THE ADMINISTRATION AND OPERATION OF THE WORKING RAILWAYS OF NEW ZEALAND (SPECIAL REPORT BY RIGHT HON. J. G. COATES, MINISTER OF RAILWAYS, ON).

Appendix to the Journals of the House of Representatives, 1928 Session II, D-03

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Session I, 23rd Parliament. 1928. NEW ZEALAND.

THE ADMINISTRATION AND OPERATION OF THE WORKING RAILWAYS OF NEW ZEALAND (SPECIAL REPORT BY RIGHT HON. J. G. COATES, MINISTER OF RAILWAYS, ON).

Laid, on the Table by Leave of the House.

The following is a general review giving in brief the principal features of nay policy whilst holding the portfolio of Railways, and summarizing the lines along which administrative action has been taken during my term of office in dealing with the many phases of railway operation in this Dominion. New Wobks Programme. By making a comprehensive tour of the whole railway system (in 1924) soon after taking control of the Department of Railways I was enabled to come into personal touch with both the clients and the staff of the Department, and to ascertain at first hand the general requirements of the railway situation. After comprehensive investigation I decided upon a ten-years programme of progressive new developmental work intended to give the public a service that would measure up with modern transport standards. This programme, set out in detail in my special report (D.-2a) of 1924, is well under way. Portions of the work are already completed, and these have in every case made a marked improvement in general railway-operating efficiency. The balance of the programme (with certain readjustments due to circumstances over which we.could have no control) is proceeding according to schedule. The scheme was certainly a large one, but it represented the accumulation of some years during which the railway industry, as with many other industries, had to mark time on capital expenditure. We also had an almost phenomenal change in the circumstances associated with the railway industry, a change which brought home in no uncertain way to every administrator in the railway industry here, as elsewhere, that the standard of service had undoubtedly to be raised if the railways were to maintain their position. There was at the time when the programme was adopted practically no room for doubt in the minds of those who had given serious consideration to the question that the right thing was being done in undertaking the various works, and I feel satisfied that subsequent events have amply justified the wisdom of the decision then made. The following is a list of the major works undertaken, with particulars of their present position :— Main Line Deviations. Auckland-Westfield. —This line will be available for goods traffic towards the end of 1929, and for passenger traffic early in 1930. It will eliminate the need for working the great bulk of the traffic over the present heavy grades between Auckland and Westfield, and was estimated to effect an operating saving of £22,500 per annum. Auckland New Station and Yard. —Steady progress is being maintained with this work. The platelaving is well advanced, the Campbell Point overbridge has been completed, also the new outwards-goods shed. A contract for the new station building has been let to Messrs. J. T. Julian and Sons, Ltd., Auckland. By the time this contract is completed and the new station opened for traffic early in 1930 the major part of the Auckland new yard will have been constructed. As stated in my D.-2a report, this yard is designed to give all facilities in the layout—viz., passenger-station, local goods-yard , marshalling-yard, and engine-depot. The necessity for these improvements has been emphasized by the departmental officers for many years, the traffic having quite outgrown the existing facilities, resulting in congestion and delays to traffic and uneconomical operation. A most cursory review of the present Auckland Station and facilities must convince any one that they are wholly inadequate to the needs of a city that has grown as Auckland has done. Morningside Tunnel, Auckland.. —The objections regarding grades which have been mentioned in connection with the alterations to give a better outlet from Auckland southwards apply also to the outlet northwards. In addition, the circumstances of the roundabout route taken by the northward outlet prevents the Department giving a service to the passengers in the northern districts that is adequate to their needs. The grades make the trains slow and working expensive, while the route considerably extends the time required to be taken by passengers in travelling to and from the city

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A survey for a new route by tunnel under the city to Morningside is now in hand, and it was intended, when the survey was complete, to go on with the work. Paeroa Rearrangement.—This work has been completed. The provision of the new station and yard was necessitated by the improvement and stop-banking of the Ohinemuri and Waihou Rivers, which involved raising the line and shifting the station to a new site. The double line from Auckland southward has been extended to Papatoetoe, with great advantage to traffic operations, and plans are in hand for extension through to Papakura. Palmerston North.—The work here is intended to relieve congestion, to give greater expedition in train-handling, and to avoid the necessity of running through the middle of the town. A special Royal Commission was appointed to inquire into the question of the desirability of this work, and it reported wholly in its favour. This report was also supported by the Pay-Raven Commission. The work is now in hand. Wellington New Yard, and Wellington - Tawa Flat Deviation.—The above works stand in relation to Wellington practically in the same position as the Auckland new station and the Auckland-West-field deviation stand in relation to Auckland, So far as the terminal facilities at Wellington are concerned, they are not only out of date and inadequate, but, by reason of the inconvenience of working with two stations, costs are much higher than they should be having regard to the quality of service that can be given under present conditions. The outlet from Wellington is also obstructed, as in the case of Auckland, with very severe grades and curves. There are also a number of tunnels, which make travelling, particularly up the heavy grades, most objectionable. A review of the conditions, both from the points of view of standard of service, public convenience and economical operation, leaves no room for doubt about the absolute necessity of undertaking the above-mentioned works. In the Hutt Valley a new double track has been laid from the vicinity of Lower Hutt Station to Waterloo Road. The Government acquired a considerable area of the land to be benefited by this railway, and for the first time in New Zealand the principle of crediting the railway with the increased value of the land accruing from the construction of the line has been applied. A branch line has also been provided for from the above-mentioned new line to serve a large area in the locality which is being developed as an industrial area. It is confidently anticipated that a great stimulus to rail traffic in the Hutt, Valley will result from the provision of these facilities. Regarding the Rimutaka Deviation, set down for commencement next year, and estimated to cost £1,000,000, it may be possible to avoid the need for this work by taking advantage of later developments in electric traction or by using other special locomotives. The Department's officers are investigating this now. Pelichet Bay Deviation - Dunedin. —- This deviation has been completed and brought into use. This work was necessitated by the reclamation and development of land by the Otago Harbour Board, and was carried out under agreement entered into in 1912 with the Harbour Board. Marshalling - yard at Middleton. — Improvements at Christchurch and Lyttelton Yards and Duplication of the Christchurch-Lyttelton Line: An investigation into conditions that were operating at Christchurch showed that work there was becoming so congested as to render it impossible for the same to be carried on with due regard to the safety of the staff and efficient and economical working. The necessity of having a yard where the marshalling could be done separately from the local shunting became quite apparent. It was decided at first to place this yard at Woolston, but further investigation led to the conclusion that Middleton would be a more desirable site, and a yard has accordingly been installed at that place. So far as the other works mentioned in the above caption are concerned, it was subsequently decided to electrify the Christchurch-Lyttelton line instead of duplicating the tunnel. The line is now a double one between Christchurch and Heathcote. As far as the tunnel is concerned, the principal trouble in connection therewith has been the unpleasant conditions arising from steam operation. Investigations showed that if electrification were adopted the tunnel would be adequate to cope with the traffic for a good many years to come, while, of course, electrification would also do away with the unpleasant conditions associated with steam operation. It was decided, therefore, to electrify the line instead of duplicating the tunnel, and, as regards the alterations to the yards at Christchurch and Lyttelton, it had been decided to watch the effect of the electrification in actual practice before coming to a final decision as regards the yard alterations. Station-yards have been rearranged and improved at Hikurangi, Frankton Junction, Otorohanga, New Plymouth, and Helensville. A thoroughly modern engine-depot has been provided for Westland. So far as Otorohanga is concerned, although anticipated that the work as originally planned could be deferred until the eighth year of the programme, it was found necessary in the interests of economical working to proceed with a modified scheme of rearrangement. This work has now been completed, and will permit of the major scheme being deferred in the meantime. Electric Flood-lighting has been installed in nine principal station-yards, and electric-light equipment has been provided at 1,716 houses and 182 stations. Level Crossings. The policy set out in my 1925 Statement provided for the elimination of the more dangerous level crossings and the provision of warning-appliances'. This policy is being carried out. The Railway Department has always borne its share of the cost of eliminating level crossings at those points where, local bodies have agreed to pay a reasonable proportion of the cost. Since the institution of the Main Highways Board the Railway Department has worked in conjunction with that body in carrying out proposals for improvements at road and railway intersections.

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Workshops Reorganization. Prior to my assuming the portfolio of Railways in 1923, attention had been drawn by the Department's responsible officers to the lack of up-to-date facilities in the locomotive workshops and, generally, to the inadequacy of the buildings and equipment. I recognized that a comprehensive review of workshops facilities was immediately necessary. In 1924 a complete scheme of reorganization was submitted to me by the Railway Board, entailing an estimated expenditure of over £1,500,000, to be spread over a period of three years. Details of the proposals were at the same time submitted to the Fay-Raven Commission and obtained full endorsement. It was found possible by extension to the existing buildings at Hillside and Addington to carry out improvements that would suffice for many years to come, but the provision in the two main North Island shops was hopelessly inadequate, and consequently land had to be acquired at Lower Hutt and Otahuhu, and modern shops constructed thereon. In carrying out works of this magnitude due consideration had to be given to the country's possible progress in the years to come. It was therefore decided to proceed with a bold and progressive construction policy that would meet the Department's needs for a considerable period. Simultaneously with this decision modern workshops methods were inaugurated. These have led to very marked improvement in the carrying-out of work. Equipment of the most modern design has been obtained for all shops, and every possible facility and convenience has been provided to secure the highest efficiency and economy in operation. Indeed, economies in the working of the new shops were expected, in the course of about ten or eleven years, to liquidate the whole of the additional capital expended. It is exceedingly gratifying for me to be able to say that this huge task is practically completed, and all four main shops will be in full swing early in the new year. The scheme represents one of the biggest reorganization works ever attempted in the Department. It entailed the transfer of some eight hundred men, and the way the staff have met the position clearly illustrates the co-ordination that exists in this branch of the service. Now that the new spacious shops are available for occupation, another very important phase of the general reorganization scheme can be proceeded with. I refer to the proposal to amalgamate or consolidate the whole of the Department's workshops operations. It is anticipated that the grouping of all these related activities will result in the saving of many thousands of pounds annually. The Department will now be equipped with shops that compare favourably with any existing in other countries. It will be able to carry out the whole of its own maintenance requirements, and at more economical rates. The construction of locomotives and rolling-stock will be made possible at costs that will compare favourably with imported prices, and this will enable the capital to be kept within the Dominion. Up to the present £4,900,000 has been expended on the workshops re-organization and the programme of works as outlined in my D.-2a report of 1924. Finance and Accounts. Under my administration a complete survey of the railway financial position was made in order to determine — (1) The total capital investment, including cost of raising and discounts on loans : (2) The actual amount of the annual interest burden : (3) The annual cost, including provision for depreciation and adequate financial reserves, floating capital, superannuation subsidies, and all other charges arising out of railway operation : (4) The annual revenue, including reasonable allowance for services rendered free of charge or at less than cost: (5) The additional revenue required to place the finances on a sound basis, and the best methods of obtaining such reveurie : (6) The possibilities of reducing costs. Investigation proved that if the railways were to meet interest charges at the actual rates (which were found to-be £5 3s. 9d. per cent, on Railway Improvement Account loans and £4 2s. 6d. per cent, on Public Works Fund loans), pay the annual subsidy to the Superannuation Fund, and make adequate provision for depreciation and general reserves, an additional net revenue of £700,000 per annum was required. A complete revision of the railway tariff was made, and it was found that, without casting any undue burden on industry and production, an estimated additional annual revenue of £300,000 could be obtained. The possibilities of obtaining additional revenue from new business were greatly restricted by motor competition, but the establishment of a Commercial Branch in 1924 ensured that every avenue of business would be actively explored. A separate financial organization, with an accounting system on commercial, lines, was set up as from the Ist April, 1925, since which date a separate Working Railways Account has been established. Systematic provision has been made for depreciation, with investment of surplus funds. The railway management has been made responsible for meeting all working-expenses and interest out of earnings, and has been given control (subject to parliamentary appropriation) of the railway reserve funds. The costing, statistical, and stores control methods have been completely modernized, and a system of budgetary control of finance instituted. After taking full account of the increased revenue that could be obtained by revision of the tarit and improved business methods, and the reductions in working-expenses that could be effected by soundei financing, judicious expenditure on improvements, and better operating methods, it became evident that the railway system could not be fully self-supporting. Judged purely on their revenue-earning capacity, and leaving out of account their economic value to the community and indirect contributions to the general revenue of the State, the railways of New Zealand are in much the same position as the railways of all other sparsely settled countries. More than one-third of the total mileage carries a volume

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of traffic sufficient to cover direct operating-expenses, but insufficient to cover the fixed charges for maintenance of the tracks and interest on capital, the latter item being resj>onsible for 75 per cent, of the loss. The railway accounts, as now published, give a complete statement of the position, showing the total capital investment, the capital liability and the sources from which the money was obtained, the total railway earnings, the total railway expenses including the provision made for depreciation, and the amount by which the railways are credited for developmental services, and the lines in respect of which the credit is allowed. Similar information is published in respect of all subsidiary undertakings controlled by the railway management. Complete statistical and cost data are also published, enabling comparisons to be made with the railways of other countries. In respect both of its published accounts and internal accounting and costing systems, I believe the New Zealand railways now compare favourably with any railway system in the world. Tariff. The question of railway rates and fares was one very intimately concerning the general reorganization of the service. In view of the financial position of the Department in 1924, it was clear that there was no margin for a general reduction in rates. An amended tariff was therefore framed without making' any material alteration to the class : fied rates and fares. It was, however, decided to remove anomalies wherever possible, to cancel concessions no longer required, and to make certain adjustments in rates where it was found that a more equitable distribution of the cost of transport was possible. No comprehensive revision of the tariff had been made since 1913, and, in order to cultivate a closer understanding between the Department and its clients, I arranged for'the proposed changes to be submitted to, and freely discused with, Chambers of Commerce and other interested bodies before submitting the proposals to Cabinet for final consideration. This policy had not been adopted on any previous occasion, and I am pleased to say it brought about a closer relationship and fuller appreciation from every viewpoint. Moreover, it enabled the many intricate questions to be amicably settled. To combat the severe road competition which has developed since the issue of the tariff in 1925, local rates have been provided (in areas where opposition services were making substantial inroads on the Department's revenue) in order to hold or regain the traffic to rail transport. Attention is now being devoted to effecting a greater degree of co-ordination between road and rail. This matter is dealt with more fully elsewhere in this report. Train Services. During my term as Minister of Railways the whole of the train services in the Dominion have been reorganized and many new features introduced. Among the many improvements the following may be touched on : —• Night Expresses. —Night limited expresses between Wellington and Auckland, with provision of sleeping-accommodation much in advance of the previous standard, were introduced. These proved such an unqualified success that a system of night expresses was introduced last June in the South Island. These night expresses have proved an inestimable boon to the business community. Acceleration of Passenger-trains.—With the object of improving communication with the main centres and making long-distance journeys more attractive, special attention was given to district trains connecting country districts with business centres. Where practicable to do so, " mixed " trains were replaced by " passenger " trains. Particular instances are : Wanganui - New Plymouth, Wanganui-Marton (to connect with the Auckland-Wellington expresses), Palmerston North - Napier, Rotorua-Auckland, Frankton-Auckland, Ashburton-Christchurch, Ashburton-Timaru, and Christ-church-Parnassus. In addition there was a general acceleration of express, mail, and mixed services. Night Express Goods-trains between the Main Centres.—Express goods trains between Wellington and Auckland, and between Christchurch-Dunedin and Invercargill, were provided, and the large measure of support afforded to these trains by the various business interests is an indication of their popularity. Accelerated Transit of Live-stock to Freezing-works, c6c.—Night stock-trains have been introduced in many areas to provide expeditious and cool transit for live-stock. Notable examples of these are the night stock-trains provided in the Wanganui - New Plymough and the Whangarei-Auckland districts. Increased Train Services for the Travelling Public. —Better service to the travelling public and improved operation* are indicated by the following figures : The train-miles run have increased from 8,300,000 in 1923 to 10,800,000 in 1928 ; in 1923 the operating-cost was 13s. 2s. per train-mile, whereas to-day the cost is only lis. Bd. per train-mile. Locomotive Operating Efficiency.—Locomotive operating methods have been thoroughly overhauled with satisfactory results. The annual engine-mileage averaged 22,294 per engine for the last financial year, as compared with 20,528 in 1926. Train-control.—A higher degree of operating efficiency has been obtained by introducing traincontrol methods in the congested areas in New Zealand, covering 300 miles art present, and with a further extension in view in the near future. The economic and operating benefits obtained have fully justified the innovation. Statistical Information. —A statistical system covering a very wide field, and reflecting at a glance the position of practically every phase of the Department's operations, has been developed, thus enabling the administrative officers of the Department to keep in close touch with the various activities and to detect immediately the necessity for the application of remedial measures.

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Increased and Improved Rolling-stock provided.—ln pursuance of my general policy, there has been a steady advance during the last five years in the provision of rolling-stock to meet the requirements of farmers and the business community. The supply of sheep and cattle trucks was largely augmented to overcome the delays previously experienced in handling freezing-stock. An extensive building programme is now in hand. Carriages. The improvement of the passenger rolling-stock was part of my programme for securing better service for the public. The steam heating of important trains has been pushed ahead, and this service on the main express trains in both Islands has been completed. Electric lighting of carriages is being extended. A new design of a day car for use on the principal expresses is now under way. It will be an up-to-date vehicle, with every modern facility for the travelling public. New type sleeping-cars have been introduced, and improvements made in the older type in service. These added facilities are mentioned to indicate that during the period of my administration the Department has been keeping pace with this side of modern developments in the transport world. Electrification. The question of the electrification of suburban areas of line in New Zealand has received consideration, and a comprehensive report 011 this matter is included in my Statement for 1926. The estimate for the electrification of the Christchurch-Lyttelton Section, in accordance with the approved plan, is £193,440. lam pleased to state that the electric service will be running on this section by the end of January, 1929, thus removing a long-standing discomfort to the travelling public on this important line. All the indications are that the expenditure will be well within the estimate. A comprehensive investigation is now in hand for the electrification of the Wellington and Auckland suburban areas, and, in view of the provision of new terminal stations at these two centres, I am satisfied that serious consideration must be given to the proposals submitted by the experts. Locomotive Power. In order to make the best use of locomotive power the whole field has been surveyed, and certain changes introduced. Three " Garratt " locomotives are being imported from England, and when these engines arrive a material reduction will be made in the number of engines required over the heavy grades between Taihape and Te Kuiti. A new type of shunting-engine is being designed to meet the varied requirements of shunting-work at important termini. Obsolete locomotives are being scrapped, and every effort is being made to bring our engine-power up to modern requirements. The efficient use of available locomotive power is receiving careful study by a special Committee, and decided improvements have been made in working which will result in further economies being effected. Use of New Zealand Coal on the Railways. The coal requirements of the railways approximate 400,000 tons annually. In the post-war period the Department was subjected to a considerable degree of criticism because of the large importations of bituminous coal from Newcastle, and it was contended that New Zealand should be self-supporting so far as coal was concerned, and that preference should be given to the local product. The uncertainty of the local supplies was responsible to a large degree for the increased importations necessary in the period referred to. As the result of comprehensive investigation by a Board of inquiry which I set up in 1925, it was found that, in general, the types of New Zealand coals the use of which was advocated were not by themselves suitable for present-day conditions, but that various mixtures of New Zealand coals could be obtained which would satisfactorily meet requirements. It was also obvious that the utilization of New Zealand coal in place of the imported article would result in a general improvement of the labour and financial situation within the Dominion. This was the objective of the Government, provided it could be obtained without a loss on the operation of the railways. I am pleased to be able to state that now as large a proportion of New Zealand coal as is warranted by the general economies of the fuel situation is being used. The following figures supply convincing proof that the Government has succeeded in its efforts to make New Zealand coal the principal fuel used on the New Zealand Railways : —

. I ■ ■ - I ! Percentage of Year. | New Zealand. Imported. ! Total. I New Zealand coal to Total. L_ _1 1 Tons. Tons. Tons. 1924-25 .. .. 94,351 313,107 407,458 23 1925-26 .. .. 85,393 278,076 ' 363,469 23 1926-27 .. .. 187,793 193,161 380,954 49 1927-28 .. .. 288,646 152,025 440,671 65-5

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It will be seen from these figures that the percentage of New Zealand coal used by the railways rose from 23 in 1924-25 to 65-5 during the last year. Inquiry regarding the scientific treatment of coal and lignite is being prosecuted by the Railway Department, in conjunction with the Mines Department and the Department of Scientific and Industrial Research, with the object of securing the best national use of these natural resources. COMMERCIAL BRANCH. I am pleased to record that the results obtained by this Branch have been of material assistance not only to the railways, but also to its clients. The commercial representatives have maintained close touch with outside organizations such as Chambers of Commerce, Farmers' Unions, industrial associations, local bodies, &c., and much good has resulted from this new means of contact. Commercial Branch work was arranged to cover a wide area, embracing every phase of commercial life having any connection with the railways. Among the principal improvements introduced have been the following : — Through booking of passengers, goods, and parcels by rail and sea between the North and South Islands. Extension of facilities for the cartage of goods to and from the rail. Clearing of goods through Customs. Farmers' trains introduced. Tourist traffic promoted by through-booking arrangements by road and rail to tourist resorts. Business development: The activities of this branch have resulted in the securing of much, additional traffic to rail transport, and, in areas where competition is acute, the staff have kept closely in touch with the position. lam pleased to record the manner in which the members of the Railway Service have co-operated in this matter. It is indeed pleasing to note the efforts which have been made to secure all possible traffic. Passenger-agents : Passenger-agents were appointed in the main centres ,and as a result of their activities numerous large excursions and special week-end trips have been run. Picnic traffic has also been extensively canvassed for by these agents, and the results have been very satisfactory. In addition, the Passenger-agents board all inter-colonial and overseas vessels on arrival and assist passengers in their travel arrangements. I arranged for the mail-agents on the Vancouver and San Francisco steamers to act as agents for the Railway Department on these boats. The services provided in this direction have been much appreciated by visitors to the Dominion. Altogether this branch has proved an essential and valuable adjunct to the railways in carrying out my policy of supplying constantly improving service to the public. Stokes Branch. The reorganization of the Stores Branch was commenced in 1925, and the organization has been brought into line with modern ideas. The system now in force will safeguard against leakages or waste, and will ensure that while there shall always be sufficient stores available, there shall be no surplus. All material manufactured by locomotive workshops for stock or for use outside the workshops, and all coal-supplies, have been brought under the stores system, the object being to bring about a better utilization of the purchasing-power of the Department and a more concentrated degree of control over stocks. When the new workshops are complete the stores system now adopted will be found of considerable value in the efficient working of the organization. The internal accounting system of the Stores Branch has been completely remodelled in conformity with the general reorganization. The passing of all purchases through the stores section is in line with the modern principle of specialization of industry. The bringing of the custody of the stores under one concentrated control has made for the elimination of waste, the maintenance of stores, the higher quality of stores, and, more particularly, the avoidance of overstock. The stores reorganization was important in view of the value of the purchases made by the Department each year, approximating £3,000,000. Railway Publicity Department established. Among the features most impressed upon my mind in the course of my visit to the Imperial Conference was the great use made of modern publicity methods to attract business to the principal railways of the world. Prior to this (in 1926) I had arranged for the publication of the New Zealand Railways Magazine, a comprehensive illustrated monthly paper dealing with all phases of railway development, and circulated to the extent of over twenty thousand copies monthly amongst the staff and the public. The usefulness and good effect of this magazine has been fully recognized in all directions, and has done much to educate both the staff and the public in the business of railroading. It has, in particular, helped to bring about amongst the stall' a fuller appreciation of the value of good service in attracting and holding traffic. The very heavy competition that has developed in recent years has also brought out in vivid relief the necessity for the establishment of a distinct branch in the railways to handle publicity. In consequence, in October of last year an organization of this kind was established. It was arranged that the Publicity Branch should have at its call trained publicity experts and journalists as occasion required. I also recognized the high standard of art work set by the Railway Advertising Branch, and it was arranged that the organization of this branch should be used as required to assist in the development of New Zealand railway publicity along the best lines.

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The action above outlined in connection with the Publicity Branch is in accordance with the policy I laid down of bringing modern commercial methods to bear on the work of the Department wherever the same could be applied with advantage. Our experience since the inauguration of that branch leaves no room for doubt regarding the wisdom of its establishment, and leaves me with a E eeling of satisfaction with the practical application of my policy in that connection. Personnel Administration. During my term as Minister many improvements have been made in wages and in the conditions under which the railway employees work, of which the following is a brief summary : — Concessions granted to Staff, First Division.—These include improvements in working-hours, holiday rates, and classification of positions. Concessions granted to Staff, Second Division. —Increased pay to locomotive running staff ; extension of children's privilege-ticket system ; penal overtime rates ; improved working-conditions for the shunting staff throughout the service and also in regard to the layout, drainage, and lighting of shuntingyards ; fractional adjustments in rates of pay ; increases and improved pay allowances to various groups of employees ; retiring-leave to casuals ; grant to widows under certain conditions ; and subsidy to the new Railway Sick Benefit Society. Suggestions and Inventions Committee. In order to encourage the staff to take an active interest in the Department's operations, and with the object of securing the greatest efficiency by the co-operation of the employees in the various branches, a Suggestions and Inventions Committee was set up, and suggestions invited in connection with any section of the Department's operations. Since the inception of the committee, oh the 15th June, 1925, up to the 22nd November, 1928, there have been received a total of 4,484 suggestions and inventions for consideration. Of these, 373 were recommended for adoption, 16 are on trial, 126 are still under consideration, and 3,969 were not adopted. This committee was set up as a means whereby the public and members of the staff might impart their ideas for the good of the railway service, and the foregoing figures show that it has developed along sound lines. Staff Discipline. A new system of staff discipline was instituted in October, 1926, the essential features being the abolition of monetary fines for irregularities, misconduct, &c., and providing for a system of merit and demerit marks in which a member would, in cases of disciplinary measures for misconduct, have placed against his delinquency the record of his previous meritorious conduct. It is considered the new system is more equitable in its operation than that adopted in the past. Staff Education. This has progressed under my administration by the establishment of a central correspondence school, opened in Wellington, in 1926. To indicate the extent to which this expert training in railway work is availed of, I may mention that the enrolments to date number 2,579, including 678 members of Division 11. Already 1,405 members have sat for the various examinations. Cadets' Hostel. . A splendid private residence in Fitzherbert Terrace was purchased in February, 1926, for the purpose of accommodating cadets appointed to the training-school in Wellington. The charge for board is kept as low as possible, being based on actual cost (including interest on the invested capital). Results have proved very satisfactory, and parents have expressed their appreciation of the action of the Department in the provision of accommodation for, and supervision of, their sons whilst away from home. Sick Benefit Society. A progressive development in the interests of the staff has been the formation of a sick benefit society to include all members of the Second Division. The complete scheme will shortly be in working - order. The fund will be administered by members of the staff nominated by the staff societies, and with these nominees will be associated representative officers of the Department. It will be supported by contributions from employees subsidized by the Department. The action of the Government in this connection is, I believe, along the lines of the best modern industrial thought, and marks the first practical application on a large scale in New Zealand of a principle of industrial life that has come to be recognized as entirely sound. I think the lead given by the Government in regard to the railway industry is fraught with great possibilities for the Dominion, and will have a definite and beneficial effect on the country's future industrial life. Road Motor Competition. No statement on the railway position would be complete without reference to the question of road motor competition. This is a matter to which throughout my administration I have given most anxious consideration. The railways have, so far as the position lay with themselves alone, already done much to meet the situation, but for them to have to adjust their business to meet uneconomic conditions would mean building their business along uneconomic lines.

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It has always appealed to me tliat all too many of our people have been satisfied to conclude that the present state of the railway industry has been due wholly and solely to some defect in the railways. T cannot help but feel surprised that one fact (which seems obvious on a reasonably close examination of the situation) has not been more fully recognized—namely, that the introduction of the road motor into transport, and development to such a large extent on an uneconomic basis, has been at the bottom of a part of the trouble. Just as obvious is it that the motor has come in as a valuable addition to the transport facilities of the country, and I feel that if anything can be done along the lines of bringing each method of transport into its true economic sphere something will have been accomplished for the country. Thinking along these lines, it was my intention—as I announced in the course of the recent election campaign—to have called a conference of representatives of the various transport interests. I think this is the method likely to be most fruitful in arriving at a solution of our present transport difficulty. The magnitude of that difficulty and its potentiality for further growth if the situation is not soon faced must give very grave cause for thought to any one that has the welfare of our Dominion at heart. In some other countries action has already been taken by legislative regulation of transport services in order to eliminate waste and secure the efficiency that can only be obtained from a thoroughgoing co-operation and co-ordination. Whether that is the best way of achieving that end in this country is a matter on which there might be some difference of opinion, but I certainly think that the first step towards a solution is to get rid of the feeling of antagonism among the various transport interests, and bring together in friendly discussion those who, by actually working in the industry, have learned to know most about its difficulties. The whole question is one essentially calling for calm consideration unaffected by motives of prejudice or interest. The early stages of such a radical change as was effected by the rapid development of road transport were certainly not conducive to such a frame of mind. I have for some years past made mention of my desire to work towards a position where we could have free, frank, and .helpful discussion at such a conference as I propose, and I feel that the realization which most thoughtful people in the country are coming to of the necessity for something definite being done to solve our transport problem makes the time ripe for a definite step along the lines 1 have indicated. Conclusion. I claim that the foregoing summary shows my administration of the Railways Department to have been along sound lines, making for progress in quality of service, efficiency in action, and economy in operation. As regards the staff, I have endeavoured —with, I think, success —to treat them fairly and, as opportunity offered, to improve their lot not only in the matter of remuneration, but also as regards their conditions of work and the facilities that make for their comfort a,nd safety. As far as the public is concerned, I have aimed to give a standard of service that would be to their satisfaction, while avoiding unnecessary expenditure. The advantages of many of the proposals that I have adopted will not be fully felt for some time, but I am confident that when they come to a full measure of fruition it will be found that there is not one of the works authorized during my regime that was not amply justified or that any wise administration could have avoided. J. G. Coates.

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