FACED WITH £2,000,000 LOSS

Sun (Auckland), Volume III, Issue 731, 2 August 1929, Page 7

FACED WITH £2,000,000 LOSS

Plight of Railways Department GOVERNMENT’S DRASTIC REMEDIES £8,100,000 to be Written Off rIE State railways lose money as water pours through a sieve. The disclosed loss last year was approximated £930,000. "If the present drift is allowed to go for only a few years longer,” declared Sir Joseph Ward in his Budget this evening, “the taxpayers will have to find not less than £2,000,000 a year to meet railway deficits. Some drastic proposals have been submitted to check the serious drift.

(THE SUN'S Parliamentary Reporter) WELLINGTON, Thursday.

To cope with heavy losses on the working of the State’s railways, the following rigorous proposals are contained in Sir Joseph Ward’s Financial Statement: To write down capital liability by about £8,100,000. Discontinuance of the subsidy on branch lines and isolated sections. To refer to the Transport Advisory Council the question of continuing branch line services. ■ Transport, said Sir Joseph, provided one of the major problems, if not the foremost problem, ’facing the Dominion. The net railway revenue last year was £1,399,655. Subsidies on branch lines and isolated sections amounted to £495,937, giving a total of £1,598,592, available for interest charges amounting to £2,331,335. The result of the year’s working was, therefore, a loss of £432,743, so that the disclosed loss for the year was approxima £930,000, as against £280,000 ft,-. 1925-26, the first year of operations under the present system. The.-real loss was even greater than indicated by these figures, as there were certain capital charges which the railways had not been asked to carry. It was pointed out that, due to heavy construction, costs of lines added to the system in recent years, and better rolling stock, the average capital cost for each mile of open line had increased from £12,106 in 1920 to £17,210 in 1924. Net income had gone down in about the same ratio, from £551 to £353. There had also been a drop in passenger revenue. RAIL AND ROAD TRANSPORT The co-ordinatiou of rail and road transport was also discussed by the Prime Minister, who maintained that some system of co-ordination was necessary. The problem would be investigated by the Transport Advisory Council.

“Unless the road motor is to be made to carry the full cost of the roads so as to force traffic into the most economical channels (and even this would involve economic waste through unnecessary duplication of services) the main highways policy must be framed as far as possible to bring about not direct competition, but co-ordination with the railways,” continued Sir Joseph. “The amount of borrowed capital available for roading purposes is not unlimited, and roads away from the railways should be the first consideration in the interests of trade and production. This aspect of the transport question appears to have been largely neglected up to the present.” THE GOVERNMENT’S PRESCRIPTION After referring in detail to the unsatisfactory position of branch lines, the Prime Minister gave this summary of the Government’s policy:—■ (1) To complete the trunk lines as the backbone of the system. (2) Not to build any more short branch lines where the transport needs can be adequately catered for by motor services on a good motor road. (3) To investigate the position of the present branch lines with a view to doing away with those that are found to be obsolescent. (4) To write down the railway capital by the amount contributed thereto from revenue, and cancel the present subsidy from the Consolidated Fund. (5) To co-ordinate the railway and motor road construction policies. (6) To take steps to bring about co-ordination between road and rail transport services. “I am satisfied that when the policy that I have outlined is carried out the drift will be checked, and the operation of the completed trunk railway system of the Dominion will earn full interest on its capital, and thus will not entaS any burden at all on tho taxpayers,” concluded the Prime Minister.