THE NEED FOR CAUTION

Daily Telegraph (Napier), Volume 58, Issue 233, 2 November 1929, Page 4

THE NEED FOR CAUTION

A promisiag feature of ihe debate on the Public Works Statement was tbe plea for "caution" empbasised by several of tbe speakers. On tbe other hand, there was a weakness manifesled, a failure to recognise tbe great im.portance of tbe policy wbicb bas been spending money freely for tbe purpose — or at least with tbat result — of subsidising motor traffic to compete against tbe railways. At one time tbe largesfc item on tbe estimate was expenditnre on railways, but tbis is now practically equalled by Governmenb expenditure on roads. We do not think tbe country bas yet fully realised tbe seriousness of. the problem 'of railway losses. Tbese are alniost wbollv due to tbe South Island, whicli at present bas, roughly, three-fiftbs of all tbe lines to serve less tban two-fifths of the population. We have on previous occasions referred to the losses incurred in the Soutb Island over & period of many years, but at this -juncture repetition is called for. Tbe position is tbat while the North Island main lines and brancbes return a net revenue of £641.08 per mile of open line, the similar return for tbe Soufch Island is only £118.31. On a basis of the return per cent. on cost of construction, tbe contrast is equally startling. In tbe jSlorth Island tbis is £3.21, in the South Island it is only £0.91. Taking the two islands togetber the percentage of net revenue to cost of construction is on tbe down grade, tbis due to increasing losses in the Soutb Island. In 1926 tbat percentage for the two islands taken together was £4 6s lld. In 1927 it was £3 19s lOd, dropping to £3 3s 7d in 1928. In view of tbis it is quite clear tbat caution in regard to railway construction — and this applies specially to tbe , Soutb Island — is urgently called for. In connection with motor competition, tbe position is not easy to understand. We are told tbat private motor services are more or less run at a loss. We do not know tbe value of this, but we do know, on the strengtb of the Government's own figures, that the subsidiary motor services it runs are a source of loss. The loss is not heavy — for the year ending with March last it was slightly less than £300— but tbat there sbould be a loss at all ^ is curious in view of .tbe contention that it is motor competition which is causing tbe loss on the railways. As a matter of^fact, railway losses in the Soutb Island were a sore point years before motor competition became serious. There is, of course, no doubt that of later years those losses have somewbat inc?jeased, while in the North Island net revenue has slightly decreased, and presumably motor competition has had something to do with this in both instances. The truth appears to be, however, especiallv in view of tbe Government's losses on its own motor services, that motor competition has now reached its limit. This being as it may be, it is clear that in regard to new railway construction a cautious attitude is demanded, and it is good to note tbat Parliament tends to take" tbis view. In considering the position it is to be noted that the railways have neyer been regarded as a profit-making concern, but rather as a means of assisting to develop the country and to increase its productivity. For many years it was beld that if the railways as a whole returned a profit of 3 per cent. this was to be regarded as- satisfactory, and there is much to be said for this generalisation. tlnfortunately only the North Island portion of tbe svstem — a fraction more tban twofifths of tbe whole at present — reaches or exceeds the 3 per cent. level, while, with tbe exception of the Westp'ort line, the Soutb Island registers nothing but serious loss.

The need for caution in regard to new railways finds support in tbe possibilifies of competition by air transport. At present this is negligible, except as to passangers, and even here may be for a long period disregarded, but there are possihilities wbicb have to be taken into account. Unfortunately the transport problem, insofar as it includes proposals for further railway construction, is eomplicated by the unemployment difficultv. Some of the speakers in the debate seemed to think that railway constrUction ought to be speeded up to provide work for the unemployed. As applving to actually needed lines — -that is, lines1 which if completed will not involve a loss upon working — tbe plea may stand,

but not otherwise. Mean while, at tbe risk of reiteration, the general position as regards railway losses mav he set out. Three-fifths of tbe open lines are run at a lmge loss, and tbe two-fifths of them to wbicb tbis does not apply return a net revenue of only £3.46 per cent.