THE RAILWAY SERVICE

Otago Witness, Issue 4042, 1 September 1931, Page 6

THE RAILWAY SERVICE

OPERATIONS FOR PAST YEAR. HEAVY. DECREASE IN NET EARNINGS. BURDEN OF INTEREST CHARGES. The Railways Statement for the year ended March 31, 1931, shows that the gross earnings amounted to £7,371,237, a decrease of £716,579 on the previous year. Working expenses- reflect the departmental economies that have been effected, and for the first time in a number of years they show a decrease as compared with the previous year. The expenditure for 1931 totalled £6,882,810, compared with £7,358,859 in 1930. There was again a heavy shrinkage in the net earnings, which amounted to £688,727, compared with £921,055 in 1930, £1,898,592 in 1929, and £1,839,415 in 1928. Interest charges amounted to the formidable sum of £2.255:345, so that deducting the net earnings a deficit of £1,566,618 is shown on the year’s workings. The capital cost of opened and unopened lines at March 31 last was £68,679,025, an increase of nearly £12,000,000 in five years. The revenue for the current year is estimated at £7,151,000, and the expenditure at £6,223,528.

MINISTER’S STATEMENT. A DIFFICULT YEAR. In presenting the Railways Statement for the year ended March 31, 1931, in the House of Representatives on Tuesday, the Minister of Railways (Mr W. A. Veitch) Baid: J have the honour to report that the gross income frohi all sources was £7,571,537, a decrease of £716,579 on that of the previous year, while the expenditure was £6.882,810. a decrease of £476,049. On March 31, 1931, the capital invested in the lines open for traffic, including the srteamers and plant on Lake Wakatipu and other subsidiary services,' was £60,545,154, as compared with £57,787,671 on March 31, 1930, an increase of £2,757,483. The increase in capital comprises £855,154, cost of the Eskdale-Putorino extension, 26 miles 74 chains, taken over on October 6, 1930, and £559,012 expended out of the vote for additions to open lines. This latter sum represents the provision for new rolling stock, grade easements between Crichton and Lovell’s Flat, additional dwellings, improvements and extensions to buildings and plant, workshop equipment, rearrangement of station yards, and other facilities. Expenditure under the Railways Improvement Authorisation Act, 1914, totalled £1.044.433. The new works carried out during the year included the completion of the new station and yard at Auckland, new goods shed at Wellington, and reclamation for station yard, Papa-toetoe-Papakura duplication, reconstruction and strengthening of bridges, completion of Ravensbourne-Burkes deviation, telegraph and telephone lines, safety appliances. and tram control. A sum of £766,073 was charged against revenue for depreciation and provision of renewals, and the amount expended from this fund was £385,724 for assets written off. The accumulated credit balance in the Renewals and Depreciation Fund at March 31,1931, was £2,067,910. During the year ended March 31, 1930, the cash resources of the Railways Department were exhausted as a result of the policy which required the department to pay interest charges irrespective of the fact that the net earnings for the year were insufficient to meet the total interest debit. In order to meet this position a further amendment to the financial arrangements of the department was made, and section 14 of the Finance Act, 1930 (No. 2), authorises the Minister of Finance to reduce the interest charges on capital where the annual accounts of the railways disclose that the full amount of interest cannot be paid out of the working railways account.

HEAVY INTEREST CHARGES . The Finance Act, 1929, section 20, provided that interest will be charged on the total amount of capital moneys expended in respect of railways, reduced by the sum of £8.100.000. The interest charges computed in terms of the Finance Act. 1929, total £2.255,345, compared with £2,132,324 for the year ended March 31. 1930. The sum actually paid for interest charges for the past year _is £685,000. The net earnings totalled £688,727. which amount, deducted from the total interest charge of £2,255,345, leave*? a deficit on the year’s operation of £1,566,618 —an increase of £355,349 compared with the figures for the previous year. Compared with the previous year, the net earnings show a decrease of £240.530. Revenue decreased by £716,579, or 8.7 per cent., while expenditure decreased by £476,049, or 6.5 per cent., notwithstanding an increase of £66,896 in the amount set aside to provide for depreciation and renewals. In comparing the net revenue for 1931 with the results of previous years, it is necessary to make due allowance for the variations in enactments, regulations, and policy applying to the finance of the Working Railways Account. It must also be borne in mind that since 1926 systematic provision has been made for depreciation in a manner which has not been adopted by the majority of State railways in other parts of the Empire, and which prior to that year had not .been adopted in New Zealand. Variations such as those referred to require to be taken into account in order that deductions drawn from comparisons will be correct and reliable. ECONOMIES EFFECTED Channels for economy in expenditure were also fully explored in every direction during the year, and the figures given above indicate the very large measure of success that was achieved in that connection, and there is no doubt that an even greater extent of reduction in the expenditurs might have been achieved if the

staff adjustments that were found possible had been rigorously pursued regardless of any other consideration than the reduction of expenditure within the department. It was felt that, having regard to the general state of the labour market and to the very great distress that was likely to be occasioned if a sudden and extensive reduction of staff had been decided upon, a steady process of more or less gradual reduction was justified, even though the department was involved in some expense in so doing. REVIEW OF TARIFF The Royal Commission, in pursuance of its order of reference, review of the railway tariff, and recommended a number of alterations therein, the principal of which were adopted as follow: — .Ordinary passenger fares increased by Jd in the shilling or part of a shilling, holiday excursion and season tickets increased by Id in the shilling or part of a shilling, the scale for workers’ weekly tickets increased, and a number of minor amend ments made to other classes of tickets. A number of the classified rates for commodities such as coal. gram, firewood, bricks, etc., were increased by 10 per cent., and the rates for fresh fruit and vegetables were also increased by approximately 10 per cent. BRANCH LINES The loss on branch lines and isolated se tions was £780,299. as compared with £761,091 for the previous year. These figures include interest charges. AUCKLAND NEW STATION The new station at Auckland was officially opened on November 24, 1930. The original estimate, including the station yard, was £550,000, exclusive of £325,459 cost of the reclamation of the site for the yard and buildings, and -work performed in connection with the erection of and alterations at the locomotive depot prioi t0~1924. The actual cost of the work at March 31, 1931. was £1,230,645, which includes the station buildings, construction of yards, goods sheds, interlocking, and signalling, etc. The estimate in 1924 was based on old designs that had been in existence for many years. After the esti mate had been framed the whole design of the yard was investigated and recast. The completion of the Auckland-West-field deviation synchronised with the completion of the Auckland station. The estimated cost of this work was £450,000. The final cost to complete amounts to £770,000 owing to alterations in the original scheme. TRIBUTE TO STAFF As the direct responsibility of administration of the department will in future devolve upon the board, I desire to take this opportunity of placing on record mJ’ personal appreciation of and gratitude to all members of the service for their cooperation in the conduct of the various phases of the department’s operations during a period of unparalleled difficulty. Considering the climatic and geographical conditions in New Zealand, which vitally affect the running of our trains, it is highly creditable that the service has been able to maintain a safe and reliable means of transport throughout the country, for so many years. The unwavering efficiency and devotion to duty of the entire staff, although called upon to make sacrifices in common with all other sections of the people, is the chief hope for the future success of the department. These factors will prove to be the mainstay of the board in its difficult task of directing the service in the interests of the people as a whole and at the same time stabilising the railway finances. I would also like to take this opportunity of acknowledging the assistance

which, as Minister of Railways, I • have received from members of Parliament. The full and constructive criticism which has been forthcoming has materially helped in the. administration of this important department of State. RESULTS OF WORKING The following is a statement of the results of working for the past two years:—

For the current year I anticipate the revenue will reach £7,151,000, and the expenditure £6,223,528. GENERAL MANAGER’S REPORT REVIEW OF WORKING SERVICES The Minister’s statement is accompanied by a comprehensive report from the General Manager (Mr H. H. Stirling) on the working of the railways for the past financial year. After setting out the principal items in the railway balance sheet Mr Stirling mentions that until August the revenue was slightly in excess of the figures for the previous year, but from the Auguct period to the end of the financial year the decrease in revenue increased month bj’ month until at the end of the yeir a total decrease of £716,579 resulted. Prior to the decrease in revenue setting in the department had put in hand a compre hensive review of the train services of the Dominion, and the reduced train services which were made effective enabled substantial economies to be made in oper ation. Close attention -was paid to ex penditure in all branches, and from the analysis made in this report it will be seen that the expenditure in all branches of the department’s activities was re duced.

The operation of branch lines and iso lated sections resulted in a loss, includ ing interest charges, of £780,299 for the year, as compared with a loss of £761,091 in the previous year. The working of these lines continues to be a burden on the department’s financial position. The passenger earnings for the yea’ decreased by 10.88 per cent., as compared with the previous year, and the goods earnings decreased by 8.50 per cent. The working revenue for the year was £6,781.388, and the total expenditure £6,882,810. PASSENGER TRAFFIC The passenger traffic for the past two years compares as follows: — 1931. 1930. Ordinary journeys .. 7,265,912 8,469,038 Season ticket trips 15,521,144 16,911,076 The revenue for the corresponding periods was as follows:— 1931. 1930. Ordinary .. .. . 1,531,376 1,733,512 Season 247,349 262,415 Total 1,778,725 1,995,927 The following tables show the decline in passenger revenue since 1921, in which year the total passenger journeys was the highest recorded, and the revenue the second highest. For the five-year period 1921-26 the total journeys and revenue decreased by 4.06 and 4.37 per cent, respectively. Between 1926 and 1931 the total journeys and revenue decreased bj’ 17.52 and 28.89 per cent, respectively. ORDINARY.

The passenger train mileage increased’ from 3,875,332 in 1921 to 4,155,773 in 1926 and to 4,874,650 in 1931. The standards of passenger accommodation have been considerably improved, resulting not only in a constant increase in capital cost, but also in the heavier tare weight of the carriages and reduced carrying capacity. GOODS AND LIVE STOCK The revenue from goods and live stock was £4,487,357, as compared with £4,904,324 for the previous year, a decrease of £416,967, or 8.50 per cent. A

comparison of the total revenue and tonnage of this year’s traffic with that of the previous year is as follows:— _ 1931. 1930. Revenue .. £4,487,357 £4,904,324 Tonnage .. 6,957,709 7,788,973 A comparison of the tonnage of goods and live stock carried, together with the revenue from the same for the past six years, is as follows:—

A comparison with 1930 of the tonnage of commodities under the six main headings is as follows: — 1931. 1930. Tons. Tons. Agricultural products 592,853 686,594 Animals and their products .. .. 1,170,036 1.138,835 Products of mines .. 2,623,123 2,879.231 Products of forests . . 526,239 724,785 Benzine, cement, and manures .. .. 791,109 908,420 General goods and miscellaneous .. 1,254,349 1,451,108 Totals .. .. 6,957,709 7,788,973 REFRESHMENT SERVICE The revenue from the refreshment service was £116,665, and the expenditure £113,324, leaving a net profit of £3341. In the previous year the revenue from this source was £131,342 and the expenditure £124,361, giving a net profit of £6981. STORES AND COAL The amount expended in connection with the purchase of stores and material during the year was £2,345,239 14s 9d, and of this sum merchants, manufacturers, and othe'rs in New Zealand received £853,055 -13 s 2d. There w y as a net decrease in the year’s expenditure of £225,117 18s sd. The work of reorganising the main stores throughout the system has proceeded steadily during the year. The change-over to the new buildings at Addington and Hillside was completed during the year, and the completion of the new buildings at Woburn has enabled substantial progress to be made with the amalgamation of the signals and maintenance branch stores with the general store. The transfer of the stores from Newmarket to the new building at Otahuhu was ready to be undertaken soon after the close of the year. The average consumption of coal per week during the year ended March 31,1931, was 8327 tons, which was a decrease of 832 tons per week compared with the previous year. A coinparison in tons of the purchases of New Zealand and imported fuel for five years ended March 31, 1931, is as follows:—

Since the close of the year alterations have been made in the constitution of the department by the setting up of the Government Railways Board, and, as the arrangements provide for my taking over the chairmanship of that board, this will be the last annual report that I will make in my present capacity. Considerations of time and space prevent mj' making a complete review of the ■ ast three years, but the main phases of our activities have been dealt with in the annual report that 1 have rendered each year. I would onlj’ saj’ that a great deal of spade-work has been done both in the direction of improving our standard of service and of reducing costs, the effect of which is now being felt, and which, I feel confident, will continue to be felt in the coming years. This has entailed a large volume of work in the face of very great difficulties. In this latter connection I need only mention that since the period my general managership commenced —on June 1, 1928 —up to the time of writing there have been no less than three changes in the Ministerial control, a fourth change in the form of control by the constitution of the Government Railways Board, and a full overhaul of the department by a Royal Commission. These circumstances alone were sufficient very materially to curtail the amount of time that could be devoted to fresh work and the amount of thought that could be given to new ideas.

As I have previously had occasion to point out, the 'side of the department’s .work that the management is most particularly concerned with is expenditure, and as regards that aspect I would emphasise the thought conveyed above — namely, that the groundwork which we were able to accomplish has already made itself substantially felt, and will continue to do so. The department has had the misfortune, as has practically every other kind of business, of having been faced with a serious trade depression, while the position regarding competition and the conditions in the transport industry generally have created a state of affairs, from a revenue point of view, that could only be described as difficult in the extreme. We have, however, maintained an unceasing vigilance as regards competition, and, as regards the condition of affairs in the industry, we have endeavoured, where possible, to secure co-ordination by voluntary effort, and as to the conditions which could not be met in that way we have endeavoured to bring to the public a view of the position in proper perspective. 1 feel sure that the result has been to help towards the position that is undoubtedlj’ developing—namely, that public opinion is crystallising in the direction of a realisation of the necessity for something effective being done to rationalise the transport industry. In concluding my term of office of general manager I desire to thank my executive officers and the staff generally for the loyal support that has been given to me. I have had the benefit of much helpful suggestion from all ranks of the service, and I feel a measure of pride in the fact that employees in even the lowest

ranks have not been diffident in discuss-* ing matters of interest to the department’s business with me as I have moved about the system. I also desire to thank the press and the public generally for the help and patient consideration that they have extended to me. Here, also, I have' had the benefit of many suggestions w’hich have assisted me materially in carrying on the business of the department. I have appreciated much friendly criticism, and J feel that it has been helpful not only from the point of view of the substantive points made therein, but from the fact that criticism, especially of a constructive character, serves an excellent purpose in: keeping the organisation up to a high standard of alertness. °

Particulars. " 1931. 1930. Total miles open for traffic .. .... Average miles open 3.322 3,287 for year Capital cost of 3.303 3,287 opened and unopened lines Capital cost of £68,G79,025 £65,526,089 open lines Capital cost w mile of open £60,545.154 £57,787,671 lines £18,226 £17,581 Gross earnings £7,571,537 £8,279,914 Working expenses £6,882,810 £7,358,859 Net earnings £688,727 £921,055 Interest charges .. £2,255 345 £2,132,324 Deficit Percentage of total £1,566,618 £1,211,269 working expenses to gross earnings Percentage of net earnings to capi90.90 88.88 tai invested Railway operating 1.16 1.61 earnings Railway operating £6,781,388 £7,473,993 expenses Net railway oper£6,406,143 £6,848,026 ating earnings .. Percentage of rail£375,245 £625,967 way operating expenses to earnings Operating earnings per average mile 94.47 91.62 open £2,053 £2,274 Operating expenses per average mile open Net operating earnings per average £1,939 £2,083 mile open £114 £191 Operating earnings d. d. per train mile .. 144.26 149.21 Operating expenses - per train mile .. 136.28 136.71 Net operating earnings per train mile 7.98 12.50 Passengers, ordinary 7,288,674 8,498,441 Season tickets Total passenger 600,440 667,432 journeys 22,813,708 25,413,621 Goods tonnage 6,409,831 7,233,295 Live stock tonnage 556.498 566,407 Train mileage 11,281,898 12 022,043 Engine mileage 16,735,624

Year. 1921 1926 1931 Journeys. .. 15,291,452 .. 11,787,723 7,265,912 £ 2,454,438 2,271,498 1,531,376 1921 SEASON. .. 13,506,143 198,497 1926 .. 15.840,034 265,549 1931 ,. 15,521,144 247,349 TOTALS. 1921 .. 28,797,595 2,652,935 1926 .. 27,627,757 2,537,047 1931 .. 22,787,056 1,778,725

Year. Tonnage. Revenue. 1926 7,256,142 £4.499.160 1927 7,308.449 4,596,106 1928 7,358,388 4,680,135 1929 7,613,445 4,846,125 1930 7,788,973 4,904,324 1931 6,957,709 4,487,357

New Year. Zealand Imported. 1924-25 94,351 313,107 1925-26 85,393 273,076 1926-27 .. 187,793 193,163 1927-28 .. 288,646 152,025 1928-29 .. 356,724 66.675 1929-30 .. 355,214 121,037 1930-31 .. 367,686 40,827 CONCLUSION