THE RAILWAYS YEAR.

New Zealand Herald, Volume LIX, Issue 18088, 12 May 1922, Page 4

THE RAILWAYS YEAR.

With a 4 net profit on working account of only £405,864, the New Zealand railways have produced the worst result for over thirty years, and as the balance represents only a fraction over 1 per cent, on the capital cost of the opened lines, the return is the lowest in the history of the system. The gross earnings were £6,643,590, compared with the estimate of £7,250,000,, and the actual total of £6,908,531 in the previous year. The expenditure, £6,237,726, is within the estimate, which was £0,490,000, as against the actual expenses in 1920-21 of £5,636,601. As a result, expenses absorbed 93.89 per cent, of the revenue, compared with 81.59 per cent, in the previous year. The volume of traffic has been maintained at remarkably high figures, lower than those of the previous year, but above those for 1919-20 as the following comparison shows: —

1921-22. 1320-21. 1919-20. P«.ss'ngers, No! 14.262.140 15.315,640 12.760.814 Seas'n tkts., No. 472.665 464,691 400.621 Livestock No. 7.915.419 7,505,967 7,674,532 Goods, tins - . 5.931,113 6.085.360 6.597.232 There is no question that the railways have not made a sufficient contribution to the Consolidated Fund to pay the interest on the capital expenditure. The only point of un-, certainty is the amount of the deficit. Counting interest at the arbitrary rate of 3f per cent, adopted by the department, the deficit to bo supplied from taxation is £984,803. In his speech at Feilding, Mr- Massey invited comparisons with the Australian railways by quoting the losses incurred by the various systems for the year ended June 30, 1921, after providing for actual interest charges. Since the average rate for the whole Commonwealth was 4J- per cent., similar provision by the New Zealand department for the past year would involve a deficit of £1,356,791- It is for the Government to discover the proper figure by introducing business methods in the management of the service. The contrast between the North and the South Island systems remains as unsatisfactory as it has been for years. Neither has earned enough to pay interest charges, but while the deficiency in the North Island is only £170,141, the South Island has passed from its usual condition of inadequate returns to failure to pay working expenses, resulting in a deficit for the year of £814,661. On the basis of capital charges at 3? per cent, the North Island railways earned in the five years from 1916-17 to 1920-21, a .surplus of £2,206,786, whereas for the same period the South Island showed deficits totalling £872,909. The contrast is emphasised by the analysis of earnings in respect of track mileage, dating from the year in which the record working profit of £1,873,940 was earned: —

North Island. South Inland. Per Per Net Rev. mile. Net Rev. mile--1916-17 . . £'1,171.700 £940 £702,246 £409 1917-18 . . 1.098.514 866 546,280 318 1918-19 . . 1.127.477 888 552.550 322 1919-20 . . 1.097.844 865 549,576 318 1920-01 . . 1,008,586 786 263,345 152 1921-22 . . 517.428 403 111.563* 64* •Excess of working expenses.

In the face of such figures, comparisons with Australia arc futile. The fundamental fact of the railways problem is that in six years users of the North Island railways have paid no less than £2,036,645 in excess of their share of the department's estimate of interest charges, out of which £1,687,r,70 has been appropriated to subsidise the insolvent South Island system, leaving a balance of £349,075 which has gone into the Treasury. Is the new board of control to have full power to make not only the railways as a whole, but the system in each island, pay its way, and thus remove the longstanding injustice against the North Island?