Nelson to lose $2M subsidy

Press, 18 April 1979, Page 1

Nelson to lose $2M subsidy

PA Wellington Nelson will be a more expensive place to live after the Government’s decision, announced last evening, to scrap the S2M “notional railway" subsidy.

The subsidy would end from October 1, said the Prime Minister (Mr Muldoon) after yesterday’s Cabinet meeting. Transport Nelson, which runs road haulage over the route, had been informed of the Government’s decision, but it had not been passed on to local mayors, local bodies, or businessmen, Mr Muldoon said. He said that the Government’s decision, which would end a subsidy introduced by his own party, was “essentially a rationalisation.” All aspects of railways were being examined and the Cabinet could not justify continuing the subsidy, he said.

The Nelson “notional railway” scheme has allowed residents of the city and the district w'hich surrounds it to receive heavily subsidised road transport for many years. It was introduced by a National Government when it halted a Labour Government plan to build a railway through rugged hills to Nelson. National’s alternative pledge was to charge, for road freight, the equivalent charge that would be levied for rail transport. The “notional railway,” and the similarly ill-fated Nelson cotton mill scheme, are bitter issues in the Nelson district, and the Government’s decision seems bound to add to this. Imported items will rise

in price because of the decision. and Nelson industry which relies on the New Zealand market will face severe cost increases. Mr G. Butler. the managing director of Transport Nelson, said last evening that all goods travelling on the Main Trunk railway system and linked to Nelson by the notional system would be affected by the dropping of the subsidy. The various transport firms within the district would not be affected as much as the bigger consumers, said Mr Butler. “Just about everything that comes here — foodstuffs, building materials, and the like — are affected,” he said. “The subsidy will have to be offset by direct payment from the users." The removal of the subsidy would also touch Christchurch manufacturers quite strongly. Mr Butler said that he had not examined the subsidy for about two years, but at that time about one-third of the subsidy was benefiting Christchurch manufacturers.

Several spokesmen for companies telephoned by

“The Press” in Nelson last evening expressed surprise about the news. All echoed Mr Butler’s comments — the position would have to be examined more closely. Mr M. J. Reid, the southern area manager of Newman’s Coachlines, said that because the notional system also affected passenger transport, it was probable that passenger rates on coaches run by nit company would b« affected.