The Dominion MONDAY, AUGUST 31, 1931. DRIFT OF RAILWAYS FINANCE

Dominion, Volume 24, Issue 287, 31 August 1931, Page 8

The Dominion MONDAY, AUGUST 31, 1931. DRIFT OF RAILWAYS FINANCE

In the rush of events last week the position disclosed by the Railways Statement did mot receive the attention, which its important influence on the Budget warrants. The drift in railways nancc 1S at once a symptom of and contributor to the larger national problem. The failure of the system to return reasonable interest on the capital invested in it accounts in large measure for the budgetary deficit last year and for the extra’ taxation imposed this year to make up i-s deficiencies. > '■ . . . If last year's results be taken, for instance, the statement remarks that “the net earnings totalled £688,727, which deducted from the total interest charge of £2,255,345, leaves a deficit on the year s operations of £1,566,618, an increase of £355,349 compared with the figures for the previous year.” The shortage is almost equal to the total budgetary deficit of £1,639,000 and even so theAnterestchargc is made on the capital cost of opened lines only, less written off two years ago. The total charge thrown on the Consolidated Fund by the railways is therefore greater than is shown. It would be unfair, however, to pass on without acknowledging the substantial saving in operating expenses made by the Minister and General Manager last financial year. Since the railways were still under political control, it was an achievement to reduce expenditure by the sum of £476,000. At the same time, owing to circumstances largely beyond the department’s control, revenue decreased by. a greater amount, £716,000, with the result that another instalment of the sorry story of the drift in railways finance had to be written. This retrograde movement can be best appreciated by a study of the following table showing results in the last five years:— 1931. 1930. 1929. 1928. 192 T. £"£ £ £ £ Net earnings .. 688,727 921,055 1,898,592 1,839,415 1,948,774 Interest charges 2,255,345 2,132,324 2,381,385 2,130,867 2,048,483 Deficit 1,566,618 1,211,269 432,743 291,452 99,659 Percentage, earn- „„„ ings to capital 1.16 p.c. 1.61 p.c. 3.45 p.c. 3.64 p.c. 8.99 p.c. The figures show clearly that the railways were on the down grade financially before they were hit by the depression and also demonstrate what a desperate task faces the new directorate. No one expects now that the system can be made to pay its way but the country does look to the board to make the best of a bad job so that some of the weight may be lifted from the taxpayers’ shoulders. Actually the Finance Minister expects to receive £930,000 from the department this year, or £240,000 more than last year, but even if that result .is achieved, a huge interest bill will still have to be met out &f taxation. According to the Railways Statement, the capital cost of open and unopened lines on March 3T was £68,679,000.' •, Interest on .that sum at 4 per cent, would be £2,747,000 but the Finance Minister expects to collect only £930,000. The difference, £1,800,000, exactly ’ corresponds to the new taxation imposed in this year’s Budget. To put the position in that way is to ignore several important factors and’ is quite unfair to the Railways -Department, but it does show the crushing load placed on the country by political railways. - With such a result open for anyone to see, it seems incredible that the politicians should be willing to add to the incubus by laying new burdens upon the old. Yet it is so. A fresh loan has been raised at a cost to the Dominion of £6/1/3 per cent, to build new lines when the old ones, serving, the most populous, richest and most productive districts are returning, interest at the rate of’only 1.16 per cent., and that on written-down capital. , It is an impossible proceeding and should be stopped at once., ‘