RAIL VERSUS ROAD

Te Awamutu Courier, Volume 53, Issue 3821, 14 October 1936, Page 5

RAIL VERSUS ROAD

DIFFERENTIAL FREIGHT CHARGES. MINISTER’S REPLY TO CHAMBER OF COMMERCE. The Te Awamutu Chamber of Commerce, at last night’s meeting, .received a letter from tha Minister of Railways, Hon. D. J. Sullivan, in answer to a letter forwarded after last meeting re the differential freight rates on railways;, the contention being that if it is necessary to charge more for carrying goods from Auckland to le Awamutu Than from Auckland to, say, Whangarei (the latter to compete with seaborr.e cargo), over approximately the same; rail mileage, the difference should be made up out of the Consolidated Fund and thus be a charge on the; whole community instead of, as at present, a penalty on one section. The Minister wrote:—“With further reference to your letter of September 11th, I have given careful consideration, to tha views of your chamber, as set out therein, and wish to state that the anomalies in the charges referred to are the direct outcome of actions which the Department has been forced to take to meet competition from other forms of transport. “For some years past the policy has been adopted of introducing local rates embodying reductions in the standard charges, between specified points, the extent of the reductions and areas of operations being influenced by the nature) and intensity of the competition which has had to be met. In some extreme cases where the requirements of the community concerned are partially met by shipping srvices, operating at a. low cost, it has been necessary to reduce some of the freight rates to a lower level than ordinarily in order to secure loading for ithe regular train services which the. Department is obliged to maintain. Whilst these rates are profitable to the Department in the sense that thqy cover all the direct costs of handling the traffic, and leave some margin for contribution to fixed expenses they cannot be. regarded as representing the standard of the rates which should be charged r” all points. ‘ The adjustment of rates so as to foster the development of the maximum volume of business is a. recognised feature of railway operations throughout the world, and is a matter of special importance in the Dominion, on account of the fact that in many cases railways had been constructed in advance of development, thus traffic density is low and most of the lines have a capacity greatly in excess of the business they are called on to carry. In such circumstances it will be appreciated that any additional traffic which can he secured to the railways at rates in excess of the direct cost of haulage, will absorb some portion of the burden of overhead costs, and will thus help to reduce the general level of costs for all commodities.

“Dealing •fepecificially with the position as affecting Te Awamutu, I would mention that the rates for the higher-rated commodities from and to Auckland are actually on a much lower level than the standard charges, and compare favourably with those charged by the competitive road services. Further, if the position is to be viewed in its true perspective, it is necessary that due weight should be given to the very material benefit accruing to the local community from the concessional rates alt which the railways convey > many commodities essential to primary production. As illustrating the position, in this connection, it may be mentioned that last year over 9000 tons of artificial manures were conveyed by rail to Te Awamutu at a cost. to the consignees of approximately only one penny per ton per mile. “In view of the foregoing, and the facfc that the rates on the general merchandise from Auckland to Te Awamutu has been substantially reduced during the: last few years, I trust your Chamber will use its influence in the direction of securing to the national transport system that whole-hearted support which is necessary to ensure the success of the operations. ” A GENERAL DISCUSSION. The president said the Minister’s reply did not bean directly on the Chamber’s complaint that the country dweller is penalised. Mr Clark said the whole thing is comparable to the State control of electric power. It sells power more cheaply to city distributing boards than to country boards. It was mentioned that Whangarei district uses artificial manures that are conveyed by rail. But what has Whangarei done to have a seaboard? The distinction was not relevant. At present one. section of the community is penalised to the advantage of another. It was remarked tha.U-the Minister’s contention loses sefine of its force when it is remembered that rail competes with road transport only, or largely, because, conditions of road transport are imposed by an authority which listens to representations advanced by the railway representatives, while, as in the case of Whangarei, it is not comparable, for Whangarei has sea-borne traffic that is not subiect to the transport authorities’ control.

The president said it did not seem fair to impose differential rates. Mr Armstrong said the principle was entitled to be encouraged as was wrong. Actually sea-carriage much as rail transport. Sailors were as useful to the Dominion, in a sense, as engineers. It had been argued that there should be uniform freight rates, and the Chamber should make up its mind as to the attitude it would take.

Mr Whitehouse said if the principle was to be stressed, why should a section of the community be charged more than another section. But there was this fact to bear in mind: Postage rates are universal. Mr de Coek said the Government has a monopoly of certain services, and where there is a competitive service the State lowers' its charges to compete. And a section of the community benefits—at the expense of residents of other localities. Mr Armstrong said that at present dwellers in inland centres and

districts now have to pay more than city or coastal dwellers.

Mr de Coek said it seemed that if certain railway lines were constructed ahead of demand or development, it seamed Ito be fair to expect the present Government to be consistent with its pre-election arguments, and spread the cost over the whole Dominion instead of making it a local penalty. At this stage it was pointed out that the Council of tha Chamber had not had time to consider the Minister’s letter, which only arrived that morning. The Council, therefore, had no recommendation to make.

Ultimately a small committee was appointed to draft a reply to the Minister setting out the tenor of the remarks expressed at the meeting.