THE RAILWAY FINANCES

Kaipara and Waitemata Echo, 8 September 1921, Page 3

THE RAILWAY FINANCES

REVENUE FAILING TO COVER EXPENDITURE

The statements recently made by the Acting-Minister of Railways in connection with the " cuts" with the train services are bringing home to the public in forcible fashion the fact that the high operating costs are very seriously impairing the paying capacity of the Government railways, which during the years 1916 to 1920 were being financed on more favourable conditions than at. any previous period in their history, the average yearly return on the capital invested during the five year period being £4 15s 2d per cent.

Last year the revenue reached the record total of £6,908,531, which was £1,156,044 moro than in 1920. But the expenditure, which rose by £1,531,534, absorbed the whole of the increase and £375,490 besides. The increased expenditure was mainly due to increased wages and cost of coal and material.

In 1914 the running costs per train mile were 4s 2d. To-day they are more than 12s. Interest charges are not, of course, taken into account by the Department in its periodical statements of receipts and expenditure, so that when those charges are brought to book the position disclosed by the figures already given takes on a more serious complexion. Roughly speaking, a sum of £37,000,000 has been expended on the railways on capital account. At 3M per cent (the departmental estimate of the cost of the capital investment), that involves an annual charge of £1,487,500— which must be met before there can be any talk of "profit" on our railway systems. As the excess of revenue over expenditure last year only amounted to £1,271,901, it follows that there was an actual loss on the working railways last year of £215,599, the return being only 3.40 per cent on the capital investment. In view of the much better returns of the previous five years (19.16-20) the loss thus shown mightbe regarded as negligible, only, unfortunately, later returns show that the position has changed for the worse.

The traffic returns on the South Island lines disclose a very unsatisfactory state of affairs. The North Island lines also appear to be drifting into a bad way, although still showing an excess of revenue over expenditure. ' For the four weeks ended on July 23 the receipts show a decline on those for the corresponding period of last year of some £9000, and the expenditure was greater than the revenue, disclosing an actual loss in working of £49,125. Something had to be done to stop the drift leeward.

The Departmental statements show that the only lines which gave a net revenue for the sixteen weeks covered to July 23rd were: — Gisborne ... ... £2944 North Island Main Lines .. 73,773 Westland ... ... 8956 Westport ... ... 8916 Picton ... ... 30 The expenditure exceeded the revenue on the following lines: Whangarei ... ... 4293 Kaihu ... ... 548 South Island Main Lines ... 80,253 Nelson ... ... 3229 Allowing for interest charges at £3 15s per cent on the capital invested in the several lines, a further Departmental statement places the position as follows .- DEFICIT. PROFIT. Whangarei ... ... £14,181 — Kaihu ... ... 1701 — Gisborne ... ... 4971 — Nth Island Main Lines 118,796 — S'th Island Main Lines 250,733 — Westland ... ... 16,282 — Westport ... ... — £1913 Nelson ... ... 8363 — Picton ... ... 7850 — Whakatipu steamers 1902 Total deficit, £422,866. That deficit involves a daily loss of £4300. The.leeway in passenger,traffic is very marked. The traffic returns show that in the North Island the number of passengers has decreased durine the periods ended on July 23 by 46,991, with a consequent loss in revenue of £23,272. In the South Island the 1 falling-off is much greater, there being fewer passengers by 270,760 and a revenue loss of £40,163, the total decrease being 317,751 passengers and £63,435 revenue. On the average the North Island decrease is 488 passengers and £237; in the South Island the similar decrease 2763 passengers and £420.

In view of the heavy loss thus indicated it was imperative that a further " cut" in the train services should be made, and that the whole railway position should be reconsidered, with the view to further economies being effected as opportunities offer. The increased wages bill last year accounted for an additional expenditure of £910,685.