THE RAILWAY SUBSIDY.

New Zealand Herald, Volume LXIV, Issue 19781, 31 October 1927, Page 8

THE RAILWAY SUBSIDY.

The policy of subsidising the operation of unprofitable branch lines and isolated sections of railway has been two years in operation, the principal result, to which a correspondent has directed attention, having been an increase in the subsidy from £359,540 to £445.221. The difference of £85,631 includes a subsidy of £12,352 in respect qf the Opunake branch of 23 miles, which was transferred to the department during the financial year. If this is excluded from the comparison, it appears that the subsidy on lines selected for privileged treatment has increased by £73,329, and, from the detailed account attached to the Railway Statement, it is found that the increase comprises £30,413" in losses on operation, after allowing for feeder value, and £12,917 in interest charges. The latter figure is surprising, since it signifies that during the year about £1,000,000 has been 'added to the capital, apparently about £7,450,000, already sunk in work, much of which is hopelessly unprofitable. Since the management has been relieved of all responsibility for the operating results of these lines, it would be interesting to know who controls capital expenditure upon them. If the actual increase in the subsidy confirms the misgivings which its introduction created, examination of the losses, before counting capital charges, leads to even more disturbing conclusions. By a simple calculation it is found that the net revenue from unsubsidised lines in 1925-26 was £1,675,824, and in 1926-27, £1,572.000, a decline of £103,824. But the loss on operation of subsidised lines, excluding the Opunake branch, and allowing for feeder value, rose from £43,031 to £73,444, an increase of £30,413. Thus, while the earnings of the unsubsidised railways toward capital charges declined by 6.6 per cent., the retrogression on subsidised lines was over 70 per cent. Such are the consequences, within so short a time as two years, of Parliament's action in giving statutory authority to the Railway Department to draw upon the taxpayers of the country for unlimited amounts instead of demanding from the Government and the department effective remedies for conditions that no efficient management, actually operating on commercial principles, could possibly tolerate.