STATE CONTROL

Southland Times, Issue 20209, 21 June 1927, Page 5

STATE CONTROL

ITS APPLICATION TO RAILWAYS.

A COSTLY LUXURY.

(By

“Taxpayer.”)

In the days of my political youth—many, many years ago—l should have laughed to scorn such a statement as the one made by the president of the Canadian Pacific Railway Company a little while ago, in a communication to one of the business magazines of his own country. The slogan of my socialist friends —the nationalisation of the means of production, transportation and exchange —had seemed to me the very foundation of just and effective legislation and administration. Wider experience and closer observation, however, have satisfied me that, human nature being what it is, and politicians what they are, it is only in rare instances and in exceptional circumstances that the public can be as well served in the ordinary activities of life by “State enterprise” as it can by “private enterprise.” In the public utility services, so to speak, the Post and Telegraph Department, the Life and Fire Insurance Departments and the Public Trust Department are the only exceptions to this general rule that come readily to mind. The Railway Department probably would be included in this list of exceptions by many observers, simply because the means of transportation must not be left to the whim of individuals and companies; but the experience of older countries has shown that with adequate safeguards this service may be left safely to private enterprise. A LESSON FROM CANADA. In this connection it may be helpful to examine for a moment what is happening in Canada. The Canadian Pacific Railway Company owns and operates 20,000 miles of track across the Dominion of Canada. The Canadian Government owns and operates 22,000 miles of track (the National Railways of Canada), across the same wide stretch of territory between the Atlantic and the Pacific Oceans. These two railroads are competitors for the trans-Contin-ental and for much of the local transportation business of the Dominion. They both are operated for the basic purpose of making a profit for their owners. The Canadian Pacific is privately owned by its shareholders; the National System is publicly owned by the taxpayers of the dominion. The statement of the President of the Canadian Pacific Railway Company, which I have just mentioned, deals with the outcome of the competition between these two great undertakings. “The Canadian Pacific,” it runs, “is the largest taxpayer in Canada. Thus, the greater the deficit of the National Railways, the greater the taxburden on the Canadian Pacific. On the other hand, if the National Railways prosper by the diversion of traffic from the Canadian Pacific, the Canadian Pacific’s loss will be greater than the taxes would have been. Again, the greater the Canadian Pacific’s profits, the greater will be its taxes and hence the larger its contribution to its rival. The public enterprise gets the private enterprise coming and going. Through the power of taxation, to meet the cost of Government, private enterprise, private industry and private thrift are compelled to pay for public enterprise, public deficit, public mismanagement and public extravagance.” And notwithstanding all this the Canadian Pacific is regularly paying dividends to its shareholders while the National system is as regularly declaring deficits. EVADING RESPONSIBILITY. There is no very close resemblance between the railway position in Canada and the railway position in New Zealand; but here, in spite of the absence of competition from any rival system, deficit is following upon deficit with depressing regularity. Since the financial year 1920-21, with the single exception of the year 1923-24, the expenditure has exceeded the receipts, and the year just closed will show a deficit of over half a million. Changes of management and changes of methods have followed upon one another with almost bewildering frequency, and yet none of them seems to have stayed the downward tendency. A couple of years ago the authorities conceived the idea of charging the losses on the non-paying branch lines to the Consolidated Fund, and Parliament, probably without understanding what the whole business meant, meekly passed a large slice of the troubles of the management on to the shoulders of the taxpayers, great and small, without regard to their ability to pay. In the first year the tax—as the “subsidy” as well may be called—amounted to £359,546, in the second to £445,222, and, with the railway authorities relieved of responsibility, is not likely to develop a downward trend in the near future. These non-paying lines are heritages from former generations of politicians, and the present Government, at any rate, is not responsible for the straits into which they have fallen; but there still are one the list of railways authorised by Parliament a number of lines which inevitably would fall into the same category were the present Government, or any succeeding Government during the next twenty years, foolish enough to proceed with their construction. HALF-WAY. If the sale of the State Railways is a too startling proposition for the dominion to entertain at the present time, Parliament at least might take some steps, apart from the appointment of commissions and the preparations of reports, towards the construction of a scheme of management that would eliminate the importunate politician, restrain the aggressive deputation and fortify the besieged Minister of the Department. The appointment of a highly qualified board, free from ministerial control and with the full powers and responsibilities possessed by the management of a privately owned railway system would be a long step towards placing the lines on an efficient and a money-earning basis.