SERIOUS CONDITION

Otago Daily Times, Issue 26596, 20 October 1947, Page 4

SERIOUS CONDITION

Finances of City Transport Department

PAST POUCY ASSAILED

An admission that the finances of the City Transport Department were in a very serious condition was made by the chairman of the Transport Committee of the City Council, Cr McCrae, when asked for his comments on a letter that appeared in the Daily Times on Saturday morning outlining the financial difficulties of the department. Cr McCrae also attacked strongly the policy of past councils in using the profits of the trading departments for the relief of rates and for other purposes.

“ When I estimated that there would be an increase in the department's working expenses of £25,000,” Cr McCrae said. “it was based on the interim report of the chairman of the Disputes Committee, Mr Rigg. Since then he has given his final report, which operates as from October 1. This gives a further rise of ljd per hour, and the annual increase to the department will now be £31,660. The increased amount for the balance of this year will be £17,960. “For the first 20 weeks of this year our loss was £9857 and the estimated loss for the year is £42,800,” Cr McCrae added. “The Transport Committee realises that it has to face up to the position and a special committee has been appointed to go into the finances of the Transport Department.” Asked if the committee had made any progress in its work and had arrived at any solutions, Cr McCrae said that the first thing it had to do was to investigate what economies could be made that would not affect the efficiency of the service. He doubted, however, that much could be saved. He was not in a position, he said, to answer a further question whether the committee would recommend an increase in fares or the striking of a special rate to meet Ihe position.

Special Rate or Higher Fares? “I do not think the council has the power to strike a special rate for this purpose, although a very good case could be made out in favour of doing so,” he said. “A strong argument would, no doubt, be put forward that the users of the trams should pay for the service. On the other hand, it should be remembered that in past years £139,833 has been taken from the profits of the Transport Department for the relief of rates and other purposes. This profit came from the users of the trams and not the ratepayers alone. Therefore, if a special rate were struck the department would be only getting back from ratepayers what it had once given them. In other words, the users of the trams would get back the profits that they once helped to make. “It \TOuld have been far better if Dunedin had built up a reserve fund from these profits rather than have used them for the relief of rates and nther purposes, Cr Mcurae suucu. “An example of the benefits of this actk.n l” provided by Wellington which has ample renewal and sinking funds and possesses a reserve of approximately £750,000.’ “ In fact, I question the wisdom of the present council and past councils—and, of course, I must accept my share of the responsibility—in taking so much out of the trading departments’ profits in the relief of rates and for other purnoses,” Cr McCrae continued. I feel, perhaps, that ratepayers would have received more benefit from a reduction in electricity and gas charges. The Electricity Department during the past years has paid out of its profits over £600,000 in the relief of rates and other purposes.”

It was interesting, he said, to note what a former city electrical engineer, Mr M C Henderson, had to say on the subject in his annual report over 10 years ago. Commenting on this subject, the late engineer had said that the corresponding figures were first published on the occasion of Waipon attaining its majority in 1928 and the nine years subsequent to that haa added very handsomely to the total. “These figures,” Mr Henderson had reported, “do not convey the whole story for the department, on account of the diversity of these funds, has had to increase its loans to an equal amount, paying interest and sinking funds which have further reduced the annual surplus and postponed reduction in charges. Greater Permanent Benefit “It is safe to say, therefore,” Mr Henderson’s report continued, “that the effect has been to increase the loan indebtedness of the Electric Light and Power Department by well over £500.000. One can only speculate upon what the effect would have been had this amount, which has been contributed directly or indirectly to these outside objects, worthy though they may be, been absorbed in the undertaking so as to limit loan indebtedness. “Suffice it to say,” Mr Henderson had continued, “ that it is more than probable that the ratepayers would have enjoyed greater permanent benefit by the reduction in charges for electricity than would then have been possible than by the saving they have made in rates, and Dunedin would have continued to hold the record for the lowest electricity charges in the Dominion.” “ I entirely agree with Mr Henderson,” Cr McCrae stated, “ and in view of the fact that a new council will be elected in a few weeks’ time, I feel this is an opportune time to raise the question. If I were a candidate for the Mayoralty of the city I would put this matter in the forefront of my policy. I feel it is vital to the progress of our city.”