PROFIT—AND LOSS

Otago Daily Times, Issue 23333, 27 October 1937, Page 8

PROFIT—AND LOSS

The Minister of Railways, presenting an analysis of railway receipts and expenditure for the first five and a-half months of the current financial year, appears to indulge in an ingenious exercise in overemphasis. For the period of 171 days ended September 18, he says, revenue was £58,000, or 4.33 per cent., better than the estimate. He finds that result very satisfactory indeed, explaining that, although a most optimistic view was taken of revenue possibilities when the Estimates were framed, receipts so far have "exceeded all expectations." It is unfortunate for the Minister that expenditure has done precisely the same thing. He explains that trend also, though in terms perhaps a shade less enthusiastic than those in which he depicts the revenue side of his department. It is useless to attempt to confuse the issue with a mass of figures, comparative or otherwise. The plain fact, which the Minister has been unable to disguise, is that the railways, from the point of view of net revenue, are steadily losing ground. No reasonable person expects the system to earn enough to liquidate its own yearly interest bill. But It ought to be able, particularly in good times like the present, to make a substantial contribution to charges upon capital cost. Yet what is the position? In the financial year 1936 the net earnings of the railways were £1,051,477. Last year they declined to £903,858. This year, after taking into account the extra administrative cost arising out of wage restorations and the shorter working week, the Minister of Finance budgeted for a net yield 0f£700,000. And in spite of his colleague's rather forced optimism, he cannot be very hopeful of realising much more than half of that amount. Mr Sullivan's review covers just on half of the year, and he is able to show a net revenue of £184,000, compared with £353,000 for the same period last year. Increased costs account for the difference. To meet the estimate the second part of the year has to yield a net return of £ 526,000. The Minister speaks in gratified tones of the "phenomenal figures" reached in July, August and September, but he omits to mention that the South African footballers were playing for him during those three exciting months. Their "phenomenal figures" produced his own. When the facts of recoveryMr Sullivan says the upward movement in traffic is continuing "with increasing momentum " —and the impending holiday period are given in, he will still have to record figures that are really startling in order that he may keep faith with Mr Nash.