ROLE OF THE RAILWAYS

New Zealand Herald, Volume LXXIV, Issue 22700, 12 April 1937, Page 8

ROLE OF THE RAILWAYS

A rough indication of the financial results for the railway year ended March 31 was given by the Minister in a statement he made at Wanganui on Saturday night. They are much as might be expected from the earlier accounts. The-Budget estimate of net revenue, £OOO,OOO, will be exceeded, thanks to an increase of some £750,000 in gross earnings. In the preceding year a net return of £1,051,477 j-epresented 1.944 per cent on a capital of £54,253,059, invested in open lines. How much less this year's will be cannot be estimated, since there is no figure showing whether further capital outlay has been brought into account. But Mr. Sullivan indicates that the whole interest on capital cannot be obtained out of earnings. He says the railways have been expected so to improve the country that taxation to meet the difference between net revenue and the total interest cost would be more than justified by the benefits conferred. This is a frank statement of the social motive in railway construction. The Minister suggests it has been the inspiration of past Governments in their railway projects. He is not quite historically accurate there. In the past it has been commonly claimed that railways would accelerate development to such an extent that they would eventually become self-supporting, even though they showed losses during the time of development. It did not always work out, even when the railways had a virtual monopoly of inland transport. It is less likely to be true now, with intense competition from the road. 8o Mr. Sullivan does not advance it, relying on the social motive instead. If it is to be sustained, there should be much more careful inveHtigation of the benefits to be expected from a railway project, in proportion to its probable cost to the taxpayer, than this Government has made before pledging itself to costly construction work through country of doubtful potentialities^