HIGHWAYS FINANCE.

Otago Daily Times, Issue 20781, 29 July 1929, Page 12

HIGHWAYS FINANCE.

• RAIDING THE ROAD FUND. The terms of a letter forwarded to the Prime Minister on June 21 by Messrs M. H. Wyuyard, A. E. Jull. and C. J. Talbot, the three members of the Main Highways Board, who are not nominees of tire Government, have been made available for publication. The letter was as follows:

“An arrangemeit was made by Mr Wyuyard, motorists’ representative on the Main Highways Board, for an interview with you this week in Wellington, but owing to your present indisposition, which we sincerely hope will be soon thrown oil, ■such interview has not been possible. On learning the nature of the proposed interview, Messrs Jull and Talbot, enmities,’ representatives on the board, desired to be associated with it. As an interview is not now possible, we desire to put in writing the views wo wished to lay before yon. We refer to the notification contained in your letter of May 22, in which you intimate your decision in regard to the finance from the Public Works Fund for the Main Highways Board Construction Account for the current year. Wc have to thank you for increasing the total amount from £400,000 to. £550,000, but the statement that 'the whole amount will he borrowed directly for highways account and no transfer will be made from the Public Works Fund is the one which "'P desire to discuss with you. Wo would point out that such a decision will, wc feel sure, bo very strongly criticised by the interests which we represent on the board, and for the following reasons:— “ Wc gather from the legal opinion, a copy of which has .been forwarded to the board, that you have been advised that there is no legal obligation on the part of the Government to pay to the Main Highways Board the sum of £200,000 a yqar. We are' not so much concerned about this legal power as we are with the universally accepted position as set •tout in the Main H'ghways Act, 1922. stating: All moneys appropriated by Parliament out of the Public Works Fund tor the purposes of main highways, being not less in any year than the sum of £200,000; . the first such payment to bo made in and for thd* year commencing on the first day of Apyil, 1924. “ The result of your decision, in brief, would mean that the Government is departing from what the people wo represent consider, to be prima facie the statutory obligation, but in any case the moral obligation with regard to State assistance to main' highways, and that the Government proposes to abs-> , '-~ itself from all liability in respect of tire construction of over 10,000 miles of the roads of the Domin;on, the further improvement of hundreds of miles of which is necessary for the normal development of the country. We would like to put on record in the following remarks our views upon the different points that ' affect the matter:—

1. The sum was expressed to be a minimum yearly payment, the clear intention of the Legislature being that such sum was. the least the Public Works Department" should give annually as a grant to the board. 2. The amount was arrived at as the amount which the Public Works Fund had been finding yearly towards construction account on the main arterial roads of the country at the time the Act was passed. In this connection the first declaration of highways comprised 5954 miles of road, afterwards increased liy subsequent declarations to G6OS miles in 1928. In The latter year the increased revenue of the board from the petrol tax enabled it to, increase the mileage to 10,178 miles. The assumption by the board of liabilities on these extra miles of highways considerably increased the construction liabilities which the Main Highways Board took over from the Public Works Department, and would have been a fair argument for asking that the £200,000 a year from, that department should be increased. The amount of public works expenditure on the 3570 miles of road taken over last year was at least £50,000. 3. A considerable portion of the expenditure of the board in the backblock scctions traversed by the various highways has in part been of a development nature, opening up metalled access to areas otherwise cut off from wheeled traffic (luring the winter months, and enabling these areas to be developed and settled, to which provision the Public Works Fund would have contributed substantial amounts iu the ordinary way. 4. The unemployment question has forced upon the board a large expenditure'on relief works, which usually take the form of improvements on existing roads (widening, grading, etc.), mud', in advance of the time when such works would in the ordinary course be considered by the board as essential, and under conditions which do not make foi the most economical construction. The amount spent by the board during the year ended March 31 last on relief works amounted to £220,000. We would point out that the relief of unemployment is recognised as in a great measure the care of tire general taxpayer, by the fact of the substantial subsidies given local authorities towards relief works carried out by them. The withdrawal of the annual grant by the department to the board would he a distinct reversal of such principle. The increasing sums spent by the hoard in rphef of unemployment have been adversely criticised by many contributors, anil the existence of the annual Government grant has in many cases been the main justification that could be urged for them. 5. The board early in 1928 laid down a comprehensive five years’ programme, intended to take up not only the funds then in its hands, but' the annually accruing funds receivable by it under the existing law. Included in this programme was the creation of new secondary highways, (of which '3570 miles have since been declared), the increase of maintenance subsidy to £2 for £l, and of bridge subsidy to £2 for £1 for the first £IO,OOO and higher subsidies over that amount, a special £3 for £1 subsidy for high-class pavements on roads adjacent to main centres or carrying heavy traffic between such centres, and the inclusion in the highway sys-

lem of extensions of main highways in boroughs of not less than 6000 inhabitans. All . these subsidies have been agreed upon and are now being paid, and the full programme has been laid out and provided for. We would particularly stress the large proposals for bridge renewals, particularly in the South Island, many of them urgent renewals of existing structures, running into very large amounts, for which tentative arrangements have been made and negotiations are in progress, also to the extensive and expensive high-class pavement schemes in which the board is providing throe-fourths of the funds. It any reductions are made in the Highways Board funds, or any of the contributors fail in their contributions, then it is clear that the board’s programme must be recast entirely and the subsidies reduced.

The precarious position that would arise is* illustrated by the fact that wc estimate that with the amount available from the Public Works Fund cut down to the limit that you -have fixed (£1)50,000), which is £150,0C0 loss than the board asked for, the credit balance, it the programme is maintained, of the board’s revenue fund, will fall ■to some £250,000 at the end of this year, and will entirely disappear at the end of next year. This is without considering' any untorosecii damage such as the heavy expenditure recently rendered necessary by the disaster 'which has overtaken the northern part of the South Island.

(0) The evident intention of the Act was that the . £200,000 ' a year grant should be n ‘minimum. Since- then lluobligations and contributions of the board and the local bodies have in creased very considerably, caused largely by the increasing number ot motors in the country: but although the Stale has from Customs revenue on such inereiise in gars received a very large addition to its revenue, its actual payment to tlio board has remained stationary. The position, to our mind warrants in various aspects rather an increase in the contribution from the 1 üblie M ul ks I* mid than its extinction. (7) The principle of the State’s part ncrship in the liabilities for main high ways is recognised in practically every country, and was certainly recognised in the New Zealand .Main Highways Act. not only by the contribution paid by statute but also by the inclusion of "in-half of its members as rcprcsenlaUvcs ol the Slate, ami so lung as that

Act continues unrcpealed it must be taken to be the intention of Parliament. “The withdrawal of the £200,000 a year grant will also disorganise the accounts of the Main Highways Board as between the 'two islands, and will involve some very considerable readjustments on account of the various factors entering into the matter of the accounts in future between the North and South. wc be permitted to refer to the political effects which will, in our opinion, result Horn the suggested withdrawal of the £200,000 a year grant. 1. The local authorities and the motorists (who were consulted prior to the Act coming into force, and who have been .satisfied with the intentions indicated in the said Act. and as heretofore carried out) will look upon the withdrawal of the annual grant as a breach of faith on the part of the Government. 2. The local authorities ami the motorists wilj consider that it is an endeavour to make them carry, without assistance from the State, a very large part of the relief of unemployment in the country, and in works often of a non-essential character. 3: Ihe motorists will consider that an unreasonable share! of what may be termed development work is placed on their shoulders without anv assistance from the State, whose* is the obligation to subsidise work of a developmental nature. 4. The local bodies will consider the impoverishing of the board’-s funds bv the loss of the £200.000 a year as a reduction of the assistance'which they have been led to expect, and a>o now receiving, and which the board is prepared to continue to give them if its funds are left intact. We. therefore, very earnestly bog you to reconsider the decision to. make the whole of file moneys from the Public U orks funds this year chargeable to loan account, but to make at least £200.000 the animal grant to the board provided for by section 168 of the Main Highways Id doing so, we would point out that the only difference to the State would be the amount (some £II,OOO a year), which 'would be the interest on the £200,000 as the whole funds payable to the board on construction account will, in any case, be provided bv State loan. “In the meantime, .we have kept the mtormation contained in your mefnorandtnn to the board of May 22 last; as confidential. Should you. however, not see -VO,U i " iiv t° reconsider the point, we would feel constrained to let our constituents know of the position, as otherwjsc we should be placed in a most invidious position in that, knowing the fact that then- interests may be prejudiced. we were debarred from communicating the position to them or consulting them upon it.” Sir Joseph Ward replied as follows, on July 16:— “I am in receipt of your letter of 2lst ultimo, concerning the financial arrangements made for the current financial year. I am pleased to receive your representation in the matter, but it is evident that the position is not being viewed in the proper perspective. All the money expended out of the Mam Highways Account is either loan money borrowed by the State, or the proceeds of .taxation, and while the Highways Board, ns representative of tire parlies particularly interested in the state of the roads, is vested with authority to determine how and when the funds made available for arterial roads are to be expended, it must not be overlooked that all such funds are Public moneys. Accordingly, tire finance ot the Main Highways Account cannot be kept apart from the finance for other purposes, and all must be subject to the general financial position prevailing each year.

1 „ „ !ast financial year ended with a deficit of £577,009, ana the Government is faced with the question of Icctifying this unsatisfactory state of affairs, and ensuring a balanced budget for the current financial year. Every item that moans added charges on the taxpayer has tcT be most carefully considered. “ The resources of the Main High wave Revenue Fund arc more than ample to meet current requirements, and aceordingly this fund must assist to make good the shortage iu other directions. I therefore regret that I am unable to amend my decision to provide the whole of the new capital for Main Highways Construction hand, by direct allocation, instead of partly through the Public Works Fund*” A T V. ,r ,ther letter from the members- of « e , l s*P va - vs Boal ’d to the -Minister of Public Works, forwarded on July IS, was its follows:

Following on our interview of this morning, the point which we wish to bring particularly before you. is that so far as information received up to date shows, the expense which will be involved in restoring the damage to main highways in the areas damaged by the earthquake on June I'> W 1" amount to a figure not far short of ( a quarter of a million. “ Tim board realises that it is part of its duty to repair damage to roads, and any such expense is a reasonable charge against its revenue fund, but this damn go is of such a cataclysmic nature as seriously to raise the question of whether some assistance should not be given from some source outside the ordinary funds of the Main Highways Board. “ In addition to the repairs there will be required reconstruction probably on better lines than the road destroyed, in winch case part of the expense should come from borrowed money. Also in coping with the 'emergency the board has tound it necessary to make use of -secondary roads, some not even highways, on which a , certain amount of construction, as apart from maintenance, will have to be carried out during the next year (or longer period if the repairs to the main highways are not complete within that timej. This charge should certainly also borrowed money. . The circumstances set out above add weight to the representations made recently to the Prime Minister by the members of the board representing the counties and motoring interest;, and addressed to him on June 21. and before he finally replies to that letter of June 21. wo would be glad if you would ask the Prime Minister to consider the facts set out above, whereby it will b e seen in addition to the general principles referred to in that letter, there is now the special circumstances of the earthquake still furflier (o strengthen the representations in layout l of the retention of the grant of not loss than £2OO 000 pe r annum’ from tlio Ijiblic V\ orks -1 nnU. fonnnno" se i- ll i 0 Wuri,H ‘ llot than £-00,000. which appear in the Act governing our operations, and we think the f9nn e nnn IS -'w lust ?."®° " hen the sum of wm°’°?i 0 ' ve, l.b c increased to deal has arisen VeV ' V Sl ' eclal allo, h r ™cy which “We recognise the ’difficulties which this year confront the Minister of Fina ice, as explained to us by him. ami. so ;f, ,l° rc ,Je . misunderstanding. this letter is not intended as a present l tion C |n , 01 ‘ P 0 (W I-’ adtLi- •!?’.. P r ? loall , ninncvs which the Min..pm t ot has already made available to us. but is a request that of that ■W o «°fT I? .^L wc wttl, clause nnt ; M :" n Highways Art. should "bfe b to r .-iv tei,C • Al,v enm ,le •» amo to on account of the sneci-il emergency would, of course, be ad - lional to the £200,000.” 1