Evening Post. WEDNESDAY, NOVEMBER 3, 1937. RATIONALISED TRANSPORT

Evening Post, Volume CXXIV, Issue 108, 3 November 1937, Page 8

Evening Post. WEDNESDAY, NOVEMBER 3, 1937. RATIONALISED TRANSPORT

The Government's belief in the rationalisation of transport is reaffirmed in the annual statement of the Minister of Railways. This rationalisation will "ensure that the railways and road motors will be encouraged to function fully in their proper economic spheres"—but beyond that the Minister explains little or nothing. He cannot or does not define "the proper economic sphere" of a road service, as apart from a railway service; and what is full functioning, as apart from paritial functioning, remains also a I matter of uncertainty. Two equally competent expert tribunals, seeking to apply this principle to the problem of continuance or discontinuance of competing road and railway services, might easily arrive at opposed decisions. The value of the Ministerial formula therefore rests not in the formula itself, but in the application of it, concerning which equally competent persons might disagree. A decision concerning competition is reached by no scientific, unanswerable reasoning. Rationalisation can, indeed, fly in the face of reason. But a case that cannot be proved by reasoning may yet be proved or disproved by results. And to results the people should look for judgment on railway rationalisation. What results are indicated? Net earnings fell from £1,051,477 in 1936 to £903,858 in 1937. It is true that the fall is partly caused by the restoration of pay "cuts" and the dropping of other cost-saving expedients. The Minister goes to the trouble of preparing figures to show "what the net earnings would have been had not wages and salary 'cuts'" been made. On this basis he indicates that net earnings in 1937 are about £100,000 above the "would have been'! figure of 1936. This hythothctical calculation is as indetermin*. ate as is the formula itself, and would. have no place in an ordinary set of explanatory accounts, or outside of a political document. The plain fact is that, in a recovery period, this annual statement shows a reduction of £147,619 in net earnings, an increase of £157,322 in interest charges (at 4i per cent.) over net revenue, and an increase in the capital account of over one million. None of these results proves the value of rationalisation to the owners of the railways. The users of the railways might draw some comfort out of any evidence that rationalisation is reducing or keeping down the cost of transport. But there is no such evidence. Private industries that seek rationalisation do so with some idea as to costs. But Governments with a transport policy proceed not to a costs'objective, but argue their way along a vague path with such terras as rationalisation and co-ordination, "elimination of redundant units," and the substitution of "complementary" for "competitive" services. Words of these kind indicate hopes—-worthy hopes—but do not point to accomplishments. If anyone who believes in co-ordination wants tangible proof that it is really keeping down transport costs, it is difficult to see where he will find such proof in Mr. Sullivan's statement or in the General Manager's report followingl the Ministerial effort. Of course, if the whole question is to be begged —ras often it has been in the past—' by reference to indirect returns from railways, and to the indirect advantages of "social service and betterment," the financial truth about the railways will remain as unattainable as ever. In that case, the rationalisation of transport will also remain a mere generalisation—a new phrase rather than a new light. There can be no rationalisation that is not based on the cost to the user, having regard to the burden imposed on the taxpayer. Rationalisation as an ideal, never to be proved or disproved, is in a different category to the rationalisation that pays for itself by proved economies and better service.

Transport competition, says Mr. Sullivan, is harmful to the national economy. It may be. In certain circumstances it is. But the substitution of centralisation for competition would be far more acceptable if there was any system of checking results by commercial and not by political standards. Many bad things

can be said of competition, but is State management guiltless? And can the public await in confidence the results—in terms of public service— of an experiment so undefined and so vaguely entrenched behind generalities and formulas? Additions to the capital account will probably give these questions sharper point when the next annual railways statement appears. The public are buying new railways on a large scale; what return from these can the rationalisers promise? The railcars are an interesting and popular experiment, and

a good deal about railcars might have been expected to appear in the annual statement. But this expectation is not fulfilled. It is noteworthy that, in improved returns from departmental road services, Hutt Val-ley-Wellington easily; leads.