T).—2.

ANNUAL REPORT OP THE GENERAL MANAGER OF THE NEW ZEALAND GOVERNMENT RAILWAYS.

New Zealand Government Railways Department, Head Office, Wellington, 31st July, 1939. The Hon. the Minister op Railways. Sib, — I have the honour to submit my report on the working of the New Zealand Railways for the financial year ended 31st March, 1939.

WORKING RESULT (Whole Undertaking).

The net revenue for the year amounted to £701,063, compared with £632,797 last year, an increase of £68,266 (10-79 per cent.). Revenue. —The gross revenue reached a new high level of £9,345,387, eclipsing the previous record figure established last year by no less a sum than £711,201 (8-24 per cent.) and maintaining the progressive gain in earnings which has been so marked a feature of railway working since 1935. As from 11th December, 1938, a general 10-per-cent. increase in passenger-fares and freight rates was imposed in order to offset rising wages and other costs, and the revenue during the last four periods of the financial year benefited as a result. No allowance was made in the Budget estimate shown above for an increase in rates and fares, the additional revenue from this source amounting to approximately £220,000. Expenditure.—The expenditure for the year amounted to £8,644,324, an increase of £642,935, or 8-04 per cent., when compared with the year 1937-38. Of the increase, wages-costs accounted for £352,625, of which sum £160,000 represents the cost of concessions granted to the staff, while the remainder, £192,625, is due to the increased wages-cost of handling increased traffic, expansion of subsidiary services, and additional maintenance expenditure. No major alteration to wage rates was made during the year. Other items of increased expenditure were —coal, £42,977 ; other materials, £153,356 ; increase in subsidiary service expenditure due to expansion of facilities (other than wages and material), £70,473 ; and miscellaneous expenditure, £23,504. Detailed comment on the variations in revenue and expenditure will be made later in this report under appropriate headings. CAPITAL ACCOUNT. On the 31st March, 1939, the capital invested in the lines open for traffic, including the steamers and plant on Lake Wakatipu and other subsidiary services, was £58,676,608. This represents an increase of £2,611,421 as compared with the previous year. The principal additions to capital during the year were on account of the following major works : — £ Improvements and additions to rolling-stock .. .. .. 1,330,077 Improvements to stations and miscellaneous works .. .. .. 29,474 Extensions and improvements to station yards .. .. .. 26,420 Additions to workshops buildings .. .. .. .. .. 98,015 Additions to workshops and locomotive depot machinery and plant .. 84,962 Construction, purchase, and improvements to dwellings .. .. 144,239 Stratford-Okahukura automatic and power signalling .. .. 25,315 Wellington new station and yard .. .. .. .. .. 64,630 Christchurch new station and yard .. .. .. .. 41,180 Purchase of road services .. .. .. .. .. 197,205 Papakura-Horotiu duplication .. .. .. .. .. 138,817 Plimmerton-Paekakariki duplication .. .. .. .. 25,535 Wellington-Paekakariki electrification .. .. .. .. 39,476 Turakina-Okoia deviation .. .. .. .. .. 119,396 Palmerston North deviation .. .. .. .. .. 36,922 St. Leonards - Sawyers Bay duplication .. .. .. .. 34,657 Miscellaneous grade easements .. .. .. .. .. 20,472 Elimination of level crossings .. .. .. .. .. 22,170 Road services, garages, and depots .. .. .. .. 76,348

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Budget Actual. Estimate, : Variation 1939 with 1938. 1939 " 1939. 1938. Per Cent. Revenue .. £9,211,605 £9,345,387 £8,634,186 +£711,201 8-24 Expenditure .. £8,706,207 £8,644,324 £8,001,389 +£642,935 8-04 Net revenue .. £505,398 £701,063 £632,797 + £68,266 10-79 Return on capital, per cent. 1-23 1*15 + 0-08 6-96 Interest charges £2,418,116 £2,335,808 + £82,607 3-54 Excess of interest charges (at 4J per .. £1,717,053 £1,703,011 + £14,042 0-82 cent.) over net revenue