TELEPHONE CHARGES.

Waikato Times, Volume 97, Issue 15211, 12 April 1923, Page 6

TELEPHONE CHARGES.

DISCUSSED BY CHAMBER OF COMMERCE. INCREASE NOT WARRANTED. At the Hamilton Chamber of Commerce meeting on Monday, the following paper regarding increased telephone charges were read by sir J. Gilbert:— Since the Chamber dealt with this question, Mr A. T. Markhan, First Assistant Secretary of the P. and T. Department, has conferred with the business community of the Waikato, ; ftnd the ■ Chambers of Commerce throughout the Dominion have discussed the matter, and we are therefore now able to take a more intelligent and comprehensive view of tne 'Department's proposals. On reviewing the question ,it is necessary to observe, preliminarily, that the Department, instead of easing its charges for the use of telephones, ; following the gradual reduction in the ,' price of labour and materials, is, in- , versely, increasing its charges, and that not in a reasonable degree, but ! in a revolutionary and alarming man- • ner. We have not yet recovered from the human and material wastage of the war; we are in the midst of an un".precedented slump, and the community is irritated and oppressed by heavy

Present Heavy Taxation.

;.• The net public debt has increased "from £91,689,835 on March 31, 1914, to £208,241,121 on March 31, 192"2. The net local authorities' debt has increased from £21,189,985 on March 31, 1914,. to £28,138,025 on March 31, 1921. Private indebtedness has greatly increased as indicated by the increase of registered mortgages from £106,442,297 on March 31, 1914, to £231,140,104 on. March 31, 1922.' The total government taxation has increased from £5,918,034 for the year ended March 31, 1914, to £16,370,516 for the year ended March 31, 1922. Local Authorities' taxation has increased from £2,187,534 for the year ended •March 31, 1914, to £3,813,910 for the year ended 'March 31, 1921. - In view of all these things, and while private enterprise is cutting out waste, cutting down costs, and cutting prices, the Department proposes to increase the charges for business telephones by 52 per cent and private by $8 per cent. Notwithstanding that, as recently as November, 1-920, an average increase in charges of 25 per cent jvas made for every direct connection. The then increase for business telephones was 354 per cent, and now it is to be 52 per cent on top of that again, making a cumulative increase of about 100 ner cent. .: The official reply to this Is that poles, wires and other equipment have Increased enormously in price, and must be passed on. -.But surely the last 25 per cent increase in fees should cover the increased co;>t of new extensions, because the old equipment stands at the former low cost.

The True Reason, ! Now that the P. and, T. and other Government Departments have set out to meet the views of businessmen that each Government trading department should issue a proper balance sheet and profit and loss statement, a discovery has been made that no depreciation has been written off the telephone plant since 1897, and the P. and T. Department, therefore, proposes to tax us with depreciation for 30 years, amounting to £107,906 2s 7d, and the workmen's salaries omitted £IOO,OOO, thereby saddling us with £207,000 in these lean years with omission of the fat' years. It is a question, however, whether the depreciation should be so charged now, except for buildings, presuming that the plant has been maintained out of-revenue during the period named. It would seem that the P. and T. Department has annually maintained its equipment in efficient working order and paid for all renewals out of revenue during the forty-one years of the existence of the system. If the present valuation of the buildings and plant equals the capital cost, then depreeiation has been met, and this generation should not be surcharged with it. However, the Department is now having such a valuation made, and we must await the results. The Immediate Question. The Department, through its Chief Telegraph Engineer; states that the extra £207,000 is not designed to recoup past losses, nor to provide funds for the physical improvement or extension of the service. The new scale of" telephone subscriptions is designed to produce £150,000 per annum additional revenue from business telephone subscribers, and £50,000 per annum from private telephone subscribers, as a blind guess at the future, because the complete analysis of the whole position will not be availab e until March 31, 1923. It is d.fflcul to decide, in the meantime, what the Department has in mind. A Problem, How can the Department accuratelv apportion the working or even capital charges between, say, the teleeranh and telephone branches. In most cases the same buildings arc used, and in hundreds of country offices the same staff is employed, not only on telegraph and telephone business, but also postal and money order business. All these branches have one business in common, viz., the provision of communication from one individual to another, and that the alternative means are postal, telephone, telegraphic or wireless, is comparatively a subsidiary matter. It is impossible to draw hard and fast lines through these inter-re-lated svstcms. The true business problem appears to be the successful lupply of all services in adequate proPortions to the needs of the community and the treatment of this combined service as one business. But we find that the only items credited to the telephone branch arc the subscriptions of telephone sufoscribers, including public fees of slot machines, amounting to £61436- for Se "ear ending March 31, 1922, while the total revenue from toll communications i.e., fees for telephone comntuScations 1 paid by subscribers and the general public between one telephone exchange and another amounting for the same year to £268,153, wfre credited to the telegraph branch nothing whatever being allowed by the Segraph branch to the telephone bfanch for the use of telephone p ant or for the services of its operators Sd Clerical staff, in carrying on tins very extensive and revenue-producing bU For GS t S his information I am indebted to the Canterbury Progressive League ,„ hn with the cordial consent of the Telegraph Engineer, the First Assist aoSwetary of the P. and T. Department the Telegraph Engineer for Canterbury and the Telegraph Engineer f ° WHhout going into a mass of figures, T miffht mention that up to 189., £50,127 had been set aside for depreciation, and that during the forty-one

years previously referred to there have been £466,063 of declared profits in the telephone branch, making a total of £516,190, which should now be credited against the alleged deficit of £207,906 that has accumulated since 1897.

The Conclusions.

(1) In face of a reduction of 10 per cent in wages, a steadily falling market for materials used, the advent of automatic telephones, which arc reducing working expenses, and that the year ended March 31, 1922. was one when labour and materials were at the peak, together with all the other considerations I have referred to, and the absence of definite and complete information, the Department is not warranted in making the proposed extraordinary Increases in the fees. (2) As depreciation of the undertaking has on the whole, during the forty-one years, been manifestly met by the practice of charging repairs and renewals in the working expenses of the branch from year to year, the Department's present claim that the working expenses of past years have been understated by omission of provision for depreciation, cannot be sustained.

(3) We consider, on \he information available to us, that it should be quite practicable for the Department, while paying interest on the capital and providing against depreciation, to profitably carry on its telephone business on its revenue based on the already substantially increased charges of the last two years, without asking more from telephone subscribers as a whole than they at present pay. 4. That a drastic investigation of the whole administration should at once be conducted in an attempt to align the Department's finance with the economic, condition and needs of the day, and to avoid, by all possible means, the easy but unjust method of passing avoidable losses on to ah already overburdened and exasperated community. Finallv, it seems an extraordinary happening that the P. and T. Department should find itself in the position to remit £300,000 this year on postages, and to debit £207.000 of this'to telephone subscribers. Mr Gilbert, at the conclusion of his paper, stated that the Department should consider very carefully any step taken to increase the telephone rates so drastically as was proposed. The value of the telephone to the individual was the number of subscribers in the book, and it should receive very careful consideration before being put into effect.

Hamilton's Efficient System. Mr E. P. Cowlcs, late district Telegraph engineer, was of the Opinion that before the paper was sent on to the Department it should be considered at a later meeting, for he did not think that the position had been correctly stated. While business people were complaining of the proposed increase in telephone rates, they forgot that the price of their goods and the price of almost everything else had been doubled. In 1916 when the Department was running so many lines through the district, they were paying £l2 per ton for the wire, but now they were paying £BO per ton, and yet up till now no increase in the subscription had been made. Hamilton of all places should be the last to complain of any proposed increase, for the system here had been extended by leaps and bounds during the past few years, and it was now the most efficient in the .world. Mr J. A. Young, M.P., said that while the Chamber should be opposed to any untoward and severe increase, it should be fair and look at the matter in a reasonable manner as business men. No doubt the price of material and the cost of construction had increased to a great extent during the war time. While there were a number of good points in Mr Gilbert's paper, there was yet a lot that ought to be eliminated, as it reflected on the Government and made no allowance for the increase through war. The chairman (Mr J. E. Tidd) thought that Mr Gilbert was deserving of the best thanks of the Chamber for; having gone so fully into the question. If there was anything in the paper unsuitable for the Chamber's requirements, Mr Gilbert would be the, first to agree to its deletion. Mr Tidd paid a tribute to the efficiency of the local svstem, remarking that it was a treat to be connected with the Hamilton bureau. In reply Mr Gilbert said his figures were based on trustworthy data, and the whole point seemed to be that the Department was now endeavouring to make up the deficit of past years in one hit, which was not fair on the business men of to-day. The speaker did not desire to antagonise the Department, and was quite prepared to cut out anything that would have that effect Mr Gilbert promised to amend the paper, and in its new form it appears above.