D.—2.

ANNUAL REPORT OF THE GENERAL MANAGER OF THE NEW ZEALAND GOVERNMENT RAILAYAYS.

New Zealand Government Railways, Head Office, Wellington, 17tli August, 1938. The Hon. the Minister of Railways. Sir, — I have the honour to report on the working of the railways for the financial year 1937-38, and in doing so have pleasure in directing attention to the fact that the earnings for the year are the highest yet attained in the history of the railways, the marked upward trend in respect of the volume of business handled by the Department, as noted in last year's report, having been steadily maintained throughout the whole of the twelve months under review. The revenue for the year amounted to £8,634,186, as compared with £7,790,651 in the previous year, an increase of £843,535 (10-83 per cent.). The total revenue actually exceeded the estimate made in the report for the previous year by £380,686. Operating revenue exceeded the estimate by £246,825, subsidiary services by £113,528, and miscellaneous non-operating by £20,333. The net revenue was £632,797, as compared with £903,858 for the previous year, a decrease of £271,061. This decrease in net revenue was due to an increase in working-expenses amounting to £442,196 on account of the operation of the forty-hour week for a full year, and other salary and wages concessions granted to the staff during the year. The increased wages cost of handling the substantial increase in business, together with the increased price and consumption of coal, stores, and other materials, plus the cost of providing improved stock-loading, yard-lighting, and other facilities at stations, amounted to £672,400. The aggregate increase in working-expenses was thus £1,114,596. With the increased costs of operation accounted for as indicated above, the net revenue produced (without any increase in fares or freights) is, from a managerial viewpoint, regarded as highly satisfactory. FINANCIAL. On the 31st March, 1938, the capital invested in the lines open for traffic, including the steamers and plant on Lake Wakatipu and other subsidiary services, was £56,065,187, as compared with £54,696,437 on the 31st March, 1937, an increase of £1,368,750. The principal additions to capital during the year were on account of the following major works: Wellington new station and yard, £215,332 ; Wellington-Johnsonville and Wellington Paekakariki electrification, £51,659; Papakura-Horotiu duplication, £77,180; Turakina-Okoia grade easement, £111,943 ; Plimmerton-Paekakariki duplication, £20,126 ; elimination of level crossings, £95,426 ; additions to workshops buildings and plant, £65,701 ; improvements to station buildings, &c., £28,158 ; while expenditure under the heading of rolling-stock totalled £662,033. The latter figure was made up of the following items : Electric locomotives, £126,604 ; steam-locomotives, £31,956 ; multiple units, £23,619; rail cars, £38,497 ; cars and vans, £270,377 ; wagons, £170,980. The financial results of the operations for the year ended 31st March, 1938, were as follow :— Year ended Year ended 31st March, 31st March, Variation. 1938. 1937. £ £ £ Gross revenue .. .. .. .. 8,634,186 7,790,651 + 843,535 Gross expenditure .. .. .. 8,001,389 6,886,793 +1,114,596 Net revenue .. .. .. .. 632,797 903,858 271,061 Interest charges .. .. .. ..2,335,808 2,309,754 + 26,054 Excess of interest charges (at 4J per cent.) over net revenue .. .. .. .. 1,703,011 1,405,896 + 297,115 Renewals, Depreciation, and Equalization Reserve Accounts. The position with regard to the renewals, depreciation, betterments, and equalization accounts is as under :—

ii—D. 2.

IX

Credit Balance r , , ,. i Credit Balance Account. broughtforward Co " t Q r^, f s ons ' 1 Ex P e „ D 7 dl „ t " re > at 31st March, from 1937. la il-aa. ( 1938 I £ £ £ £ Renewals .. .. .. .. 748,467 207,657 L65,684 790,490 Depreciation .. .. .. .. 211,490 636,639 526,507 321,622 Betterments .. .. .. 3,091 .. 1,297 1,794 Slips, Floods, and Accidents .. .. 54,147 19,820 53,582 20,385 Workers' Compensation .. .. .. 44,217 48,491 48,150 44.558 Insurance .. .. .. .. 98,459 11,937 4,227 106,169 1,159,871 924,544 799,397 1,285,018 I