WHAT REMEDY?

Evening Post, Volume CVIII, Issue 81, 2 October 1929, Page 11

WHAT REMEDY?

RAILWAY TRANSPORT RIDDLE

HIGHER FREIGHTS

OR "REGULATION"?

In other parts of this issue appear quotations from the Railways annual report dealing with (a) the deficit on the railways caused by developmentalism and road competition, and (b) by the failure of the State to equip the Railways Department for the fight, in that the State has commercialised the Department's working methods but not the policy. This section deals with the possibility of another remedy—regulation of transport. JOB TOO BIG FOR MOTORS. \ Reports the General Manager, Mr. Sterling:— "As I have already indicated, we find ourselves, in connection with the increasing of our business to make good the present financial deficiencies, faced with serious difficulties, the chief of which is, of course, the • unregulated competition of road motor-vehicles. These services start with the-great advantage of having a road provided for them, a circumstance which has no counterpart in connection with railways. Large sums of money are being spent on the improvement of roads paralleling the railway, thus making increasingly possible the competition of road services with the railways. To the extent that this is being done the country is duplicating, and in some eases (as when sea transport also exists) triplicating, the means of transport. More especially in a country such as .New Zealand, where the railways are the property of the community, this raises a definite question as to whether it is m the interests,of the community that tins should continue. If the community by the expenditure of money on a new facility depreciates an existing one, then on any adequate review of the situation such depreciation should be taken into account and provided for True, the community may prefer road transport to rail transport even at the expense of duplication; but the money invested in the railways has to be provided for, and the two services have inevitably to be paid for though only ; one is used. The difficulty arises large- ' Ij from the fact that the responsibility is communal, while the advantage is largely individual. Individuals desirous of running, or taking advantage of, motor services clamour for improved roads to be" provided by the community, while the benefit is reaped by comparatively few. , ."It must be'remembered that, the railways are still an indispensable factor in our transport system.

• It would not only be a physical impossibility for road services to cope with the whole of the traffic, either passenger or goods, but it would be an economic impossibility also. This will be quite clear from & consideration of tho fact that the average revenue per ton-mile necessary to have covered all railway charges last year would have •, been only 2.86 d (without the necessity even for a. credit on account of developmental lines). Obviously road servics could not produco the necessary transport at that price.

as the figures show, the competition by road services is confined to the more highly rated commodities. The net result of this is to weaken the position of the railways from the point of view both of service and price, and the community as a whole suffers. Nor is tho competition of road services on a basis of equity or economic soundness. As already mentioned, the road hauliers start with a road already provided; they skim the cream of the traffic, having a scope for choice of what they will transport that is incomparably wider than that which exists in the case-of the railways; ana they have a power of differential treatment that has an immense influence on their power to secure traffic by bargaining, and which is almost entirely absent in the case of the railways. "There is no doubt that much of the motor competition with the railways is not on an economic basis. We are repeatedly coming across cases where prices are quoted by motor-lorry owners that cannot possibly be remunerative if all costs are taken into account. There are a large number of owner-drivers operating on our roads who have had no business training whatever, and it is not-surprising, therefore, to find that their operations show-little evidence of capacity to see' ahead and calculate in a businesslike way what prices they can afford to charge. It may be replied .that these people will inevitably drop out. So they do; but not only does ;the supply seem to be inexhaustible, but during the course of their career they do. an infinite amount of harm, and they enable the individuals who make use of their services to get an advantage at the expense of the community, which not only pays through the expenditure on, road repairs and deficiencies on 'the railways, but has also in the long-run to bear the losses arising put of insolvency of individual enterprises (a factor too .apt to be overlooked)." - Mr. Sterling goes on' to argue that a regulative policy aiming at correlation of the services, and stabilisation of service, is in the interests of all parties. FIGURES THAT DO NOT PAY. _ "The first essential to a proper adjustment is a determination of the proper economic position of each part of -the industry. Uneconomic conditions such as unfair or unsound competition can on the plea of 'natural forces' only be met by uneconomic action. A policy framed on such action cannot possibly be permanent, and it might well be that on the adoption of a policy on that basis the last position might be worse than the first. It is inevitable that later, when the long and painful process of adjustment by natural forces had worked itself out, there would have to be another adjustment of relationships, and there seems to be no good reason why; two such adjustments, separated only by a long and undosirable period of time, should be adopted if the result can be obtained by more expeditious and desirable methods. To illustrate the position by referring to a concrete case, I may refer again to the fact that we find traffic lost to the railways in many cases through the quotation by road-hauliers of prices for the transport of the goods concerned that we know cannot possibly be on an economic basis. Obviously, as it was the price that lost the traffic, we may assume that if we quoted a price below that of the road hauliMs we would retain the traffic; but Buch quotations, being forced by uneconomic conditions, cannot possibly be permanent, and it is not difficult to imngine the disturbance that would take place if the Bailway Department adopted a policy of quoting rates based on uneconomic conditions, and, when such action forced the competitor out of business, it raised its Tates again. Such action -would undoubtedly lead to ill will and the upsetting of_ business relationships by the uncertainty that would arise in regard to actual transport costs, and we would have confusion worse confounded. "Wo certainly geem. justified in. at least saying

that if the occasion for such action can be avoided, then it should be avoided.

"All these circumstances seem to me to justify resort to the regulative power of the community to expedite the bringing of the industry on to a proper basis. There is nothing new in such action—and it has long been known in the transport industry, where it has been applied to railways practically from their inception, and has already been developed to some extent in connection with the passenger side of road transport. In the ease of State-owned railways such as in New Zealand, this community power operates through the railway, statutes and the effect of public opinion as reflected through the Parliamentary institutions. In the case of pri-vately-owned railways, they have been rigidly controlled by statutory authorities such as (in England) the Board of Trade and (in the United States of America) the Inter-State Commerce Commission. Two principles have been the basis of this action —first, that the community interest in transport shall be adequately protected (this has led, e.g., to the limitation of financial return, the fixation*of rates, and the running of certain essential services, such as "cheap" trains); and, second, that all persons shall have equal treatment— there shall be no undue preference. Such regulation was no doubt felt to be irksome by railway authorities, as it might also be expected to be by some sections of the motor-transport industry (especially those whose business is not a sound community proposition). But that does not prove that such regulation is' inherently wrong—rather the contrary. The railways survived and extended under "it with a rapidity and vigour that was phenomenal; but essentially the general interest was protected by the regulative power of the community actively operating through legal enactment. Such regulation is sometimes objected to as "legislating the motor-carrying industry out of existence" or "bolstering-up the railways." It seemß to me that both of these statements are nothing more than unjustifiable assumptions. The motor j vehicle is here to stay, and unquestionably has a place in the transport industry. But why should such objectors assume that proper regulation will push the motor-carrying industry out? Such an objection would-seem to imply a more or less eonscions weakness in their case, with a consequent disinclination to face the issue. The railways under private enterprise were regulated, but they did not go out of existence—they nourished and did undoubted good work for the community; and if history means anything at all we nfay rather assume ..that the same may. happen to the' motor carriers. Similar considerations apply to the "bolstering-up of the railways." Opprobrious epithets are not arguments: they generally rather betoken an absence of valid grounds. If on examination of all the facts it were found that a particular service could be given by road-motor more economically than by rail (and there would be many such cases) it would be irrational to perform the service by rail, and no regulating institution whose decisions were irrational" could long survive."

WANTED—A TRANSPORT BALANCE-SHEET.

Finally, the General Manager of Kailways appeals for a transport balancesheet: "Another matter in connection with road transport that I think worthy of mention is the desirability of there being prepared by some responsible authority an annual balance-sheet of the road operations of the Dominion. At present the information regarding expenditure and revenue in respect of roads is more or less scattered throughout the various records. Especially in view of the fact that the question of tho distribution of transport costs among tho various sections of the community is such a live one, I think it would bo very advantageous if the whole facts were brought together in a comprehensive and readily understood annual statement. The whole question of railway and' road finance is really one of the distribution of the total transport costs of tho community, and in order that clear judgments may be formed as to the oquity or otherwise of such distribution tho first essential seems to bo to have all the facts ,of revenue and expenditure in connection with the transport operations clearly before us."