HEAVY RAILWAY DEFICIT

Sun (Auckland), Volume IV, Issue 1066, 2 September 1930, Page 1

HEAVY RAILWAY DEFICIT

Loss of £1,211,000 for Year

STATEMENT BY THE MINISTER

Earnings Decrease £470,398

THE SUN’S Parliamentary Report

WELLINGTON, Today. A DECREASE in the net earnings of the New Zealand Railv.ar W of y^n??o«?B ' to l , £470 ’ 398 ' and a total deficit the year of £1,211,269, is shown m the annuo! statement of the department, presented m the House of Representatives toIt is anticipated that for the current year revenue will exceed expenditure by £2,000,000.

The statement points out that the gross Income from all sources ' was £8,288,116, an increase of £39,078 on that of the previous year. The expenditure was £7,358,859, an increase of £509,476 over last year. The net earnings were £929 257 as compared with £1,399,655 —a decrease of £470,398. On March 31 the capital invested in the lines open for traffic, including steamers and plants on Lake Wakatipu, and other subsidiary services, was £57,787,671, as compared with last year—an increase of £1,218,073 on the capital account of the previous year. The increase in capital comprises £393,072, expended chiefly on the rolling stock and signal construction, and charged against the capital account, and £824,496 expended on works such as new workshops. The Finance Act, 1929, provides that interest will be charged on the total amount of capital moneys expended in respect of railways reduced by the sum of £5,100,000. The interest charges, amounting to £2,132,324, have therefore been computed in terms fi* e Act. These for the year total £2,331,335, and the decrease in these charges for the year is £199,011. The deficit on account of revenue and expenditure on the year’s working is £1,203,067, to which must be added the sum of £8,202, an adjustment of the branch line debit for 1929, making the total deficit for the year £1,211,269, an increase of £778,526, as compared with the results of the previous year. “Since I assumed control, comprehensive reports have been submitted, and in view of the heavy annual losses I was reluctantly compelled to authorise the closing down of certain branch lines and isolated sections.” announces the Minister, Mr. W. A Yeitch. “In order to effect further economies in train operation, certain passenger train services have also been curtailed. “I found that the department, in this connection, had been striving, to n business by providing attractive services over long distances, and although train-mileage had increased, there was still a decline in passenger revenue. The following table shows the actual position: . xr r * Increase or • , i ear. £ st* ! UM-18 .... 2,288 ,571 61,029 decrease. ’ •• •• 2,537,047 248,476 increase. ! }“«-*? .... 2,304,180 232.867 decrease. | .. 2,145,296 158,884 decrease. • H!!' 29 •• *• 2,124,746 20,550 decrease, i 1929-30 .. .. 1.99 5,927 1 28,8 1 9 decrease. '‘The train-mileage increase was due a fairly large extent to the growth Roods traffic; but even with this favourable aspect, a large proportion °* the increased mileage was due to Passenger services. “In view of the financial position °f the department, the running of several of the passenger trains has had to be restricted, at least until the busy season commences.” “For the current year I anticipate the revenue will reach £8,470,695, and the expenditure £6,378,003.” The decreases are explained by the general manager, Mr. H. H. Sterling, m his report to the Minister. There was a heavy decrease in the Passenger traffic amounting to *130,000 due to (1) there being Practically no Easter traffic included m th© 1929-30 figures, whereas there Waß the greater part of two Easters the 1928-29 figures. This factor *J 01le accounts for approximately £107,000; (2) the balance of the decrease on account of passenger

traffic (£23,000) must, I think, be principally ascribed to the diversion of traffic to the road. The position in regard to commercial competition hy road has been watched during the year, and the indications are that it has not grown to any material extent. The increasing diversion of the passenger traffic must, I think, be ascribed to the Increasing use of private motor-cars. The registrations of motor-cars for 1929-30 were 148,090, as compared with 130,566 for the previous year, being an increase of 17,534. The effect of such an increase in the number of motorcars is inevitable. Over against the decrease of £130,000 in passenger business must be set an increase in the goods business amounting to £58,000. While the goods increase was insufficient to offset the passenger decrease I think it must be regarded as satisfactory, especially in view of the record in goods business that was established in the previous year. More particularly is this statement justified by reason of the fact that there were special factors operating against our showing an increase in goods business for the past year. Among these factors may be mentioned:—(l) An abnormally late season for live-stock. (2) The drop in wool prices, causing much of the clip to be withheld by the growers. (3) The late distribution of fertilisers in the North Island in 1930, as compared with the previous year. (4) The loss of revenue on fertilisers and lime traffic owing to the reduction in the proportion of the rebate recovered from the Department of Agriculture as previously mentioned. With regard to (1), the late season for live-stock —it is interesting to note that tor the first two periods of the year 1930-31 there has been an increase in the sheep carried in the North Island of no fewer than 123,000 head, and in the South Island 53,000 head, as compared with the previous year. This fully bears out the statement that the live-stock traffic was later in 1930 than in the previous year, and has had the effect of lessening the revenue from this class of traffic for this year. It has -been estimated that there are no fewer than 150,000 bales of wool belonging to the 1930 wool clip that have not yet been sold. We had a decrease in our wool traffic of approximately SO,OOO bales as compared with the previous year, so that had the price factor not entered into the wool business we could confidently have looked for an increase rather than a decrease in this rtaffic for the year. The distribution of fertilisers—this was, I believe, caused principally hy the fact that in the previous year fertiliser companies in the North Island gave a special rebate to farmers who took early delivery of their requirements for autumn sowing. During the year 1929-30 this arrangement did not operate, and this threw deliveries later in the subsequent year. The decrease for the three four-weekly periods ended March 1, 1930, as compared with the corresponding three periods in the previous year, was no less than 54,933 tons in the North Island. "Additionally to the above-mentioned factors, I think it may be assumed that the department could hardly fail to be adversely affected hy the general depression that set in during the year,” says Mr. Sterling. “It is, of course, impossible to state in terms of money the extent of this effect, but it can scarcely be doubted that it existed.”