TAXATION BY ORDER-INCOUNCIL.

Hokitika Guardian, 12 May 1926, Page 3

TAXATION BY ORDER-IN-COUNCIL.

A PERILOUS PROCEEDING. (Contributed.) “ An -Orderin-Couiicil is an order is- ; sued by the Sovereign, in an emergency, on the advice of the Privy Council. Until confirmed by Parliament, it lias only a temporary legislative effect. Those who advise the issue of such orders arc considered personally responsible for them until indemnified by Parliament.” (Encyclopaedia.) fu view of the extensive use being made of Orders-in-Council by the Government just now it may be both interesting and illuminative to examine briefly the purposes to which legislation of this description may he turned. A . recent Order-in-Council in connection with the new accounting system inaugurated by the Railway Board may he taken as an example. This Order prescribes that thirty branch lines and four isolated sections of railway shall he classified as unprofitable and that any losses they may incur in future shall be covered, by a subsidy from the Consolidated Fund. This means that these thirty unprofitable branch lines and four unprofitable isolated sections are no longer to worry the Railway Board, but are to become a cliargo upon the long-suffering taxpayer. Presumably they will remain under the control of the Railway Board; hut that body no longer will he responsible for their finance. Whether the present loss, estimated at between £300,000 and £400,000 a year, increases or decreases it will he the concern of the taxpayers alone. This being the case the taxpayers are entitled to know exactly how the new system will operate. CAMOUFLAGE. The Prime Alinistor, in his capacity of .Minister of Railways, has explained the mere accounting part of the system. “ All revenue on traffic that does not travel on the main line,” lie stated the other day, “ belongs unquestionably to the branch. In the case of traffic that originates on the branch, and has a destination somewhere along the main line, the branch gets the whole of the revenue on its own running, and the net revenue on the main line running; that is to say. the main line is paid only its hare costs, and the branch receives all the profit. Li the reverse case, traffic that originates on the main line, and has a destination somewhere along the branch, the branch again receives all the revenue on its own running and the net revenue on the main line. Even if goods run 100 miles on the main line, and only three miles on the f branch, the latter still receives the revenue on the three miles and the net revenue on the hundred.” All this is ! plausible camouflage. Boiled down to plain facts it means that the unprofit.able railways will remain unprofitable and that the paying railways will be j freed from the loss with a corresponding improvement in the appearance of their balance sheets. EATR PROAHSES. )

lii his railway .statement of Inst year, the Minister made fair promises for the future. “ The policy of the Department." he said, “ will he to manage the railways so that the receipts will lie sufficient to meet working expenses, interest on capital, reserves and sinking funds. . . Deficits will he met hy taking steps to improve financial results in the direction indicated hy the statistical data completed." Nothing could have been more admirable than this. But now, it seems, having handed over his responsibilities to an irresponsible hoard the .Minister concurs in a proposal to charge the loss on the unprofitable lines to the Consolidated Fund and to leave the Board to obtain all the revenue it can from the profitable lines. The Statistical data referred to hy Mr Coates show that the gross revenue expected from the branch lines indicated in the Ordcr-in-Council does not exceed £.500 per mile, while the estimated expenditure at 4 ’ per cent, runs into C 777 per mile, leaving a running loss of £271 per mile. This is the measure of the total deficiency, reaching between £300,000 and CIOO.OOO. which the Board, with the concurrence, of the Minister, intends to charge to the Consolidated Fund and to pass on to the taxpayers. AN EXTRAORDINARY STATEMENT In reply to criticism that has been provoked by the proposal to relieve the Railway Department of responsibility in connection with the unprofitable lines, the Department has circulated a

most extraordinary statement Some people agree,” it says after re

iterating portions of the Minister's earlier statement, “ that tho railways should bo asked to earn enough or to economise enough to make the whole service—main lines, branch lines, isolated sections and all—self-supporting. The Department of Railways says that this cannot ho done. It cannot he done by economics, because the branch line statistics published in the Railways Statement of 1923 show that, even after estimating the credit to ho allowed to branch lines for all traffic contributed hy them to the main lines, it would have been necessary to effect a reduction of 57 per cent in operating expenses before the branches would pay their way. The Department says that if it is not relieved by Llie Consolidated Fund of the branch line losses, it cannot put itself on a commercial basis save hy the drastic process of closing the brand! lines. That course is not only politically impossible, but would be economically bad for the country, because heavy haulage and long haulage-of goods is not a burden that the road motor is prepared to take up. To retain the use of the lionpaving developmental lines, they must be put on a subsidy basis if the general railways are to be put on a commercial basis. That principle is confirmed bv Sir Henry Newton, head of the Canadian National Railways.” POLITICAL CONSIDERATIONS.

In view of its admission that it is “ politically impossible ” to stay the loss on the unprofitable railways it surely is a little ludicrous, to say the least of it. for the Department to talk about putting the railways “on a commercial basis.” On one of the unpro- . fitable lines 1092 trains are run during the year and, the loss is £44 per train, or a total of £44.997 during the twelve months. Other striking losses vary from £ll 4s per train to £32 per train, and political considerations, it seems, are to make them a permanent charge upon the taxpayers. The plea that eleven unprofitable lines ranging in length from three miles to fourteen must be kept open “ because heavy haulage and long haulage of good is not a burden the road motor is prepared to take up ” is confronted by tho fact that these lines already are in competition with the road motor. But this apart, no one acquainted with what is going on all over the country would describe the length of any of these unprofitable lines as a “ long haul.” Hundreds of individual, firms ( and companies, operating on a strictly “commercial basis'.” are covering “hauls ” ten times as long with profit to themselves and satisfaction to the community they serve. The Department itself scarcely would suggest that every settler within ten miles of the main line should have a branch line to his back door, yet that would be the logical application of the “ political consideration ” it thinks it ‘ impossible ” to ignore.

DUCKS AND DRAKES.

"Whether the Minister or the Pe-

partment is responsible for the retention of these “political considerations” is not a question for discussion here. The fact of importance is that by this Order-in-Couneil the Department is authorised to dip its hand into the Consolidated Fund, the national till, to which every member of the community subscribes in one way or another, and recover the amount it has lost on these unprofitable railways. Even the most ardent supporters of the Government have only faint praise for the scheme. “ Whether it will actually help towards efficient management,” one of them says, “we cannot feel quite certain; but there does not appear to be any reason for jumping to the conclusion that it is only a new cloak for inefficiency, the old fraud in a new suit.” This faint-hearted champion finds comport in a curious direction. “If the new arrangements turns out less well than is expected, it can easily be abandoned, for it is not dependent on legislation.” This is all too true. Jiy Order-in-Council ducks and drakes may' be played with the railway finances, and by Order-in-Council one game of ducks and drakes may be succeeded by another. Nor need the playground of the Order-in-Council be confined to the Railway Departiiient. Tn the same way as that Department lias freed itself from the burden of unprofitable railways, the State Advances Department . might transfer its bad accounts to the Consolidated Fund; and the Tourist Department its losses to the same convenient receptacle, while any other department with the precedent established, might as easily pass on the accumulated debris of its administrative blundering to the wrung shoulders of the taxnayers.