LOSSES ON RAILWAYS.

New Zealand Herald, Volume LIX, Issue 18202, 22 September 1922, Page 8

LOSSES ON RAILWAYS.

PAST YEAR'S OPERATIONS. DEFICIT ON CAPITAL COST. TOTAL SUM OF £1,021,156. [BY TELEGRAPH.—SPECIAL UIIPOBSEIt.] WELLINGTON. Thursday. The railway statement for the last financial year was presented to Parliament to* day. Tho gross receipts amounted to £6,643,591, a decrease of £264,940 on the earnings for the previous year, and £606,409 below the estimated revenue. Tho following gives a summary of the results: — ■ ( 1922. 1921. Total earnings ~ ±'8.613.591 ;£8.90i531 Total expenditure . . 6,237,727 6,630,601 The net revenue, £405,864, was equal to a return of 1.07 per cent, ou the capital invested in the lines open for traffic (£39,309,097). and 0.91 per cent, on the capital invested in the opened and unopened lines (£44,689,748). Counting interest on capital cost the year ended with a deficit of £1,021,156, caused by the abnormal conditions prevailing as the result of the war. In view of the unsettled conditions still 'prevailing' a guarded estimate is made for the current year tho revenue being, estimated at £6,700,000 and the expenditure at £6,164,000. Tho causes which have contributed to the present position, says Mr. McVilly, are the decline of traffic resulting from business depression, increased price of coal and other material, together with tho advance in wages. The circumstances have, however, been so exceptional that too much importance cannot oe attached to the results obtained. The department should be judged nnfc on tho results of a single exceptionally bad year, but on its general achievements/ which are governed by a policy which has the effect of setting a limit to the financial results. Wages Expenditure. ■ The increaso in the wages expenditure alone for the last two years has amounted to £1,080,589. * ■■ , Calculating the interest on tho capital invested in the railways at the policy rate of 3 per cent, from 1896 to 1909 and at the policy rate of 3$ por cent, from 1910 to 1922 'inclusive, the total net amount required to bo earned by the railways to meet, the interest charges iB £24,194,217. The net amount actually earned is £25,862,185, or £1,667,968 in excess of the policy rate required. In addition reductions made in rates in pursuance of policy amounted to £2,000,000. . ; .. During the eight years, April 1, 1915, to the close of the year under review, throughout tbe whole of which war conditions have prevailed, the railways havo returned a sum of £579,610 in excess of the amount required to pay working expenses and interest ab the policy rate of 3| per cent. ~ . •, , 1 Disregarding th& policy rate, and looking at the position from the point of view of the average interest payable on the public debt for the same period, the total net amount required to be earned to meet interest charge's, after paying working expenses, is £27,112,442" against the actual total net earnings of £25,862,185. Qn this basis the deficit in 26 years is £1,2c0,257.

Cost to the Community. The position then is that under the policy on which they are working the railwavs have returned a profit of £1,667,968, or an average of £64,922 per annum. On the basis of earning interest at the average rate on the public debt they have made a loss of £1,260,257, an average of £47,933 per annum. This figure represents the cost to the community of having the convenience of means., of transport by> railwav, and the question naturally sug-. gests "itself as to whether this cost is Justified; whether, that is, the economic advantages accruing to the community through the sources of wealth (such as the possibilitv of greatly increased settlement and development of industry) that have been opened up by the railways constitute & sufficient return for the outlay. Services Rendered at * I* B6 * One has but to endeavour for a moment to visualise what the state of this country might have been without the railways. The answer becomes obvious. The railways are at the present time performing many services at less than the actual cost. In. many instances exceptionally low rates were granted to assist in establishing industries which are now in a flourishing condition. Included in the list of traffic carried at a loss is roadmaking material for local bodies. The loss to the department on the actual cost of haulage of this material, used largely for the upkeep of roads to enable motor-lorries to compete with the railways, is over £50,000 a year. The loss fn respect to other unremunerative services is £130,000 a year. In assisting the cause of education the concession made .in railwav rates to children amounts to £25,000 per annum. '. £ Details of Increased f Costs. Of the gross increase in expenditure the sum of £220,026, equal to 36.60 per cent.-, represents the increased cost of wages, salaries, and conditions resulting from the granting of the 44-hours week to the railwav Staff by the Wsces Boflrd in 1921. The balance, £391,814, or 65.18 per cent., jepresents the increased price of stores and materials used during the vear in earning on the business of the department. TWe co«t of miscellaneous services decreased by £10,714. Of the increase in the locomotive branch salaries and wages absorb £146,361. or 31.08 per cent.: coal, oil and other stores and materials, £322,623, or 67.56 per cent.; and miscellaneous, £6468, or J1.36 per cent. Maintenance increases are represented by salaries and wageß, £56,038, or 42.72 per cent.; stores, £71,092, or 54.19 per cent.: and miscellaneous, £4048, or 3.09 per cent. The expenditure of the traffic branch shows a decrease of £9327, and "management" a decreaso of £°-58. The sum of £329.741 was expended in the maintenance branch, and charged to capital under the head "additions to open-Jines." Thoso comprise additions to station yards, signals, tablets and telephone installations, interlocking, additional dwellings for the staff and purchase of land. . ' =• ' Tho sum of £1,121,132 was expended in the provision of additional rolling stock, tarpaulins, Westinghouse brakes, steam piping, and workshops machinery.