N.Z. RAILWAYS STATEMENT SUBMITTED

Grey River Argus, 17 September 1948, Page 7

N.Z. RAILWAYS STATEMENT SUBMITTED

WELLINGTON, Sept. 16. Hon, R. Semple, submitted to Parliament to-day the Railway Statement.

The gross revenue for the year was £17,070,872, which, surpassed the previous record attained last year by

£1,390,815, or 8.87 per cent. The greater part of this additional revenue was received from the increases in rates and fares which applied from September 14, 1947. Rail fares other than suburban were increased by 15 per* cent, and freight rates were increased by 20 per cent., and these increases produced £1,300,700. _ Passenger revenue declined by £566,000, due to a/large extent to the very heavy decrease in Armed Services traffic. Added to this was the loss of passenger traffic during Easter, 1947, and Christmas, 1947, on the latter occasion due to the outbreak of poliomyelitis. The revenues from subsidiary services were well maintained with the exception of those produced by the Refreshment Branch.

In contrast to passenger traffic, goods traffic continued to rise and new records in both tonnage and revenue were set up. Even without increase in freight rates, the goods revenue would have been a record.

Gross expenditure for the twelve months was £17,710,897, a substantial increase of £1,766,627, or 11.08 per cent., compared with last year. Two items particularly were responsible for this increase—namely, wages and locomotive fuels. The total wages bill rose by .£786,000, partly due to additional hours worked, but mainly due to higher rates of nay and improved conditions of employment. The cost of locomotive fuels rose by £673,000, due to the increased use of imported coal and fuel oil. The net result was a loss on working of £640,025. It was estimated that the increase in rates and fares would not be sufficient to balance revenue and expenditure, but the sum: required from the vote —Economic Stabilization—was larger than anticipated, due to further increases in wages and fuel costs. LOCOMOTIVE FUEL The total quantity of coal consumed by locomotives decreased from 593,831 tons to £567,978 tons, but the .quantity of New Zealand coal consumed decreased by 81,320 tons. In order to maintain reasonable seivices, 90,812 tons of American coal (55,467 more than last year) were used, plus 24,266 tons of fuel oil. It is conservatively estimated that the cost of using this imported coal was at least £635.000 more than the cost of an equivaent quantity of New Zealand hard coal. This amount is almost equal to the loss on the year s working. The Railways Department | is carrying the whole burden of the higher-priced imported coal. Before I the war considerable quantities of coal were imported from Australia for use, in various industries, particularly gasworks. These industries now have the advantage of the use of the New Zealand coal, particularly hard coal, at New Zealand prices. During the years 1941 to 1943 Australian coal cost the New Zealand Railways approximately £2 7s 6d per ton, whereas the average cost per ton of coal imported during the financial year ended 31st March, 1948, was over £lO. The average cost for the year of New Zealand hard coal delivered in the North Island was £2 13s 9d per ton. In addition, there is the cost of fuel oil which increased considerably

during the year. While the use of fuel oil is more economical than the use of American coal, the extra cost ovei’ and above that of a supply of New Zealand hard coal with an equivalent fuel value was approximately £140,000. Good progress has been made with the conversion of locomotives to oilburning, and at the end of the year a total of 34 oil-burning locomotives were in service. At the end of the year it was understood that the allocation of fuel oil would be limited to a quantity sufficient for only 35 oil-burning locomotives, but since then an increased allocation has been obtained and the Department is proceeding with further conversions. PROSPECTS It is estimated that for the year ending 31st March, 1949, the revenue will be £18,093,000 and the expenditure will be £18,993,000. That is to say, there will be a loss on working of £900,000. Estimates prepared earlier in the year indicated a prospective loss of £600,000, but since then further provision has been made for' additional conversions of locomotives to oil-burning and for the increased use of imported coal. The predicted loss is due to a large fextent to one factor, and that is the even a restricted .service makes the fuel situation. The maintenance of importation of coal from overseas and and the extended use of fuel oil an absolute necessity, but the cost of so doing greatly inflates the railway expenditure. Even with the. use of fuel oil and imported coal, passenger services must still be severely restricted, and this has a very adverse effect upon passenger revenue. It is estimated that for the coming year ending 31st March, 1949, the cost of using imported coal and fuel oil will exceed £984,000 (on the new basis of exchange) what would have. beenthe cost' of a quantity of New Zealand coal having an equivalent fuel value. • Apart from this additional cost, the results ,for the next year should show an approximate balance between working expenses and revenue, but a changing trade situation may affect the financial position, and the matter will be kept constantly under review.

WORKING RESULT 1948 1947 £ £ Revenue 17.070,872 15,680,057 Expenditure 17,710,897 15,944,270 Loss 640,025 264,213 Return on average capital invested in open lines, per cent. Nil Nil Interest charges 3,030,033 2,992,900 Excess of interest charges over net revenue 2,030,033 2,992,000 REVENUE . Railway passenger revenue again decreased, this year by £565,981, or 17.40 per cent. Allowing for an estimated value of the fare increase operating from 14th September, 1947, the decline was £743,643. Passenger journeys (ordinary) decreased by 2,110,908, or 20.65 per cent., while journeys on season tickets decreased by, 871,038 or 4.67 per cent.

The main reasons for these decreases were:— s

(1) The substantial decrease in receipts from the Armed F0rce5£475,022. £475,022. (2) The cancellation of all special trains for Easter, 1947, as a result of the Waikato coal miners’ strike. (3) The outbreak of poliomyelitis specific ban. was placed on travel other than inter-Island, there was a large-scale cancellation of holiday arrangements and probably £lOO,OOO revenue was lost as a result. (4) Intensified competition of road and air services. Both road and air services have expanded rapidly since the end of the war, and the inability

of the railways to provide daily services has meant a greater diversion to road and air than would otherwise have been the case. The revenue from parcels, luggage and mails has shown an over-all increase of £112,635, mainly as a result of tariff increases. Freight traffic was again of record proportions, new records being set up in revenue, • tons, and ton-miles. The revenue was £10,486,744, an increase of £1,582,982, or 17.78 per cent., and even without the tariff increase, which produced £1,049,692, the revenue exceeded the previous record by £533,000; the tonnage was 9,52'4,043, an increase of 194,710, or 2.09 per cent.; and as a result of the increase in tons and an increase in the average haul, net ton-miles increased by 6.08 per cent. Decreases occurred in the tonnages of live-stock (23,000 tons) and artificial manure and phosphate (117,000 tons), although by reason of the tariff increases, the revenue in each case showed improvement. Commodities showing increases in tonnages were timber, coal, grain, benzine in tank wagons, and general merchandise. The tonnage of agricultural lime carried showed an increase of 4605 tons to set a new record of 733,628 tons.

EXPENDITURE Details of operating expenditure, divided into maintenance, transportation, etc, are also set out in Statement No. 3. The increased expenditure is due once again to two main factors —a higher wages bill and increased fuel costs. The following table sets out a division of the total expenditure, with comparisons with the figures for 1946-47:— 1948 1947, £ £ * Wages 10,375,359 9,588,798 Coal and oil (loco) 1,873,799 1,203,817 Stores and materials 2,636,305 2,319,873 Depreciation and and renewals 1,495,865 1,473,685 Miscellaneous 1,329,569 1,358,097 Totals £17,710,897 £15,944,270 The increase in wages paid can be divided approximately according to the principal causes—viz., £212,000 for additional man-hours worked and £575,000 for higher rates of pay and improved conditions of employment. The additional man-hours were incurred mainly in the road services and traffic transportation, while the largest single item in the higher pay cost was the general increase of 10s per week operating from Ist. October, 1947, which cost £346,000 for the portion of the year to which it applied. The rise in the cost of locomotive fuels was due to the necessity of importing some 94,000 tons of American coal and to the increased use of fuel oil. It is estimated that the cost of the imported coal and oil. fuel used exceeded the cost of the equivalent amount of native coal by- £635,000 for the coal and £140,000 for the fuel oil.

The general price level of stores rose and a larged quantity was used. Two main single items of increase were £51,000 for road service fuels and £61,000 for materials for tarpaulins. Under the heading of "Miscellaneous” the main variations were a decrease of £125,000 for deferred maintenance and increases of £82,000 for superannuation subsidies and £71,000 In December, 1947. Although no for ancillary lorries. The increase in the superannuation subsidy was due mainly to the increased cost-of-living bonus payable to superannuitants (£51,310 increase). The permanent staff numbered 16,526 on March 31, and temporary staff 9433. the total being 127 fewer Than in 1947.