RAILWAY LOSSES.

New Zealand Herald, Volume LXVI, Issue 20425, 29 November 1929, Page 12

RAILWAY LOSSES.

A request for a precise definition of railway policy was implied in the conclusion of the last annual report by the General Manager of Railways, in which Mr. Sterling stated that if the object is to ensure "the best financial results directly through the revenue and expenditure accounts . . . the only logical

thing to do is not only to commercialise the methods of working, but also to commercialise the policy," since the latter is "unquestionably the governing factor." In other words, a decision must be made between the alternatives of requiring the railways to pay their way, by the application of commercial principles, or requiring the taxpayers to make good whatever losses may bo incurred. Parliament made no response to this invitation, its only action being to cancel the statutory subsidy, reduce the department's interest liability by £324,000, and leave the problem of recurrent losses hidden in the national Budget. Hence, it was not surprising that, in a speech during the commerce train tour, Mr. Sterling should have deprecated anxiety regarding the annual loss of £1,000,000, and declared that, instead of losing, the country had gained many millions from the service provided, since the financial loss was insignificant compared with tho marvellous work of the railways in the development of New Zealand. If the argument were sound, there would be no limit to the amount of losses that could be condoned in the name of "national service." The fallacy is, however, evident by contrast with the fact that service for the development of the country in many other directions has been performed and is being continued on tho elementary principle that the direct beneficiaries should pay tho whole cost. It would be ridiculous to suggest that development has been effected only by State activities ; yet acknowledgment of the contribution by private enterprise involves recognition of the fact that it succeeds without unlimited subvention at the expense of taxpayers. Nor have State commercial enterprises any legitimate right to capitalise intangible values. The enormous railway system of Argentina affords a striking contrast with the publicly-owned railway services. There private companies have to combat similar difficulties without public assistance. Their traffic varies enormously, owing to the preponderance of agricultural production, they are faced with increasing motor competition, and they are not only subject to State regulation of their charges, but are also required to contribute to road funds. Of the seven systems under British control, one has this year paid a

dividend of 8 per cent, for the fourth year in succession; four paid 7 per cent., ono for the seventh year in succession; one paid 2 per cent, and only one has not yet reached the stage of paying dividends on its share capital. These railways have also done "marvellous work" in the development of Argentina, quite as important as that of the New Zealand railways in their sphere. Parliament may attempt to ignore and the general manager to excuse the significance of losing £1,000,000 a year on a service which could and should be made financially independent, but their responsibility to the taxpayers will have to be faced.