TRAMWAY FINANCES.

Star (Christchurch), Issue 9211, 14 April 1908, Page 4

TRAMWAY FINANCES.

DISCUSSION BY THE BOARD. At yesterday's meeting of the Christchurch Tramway Board, the annual report of the Finance Committee and the balance-sheet for the year ending March 31 1908, which had been presented at', the previous meeting, were discussed. ( In moving the adoption of the report and balance-sheet, the chairman of the* Finance Committee (Mr W. Recce) said that, with regard to matters of income and expenditure, it must be considered that the Board's work for the year was very satisfactory indeed. It was quite natural that the time of excitement and increased traffic brought about by the Exhibition should have some effect on the following months, but it was astonishing to note the way in which the traffic had picked up since. The expenditure upon many items had been reduced during the past year, as the result of a special effort instigated by the chairman earlier in the year. He hoped that this policy of economy would be continued, and that it would result | in a further reduction in expenditure. ; Tt was evident that the cost of steamengines for tram work was excessive, and he hoped that before long the Board would see its way to substitute the electric or some other system on those lines on which steam-engines were used. A matter upon which there ap- ; peared to be some misunderstanding was x in connection with the sinking fund: It would be remembered that at one or two annual meetings there had been considerable discussion as to what the amount of the sinking fund should be,' and it was generally considered that this was entirely a matter of opinion and of policy. In many parts of the world much larger sinking funds were allocated than had been considered right by the Board. It was a question whether the people were to pay, in fares, or in. some other way, a sufficiently large amount to provide a sinking fund which would not only pay off the loan at maturity, but would also present the whole undertaking clear of debt to the city. It was considered that if sufficient money was allocated to pay the loan at maturity, and also to provide a considerable sum for maintenance and for the replacement of worn parts of the system during the currency of the loan, quite sufficient was being done. , At the proportion of 1^ per cent a sinking fund of £403,295 would be provided towards the repayment of a loan of £405,000, leaving the balance, the other li per cent of the fund, to be set ar;ide to be used by the Board from time to time, wear and tear necessitating a fund for reinstatement i purposes. Considering that the' present system of fares was entirely different from that upon which the tramway system was started (an average charge of Id per mile), and considering that the Board had made extraordinary concessions, made in no other part of the world, the Board was to be congratulated upon its present position. It had not been intended to allow a discount on the smaller fares at the initiation of the system, and had it been considered at that time the Board would never have gone on with it the result appear-

ing so doubtful. However, if due care was used, the sinking fund aud the finances of the Board generally would continue in a satisfactory and business-like condition during the coming year.

Mr C. M. Gray, M.P., in seconding the motion, said that the Board might congratulate itself on a very satisfactory year's business. The first five months were very discouraging, following as they did the -Exhibition boom, and this caused the impression to get abroad all over the dominion that the Christchurck trams were turning out a " bad speculation." He had always had every confidence in the undertaking, and believed tie Board would be able to run the trams in the interests of the ratepayers. Although the Board did uot desire only to make money it desired bo establish a sound finance in the early stage of He history. If it neglected to lay its financial foundations on a proper basis it would, be blamed in after years. He thought that a higher percentage for depreciation might be allowed on plant, permanent way and rolling stock. Some authorities contended that as much as 8 per cent ought to be allowed. The last' figures from Glasgow v where probably the model tramway system of Great Britain was installed, showed that the amount allowed there equalled 6 per cent. The Board would like to make a larger allowance than had been made, but had not made a profit sufficient to enable this to be done. If it started to write off 6 per cent per annum for depreciation it would probably have to strike a rate to make it up, and there was no desire to do that. An interesting feature of the balance-sheet was that in addition to being able to put on one side the amount for depreciation, £13,000 to £14,000 had been expended for renewals and maintenance. That was another way of providing for depreciation — by meeting it as it occurred. The depreciated parts of rolling 6tock were being replaced, and the money the Board was putting towards the depreciation fund would be acceptable in years to come, when heavier expenditure would have to be met in regard to the permanent way. Owing to the expenditure out of capital on " cubing" the Board would make a saving in the maintenance of its lines for years. The expenditure on keeping the roads up to the level of tie lines had ! been a very heavy item, and when they had as much of the system cubed as might be found necessary the amount saved would exceed the interest on the capital expended. It was necessary to emphasise th« fact that the tra-mway system belonged to the people. Occa-l Bionally a spirit of antagonism was exhibited in the minds of some people, as if the Board was trying to make money. It would help the Board a great deal if it felt that it had the moral support of the ratepayers of the tramway district. By exercising a little consideration and thoughtfulness the people could do much to lighten the labours of the Board. He trusted, that next year the Board would have a still better report to refer to the " shareholders of the company" — the ratepayers of the district.

Mr J. A. Flesher said that the committee had brought down proposals in the right direction., particularly in regard to the investment of half the depreciation fnnd. All that the Board was called upon to do was to provide sufficient in the way of accumulated funds and property at the end of the loan period to represent the full amount of the loan. The next generation must take up the responsibility for itself. In the course of the next thirty years the Board's landed estate must increase in value to a very large amount, the land being an aeset Which would increase in value and not waste away. He hoped that the whole of the system would shortly be electrified, removing the anomaly of a mixed steam and electrio system; which existed nowhere else in New Zealand. The use of steam locomotives had brought about considerable loss of life, and although this was not the fault of the Board it was its duty, even though the change did not save much money, to electrify all the lines, and there was a good case for it on this ground alone. In the matter of fares the people of Christchurch were treated more handsomely by the Board than the people of any other part of New Zealand, and he hoped that in future there would be less clamouring for concessions. In answer to Mr G. T. Booth the secretary stated that the amount appearing in the statement of the Board's aßsets, preliminary expenses, £35,222 2s Id, was the amount paid for interest during construction, goodwill paid to the Christchurch Tramway Company, | and a number of construction contingencies which occurred during the progress of the work. During the year £836 3s 2d had. been spent on cubing.

Mr D. Sykes said that it was a question whether the Board could not reduce its expenditure without reducing efficiency, and increase its revenue without a corresponding increase of expenditure. In four items for maintenance in this year's halance-sheet the expenditure amounted to £4040 more than last year, which showed that the Board was on the right lines in keeping the plant up-to-date. He advocated the use of a larger gauge for metal for permanent-way work, and was glad to see that the engineer was now using a larger gauge than formerly. The time had arrived when a saving might be effected in the direction of decreasing the number of heads of departments. The law charges against the Board, two firms of solicitors being employed, were pretty stiff. He thought that the present discount system in regard to fares could be bettered in the direction of issuing tickets which were available only over a fixed period, thereby ensuring a bigger concession to the man who always used the trams than to the man who used a bicycle in fine weather and a tram only in wet weather. There were from 20 3 000 to 25,000 bicycles in use in Christchurch, and they could not expect to capture the bicycle traffic. In fact the' bicycle traffic was capturing them. The number of people carried in the early hours of the morning was now much less than when the Tramway Company held control. ,A return to. the old system, of a 54-ride ticket, available for one month, would do much to popularise the sbrvice. The present system was not reaching the people it was intended. Mr S. A. Staples supported Mr

Sykes' views on this matter, and advocated the issue of tickets at cheap rates, available for use only before 5.30 a.m. and from o p.m. to 6.30 p.m. daily. It might be possible to capture the bicycle traffic to some ©xtent by doing that. Mr H. Pearce said that a 3 per cent depreciation fund was not sufficient. In no case elsewhere was the provision so small as that, though in Christchurch they had less cars running and less wear and tear on the permanent way. He thought that at least 4£ per cent should be allowed. The Board could increase its revenue by making a different disposition of its cars and by alterations of some of the sections. There were always a number of cars lying idle that could be run on some of the smaller sections. The expenditure in repairs in connection with some of the old locomotives and trailers was so great that it would be cheaper to use them up without further repair and replace them with new stock. If some of the sections near town were lengthened and cars now idle \i ere put on to them, the revenue of the Board would greatly improve. Mr J. Richardson expressed his satisfaction at the manner in which the Finance Committee had handled the depreciation account. He thought Mr Sykes had forgotten to give credit to the Fares Committee for the fact that it had deferred consideration of reviewing the matters brought forward till the result of the year's working was available. It might be possible to review'the fares in such a way now as to help the revenue of the Board.

The chairman (Mr A. W. Beaven,) said that in. all items relating to power, traffic and office expenses, the expenditure last year was under that of the previous year. The general maintenance expenditure wae in excess of that of the previous year, and the total expenditure as compared with revenue was also slightly more. This was a reason for being extremely careful during the next twelve months. The Finance Committee had kept a tight hold on the finances, and, although .the result of the year's work was ahead of expectations, it would be necessary to watch matters very closely this year. Extensions cjould not be entered into very largely in Christchurch for some time. The whole of the maintenance' expenditure had been paid' out of revenue, and the lines were in first-class order at a very low initial cost, lower than elsewhere, and, he believed, just as good. The maintenance of the whole of the lines for the past two and a half years had been paid out of the revenue account, and the Board had in hand £12,000 to credit of the renewal account. So far as could be judged, there would be no cause this year to spend the renewal fund, and the Board would be able to place the whole of the sum to credit, bringing the amount up to £18,000 next 3 r ear. This money would be wanted for renewals to kerbs and trol-ley-wires within a fair number of years. The Board had written £10,000 off preliminary expenses, and there was £4000 to the credit of the sinking fund. The finances were in a good condition, and he hoped they would be kept so. He congratulated the Finance Committee, which had energetically tackled the work of bringing expenses down, and he congratulated the officers of the Board on the* year's work, particularly the office staff, which had prepared the financial statement for the Board in the short time of four days. The motion was carried unanimously.