RAILWAY ACCOUNTING

Evening Post, Volume CX, Issue 140, 11 December 1930, Page 8

RAILWAY ACCOUNTING

REFORM IMPERATIVE

(By Associated Chambers of Commerce.) In the report laid upon the table of the House of Representatives last session, by command of His Excellency the Gover-nor-General, the Commission appointed to investigate the affairs of the Dominion's Kaihvay Department deals trenchantly with the questions of depreciation and reserve funds. The Commission found that the Department had scrapped, or was about to scrap, assets in the form of rolling stock, engines, workshops, bridges, and railway stations, nominally of a value of some £10,000,000, and that no real provision had been made to cover this clearance. The authorities, however, had devised an easy means of overcoming this difficulty by transferring the interest on that dead asset from the left-hand pocket of the public pants to the right-hand pocket. In other words, part of the interest on the capital liability, which has to be paid by the taxpayer, is met from some other fund than the railway revenue account, although the taxpayer pays it all tlio same.

By the authority of the Finance Act of 1929, the capital liability on which the Department is required to earn interest is reduced, as previously mentioned, by au arbitrary sum of £8,100,000, but the Department is given no authority to write down its assets by a corresponding amount. The report emphasises this point. "Your Commission," it states, "is of opinion that this adjustment of capital should be made so that the assets of the Department will be shown at their true value ... a proper adjustment of the position between the Treasury Department and the Railway Department in regard to the payment of interest must take effect, for, in the opinion of your Commission, it is unsound and unreasonable for one Government Department to demand from another payment by way of interest in excess of the net earnings arrived at by approved accounting methods." Surely these contentions are beyond dispute.

So far no steps appear to have been taken by those in authority to give effect to these axioms, and the further one delves into the facts the more obvious it becomes that the only salvation for the Dominion's railways lies in their complete removal from political control.