MAKING RAILWAYS PAY

Dominion, Volume 29, Issue 199, 20 May 1936, Page 12

MAKING RAILWAYS PAY

Heavy Capitalisation SEPARATING SERVICE FROM DEVELOPMENT A suggestion that the capitalisation of the railways should be altered to provide for recognition of both developmental and commercial considerations was made by the Rt. Hon. J. G. Coates (Opposition, Kaipara) during, the second reading debate on the Transport Licensing Amendment Bill in the House of Representatives last night. “The abolition of road services cannot make the railways a paying proposition.” Mr. Coates said. “If the only objective of the Government is to make the railways pay, far more honest methods could be followed. The Government admits that, the railways are partly developmental in character and partly a commercial enterprise. With a capital cost of £54,000,000, it should be possible to fix a figure, say. £25,000.000, representing developmental expenditure, and to lay if down that the balance of £29.000,000 should be the operating capital. “The sum representing development could be put aside in a separate account and Interest paid on it out of taxation or other revenue. The railways could then he charged with the duty of earning their profit only on the"operating capital. The proportion I have fixed is only for the purposes of argument. The exact balance as between developmental and commercial capital would have to be determined.” It was no use.asking the railways to earn a profit on £54,000,000, Mr. Coates added. Even a financial wizard would find the task impossible. It would be far more honest to separate the capitalisation into developmental and commercial accounts.