THE RAILWAY FINANCES.

New Zealand Herald, Volume LXVIII, Issue 20961, 26 August 1931, Page 8

THE RAILWAY FINANCES.

Complimentary reference to the report of last year's Railways Commission is made in several passages in the annual Railways Statement. In one of them, the Minister of Railways says "the Government has given effect to most of the commission's recommendations." Those which have been ignored include the extremely important proposals for the reform of the department's ('man cial Structure, the independence and the stability of which, the commission considered, should not be subordinated to the demands of the Minister of Finance for the payment to the Budget account of interest upon the capital liability. The Prime Minister has remarked that one weakness of this year's Budget is the proposal to draw £1,140,000 from special reserves - , yet to produce the surplus announced last year the Government drew £1,203.000 from the railway reserves, increasing the amount paid to the Treasury in excess of actual earnings to over £2,000,000. So far only £150,000 has been refunded by the Treasury and the railway balance-sheet still shows a debit balance of £1,892,000, for the liquidation of which no provision has been made. The commission recommended the creation of a general reserve of £2,000,000 to provide working capital for the department, by five annual additions of £200,000 to the existing funds; it insisted that the annual appropriations from revenue for depreciation should be repaid to the Treasury in reduction of the capital liability and that funds reserved for renewals

should be separately invested. It also required the insurance funds to be strengthened and separately invested. The customary provision for depreciation and renewals has been made, but nothing has yet been done in fulfilment of the major recommendations. The excuse may be offered that the earnings did not permit the inauguration of these reforms, for the department was able to make only the utterly inadequate contribution of £680.000 toward the statutory interest liability of £2,255,000. Nevertheless the fact remains that even that payment was made at the expense of essential reserves, the lack of which in the past has already involved writing off £10,400.000 of capital losses. Even the acknowledged railway deficit, is a tremendous burden on the taxpayers, but nothing will be gained by understating it by a process which simply means that t,he Budget is being bolstered by draining the capital resources of the railways.