RAILWAY SPECIAL BATES

New Zealand Herald, Volume LXV, Issue 19953, 23 May 1928, Page 10

RAILWAY SPECIAL BATES

Discussing the use of special rates for railway transport as a means of meeting competition, the divisional superintendent has advanced two claims in defence of the department's tariff that do not appear to be justified by results. Referring particularly to the special rates in force in the South Island, and generally to those ruling in other parts of New Zealand, Mr. Casey claims that none of these rates is below the economic level. To be intelligible, that statement requires a definition of the "economic level." It is apparently offered in the further claim that the department does not carry goods at special rates "below cost," though such goods do not provide so large a contribution to overhead charges as they would if ordinary rates were charged. There is no reason to question the accuracy of Mr. Casey's statement, which is no doubt based on information not available to the public. It is certainly interesting that no traffic is carried below cost, but taxpayers contemplating the losses on railway operation may not readily agree that actual cost of carriage, to which Mr. Casey evidently refers, is synonymous with the economic level and that cost can be measured without reference to capital and other overhead charges. For instance, the special rate for coal from Greymouth to Dunedin may cover the actual cost of haulage, but what contribution does it make to overhead charges? The question may also be raised whether all the special rates still in force are necessary, or whether many of them did not originate under competitive conditions that no longer prevail. There is at least circumstantial evidence that the tariff in the North Island is not below the economic level, for the net revenue earned by the main trunk lines and branches in 1926-27, without counting miscellaneous revenue that is not apportioned, was equivalent to £4 6s 9d per cent, of the capital cost. But the South Island system, excluding the three isolated sections, earned only £l 5s 8d per cent. Had its results been proportionate to those of the North Island, its net revenue wguld have been over £900,000, instead of only £265,000. The disparity is probably too wide to be due wholly to the operation of unprofitable special rates, but it is evidence that, in the aggregate, all traffic in the South Island is carried at rates far below the true econoinic level.: