RAILWAY FINANCE.

New Zealand Herald, Volume LV, Issue 16848, 13 May 1918, Page 4

RAILWAY FINANCE.

A brief statement by the Minister for Railways made in explanation of the year's railway accounts is published to-day. It will be generally welcomed, for it certainly shows the railway loss to have been less serious than the bald figures indicated. At the same time, few people • will be found to agree with the Minister that the results of the year are "very satisfactory." Mr. Hemes is able to show that in the past three years the profits have been exceptional, and he claims that the decrease this year, as compared with last, is due to the payment of bonuses out ,of earnings instead of out of the Consolidated Fund. But this explanation is only partial. It gives no account of the effect upon railway .revenue of the increased fares and freights. Clearly the high profit of the past three years is attributable to this cause and cannot be placed to the credit of the railway management. The first increase in fares and freights became operative in the middle of September, 1915, so that for more than half of the year ended on March 31, 1916, the Department was working under conditions which were not comparable with those of the previous years. The revenue for that year showed an increase of £442,899, of which the general manager ascribed £220,000 to the additional rates. Throughout the whole of the following year these war rates were in operation. Their actual effect upon railway revenue in that year has not been stated, but the gross revenue then showed an increase of £252,454-and the net profit on working an increase of £236,473. This year two new factors are introduced payments by way of bonus are rightly charged against railway profit and for the last four months of the year a further increase in fares and freights has been in force. The bonus payments are stated at £229,838, and when comparisons with last year are made it is only fair that this should be taken into account. It may fairly be placed against the decrease in profits, which is shown at £229,152. But when this deduction has been allowed there is an actual loss on the year's working corresponding to the revenue drawn from the second increase in fares and freights during the months of December, January, February, and March. How much this may be Mr. Hemes does not say. Two years ago the Railway Department was able to estimate the effect of the first increase, but since then it has apparently regarded the war-time tax on railway fares and freights as part of its ordinary revenue. The result has been to confuse the accounts and make comparisons valueless. The figures quoted by Mr. Herries as showing that the interest earned on cost of construction in 1915 was £3 10s 7d, and in 1918 £4 ' 12s, are meaningless unless the Minister also shows how much the users of the railways paid in extra rates in the latter year. The Railway Department must be in possession of some such information and there is no reason why it should' be withheld from the public.