WHERE LOSSES OCCUR.

Star (Christchurch), Issue 17344, 26 September 1924, Page 10

WHERE LOSSES OCCUR.

The railways earned 3.83 per cent on net capital invested, and working expenses in proportion to earnings showed an appreciable drop last year. The General Manager of Railways, discussing the financial side of the Department. anticipates a revenue of £7,000,000 during the current year and an expenditure £450.000 less than that. The total wages bill went up by £142,141 last year and the difference between the total and that of the wages bill in 1919 is, says Mr M’Villv, sufficient to pay 3.06 per cent on the capital invested. The estimated annual loss on the working of the Otira section is £70.000. The policy obtaining in New Zealand has been to regard the financial return as of less immediate importance than the developmental aspect, and for that reason the return required on railway capital has been fixed at 31 per cent, which is, of course, less than the average interest on the public debt. The value of concessions granted in railway rates and services, however, represents a sum more than sufficient to cover the difference between interest at the policy rate and the amount that would be required to meet the full liability at the average rate of interest on public debt in respect of the capital invested in the railways. Comparing the result achieved on

various sections during the year the report observes that the. South Island main lines and branches section produced a return of only £2 2s 8d per cent on capital invested, while the North Island main line and branches gave a return of £66 7s 6d per cent. Of the smaller sections only three returned any interest on the capital invested, viz., Gisborne, which returned 17s 7d per cent, Westland 6s 6d per cent, and Westport £4 17s 2d per cent. Sections which failed to return sufficient revenue to cover actual working

costs are:—Whangarei £6653, Kaihu £1169, Cape Foulwind £1512, Nelson £5170, Picton £3403, Lake Wakatipu steamer service £1473. Allowing for interest at the policy

rate of 32 per cent the loss on the Whangarei .section was £42,747, Kaihu £8365, Gisborne £20.091, South Island main line and branches £259.709, Westland £83.684. Nelson £21,851. Picton £29.191. Cape Foulwind line £5016, Lake Wakatipu steamers £3246. The North Island main line and branches and the Westport section yielded a profit of £407.833 over the policy rate. Losses on South Island branches amounted to £173.300, representing over 66 per cent of the deficiency of the whole South Island main line system, and are largely responsible for the failure of this part of the system to pay the policy rate of interest. Another factor that contributed very materially to the difference in returns obtained in the South Island and North Island respectively was competition by road. The South Island, by reason of its superior roads and topographical features lends itself more readily to road transport than the North Island. The problem of dealing with traffic on these branch lines with a view to securing a more remunerative return has for some time been engaging the attention of the Department, and it is hoped that experiments in connection with rail-motor transport may provide at least a partial solution.