ROAD TRANSPORT SERVICES

Southland Times, Issue 23308, 18 September 1937, Page 6

ROAD TRANSPORT SERVICES

Question Of State

Control

FIRST SITTING OF TRIBUNAL (

VALUATION FOR FIVE BUSINESSES

(United Press Association)

AUCKLAND, September 17

Whether the Transport Licensing Act had served to create monopolies for road transport services was the major issue discussed by counsel at the first sitting today of the special tribunal appointed by tlie Government to determine fair conditions of purchase for certain goods services which the State proposes to acquire. Most of the morning was occupied by general submissions but in the afternoon a start was made in the hearing of specific evidence relating to the position and prospects of five companies which are concerned by the Government’s policy.

The tribunal consists of Sil Francis Frazer, chairman, and Messrs S. S. Millington and L. H. Hesiop, of Wellington In a general submission on the question of compensation Mr Leary, for one company, said .it was clear that while the Government intended to taka over and pay for the services at a fair price it desired to deduct from their value any worth they might have as monopolies. Mr Leary submitted that the average haulier had no monopoly. As a result of this system of licensing there was opposition from the railway, which had exerted itself to overcome the competition of the lorry by discriminating tariffs, by extra trains and by speeding up the service. Moreover, if a firm was not satisfied with the hauliers’ prices or the railway rates it could, and did, put on its own lorries. Mr Leary contended that the Government was taking from the operator his right to serve the public and to obtain future profits. Sales to the Government were not of the hauliers’ seeking and the State should consider a fair value of the future prospects of concerns which had come into existence in response to the public demand. Their activities were to be carried on by the I State in future for its own advantage and it was because of the very permanence of the businesses that the Government desired to acquire them. ASSESSMENT OF PROFITS Mr Leary concluded by suggesting that the present year should be taken for any assessment of profits in computing the net profit proper. The wages of the management should be allowed off the profit and should be debited with proper interest on the capital involved and any percentage due to monopoly value then deducted. The figure obtained should be multiplied by at least seven for the expectation of profits. Observing that the transport question had been one of great moment, Mr V. R. Meredith, for the Crown, expressed the view that the value of the road ■ services had been largely determined by the monopolistic effect of the licensing. Mr Meredith contended that had the licensing system not been in operation during the recent years of the trade revival every other person would have put a truck on the road and competed with those firms which were granted licensed security, bringing about the former conditions of uneconomic prices. Leaving the railways to cope with all heavy haulage at low rates the road operators simply took over the high tariff items and under the protection of the licence were given absolute freedom from competition. It was obvious that such a condition could not be allowed to continue. However, operators had this piece of good fortune. They could not only retain the very handsome profits they had made but also that the largeness of these returns should be made the basis for recompense from the public purse. Now their “good spin” was over. Referring to McClymont’s Transport, Ltd., one of the companies concerned, Mr Meredith said the value put on McClymont’s vehicles by the purchasing officers was £3185, but the firm, which considered the plant as a complete unit, arrived at a figure of £5754. “GOLDEN AGE” One of the purchasing officers acting for the Government, Henry Valentine, second assistant to the General Manager of Railways, said it was submitted that the most optimistic carrier could not expect the “golden age” to continue much longer. “It is the intention of the Railways Department in New Zealand to provide such services as will reasonably meet the requirements of the public and the Crown is prepared to pay a fair purchase price to the present officers,” Mr Valentine said. “It is submitted, however, that the uncertainty of tenure of any road service operator is a factor which makes it impossible to attach any goodwill value to existing licenses.”

The view adopted by the purchasing officers was that the goodwill value of any road service should be based on the actual results before the introduction of licensing and regulation, Mr Valentine added. If no goodwill could be established on this basis the purchasing officers had adopted the alternative of offering, without prejudice, the minimum of 20 per cent, on the value of tangible assets in accordance with the directions of the Government. Mr North, for McClymont’s: Is it a fact that the department interviewed clients of McClymont’s Transport and threatened them?—They would be canvassed, but I am not aware of any threats. The tribunal then adjourned.