WORKING RAILWAYS

Otago Daily Times, Issue 18340, 2 September 1921, Page 6

WORKING RAILWAYS

WHY THE “OUT” WAS MADE. LOSSES INCURRED. INCREASED WAGES BILL. (Faoii Our Own Correspondent.) - WELLINGTON, September 1. During tne years J.9IQ to iUEO tfio Now Zealand Railways were in a bolter position Imanci'niy tnan at any previous period in tnair nistory. The average yearly return on the capital invosteu during this live year term oemg slightly more than 4J per cent. ’lhe Minister ol Railways has shown already how much the position has changed lor tne worse, with the result that services have had to be "cut” in order to reduce the loss that is being incurred on the working o£ the lines, no has now euipnaaised tne uitheuities of tne position in a further statement. Last year the revenue reached the total ot £6,908,531, which was £1,156,044- more than in the 1919-20 financial year, states the Minister in a memorandum on the subject, but tne expenditure, which rose by £i,63i,534, absorbed the whole of the increase and £375,490 besides. The increased expenditure, according to a departmental statement, being due to the following causes: (1) The re-establishment of the pre-war train services; (2) increased cost of operating dueto advance in wages and working conditions of staff; and (5) increased cost of material, particularly coal. In 1914 the running costs x jer train mile wore 4s 2d; today they are more than 12s. The. reestablishment of file pre-war services increased the train mileage by 1,894,754 (approximately 1,100,000 miles in the North Island and the balance in the South). But while- the operating costs increased by 12jd per train mile in the North Island, and by' 9d in the South, the receipts showed a decline of 3id per train mile in the North Island, and Is per train mile in the South Island. The big drop in the case of the South Island lines necessarily reduced the margin between receipts and expenditure, the latter absorbing per cent, of the revenue. Interest charges are not taleen into account by the Department, in its periodical statements of receipts and expenditure, so that when those charges are brought to book the position disclosed by the figures already given takes on a mbrje serious complexion. Roughly speaking, a sum of £37,000,000 has been expended on the railways. At 3J per cent, (the departmental estimate of the coat of the capital investment) that involves an annual charge of £1,487,500, which must bo met before there can be any talk of “profit” on our railway schemes. As the excess of revenue over expenditure last year only amounted to £1,271,901 it follows that there was. an actual loss on the working .-.of the railways last year of £215,599. The return, according to the departmental estimate, being only 3.40 pre cent, on the capital investment. In view of the much better returns of the previous five years (1916-1920) the loss thus shown might be regarded as negligible, only, unfortunately, later returns show that the position has changed for the worse. The departmental statement shows that the only lines which gave a net revenue for the 16 weeks covered to July 23 were Gisborne £2944, North Island main lines £73,773, Westland £8956, Westport £8916, Picton £3O. The expenditure exceeded the revenue on the following lines: —-Wfiangaroi £4293, Kaihu. £548, South Inland main lines £80,253, Nelson £3229, Wokatipu steamers £1395. Allowing for interest charges at £3 15s per cent, on the capital invested in the several lines, a departmental statement shows for the 16 weeks a total deficit of £422,866. That deficit involves a daily loss of £4300. In view of the heavy loss thus indicated it was imperative that a further “cut” in the train services should bo made, and that the whole railway position should be reconsidered with the view to further economies being effected as opportunities offer. The Increased Wages Bill’ lost year accounted for , an' Additional expenditure of £910,685, which has been further increased by the extra shilling per day, and the 44-hour week given to tradesmen employed by the department, as from March 6, 1921. It may be pointed out that the rates of pay are all fixed by statute, and cannot be altered, except by Parliament. In the matter of supplies, coal alone is costing the department £2 4s per ton more than during the last two years.