Meeting The Railways Deficit

Southland Times, Issue 23612, 13 September 1938, Page 6

Meeting The Railways Deficit

In a statement on the financial working of the railways, made in the House of Representatives last Friday, the Minister of Railways could promise nothing more definite than that the possibility of ensuring a larger contribution to the Consolidated Fund, might have to be considered.” This was at least an admission that the Government is aware of the rapid drift in the railway finances; but it gave no assurance that the situation will be dealt with promptly and adequately. It is significant that the Minister, and the Government, think of the railways not as a business undertaking that is required to balance, as nearly as possible, expenditure against revenue but as a service that pays into the Consolidated Fund just what “contributions” it can. These “contributions” do not, as some may be led to believe, represent profits, but merely the balance of gross earnings over working expenses, exclusive of interest charges. The net earnings are paid into the Consolidated Fund and the railways’ interest charges, a very much larger sum, are paid out of that fund. The point is that since political control of the railways was restored the income received by the Consolidated Fund has been getting smaller and smaller and the outgoings on account of interest have been getting larger and larger. The position since 1935 is shown in the following table: Year ended £ thousands March 31 Income Outgoings

*Rough estimate: no official figure given. • It will be seen that the adverse balance which has to be made up from the Consolidated Fund —that is, from general taxation —has increased from £1,243,000 in 193435 to £1,703,000 in 1938-39 and may be £1,855,000 (or more) in 1939-40. In other words, the railways are now costing the general taxpayer half a million pounds a year more than when Labour came into office, in spite of the fact that their gross revenue over the same period has increased by £2,000,000 a year or by about 30 per cent. Considering the railways as a social service, as he and his colleagues do, Mr Sullivan declared in the House that “it might be decided that the best interests of the country would be served by allowing the present position to continue.” He added that there was a great deal to be said against the alternative course of increasing freights and fares. That may be true enough. No one likes paying high charges for anything. But it would not be an unhealthy thing—it might, indeed, be salutary—if the people .were made to realize in the most direct way just what the Government’s administration of the railways has meant. They would take notice of higher fares and freights far sooner than they will of the mounting levy of direct and indirect taxation required to make up the railways’ deficit in the Consolidated Fund—though even that is reaching such proportions that it can no longer be easily concealed. The imposition of higher charges might drive them to demand that the Government should make an end of wasteful expenditure on new construction and that it should conduct the railways as a public service certainly, but with greater regard for business considerations. They might even reach the conclusion that the railways were administered a good deal more efficiently by the Railways Board than they are being administered today. So a possible increase in freights and fares—in short, an effort to make the railways something better than a growing liability—remains just “one of the questions that might have to be considered.”

1935 1,087 2,330 1936 ' 1,051 2,300 1937 904 2,310 1938 633 2,336 2,360* 1939 (est.) 505