RAILWAY FINANCE.

New Zealand Herald, Volume XLV, Issue 13673, 14 February 1908, Page 6

RAILWAY FINANCE.

. ARE NEW ZEALAND LINES PAYING? ! AX INTERESTING REPORT. Ax interesting report upon '.'the subject, of New Zealand railway finance was presented by the Railway and Shipping Committee of the Auckland Chamber of Commerce sit the meeting of the council of the Chamber yesterday afternoon. The committee had had before it & letter from Mr. Samuel Vaile relative to the subject, find also an article by Professor Jas. E. le Rossignol, of. Denver University, U.S.A., which was published in a magazine in August last, and extracts from which were published in the-; Hehald some time suosequently. The report of the committee, which. presented by its chairman, ilr.Barth. Kent, was as follows: — "■''.:■• ■■■.'. '*.-, .:■;■' ,-,■■'''

Upon a presentment of a summary of the working of the New Zealand railways from 1897 to 1906 by the two gentlemen named, it is shown that this Dominion has suffered a loss of no less than £4,380.14?, but your committee is not quite at one with the two gentlemen named in their method of placing the entire cost of additions to open lines " wholly to revenue account. Wo are of opinion that" a: very substantial amount, of such additions should bo placed to capital account, and not to revenue, and, of course, that would very considerably modify the total loss shown by Mr. Vaile ami Professor le Rossignol from 1897 to 1906. To illustrate this matter in as simple a way as we can, we will invite your attention to the year 1906 at that time the total length of railway-open was 2405 miles. The gross earnings for that year wero £2,349,704, and the working expenses £1,621,239, showing a net profit of £728.465. The interest on the railway debt (£24.092,085) amounted to £903,453. thus Riving a loss for 1906 of £174,988. Sow comes the very important item of "additions to open lines" for 1906,, via., £353,025. Your committee is of opinion that out of this large sum for additions to open lines there. must be a very considerable proportion which rightly should bo placed to the debit of revenue- account, and the balance placed to capital account. As to the proportions, your commit has no information, but whatever tho amount that should bo'debited to revenue account-— and it must be a serious onesuch amount must be added to the working loss of £174,988, already shown. Mr. Vaile and Professor Rossignol show that the actual net loss upon the working and maintenance of our railways for 1906 was £528,013, and whilst your committee is unanimously of opinion that a considerable proportion of tho item "additions to open lines" should go to capital account, there can bo no doubt whatever that the annual loss upon tho working of tho whole of our railway system is a very hearv one indeed. It now remains for the Executivo Committee of this Chamber, to determine what further action, if : any, they will take in this very serious matter. It is a subject of the very gravest importance to tho whole Dominion, and the causes which have led to the very serious losses in the working of our railwav system for the past 10 years should bo thoroughly examined, and the accessary remedies applied, if tho present annual loss is due to preventablo causes..

Mr. Kent presented a statistical summary of the working.of the railways from 1897 to 1906, which showed a net loss for that period of £4,380,147. The additions to open lines for that period amounted to £3,122,478. Of the latter, he said, there must be a, considerable sum for new and improved plant, such as heavier rails, which should be charged to capital account, and not revenue account. . This, would minimise the loss very much. It could not be right to make the revenue account pay wholly for increased and improved new plant, as was done by the system of calculation adopted by Mr. Vaile and Professor le Rossignol. The latter had spoken of political influence in connection with > the railways, the, result being that many railways were constructed in places where they should never have been placed. He (Mr. Kent) thought that.they should draw the attention of the Government to the matter, in order that they might hear what the Railway Department had to say in reply. He moved the adoption of the report. Mr. S. J. Nathan seconded the, motion. • Mr. G. L. Peacocke said that the turning point of the whole question was 'what should be the standard on which they should base their calculations, and the committee did not agree that Mr. Vaile and Professor le Rossignol had adopted a proper basis of calculation, but, in any case, there appeared to be a loss on the working of the railways. That, however, was always more or less the case in regard to new undertakings. If the loss was created by low rates and passenger fares, the public were getting the benefit. It might be that the country was indirectly receiving benefits that could hot be shown on paper, and he thought that the attention of the Government should be drawn to the matter. He agreed that there had been political railways in. New Zealand. Mr. Graves Aickin said that the contention of Mr. Vaile that the whole cost of. additions to open lines should be charged to revenue account was unreasonable and unfair, but perhaps a greater proportion should be charged to revenue than, -was done at present. - The President (Mr. ■N. Alfred Nathan) suggested that the Minister for Railways should be supplied with a copy of the committee's report. Mr. T. Peacock said that the important point disclosed by the report was that a loss was being made independently of the disputed point regarding tho cost of additions to open lines. .'•' Renewals should be charged to revenue, but additions should be a charge against capital. M?r. L. J. Bagnall pointed out that the Government might say that even if the railways were being run at a loss the people were receiving an indirect benefit. This, however, was not an equitable way of looking at the matter, as those people who were unable to make use. of the railways were taxed to provide the cost of their construction and upkeep. That there must be something wrong with the management was shown by the fact that the South Island railways, which had been longest in use, were the lea.st profitable. The President said that Mr. Vaile had stated that he did not supply Professor le Rossignol with the figures used by the latter. The figures used by each writer must have been taken from the same official source. :..-.. ' .'■.,'':.,■

It was decided to forward a copy of the report to the Minister' for Railways; and to draw His attention to the statements into which the committee had inquired. -

STATEMENT BY THE PRIME MINISTER. CONCESSIONS FOR THE PEOPLE. [by telegraph.— special corsespoxdbnt.] Waihi, Thursday. Railways occupied a portion of the Prime Minister's speech here to-night. He stated that since he first held office the concessions given back to the people in the shape of fares, season and annual tickets,, etc.. amounted to £850,000, including £500,000 to the agricultural and pastoral community. In the shape of increased mileage the sum amounted to £885,458, whilst the increased pay to employees during the same period totalled £375,000 per annum. This made a total of concessions amounting to £2,108,000. _ Some of the Government's opponents said that a tremendous sum had been spent on the Dunedm railway station. This was altogether misleading. The Government's critics did not take the cost of the station only, but of the remaking of the railway yard, sidings, and tracks that had to be done on account of the position of the station, and they added the cost of all these together, and" said that was the amount the Government was spending on the Dunedin station. That was " unfair. Whatever the Government did in future in the direction of erecting stations, post offices, or public buildings, they were going to avoid the mistakes of their predecessors, who put up buildings that had to be rebuilt two or three times,, because in building them originally they did not look ahead. . In Dunedin. 23 years ago, the foundation of a station had been hud which it was intend-' ed to erect, but that station was not built; and for many years an old, ramshackle building had remained to do service there. When the Government did build a new station, they certainly built one that would not have to be pulled down in 10 years or SO. .■'■;. * ' ,; ; " '''' : \"v : ' ' ■