The Gisborne Herald. IN WHICH IS INCORPORATED "THE TIMES." GISBORNE, WEDNESDAY, JUNE 15, 1949 RAILWAY LOSSES CAUSE FOR CONCERN

Gisborne Herald, Volume LXXVI, Issue 22972, 15 June 1949, Page 6

The Gisborne Herald. IN WHICH IS INCORPORATED "THE TIMES." GISBORNE, WEDNESDAY, JUNE 15, 1949 RAILWAY LOSSES CAUSE FOR CONCERN

jYJOUNTING 'losses on New Zealand's railways have reached the stage at which the public is entitled to a much more satisfactory explanation than that alreadv offered. Higher wages and fuel costs arc blamed, yet everv business is grappling with similar problems and is expected by its shareholders to make a profit as well as' pay taxation and interest charges. Most of them are doing that ; those showing a loss are faced with effecting economics or going to the wall. The railways arc neither making a profit, paying taxation nor meeting interest charges: they are dipping into the taxpayer’s pocket to the extent, of millions of pounds. And what is the taxpayer doing about it? Nothing. New Zealand has approximately 3525 miles of railways the capital cost of which now totals about £77,000.000. Even at the peak of the war when the railways were used to a greater extent than ever before in their history they were hundreds of thousands of pounds short of meeting interest charges of about £0,000,000 a year. Now interest charges are forgotten in reviewing the operation of the railways. The term working accounts is used and they include the profits of subsidiary organisations suHi as the Railway Road Services, thereby boosting up receipts am! reducing losses.

Post-War Losses Increase

Excluding subsidiary services and interest, charges, the operation of the railways over the past .11 years has resulted as follows: 1938, surplus £300,000; 1930, surplus £341,000; .1940, surplus £819,000; 1941, surplus £1.287,000; 1942, surplus £1.481.000; 1943, surplus £2,395,000; 1944, surplus £2,099,000; 1945, surplus £751,000; 1946, surplus £555,000; 1947, loss £821,000; 1948, loss £1,126,000. .Separate figures for the railways in 3948-49 are not available. Including subsidiary services, the loss was £1.102,866. On top of the present total capital outlay of about £77,000,000 the Government is now considering spending untold millions in electrifying not only the Wellington and Auckland suburban lines but the whole of the Main Trunk route. Because of the coal shortage, coupled with the fact that the remaining steam coal resources in the Dominion are limited, and traffic congestion, the Minister of Railways, Mr. Semple, and the general manager, Mr. Aickin, are convinced that the only solution of New Zealand’s problems is the electrification of main lines. This may well be true in the future, but it is debatable whether large-scale commitments are

warranted immediately.

Plans Well Advanced

Mr. Aickin is now on liis way to Britain to discuss contracts. His department’s plans appear to be far more advanced than the public has hitherto realised. Together with Mr. Semple he has gone thoroughly into costs and other questions, and with the resources of information at hand their arguments must be respected and given weight. It is also reported that to interest the British construction company in mind the contract will have to be a large one. That may be all right for the company. On the figures in his possession Mr. Aickin says the complete electrification of the Wellington-Auckland line will he self-supporting. Docs that mean that it will stand interest charges as well as working expenses" He is not, however, certain whether suburban electrification will pay its way for some years. The public has'no official estimates of cost but it does possess certain knowledge which is being applied by prudent business men today. It realises that the future should not necessarily be assessed on the present abnormal business activity; it knows that it js the worst possible time to buy capital equipment and that prices are expected to decline; it is fully conscious of the electricity shortage; it is aware that sterling may have to be devalued; and it also realises that although railways will always be of paramount importance for long hauls of goods traffic there is likely to he increasing competition for passengers by air and road services. At present the State monopoly restricts such competition, but that may not always be tolerated. Many mistakes have been made in the past and we must be doubly sure of our steps in the future. Until that is more certain it is suggested that the policy of railway electrification, to which the Government has already committed itself, should be scrutinised with the utmost caution.