THE RAILWAYS

Evening Post, Volume CVI, Issue 53, 11 September 1928, Page 7

THE RAILWAYS

YEAR'S RESULTS PASSENGERS DECLINE EFFECT OF COMPETITION The Bail-way Statement presented to Parliament by the Minister of Railways (the Eight Hon. J. G. Coatcs) shows an increase in tho rovenue last year by £89,88-1 on that of the previous year, but expenditure) also . increased by £ 194,243. The gross revenue from all' sources was £8,524,535, whilst the expenditure was £0,685,123. The net earnings therefore amounted to £1,839,415, or £111,360 better than anticipated in tho forecast given last year. The net revenue amounted to £1,839,415, as compared with £1,943,774 last year, a decrease of £104,359. Interest charges increased from £2,043,433 to £2,130,867, or by £87,434. DEVELOPMENTAL LINES. Included in the gross revenue is £459,568 credited in respect of developmental lines, a sum which is higher by £44,347 than the corresponding amount for the previous year. A sum to cover accrued depreciation and provision for renewals, amounting to £615,674, was debited during the year to working expenses. Against this there was an expenditure of £321,542 for assets written off or renewals effected during the year. Tho net iuereaso in the renewals and depreciation fund was therefore £294,132, the total amount standing at credit of the fund at the close of the year being £930,870. Interest charges increased from £2,----043,433 to £2,130,867, or by £87,434. Of this increase, new lines taken over during the year accounted for £11,608, while the balance was duo to improvement works and the provision of additional rolling stock. The interest burden on improvement works under construction was particularly high this year, amounting to £75,000. This amount is charged to working expenses. The revenue from passenger traffic decreased by £158,884, or by 7 per cent., tho principal contributing factors being the heavy bookings incidental to tho tour of our Royal visitors, T.R.H. the Duke and Duchess of York, in tho previous year, tho competition of road motor services, the increase in. the number of private motor-cars, and tho trade depression through which the country has been passing. Unfortunately, it has not boon possible to reduce expenditure on passenger services in kecpink with tho very heavy shrinkage in revenue, but, on tho contrary, it has been necessary to provido more attractive services at higher cost in the endeavour to retain existing business. This is borne out by tho fact that the rovenuo per passenger-train mile decreased by nearly 11 per cent. It is noteworthy that low-rato suburban season-ticket traffic shows an increase of more than 5 per cent, with a corresponding increase in the peak load for which accomnvodation must be provided. This is an important aspect of the railway business when its financial returns arc being considered, ivnd is further commented on later in this statement. COMPLETING ROAD SERVICES. Freight revenue increased by £83,----969, or approximately 2 per cent. Substantial increases in live-stock, grain, frozen meat, dairy produce, wool, nativo coal, motor-spirit, cement, and manures were to some extent offset by a decrease in timber and road-metal. It is unfortunately a fact, however, that owing to the operations of competition by road services tho railways are not securing the full benefit of the increased primary production in tho Dominion. On the expenditure side tho principal increases occurred in maintenance of permanent-way and signals £74,----743) and maintenance of rolling stock (£77,283). Tho increase in perman-ent-way expenditure is duo partly to tho greater average mileage of track maintained (twenty-one miles) and the necessity for improving tho condition of tracks and bridges to carry a greater volume of high-speed traffic, and heavier axle-loads. The increased cost of maintaining rolling stock is attributable largely to the higher overhead charges arising out of the workshops reorganisation, on which heavy expenditure (that is not yet reproductive) has been incurred. This is a transitory circumstance which will automatically right itself when the reorganisation is complete and tho assets represented by the old workshops have been realised upon. The greater number of dwellings pro\*ided for the railway staff was responsible for an increase of £24,717 in expenditure, while additional road motor services account for an increase of £23,877, including full provision for interest, depreciation, and maintenance. During the year the Dumber ot men employed was considerably in excess of requirements, but as a matter ot' policy their services were retained in order to- rolievo unemployment. I The goods traffic conveyed on the | railways shows a steady growth, but it | also has sufEcred severely from road competition, principally in the higher I rated classes of goods. The- average ! charge for conveyance of freight traffic by rail last year was 2.31 d per ton per mile. If this average charge- could have been ■ increased by as little as 0.15 d per ton-mile tho deficit on the year's working would have been met, while an average charge of 2.91 d would have placed the railways in a position to dispense with the credit receivedfrom the Consolidated Fund for the loss incurred on branch-lines and isolated sections. A SERIOUS PROBLEM The decline in passongcr traffic that has been experienced since tho year 1921 has had a very serious effect on the financial position of the railways. The problem is not peculiar to New Zealand, but is causing grave concern to railway managements in practically all countries. In the soven-year period 1914-21 the number of passen-

gers carried by nul increased from 23,----200,000 to 25,500,000, or by 24 per cent., and the revenue from £1,450,000 to £2,----655,000, or by 83 per cent. Between 1021 and 1928 the number of passengers has decreased to 25,400,000 or by 12 per cent, and the rovenuo to £2,150,000, or by 19 per cent. The decrease is confined to the more profitable ordinary passenger traffic Season-ticket business has shown a steady increase, which is very marked in the low-rate suburban weekly tickets. A decline of 6,016,483 ordinary passengers has liocn accompanied by a. docreaso of £568,351 in revenue, while an increase of 2,574,365 season-ticket passengers was responsible for an increase of only £59,914 in revenue. The position as it now exists is duo wholly to tho development of the road motor, and must be accepted as a permanent feature of tho transportation problem. Up to tho present tho decline in rail-borne ordinary passenger traffic shows no sign of having been checked either in New Zealimd or abroad. Investigations made in England indicate that 70 per cent, of tho road passengers aro carried in private cars, and only 30 per cent, in vehicles plying for hive. If the increase in the number of motor-cars per head of population continues there is every reason to anticipate further losses in railway passenger traffic. A gross profit of 38.06 d per passenger train inilo in 1914 and 61.86 din 1921 has become a loss of B.lod per train niilo in 1925. Not only is passenger traffic making no contribution towards interest charges, but it is not carrying its full share of operating costs. The loss has been mot in part by the increased charges levied on certain classes of freight in 1925, but the balance has not been provided for, and tho accumulated loss remains to the debit of the railway account. THE FUTURE POLICY. j "It is proposed to continue tho policy ! that has been pursued during recent years of running the Department in accordance with sound commercial principles, with an eye ever upon the development of the country," says Mr. Coates. "I recognise that the Department must give a service that will enable the transport needs of the community to be adequately met, while at the samo time extravaganco and undue costliness in the matter of railway services is to bo strictly avoided. "During the past year tho railway staff have given valuable service in the practical development of this policy, and I desire, in conclusion, to pay my tribute to their work in this connec- I tion and to say that I look forward with tho greatest confidence to a continuance of their efforts to maintain the railways in the highest possible state of efficiency."