STATE IN BUSINESS

Evening Post, Volume CVI, Issue 51, 7 September 1928, Page 8

STATE IN BUSINESS

CUTTING. RATES

AT TAXPAYERS' EXPENSE

(Nineteen Twenty-eight Committee.) A littlo while ago tho now General Manager of tho Railway Department proclaimed to an interested public that the- Dominion railways wore being run "for service, not for profit." Only a few weeks before the Prime Minister hail made- it known in tho course of an interview that tho railways were "now being run on business lines." These two statements are not necessarily irreconcilable, as service- may mean profit and business lines may mean either service or profit or both of them. It seems' desirable, however, that the Prime Minister, who in hia capacity of Minister of Railways remains supremo head of the Department, should make the position a littlo clearer than it is at tho present time. If the General Manager meant to say the railways should be run with the two objects of giving tho best possible service to tho public and paying their own way, no reasonable- exception can bo taken to his view of the situatioii. This also may be tho Prime Minister's conception of running the railways on business lines. But there aro business linos and business lines, and some of those practised by tho Railway . Department appear to go a little beyond fair competition. A CASE IN POINT. Tho relations between the Department and the Northern Steamship Company constituto a caso in point. Tho company for many years lias maintained an admirable service between Auckland and tho numerous settlements lying along tho Bast Coast from Doubtless Bay in the north 'to "the- Bay of Plenty in the south, thus "making occupation and production along the northern peninsula possible much earlier than it otherwise. would have been. Until five or six years ago the company was allowed to carry on its business without any irksome interference from the Railway Department or any other State Department; but, following upon various pin-pricks of a minor character, in 1D24 the railway authorities discontinued running trains in connection with the company's steamers with the obvious purpose of compelling travellers, wherever possible, to make use of the railway instead of tho company's boats. Then goods carried by the company's boats and railed from the shi A 's side were charged "A" rates whether they belonged to that class or to any lower class, as they frequently did. The Department refused to tally or give receipts for cargo transferred from the steamers to the railway at Onorahi and Opua, and all risks remained with tho company. Incidentally the lighting dues on tho company's steamers were raised in 1924 from £669 per annum to £1671, an increase of 139 per cent. AT ANY PRICE. , The main effort of the Railway Department to drive tho company out of business, however, took' tho shape of a huge cut in freight rates. To fully appreciate the magnitude 'of this cut it is necessary to glance at a map showing the railway systems of the Auckland Province. The distance between Auckland City and Thames by rail is 143 miles and by sea between fifty and sixty miles: In order to onst tho company from this trade the Department reduced its'"A" class freight rate from 85s 10' d per ton to 25s per ton, and its other class rates, standing at 69s 4a, 55s'0d,' and1 45s 6d, to the same- figure. This was not merely rail carriage attempting to compete against water carriage' over an equal distance. It was rail carriage attempting to achieve the impossible three times over. Yet the Department' made similar reductions in all classes of- freight be- ; tween ports served by the company's steamers. Its "A" rate between Auckland and Waihi (141 miles) was reduced from 83s sd-to 355; between Auckland and Paeroa (128 miles) from 7Ss lOd to 255,' and between Auckland and Te Aroha (115 miles) from 74s 4d to 355. Needless to say the Department cannot make these huge reductions without suffering a corresponding loss. Every freight carried across the rails means an additional demand upon the taxpayer. THE COMPANY ASKS NO FAVOUBS. The Stamship Company, in the protest it has made against tho Railway Department's efforts to cripple its long-established business, emphasises the fact that it does'not seek to securo a monopoly for itself. "We do not object to railway competition," its spokesman states, "so long as it is subject to tho same trading conditions as private enterprise. More than this, wo grant that a policy of differential rates to moot effective competition-is a generally recognised weapon by railway concerns all over the world. But it is a weapon that can be justly employed only by private carrying concerns. These concerns can- go no further than their resonrces, or their common-sense, permit. The New Zealand Railway Department, on tho other hand, can dip its fingers into tho pockets of the taxpayers as deepjy as it pleases, even into the pocket of th© company it is striving to pull down, and all public decency and national honesty must revolt against such a proceeding." Tho contention on its face is perfectly sound. If the Railway Department has set its heart upon acquiring the property aud good-will- of the Northern Steamship Company there is a perfectly legitimate course of proeeduro by which it might satisfy its longing, probaTjly at a smaller cost than would be involved in driving the company out of business by a reckless expenditure of the public's money.