THE OTAGO DAILY TIMES TUESDAY, APRIL 26, 1910. THE RAILWAY POLICY.

Otago Daily Times, Issue 14817, 26 April 1910, Page 4

THE OTAGO DAILY TIMES TUESDAY, APRIL 26, 1910. THE RAILWAY POLICY.

Until ho spoke last week at Levin the I Prime Minister had, we think, not committed himself definitely to any railway policy that involved a departure from what has been known in the past as the 3 per cent. ..policy. . So recently, indeed, as in his last Financial Statement, presented to the House of Representatives on the 10th November last, he reiterated his adherence to the 3 per cent, policy in connection with the betterment scheme that was to have been submitted to Parliament last year, but that was withheld along with a good deal of other Ministerial proposals which . had been promised. In a. passago in the Statement that was not more remarkable for its defiance of the principles of lucidity of expression than some of the other declarations in that deliverance, Sir Joseph Ward said: "In order to prevent the possibility of unpayable railways being established in the country, and that upon careful examination it is found are likely to render a return of less than 3 per cent., I propose to submit legislation to protect the. inroad that • h losses make upon the general railway revenue of the country by the construction of railways that are not likely to return as low a rate of interest as that I have named." Now, however, the Prime Minister seems to have availed himself of the opportunity afforded him by the preferment of a request by a deputation at a small township in the Wellington district for tho construction of a new line to announce an important .nodifieation of the policy that was proclaimed in his Budget' lost year. " All railways," lie now tells,us, "should be made to return 3J per cent, on the cost of construction." Ho claimed for the Government that it was. following a sound, policy by saying that there must be a reasonable return on the cost of construction, and "for that 'reason," he added, " it would require to make some provision by which a district that required a'railway would contribute any difference between the revenue and 5J per cent." This, then, is the new railway policy of the Government —a policy the announcement of which by the Prime Minister infercntially condemns as inißound the 3 per cent, policy of the past. As a matter of fact, a return of per cent, upon the cost of construction of the railways is not sufficient to Telieve them from the reproach of being unprofitable, A return of at least 3|" per cent, is necessary to provide interest upon the capital that has been expended upon railway construction. Moreover, this estimate disregards such expenditure, mounting to many thousands of pounds, as has been incurred upon the " additions to open lines " account.

There is ' a good deal to be said in favour of a betterment policy as a general principle. But the particular direction in which the Government proposes to apply the policy is distinctly objectionable. The Government contemplates the application of the principle not only. in respect of the construction of railway lines that have not yet been commenced, but also ! n respect of the extension of authorised lines .that are already in course of.' construction. This is in itself wrong, since it directly involves the Government in a breach of faith with districts that have been encouraged to look forward to the construction of railways that will be of service to them. But what renders the Government's proposals especially open to condemnation is the fact that it is, not intended' by it to make the system of general application. Upon what principle of justice can it be pretended that the settlers in, say, the Teviot Valley should be called upon to guarantee the Government a fixed return upon the capital cost of the Lawrence-Roxburgh railway when' no similar guarantee is required from those, whoever they may be, who will benefit from the construction of the Midland railway? Surely it is only reasonable, if a betterment policy ! s to be instituted in connection with the construction of unfinished railways, that it should be applied without exception to all such railways. Otherwise a very formidable instrument of corruption ■•is to be placed in the hands of the Government of the day. And. this criticism applies equally to tho proposal—for such we gather to be the intention—that the Government shall decide which lines that may in future be constructed shall be subject to tho principle. Clearly, under an elastic ■system- of this kind, it would be in the power of the Government to demand a guarantee from a district that was politically unfavourable to it and to absolve 'a "district which returned a supporter to Parliament from the obligation to furnish a- guarantee. Underlying the wholo proposal which the Prime Minister has. sketched is,, however, the fallacy that the railway system of the Dominion is not a' complete system of lines, each one'of which contributes to tho successful operation of the other, but that it consists of a number of isolated lines. It is conceivable, and, indeed, highly probable, that a branch railway carried!) into a newly-settled' district may for a few years be unable to earn the revenue wjilch the Government deems it to-be necessary in the interests of the country that every line should produce, and yet it may prove, even in the early years of its existence, a useful feeder to the main the Dominion.. To apply the betterment system to this line would not only be unjust to the settlers in the district concerned, but would almost certainly have the effect of seriously retarding the settlement of the district. The policy of railway oonstruclion should, however, be -so carried out as to promote the settlement of the country. Even if a line should be unprofitable for a few years, the interests of the Dominion as a whole might be vastly advanced by its construction. It must be evident, therefore, we think, that, although the Government's railway policy may on the surface seem attractive enough,-there are various reasons why the public should regard it with distrust.