The Gisborne Herald. WITH WHICH IS INCORPORATED "THE TIMES.” GISBORNE, FRIDAY, FEB. 28, 1941. WAR-TIME ECONOMICS

Gisborne Herald, Volume LXVIII, Issue 20492, 28 February 1941, Page 4

The Gisborne Herald. WITH WHICH IS INCORPORATED "THE TIMES.” GISBORNE, FRIDAY, FEB. 28, 1941. WAR-TIME ECONOMICS

The net railway revenue for the current year is almost certain to constitute an all-time record, according to a statement issued yesterday by the new Minister of Railways, Mr. Semple. The Minister has some reason, no doubt, to be gratified at this position, but in any consideration of the matter there are certain reservations that should be made. From 1935 to 1938, the net returns from the railways showed a steady and substantial decline and it was not until an all-round increase in charges was imposed that any improvement was effected. The revenue last year, for the first time since the present Government assumed office, passed the £1,000,000 mark, and this year it will be nearer £2,000,000. The point which must be borne in mind, however, is that the greater part of the improvement is entirely fortuitous and that very little of the credit .for it can be claimed by the Railways Department. It is probably entirely due to the additional traffic necessitated by war-time- conditions —extremely profitable traffic, a large part of which is an expense item for othei Government departments while the remainder is chiefly accounted for by exceptionally heavy exports of wartime commodities. It seems likely that the normal railway traffic would show a substantial decline. In case the new Minister might take too optimistic a view of the finances of the department, it would be advisable for him to study the experience during the last war. In 1916 and 1917, even as now, it was possible to claim that the net receipts from the railways broke all previous records, but in the years immediately after the war there was a serious decline from which there has never been a full recovery. In 1917, the net earnings showed an increase of nearly 60 per cent over the figures of two years earlier, a gain which will be almost exactly paralleled by the experience this year. Incidentally, the net revenue in 1917 was very similar to that expected this year, but it was obtained from a total capital investment of less than £40,000,000, whereas to-day nearly £70,000,000 is tied up in the State railways. On a proportionate basis, therefore, the results from the railways at the present time will not bear comparison with those of 25 years ago. Another point for consideration is that if the railways were a private concern their increased earnings would be automatically attributed to the war and, in addition to ordinary taxation of 12s in the pound, would have to pay a substantial sum as excess profits tax. Viewed in this light, the position is hardly as satisfactory as Mr. Semple would suggest. The experience in regard to the railways is more or less typical of the

whole war-time economy of the Dominion; it is on an artificial basis which might well become dangerous in the future. Further evidence of this was provided in another item of news yesterday showing the large increases in the main items of exports. The quantities of meat shipped abroad, for instance, increased by from 12, to 33 per cent over the previous year. The aggregate value of all exports showed an increase of 27 per cent and reached the almost staggering figure of £73,741,000, or more than double the figures for 1931 and 1932. These returns, like those of the l-ailways. were a fortuitous result of the war, and there is no reason to expect that they will be maintained. On the contrary, there is likely to be a reduction of 25 per cent in the value of meat which it will be possible to ship and there is no prospect of shipping any fruit at all. It may be that there will be a proportionate decline in other exports, so that the Dominion must be prepared for a contraction in its export income and, consequently, in the national income as a whole. In the meantime, the Dominion continues to live on an artificial basis, a point which is emphasised by the fact that last year, despite rigid restrictions, imports showed no real contraction. It is not a moment too soon for the Dominion to face up to the unpalatable facts of the present situation. In effect, it is living on the basis of an export income of £73,000,000 a year when it knows that that income cannot be maintained. The value of exports is not the real value, but an artificial one created by the war. Despite the incentive which higher prices would appear to offer, the volume of production has steadily declined for the past four years and on a per capita basis is now lower than it was a decide ago. The combined factors, of reduced production, restricted export markets, and the possibility of lower prices present a picture which should cause New Zealand to wake up to the dangers which confront it. Despite the prospects of a seriously depleted national income the Dominion is living more extravagantly than ever before and is basing its living standards on conditions that possibly be maintained. Apart from the cost of the war, which is superimposed on all other Stale expenditure, the cost of government is higher than ever before and already the social security fund is millions of pounds in debt. Instead of prating about the temporary financial gains secured from the war it is time the country awakened to the serious position which will have to be faced in the near future.