RAILWAYS MANAGEMENT.

New Zealand Herald, Volume LXV, Issue 19932, 28 April 1928, Page 10

RAILWAYS MANAGEMENT.

Even if Mr. Coates has not said that the railways are losing £1,000,000 a year, there is no gainsaying the fact that the deficit for the past year will not be far short of that figure. It is, of course, true that the losses under the present management are heavier than they would have appeared under earlier conditions: the rate of interest which the department is expected to earn has been raised, and its revenue is now charged with superannuation fund subsidies and provision for reserves that were formerly borne by the Consolidated Fund. But these additional liabilities had been imposed when the Minister of Railways undertook that, under the board of management, "the receipts will be sufficient to meet working expenses, interest on capital and sinking funds," and that deficits would be made up by improving the financial results. The explanation now given by Mr. Coates for the postponement of that result does not precisely define the reason for delay in its realisation. He says it would be impossible for the department to show profits during a period of development, while capital costs were being incurred. This statement might mean that the deficit arises through the department having to meet the interest charges on capital expenditure that is not yet productive. That, however, seems unlikely, since those charges must be very much less than the apparent deficiency. The interpretation is probably to be found in another direction. The department calculates that the programme of improvements will ultimately produce economies more than sufficient to pay the additional capital charges. Does Mr. Coates mean that the excess of savings over the new costs will balance the losses which he anticipates in the interregnum 1 This appears to be a bold, as well as a long, view of the prospects, though it has the support of the Eay-Baven Commission, quoted in the last Bailways Statement, that by 1934-35 the railways will be earning 4.59 per cent, on a capital of £70,000,000. The improvements, which are the chief factor in producing this result, are limited to certain parts of the system, so that the forecast implies so large an increase in the profits from those sections that the deficiencies throughout the rest of the system will be covered. It means, for instance, that the loss of £500,000 on subsidised lines will be balanced by an increase in the profits on unsubsidised lines. Even if this forecast can be accepted as reliable, is it sound policy to neglect weaknesses which now cause the greater part of the annual losses 1 An active attack upon deficiencies of the system or its management that are substantially responsible for the defeat of Mr. Coates' policy of making the railways pay, weaknesses for which the programme of improvements cannot be regarded as a remedy, should make the prospects for earlier . years brighter and those for 1934-35 more certain,)