RAILWAY REVENUE.

Shannon News, 16 April 1926, Page 4

RAILWAY REVENUE.

PROBLEM OF NON-PAYING LINES. AUCKLAND, Last Night. In a statement to-night regarding i the Government's policy in respect of [ unprofitable railway lines, the Prime Minister said: „ I "When the decision was made to run the railways on business prin- j ciples, the question immediately developed as to what could be done in regard to lines which even the'most intense:, application of business could ; neverjmake into payable propositions, j Was this capital cost to be written I off? Should the lines be, abandoned? Were they to be allowed to continue as a drag upon administrative efficiency in the management of the railway? The matter was one calling for much anxious thought and the course decided upon, that of allowing consolidated revenue tq bear directly the loss on non-paying branch lines, appeared to be the fairest means for both removing the handicap of .past bad business management in railway construction and preserving to districts, served by these lines, the advantages which a railway connection bestows.

"This course is to be pursued until seme means can be found, either to reduce such losses to reasonable limits oi. to establish a less expensive form of transportation. The' Government Railways Amendment Act of last session embodied the most serious legislative hitherto made in New Zealand to place the railways on a sound administrative and financial basis and should be given a fair trial. A close study of the question shows it is practically' impossible for the railways materially ,to increase the volume of- traffic from agricultural or pastoral country, and an addition to tariff rates or a reduction in services would drive a considerable amount of on to the roads. The only alternative is to endeavour to reduce operating expenditure. ' "The branch line statistics published in the railway statement for 1925 show that, even after estimating the credit to oe allowed to branch lines for all traffic contributed by them to main lines, it w-ould have been necessary to effect 57 per cent, reduction in operating expenses before branchco would pay their way. The introduc-" tion of rail motor services may afford seme, relief, but unfortunately such services do not cater for goods traffic. Under terms of the regulations governing the assessment of revenue on branch lines, the whole of net revenue derived on main lines from traffic to or from non-paying . branches is credited to branches. "Since 1896, when the railways were "first called on to pay 3 per cent, on capital investment (increased in 1909 fo 39 per cent.), the amount earned in excess of the minimum, return was £1,300,000. As interest is calculated on the total investment, including non-interest-bearing funds, which form a considerable proportion of the whole, it may reasonably be claimed that the railways have made a very' good showing, in spite of the fact that they have not received direct capital subsidies, such as were granted to private companies. "It will be-generally admitted that quality' and efficiency of the service rendered by the railways has improved materially during the past two or three years. > This is doubtless due to the stimulus of competition and the new- spirit of co-operation in an effort resulting from a reorganised and decentralised system of management. * "The railways," Mr. Coates concluded, "are entitled to credit for the progress so far recorded and should be encouraged, by the reasonable linancial arrangements now provided, to carry on toward a still higher standard the good work of increasing their general efficiency in the interests of national welfare." Mr. Coates left for Wellington to- j night. ' j

During the last lew years, while a number of other countries have had to contend with the after-effects of the war, the position of Australia has been exceptionally favourable, says the Banking Record. There has consequently been .an unusual combination of favourable seasons and high prices, the culminating point being reached in 1924-25, when the aggregate value of exports reached a maximum. The influence of this combination has been accentuated by the large scale of public expenditure of borrowed money. All the main factors have thus tended in the same direction to produce activity. This .prosperity has not been attended with commensurate progress in actual development of the country. One aspect of this is visible in the different rates of increase in city and country population. Progress in the country in this respect has been much less rapid than in the cities and the result has been that the proportion of the population of the six capital cities to the total poulation of the commonwealth rose to 45 per cent, at the end of 1924 against the pre-war proportion of under 40 per cent. For progress on any considerable scale it is requisite to look to the development of the natural resources of the country on a selfsustaining basis, free from artificial support, and with the ability to cater for outside markets in a manner that will give room for expansion. It is further necessary to .allow for the 50sMibility of a return to more moderate prices, to which costs of production -and the of the land, which ha 3 tended to capitalise the effct of Jiigh prices, would require to be readjusted.