TRAMWAYS A GOLDMINE

Sun (Auckland), Volume III, Issue 668, 21 May 1929, Page 1

TRAMWAYS A GOLDMINE

But Buses Lose Heavily TRANSPORT BOARD ACCOUNTS ACCORDING to the balanee-sheet the A’u kiaml lr:;import Board for the financial yew ending March 31,1929, made available this morning, ratepayers of this city would find themselves shareholders in a veritable gold mine, but for one dismal fact —a ruinous loss incurred in the operanrar of the motor omnibus services. For the period under review the tramway undertaking earned a net profit of £48,004. and against this the buses lost £46,587. The net effect of the combined activities of bus and tram is a profit of £1,417.

Itemised the balance-sheet discloses on the assets side a sum of £40,475 transferred from the general revenue account to the capital account. Stores, ticket stock and motormen's and condoctors’ outfits are valued at £59.908. Sundry debtors are expected to yield £53,337. There is a sum of £425,714 in sinking fund investments for the purpose of meeting loans maturing from time to time. Cash in the bank or in the hands of officers totals £13,547, consisting of £9,412 in the general account and £4,135 in the loans account. This side is completed by a debit balance in the net revenue account of £78,539. On the liabilities side sundry creditors (wages £8,199, interest, etc., £20,586 and trade £15,541) are owed £44,626. Accident fund reserve account shows a balance of £4,556, sinking fund account stands at £ 125.714, and depreciation account for motor-buses, £57,893. Amounts set aside to write off expenditure oil dis- , count on loans was £11,050, on track renewals £7,365, on motor-bus goodwill £3,118, and on the Hobson Street power-house and Ponsonby depot, £ 69 299. “I have the honour to present the statement of accounts for the year ended March 31, 1929, duly audited and certified by the Auditor-General, and in doing so to draw attention to the fact that the combined undertakings show a profit of £1.417 2s Sd,” said the chairman, Mr. J. A. C. Allum, in moving the adoption of the accounts.

“The tramway undertaking shows a profit of £48,004 1s 11d, while the loss on the omnibuses is £46,586 19s 3d. The year ended March 31, 1928, showed a loss on the combined undertaking of £41,682 9s 9d,

“The statement of accounts has just been received, and a detailed report will be presented later. The board has only been in office since December 22, 1928, and, while much useful work has been done during the intervening five months, the benefit from such work will only become evident in the future.

“Every effort has ben made to impress upon the ratepayers that the undertaking is owned by them and that it is run in the public interest. The success of our efforts in this direction was evidenced in the remarkably successful loan poll taken on May S.

“Now that the undertaking is brought back on to a profit-earning basis and with the loan authority recently obtained, there should be no difficulty in rapidly overtaking the leeway of the past few years/’ In submitting the accounts Mr. Allum commented briefly on each of the principal items of the balance sheet, as follows: Depreciation Reserve, Motor Buses The total of this account is now £57,893 3s 7d, leaving £25,724 12s 2d to bo written off the fleet of English buses, and £9,735 11s 6d to be written off on account of buses acquired under tli© provisions of the Motor Omnibus Traffic Act, 1926. The whole of the latter amount will be written off during the current financial year, and the undertaking will be then relieved of this burden.

The English buses will be fully written off by 1933, and it should be born© in mind that these buses were purchased out of loan moneys for the redemption of which a sinking fund is provided. As the result of the Local Government Loans Board’s decision not. to approve loans for omnibuses, the board will make future purchases of these out of general account and provide depreciation only, thus avoiding the necessity to provide also a sinking fund. This was the policy adopted in connection with buses acquired from private owners. Track Renewals Suspense

It will be recalled that when the £IOO,OOO relief of unemployment loan was expended on track renewals it was arranged that 40 per cent, should be placed to capital account, and the balance of 60 per cent, should be written off over a period of 20 years. The 60 per cent, represented £57.428 and the amount written off to March 31, 1928, is £7,265. Notwithstanding this writing off of 60 per cent, of the expenditure the board is contributing to a sinking fund sufficient to liquidate the whole of the loan at maturity. Motor Bus Goodwill This item represents the difference between the actual value of the vehicles acquired and the fleet value awarded by the Assessment Court. The sum involved is £15,590 9s, and will be written off over a period of 10 years or such other period as the board may direct. At March 31. 3929. the sum of £3,118 had been provided toward the liquidation of this account. Hobson Street Power House and Ponsonby Depot Account The loss in realisation of the Hobson Street power station and demoli-

tion of the Ponsonby depet is £lOl.. 13 and the sum •already provided to write off this amount is £69.299. The undertaking has. however, already available in the sinking fund approximated 35 UOU which can be set against these losses in realisation, so no rurthcr provision need be made beyond the continuance of the payment of the sinking fund of 2 5 per cent. The position will relieve the current year's finances to the extent of £7.383 4s 9cl. In connection with the Ponsonby depot it should be remarked that the land appears on the board's books at a low figure, and there will be undoubtedly a very considerable profit from the sale of this asset. The bui.dings are now demolished, and tlie board can proceed to sell the land at an early date.

Sinking Fund It will be noted that the sinking fund now stands at £428.714 19s 10d. which represents 231 per cent, of the board's loan indebtedness at date. The whole of the sinking fund is invested outside the undertaking, and will continue to earn interest until required to liquidate the respective loans as they fall due.

Balance Capital Account This amount of £40.475 Os 7d represents expenditure on capital account in excess of loans authorised at March 31, 1929, or in other words, value of capital works paid for out of revenue. There remains unexpended an amount of £4.135 17s 2d on account of old loan authorities, and as this. sum is spent so the balance of capital account will increase accordingly. It should also be known that onethird of the cost of reconstruction of tracks done out of revenue could properly be charged to capital. This adjustment would increase the capital account by a large sum. RETURNED CLEAN In seconding Mr. K. H. Potter said it seemed to him that the feeder bus statistics should be kept separate from the ordinary bus service returns. "Personally I cannot accept the bus figures until 1 see a detailed statement of the accounts,” he said. Mr. Potter also could not agree with an item concerning track renewals. Mr. M. J. Coyle: Are there any tags to the balance sheet? Mr. Allum: None at all. It was returned clean. Mr. F. S. Morton complained at length about the board’s system of book-keeping and took exception to the track renewals suspense account and an Item of It which troubled Mr. Potter. “I am proud of the balance sheet,” said Mr. Allum. "I want the board and the public to understand that the Government auditor has done much more than merely check figures. He has taken a keen and searching interest in the board's accounts and has wanted to know the why and the wherefore of all transactions and transferences of items between account and account. I am going to state that the whole finances are now in a sound and secure position. “The undertaking has now reached a condition in which it can only be harmed by a small section of the community or by the board itself. If I am any judge the small section has now no chance of killing the business and any killing will be done by the board. “The condition of profit and prosperity now enjoyed by the system has only been made possible by the board grappling with difficulties. I may have been unpopular and the board's policy may have been unpopular in certain quarters but the whole undertaking has been brought back to a profit-making basis. We have done it in the worst years in the experience of this city.” emphasised the chairman. TOO LATE, MR. POTTER “I want to point out that the Government auditor did not agree with certain items,” remarked Mr. Potter in rising to speak again. Mr. Allum- You have already spoken, Mr. Potter. You had no objections when I invited members to comment on the balance sheet before: I rose to reply. Mr. Potter: I wish to make a personal explanation. Mr. Allum: You are out of order because I made no reference to you in my remarks. Mr. Potter: Very well, I shall hand my statement to the Press. Mr. Allum: Is it the wish of members that Mr. Potter be allowed to speak. Are there are any objections? Mr. G. Baildon: Yes, I have the | strongest objection. Mr. Entrican: It is a most unheardof thing to allow a person to speak after the mover of a motion has re- , plied. Mr. Allum thereupon ruled Mr. Potter out of order and the balance sheet was adopted.