RAILWAY FINANCE.

Hawera Star, Volume XLVI, 14 April 1926, Page 5

RAILWAY FINANCE.

IVOR,KINGS OF NEW SYSTEM. A SMALL SURPLUS EXPECTED. (BY TELEGRAPH PRESS ASSOCIATION.) AUCKLAND, April 13. On the subject of .railway finance, the Prime Minister (Rt. Hon. J. G. Coates), in an address at Kings land to-night, said the railway finances were placed on an entirely new basis as from April 1, 1925, with the object of placing the .sen-ice as'far as possible on a selfsupporting basis and to show clearly the results achieved. A separate working railways account was established in, the Treasury, and the railway administration is now required to earn sufficient revenue to meet all working expenses, provide adequate reserves for renewals, depreciation and insurance, pay ,superannuation fund, subsidies and cover interest charges on capital. All services rendered to other 'Government'departments, are charged for at ordinary rates, and a is paid from the Consolidated Fund to recoup the railways for losses sustained in operating isolated sections ; and branch lines, which, though they contribute substantially to the development and prosperity of the country as ,a- whole, cannot be run as a commercial'undertaking. The policy of subsidising the railways operating in sparsely settled districts, by means of either land grants or guaranteed minimum earnings, is practically universal and the benefits accruing to the State, either directly or indirectly, as a result- of that policy, are greatlv in excess of the cost. The railway accounting system has been completely reorganised. Separate' accounts have been set up to show the results of railway operations, steamer services, refreshment rooms, advertising. sawmills, surd departmental dwellings respectively. Accounting and statistical data have been recast to conform with the best, modern practice, in order that more accurate costing may disclose any sources of weakness or inefficiency. The annual accounts will Ire published in the form'.adopted by the railways of the United Kingdom on recommendations of a committee composed of the foremost accounting and economic authorities. , Approximate resu'ts of the first comolete year’s working under the new system are now available!, The railway operating revenue has increased by about £700,000. passenger receipts have increased by about £240.000, goods receipts by £400,000, and . miscellaneous by £50,000. The operating expenses have increased by about £650,000, due prineily to the provision of reserves for i-enewa l and equalisation funds (£280,000) and to the additional amount contributed to the superannuation fund l£65.000), formerly paid out of the consolidated revenue. The balance of the increase (£305,000), is due almost entirely to the provision of faster and more frequent trains, and to'improved and additional transport facilities now rendered by the department. The rate of interest payable on capital has .been advanced from 3-J per cent.-to 4$ per cent.: in the case of moneys provided out of the public works fund, and from other miscellaneous sources, and to £5 3s 9d per cent, in the case of loan moneys raised specifically for railway improvement.

The position now is that railways are 'Tying interest on the total, .capital investment in open lines at either the average rate payable in respect of loan monevs in the public works fund, or at actual rate payable <in respect‘of loans raised wholly for railway purposes. The additional interest burden is £265.000 per annum. It is anticipated that, ;nf•er paying all expenses, providing adequate reserves and meeting interest charges, a . small surplus will l>e shown on the year’s working.