THE RAILWAY LOSSES

Otago Daily Times, Issue 18673, 30 September 1922, Page 11

THE RAILWAY LOSSES

LINES THAT WILL NEVER PAY. NECESSITY FOR DRASTIC REMEDIES. A POINTED - SPEECH. (From Our Own Correspondent.) WELLINGTON. September 29. An important, and unusually interesting speech was delivered in the Legislative Council to-day by Sir Edwin Mitchelson, whose knowledge of New Zealand politics is perhaps second to none. Sir Edwin Mitchelson first discussed the railways and the reason of their not paying. The Railways Statement recently tabled in the House did not, he said, give the real cause of tho deficiency. It adduced, as explanations, the aftermath of tho wav, the high price of coal, the increase in wages, and the largo amount of work which tho railways did for little or no payment. He regretted that tho department, had not given its opinion of the real reason for tho losses which tho railways had been making for a groat many years. lie proposed to supply the want. He had no hesitation in stating that the cause of the great, decrease in railway revenue was the great mileage which iiad to be worked without any prospect that the actual working expenses would he returned. He would go back to the early days of public works. Some' of tho railways built then had never paid working expenses, and never would do so. The rails of these lines should bo taken up. ) Some of (he lines should be turned into roads instead of being kept running at enormous expense only to make losses. The, railway" showed a loss despite the fact that charges had been increased in 1916 and again in 1917 and 1920. They showed a loss despite the curtailment of some of the services. The (Statement this year made it clear (hat it interest, at tho rale of 3i| per cent, was allowed on the capital there was a deficiency of £1,026,000 on the year’s working, Certain unprofitable services were given for a very small return. For instance, (lie carriage of metal bad cost the .department: £50,000. and the . metal was carried free. He thought the time had arrived when local bodies should pay for the carriage of metal and find the necessary amount of rates. Very many taxpayers had to pay under the present systenj for things for which they were receiving no direct benefit. Lime was carried free of charge up to 100 miles; other services were being given which he considered should bn discontinued. There should bo « complete revision of tho fist oi things carried at, non-paying rates. The original policy with the railways was that, (hey should be used for the purpose of opening up the country for settlement. That policy had been followed to some extent. bat it, had also been departed from. Lines were being extended in districts where there was-no chance of their paying. Since 1880 railways had been commenced without, an examination of their prospects of paying working expenses and interest on the cost of construction. The Railway Statement showed that over a period of 26 years, if interest were reckoned at 3 per cent, for the first half and at 3J per cent, for the second, the railways had made a profit of £1,667,968. With the interest reckoned at such low rales, tho annual profit was only £64,922. If interest for the whole period were charged at the average rate paid for the loans raised for tho construction of the railways, a deficiency would be shown of £1,250,257, or an annual deficiency of £47,993. This deficiency could not be attributed to the war. Surely a better record should have resulted from the working during all those years. It was pitiful that for such a period a handsome profit should not have been shown. At the beginning the railways had been charged with interest at 3 per cent, and later they had been charged with interest at 3| per cent. The latter rate was not equal to the average cost of the loans raised for public works. A fair charge would be at least 4 per cent., with an additional 1 per cent, for sinking fund. After observing that the Statement showed that the average daily loss on the railways during the last four months recorded was £2753, the speaker quoted the monthly loss on various lines. The Westport line, he stated, was the only line in the dominion that was paying its working expenses and interest. The four weekly returns given by the Railway Department, Sir Edwin Mitchelson continued, showed the losses only on certain lines. He wished to know why it should not give separate returns for all branch lines, as the General Manager stated that 26 branch lines were not paying working expenses. It was clear that a largo number of lines had never paid and never would pay. It was useless to blame the Government or the departmental officers. The blame for the running of trains on sections of line that could not possibly pay rested on those—supporters and opponents of the Government alike—who had compelled the Government to build the lines. There was a continual clamour from one district and another for tho expenditure/of money on public works. To have conceded the demands made by deputations this year alone would have cost millions. A large deputation from the Wairarapa bad asked for a deviation from the Rimutaka incline. If he remembered correctly, the cost of the only one of the proposed routes for which tho estimates were complete had been stated by the Prime Minister to be computed at, £106,000. The lime had not arrived when this and similar works could safely be carried' out. Until the financial condition of the country had improved this project and others should bo postpcaied. Before other projects were executed Wellington should have its new railway station and yards. The present station and yards were a disgrace to tho country, and they should bo replaced by others before any deviation or extension was made elsewhere. The Government had warned the people of the state of tho finances; still the people clamoured for expenditure and were supported in their demands, by members of Parliament who had no responsibility beyond that of getting grants made for their own district. So long as the clamour continued there was no hope of better things. ’The people should be assisting the Government, not embarrassing it. He was not a pessimist, but unless strong measures were taken and borrowing entirely stopped the country would drift into a position from which it would not be extricated without the greatest difficulty. He would not like to say in view of the unemployment rife in the country that borrowing should cease immediately, but it should be tapered down as it had been between 1887 and 1891. In 1887 the amount voted for public works was £3,500,000; in 1891 it was about £450,000. The respite given by those four years had enabled the finances to recover and in 1691 a surplus was shown. for the first time in 20 years. The public was to blame for the borrowing. They were always out for grab and plunder, and they got it Instead of leaning on the Government for everything districts should endeavour to meet their own needs more extensively. Something like £5,000,000 was being piit into the extension of lines of railway that could not bo made to pay. It would bo better to stop the work and pay the interest on tho £5,000,000 than to go on and burden the country, not only with t tho interest, but also with tho prospective loss, on the working of the lines. If it was intended to go on constructing railways tjio Government would bo wise to appoint a commission to inquire what railways were likely to pay and what railways should have their rails pulled up. The speaker proceeded lo enumerate the now lines and extensions which ho was sure would not pay. He mentioned the Whangarei line, the Kaihu line, the Gisborne to Wairoa. lino, (ho Opotiki Hue, the Napier to Wairoa line, the Thames to To Aroha line, the Stratford to Taumanmui line, the Nelson to Pieton lino, tho Christchurch to Otira line, the Gore to Kingston line, tho Winton to Kingston line, and tho Ojago Central, Seaward Bush, ami Gatlins River lines. He did not object, lie said, to railway extensions in general, hut only to extensions and new lines that, had no chance of paying their working expenses. It. would he a good tiling, Sir Edwin Mitchelson thought, if railways, roads, and other public works were taken out of the hands of Parliament. Members were afraid to sneak about a line tint was not paving in their neighbouring district 'because they feared that some extension they wanted in their own would not be made.