The Dominion. FRIDAY, OCTOBER 6, 1911. MUNICIPAL TRAMWAY FINANCE.

Dominion, Volume 5, Issue 1248, 6 October 1911, Page 4

The Dominion. FRIDAY, OCTOBER 6, 1911. MUNICIPAL TRAMWAY FINANCE.

On Wednesday last we briefly discussed the necessity that the' City Council should begin to consider seriously the need for a thorough overhaul of the finances of the tramways system. The Council doubtless feels, and the citizens have been encouraged to believe, that municipal tramway finance is a thing that must be "all right" in the nature of things; and until lately that has also been the feeling and belief of the municipalities and municipal publics of Great Britain. The perfect trust of Great Britain in municipal traffic undertakings has begun, however, to give way to a commingling of doubt with a strong feeling that a general overhauling is desirable. The Financial Review of Reviews for August, for example, gives first place to a destructive analysis of the finances of the municipal tramway systems of England and Scotland,', and there are many lessons in the article for the citizens of Wellington. The day has gone past, tho writer says, when "there were many congratulations upon the far-seeing wisdom of the local ediles who had wrested from grasping monopolists this splendid source of profit," and "to-day there is a widespread searching of municipal hearts at the unmistakable slump that has taken place in the Municipal Tramway market." Although the full truth is obscured by "a lax system of municipal accounting," and although tho Local Government Board is benevolently biased, yet the truth cannot be fully concealed. It is pointed out in the latest Government .Report, which covers the year ended March 31, 1910, that no fewer than 29 local authorities had during the year to seek aid from the rates to meet the year's tramway liabilities. The total capital expenditure of all tho concerns amounted to £40,563,775, and against this there was provided a total reserve of only £761,646 or about 1-i per cent. Even this insignificant figure has to be heavily discounted, for more than three-fourths of the reserve is accounted for by five authorities out of the 176 which figure in the official return. The great, weakness of almost all the municipal tramway concerns is the inadequate provision for depreciation. The Glasgow Corporation, cne of the pioneers of- municipal electric tramways, is a shining excaption. Its capital expenditure is about 3i millions, and in the -past five years it has provided £309,640 for sinking fund, £1,112,7-22 for depreciation, and handed over £183,028 to the "Common Good Fund." In five years, that is to say, it has set aside about \l millions for depreciation and sinking hind, or S per cent per annum. This, of course, is extraordinarily good—too good for the ordinary mortals outside Glasgow to follow. An authoritative opinion as'to the amount that should be set aside for depreciation and sinking fund,was given a couple of years ago by the manager of tho Leeds Corporation Tramways, who said that 5 per cent \vas_ necessary. There are twenty municipal tramway concerns in which the capital ranges from half a million upwards. Their aggregate capital is £28,575,139, and the aggregate of_the allotments to depreciation and sinking fund for the year 1909-10 was £1,393,495, which is nearly the 5 per cent that is proper. But in individual cases the results are very unsatisfactory: it'is Glasgow, Manchester and Liverpool that make tho total good. "West Ham, to cite a particularly flagrant case, sols apart £11,438 in respect of ltcpayment of Debt [Sinking Fund] and carries nothing to ltcserve [Depreciation and licncwals], yet the ratepayers are 'relieved' to tho extent of £5738." The capital sunk amounts _ to £553,711, and 5 per cent on this is nearly £28,000 so that instead of being "relieved" to the extent of £5733. the. ratepayers should have

been debited, and in the long run will have to pay, over £10,000 for the year, _ "Another glaring ease of throwing dust in the ratcpaying eye is afforded by the Sal ford group of enterprises, which, with a total capital of £949,540, set apart £-21,861 for Repayment of Debt, carry £2172 to Reserve, and relieve the rates to the extent of £17,000. The proper allowance for debt repayment and reserve is £47,477, so that in reality this relief of rates is quite mythical, there being instead a liability against them on the year's working of £0507." The case of London is very instructive. It is on paper one of the "sound" systems, yet it has really not been soundly managed. The 'provision for sinking fund and depreciation is quite inadequate. The Glasgow 8 per cent is too much to ask but supposing that 5 per cent had been insisted on, we can see what the position would have been from the following table: Actual 5 Capital sinking per cent expen- fund and on Defiditure. reserve, capital, ciency. £ £ £ £ 1905-6 ... 3,098,40S 109,408 154,920 50,512. 1906-7 ... 3,614,847 126,401 180,742 54,341 1907-8 ... 6,946,310 161,520 347,315 185,795 1908-9 ... 8,414,591 261,609 420,729 159,120 1909-10... 10,709,501 486,067 535,475 49,307 A real deficiency of half a million on the five years' working. The really bad concerns are quite hopeless. They do not charge themselves with all the chargeable costs of management, or with the equivalent of rents. There is also, the writer of the article has found, "too great a disposition to charge the rates with an undue share of a burden which properly should be borne by the tramway undertaking"—a fault in our own system that was admitted at Monday's meeting of the Council. Would the Wellington tramway accounts come satisfactorily out of a close analysis of the kind to which the British undertakings have been subjected in the article quoted 1 ! To take no thought for the morrow is, we all know, the policy of the Government; but it is a policy that the city should guard against before much injury is done.