NEW ZEALAND RAILWAYS.

Gisborne Times, Volume XXVI, Issue 2118, 18 February 1908, Page 2

NEW ZEALAND RAILWAYS.

THE PREMIER HEPLYS TO FINANCIAL CRITICISM.

Press Association. AUCKLAND

Iho Premier interviewed at Cambridge, made a further reply .to tho criticisms of the New Zealand railway finance. Ho said that Professor Lo Rossi god's assumption tbit there bus been u loss d £4,1180,1-1.7 on railways during the lust ten yuirs is entirely erroneous. it is manifestly wrong to include £8,122,-178 expenditure on additions to open lines in the capital cost of the lines, and to compute interest on that sum, and at tiie same time deduct -additions to open lines expenditure from the net profit of the working, having left Lhe amount in capital. It may fairly lie assumed that the -professor was satisfied .that the practice of including additions to open lines expenditure in capital was correct and sound in principle. Clearly, therefore, lie has erred in deducting £3,~ 122,178 from the neL earnings. The net loss showed by him must therefore be reduced by this £8,122,187, which lie has wrongly deducted. This leaves the difference of £1,257,099 required, according to tho professor’s showing, to bring tiie interest on the capital cost of the railways -up to 8.75 per cent., which he contends they should. The concessions given to the public in the matter of fares and freights amount to £850,000, and the value of increased -train services to £883,000. These concessions, representing money, the Government has returned to the users of the railway jointly total £1,733,000, or £475,000 in excess of tho amount that would have been required ta pay the 3J per cent, interest which the professor assumes to be the average rate paid for capital invested. This takes no account of concessions in pay given to the railway staff, which amounted to another £375,000. Professor L.c llossignol’s line of argument is that the railways should earn tho full amount of interest, and that tne value of lines as adjuncts to set clement should not he taken into consideration ; in fact, that the policy of being satisfied with t'ho net return of 3 per cent, from the railways and giving the people of tho Dominion as concessions in -fares and freights the surplus over 3 per cent, is wrong in principle, and that wliat should be done is to work the railways as mere revenue-earning machines. The net .profit on working -to which reference is nude is shown clearly in the railway statement No. 5, -being the difference -between -the revenue and expenditure, and which is available for interest purposes. The figures shown in the railway reports and copied into Professor Le Itossignol’s -table give the true results of the working railways, and show that in no instance have our railways given a return of less than 3 per cent., oven when the capital cost of unopened lines has been included. AVith regard to the question of what items, should or should not he charged to -additions to open lines, the practice followed by the Department is perfectly sound in principle, and is, moreover, in accord with the practice in operation in other States. It Ims been fully discussed at various times, and has received the concurrence o-f such men as Messrs. J. Matheson (-late Chief Commissioner of Victorian railways, and afterwards general manager of the -Alidland Railways, England), Charles Olliver (Chief Commissioner of New South Wales railways), David Kirlccaldie (of the same line), Pendleton (Chief Commissioner, South Australia), Shallon (Commissioner of and Jno. Davies (formerly general manager of AA'est Australian railways, and now holding a prominent position- on the Midland railways, England). The value of the concessions to the users of our railways was incalculable, even beyond the -total of the amount which had been conceded to them. It would be the easiest thing in tinworld to make -the State railways o! New Zealand to produce large dividends. There was no reason why 10 per cent, could not -be taken out. bu-t would it- be a -wise course to follow? Quite irrespectively of Professor Le Rossignolo’s opinion, the Dominion would for -at least main years go on utilising its railways as a great engine to help ’and promote tin general interest of the people, both in town and country.