WHY A DEFICIT?

Evening Post, Volume CVIII, Issue 81, 2 October 1929, Page 15

WHY A DEFICIT?

RAILWAY PROBLEM

"JKEW .LINES BIG LOSERS

SOME MOTOR RIVALS

v- '..-Eor.the year ended 31st March, 1929, the Minister of Railways, the Hon. W. B. Taverner, reports that "the gross income from all sources was £ 8,747,975, i; of £223,437 on that of the "" previous year, whilst the expenditure was" £6,849,383, an increase of £104,----280. The net earnings were £.1,898,----592,, as compared with £1,830,415, an improvement of £59,177 on the- results in the previous year. "On the 31st March, 1929, the capital >iii Vested in the lines open for traffic, in- «; eluding the steamers and plant on Lake Wakatipu and other subsidiary services, was £56,568,598, an increase of:£s,----381,222 on the capital account for the previous year. "The increase in capital comprises ? £3,464,578 construction charges on *io7";miles of new lines taken "over from the jEublic/^orks Department during the year, ■£368,886 expended on new works and: charged against capital account under ' Additions to open, lines,' and: £1,547,758 expended under the Kailways; Improvement Authorisation Act, .1914, on works such as new workshops anathe "Westficld and Tawa Plat Deviations. : . .. ;"Ineluded in the gross income is the p sum of £498,937 credited in respect of developmental lines, a sura £9369 higher than the amount received under 'the same heading for tin previous year, .fA sum of .£655,986' was charged ' against-:revenue for depreciation- and provision: for renewals, and the'amount expended from this fund was £558,836 • for.assets written, off or renewals effected during the year. The accumulated balance in this fund at the 31st .March, 1929, was £ 1,328,020', an increase of- £397,150 over the balance at -l.he 3Jsfc March, 1928. ,' .."Interest charges amounted to £2,- ---. 331;335, as compared with £2,130,867 an the year, an increase of .£ 200,468. -

"The: deficit on account; of revenue ana expenditure .on the year's working .was £432,743, as compared -with £291,----452 for the previous year, an increase qfv £141,291; and this increase ie prin-i-cipally duo: to the unprofitable, nature r , of. the, new lines "taken over during the year,_ the revenue'from which was insufficient to pay working expenses, thus leaving no margin for interest charges. "The revenue from passenger traffic totalled £2,124,746, as compared with r*2,145,296,in tie previous year, a de-crease-of £-20)550, or 0,96 per cent. While .these figures are more satisfac- . Tory than those for tho previous year, whoa the decrease was £158,884, tho tact must-not be overlooked that the •< decrease; in ordinary passenger traffic still continues. 'For ,the year under review the revenue from ordinary passenger traffic decreased by £148.476, but owing to;,the fact that Good Friday fell . on the 29th March, 1929. as compared with, the Bth April, 1928, the bookings • *°?. J?29 include the major part of two 1 Easter- holidays, and the heavy decrease injordinary bookings is partially •balanced by the increase in the holiday '^itursion.issues."' . . ■ • . ,j^f -rBIAKAOERIAI. "COJIMENTS.- ---' .^ <>yr": ;*44e4 railways aro adding to tnelossrr-and the new Government has brought;, forward a programmo aiming at' still more added railways—is indicated by the above, and also by the ro- ■ port of tho General Manager Mr . Sterling. ; ; .'•., . ■ . ■ . . ■ "It will", be. noted that the revenue, excliic.ing the credit in respect of developmental lines, increased by &214,p68,:equal to 2.66 per cent, while jne expenditure increased by £164 260 ■equal to 2.46 per cent., an improvement (jm revenue oa these figures of £49,808. « iJv. r ' $Wf yer > to got a comparison f;this .year frith the previous year in true-perspective it is necessary to make for, certain circumstances Tvlueh arose during the year under reTtew, and' which have a differentiating effect •as; between the two years. In other words, in order to make a true ■-comparison .for purposes of framing a ■■ judgment on the financial results of the •Department It is necessary to bring the ..toresvof both years as nearly as possible to the same basis. _ "The. first and largest differentiatrag. facto* is the new lines that were ' i^ken over during the year,' and for .$&?& credit.for loss was not received : -«y;.theDepartment. These were tlie -Kinkopuni and East Coast Main Trunk lT^-\ ■ Th? °Pera^g revenue on . the Kinkopuni section from the time ; afewas taken over until the end of the •"S? 35 ™ 2495; "Ie e*P™aituro wuWs\lr a ? k& expenditure on the Bast Coast JTaiaTronk railway was £72,689, the revenue was £49,678. The tpM. ©pelting, expenditure on.the two 3ines. was £80,170,.and the operating S^Mf 52,173. Deducting these -^mfW-tTom-, the revenue and expendi- / «*owmn the figures for 1928-29 tabolated-above, we find that if these two |pies had not been taken over the «*penditure would have shown £6,769,-----id and the revenue £3,695,802, giving anet revenue on that basis of £1,926----5^9 a B compared with a net revenue o» the, B ame basis last year of £1,839,K?'n6t'Jfc£s factors **b .nQta<iiomea. for, erroneous dedni>..meai. -pnder the old system ther'o-was ,|P provision for. setting, aside* raserm to meet accrued depreciation on obsol«?cence, or for equalising^ the widely fluctuating expenditure renting from .fire.-^ood, or. accident. Tho l-ailwav accounts were not charged <;vith the 'lVn f1 Of SU, b- id. ieS t0 the s«Perlunu atj -^ Pnnd, and interest was computed at a policy : ; rate, which, at least in later S M'^ af, C 0 below thfac" Si thp" \or tlie- four yeara '«aed for rill ?arg^ against the railways a*';!? n l Bwal?> .depreciation, fire, flood, accident, writing off obsolete stock £^4n P£T n-U^i° n fuud subsiai<* was ea tne interest bill by £910,995 in th" &UT years ended in 1929. The total mmJw«f- nm-V*y™g «ne S in the same penod was £1,793,266, or little to nicet the S faY °V? est and Superannua£S£?S? fubsidies.- I regard tho foregowig as important, as already some m^a a t- S have hoen lcrl t0 make ms* deductions regarding the railway •ttrctKm as a resnlt of their failure

to take account of the circumstances mentioned."

"The increase in the operating earnings for the current year over tho year ended 31st March, 1928, is 2.46 per cent. The passenger earnings in the same period have decreased by 0.96 per cent., while the goods earnings have increased by 3.55 per cent. PASSENGER TOTAL BACK ' TWENTY YEARS. "The figures for the year under review show that the decrease in ordinary and suburban tictets i% again the principal cause of the decline in passenger revenue. This decrease is duo to the extensive use of the private motor-ear, together with (in a lesser degree) the ssrvice-car organisations which have established services throughout the Dominion. The' mobility of the motor vehicle is- such that for curtain classes of travel tlie railway cannot hope to compete with' it on an economic basis, and further decreases in passenger traffic by rail,under tho headings mentioned must be expected. For. example, the service-car organisations run a number of services betwen the principal towns at stated hours daily, and this smaller and more mobile unit is at a great advantage iii catering for the' passengers .who may not find it convenient to travel by the scheduled trains which run between those places. It would obviously be quite unsound for the Bailway. Department to endeavour to cater for this class of traffic by providing additional trains for the small number of passengers which a ser-vice-car conveys. There is another factor which, in my opinion, contributes largely to the decline in passenger traffic. People in country areas cannot conveniently use the:rail for travol between neighbouring "stations, because in respect to tbo intended journeys tho location of the railway station in many instances involves' a more or less substantial measure of travel to and from tho railway stations. On tho other hand, the motor-vehicle can give continuous service all along the road, whereas with trains tho railway can only do so at stations which are in most cases some miles apart.. ; "The number of season tickets issued increased by 23,428; of this number 21,853 were workers' weekly tickets, which are by'no means.remunerative to the Department, but represent a concession to the suburban residents concerned, tho value of > which it is impos-' sible-to' state in terms of money. This Class of ticket enables many workers to leave the congested city areas and reside. in congenial surroundings some distanco from the city, and this canont but be beneficial to these people, the majority of whom are thus enabled to purchase homes of their own-. • Thjß is but" one instance where the Government railways provide a Service which is not remunerative in so far as railway revenue is concerned, but is one which means better living-conditions for the people; and brings added prosperity not only to the districts served,'but to'the Dominion as a whole, VFor the year ended 31st March, 1929, the number of passenger journeys, exclusive of season tickets, was 9,046,267, and this is smaller than the number carried in 1907, when the figures were 9,600,786. In other words, the railways are back to the basis of twenty-two years ago so far as, tho number of ordinary passengers is concerned. Tho peak of the passenger traffic: was in 1921, since when there has been a steady decline in this branch of tho railway business. . . It; is in connection with those aspects of the passenger problem that we find an almost insuperable, difficulty in "the increasing use of ttio- private motor-car. The more limited mobility of a railway as compared with the private motor-car places the railway at a disadvantage that is not nearly,counteracted by its cheapness. The railway encounters a difficulty in this Tcoiinection' not only arising from its physical, nature, which requires it to run' on rails, but:also resulting from the fact that it deals with traffic in the mass, while the mobility of the private motor-car depends practically entirely on the necessities of very few individuals. COMPETITION NOT BASED ON COST. "Experience has shown that the question of cost has a very, remote influence in overcoming the handicap that the railways suffer in this connection. Weflndpeoplßfreely using their motorcars at a cost, when taking all factors, into account, that must be considerably' higher than that at.which transport

could be secured by rail. A further difficulty in connection with the competition of private motors is to bo found in the practice, which is assuming large proportions in this country, of private motor-car owners who make regular use of their cars in travelling between tho' suburbs and tho cities, picking up their friends en route. Allied to this there is also the practice which has arisen at holiday times of persons sharing their motor-cars with thoir. friends for the purpose of extensive trips throughout the country. This must inevitably have an effect on the holiday traffic at such periods as Christmas and Eastei'. The railways have endeavoured to counteract these factors by increasing the attractiveness of their service, more particularly from the points of view of safety, comfort^ and speed. "It is in these aspects that the railways will, it seems to me, be able to set a constantly improving -standard that will always have a limiting effect on the development of the .service-ear business. So far as safety is concerned tho superiority of the railways cannot be seriously challenged by tho roadvehieles.

"On the question of comfort we have a rather extraordinarily paradoxical position. We find the public continually demanding an increasing standard of comfort in the railway carriages, while on the other hand we find tho public willing to sit more'or less cramped in servieo ears with a comfort that must often bo conspicuous by its absence. The freedom of movement and the greater measure of convenience that railway travel. affords- makes me feel that this position cannot, be regarded as a permanent one, and when the novelty of motor transport has, as I think it will with the passage of time, ceaso to be a.factor, I think that the advantages which the railway has in the matter of comfort will make themselves felt and will make it increasingly difficult for the roaa motors to maintain their position.

"Iregard it, however, as imperatively necessary that an improvement should be made in tho standard of our passenger rolling-stock. We have drawn up a programme of rolling stock construction to this end, but our capacity to carry out'this programme is, of ■course, limited by the amount of finance that can be made available, and I desire to express the opinion that tho improvement or, indeed, the maintenance of the position of the railways will depend on the making of such financial provision as will not hamper our efforts in this connection^

"As regards tho mattor of speed, -I think that improvementsin this connection will be in the direction of running long-distance trains with fewer stops while working the intermediate traffic requiring more frequent stoppages at the less important stations by means of smaller rail units having a relatively hfgh rate of acceleration, or by road services. As I have already-indicated, we are now actively investigating the position in this regard with a view to collating the data, necessary to enable spund decisions as to the modes of future development in this direction to be arrived at. "We" are also reviewing time-tables and rolling stock. .The former "will be the subject of progressive development,- and the latter is already covered. SUBURBS THE WEAK POINT. "So far as the competition of the. lured road vehicle affects retaining or regaining/traffic, the position is that tho'principal factor is undoubtedly the large motor-omnibus operating between the cities and the suburbs. An unfortunate aspect of this business from the .point of view of the railway financial returns is that the railways aro still left with tho unrenmnorativ.b workers' traffic while the buses reap the benefit of the bettor-paying casual suburban traffic. This is very vividly brought out in the passenger figures shown in this report. It will be Seen that while the casual suburban business fell off as compared with last year by no less than 195,000 passenger' journeys, the workers' suburban traffic increased by no less than 262,000 passenger journeys. The point here is that while the railway revenue for its passenger business in the suburban areas has'substantially decreased, the quantity of service wliich it •' lias rendered to the public jn >thdsc areas has actually increased. In other words, if the position of the railways in tho community as regards this branch of its busrjiess could bo judged by units of service instead of by units of money received, tho position of the railways

would, take on quite a different aspect. "The bus also has the advantage that, so far at least as its physical characteristics are concerned, it can keep in immediate contact with the areas of greatest traffic, whereas the railway route is fixed, and may be, and is, more or less remote from the traffic areas. The smalluess of the bus also as a transport production unit enables it to pick up traffic en route in a way that is not practicable in the case o"f the railway, and this is of a special significance so far as the subnrban passonger traffic is concerned. The necessity of walking to and from a railway station is one of the most potent features operating against the railways in connection with this class of traffic. "So far as the hired road vehicle is concerned, with traffic outside the suburban areas I feel that it is not nearly! so" serious a competitor as it is in .the suburban districts. It has, of course, the advantage of a door-to-door traffic, and in some cases where the rail route between given points is more circuitous^ and more effected by adverse conditions than the road route, the service car is able to maintain its position against the railway. The service car also tends'to create a traffic for itself by reason of its being able to make journeys for a. comparatively small number of passengers,'and in cases where people desire to travel at abnormal times the service car will have a traffic of its own. I feel, however, that service car competition with :the railways is not responsible in any great measure for. the continuance of the decline in railway passenger traffic. "In the foregoing brief review I have not hesitated to state what I conceive to be points of weakness in the position of_ the railways from a competitive point of view.'■ Ido not, however, do this in any pessimistic sense (because I think that for many years to come there will continue to be a large field open for. railway activity), ' but be* cause I think that a recognition of these points and the causes underlying them is a necessary preliminary to the devising and: applying: of proper repie* dial measures where such are found pos» sible.

"Coming to the question of- the methods that might be, adopted by the railways to meet the position," I would express the opinionthat as to the suburban areas the railways will continue to work the great bulk of the workers' traffic, but will not be able to successfully compete for the casual traffic. Even if electrification could be justified by circumstances such as intensity of traffic and the other conditions which form tho economic basis of that form of transport, I am doubtful whether the railways in New Zealand could even then maintain their position as regards this latter traffic. „ ■ "

"So far as the traffic other than sub-ux-ban is concerned,' I think the railways will continue to hold-the long-distance traffic against its road competitors, by improved methods of traction combined with development of higher standards of services and facilities. The traffic lying between long-distance traffic and the suburban traffic will continue to feel tho effect of motor competition, but I think that it niight be possible to meet the position in some measure by the institution of more frequent ser•vicesby means of rail-cats or road services having a greater measure of elasticity in the matter of stopping-places than is possible in the case of trains.?'

The oldest clergyman' in England, the Rev. Denham Eowe Norman, of Lichfield, recently passed his 101 st birthday. A few years ago Mr. Norman took part in an impromptu dance with a tiny tot of four years.