and fair. Both sides could say tho same. (Hear, hear.) In a transaction such as this with tho shareholders on one side to.pleaso and tho Government and critics of tho Government on tho'other to satisfy, tho task was a difficult one. Ho would go fully into the position as far as tho country was concerned. Ho then reviewed the negotiations from tlio first transaction in tho purchase of the line. Soma details. In tho original estimate in 1902 it was calculated the lino would cost £605,802 (£7213 per mile) to construct, which must bo added to tho value of tho equipment which was greater' por .mile on the Manawatu railway than on the Government lines on account of there being a greater, number of engines per. average mile;. Adding the value of the ordinary equipment to the estimated cost brought - it up to £773,892, or £126,180 less than the amount agreed upon, though the estimate we had quoted 'Was made when material was'low in price. Since the offer of the Government in 1902 tlio capital value' of the railways had been increased by £147,000. The ' price of the railway then was £951,845, but tho country would also have had to pay on the debentures for sis years at 5 por cent., borrowing tho monoj; at 4 por cent; They would thus have entailed a further equivalent of £40,080,- which would have brought tho prico'up to £992,645. There was also this difference between then and now, that tho'prico in 1902 included: all the assets of the company. Deducting the value of the land, which-was not included in tho present purchase, tho net prico of the line in 1902 was £799,913. / Adding to this the amount at which tho equipment was valued and the accrued'.value would bring tho total up to £939,518,. and this was the valuation upon which they had agreed to pay £900,000. Share Basis. On the sharo basi? tho cost of tho railway,' deducting the assets which the country was hot taking' over, would havo amounted 't0'£980,707." From any aspect, therefore, -it was evident the country was getting the lino and its equipment upon better terms than in 1902. It would bo 'difficult '■• to ascertain what the cost would have been if tho acquisition was under the original Act. Mr. Blow had estimated that it would bo in the vicinity of £850,000, but finally he had como to tho opinion- that it would probably run into £900,000- Tho Prime Minister then proceeded to calculate on. the mileage basis. In the negotiations ho had kept before him all the time'tho cost per rnilo of the Government railways and rolling stock. Li his opinion this had been a most important thing in a transaction of this kind. The average cost of tho Government railways was higher on ccrtain. sections . than ,the. Manawatu line, - but at the same .time, in stating an average, he thought they had paid the company upon a fair basis. Ho thought they had done a fair thing at tho samo time to the company. Arbitration Avoidad. ' Ho thought it had been advisablo to avoid arbitration. (Mr. Izard: Hear, hear.) There would liavo been introduced all' sorts of probloms, and perfectly legitimately by tho company, such as items of interest, tho cost of preliminary expenses, ratos and taxes to local , bodies, etc., and it would have been difficult to have foretold tho result and the delay. Therefore 'he thought the best thing had been dono. for tho country, and also for tho oompany and' the shareholders. The Primo Minister then showed that' in calculating tho prospects of the company ill the past, it would be recognised that-a good deal niore would bo expected'of 1 Government control in/the way of facilities : to settlers, improvements, etc;, and • it -' could not bo c'x- ■ pected that an average, profit of £62,000 would bo shown. ; The Full Value. He emphasised that tho shareholders would got the whole of tho purchase money. Nothing would go to intermediaries, agents, or others.All the pogptiatipns|.h,ad'.bcon,.between the ' chairman : ofdirectors and.,,the; Primo Minister. The chairman of directors was a keon business raan, and all. negotiations had been fully gone into. Ho had displayed a spirit of faimoss throughout. Tho Prime Minister mentioned tho invaluable services of. Mr. Hannay. Ho also paid a tribute to tho excellent work dono by Mr. Blow. His assistance had been vory valuable indeed. In conclusion, -the Primo Minister referred to the good pioneering work of those people—few of whom no doubt now remained —who had come forward and risked their money in carrying out a work that the country itself was unable and unwilliug to undertake. He fully believed that the line would become in timo one of the most ■ valuable in the country. (Applause.) ' ; Opposition Criticism. Mr. MASSEY said there, could be little to say after the speech of the Premier, but there was reason for congratulation on the completion of the negotiations. . In expressing pleasuro at the acquisition of tho lino he did not infer that tha management had heen at fault-r-quito the contrary. He paid a high tribute to tho originators of tho line, especially in view of the fact that a Royal Commission had reported against them. The last balance-sheet disclosed a position of groat success, especially -when 7 per cant, was paid last yoar upon tho. capital of tho shareholders, in addition to.paying interest upon the borrowed capital upon the debentures, and paying taxes to tho Government and local bodies. Tho expenditure in proportion to earnings in the caso of tho Manawatu Company was for last year 60.2 por cent., and .in tho case of the Govornmentownbd linos 69.06 per cent—a difference of 9 per cent, in favour, of. tho company. He spoko of tho enthusiasm and efficient sbrvico of tho whole company's staff. Personally, ho would havo preferred arbitration, and ho called attention to tho fact that arbitration was provided for in the Act of 1881. He was not of opinion that because the period of- twonty-ono years had ox pi red tho necessity to arbitrato had expired also. Tho limit-only applied to tho 5 per cent, in the caso of ten yoars, and 7 per cent in tho case of; fourteen years. Ho was not going to quibble, and would not say too much had been paid, neither would ho say that the chairman of directors had. been : too astute \? r A' 10 r ' lno Minister. and his colleagues. Nothing of tho sort; but ho would say that people bandied public money could not bo too careful that they did not lay themselves open to adverse criticism. Ho believed the whole transaction had been satisfactory, and would turn out satisfactory! Congratulations. Mr. IZARD (Wellington North) congratulated the Government and tlio railway conipany upon, the agreement arrived at. Ho desired to put on record tho first provisional directors of the company, whoso names ho procoeded to read. Their -record of enterprise and commercial risk had been a great ono.. He proceeded to refer enthusiastically to what they had done. Ho paid a high tribute to Mr. William Hannay .(general man- * ager of tlio company) arid, Mr. Marchbanks ' (chief ongineer). . Ho was sorry they could not be taken ovor into the Government employ. Question of Goodwill. , Mr. J. ALLEN (Bruce) argued that the purchase could havo been mado in 1901 without paying for tho goodwill. | Sir J. G. Ward: "Wo are not paying for tho, goodwill now." Mr. Allen: "I differ from tho hou. gentleman." ....... , After further remarks, Mr. Allen declared that tho line had somo goodwill,. and theDominion ought to pay some £77,000 for it. Was tho country going,to pay an adequate amount for the goodwill? , , Mr. W. H. FIELD (Otaki) said that a gontloman fully conversant with.tho negotiations that had taken place had told him that tho Primo Ministor had acted with tho utmost fairness and courtesy, and yet had cleaTly determined that tho country should not pay ono pound moro than it ought for tho railway. Ho was informed also that had litigation been resorted to £20,000 would not havo covered, the legal expenses. 110 insisted that tho employees- of the company should havo been allowed to count for superannuation purposes their service-, with tho company as though- it were servieo-with ~tlio ■ Government. The £70,000 included in the loan would not be sufficient for iiaprovoments to the line, aa duplications would bo required in

several places, and a loop-lino would probably bo required aloug tlio slioro to avoid tho Paekakariki Hill. Ho regretted that tho two leading officials were not to join tlio Government Railway Department. If tho gonoral manager of tho company were given a high position in the Government service tlio wholo Dominion would benefit considerably. The loss of rates paid to tho local bodies by tho company would bo a serious ono. Ho bolieved a good bargain for tho country had been mado. The Best Paying Lino. Mr. W. 11. HERRIES (Bay of Plenty) suggested that the' provisional agreement between the Government and the company should be laid oil the table. Ho believed tho country was making a very good bargain, but ho thought that the difference between tho £828,000, which was the company's valuation of tho lino, in its balance-sheet, and the £900,000 which was to bo paid, was really goodwill. The railway was paying bettor than tho Stato railways, and was better supplied with rolling stock, and yet tho price por mile was very little more than tho cost per mile of tho State railways. He hoped the Government would compensato the local bodies for loss of rates on the railway lands. Mr. C. H. POOLE (Auckland West) expressed great satisfaction _ at the arrangements made for tho acquisition of t-ho line. Sir Joseph Ward's Reply. Tlio PRIME MINISTER, replying on the debate, expressed pleasuro at the general unanimity;of tho House in its approval of tho Bill. Mr. Allen was speaking on imperfect information when he said that the Government.was paying 9s. per share more than it would have paid in. 1901. Sinco that'.date £140,000 worth of additional stock and improvpmonts had been added to the concern, and this had the effect of adding nearly £1 per share to tho capital cost of the railway. Mr. Herries, in his argument from the company's balance-sheet, did not tako account of the fact that a portion of the value of tho lino was written off to avoid taxation. Tho Act of 1881 laid it down clearly that the Government must not pay tho company anything for goodwill. Tlio position of the employees as regards superannuation was fully provided for on the lines desired by Mr. Field. Mr. Field: Yes, but what about promotion and classification? Tho Prime Minister said tho Government would take over all the employees, except tho two superior officers, but it -would never do to havo 'tho classification system dislocated, causing unfairness to previous Government officers. The Manawatu employees would be fairly treated. As to the general manager, Mr. Hannay, and tho engineer, tho difficulty Was to find suitable positions for them that would not bo sinecures, such as they as self-respecting men could hardly accept, and yet that would not involve unfairness to officials of tho Department. It was the plain duty of the company to mako proper provision for those two men, who had done such excellent service, and there was no doubt in his mind that tho company would do so. _ Tho reason why tho Manawatu line, had paid better than tho Government railways was that it had been in a very fortunate position. It had received traffic from the Government lines at both ends. Besides, the Manawatu Company had no members of Parliament coming to it asking for expenditure on now branches and hotter services, and other things. > Mr. Aitken: "That's tho wholo thing. You've given it al! away." _ The-Primo Minister argued on familiar lines in favour of State ownership of railways. . ; The second reading of the Bill was carried on' tho • voices. PUBLIC BODIES' LEASES BILL. The MINISTER for LANDS (Hon. R. M'Nab) moved the second reading of tlio Public Bodies' ■ Leases Bill, a summary of which has been published. : The LEADER of tho OPPOSITION (Mr. Massey),- expressed general approval of the Bill, but.toped somo amendments would be mado in committee. After a short discussion, tho second reading was carried. I BILL PASSED. The Agricultural Produce-Sale and Importation Bill was put through its - final stages. INSPECTION OF MACHINERY. Tile Inspection of Machinery Amendment Bill (Hon. J. A. Millar) was committed. On the motion of Mr. Massey, an amendment effecting tho exclusion of machinery driven by hand-or animal power from the Bill was agreed to. . The Governor was empowered by another amendment' to oxempt specified kinds of boilers, as well as machinery, from tho operations of tho principal Act. Section 4, which required repairs to machinery to be notified to tho inspector in the same manner as repairs to boilors, was struck out. ; Slight amendments were mado in later clauses, and tho Bill was reported. The Houso rose at 12.35 a.m.