The Dominion THURSDAY, OCTOBER 3, 1929. RAILWAY LOSSES—PRESENT AND FUTURE

Dominion, Volume 23, Issue 7, 3 October 1929, Page 10

The Dominion THURSDAY, OCTOBER 3, 1929. RAILWAY LOSSES—PRESENT AND FUTURE

The Railways Statement presented in the House of Representatives yesterday may be looked at from a great many angle* It is inevitable, however, even if it is not quite fair to the General Manager, that the final judgment will be taken on the question of finance.

On this money-test the deficit on the year’s working is £432,743. to which has to be added the credit allowed from the Consolidated Fund for developmental lines, £498,937, giving a total on the wrong side of the ledger of £931,680 or almost one million sterling. Compared with the previous year, the loss has increased by £141.-9 . and the deficit for the two years combined exceeds £1,700,000. . These facts clearly proclaim the need of a careful stock-taking of railways policy. A significant sentence appears ear y m t Minister’s Statement. , Speaking of the increased loss on the year working, he remarks that “this increase is principally due to the unprofitable nature of the new lines taken over during the year, the revenue from which was insufficient to pay working expenses, thus leaving no margin for interest charges. ’ Despite this experience there is no declaration against the construction of further new lines, which also on the known facts are certain to prove unprofitable. in operation. Far from heeding the plain warning of past experience, the Government is instead proceeding on an expensive programme of new construction, including such questionable enterprises as the South Island Main Trunk and the Nelson-Inangahua and Gisborne-Wairoa sections. These new works which, on completion, will be hung hke a millstone round the Department’s neck, are discreetly ignored. ihc Minister confines himself to the adoption in toto of the railway policy outlined in Sir Joseph Ward’s Budget. In the forefront of that policy Mr. Taverner places “the determination of respective spheres of railways and road transport. He adds that the first step, as it appears to him, clearly is so to regulate the transport industry that the true value of each method of transport can be made clear. z This sounds very well, but unfortunately the first step decided on by the Government is further new construction. It has been uro-ed in these columns and elsewhere that before further new railway works are undertaken there should be full investigation of the whole question, but the Prime Minister has denounced the suggestion Yet the trend in recent years of our working railways has been steadi y retrograde, as the following figures taken from the official statement

•Surplus. The most superficial examination of the above table emphasises beyond cavil the unfavourable trend of railways finance. The additional mileage opened has added disproportionately to the capital cost And with nine millions more capital expended the net earnings last year were £lOO,OOO less than in 1926, and a small nominal surplus has been transformed into a real and substantial deficit of £432,000. Allowing for subsidies the loss has grown since 1926 from £ZBO,OUU to £93f000. The. Government’s answer to these facts is to launch out foolhardily on an accelerated programme of new construction. Not because the experts say that these new lines will retrieve the national railway fortune, but because Sir Joseph Ward says so. Surely if the railways make a heavy loss on lines which cost at an average £17,210, or even £15,172 per mile, it is fairly obvious that the loss will be greatly increased when further lengths are added at a cost of £30,000 a mile (South Island Main Trunk), at £40,000 a mile (Nelson-Inangahua), or even at £21,000 a mile (Gisborne-Wairoa) ? In ordinary business we know what would be said of a man who was guilty of the irresponsibility of voluntarily adding more liabilities to an already over-loaded balance-sheet. And as shareholders in the national railways, the people of the Dominion have grave reason for concern over the irresponsibility of the Prime Minister’s railway construction programme. Mr. Taverner should be the first to protest on behalf of a Department shortly to be presented with more dead horses to flog, but we can appreciate his difficulty in the matter of running counter to his chief. The country will agree with Mr. Taverner when he says : “I do not think it wise at the present time to make any final decision as to what might’ be done some years ahead, principally for the reason that the railway position is in such a state of flux as „may make a decision to-day more or less valueless in a few. years..”. That is a point of view that must be impressed on the Prime Minister. New railways construction must be stopped until the “state of flux” is passed, and New Zealand is better able to decide, on the evidence of experts and not on the word of a politician, whether any new railways should be built and, if so, where they shall be built.

show: 1029. 1928. 1927. 1926. Mlles open for traffic Capital cost Capital cost per mile Net earnings Interest charges .... q 987 £17,210 £1,898,592 £2,331,335 £432,743 3,180 £51,187,376 £16,097 £1,839,415 £2,130,867 £291,452 3,164 £49,183,916 £15,545 £1,943,774 £2,043,438 £99,659 ■ 3,138 £47,608,676 £15,172 £1,992,334 £1,913,311 ’£79,023 Deficit with subsidy £931,680 78.30 p.c. 3.45 p.c. £781,020 £544,880 £280,517 Expenses to earnings Earnings to capital. 78.42 p.c. 3.64 p.c. 70.95 p.c. 3.99 p.c. 76.45 p.c. 4.35 p.C.