THE RAILWAYS

Evening Post, Volume CXI, Issue 92, 20 April 1931, Page 8

THE RAILWAYS

QUESTION OF CONTBOL

SOME SUGGESTIONS

(By tho Associated Chambers of Commerce of New Zealand.) The first generation of New Zealand settlers decided that they needed a railway system. They also . decided, philanthropically, that the railways would be even more beneficial to posterity than to themselves, so they raised money on loan, paid the interest, and left the capital repayments to the second generation. The second generation followed a similar line of argument, except that they went further and left the problems of depreciation and obsolescence as well as v the repayments of the original and succeeding loans to the third, and present, generation.1 The third generation is now wondering what to do about it all. Had the railways been constructed and operated according to business methods they would not only have fulfilled their purpose, but have contributed substantially to the revenue of the country. Unfortunately, they were put under political control with the consequential evils of interference with the management, "influence" and lack of co-ordination between departments. As at present handled, we have a General Manager at £3500 per annum, with loss real authority than the branch manager of a country store, without the power "to hire and fire." We have a system of finance that has brought the railways to the verge of bankruptcy. We have a system of new construction that is governed entirely by political considerations, and a general policy that is as indefinite as it is unstable.WHAT THE NEW BILL , PROPOSES. The Bill proposes to supplant the General Manager by three men (now amended to five), whose qualifications may or may not be such as would enable them to take over from the General Manager and the Minister of Railways the job of controlling the country's largest enterprise. , 'Under the Bill too much Ministerial power remains, and that power is obscurely and contradictorily defined. The result may easily load to. even greater chaos than at preset. The first part of clause 15, for instance, transfers the present powers of th<J Minister to the board, the second part takes many of them away again, while the Bill'as a whole removes all real power- from the General ■ Manager and makes his office superfluous. The Bill makes no mention of. the Appeal Board. If this is to remain as at present, the Bill gives no real authority to the Railways Board to deal with the staff. The actual controller of the railways at present is the Magistrate who presides at the Appeal Court, for he, and he alone, possesses the ultimate power of dismissal. ' \ If the chairman of the proposed Railways Board is to be the de facto manager, he will need to possess transport and technical knowledge. So far as ono can see, the present General Manager is the only available man in New Zealand with 'the necessary qualifications, so possibly the Government intends to appoint him chairman.' Summed up, the Bill as a whole appears to bo a political gesture, designed to allay public agitation, whilst _in reality preserving the present situation, with; little'or no change. WHAT THE COUNTRY NEEDS. Political interference and mismanagement, lack of provision for depreciation or obsolescence, and similar factors have be6n the direct causes of the chaotic position into which tho railways have drifted. The blame cannot fairly be charged to the officials in nominal charge of the Department because they have had no real authority or opportunity to show their capabilities. That being so, it seems only fair, if the Department is to make a fresh start, that it should be placed upon a reasonable capital basis. Already £10,400,000 has been transferred to the Treasury, and the interest presumably is to be met from consolidated revenue. This amount is not enough. Judging from the recent Royal Commission's report an..amount of at least £20,000,000 should be written off capital. An account should be opened by the Treasury to be known as the "Railways Deficiency Account," starting with the £20,000,000 a^bove-men-tioned. The interest, plus a fixed amount for eventual extinction, should be paid out of ordinary taxation. If such taxation raised a storm of protest, so much the better, for tho "Deficiency' Account" itself, plus its unpopularity, would be a monument for many years to the failure of politics in business and a perpetual danger signal to the politicians of the future. With its capital reduced to approximately £40,000,000, the Railways, under proper control,..should have a reasonable chance to succeed. Evidently a large number of amateur would-be saviours of tho Railways are aspirants to the position of director. It seems a pity that the Prime Minister has yielded to tho pressure which Mr. Veitch recently described, and has increased the number of directors from three to five. A small directorate would be infinitely- stronger and more decisive than a large one. The new fees proposed arc too small to attract the class of man required, and the probable result will be . continued failure. Criticism, unless accompanied by constructive suggestions, is not very helpful. So the Associated Chambers _of Commerce suggests the following method of railway re-organisation:— (1) That tho Railways should be incorporated in the same way as a public company, with - a definite capital of, say, £40,000,000, and a definite charter or franchise. The adult population of New Zealand, approximately 400,000, would be the shareholders, each with a £100 share. These shareholders, through the Government, which they acquire through the ballot box, should elect three directors to control the policy of the company. As with Judges of tho Supreme Court, these directors should be- subject to removal only by resolution of both Houses of Parliament. - (2) This corporation must be entirely divorced from Parliamentary or Ministerial control, and placed in the hands of its board of directors, with, the same powers as the directors of a public company. These directors should be mcii of wide business experience, but need not necessarily have transport or technical knowledge. 3. This board, although entrusted with the formulation of the general policy of the Department, should appoint a General Manager, possessing the necessary transport and technical experience, who should be given the responsibility and opportunity of carrying the board's policy into effect. 4. The appointment or dismissal of the entire staff should be in the hands of the.General Manager. 5. Tho board of directors, in consulta-. tion with the General Manager, should have the solo power to initiate or stop new construction; to continue or discontinue traffic on unpaying lines, and to fix all tariffs, passenger and freight. 6. Finance for new undertakings, unless provided out of revenue, should be provided by the Government, making an addition to the railways capital, on the authority of Parliament. 7. The office of Minister of Railways should be abolished, and the board should deal with Parliament when necessary through the Minister of 3?n.ance. 8. 33ae purchase;-?£ stores. *,qeia T>«

vested in the General Manager, but single contracts beyond a definite amount (say £5000) should be subject to the approval of the board. 9. A full-time chairman seems unnecessary, but as the,work will be of a responsible character, remuneration should be £1500 per annum for the chairman and £750 each per annum j for the other members of the board,1 but the board should not exceed three in number. 10. Ordinarily, the appointment of General Manager should be in the board's hands, but as the present occupant is under definite engagement for a fixed period, he should be given a reasonable opportunity to show his capabilities. If the board eventually finds him incompetent, it should have the power to terminate Ms engagement on mutually satisfactory terms. 11. It should be a duty of the board to make a comprehensive annual report to Parliament, and to issue public statements of its progress from time to time. 12. The railway accounts should be kept on recognised commercial lines. Subject to the reasonable capitalisation of the railways, depreciation and obsolescence should, in future, be charged against revenue. 13. The Appeal Board, as at present constituted,* should be abolished. .' In conclusion, the Associated Chambers of .Commerce appeals to Parliament to' settle decisively this vexed question of railway control. Our country is staggering under an almost un> bearable load of taxation. The railways, as now handled, furnished the most crippling item of all, and until, and unless, they are placed on a busi-ness-like basis, there is little chanco of the country regaining financial stability.