CITY TRAMWAYS FINANCE

New Zealand Herald, Volume LXV, Issue 19991, 6 July 1928, Page 12

CITY TRAMWAYS FINANCE

[ESTIMATES FOR THE YEAR,

'FORECAST OF £9812 SURPLUS.

GREATER PROFITS FROM TRAMS REDUCING LOSSES ON BUSES. 'A surplus of £9,812 i:i the working cf (rams and motor-buses is forecasted in the estimates placed before tho Auckland City Council last evening for tho year ending March 31, 1929. The tramway surplus is expected to expand to £58,894, against £18.942 for the year recently ended, while the estimated deficit on tho buses is placed at £49,082, against £64,02S last year. Last year's operation of both trams and buses resulted in a total deficit of £45,086.

Explaining the estimates, Mr. J. A, ClAlium, chairman of the Tramways Committee, said that, while it could not be claimed that all Auckland's transport difficulties were solved, yet it did appear that the issues were being narrowed down, and the financial prospects were brighter than they had been for several years. While any figures for a portion of the year must not be taken as conclusive, yet the results for April and May were encouraging. In that period the trams had shown a net surplus of £10,213, while the net loss on tho buses was £8242, leaving a net surplus of £1971. The estimated surplus of £9812 at the end of the current year was subject to payment, of any portion of the Transport Commbsion's expenses. . Keduced Power Cost. ''The financial position of the tramvavs is sound and profitable, as it always has been," added Air. Allum. "The anticipated increase of £39,952 in the surplus is accounted for by the following items:—lncreased receipts, £39,360; reduction in cost of power, £7954; reduction in administration and general charges, £4041; reduction in building maintenance, £1410; a total cf £52,765. Against that have to be set the following increased charges : —Running expenses, £3149; distribution, £1051; repairs, £405; permanent way, £5808; car advertising, £/4; interest, £1820; s'inking fund, £380: accident provision, £146; a total of £12,813."

The reduction in the cost of power from £98,954 to £91,000 was due to negotiations now in progress to secure a reduction in price from tho Auckland Power Board to the tramways department, and to economy of operation. The ascertained cost of power last year was 1.169 d a unit, compared with 1.2 din the preceding period. The anticipated £28,000 loan, being 10 per cent, of the £280,000 loan, accounted for the increase in capital charges. When that further sum was available, the Halsey Street connection, for which the material was in stock, would be among the works put in hand. Commenting on the substantial sum of £36,515 set asida for sinking fund, Mr. Allum said that at the end of the current financial year, the accumulated sinking fund of the undeitaking would be approximately £425,000, which could be regarded as a reserve fund invested outside the business. Deficit on the Buses. "By continuing tho existing motor-bus services, it is anticipated a substantial loss will be incurred," added Mr. Allum. "It is not in accordance with the council's policy to maintain all existing services, but the committee feels that no alterations should b<B made until the recommendations of the Transport Commission are made known. Explaining tba estimated deficit of £49,082 on the buses, Mr. Allum said the reduction forecasted was accounted for as follows: —Increased receipts, £1575; reduced running expenses, £1808; reduction in repairs and maintenance, £984.3; reduction in administration and general, £1872; a total of £15,098. Against that amount was set £lsl—for increases in depreciation, £23, and in accident provision, £l2B. The increase in receipts might appear small, but modifications of existing services asd the inauguration of feeder services had substantially reduced the bus mileage, with a consequent reduction in revenue. That explanation also accounted for the reduction in expenses The reduction in repairs and maintenance was largely accounted for by the fact that the bulk of the_ buses were brought up to the Public Works Department's requirements last year, and the expense was naturally non-recurring. Details ol the Estimates. Basing his estimates on the whole undertaking, the general manager, A-r. A. E. Ford, placed the revenue at £757,721, and the expenditure at £747,909, leaving an estimated surplus of £9812. Details of the estimates are as follows, the actual expenditure for last year being shown in parentheses Receipts.—Traffic, £744.541 (£702.817); advertising, £BSOO (£8228); sundries, £I6BO (£1636); scrap. £3OOO (£4104); total, £757,721 (£716,785). Expenditure. Purchase 01. power, £91.000 (£98,954); running, £318,688 (£316,890); distribution, £12,530 r£ll 499): repairs aiTd maintenance of rolling stock, £52,184 (£51,779) ; repairs and maintenance of buses. £28,0j0 (£38.493); permanent way, £46,060 (£40,252); buildings. £750 (£2159); advertising. commission and erection, £2725 (£2651); administration and general £21,682 (£28,051); interest on loans. £95.800 (£93.980) : sinking fund, £38.115 (£37.735); discount on loans, etc., £IBOO (£1300) ; depreciation on buses, £19.830 (£19,307); accident provision. £6282 (£6008) ; loss in realisation of power-house assets, £7383 (£738.3); track renewals, suspense account, £2871 f£2871): omnibus purchase suspense account. £1559 (£1559); total, £747.909 (£761,871).

Work on Permanent Way. T,he estimate for tram receipts only was £662,338, and for expenditure £605,444, leaving an estimated credit of £58,894, stated Mr. Ford. The receipts last year were £622.978. The more important permanent- way works to be undertaken were the renewal special •work at Newmarket, at the Syraonds Street and Welieslev Street East junction, and at the Welieslev and Queen Streets junction, eastern side, £7510; foundations and paving of 42 chains at Morningside, and 33 chains on the Remuera Road: £8750; and rails and paving on the Remuera Road. .£3050. Provision had been made for the annual payment of £7383, spread over three years, to extinguish the loss on the realisation of the power-house assets, and for tho payment of £2871, the second annual instalment to write off in 20 years the track renewal expenditure under the £IOO,OOO unemployment loan Turning to the motor-bus estimates, Mr. Ford forecasted receipts at £95,383, and expenditure at £144.465. leaving a debit balance of £49,082. That was not a satisfactory position, or one that could be indefinitely maintained. Depreciation was estimated at £19,830. based on 12 £ per cent, of the cost of the original fleet, and 33 1-3 per cent. of the departmental value of the buses taken over. Last year's provision was £19.807. Regarding an item of £1559 in the niotorbus purchastC suspense account. Mr. Ford said there was a difference of £15.590 between the price paid for motor-buses taken over and the departmental value. That difference was considered as goodwill, and was being written off over ten years. One writing-off had already been madt?.

The estimates were adopted after a ■hort discussion.