THE RAILWAY ACCOUNTS.

New Zealand Herald, Volume LXVIII, Issue 20812, 3 March 1931, Page 8

THE RAILWAY ACCOUNTS.

A statement has been issued by the Minister of Railways ostensibly to indicate "the true position'' of the railway accounts and especially to create the. impression that the increases of losses appearing during the last five years are more the re suit of a new system of accounting than of actual deterioration in railway business and finance. Unfortunately, the laborious calculations presented by Mr. Veitch are utterly wasted, for the whole argument is based upon a fallacy obvious to any intelligent student of railway administration and finances. Various comparisons of revenue and net earnings are made, all of them between the accounts for 1924-25, the last year under the old system of accountancy, and 1929-30. Why does the Minister not take the accounts for the last five years, all compiled upon the same system, and all embodying the effects of provision for depreciation and other reserves? The Royal Commission confined its attention to the accounts for that period, and so does every other critic of the administration. The Minister dare not venture to say that provision for depreciation is unnecessary and he dare not base his examination upon the accounts for the last five years, because they demonstrate in the most positive fashion the deterioration which he attempts to deny. Mr. Veitch says that had the same method of accounting been adopted for 1930 as for 1925, the net earnings would have appeared as £1,294,188 instead of £921,055, showing a decrease of £272.920 instead of £646,053. But comparison between the accounts for 1925-26 and 1929-30, both compiled on the new system, shows a decline in net earnings from £1,632,793 to £929,257, so that the deterioration in four yeais was £703,536. A great point is made by Mr. Veitch of the alterations effected by "the legislation of 1928." It is surprising that he should revive that subject, since the actual facts are far from creditable to the Government arid have certainly not been ignored by critics,

generous or not. The changes he catalogues were not made by legislation in 1928: the abolition of the subsidy and the reduction of the capital were made by the Finance Act of 1929, as an integral part of the United Government's policy; the increase in the interest rate was made by Order-in-Council in March, 1030, and was made retrospective to April 1, 1929, and the other additional charges mentioned by Mr. Veitch were imposed by "various strokes of the policy pen" as the general manager described the process. The object, of course, was to extract the maximum amount of revenue from the Railways Department for the benefit of the Budget, and the final result was that the Government proclaimed a spurious surplus of £150,000. The management, of the railways has a legitimate grievance, but so far as the Government is concerned the whole proceeding was inexcusably reprehensible. The fact that in 1925-26, under the new system of accounting, the railways earned £79,000 more than their interest liability, and that in 1929-30 the department was compelled by the Government to draw £1,203,067 from capital reserves to pay interest to thej Budget is sufficient evidence of deterioration in business and finance. Without reference to this evidence and the complementary strictures by the Royal Commission, the Minister's statement is merely special pleading, as meretricious as it is misleading.