RAILWAY MATTERS.

Manawatu Standard, Volume XLIII, Issue 400, 18 May 1922, Page 5

RAILWAY MATTERS.

DECLINE IN BUSINESS,

PRIME MINISTER EXPLAINS,

(Per Press Association.) AUCKLAND, May 17.. "When dealing with railway matters in my speech at Feildihg," said Mr Massoy to-day, "1 explained at; somo length that the causes of the decline in the business being done by the New Zealand Railways were entirely beyond the control of tho Government and the department. In point of fact, the abnormal conditions tinder which the railways have been working since 1915, due directly to the economic effect of the war, have made such results inevitable, INCREASED EXPENSES. "On the one hand the costs of operating, due to increased price of stores and materials and the advances in wages, have increased expenses as compared with 1915 by 130 per cent.; while on tho oilier band rales for the carriage of passengers ami goods were raised only 25 per cent, ami per cent, respectively during the same period. Up till 1920 trade in the country was abnormally stimulated by the high prices of its products, and this brought about such expansion of the departments business as to make up for the disproportionate increase of rates in relation to tho large increase in expenditure. Freight charges in themselves, moreover, were small compared with the high prices ruling for commodities.

"Tlie .slump in trade last year, however, changed all this, and the reduction both in export;; and imports reflected itself in railway business. The 25 per cent, and 40 per cent, additions in charges were no longer sufficient to maintain a proper balance in the department's accounts; further* more, the fall in prices of the country's products made it impracticable to seek to adjust the balance by still further raising charges. I made special reference to the large increase in expenditure due to the high cost of material and the advancement in wages and improved working' conditions to stall'. IMPORTED COAL. "In order to illustrate clearly the effect; these increases have had on the financial result of the working of the railways, it may he explained thai stocks of coal which the department had to obtain in order to maintain its obligations to the public, as was explained at t'eilding, have been purchased ai a high rale—actually 293 per cent, above the pi ice in 1915—and will continue to be charged at thai rate to the. working expenditure until such time as the stocks are exhausted. "The same applies to stocks of other material required for Hie carrying on the railway business. These are issued from the stock of stores at the rates ai which they were purchased, and some time must elapse before the lower prices now ruling will be reflected in tin* expenditure." ARREARS OF WORK. The Prime Minister explained some of the increases in expenditure, and then continued: "With regard to wages, an important factor in keeping down expenditure during the war years was dun to the department's policy in releasing men for active service. Its efforts in this direction resulted in the staff of the department being reduced below normal, and necessitated postponing repairs find renewals as tar as could be safely done until the ((inclusion of the war. Arrears of this work, accumulating over the whole war period, must inveitably increase expenditure for this year, and for several years to come." EFFECT OF BONUS REDUCTION.

By the Public Expenditures Adjustment Act of la-st session, a reduction has been made in the bonuses which were being paid on account of the high cost of living, which is now very much lower than a your ago, I nit this took effect too late in the year in question to have any marked effect upon the total sum expended. As has been slated, New Zealand is not the only country affected by the abnormal conditions which have existed during the lust, year or two—the effects of which are still pre, ailing. OTHER SYSTEMS LOSING.

"'As a matter of fact, railway systems in other parts of the world have made losses for several years, while last year was the first year in which the percentage earned on the Dominion railways did not come up to the rate expected in normal limes. Heference that was made to the linancial results of the Australian railways was not for the purpose of a comparison of results of working. Such a comparison would obviously be useless without a_ close. analysis of the conditions and policies of the"'Government. Each _ reference had as its object merely to indicate that the causes which have brought about the present financial condition of the Dominion's railways have had precisely the same effect upon those' in Australia—and. indeed, upon railways throughout the world, whether State or company-owned. FURTHER INCREASES NOT ADVISABLE, "As I have pointed out, railways fares and freights in New Zealand have been increased by 25 and 40 per cent, respectively, and I am (irmly of the opinion thai, to go further with the idea of securing a larger excess of revenue over expenditure would create serious industrial depression, with consequent loss of business to the railways and the Dominion generally. That the position of the New Zealand railways is not nearly so serious as in other places may be gauged from the fact that although goods and passenger rates on the English railways are 120 per cent, and 75 per cent, respectively higher than those ruling in 1914, compared with the Dominion's increases of 25 per cent, and 40 per cent., the English railways for some lime past have failed to make an adequate return for the money invested. REMOVING ANOMALIES.

"So far as present rates are concerned every effort is being made to remove anomalies, but. the imperative necessity of conserving every penny ofrovenuo prevents the Government from going as fur as it would like in the way of reducing charges to users of railways. The question of keeping expenditure down has nor boon lost ■sight of for a moment, but is one that has received constant consideralnoi) both by Ihe Government and the Railway Department. The position has been, and is still being, very closely ■watched, and 'cuts' in service!! throughout iho Dominion were decided uoihi only after tho position had been thoroughly investigated. Although some inconvenience to the public was caused, tho result, aohieved finally fully justified the action taken, and a. large saving of expenditure was brought about "Taking also into consideration iho whole of (hose circumstances, it must be quite clear to all that the railways could nol possibly pay anything like the rate of interest which lias boon laid down by the Government as a. basis in the past. "The rale of 3] per cent, laid down as being the interest which the Railways Department should aim at earning was not aribtrarily lixed-as suggested, but was arrived at alter mature consideration. This rate represents approximately the average cost which the country paid for tho capital invested in working railways. Even _ allowin" that the rate is now compared with the present cost of money, it may bo claimed that the difference is fully represented by many of iho services rendered by the department: to the. country without an adequate return from a commercial point of view. It must not be forgotten that tho railways act powerfully in the promotion of agricultural, industrial and commerce development, and it has been Hit' policy of Iho Government to utilise the railways of tlie Dominion to a very considerable extent in this direction by rendering services in many cases at below cost. '