RADIO EQUIPMENT

Dominion, Volume 26, Issue 30, 29 October 1932, Page 11

RADIO EQUIPMENT

Purchase by the State BASIS OF AWARD Department and Company JUDGE BLAIR’S REVIEW One ot the main considerations which influenced Mr. Justice Blair to award £58,646 to the Radio Broadcasting Company as the price at which the Government should take over its plant was the fact that the Crown was not an untrammelled' buyer free to search the world for the latest in transmitting equipment. It had agreed to buy the very plant the company was using. This statement is contained in . a lengthy statement by Mr. Justice Blair, who was appointed arbitrator between the Government and the company, and which was tabled in the House of Representatives yesterday, together with a statement by the Post-master-General, Hon. A. Hamilton, on the settlement signed on September 9. It was revealed that the company’s valuation of its plant was £55,812, the Government’s valuation being £27,353. The company’s agreement expired on December 31 last. Arbitration proceedings started just before Christmas and ended on February 6. Mr. Hamilton says in his statement that incidental to the purchase of the plant and apparatus from the Radio Broadcasting Company, it was necessary to pay the company the sum of £5OOO, representing interest on the amount of fees collected on behalf of the company and held by the Post and Telegraph Department in the broadcasting fund. The new agreement with the board provides for payment by the department of fivesixths (that is, 25/- per annum) of the fees received from listeners. Of the balance of the annual fee (30/-). 3/per annum is paid by the department, for patent rights to Amalgamated Wireless (Australasia), Ltd. Plant Depreciation. “Upon the question of the factors to be considered in the question of depreciation there was difference between the point of view of the Crown and that of the company as to what were to be considered as constituting depreciation,” Mr. Justice Blair said. “The company did not dispute that wear and tear, age, or obsoleteness were factors which properly came into consideration. The Crown, so far as the broadcasting plant was concerned, claimed that the factor designated as ‘obsolescence’ must also be considered. .... “If the Crown’s contention be sound, then the purchaser of the stock-in-trade of a vendor of perishable goods—say, meat or butter—could say that as the stock would perish in a matter of day# or weeks the true market value of the goods at the moment of sale must be depreciated because of this quality of ‘obsolescence’ inherent in the goods themselves. This quality of ‘obsolescence’ cannot to my mind be divorced from and separately assessed from the market price, as the Crown has claimed to be able to do.

“It is a taint inherent in all evanes, cent goods, and, as such, affects thd market price itself, but cannot be sn« persubstracted from the market price as a further depreciating factor separate and distinct from the market price. I therefore reject the contention of the Crown that special depreciation must be assessed in respect of the quality of ‘obsolescence’ inherent in all broadcasting equipment. . . . “This plant to-day,” continued his Honour, “is worth the market price of such an equipment if purchased new to-day in competiton with later, better designed, and more efficient plants, but, subject to the additional deduction due to the fact that the company’s plant ds (not new, but is second-hand.” Although the company’s plant had been in use for four years or so, it was today just as efficient as when it was new. And given, reasonable maintenance and renewals fr ocertain wearing parts such as valves, generator bearings, commutators, and the like, the plant had mere.or less indefinite life. I mtay be said that having been in constant use for three or four years, any hidden defects in faoture had now had tune to disclose themselves and be corrected. Lade of Practical Work. The experts for the department were handicapped by the. fact that they had had little experience in the practical work of broadcasting, and their evrience was in the main theoretical and derived from study rather than practice. The expert for the company, Mr. Bingham, in addition to theoretical knowledge, had behind him the valuable practical experience of supervising the company’s operations for about five years. This officer was bein taken over by the department and_Hs evidence was given . with the utmost frankness and sincerity, and, empire ment wflh the company being terminated he had no possible interest m being other than fair to the department, which was now his employer. . “Indeed, it might be said that as. ne will be in charge of the plant and resnonsible for its satisfactory functioning, his intJres? would be to point rather to its weaknesses than its strength. . . - Future Developments. “The department’s officers all expressed the view that 60 per cent, depreciation should be allowed, but.once the theorv of obsolescence is rejected the whole basis of the Crown’s case is gone, and they do not help me by any alternative. A great deal of eyi dence tendered by the Crown dealt with the question of obsolescence, and with speculation as to the possibilities of future developments in the art of broadcasting. ... “If the department had gone into the best markets in the world for the purpose of getting equipment equivalent in power to that used at the company’s stations, it would have been compelled to buy a plant similar in design to that used by the company, but with certain modem refinements. “If in a year or two such advances were made in the art of broadcasting as made that plant obsolete, this would not have affected the price the department would have had to pay on January 1 last for the latest system in vogue on that date. The company does not dispute that its plant should to some extent be depreciated in price by reason of the partial obsoleteness of portions of the plant, and by reason of some slight ageing or wear-and-tear in the plant. The company for income-tax purposes and possibly for the purpose of making generous provision for depreciation. made an allowance for depreciation of 10 per cent, per annum. This. is pointed at by the Crown as indicating whjit should be allowed for depreciation. Tne company contends that physical deterioration of the plant is negligible, and that any deterioration in value due .to advances in the art is very small.