RAILWAY LOSSES

Dominion, Volume 32, Issue 236, 4 July 1939, Page 8

RAILWAY LOSSES

It was hardly to be expected, perhaps, that much would be said at the opening of the Napier-Wairoa section of railway on the. subject of costs and losses. Two Ministers spoke with proper enthusiasm of the boon the railway would be to the district, and the local residents, naturally, were enthusiastic, too. So far as the country as a whole is concerned, however, there is, unfortunately, little room for doubt that this railway will prove another continuing annual loss in working and a further burden on taxpayers. In 1932, when the economic depression forced the country to curtail expenditure and concentrate on essentials, the Railway Board presented a report condemning further construction work on the East Coast railway and various branch lines, on the ground that they were uneconomic propositions, and in operation would show a heavy loss. Refer - ring to the East Coast line in particular, the board considered that the prospect of obtaining from goods and passenger traffic any. very substantial return on the money invested was “highly speculative. Assuming that the line could produce a result equal to that produced by the main North Island lines, the estimated annual loss when it was completed was set down at £195,037. This estimate was based on the fact that the total amount expended on the line, to March 31, 1931, was £3,400,842. The additional cost to complete was estimated at £1,526,663, bringing the grand total to £4,927,505. By March 31, 1938, however, the total expenditure had already swelled to £4,690,277, and if the amount spent during 1937-38, £509,800, is any criterion of the expenditure for 1938-39, it would not be surprising to find, when the figures are presented to Parliament, that the £5,000,000 mark has been passed, and that with a section of 35 miles still to be completed.

Whether railways should be run as business propositions, paying their way, or as public utilities conducted regardless of loss, is a question on which Government policies in the past have vacillated from one side to the other. The present Government’s policy is to push on with railway construction regardless of expense, and without due consideration being given to the prospect of making those lines pay their way. This policy is simply piling up losses for the future. It places upon the national railway system a burden that no undertaking designed to provide efficient service at a reasonable cost can possibly carry without making heavy demands upon the pockets of the public as taxpayers. At the present time nearly £2,000,000 is required in taxation each year to make up for the losses incurred by our railways.