THE RAILWAYS.

Press, Volume LXVII, Issue 20177, 4 March 1931, Page 8

THE RAILWAYS.

FINANCIAL POSITION REVIEWED MINISTER'S STATEMENT. EFFECT OF THE DEPRECIATION ACCOUNT. ' (rasas iSEOcivriox nuasiv.) WELLINGTON, March 3. In a statement reviewing the financial position of the railways, the Minister for Railways, the Hon. W. A. Veitch, drew attention to the present system of accounting, and said that had no change been majje in the matter of interest rates, depreciation funds, etc., the railways would have shown a surplus over the last five years of £1,759,761. instead of a deficiency of £2,035,123. "Until a few years ago, the railways had not presented a balancesheet. No charges were made against the Working Account for depreciation, and very little had been provided for renewals of structures, rolling stock, and other property," stated the Minister. "Even the. rate p* interest was not charged; but a policy rate of three per cent, was adopted. This subsequently was increased, till now it was 4J per cent. "Legislation of 1925 set up ft General Renewals and Depreciation Reserve Acaount; but as it did not provide the necessary funds, it only served to disclose and exaggerate the position, without overcoming the difficulty. Thiß legislation went too far, in tUat it suddenly heaped upon the Working Railways Account, npt only the current depreciation, hut also charges calculated to provide against accumulations of depreciation in the existence of the Department. For instance the average amount written off in 1920-25 was only £IBBS yearly, while in 1925-30 it was £477,993 yearly. In addition, the burden of superannuation on the Working Account had increased from £BO,OOO for the period 1920 to 1925, to £892,000 fqs the next five years." The Minister said it had been Btnfced that the 1928 legislation ;e----liered the railways of payment of interest amounting to £344,000 annually ; hut the legislation ; of the same yeßr also imposed burdens in the way of unrecovered losses on developmental lines, contributions towards the cost of concessions on fertilisers and lime, and additional interests amounting to £856,000. These points were Hot raised in a spirit of complaint, but he thought it right &> indicate the true position of the railway accounts. Since h© had assumed the portfolio eight months ago, substantial economies tiad been effected, which. together with others, nnder consideration, would reduce expenditure at least £760.000 .annually. _ There was no reason, said the Minister, to fear for the future of the railways. He predicted that it would be possible substantially to reduce if not to eliminate losses when normal trade conditions returned.