RAILWAYS STATEMENT

Manawatu Standard, Volume LVIII, Issue 229, 26 August 1938, Page 8

RAILWAYS STATEMENT

MORE BUSINESS—NET EARNINGS LESS

£1,703,011 BELOW INTEREST CHARGES

In the statement of tlie Railways Department for the year ended March 31, 1938, presented to Parliament by the Minister (Hon. D. G. Sullivan) it is shown that while record business was done the net revenue was j£271,061 less than in tlie previous year and the. sum returned (.£632,797) is £1,703,011 less than the interest charges (£2,335,808). The revenue for tlie year amounted to £8,634,186, as compared with £7,790,651 in the previous year, an increase of £843,535 (10.83 per cent.).

The decrease in net revenue, it is stated, was due to an increase in working expenses amounting to £442,196 on account of the operation of the 40-hour week for a full y ea H and other salary aud wages concessions granted to the staff during tlie year. The increased wages cost of handling the substantial increase in business, together with the increased price and consumption of coal, stores, and other materials, plus tlie cost of providing improved stock loading, yard lighting, and other facilities at stations, amounted to £672,400. The aggregate increase in working expenses was thus £1,114,096. On March 31, 1938, the capital invested in the lines open for traffic, including the steamers and plant on Lake Wakatipu and other subsidiary services, was £56,065,187, as compared with £54,696,437 on March 31, 1937, an increase of £1,368,(50. For the current year it is anticipated that the revenue will reach £9,211,605, and the expenditure £5,706,207. Comparative items in the Statement covering - the last four years are Year ended March 31. 1938. 1937. 1936. 1935 Total miles open for traffic 3,323 3,320 3,320 3,3-0 Capital cost of opened and • , unopened lines £63,189,260 £60,659,783 £59,611,834 £09,477,143 Capital cost of open lines £56,065,187 £54,696,437 £54,203,059 £04,089,190 Gross earnings £8,634,186 £7,790,651 £7,004,316 £6,6-7,928 Working expenses £8,001,389 £6,886,793 £5,952,839. £5,040,437 Net earnings £632,797 £903,85S £1,051,47✓ ?I’9§Z’oql Interest charges £2,335,808 £2,309,754 £2,300,00l -.2,330,886 Percentage of net earnings _ to capital invested .... 1.15 1.65 1-94 -XI Total passenger journeys . 22,441,212 21,235,428 20,358,524 19,604,467 Goods tonnage 6,847,974 6,212,907 5,018,4 // 0,444, 977 Live stock tonnage 668,075 600,333 5/0,328 o/5.983

BUOYANCY 0E TRAFFIC. RECORD BUSINESS DONE. BUT NET REVENUE LOWER. EFFECT OF HIGHER COSTS. The financial 3 r ear, which ended on March 31, 1938, the second since I assumed the portfolio of Railways, has been one of marked progress in every feature of railway activity, with notable buoyancy ill many classes of traffic carried by the department and some important developments .that have been particularly helpful to the people of the Dominion from both the business and t'he recreational aspects, said the Minister in presenting the Statement. More business has been done by the railways during the past twelve months than in any previous year in the history of the Dominion. This fact is attested not only by the record gross revenue earned, but also by the record total of 561,000,000 goods net tonmiles. There was an increase over the previous year of 1,205,784 passenger journeys by train, and 890,023 additional passengers were conveyed by railway road services as compared with the year ended March 31, 1937. 'Hie internal activities of the department have been equally impressive. Never previously have the railway workshops been so fully engaged, their total staff now standing at approximately six thousand, and in no other .year have so many major improvements been introduced into the working railways. The year lias proved the efficiency and popularity of rail cars designed and built by the department, for certain classes of traffic in suitable localities. Following the experimental stage of Wairarapfi and Midland types of rail cars, the first of the standard rail cars, evolved to meet tlie general requirements of the department, designed by our own engineers and built by our own craftsmen, has. been completed at the Hutt Valley railway workshops. Larger and more powerful than anything of the kind previously seen in New Zealand, the new “Aotea” type of vehicle, of which a further fifteen are under construction or on order, is striking in appearance, fast and comfortable to travel by, and is a power unit of great adaptability which promises to Have an extremely beneficial effect oil rail travel in New Zealand, particularly in those districts where it can be utilised to replace mixed trains or be used as complementary to existing express services. The 'electric multiple-unit coaches, introduced in July upon the Welling-ton-Joil nsonvi lie line, have demonstrated what can be done by appropriate action in winning traffic for the railways by giving the highest standard of service to the public upon a line which but a few years ago was officially assessed as having no more than a trilling salvage value. The first of the seven powerful electric locomotives for the WellingtonPaekakariki section of the North Island main lines has already been tested and lias met all requirements, and when the others of tlie same type now under construction at the Hutt Valley Railway Workshops are completed and all trains to and from the Main Trunk line are electrically operated between Wellington and Paekakariki, a further stage in the modernisation of the railways will have been achieved.

claimed that in the past two years the New Zealand Railways have come well out of tlie doldrums into the fair trade-wind of present-day conditions, and that the Government’s policy has been the power which has helped them to achieve these results. The actual financial results of the year’s work compare with the Budget objectives as follow : Budget Estimate Actual , £ £ Revenue 8,253,500 8,634,186 Expenditure ... 7,651,198 8,001,389 Net revenue / ... 602,302 632,797 The gross earnings for the year — namely, £8,634,180 —are the true earnings of the department, no device having been adopted to swell the gross revenue. This should be remembered when comparison is made with, say, the financial years ended March 31, 1926, 1927, 1928 and 1929, when the railways were provided with subsidies from the Consolidated Fund amounting to £359,540 in 1926, £445,221 in 1927, £489,568 in 1928, and £490,735 in 1929, which amounts were included 1 in the gross revenue of the respective years, and the net revenue return increased correspondingly. The expenditure for the year totalled £8,001,389, an increase of £1,114,596 upon the .previous year’s figures. The main items of this increase are additional expenditure upon maintenance, oiling stock, and locomotive and traffic transportation. which. together accounted for £905.163 of this amount.

I think the public are already well ware of the need in the interest of safety and progress, for necessary and desirable expenditure upon the ■ efficient maintenance of the railways so far as the track, structures, and rolling stock arc concerned.

WAGES AND CONDITIONS. Wages for tlie year amounted to £4,902,226, or 61.27 per cent, of the total expenditure. Wages paid the previous year amounted to £4,168,041, so that the increase for the .year under review amounted to £734,185, made up as shown hereunder: Restoration to 1931 level, £74,516; forty-hour week (in operation for only a portion of previous year), £223,697; cost of removing anomalies as from September 1, 1937, created by the introduction of the 40-hour week one year earlier, £44,582; new wages schedules and regrading, £99,401 —total increase in wages (working expense accounts) due to concessions to staff, £442.196; Increased wages cost of handling additional traffic, £291,989; total increase in wages, £734,185. As the net revenue was £271,061 less than in the previous year, it will be seen that the improved wage conditions provided for the staff during the year under review, costing £442.196, 'more than accounted for the decrease in net revenue.

LABOUR’S POLICY. It cannot be stated too clearly that the Government’s policy, based on the primary consideration that the general standard of living in New Zealand should be such as the country’s great productive capacity justifies, is applied to the railways as it is to other industries and to other Government departments, irrespective of whether they are revenue producing or otherwise. The policy called for action to improve the purchasing power of the people, including the 40-liour week to assist in eliminating the national scourge of unemployment. In the railways it required also—(I) a complete restoration of wages following the “cuts” authorised by the legislation of 1931 .and 1932; (2) the removal of certain anomalies in the wages scale; (3) the regrading of positions, a right to which the staff were entitled, but the operation of which had been postponed by the previous Administration: and (4) a revision of the standard wages paid to the lower paid men in the service, with the object of ensuring that they received reasonable remuneration as compared with employees in other Government departments and those working under awards of the Arbitration Court. It should be noted how large a proportion of railway expenditure—amounting now to 12s 6d in the pound —is used in the payment of wages to a staff of approximately 23,000, and that a further Is lOd in the pound is spent entirely in New Zealand for ccal, and a large proportion of the 2s 5d in the pound for stores and material is also spent in New Zealand. The cash expenditure, after allowing for depreciation, etc., amounted to approximately £7,000,000. of _ which £6,250.000 was spent entirely in New Zealand. These figures indicate the tremendously important place.the railways occupy as an industry in the economic life of the nation. AIILSON DEVIATION.

The steam locomotive power has been improved by building six newtype heavy engines of the G class for the South Island, and a number of ditioiial K engines are under construction. Passenger rolling-stock has been improved, and more and better wagons have been provided for the conveyance of goods. Bridges and viaducts have been strengthened, heavier tracks laid, grades and curves improved, duplications extended, and innumerable other improvements on a considerable scale have been carried out during the year. The leeway of the past years is being steadily made up, and the cost of arrears of maintenance has been borne out of the current year’s earnings. THE FINANCIAL ASPECT. The revenue for the year ended Alarch 31, 1938, was £8,634,186, the highest amount yet earned by the department in any financial year, representing an increase of £843,535, or 10.83 per cent., over the gross earnings of the previous year and £1,629,870, or 23.26 per cent., more than the earnings for the year ended Alarch 31. 1936.

This increase of 23.26 per cent, in the gross revenue during the two years of the present Administration is a remarkable proof of the earning capacity of the railways when trading and the conditions of the country generally are favourable for their operation, particularly as there have been no increases in the rates for passengers oi goods during this two year period. Bearing this in mind, it may reasonably be

Reference is also made by the Alinister to improvements to existing railways. the major works being enumerated. These include the Alilson deviation —a total distance of about seven miles and eliminating 18 level crossings, with the provision of a new station and buildings to replace the present inadequate facilities. A double frack is to

be laid from Longburn to the new Palmerston North station yard. The duplication of portions of the Main Trunk Line near Wellington, easements of grades between Palmerston North and Marten and the big deviation between Okioa and Turakina are also mentioned, among other works. The Minister concludes by thanking the General Manager (Mr G. H. Mackley) and staff for their efficient work and helpful attitude.