RAILWAY PROSPECTS

New Zealand Herald, Volume LXXII, Issue 22211, 11 September 1935, Page 12

RAILWAY PROSPECTS

"\Yith the appearance of the annual report of the Government Railways Board, there becomes available one feature of last year's operations which has not been known before—the relation of net earnings to the capital employed, and the interest payable on it. The contribution by the railways in 1934-35 toward this interest bill was £1,087,491. This was a satisfactory result compared with the corresponding figure in 1933-34, £1,085,558. In its turn this compared favourably with results in preceding years, £850,544 in 1932-33, £837,993 in 1931-32 and £688,727 in 1930-31. But the capital invested at March 31, 1935, was £54,089,190. The net earnings were 2.01 percent of this sum, and fell short by £1,243,395 of the interest bill, which amounted to £2,330,886. It can be granted that the railways have made a good fight against the alarmingly falling net return which marked the years 1930-31, 1931-32 and a great part of 1932-33. At best, so far, they leave a heavy burden of interest to be borne by the taxpayer. Many factors underlie this position. Provision is now being made for a general reserve, depreciation and renewals, items which, not so long ago, were entirely neglected. This, however, is done as a matter of course by the ordinary commercial undertaking before the question of distributing profits is considered The earnings which fall so substantially short of interest costs are not therefore drawn upon in any extraordinary way to make such provision. It is evident that the railways have far to go before they can relieve taxation funds of their capital charges. The accounts for the current year do not promise to be better than those for 1934-35. The net earnings are some £IB,OOO less. The 5 per cent restoration of wages and salaries affects expenditure now. It is not represented in the accounts at this time last year, though it was paid for these months in a lump sum during the September - October period. Apart from that, the level of expenditure is rising, showing that it is not possible yet to fall into an attitude of easy optimism over the prospects for railway finance. The board has done good work, but care and economy must still be its watchwords.