THE New Zealand Herald AND DAILY SOUTHERN CROSS. TUESDAY, JULY 26, 1921. LOSS ON THE POST OFFICE.

New Zealand Herald, Volume LVIII, Issue 17843, 26 July 1921, Page 4

THE New Zealand Herald AND DAILY SOUTHERN CROSS. TUESDAY, JULY 26, 1921. LOSS ON THE POST OFFICE.

When the Government is moved by the pressure of public opinion to undertake the long-overdue economy campaign it will find itself obliged to study very carefully the accounts of the earning, as well as the administrative, departments. The unsatisfactory financial position of the railways has already been referred to in the Herald, and it has been shown that, allowing a very moderate rate of interest on capital, the loss on the railways during 1920-21. was at least £363,000. No such test can be applied to the Post and Telegraph Department for the simple reason that it does not show its capital outlay. An attempt is made in the appendices to the annual reports to indicate the position of the telephone exchanges, and, though no interest is allowed on buildings, this service was conducted in 1919-20 at a loss of £19,000, and probably at a greater loss during the past year. The postal and telegraphic services, taken as a whole; are making leeway even faster„than the railways, as the following table, showing the excess of revenue of the two departments over a series of years, indicates: —

As the latest " net profit" of' the Post Office is only sufficient to pay interest on a capital of about threequarters of a million it is evident that the Post Office is being run at a heavy loss, which is made good out of taxation. There will be no disposition to insist that either the Post Office or the Railway Department should be judged by a strict accountancy test. Both provide services which encourage pioneering and the development of the country. Indeed, in the case of the railways 3 per cent, was for very many years regarded as a sufficient return on capital, and any excess over this rate was followed by a reduction of fares and freights. With the extension of settlement a higher rate of interest was aimed at, and twice before the outbreak of war the return had exceeded 4 per cent. The -Post Office pursued an even more liberal policy, and although it increased its net revenue from £22,817 in 1901-02 to £112,209 in 1914-15, this growing profit was shown in spite of, or rather because of, a constant extension and cheapening of facilities. During the Avar period the traditional policy of the Post Office was abandoned. For a time the Government frankly regarded it as an instrument of taxation, and in 1915 imposed increases in charges which had the effect of swelling the.profit to an unprecedented level. The rise in working costs, however, gradually ate into this profit, and reduced it from £438,507 in 1916-17 to £162,834 in 1919-20. Under these circumstances, and faced with the necessity of paying higher salaries throughout the service, the Government decided a year ago on further increases in rates which doubled the pre-war charges for letters and telegrams. tjven allowing for the circumstance that the new rates were in operation

for only eight months of the financial year the results of the past year's working must be regarded as unsatisfactory. The details of the business for the period have not yet been disclosed, but the Minister has announced that over a million fewer telegrams were sent. It is obvious that the rates for the various services rendered by the department have reached a level that does not permit of further increase; in the case of telegrams the raising of the rate has actually resulted in a contraction of business and has presumably confronted the department with the alternatives of discharging skilled employees not easily replaced or of retaining their services in the hope that telegraphic business will gradually return to its former volume.

It would be unfair to criticise the Post Office harshly because its difficulties have been enormous. Wages and salaries account for considerably more than half its expenditure and the increase in the cost of living has been a grievous handicap. All post offices throughout the world have felt the pressure of abnormal times, and the British Post Office in particular has been running at a heavy loss. Nevertheless, some escape must be sought from the present unsatisfactory position of the Post and Telegraph Department because taxation is at far too high a level for a public service of this kind to lean heavily upon the Consolidated Fund. On the other hand, the rates to the public have been raised to the practicable maximum. itelief must rather be sought in a cheapening and widening of facilities. Upon low rates and efficient service post offices in every country have based their popularity and prosperity, and though force of circumstances has necessitated a temporary reversal of that policy it is still sound, and should be applied in New Zealand at the first opportunity. In the meantime, the Minister may be recommended to investigate the organisation of the department with a view to effecting internal economies and. to inquire whether the increase of the staff from 8136. in 1914 to 10,797 in 1920 is warranted by the expansion of business. The finances of the department are so unsatisfactory that it can no longer escape the public criticism which is being aroused by the constant increase in the national expenditure.

Year ended Railways- Post Office. March 31. £ £ 1912 . . - . 1,210,613 98,799 1913 . . . . 1,265.393 98,554 1914 . - . . 1,163,005 96,607 1915 . . .. 1,185,002 112,209 1916 . . . . 1,637,473 399,235 1917 .. . . 1,873,946 438,507 1918 . . . . 1,644,793 347.814 1919 . . . . 1,680,057 270,491 1920 . . . . 1,647,420 162,834 1921 .. . . 1,271,930 35,277