THE RAILWAYS DEFENCE.

Evening Post, Volume LXXVI, Issue 107, 2 November 1908, Page 6

THE RAILWAYS DEFENCE.

It is the experience of politicians that many people may be led by the ears, and that statements and opinions in direct opposition to facts will be accepted by a large section of the public if only they are shouted long enough and vehemently enough. It is apparently in conformity with this policy that we find the Minister for Railways and Mr. C. H. Izard, as a dutiful supporter of the Govern.ment, reiterating the defence of the administration of the Government railways, which every year is adding certainly not less than £400,000, and probably a great deal more, to the enormous public debt of the country. How much more than £400,000 the railways lose "'every year' through wasteful political" management cannot be shown clearly, . because no adequate statement of the Loan Account is ever given to Parliament or the public; and the AuditorGeneral, whose function it should be to ensure a plain presentation of the Government .accounts, and to furnish an independent criticism of the manner in which those: accounts are managed, has been reduced to the impotence of. a mere checker of additions and certificator of bookkeepers' balances. The Minister for Railways fails in his clear duty •by failing to supply annually a full statement of the sum*, borrowed for the construction of the railways, together with the interest paid from the general revenue upon each loan, and the loss to the general revenue by the flotation of loans below yar. The full account is suppressed or covered up as the State Coal Mines Account is covered up by the Minister for Mines— with the connivance of the Liberal Party in Parliament, of course— so that the precise loss on the Seddonville mine is unascertainable. Consequently no one can find out what the railways have actually cost, or what is the exact yearly Toss. in interest that ha-) to be paid by the general revenue from taxation — or borrowed in the old convenient way. It is known, at least, that the average interest now paid on the New Zealand public debt is not less than 3f per cent., though if the losses on loan flotation 'were added the cost of the money has probably been nearer 4 per cent. However, taking the interest on the railways debt at only 3§ per cent., in order to give the Administration every advantage, here are the figures, drawn from the official statement, showing the loss on working the railways during the year 1907-8 : — N.Z. RAILWAYS LOSS FOR IDO7-8. Total earnings for 1907-8... £2,761,038 Working expenditure ... £2,283,145 Interest expenditure ... £001,245 ■• £8,184,330 Net loss for 1907-8 £422,452 This is the minimum estimate of loss for one year only, based on the official figures. What the real loss is, possibly the Minister does not know himself ; and the public cannot ascertain because the information relating to it is smothered. Of course, the Minister does not admit this loss in so many words and figures. On the contrary, the ac-' count is cooked for Parliament in the Railways Statement so that a casual reader might imagine, that there is even a profit. The "net profit' on working," say_s the Minister in the first paragraph

of the Railways Statement was, " £812,179." The Minister would explain that this is a "working" profit only, and that, "of course," the interest charge is J 1 understood." Nevertheless, the presentation is misleading. Nor does the Minister show the railways loss in the way in which it, is shown above. The loss is manipulated. The sum of £333,386, representing ordinary working expenditure, is taken out of th© working account and charged to loans. In other words, in order to make good the railways loss to the extent of £333,386, that amount is borrowed and added to the public debt of the country. The balance of loss, representing the failure of the railways revenue to meet the interest which has to be paid on the railways) debt, is transferred to the Treasury general account, and is there met either out of the general revenue or by borrowing. This loss has boen going on regularly for years— it is doubtful if tho railways ever made a real profit in a single year since the Government has handled them; and in recent years the loss has been increasing. Owing entirely to extravagant political management, and although goods and passengers have been carried at such a high rate that the revenue in proportion to services has been much tho greatest in Australasia, the ratio of working expenses to earnings reached last year the monstrous 'figure of 70£ per cent. That means that it cost the railways' £7 in expenses for every £10 of their earnings. This is the Minister's own estimate. But as the Minister has lessened the real figures of his working expenditure by putting £333,386 to capital account — or, in other words, by borrowing that • sum in order to make good his working losses— it really costs the railways £8 for every £10 they earn. The Wellington-Manawatu Railway last year showed a ratio of working expenses to earnings of 61 per cent. ; that is, the Wellington-Manawatu Railway paid only something over £6 for every £10 of revenue ; and in that difference between private management and political management is seen the nature of the public loss. The scale of expenditure which causes the Government railways loss is really so monumentally wasteful that the Government scarcely attempts to defend it. The number of men who have beej) jobbed into political billets on the railways, even where traffic is decreasing, is really so abnormal that the wisest plan is to say nothing about it. Consequently the Government talks always about the great concessions in cheap fares and freights made to railwayusers. The answer to this is, that the railway-users nevertheless ' pay higher fares and freights in proportion to the services given them than railway-users in Australia do; and yet Australian railways, managed by Commissioners, show a large annual profit, while New Zealand railways, managed by and for the Government, show a huge annual loss. The Minister for Railways is now taking fresh ground, and pointing out how many miles of line have been relaid, and so on. It does not appear whether the whole of this re-laying was really necessary at the present time; or 'whether some, of it was done in order io keep up' the mana of the railways as' a political relief works. In any case, the old rails earned revenue, , and the Minister has spent the revenue ; and, if he cannot manage the railways as a going concern so that his revenue will replace his outworn stock and fixtures, then any shopkeeper can tell him that his business is steadily drifting towards insolvency.