RAILWAY FINANCE

Evening Post, Volume CIV, Issue 36, 11 August 1927, Page 12

RAILWAY FINANCE

PAYMENT] OR LOSSES

FROM CONSOLIDATED FUND

A. JUSTIFICATION

The new system whereby losses on branch railway lines are compensated for out of the Consolidated Fund, was criticised in the House of Eepresentatives last night by the Eight Hon. Sir Joseph Ward (Invercargill), and subsequently justified by; the Minister of Agriculture.

Sir Joseph Ward said he did not like the system of making contributions from the Consolidated Revenue t- the Kailway Department, and he Was very doubtful if it could continue for long. He would infinitely prefer to see the Government lay down the policy that the railways should not be expected to pay more than 3J per cent. If it was right that the country should subsidise I one Department that was not producing the rate of interest it was apparently i expected to do, then why not apply the same principle to other Departments? At the present time he doubted whether 50. per pent, of the farmers were paying their way, and what better thing could be done for them than to carry what they required at a cheap rate on the railways! That would be an indirect means of increasing the country's production. The railways was one of the most important Departments of State, and it could do an ■ immense amount of good for the country if it was allowed to carry goods and farmers' requirements cheaply. To ask the Department to pay a rate of interest of nearly 4J per cent, was going further than was necessary. The Government used to return to the users of the railways in the shape of concessions whatever -was earned over 3 } or 3J per cent., and the country did not object. He advocated that the same principle should be followed again. DIFFICULTIES OF MOTOR COMPETITION.

The Minister of Agriculture (the Hon. O. J. Hawken)) observed "that while a good many people would say it was purely a matter of book-keeping, there were good reasons why the Railway Department should not be called

upon to pay out of its revenue for lines which were not paying. Very few peopla appreciated the enormous difficulty the Department had been faced with in recent years in. the mattor of motor competition, which practically

was non-existent „ „ before the war. If the Government had known at that time now things would develop a good many miles of railway in New Zealand would never have been built. Lines had been built, in the South Island principally to enable the farmers' wheat to be conveyed to the market, but the farmers now found it more profitable to crow other produce, and the lines were practically useless. Was it fair that a Department which had been placed on a business footing should be asked to pay £°if ■"? T ? t. was Poetically a dead horses The Minister said he believed it was far better to give the Department something to fight for, to expect it to pay a certain rate of interest, and give some incentive for.it to make the railways pay up to that point. In the face of motor competition it was impossible for the department to make its operations pay. If it were expected to pay, it would continually present a debit balance + which would have to be paid out of the Consolidated Revenue It was not only the Bailway Department that had been called upon to put its busness on a reasonable footing. He instanced the Agricultural Department, which had been charged last year with £.20,000 for the carriage of manures on the railways, and £30,000 for the carriage of hme. Mr. Hawken said he believed that was the correct system. It was difficult to argue that the railways should lower their freight rates. The Department needed all the encouragement possible to enable it to carry on the fight and not lose too much of the country's money.