The Southland Times. PUBLISHED EVERY MORNING. Luceo Non Uro. THURSDAY, JUNE 5, 1930. THE RAILWAYS

Southland Times, Issue 21101, 5 June 1930, Page 4

The Southland Times. PUBLISHED EVERY MORNING. Luceo Non Uro. THURSDAY, JUNE 5, 1930. THE RAILWAYS

Losses hidden are not losses eliminated. For that reason it is always better to know what the actual losses are. These are simple statements, expressing ideas which everybody will endorse, and they should bo set alongside the declarations of those good people who are trying' to convince us that the railways deficits which gave alarm to the Prime Minister can be viewed with equanimity because the railways have assisted in the development of the country. Commercially controlled railways do this also, but the shareholders do not accept the achievement as a sufficient offset to balance sheets with the surplus on the wrong side. The phrase “assisted in the development of the country” is another one of those products of the democracy blessed because it can be used to cover a multitude of unkindly facts, and to foster an attitude favourable to the perpetuation of inefficiency. In this case it means that the railways over the long period of the Liberal regime were operated at an apparent profit while the country was developing, though actually losses were incurred because no effort was made to put the Department’s accounts on a commercial basis. When an effort was made to discover the real position of the railway accounts and the disabilities of political control were revealed, this blessed phrase was paraded again to excuse the mistakes of the past, but the facts are too stubborn, too momentous to be cloaked easily and the electors are too experienced to be induced to give further imitations of ostriches. The adoption of a commercial system of accounting by the Department was due, not to a desire to make profits or to raise freights, but to secure efficient administration, and to discover the actual c6st of the service to the country. New Zealand to-day has a better idea than it had twenty years ago of the fruits of political railway building, because commercial accountancy has revealed the true position. If earnest but ■ deluded people allow £50,000,000 to be the, value of the developmental work of the railways, they do not get rid of the awkward fact that the rail-.

ways this year arc going to cost the taxpayer £1,125,000. Last session the Government changed the arrangement made by Mr Coates under which certain branch lines were made a charge on ’the Consolidated Fund, eliminating this and cancelling over £8,000,000 of railway capital account, but tho net result was that the Department had to pay increased interest charges to the Consolidated Fund amounting to £177,000. The losses were not reduced as the following summary of the results of five years, giving the net revenue and the interest due to the Consolidated Fund after the deduction of subsidy, will show:

* Surplus after transferring £58,000 to reserves, t Approximate. Four years’ operations resulted in an aggregate deficit of £802,831; for the last year alone the deficit is £1,210,000. It should not be forgotten that during this period the Department has established reserves for renewals and depreciation by annual provisions charged as working expenses. The balance of these reserves is now about £1,450,000—an amount that is presumably barely sufficient and cannot be raided without imperilling the future of the system. The only ‘‘cash resources” available to meet the accumulated deficit are contained in the general reserve, the origin of which was explained by Mr Forbes; the 1§29 balancesheet showed the amount to be £1,378,316. The total losses have reached £2,Q13,000, so there is a balance of £635,000 to be covered, less the £58,000 transformed • to reserve from the surplus of 1926, actually £577,000, as well as a prospective loss of £1,250,000. Talk of, developmental work may reconcile people to this loss, but it remains as a loss to be met by the taxpayers and an item to be added to the cost of the service given the country by the railway system. What is to be done about it? A “searching investigation”; but a calm survey of the position will convince most people, we think, that the question to be decided is whether the political factors in the control of the railways are to be permitted to remain at an annual cost of £1,250,000. The application of commercial methods to the railways has not caused these losses; it has discovered them, and the duty of Parliament is to devise means to eliminate political influences and establish the independence of the railways as a commercial enterprise. If this is not done no “searching * investigation” will do much good. •

Net. Net. Revenue. Interest. Deficit. £ £ £ 1926 .. 7 1,632,793 1,553,770 21,023* 1927 .. 1,498,553 1,598,212 99,659 1928 .. 1,349,847 1,641,299 291,452 1929 .. 1,399,655 1,833,398 432,743 19301 892,395 2,102,395 1,210,000