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the District Divisional Superintendent on matters relating to the maintenance of proper standards as laid down by the Chief Engineer. With respect to the maintenance of track, the average number of miles maintained per man is, in the North Island 1-83, and in the South Island 2-13. On the branch lines the proportion is somewhat greater. Some saving lias been made in maintaining branch lines and by the use of motor-trollies. A further saving of probably £20,000 per annum could be made if branch-line passenger services are curtailed, speeds reduced, and gangs furnished with motor-trollies. Since 1925, £250,000 per annum has been charged against maintenance renewals, the amount being based on the life of the rails. It is estimated that an average of 100 miles of track should be relaid each year, so that if less than 100 miles is laid the full contribution is made to the Renewal Fund. Last year miles of track were re-layed with 70 lb. rails, as compared with 36 j miles for ]929. In the case of bridges, a contribution of £10,000 per annum is made to a Bridge Renewal Fund, but this amount has been found to be insufficient for the required purpose. The cost per mile for maintenance of way and works and buildings was last year £347 per mile, compared with £340 and £359 per mile for the two previous years, the average cost for the past five years being £350 per mile. The Chief Engineer stated in evidence that the number of casual men employed during the past two years would have been reduced had it not been for the unemployed difficulty which existed. We are of opinion that all casual labour should be employed and dispensed with in accordance with the requirements of the works on which they are employed, and by the officer in charge of such work. Your Commission is of opinion that if the present standard of maintenance (which we consider necessary for the safe running of trains at the present scheduled speeds) is maintained, the cost of maintenance on main lines cannot be materially reduced. Some reduction in expenditure can be made on branch lines where our recommendation for the elimination of passenger traffic is given effect to, but in neither case should the standard of maintenance be reduced below a proper margin of safety. When the works now in hand on Additions to Open Lines and Railway Improvement Authorization Programmes are completed a considerable reduction in staff should be possible. With respect to the cost of maintaining signals, for the year ended 31st March, 1930, this amounted to £117,576, which was at the rate of £35-64 per mile ; there has been a gradual increase in the annual expenditure brought about by the equipment of greater mileage. The cost of materials increased by nearly £4,500, while oversight and inspection increased by £1,787. The amount paid for wages was slightly lower in 1930 than in 1929, but greater than in 1928. Casual labour is employed for new works where needed, but is dispensed with when the work is completed. The Branch appears to be well organized, and, apart from the cost of oversight and inspection, there does not appear to be any probability of any great saving being made in expenditure, but some economy can be effected by the abolition and consolidation of the positions of some of the members of the staff. (10) What reserve fund should be set aside from revenue each year to cover depreciation and renewals, including deferred maintenance and/or depreciation and/or renewals, if any, or by way of general reserve. The General Balance-sheet of the Department as at the 31st March, 1930, shows that the accumulated loss from the Ist April, 1925, to the 31st March, 1930. amounted to £2,042,0.17 and sets out the following liabilities : — £ £ Sundry creditors .. .. .. . . 344,528 Advance from Consolidated Fund .. .. 150,000 Collections for refund . . . . . . . . 19,951 Sick Benefit Fund .. .. .. .. 5,794 Items to be written off .. . . . . 5,087 525,360 Liability to capital for depreciation and renewals from Ist April, 1925, to 31st March, 1930, only . . 1,687,562 Total liabilities .. .. .. .. £2,212,922