RAIL AND ROAD

Nelson Evening Mail, Volume LXIII, 3 August 1929, Page 13

RAIL AND ROAD

THE TRANSPORT PROBLEM

m:ri:iu:Ncii in budget ' FOREMOST PROBLEM IN DOM IN IUX" (By Telegraph) (From “’The Mail’s” Parliamentary Reporter) WELLINGTON, Ist August. Dealing wi.Ti railways and road transport, in the course of the financial Statement the Prime Minister (fhe Rt. Hon. Sir Joseph Ward) spoke as follows: ’.I lie next matter 1 wish to deal with is the position of our railways, witn which is involved practically the whole transport problem ol the Dominion. This is one of the major, if not the loremosl problem with which we are faced. The development of road transport is comparatively recent, and .1 doubt whether the true significance of the problem is generally appreciated throughout the Dominion. The railway revenue for last year amounted to’ £8,249,038 and working expenses tir £0.849,383, leaving a .net. revenue of £1,599,055. Subsidies oil branch lines and isolated sections (paid and accrued) amounted to £498,937, giving a total of £1,898,592 available for interest charges amounting to £2,331,335. Thu result of the year's working was, therefore, (a. loss of £432,0-13 so far as the Railway Department was concerned under present arrangements. Thu subsidies merely represent losses already borne by the Consolidated Fund, so that the disclosed loss for the year is approximately £930,000, as against £280,000 for 192526, the '•first year of operations under the present system. The real loss is even greater titan, is indicated by these figures, as there are certain capital charge which the Railways have not been asked to carry. RAILWAY LOSSES Now, that, part of the loss which is at present carried by the Railways must be met out of their working capital and such reserves as they have for renewals and depreciation, etc., anil ns soon as these are represented only by accumulated losses, the railways will obviously he unable to carry on without further assistance from the Consolidated Fund. This will mean that the whole of the losses will have to he borne directly by the taxpayers as the same accrue, and 1 am satisfied that- if the present drift is allowed to goon for only a few years longer the taxpayers of lliis Dominion will have to. find not less than £2,000,000 a year to meet railway deficits. That-is what w (! are faced with.

The heavy construction costs of the lines added to the system in recent years, together with the extensive programme of improvement works authorised by the previous Governments, and better rolling-stock, have toge'thcr been responsible for raising the average capital cost per open mile of line from £12,105 in 1920 to £17.210 in 1929. This has meant increased interest charges, especially in view of the high rates for money that have ruled in recent years, against which net earnings per open mile liavo gone down in about the same ratio as the capital cost lias gone up—viz., from £551 in 1920 to £353 in 1929. ' The seat of the trouble lies in the passenger traffic, where the revenue has declined, notwithstanding the fact that over the period, lines opened for traffic increased by 281 miles, while passenger train-mileage run increased by about 60 per cent. Had tlie passenger revenue increased in the same ratio as tfe. goods revenue all would have been well.

MOTOR TRANSPORT i The falling-off in the passenger traffic is undoubtedly due to the development of motor transport, which is becoming a rapidly increasing factor in the transport system of ' tile i Dominion as elsewhere. As things are at present- there is no possibility of the road transport doing tlie whole job and superseding railways in the, same way as railways displaced the coaches. It seems likely, however, that in certain classes of work, particularly short -distance suburban traffic, the road-motor will piove the most economical form of transport, but for long-distance traffic there is no doubt that when all costs are taken into consideration the railways provide tlie cheapest and most efficient means of transport. The present long-distance motor competition is profitable to day because the motor is required to bear only part of the cost of surfacing and maintaining the principal roads, and escapes tlie interest charge on the capital' cost of all roads, as well as many other charges incidental to motor traffic. The irony of the situation is that the heavy losses on the publicly-owned railway's are being largely brought about by good motor roads being built, also with public money, to facilitate direct competition with the railways. In other words, .State capital is being provided to assist in the direct undermining of the earn-ing-power of £57,500,000 of State capital already invested in railways. tlie trains have to be run to canv the bulk of the traffic, and they could handle the whole of the long-distance traffic practically without any additionalcost, thus the long-distance motor competition amounts to pure economic waste, which the country can ill afford. 1 Good roads are nevertheless necessary, hut unless the road-motbr is to lie made to carry the full const of the roads so as to force traffic into the most economteal channels (and even this would involve economic waste through unneces- i sary duplication of services) the man- ] highways policy must he framed as fur j as possible to bring about not direct I competition, but co-ordination with rue railways. ■ Thu amount of borrowed capital available for reading purposes is not unlimited, and reads awav if mu * the railways should be tlie first consideration in the interests of trade and production. This aspect of the trims- ! port question appears to have been largely neglected up to the present. i CO-ORDINATION OF RAIL AND S ROAD . Diet-, it hiis been found irt prae- t Oeally. all countries that the only solu- ! lion to the problem lies in co-ordination I between the two hums of transport. I In fact, in view of the serious loss that 1 "jb certainly result if the present trend ol aliairs is allowed to continue, 1 believe that the. Government would be. fading in its duty R it, did not make a determined el fort to control transportin the nil (’rests of the Dominion as a ] whole. Ilow best to attain Ifiis object, j ls :l 'midi moi e ,i 1 illiei l ll matter to I del ermine. I i'c 1 oA'criimeiif desire to encourage J molnr transport as feeders to the trunk ! railway-line* and to ami from those dis- ' D'icts not directly served hv the rail - wavs, sii it would appear that the desiicd end must he obtained per medium oi sonic regulating authority. which will direct the flow of t TJmspru'!. inln J channels where it will produce the lasi.

results to the Dominion as a whole. The < iovc'i i 11 (ioii( has already taken action in. (lie, direction of setting up a .Ministry of Transport and an advisory Council, it is proposed to broaden the basis oi the Conned by giving the railways ade quale representation thereon, and by adding representatives of the commercial and farming interests who are also directly interested, in that unnecessary and wasteful duplication of transport facilities can only lead to higher transport costs all round. This •Council, representative of all interests concerned, will be asked to fully investigate the whole complex problem and report to the I to'veniment as to the host means of eliminating wasteful competition and promoting co-ordination between the road and rail transport facilities ol' the .1 lominion.

So far as the. railways themselves are concerned, the Government is convinced that the trunk' lines musk be the backbone of Ibe transport system, and. as I have already slated, every effort will he made (o' complete the trunk lines as soon as possible. Where the transport needs of any particular district can he met- by motor transport on a good motor road no further branch lines of railway will he built. BRANCH LINKS The existing branch lines, almost without exception, do not pay working expenses, let alone interest on the capital cost of construction. At present losses on branch lines and isolated stations are covered hv a subsidy Irom the Consolidated Fund; which last year amounted to approximately £500,030. The isolated sections-.will /for the most, part be linked up with the trunk lines when the present construction proposals are complete.

The branch lines concerned consist of six short iengt’hs of line in the North Island, on which the working loss, apart hum interest, was £32.593 for 1023-20: and, including the Otago (,'eiitrnl line, twenty lwo .sections of line in 'the South Island; working loss for 1928123, £115,578. The total working loss | on branch lines was thus £148,176, from which was deducted £57.592 for Hie estimated feeder value of these lines, interest on the capital at 4£ per cent, amounted to £273,221, making the total not loss on branch lines £363,805. Subsidy for losses on isolated sections amounted to £132,773, making a grand total of £496,578 paid out of the Consolidated Fund last year. Home of these so-called branch lines the Otago Central line, for instance—must remain as an integral part of th,o railway system, hut some of the short ! lengths of line merely tacked on to the main lines have clearly served their purpose from a developmental point of view, and with the development of I motor transport such lines have bdeome j obsolescent. In such eases any private | concern would probably tear up the railway-lines, ami it is a matter for cc-n-I siderntion as to whether the Govcrii- , meat should not do likewise. Clearly i it is necessary to have all the facts j before us in each ease, and this is one I of the matters where the proposed Council might do good work. The matter j will he referred to the Council aeeord- | ingly. Jo any such case where private enterprise has already established adequate motor services no further action | by tile Govei niiienf, would be necessary, i but iii oflier eases it might be necessary

: for the Railway Department to run a j motor service. Either wav the (doveriii inept would see to it that the residents of the'districts concerned have adequate transport facilities.

WRITING-DOWN OF RAILWAY X t CAPITAL As to the loss of capital invested in such lines, I have to point out that- part of the capital for the Public Works Fund lias been provided out of transfers 1 from national revenue, and when an allo- ! cation is made it is found that ap--1 proximately £8,100,000 of the total railway capital lias come from surplus revenue. Thus the capital sunk in lines that- are done away with can he. written off without impairing the total of assets representing loan capital. Jn any case the Government has decided to go further than this and write down the capital of tiro railways. At the same time the present, subsidy out of . the Consolidated Fund will he aholislisd. POLICY SUMMARISED 'To sum up, the Government’s policy | in regard to transport is—- | (a) To complete the trunk lines as the I backbone of the system : l (bj Not to build any more short branch - linos where the transport needs can be | adequately catered for by motor services I on a good motor road : j (c) 'To investigate the position of the | present branch; lines with a view to do- ; ing away with those that are found to | he obsolescent: I (d) To write down the Railway capita 1 ; by the amount contributed thereto from , revenue, arid cancel Hie present subsidy ; from the Consolidated Fund: I (e) To co-ordinate the railway and mo-tor-road construction policies: I (f) To take stops to bring about co- ! ordination between road and rail transport services. , The benefit of this policy lies in the checking of the present dangerous drift into economic: waste, which, if allowed to go oil. bids fair to increase the railway losses to -he borne by tlie Consolidated Fund from the present figure of £500,000 to £2,000,000 a year within a few venrs.