FINANCES OF THE CITY TRAMWAYS

New Zealand Times, Volume XXXVI, Issue 8189, 2 August 1912, Page 7

FINANCES OF THE CITY TRAMWAYS

BOARD OF MANAGEMENT’S REPORT ON THE SERVICE UNDER DISCUSSION BY COUNCIL LENGTHY STATEMENT BY MAYOR REGARDING POSITION

The City Council held a special open meeting' last night to consider the report of the tramivaye board of management on tho administration of the Wellington tramways. There were present: The Mayor (Mr X). McLaren), Councillors J. Smith. F. Cohen, J. Trevor, J. Godber, W. U. X 3. Barber, E. Trcgcar, J. Fuller, J. E. Fitzgerald, G. Shirtcliffe. It. Fletcher, E. A. Cameron, A. E. Atkinson, G. Frost, L. McKenzie. Leave of absence was granted to Councillor Hiudmarsh, owing to Parliamentary duties. POSITION EEVIEWED.

The Mayor read to tho council a lengthy statement. He said that in dealing with this important report he considered it right to review the general position of tho finances with special reference to the increase or decrease of income or expenditure. The total income for 1913 was .£138,709, and in 1911 it was £135,708, the increase in the year being £3OOI. On the other hand, the expenditure in 1912 was £99,909, and 1911 £92,036, or an increase of £7883; thus the expenditure increased by £2282 more than the increase of income. Taking the different branches of expenditure, traffic expenses showed an increase in the year of £2506; that amount was principally made up as follows

Wages of motormen and conductors i 1577 Other traffic employees 293 Superintendents 208 <£2078 The general expenses showed only a slight increase amounting to <£l3s. Power expenses showed an increase of £1144, but the main branch of increased expenditure was on repairs and maintenance, which showed an increase of <£lllo. The respective amounts for 1912 and 1911 were:— <6 • 1912 23,068 1911 18,958 THE GROSS BALANCE. The gross balance on the working of the service showed a reduction in 1912 of <£2BBl, as the amount carried to net revenue account in 1911 was .£41,681 and in 1912 <£38,800. There was a considerable reduction in the amount carried to the balance of the appropriation account. In 1911 £5648 was thus carried forward, and in 1912 only <£1241, being a drop of .£4405. After appropriations were made out of the appropriation* account the balance-sheet showed a debit of <£2824 on the year. The estimates supplied by the board this year were on the narrowest scale so far as providing for any surplus at the end of the term, as it was only estimated to have a net surplus of <£445, and it was to be noted that in the estimated receipts tho board calculated on the council calling np the whole amount of <£2200 on Wadeslown. Instead of that they were leaving an amount of £543 outstanding, so that even with . the most rigid economy they must look to have on the present working a debit balance at the end of tho year. On the expenditure side of the estimates adopted tho amount of £9OOO was set down, by way of increase in wages of motormen and conductors, and it seemed most likely that this might be added to by nearly £IOOO. The return presented to the council recently of the working of the services for the twelve weekly period to June 23rd gave the increase -on account of wages referred to as £9OB. Thcy>had to face the position that last year’s working showed a debit balance of £2824, After providing for appropriations and on the present lines or running, that amount was likely to bo exceeded. By resolutions passed recently the council had decided to set aside from the depreciation fund this year an amount of £IO,OOO, and in carrying out improvements recommended by an overdraft of £20,000 they were making provision to set aside £SOOO per annum for the reduction of this temporary loan. FINANCIAL LIABILITY. It is very evident, continued the Mayor, that we cannot hope to meet this financial liability unless we provide some means of raising additional revenue, and also by curtailing the expenditure. It becomes a question of whether the concessions that have been given from time to time have not been too excessive. For instance, last year. 1912, the concessions on ordinary fares amount to £7333, and the total of concessions of all kinds granted since 1906 amounts to £31,290. We are face to face with these two things—that taking 1912 compared with 1911 there was a decrease in the gross surplus to capital expended from 7.5 per cent to 6.8 per cent., and there was an increase in proportion of working expenses to revenue of 67 per cent, in 1911 to 70 per cent.

WORKING EXPENSES. The ratio of revenue to worfcfiig expenses since 1909 is as under:—

1909. 1910. 1911. 1912. Revenue 14.05 14.27 14.25 14.68 Expenses ... 9.69 9.72 9.81 10.56 And for the twelve weeks ended June 23rd this year the revenue per car mile was 14.39 and expenses per car mile 11.02. Comparing the ratio of expenditure to income of services in Great Britain, the cost of working locally is very much in excess of what is existing in the Old Country. It will be notea that in ihe board’s estimates for the year an increase in the working expenses for the year of -£4500 is exported, whilst the increase last year amounted to .£7BBI. I think, therefore, it is fully seised of the necessity for curtailing the expenditure as much as possible without damaging the effectiveness of the service.

THE INCREASES. Tho general increases on the expenditure sido last year were: —

Traffic superintendence , 208 General account, office and staff ... 258 Power expenses, salaries and wages 302 Motormen and oonductora 1577 Other traffic employees 293

.£2638 Of this fully £2OOO was for increased wages. A reference to the special returns on income and expenditure since the inception of the service which has been supplied by the board shows that the chief growth of the expenditure is in respect to the matter of repairs and maintenance. This last year shows a considerable increase under that heading. In 1911 the percentage was 2.02. and in 1912 it is 2.43. At the present time the management is making close investigation into the whole of the details of the expenditure, and it is contemplated that some reductions may be made within the year; but taking the most that can be done in that direction it will still leave us with a considerable amount to be made up in some other way in order to place our finances on a perfectly sound foundation. The principal matter to be dealt with in the present report that is submitted by the board is that of the alteration to the sections. This is by no means a new question that is raised, as the council has had this matter under discussion on previous occasions, and it has been throughout recognised that some alteration is required with reference to the very lengthy sections which are oat of proportion to

others and over which the same fare paid. PASSENGEBS. Taking the carriage of passengers over tlie whole city, the Id faros average about 112 chains or nearly 1$ miles for the Id., and reviewing tho carriage of passengers during this last year there is shown a decrease of passengers carried on the single Id ticket of 255,633, whilst there is an increase in the carriage of passengers on workers’ tickets of 825,466, on concession tickets 18,864, on school tickets 26,832, and on Is cards 42,669. This means an extension of concessions which does not allow for proper increase in revenue to meet the liabilities we are face to face with. In comparing our sections with the return which I have of the whole tramway services in Great Britain. I find that on our Id fare the distance we carry passengers is slightly over the average of that of the services in the Old Country, and in excess of other services in the' Dominion, whilst on our workers’ return tickets the length wo carry passengers is in excess of that of the most up-to-date service in Great Britain. Whether with the cost of material and wages we are justified ia making the length the same as that in services at Homo is very doubtful. In ,tho proposals for tho alterations of sections submitted by the board there is an endeavour to shorten the more lengthy sections, and at tho same time provide for connections with the short extensions which must be made in the near future. The bear'd is also taking fully into consideration the fixing of the ending of sections at such positions os provide adequately for connections with «]/ branch lines. A DEBIT BALANCE. To sum up tho matter of our financial position, ns it appears to me, wo have undertaken liabilities for further improvements of the service which, will make a charge on the revenue. In the meantime the net balances to credit have vanished; for, whereas in 1908-9 there was a net credit balance, after making appropriations of £4354. that position baa been altered, until last year, after making appropriations, there was a debit balance of £2824. It must be recognised that, in the matter of sections and fares, we are giving considerably greater concessions than other tramway services in. the Dominion, the average lengths of sections being: .

Wellington .... - 103 chains Auckland 86 chains Christchurch 83 chains Dunedin 79 chains The faro per mile for these four eer» vices is: Wellington 79d Auckland 93d Christchurch -96 d Dunedin —l. Old INCREASE IN CHARGES. For this coming year we have to' face the position of a considerable increase in the chargee from revenue ooen&ig. Thus, towards the redemption of the overdraft of £20,000, we decided to set aside £SOOO per annum. Again, increased wages under the new agreement will be about £4000; on worker#’ concessions about £3000; extra cost of fuel £1000; probable increase In repairs and maintenance at least £IOOO. We shall also have to meet interest on the overdraft of £20,000, and those charges altogether amount to nearly £15,000. Thus, though economies are effected, end the board is reducing expenditure in several directions, dt Is not likely that w« can provide for more than £4BOO to £SOOO in this way, and it still requires that an extra amount of revenue of £IO,OOO shall be provided for. NO RESERVE FUNDS.

It is important to note that we have n» funds in reserve, and that there are very necessary extensions of the service which are still awaiting consideration, such as that over Constable street; and if we do not place the general finances on » more solid foundation it is scarcely likely that any loans will be voted if asked for, so that the whole service'may be placed in a perilous position unless due provision is made from now onward. I consider that we must directly face the situation of either requiring the ratepayers to bear the charge of a rate fox tramway purposes or the proposals fox modifying the sections ana fares must be put through by the council in ordex to place the finances on a proper working basis. The ’ Mayor formally moved that th* report of the council in committee on th# board’s report be adopted. AN AMENDMENT, 'Councillor Barber moved an amend ment, of which he had given notice: That before deciding on the report# of the tram way board and matters relative thereto, ihe board be instructed to furnish a further report showing what economies can be effected in the tramway system and report same to the council.

He had no desire to hamper the board in any way, but before interfering with the sections the board should ascertain a# far as posisble what economies could b# effected. He believed that the method# adopted by the board for the purpose of placing the tramways on a sound financial basis were decidedly wrong. Economies could be effected In the cost of running per oar mile. This was now 2s per car mile. (Councillors challenged this figure.) Instead of running core on particular sections at a Joss transfer tickets should be issued, enabling passengers to transfer to through cars. Th# South Wellington district oould not afford to make up .£9750 per annum. Th# increase of the fares to Newtown was a direct contradiction to the advocacy of the Mayor and councillors that they should encourage people to live in th# suburbs. They were carried a great deal cheaper In the days of the old hors# trams. A MISTAKEN POLICY. Councillor Cameron, dn seconding th# amendment, maintained that the information placed at their disposal wo# meagre and misleading. The Mayor: Haven’t you had the bal-ance-sheet? Councillor Cameron: xeft, but that doesn’t show tho joss on individual lines. Ho considered that a grievous harm would be done to the city if the report were adopted. It should be their duty to widen the area from the centre of th* city, so that people for one penny could get out as far away as possible from their work cheaply, and live in decent, healthy suburban homes. They had heard a good deal of a town planning policy, but tho## proposals would tend to create mar# slums and make matters worse. Th# board made a great error in the first place in not coming to the council fox its policy. _ ~, Amidst mild protests from Councillo* Tregcar, for personal references. Councillor Cameron proceeded to make comparison of what it was proposed to concede to what bo called the "Thorndon Carnegies" and the "Newtown Carnegie#,** a "fanciful allusion" which the Mayor permitted. Councillor Cameron said it was Attended to allow the "Thorndon Oarnegies" to travel 109.6 chains for (hi: 1 - 1

first penny and the "Newtown Carnegies" (including Wallace street) 70 2-ff chains for a penny.

A POLICY QUESTION,

The Mayor interposed that by impliesMon Councillor Cameron had inferred that the Tramway Board had dictated the present policy. He -was astonished to hear any councillor make that remark in view of the fact that the board’s report stated that as a question of policy was involved the matter should bo determined by the council. Councillor Trevor said that from Councillor Cameron’s statements it would seem that he wanted to get back to the ward system and parochialism. A great noise had been made about injustices to the people of Newtown, but Councillors Cameron and Barber did not say any. thing about the injustice the rest of the citizens of Wellington had suffered since the inception of the trams. They had given, within -11 chains, two miles for a penny. Councillor Frost said that at the outset he wished to make it clear that he was In favour of making the trams pay, and making the users pay for them. Councillor Barber, in his estimate of what Newtown people had to pay, seemed to forget that the people of the city generally would contribute towards this. Personally he thought that the Post Office square would bo preferable as a centre from which, to work. The board hod not recommended that, but the scheme it had brought down was one which the council should give a fair trial. ECONOMIES. The Mayor here read a report from the Tramway Board on the question of economies. This showed that further economies could be effected at the Thorndon office by amalgamation of the traffic and cashier’s staff, to the extent of about J 1250. It was considered that the new time-table would show further economy in traffic expenses. Th© board bad also considered the question of. economies at the carshed. It, had recommended that a separate building for repairs be erected adjacent to th© Newtown carshed, leaving the present building to be utilised almost entirely ns a running shed. It was likely that great benefits, both in the attention to the cars and as regards economy, would be the result of this alteration. Economies could also be made in connection with the printing of tickets, this being a very heavy item of expenditure. The number of inspectors could be slightly reduced. To effect any large economies other than those indicated would necessitate dealing with the agreement under which the employees were at present working. It was found advisable immediately after the board was installed to endeavour to effect an improvement in tb© relationship of the employees with the management. This improvement was badly needed, and the board was glad to report a somewhat better condition than what previously existed. The financial position ot the corporation with regard to its tramways was to a very great extent in the hands of the motormon and conductors—the motormen in seeing that no more than the necessary power was used iu connection .with the cars, and the proper handling of the equipments and the avoidance of accidents; and the conductors in exercising vigilance in tho collection of all fares. The board did not consider it advisable to at present suggest any alterations in the conditions under which the men were now working. Small savings might be made in connection with management and office expenses. No economy could be mad© in connection with th© maintenance of the permanent way, overhead equipment and power supply. HOW THE LOSSES OCCURRED. Councillor Shirtcliffo said that practically this report wiped out Councillor Barber's amendment. At least .£IO.OOO additional revenue must be found, and

any economies effected must be only a drop in tho bucket. He thought it was unwise for certain councillors to b© continually running down Wellington’s tramway service. Up to a year ago this service was the model tervice in New Zealand.

Councillor Barber: Why isn’t it paying now?

Councillor Shirtcliffo: I will tell you why. A return issued by tho tramway board showed that concessions to workers accounted for J250C0 and th© new agreement with the tramwaymen’s union absorbed .£4OOO, so that iu two items alone ■£9ooo was gone. Was it any wonder that the tramway service was a non-pay-ing concern? They must in some way replace that revenue. Councillor Barbel - was totally wrong in his estimate of the cost per car mile being 2s; as a matter of fact it was only lid.

Councillor Smith reminded the council that only a short time ago councillors were congratulating themselves upon tho appointment ot a tramway board of management, yet now they found certain councillors complaining. He commended the board upon tie action it had taken. OVERLAPPING SECTIONS. Councillo: MoKeuzie thought economy could be made in regard to the overlapping of sections. There would be a distinct loss of revenue, under the new proposals, on their main artery—Newtown, for people would walk, and it was preferable to have the cars full. Councillor Fletcher maintained that this was not a sectional question. . They were legislating for the whole community. Tho system oould not be imperilled for the sake of a fraction of a penny, and he believed that tho people, with a full knowledge of the facts, would cheerfully help th© council out of its difficulty. Councillor Fitzgerald said it was aggravating in the extreme to continually hear the question as between Newtown and other parts of the city continually cropping up. Newtown people were asking for an extension of the Constable street line, but if the present service did not pay. : how could extension bo granted? Councillor Godber believed that the tramway board was doing good work, but he thought tho council should encourage people to go out into th© suburbs. Ho was sur© they would have to increase their accident fund very materially if the Royal Oak corner was made a terminus. He was prepared to support the board’s recommendations, if only to give it a fair trial. PETTY ECONOMIES. Councillor Tregear considered that the economies recommended were of a petty character. The council’s efforts ought to have been directed to influencing the Legislature to amend the legislation so that the council might got revenue from the land values created by the construction of tramways. Loans were raised and trains erected, and people moved out into the suburbs. Then up went tho rents. AMENDMENT LOST. Councillor Barber’s amendment was lost by 13 votes to 2. Councillor Fuller, continuing the debate on the report, quoted figures of comparison between Dunedin apd Wellington to show that Dunedin's tramway management was better, especially in re gard to depreciation and renewals. Ho believed the time would come when weekly tickets would bo issued, to be used whenever the people liked. What was tho cause of all the empty shops in Newtown? Because people could travel too cheaply to the city; decentralisation was needed.

Councillor Atkinson congratulated the council and the tramway board upon the clear course it was about to follow. Political considerations had led them astray from the path of duty, and he was glad that under the guidance of the tramway board they were about - to return to the paths of soberness and sense. Notwithstanding any temporary unpopularity, he was glad to see that the.

council was not showing the white feather. Councillor Cohen supported the recommendations of the tramway board. RECOMMENDATIONS AGREED TO. The Mayor, in. reply, said ho wished to remove the impression that they had been running the trams at a dead loss. There had been considerable profits from the service which had been devoted to the extension of the service to tho advantage of the people of Wellington. It could not bo said that the economics were petty. To have made drastic economies would have meant wholesale retrenchment and the turning out of a large number of men, a policy that he was sure the council did not favour, seeing that it would have resulted in tho laying up of many cars, to tho detriment of the whole service. With regard to tho suggestion of Councillor-Tregear for a betterment tax, he believed that the principle was sound, but in his opinion the only practical way of applying that principle was by a system such as nnd been adopted by many German boroughs, and that was an increment on tho selling price of a property, so that the actual increase which was brought to the owner between tho time of purchase and sale should go to tho community. But if they dealt with this question by way of ordinary' rates, then they would hit a large working population of ratepayers who in the true sense were neither landlords nor speculators in land values. The report of the committee was adopted, only Councillor Cameron and Barber voting against it. THE NEW SCALE WHAT IT MEANS. Tho now scale may be summarised as follows; To divide the Newtown and Constable street sections, which are nearly two miles in length, into two, at about John street, which will also bo the end of tho second section on the Island Bay route. Thus tho cash faro from the Lamb ton railway station to Newtown will bo 3d (instead of 2d), but holders of concession tickets will bo able to travel this distance for 2Jd. Tho alterations on tho Dyall Bay and iMiramar routes are as follow®: —Tho present two sections between Courtenay place and Lyall Bay and Miramar boundary will bo divided into three, or in all four sections from the Lambton railway station, the cash fare for riding over tho total distance being -Id, but holders of concession tickets will bo carried over the four sections for threepence. The concession tickets are arranged on the following basis:—One section, full fare; two sections, 14 rides over two sections for 2s; three section tickets, 12 rides over three sections for 2s 6d; four sections, 13 rides over four sections for 3s. These concession tickets will be available for continuous rides on any two, three, or four adjacent sections throughout the city. Thus a ■ passenger with a two-seefion ticket could ride between Botanical Gardena and. Courtenay place (one clip), or ho could ride from Courtenay place to Newtown terminus (one clip). The same facilities will bo given to holders of three-section or four-section tickets. The Sunday fare will remain for the present the same as for ordinary travelling. The question of advertising on cars is to be remodelled altogether and is to bo replaced by a new scheme of advertising. The scheme permits of the use of ornamental cards placed along the coves of each car, in addition to the glass signs in use at present. There are arrangements by which a passenger, on payment of a reasonable charge, can carry his luggage from tho railway istafdou in the same car by which ho travels, instead of sending his luggage on in a separate car as at present.