RAILWAY STATEMENT

Hokitika Guardian, 3 October 1929, Page 3

RAILWAY STATEMENT

(Per Favour of Government.) WELLINGTON, October 3. The ‘Minister of Railways (the Hon. W. B. Taverner) presented the Railways Statement to the House yesterday afternoon. It was as follows: in presenting the Kaiways Statement for the year ended 31st March, 1929, I have the honour to report that the gross income from all sources was £8,747,975, an increase of £223,437 on that of the previous year, whilst the expenditure was £6,849,383, an increase of £164,260. The net earnings were £1,898,592, as compared with £1,839,415, an improvement of £59,177 on the results of the previous year. On the 31st March, 1929, tfie capital invested in the lines open for traffic, including the steamers and plant on Lake Wakatipu and other subsidiary services, was £56,568,598, an increase of £5,381,222 on the capital account for tlie previous year. The increase in capital comprises £3,464,578 construction charges on 107 miles of new lines taken over from the Public Works Department during the year, £368,886 expended on new works and charged against capital account under “ Additions to open lines,” and £1,547,758 expended under the Ra 1ways Improvement Authorization Act, 1914, on works such as new workshops and the Westfield and Tawa Flat Deviations.

Included in the gross revenue is the sum of £498,937 credited in respect of developmental lines, a sum £3,69 higher than the amount received under the same heading for the previous year. A sum of £655,986 was charged against revenue for depreciation and provision for renewals, and the amount expended from this fund, was £258,836 for.assets written off or renewals effected during the year. The accumulated credit balance in this fund at the 31st March, 1929, was £1,328,020, an increase of £397,150 over the balance at the 31st March, 1928. Interest charges amounted to £2,331,335, as compared .with £2,139,867 in the previous year, an increase of £200,468.

The deficit on account of revenue and expenditure on the year’s working was £432,743, as compared with £291,452 for the previous year, an increase of £141,291; and this increase is principally due to the unprofitable nature of the new lines taken over during the year, the revenue from which was insufficient to pay working-expenses, thus leaving no rfiargin for interest charges. The revenue from passenger traffic totalled compared with £2,145,296 in the previous year, a decrease df £20,550, or 0.96 per cent. While these figures are more satisfactory than those for the previous year,

when the decrease was £158,884, the fact must not be overlooked that th?

decrease in ordinary ■■ passenger traffic, still continues. For the year under review the revenue from ordinary passenger traffic decreased by £148,476,' but owing to the fact that Good Friday fell on the 29th March, 1929, as compared with the Bth April, 1928, the bookings for 1929 include the major part of two Faster holidays, and the heavy decrease in ordinary bookings is partially balanced by the increase in the holiday excursion issues.

It is satisfactory to note that the .efforts of the Department ih catering for week-end and picnic traffic and special events have resulted ih an increase of £14,992 in the revenue from passengers carried at reduced fares. Freight revenue * totalled £4,846,125, an increase of £165,990, or 3.55 per cent., as compared with the figures for the previous year. The principal increases were in grain, butter, cheese, wool, agricultural!. lime, soft coal, road metal, benzine, and artificial manures. The live-stock traffic totalled 10,319,768 head, an increase of £560,311 as compared with the previous year. 'The gross expenditure was £6,849,383 as compared with £6,685,123 in 1928, an increase of £164,260. The principal increases were in maintenance of roll-ing-stock (£43,439) and traffic transportation (£65,506). The increase in the former item is due to the greater provision necessary for renewals and overhead expenses in respect to the workshops reorganization, while the larger expenditure on the traffic side is due chiefly to the expense incurred in working the additional mileage taken over during the past year and the cost of providing additional services such as the night expresses in the South Island. Immediately on my assuming office I took the opportunity of making myself personally-acquainted, with so much of the railway 'systemSKs ciVbumstances

permitted. ,l ' In the course of liiy "tour' I received many representations regarding a variety of matters affecting the Department’s operations—a large proportion of these had reference to improvements that were desired. So far as these requests involved the undertaking of new works, I found myself considerably restricted in meeting the requests by financial considerations. The very large commitments in which the Department was involved to carry out the extensive works that are now in hand and must be carried to completion absorbed practically the whole of the available finance. I deal more particularly with the works in hand in another portion of this present Statement.

I have also given very careful consideration to the.question of the financial position of the Department.

Dealing with the question of the railways from an historical point of view, we start fromfthe point that the railways, in the first place, were undoubted Iv constructed as a developmental institution rather than as a profit-mak-ing institution, indeed, it is scarcely possible to conceive that much of the mileage of the,.present railway system, even of the main lines, would have been constructed at all if at the time when, their, construction was decided upon the question as to whether they shouldibe. gone on with or not had been decided on a profit-making basis. As the years have gone on this, policy has been Nor has it been confined to construction only; it has extended also to operations, and many services and tariff concessions have been given in the past,,on the basis of the developmental aspeqifcof the railway policy. It is, I think, absolutely essential to a proper interpretation of the railway accounts that we should keep these facts clearly in our mind. More especially do I think it timely to emphasize this fact, as there has undoubtedly grown a tendency to regard the deficit as shown in the annual Statement as a “ loss.”

In the light of the policy as above enunciated this is quite unjustified. It is beyond the possibility' of question that the country has reaped very material indirect return from the existence olf the railways. This return, however, has not been reflected in the annua’ Railways Statements. It is none the less real. The whole question resolves itself into one as to whether the time has arrived when the country is pay'ing through the deficit on account of the railway work too much for the indirect returns that it is getting.

At this point, a very great difficulty is encountered. It cannot be denied that the railway position in this as in every country in the world has been very adversely affected by the introduction of road-motor transport.

if we take the passenger figures alone we find that as compared with pre-war the revenue is down some £600,000. Taking also the natural increase that took place in the Department’s passenger revenue prior the advent- of the road motor we could confidently have expected that the passenger revenue alone, but for the influence of the road motors, would have approximated to the amount of the present deficit, and the extra revenue would have been earned with comparatively, small increase in expend'tiife.

The question therefore arises as to what nro n ortion of the railway deficit should be regarded as: .pronerlv payable in respect of the developmental work of the railways. This obviously will depend on what the railways can be made to earn in the face of the fact that road-motor transport has now to he accepted as a permanent factor in the transport industry.

Reforo this can he determined it is essential that . the respective spheres of railways and roau transport should be determined and the fullest possible measure of co-ordination obtained. As matters are at present, it would be impossible to say with any degree of certainty what the railways are worth as a revenueearning institution, The first step,

as it appoaris to me, clearly is to so regulate the transport industry that the true value of each method of transport can be made clear The policy of the Government in this connection . has already been enunciated in the Budget and need not bo here repeated. I desire, only to emphasise my firm conviction that the carrying-out of that policy is the first and most essential slop in the development of a policy lor a solution of the financial problem in regard to railways.

WORKSHOPS REORGANISATION

The position in regard to the car rying-out of the scheme of the reorganisation of the workshops is fully set out in the report of the Genera'. Manager. As I understand the gene sis of this scheme, it arose out of two factors—(4) Tlie unsuitability of the old workshops for the purpos' for which they were being used, and (2) the direct financial benefit that was to be obtained from the undertaking of the scheme.

NEW WORKS

I have paid much attention to tin matter of new works which the -Department have in band and which are in contemplation as disclosed by tlie programmes that have been formulated. All those in hand will with tlie exception of the Palmerstoi '■North Deviation, be carried to cop pletion. These works are of consb’ erable magnitude, and the sums ic quired to enable them, to be carrir on have, as far as the present ye: is concerned, absorbed all the mono that- could be made available to th Railway Department for the purpc.s< of new works of this character,, air this position is likely to continueyf' at least the: next year or two. :. ; . As far as Palmerston North Deviation is concerned, an nnnqnno ment has already, been made 'regain ing that work, and amply justifies the Government’s decision not t carry on the work in connection wit 1 the deviation and to provide the im proved facilities on the present site. As regards other works in the pro gramme which have not yet bee; completed, I desire to say that I prr pose to review these progressively ns time for their commencement ap I do not think it wise ai the present time to make any final decision as to what might be done some years ahead, principally lor tin reason that the railway position is n such a state of flux as may make : decision to-day more or less valueles: in a few years. The correctness o this /position has, I think, been al ready amply .demonstrated. An outstanding example is the case of tin Palmerston North Deviation, as t< .Which, however correct the decisior might have been at the time when b was decided to undertake the work there is not the slightest doubt ilia' the conditions as they exist to-day called for a review of the situation and justified tho,..Govcninieiit in ,;’t: decision to stop the work. For,those reasons I do not think that any other course of action can be fit tingly adopted under present circumstances than.'to do as'l have already indicated—namely, carry to completion the large works now in hand, and as financial possibilities and other circumstances permit review all propositions for railway improvement.

One of the' aspects of new. works re quired to be undertaken that I think i' important is that of the means of communication. From my own experience in moving about, and from consideration of the great changes that have taken place in the machinery of communication during recqnt years, I gathered the decided impression that the Department was working at great disadvantage so far as these facilities arc concerned. The matter has been specially investigated, and the report shows that it is very necessary Tor efficiency and will certainly make foi material'economy if improvements arcmade in the Department’s communication facilities.

On the economy side' special significance attaches to the system of traincontrol from a central office by meansof a special telephone system. Traincontrol is already in operation on certain parts of the railways, and experience lias shown that very considerable economy has resulted and much more satisfactory service has been made possible from the point of view of the more expeditious working of the trains. The system of train-control has a spe'ial value in New Zealand with oui high proportion of single-line working, whic-h calls for a higher standard of organisation to reduce delays to trains resulting from initial delay of any particular train. In the allocation of available finance in future I propose io pay special attention to the requirements of the Department’s means of communication. For the year now current the sum of £51,000 has been allocated under this heading. . TRAIN SERVICES.

I have commenced an investigation into the train services with a view to seeing whether improvements might not be possible to ensure better running or improved services. Some adjustfnents have already been made in the schedules affecting passenger trains in the South Island and on the Rotorua and East Coast Main Trunk lines. The running of the night trains in the South Tsiand has been continued, mil has given a large measure of satisfaction, especially to the business community. It will he my policy to ileveop night-passenger services as far as nossible, as I am convinced that this is a field in which the railways should have considerable scope for the development of a traffic that should become both profitable to the Department and increasingly appreciated by the community.

DO AD-ROTOR SERVICES

Another matter of growing importance, and one which will come more

frequently up for decision in connection with the Department’s operations in the future, is tliat of the working of traffic by the Department through the medium of road vehicles.

My own view is that such operations should lie decided upon with very great caution. AVe are by no means in a position to say that the road-motor operations that are now being carried n in cl:e community are on a sound oasis, and 1 fool that any action on die part of the Department in the direction of embarking on road-motor operations to any great extent requires arcful examination as it might have serious results on the Department’s .inancial position. I can quite realize, however, that •here may we! ( l be cases where the Department lOiild, with advantage to itelf and for better service to the community, undertake road-motor work; uul when a case is clearly established ‘or sound working on these lines, then think there is no good reason why the Department should not undertake the work.

I am impelled to make these observations, because there have been suggestions that the Department should lot carry on road-motor services. I do ot think that the matter can be carded to the point of absolute prohibition of any such action on the part >f the Department; first and foremost ‘•lie Department is a transport instituinn, and its duty is clearly to give the 'rnnsport service for which it is provided by the cheapest and most effi:ent means. Only when a road proposition is. definitely ascertained by x’aniillation of all the facts to be the heapest and most •efficient means, and rnt till then, should the Department L urn to that form of transport to en■hle it to carry on its services.

MAINTENANCE' OF BUILDINGS. As I have moved about the railway ystem it has been increasingly borne n upon me that the standard of the aihvay buildings is not up to modern deas. Many of the buildings are -■ery old, and though they.may be rea•onably adequate for the purposes of he business, .they are architecturally nit of date, and have the effect of givng the railway surroundings a somewhat drab appearance.

The great majority of the buildings ire constructed of wood, and have done luty in many cases over a very long period of years. Especially with wooden buildings, maintenance costs tend to tow pr'ooortionntelv higher with inleasing age, and I think we must look ‘brward in the near future to rising oaintenance-costs in respect of our buildings. / LYTTELTON TUNNEL ELECTRIFICATION.

This important improvement .was •ompleted and the length opened for ‘•.raffle on 14th. February, 1929. The L otal cost of the. work .wqs £145.C00. While the expenditure is* not expected to bring in any substantial increase,of •evemte; it' 1 ijvai ‘bfidowwodly justified from the standporit pfjeomfort and is in accord with the demand for better travel facilities, a demand, it may be nentioned, with which the Department .s faced in many other directions.

It was inseparable from a change jver from the old workshops to the npw jnes that the work of passing the ;Ocomotives through the shops should >ecome somewhat disorganised and fall nto arrear. Joined with this fact was ;lie circumstance of a peak pressure it traffic. We had during the concludng portion of the yeai’ a record tonlage, and our locomotives were kept ontinuonsly employed, considerably retricting the opportunities for running ©pairs and general overhaul. This onjunction of circumstances, is how,wer, a passing phase, and definite arrangements have now been made for the overhaul of locomotives to be rigormsly pursued so that the standard of efficiency of our engines will be fullyjp to requirements for the next ensu.ng busy season. A further aspect of the question that las engaged my attention is that of die cleaning of locomotives. The necessity for rigid economy lias prevented die same standard of polish being giv,>n to engines as was the case in past years. 1 desire to make it clear, howiver, that economy in this direction will be confined only to such parts of the cleaning process as do not effect die efficiency of the engines. All moving parts will require to be thoroughly .-leaned, and my policy will be to see that there is no sacrifice of efficiency to iconomy in this connection.

While so laying down the policy, however, I wouia mention that in the uatter of the cleaning of essential parts of the engines we are pursuing nvestigations with a view to enabling the work to be done more cheaply than has been the case in the past. This will generally take the line of adoptng other methods than hand-cleaning :>f the engines, and a praeticaE commencement has already been made by the installation at Dunedin of a process of cleaning by means of a steam jet. The results will he carefully watched, and if proved satisfactory and economical the system will be further etended. UTILISATION OF NEW ZEALAND COAL. The figures supplied in the General Manager’s report under the heading of “Coal Supplies” indicate the pleasing fact that the quantity of New Zealand coal utilised during the past year amounted to the unprecedented figure of 356,724 tons representing 84.25 per cent, of the total coal consumed. It will also be noted that whereas in 1925 the total importations from overseas amounted to 313.107 tons, which represented, a percentage of ■ 76.84 of the total consumption, this figure dropped in the year under review to 66.675 tons, or a percentage of 15.75. It is very gratifying to be able to record that the Department has been

? >, T 'Table to', utilize the local product in an increasing ratio, thus assisting in the maintenance of one of our great national industries. ■ /

RENEWAL FUND PROVISION,

I desire to record, the fact that prior to 1925 the railway accounts did not include a Renewal Fund ?for the replacement of items 1 of plant which had become obsolete 'or worn owt. A Renewal Fund was established in that year with a contribution from the Revenue Account of ; £553,891. Up to the,'.end of the financial year 1928-20 a . total contribution Of £2,397,088 had been made out bf revenue. During the same period the fund had; been called upon to the extent of £1,009,968 for the purpose for which it was established, leaving a credit of £1,328,020 ;ns at Slit March last. . ,‘

It is necessary to point out that the making of adequate provision :fpr renewals in a system, as vast as . that ’

of the railway's, and one in which such a large amount of capital ihas been invested in .assets, which rightly must be regarded as of a wasting nature, is a matter in which opinions might differ as to what is or is not adequate provision. 'lt is admittedly difficult when any business is conducted a<t a loss to keep contributions of this nature up to a correct standard. At the same time it is obvious and needs n.o demonstration that unless that standard of contribution 'is maintained the ultimate strain upon the rovenuc of the Department for renewals and replacements must be in an increasing ratio as the years pass. The,position in this regard is very vividly brought out by the reference made in the General Manager’s report under the heading of “Bridges.”

The Department has over fifty lpiles of bridges, many of which are - now due fc-r renewal or strengthening. This will call for a heavy outlay, arid the point that I would emphasise at the present juncture is that the .additional financial provision that now has to be made for renewals in consequence; of the inadequate provisions made in the past cannot be rightly' regarded as loss on present or- future working. The country ;in making up this deficiency is simply paying back something it should not have had in the first place. CONCLUSION;/ ■ \ •

In conclusion, I would Jake to say that in. the time afforded • pie since assuming office tjiere has not been opportunity for working out a detailed policy in connection with ilie that in consequence of a change in the administration not only,, in respect to the Ministry, but also Jn respect to the management, much.inquiry .was necessary, in order/ sound foundation of data might be obtained for the building-up of a policy for the future. •. _ . ......... I have in the course of this statement dealt with some > matters of more immediate • moment -that we hove, been,able to' deal with to a greater or less extent up to the present. Further than that I. can but lay, down the general lines' of my ■policy,,-, which, stated in the fevyest •possible words, will be to give the gi;p ( atest .measure of service to, the community at the lowest cost that the circumstances will allow. The strictest economy consistent with, preroer efficiency will .be aimed at so far as the internal working of the Department is concerned. As regards its external relationships with othpr factors in the transport industry, it will be iriy policy to work to the fullest possible degree of harmony with other forms of transport, constantly endeavouring,to give the fullest niepsure of usefulness to the community. out of the transport industry as. a • whple. t ; ; ; >«• "The acquaintance which I hav.e-.al- ~ ready formed with the detailed working of the Department has convinced ‘ t me that we have a staff able and enthusiastic, imbued with 'high principles of service and desirous riot only of carrying out tlieir daily vocations, as a means, of livelihood, but also to make » the railway service something that' will stand, to the credit of the Dominion. Before concluding' I desire to express my personal appreciation . for the invaluable assistance rendered to me by Mr H. H. Sterling,. General • Manager, in my endeavour to grasp, the intricate' details of railway-man-

agement. I regard Mr. Sterling as a' map of exceptional ability, and one in every nvay capable of carrying out to successful conclusions the . extremely important work in wTiicli he has been engaged by the State.