TRAMWAYS FINANCE.

New Zealand Herald, Volume LXIV, Issue 19712, 11 August 1927, Page 8

TRAMWAYS FINANCE.

Several aspects of the finance of the tramways undertaking on which it was suggested complete information should be ' furnished were discussed by the Herald a few days ago. One of them is the subject of a statement by the chairman of the Tramways Committee. In view of the fact that the revised estimates for the year forecast a loss of £5357, or excluding the proposed provision for loss on realisation of old powerhouse assets a bare profit of £2026, the judgment of ratepayers upon the prospects of the undertaking will depend very largely upon their confidence or otherwise in the official estimates. The latter were based partly on the actual results for the first four months of the present year, and the suggestion was made that the council should publish an exact statement of those results in comparison with the management's original estimates for the period. Mr. Allum's statement simply sets forth the increase in gross receipts over those for the corresponding period of last year. Such a comparison is of little practical value. A year ago, the competition of private motor transport was at its height, and the

tramways were operating on unprofitably low fares and maintaining additional services in their efforts to meet the competition. Receipts were consequently abnormally low and expenses high. During the first four months of this year the competition was negligible and during three months of the period a new scale of fares was in force which would account for at least £BOOO of the increase in revenue mentioned by Mr. Allum. Since the circumstances have been radically altered, a mere comparison of gross receipts cannot be made the basis of sound conclusions. What is required is a complete statement of actual receipts and expenditure for the period, set beside the estimates prepared before the new scheme of fares was drafted. Nor should the committee overlook the request for exact information regarding the amount of losses which it proposes to discharge out of future profits, and for some indication of the committee's calculation of the period that will elapse before the whole undertaking is restored to a profitable basis. The committee may hesitate to accept the responsibility for such estimates, but the alternative is an admission that it is asking the ratepayers to vote, not for a sound business proposition or even n fair business risk, but to commit themselves to an indeterminate liability for an indefinite period.