RAILWAYS OPERATION

Taranaki Daily News, 11 September 1935, Page 11

RAILWAYS OPERATION

IMPROVEMENT IN RESULT INCREASE SHOW IN REVENUE. BOARD MEETS COMPETITION, , Wellington, Last Night. Improvement in the financial result of the operation of the New Zealand railways in the year that ended on March 31 is recorded in the Railways Board statement, which was submitted to the House of 'Representatives to-day. The statement says, in part:— i The gross revenue for the year showed an increase of 4.66 per cent., or £295,217 over the previous year. Sixty-four per cent, of the board’s revenue is derived from goods traffic. The gross expenditure increased by 5.59 per cent., or £293,284. The total figures are as follows:— Gross - revenue £6,627,928 Gross expenditure £5,540,437 Net revenue £1,087,491 . During the year' the 5 per cent, increase in salaries and wages added £149,475 to the board’s expenditure. Reduced revenue from worxers’ dwellings owing to a concession of lower rentals had a. further effect in reducing the net earnings of the system. The revenue result was achieved by the strictest supervision and direction over the diversified interests of the system and by the board’s constant and unremitting efforts torender prompt, and efficient railway service to the public in which it has at all times had the steady and consistently increasing support of the staff in all grades of the service. The entire structure of this great system depends upon its revenuq-earning power for its support. The board recognises that such in tum depends upon the measure of patronage accorded by the public, which appears to the board to be impressed by die increasingly high standard of railway service. While the board has particularly directed its attention to the preservation of its goods traffic revenue, at the same time the improvement in passenger revenue follows the efforts of the board to provide 'cheap, comfortable and expeditious travel facilities. Nothing comparable to the Government railways for general travel, particularly over the long distances, obtains in New Zealand. The board emphasises this for its direct bearing upon the revenue position. With regard to expenditure, wherever the board could reasonably introduce economies it has done so. Taking the system as a whole in general terms the economies of recent years have brought operating costs down to what the board regards as a minimum. It follows, therefore, that while the I net improvement which has been recorded in the returns during the last four years has been contributed to substantially by the review of' expenditure, a point , has now been reached when the prospects for future improvement must depend upon efforts devoted to the further building-up of the board’s revenue. CAPITAL AND INTEREST. s The railway capital at March 31, 1935, stood at £54,089,190. The interest charges for the past year amounted to £2,330,886, which represents an excess of £1,243,395 over the net earnings of the service. It will therefore be seen that the New Zealand railways system, by a net payment last year of £1,087,491 into the Government account, earned a little less than one-half of the interest due. The substantial deficiency has to be found by the general taxpayer. • - . It is merely stating the obvious to say that aIT additional patronage extended to the railways means a decrease in the burden of interest to be found by the general body of taxpayers. This aspect is freely, conceded, and meets with general recognition by taxpayers when they think and act collectively. Its recogni- ' tion is not so apparent, however, when considered from the point'of view of the course of action followed by the individual when making a choice from the alternative transport systems at his disposal, whether for goods or produce or for personal travel. The sum of £204,730 was charged against revenue for renewals, and the amount expended from this fund for track renewals was £147,552. The credit balance in the renewals fund at March 31, 1935, was £729,004. The sum of £556,357 was charged against revenue on account of depreciation. The steady improvement in the railway position has been a feature of the board's operations. This result has been maintained notwithstanding the severe competitive conditions which the board has been called upon to meet. This competition is chiefly aimed at and attracts the more remunerative lines of railway traffic. This condition, which threatened the stability of the railway service as the principal transportation system throughout the Dominion, caused the board considerable concern. It cast upon it the responsibility of counteracting this threatened danger of attrition and the consequent loss of the best of railway traffic. “SPECIAL RATES." In meeting this condition the board, with due regard to the entire range of its business, has been compelled to institute ever a considerable volume of goods traffic “special rates’’ which have enabled the board to hold a large volume of business which otherwise would have been lost to the railway service. Since the commencement of railway operation in New Zealand freight charges have b»en made under what are known as “classified rates." which are based upon 1 the prrinciple of requiring various classes of goods to pay charges which they can bear. Thus we have “A" class gb°ds (being the highest-rated goods'), “B” class and so on. This policy in the past hds given to the railway system the benefit of reasonably payable rates for -ftsj highest-rated traffic with the obvious result that with many low-rated lines (such as fertiliser and coal) freight rates are relatively inadequate and unprofitable for such individual lines of traffic Nevertheless the country has en- ■ joyed benefits from these low freights, which are still in operation under the “classified" principle. It will be recognised at once that the benefits derived by the farming com- ' munity and by the industries alone are < considerable; they have been a vital factor in the development of the country s : agriculture and in the volume of its pro- i duction of primary products. In that de- i velopment the railway system has thus played a large part. If the conditions < which the board has been called upon to • meet, • particularly in parallel road com- 1 petition, are to be accentuated, then it is doubtful if the “classified rates” as now operative with the benefits of low cost ■ of transportation of heavy good (f er til is- ; ers» etc.) under the lower rating the i present railway tariff can be maintained ; without a seriously diminishing revenue. That is the threatened condition which, < if further experienced, the board will be forced to meet. . 1 The only practical chief alternative to ; the well proved and useful system of i “classified rates” appears to be a generm I tariff under which many lines of good! - i Would be carried at much lower charges .! than those which are now enforced and • which, on the other hand, would mean 1 the raising of the rates on many lines (es- j gential -to agriculture and to industry ]

generally) would under such necessity be raised, and in numerous cases would add to the cost of primary production and of other industries. At March 31 last there were 16,189 employees under the control of the board. The average number actually at work throughout the year was 16,048, compared with 14,97i,.f0r the previous year; of this number .11,835 were . permanent and 4213 were casual employees.. The average number of men on works chargeable to capital was compared with 640 during the previous year. The amount distributed in salaries and wages was £3,671,371, and it will be seen that, this constituted the major portion of the board’s total expenditure of £5,540,437. These figures indicate that the railway . system administered by the board is the largest labour-employing undertaking in the Dominion to-day. The importance of this aspect • is selfevident when it is' considered in relation to the ever-pressing national problem of providing reproductive work for the people of the Dominion. By no means the least of the difficulties confronting the board during the past year and preceding years has been the problem arising from intensive competition in the transport industry. The board realises fully that competition in any major industry is inevitable; it may be said, indeed, that, as a matter of experience. healthy competition is preferable to the possible evils of unregulated monopolistic control in any such industry. Nevertheless, it is equally true that unregulated and unbridled competition is fraught with grave dangers, and no small part of the world economic problem to-day is attributable to this very factor. The effects of this in the trans-port-field throughout the-world have cer-

tainly been as great as in. any other field of enterprise, if, indeed, they have not been greater.' PASSENGER TRAFFIC. The result of the year’s operations in passenger traffic may be regarded as satisfactory inasmuch as there is an increase of 607,281 passenger-journeys and £32,354 in revenue compared with the previous year. On account of the variation in the dates of the Easter holidays no Easter bookings were included in the figures for the year, whereas for the previous year two Easter periods were included. When allowance is made for this variation in the conditions - it becomes apparent that the . result achieved this year is more favourable than the figures indicate. The improvement in passenger traffic can be ascribed in a large measure to the attractive fares now in force for ordinary travel and to the higher standard of service which is given in such matters as improved passenger accommodation and faster train services. A further important factor has been the large measure of success which has been achieved in developing week-end, special-excursion, and other classes of purely pleasure travel, the increased business under this heading as compared with last year amounting to 273,481 journeys and £21,226 revenue. It has been recognised that the development of week-end travel offers an extensive field for exploitation, and, with a view to catering for this class of business, attractive fares for Saturday to Monday travel have been made available by the ordinary train services be- ? tween stations in the more populous areas. As distinct from these-regular

; week-end fares, the organisation of ; special day and week-end excursions has received special attention during the year. A complete programme of these outings has been planned and carried out in each railway district throughout the i Dominion. ‘ An increase of £28,641 (2.46 per cent.) ’ is shown in passenger revenue, notwithI standing the fact that no Easter traffic is : included in this year's figures. If Easter ' receipts be eliminated from last year's ’ figures, the increase is £83.641, or 7.54 1 per cent. The statistics of passenger ’ traffic show a steady rise over the last • three years. ' ■ The rise shown during the year in the • standard-fare figures was maintained • during each four-weekly period, with, of : course, the exception of the Easter periods, indicating a real increase In : general passenger traffic and one likely > to be maintained rather than a mere > fluctuation due to particular events. An outstanding feature of{ the pas- ; senger business in recent years has been [ the growth of day and special excursion ; traffic, the revenue index figure having : risen from 253 in 1932 to 388 in 1935, • while the revenue earned this year was , nearly four times as much as in 1926. • An increase of £37,217 (28.38 per cent.) : was shown last year in the receipts from ■ this traffic, and a further advance on last • year's figures is again recorded this year, the increase being £21,226 (12.61 . per cent.). Of this latter increase, £17,i 098 (23.16 per cent.) is shown in that portion of excursion traffic comprising special excursions to tourist resorts and i between important centres of population, . Sunday, week-end and market-day ex- , cursiqhs. Day excursions showed an in- ; crease of £3457, or 16.71 per cent. School ■ and other - picnic . traffic increased ' by

£2148, or 8.09 per cent. The exceptionally fine summer contributed to some extent to the general increase in excursion traffic, which has been keenly fostered throughout the Dominion.