Railways Service Is Awake

NZ Truth, Issue 984, 4 October 1924, Page 1

Railways Service Is Awake

Now^ Out For Competition

Motor Rivalry Causes Financial House-Cleaning

Both Commercially And Tractively There Is A New Spirit Of Progress V

.• \ While not withdrawing from its developmental mission, the revived Railways Department gives signs of refusing to be doped with developmental pretexts for business slackness. It shows a desire to place the real' position candidly before the public; to show, what part of its business pays, and what part doesn't; and to build up reserves and do other things m line with financial soundness. ' . Also, the Department is not. only disposed to defend itself, on the rails against road-borne and water-carried competition. It may ( even carry the war intqihe enemy's country by doing business on the roads, on the principle that attack is the best defence. But the most imposing part of its technical programme is the introduction of petrol propulsion on the- railways, and the proposal to develop a new light type of steam locomotive operable by one man. ■ <■■ ,

From the financial point of view, there are three ways m which to run railways: (1) at a profit (which is "private enterprise's" way) ; (2) on a self-supporting but non-profit basis; (3) at a loss. ' The people who advocate running railways at a loss ;genei-ally excuse themselves by saying that as railway transport develops the country, the loss on the running is sufficiently offset by the developmental gain. Admittedly, there is a great deal to be said m favor of a developmental use of any publicly owned transport system; but where a regular and recurring lpss is tolerated, the greatest temptation to slackness on the part.of the staff is the result. To maintain economy and efficiency m such an undertaking, a self-supporting basis is essential. Any other basis leads to wastes that even the- developmental betterment of the country cannot excuse; When Mr. Holland talks about development, what ho really wants is a' loose, system under which a Labor Government could bribe the railway employees without being brought, to book' on financial grounds. From such a system— or lack of sys-^ tern — may the country be preserved. The Elusive Cash Balance. , : A self-supporting basis, m its strict meaning, means more than merely presenting an apparent cash balance at the end of the year.- A cash balance can be a snare and- a delusion if there are no reserves . and no provision for depreciation. it is encouraging to see that Mr; Cbates's new Railways Statement — probably the most important of its kind for two' decades— proposes to create: -, , (1) A depreciation-provision as a charge against earnings. (2) A' reserve fund, and (3) A -betterments fund, created out of profits "to meet expenditure for'improvements of a non-capital nature." This proposal; is a very big step towards the financial independence and self-respect -of the railways' service. N Of course, it isy only one step to financial independence. Real independence would include nbn-political administration by a trust or commission, with complete capital control and the responsibility of raising its own loans. That would be utterly distinct from the present method, under "which the Railways Department: applies to Parliament every year for its expenditure money, and pays into the Consolidated Fund its earnings.' ! . ' ' . If the Railways Department were not based on the Consolidated Fund, if its financial independence were real, it would have' to find the interest on (current loan money at current rates; arid, current rates are round about 5 per cent., which is a' considerably heavier annual impost than the 3% per. cent, which, by some process of hypo-" thetical reasoning, is assumed to be the maximum: return to be ex-' , pec'ted . f rom the railways service. '< In other words, the Department would carry the responsibility of paying cur-

rent interest rates, and therefore of earning them. ) , But if that i onus "were, cast on the Department, then it could not carry lime free on the railways for farmers, m the sacred name of development. ■ Separate Finance. : While Mr. Coates does not go to the limits of independence referred to above, he proposes a considerable advance towards putting railway finance on its own bottom,' giving the railways full credit for the services (sometimes free, as lime) ' performed, and showing what the taxpayer pays and what he receives. He recommends "the establishment of a separate railway account, into which all earnings will be paid, arid out of which all working-expenses met; as well as superannuation subsidies, actual interest on fixed and float- 1 ing f capital, and renewals and. replacements. On the other hand, the railway account will be credited with all services rendered by it, including the loss on operation of unpayable lines. It is now generally recognised that the compiling- and publishing) of facts and figures relating to financial rejsults m proper form will dispel ignorance and inspire confidence m the administration." ' ' . . •Certainly the present system does not inspire the confidence of the public m the administration or of the administration m itself. The Minister's hope that the railways will be made to pay their way, or at any rate that the real extent and, nature of the loss (and the. why of it) will be made clear co the public m the annual statements, is something more constructive than any Minister of Railways has promised for many years. It is a good Ministerial spirit to be. m at a time when the English are about to analyse the service and tell, us what's' whatAnother feature of the new Railways Statement is the prominence given to improving the Department's technical and commercial methods of .competing with its rivals, particularly its motor rivals.* Commercial methods include live canvassing for business, through .tickets (for example, rail-cum-motor fare at Lower Hutt), judicious advertising, back-loading rates. Technical includes tractive (road as well as rail). The Department may meet; road competition by going out on the roads .itself with its own road motors, or by making arrangement with private carrying firms to feed the railways. Againi oh its own rails it will introduce motor-cars or improved traction: These new rail vehicles may be propelled by petrol or by steam; and it seems that the day. of steam is by no means dead even on the shorter runs, as the development of a light steam locomotive operated by one man is designed.

To a correspondent who inquires whether he should exercise on a full stomach: No; if you; have been ad r vised 4 ' to take more exercise, do it standing.