Evening Post. TUESDAY, SEPTEMBER 12, 1911. WHAT DO THE RAILWAYS PAY?

Evening Post, Volume LXXXII, Issue 63, 12 September 1911, Page 6

Evening Post. TUESDAY, SEPTEMBER 12, 1911. WHAT DO THE RAILWAYS PAY?

True to Saturday's promise, The Post ie making an attempt to-day to translate some of the intricacies of the Railways Statement into language which tho owners of the enterprise may under* stand without an expert knowledge of accountancy, political or non-political. W« confess, without shame, our inability to make straight and clear the *p&th for the public from the "M*. ■Speaker" at the beginning to tlte "by authority" of the Government Printer at the end. Between the Budget of Sir Joseph. Wavd and the Railways State* ment of the Hon. J. A. Millar even th« coolest investigator may encounter things to Taise his tempe^ture. Sir Joseph, under the heading of "gtoSfr debt," puts , .the railways down at £25,602,948, and this is tho amount on which, according to Sir Joseph, the enterprise earns interest. In another table of the Budget Sir Joseph, regarding the railways from the asset view point, writes up £51,509,960. This ie, in fact, the capital coet of opened and, unopened lines, and tallies exactly with the line in Mr, Millar's statement, but the Minister of Railways differs bewild'et' iflgly from his chief in mentioning that the capital cost of open or interest' earning lines is £29,606,546, and the net revenue for the year is set forth as " a l>efcurn of 4.G6 per cent, on the capital invested in the open lin««." After vainly trying to solve this pu22le, the enquirer may find rest in a change of occupation. He can endeavour to reconcile the Budget with the Statement in relation to the estimates of incrcsed expenditure. Mr. Millar anticipates that the "extras" will absorb £72,000, but Sir Joseph Ward provide* for a " gross increase " of £95,000 in wages alone (£60,000 according to scale and £35,000 in addition^ to scale). These apparent discrepancies call for some ex- j planation. Mr. Milla?* says in one part, that the "net revenue" for the year ia 4.06 per cent, on £29,606 A si6, and a little further on this "net revenue" of 4.06 per cent, is promoted to the grade of "net profit," which it is not. • The payment of interest (averaging over 3 per cent.) has I to be deducted before pit>fit can bo claimed. <Mr. MillaT's entry of "working expenses, £2,303,272" is a little mis* leading, for some additions have to be made by way of the difference between liabilities outstanding on 3lst March, 1911, and 31st March, 1810 (an item of £14,242), and a difference between stores in hand for the same dates, a matter of £20 2 596 against the Minister. Thus the actual expenditure sla-nds at £2,338,110, and this reduces the net revenue (not net profit) to £3 18s per cent, on open lines. Moreover, a sum of £113,400 was spent on deviations without writing anything off for the value of the line? and other equipment replaced. Assuming that a sum of only £30,000 should have been charged to working expenses on that account, the real net revenue comes out at £1,106,--000, equal to £3 15s per cent., from which the interest charge" on the whole outlay has to be met, This question of disbursement on deviations and track renewals generally should draw some shrewd questions from members during the debate on the Budget. With such maintenance as is charged to revenue, the New Zealand rate last year was £254 per mite, against £187 in Victoria, £193 in New South Wales, £125 in Queensland, £140 in South Australia, £166 in Natal, £110 in Y^esEeVn Ausj tralia, and £135 itt Tasmania. Even granting that New Zealand may have j more than the average share of bridges, I buildings, and other things to maintain, the difference is one to arouse curiosity. Yefc with this high charge of £254 a j mile, Ills amount actually chargeable may not be fully stated. Some track renewals 'are set against revenue, but deviations .^ecm to be wholly charged to capital. For example, the new Hufct railway is wholly dono out oi cvpitalj I and thus the undertaking has to pay interest on the cost of the new work plus the bill for the old one. It would be fair U> charge to Capital the differ ence between tho two sums, but surely sotihd' finance tequif.es that some portion of plant replaced should be meb out of revenue. To take a typical example, for purpose of argument we assume that the Government/ has a mile of railway, at a cost of £5000, between two, points A and B. If the line is gradually replaced, fail by rail, without changing the foute, the renewal is charged to revenue. If there is a deviation, at an expenditure of £5000, ths cost seems to be wholly charged to capital. Thus the mile of railway is asked to pay interest on £10,000. There is £5000 of "dead stuff" for which the. new livo fine has to pay interest. How much dead and buried material figures among ths £29,606,546 of opened lines? Revenue can be increased by a stroke of the pen as it was in 1909 when' the long distance fares wore increased. Therefore things charged in percentages to revenue aro apt to mislead. The real test of a Minister's work lies along ihe line of actual working expenses. Last year the revenue improved, but "ordinary passengers" (who may be taken to account for nearly 90 per cent, ot the total passenger revenue) showed a surprisingly small increase (only 69,471 wmk ,£&ss j& •&• wssssm war*

700,428 for 1909. 155,930 fov 1908, and 774,404 for 1907). The extra charge for fares no doubt filliped the revenue. Comparing Mr. Millar's kteet figuree with" those for the last year. 1908, of hie predecessor, Sir William Hall-Jones, we find the following increases : Total of ordinary passengers, 15 per cent. ; total passenger revenue, 30 per cent. ; total goods tonnage, 16 per cent. ; goods revenue 24 per cent. ; total expenditure (adjusted), 20 per cent. The locomotive cost per train mile has increased from 24.96 d to 25.81 d (3.4 per cent.), and the traffic cost from 18.20 dto 18.61 d (2.3 per cent). Tile maintenance rate per mile has declined from £258 to £254, but against this advantage for Mr. Millar must be put a proportional decrease in the item of track renewals. Excluding this item the maintenance of this last year of Mr. Millar'e regime is £184 against £174 in 1908 (an increase of 5.7 per cent.) Mr. Millar may claim that an improved scale in the wages and salaries account explains the difference, and against this comes the present outcry in the service. The resignations from the permanent staff last year totalled 413, against 266 for the previous year, and, curiously supporting arguments advanced by the Railway Officers' Advocate, the number of fatalities, on the railways rose from 25 to 35. We do not ptees the coincidence, for We have not sufficient evidence. We believe that we have ehown. enough from a series of Railways Statements to indicate to memIbers of Parliament that th^s great undertaking neede some close watching. We have noticed, by the way, that 'in one table, setting out various glittering increases betweea th» yeai* 16D5 and 1911, the Minister has omitted to include one important item. H© ha© not forgotten "total revenue, 204 per cent.," but there was no room, apparently, at the bottom of the list for— expenditure, increase, 310 per cent. Mr. Millar be* gan with good intentions, but he has yet much to do before he can claim all the praise which he set out to earn three years ago.