CURTAILING LOSSES.

New Zealand Herald, Volume LVIII, Issue 17844, 27 July 1921, Page 6

CURTAILING LOSSES.

r It is not surprising that the atten- ' tion of the Government should have turned first to the railways in the y overdue effort to curtail the heavy l cost of the "national government. They have been conducted for many ' years upon an utterly unsound basis, involving the imposition of unnecessarily high charges to supple- , ment from the profitable North , Island system the inadequate rej turns from the South Island lines. . Now that even the working account „■ shows a dead loss on the Southern | system, without reckoning capital . charges, drastic reforms become im- , perative. A telegram from Wellingi ton published to-day indicates that the department does not recommend , a further increase in fares and freight charges, but has prepared , proposals for the elimination of the least remunerative services. This is : manifestly the only policy adapted L to the circumstances. One factor in , the situation has been a decline in ; traffic, a tendency which would be i aggravated by raising fares. The worst feature of the situation, how- , ever, is the disproportionate in- , crease in expenditure, and this can be checked only by discontinuing services that are in excess of actual requirements, and thus effecting allround economies. At the outset the Government should determine exactly the capital obligations in respect of the railways, and devise ' its economy scheme to produce as 1 nearly as possible a net revenue sufficient to meet the bill. Proceeds ing upon this basis, it will be coml pelled to husband all real sources of - profit and to prune drastically ! wherever working expenses are out > of proportion to receipts and to the ' public value of the services. It may t be presumed that little can be 1 achieved upon the isolated sections, I where, at the best of times, only I meagre provision is made for the s districts they serve. The position - of the Main Trunk lines and branches i is of far greater importance, and I recent statistics indicate directions ' in which action should be taken. i When the " coal-saving cut" was i made in 1919, the services in both i islands were reduced in the same I proportion- This was proved to be ' a mistake, for the reduction of re- • venue in the North Island was much greater than in the South, de- > monstrating conclusively that there • had been an excessive provision of i services in the South Island. Ex- [ amination of the department's rei turns shows that on the North Island t main line system passenger and i goods traffic are heavier than last i year, only livestock having slightly • declined, and the- gross revenue is ■ higher. On the South Island system passenger traffic and livestock ears ried have declined, and goods traffic j shows a small increase. The re- - ceipts are also slightly better, but i the increase is almost insignificant in comparison with that in the North , Island. The position is fairly disclosed by the working accounts for . April and May. According to them, . the North Island main line system is returning profits at the rate of £396 per track mile per annum, while the South Island system is rnnning at a loss of £93 per mile. There may be opportunities in the North Island to effect savings, but the department ! would obviously be well advised to > proceed warily in pruning services j producing this average result, while r a much larger mileage in the South i Island is actually failing to pay i working expenses.