UNPROFITABLE LINES.

Poverty Bay Herald, Volume LII, Issue 17008, 15 April 1926, Page 10

UNPROFITABLE LINES.

CONSOLIDATED REVENUE TO BEAR LOSS. GOVERNMENTS RAILWAY POLICY. (Per Press Association.) 1 . AUCKLAND, Lost night-. lira statement to-night regarding the Government's policy in respect to unprofitable rail way lines, the Prime -Minister, Mr. .J. CL Coates, sanl: When a decision wuts made lo mn the mil ways on business principles', the question immediately developed as to what could lie done in regard to lines which 1 even the- most intense application of business principles could never make into payable propositions. Was this capital cost to be wntten,,o£f? Should the lines be abandoned? Mere they to be •allowed to continue as a drag upon administrative efficiency in the management of the railways? The matter was one calling for much anxious thought, and the course decided upon, that ot allowing the consolidated revenue to bear directly the loss on non-paying branch lines, appeared to be the fairest means for both removing the handicap of past bad business management in l ail way construction and [ireserving to the districts served by those lines tile advantages which a railway connection bestows. This course is to be pursued until some means can be found either to reduce such losses to, reasonable limits, or to establish a less expensive form of transportation. FINDING A SOUND BASES. “The Government Railways Amendment Act- of last session embodies the most serious legislative effort hitherto made in New Zealand to place the railways on a- sound administrative and financial basis, and shouJd\be given a. fair trial. A close study of the question shows it is practically impossible for I he: railways to materially increase the volume, of traffic from agricultural or pastoral country. Any addition to (lie tariff rates! or reduction in services would drive a; considerable amount of business on lo the roads. The only alternative is 10. endeavor to reduce the operating expenditure. The branch line statistics pub-i lislicd in the Railway Statement fpr 1925; show that. i;ven after estimating the! credit to bextllowed to branch lines for: all traffic contributed by them to the main lines, it would have been necessary to effect- 57 per cent, reduction in opera-, ting- l expenses before the branches would i pay their way. “HAVE MADE A GOOD SHOWING.” 1 ‘‘The introduction of Hie rail motor services may afford some relief, but unfortunately such services do not cater for goods traffic- Under tlio terms of the regulations governing the assessment 1 of revenue on branch lines, the whole of the net revenue derived on main lines front traffic to or from non-paying branches is credited to the branches. Slice; 1696, when the railways were first called on to pay 3 per cent, on capital investment (mcieased in 1909 to 3| per cent.), tlie- amount earned in excess: of minimum return was £1,300.000. As the interest is calculated uu the total investment, including non-interest. bearing funds, vhich form a considerable proportion of the.whole, it may reasonably be claimed that the railways have made a very good showing, in spite of the fact that- they have not received direct capital subsidies such as were granted to private companies. It will be generally admitted that the quality aud efficiency of the service rendered by the railways has improved materially during the past two or three years. This is doubtless due to the stimulus of competition and the new spirit of co-operation ill an effort resulting, from a reorganised and decentralised system of management.” ‘‘The railways,” Mr. Coates concluded, “are entitled to credit for the progress so far recorded, and should be eucour- , aged by the reasonable financial arrangements now provided to carry on toward a still higher standard the good work of increasing their general efficiency in the interests of national welfare.”

Mr. Contes left for Wellington to [light. A