D.—2.

XXXVIII

There are other aspects of the matter which also seem to be worthy of mention as being too often overlooked. In this connection it may be mentioned that tho service rendered by the railway is safe, speedy, and reliable, and available for use practically without intermission throughout the year. There is also, as has been so repeatedly emphasized, the aspect of false economy which enables the motorist to obtain the free use of the roads at the expense of the ratepayers. Turning to a consideration of the methods by which the position can be met, it is to be noted that the last-mentioned matter is one that is in no way within the Control of the Railway Department. In respect of charges and transport to and from the railway, however, the Department is in a better position. It may be possible —and the Department is now taking steps in that direction —to make suitable arrangements for transport of goods to and from the railway at a reasonable charge. So far as the position may be met by the lowering of the railway charges, definite proposals in this direction will be made in connection with the revision of the tariff, and this prompts some comment on a state of affairs that is becoming increasingly common. I refer to the practice of certain sections of the community who take advantage of free services afforded by the railway, such as the carriage of lime; for agricultural purposes, but who do not hesitate to send their more remunerative traffic by other forms of transport. The purpose for which free carriage of lime was granted was to increase the productivity of tho land, and it was assumed in justification of the concession that the resulting increased product would be carried by rail. The railways are required to pay a certain rate of interest on the capital invested in them, and in view of this circumstance free services such as the carriage of lime have to be paid, for by the higher-rated classes of traffic. If, therefore, the Department does not get this higher-rated traffic, it is deprived of the means of affording the free services, and the ultimate; result of the diversion of the paying traffic to the road must inevitably be the withdrawal of the unremunerativc services. Another aspect of the competition by road motors is that the road carriers transport only such classes of goods as suit themselves, and their services are not available, as the railways are, for the; carriage at all times of every class of goods that may be presented to them so long as the goods are; not of an objectionable nature. The effect is that the motorist confines himself to a comparatively small range of commodities which are capable of bearing a high rate, and it is interesting in this connection to compare the railways in New Zealand as a State institution with another State institution operating as a public utility—namely, the Post Office. As is well known, the' Post Office; has a statutory monopoly, and the grounds that justify the action of the Legislature in this connection are those stated by Bastable in his book on " Public Finance " as follows : — " The bestowal of a monopoly is justified on the double grounel that otherwise private agencies weiuld compete for the more profitable parts of the business, leaving the supply of sparsely peopled anel backward districts to the official Post Office, whilst the waste involved in rival establishments would hinder the reduction of rates below their actual level." That exactly states the position of the, railways in New Zealand to-day. The- motors are; competing for the more profitable business, leaving the, railways with that which is unprofitable, with the inevitable result, as stated in the quotation, that the financial position of the railways is adversely affected, and the Department is put in the position that it finds it difficult to reduce its charge;s. This is an aspect that is too often overlooked. People are too prone; to decide not to send their traffic by rail until the railway charges are reduced, quite failing to grasp the fact that the only way in which the Department can be placed in a position to reduce its charges is by receiving an adequate proportion of remunerative; traffic. Office Accomodation. The accommodation in the Head Office buileling has now become quite; inaelequate for requireme;nts, and the management is much hampered in connection with its proposals owing to the; lack of suitable rooms in which to establish the staff that it is desired to emgage on the various matters that arc contemplated. It has therefore become a matter of necessity that the; present building should be; cemsklerably enlarged. An important provision that should be made; at the earliest possible moment is a suitable lectureroom in which practical lessons in railway - working can be given by the use of suitable models. The complete modernizing of the railway plant necessitates that the staff should have a thorough practical as well as theoretical training in its working if the maximum degree of advantage is to be obtained from the various improvements. An essential part of this training is the giving of lectures by the expert officers, such lectures being supplemented and explained by reference to actual working of models. Another matter that cannot be developed owing to the lack of accommodation is the provision of a suitable library in which information on every aspect of railway-working can be suitably collected and collated in a form that will admit of easy reference. Apart from these aspects the position has become acute in connection with the accommodating of the growing staff that is necessary to cope with the increased activities of the Head Office and Branch management. At present every available room in the Heaei Office building is being made full use of, leaving no margin whatever for expansion, and I would therefore urge the necessity for making the provision of further accommodation a matter of urgency. General. The policy of rigid economy has been strictly pursued during the year, and in consequence the percentage of expenditure to revenue has been reduced below that of the previous year. It is fully realized that it is only by reducing expense to the greatest possible extent that the Department can be placed in a position where it can compete with other forms of transport and attract additional traffic