Manawatu Evening Standard. THUESDAY, DEC. 9, 1926. NATIONAL ACCOUNTANCY.

Manawatu Standard, Volume XLVII, Issue 10, 9 December 1926, Page 6

Manawatu Evening Standard. THUESDAY, DEC. 9, 1926. NATIONAL ACCOUNTANCY.

“Taxpayer’s” article dealing with the “Dominion’s account keeping,” contributed to the “Standard” on Saturday, reopens a question which has been discussed by his journal on several occasions—that of the separation of the trading accounts from those of the non-revenue producing departments, or as it mi'ght, perhaps, be better put, from the purely administrative departments charged with the direct government of the country. The complaint is that, in their present form, the accounts as presented in the budgetary statements and the other, financial papers placed before Parliament are “incomplete and confusing.” It must, however, be admitted that, of recent years, there has been a material improvement in the manner in which the accounts appear, as balance-sheets are now preesnted by every department, which more or less explicitly set forth the cost of such departments to the State. It is some years now since the “Standard” advocated the separation of the accounts of the railways and post and telegraphs from the administrative accounts, together with those of the trading and revenue producing departments, but it was only when Mr Coates took charge of the Eailways Department that the idea appears to have been seriously considered. Even then it would not seem to have been regarded as practical until it was recommended by the Fay Commission which investigated the position of the department. The separation of the railways accounts from the general financial statement took place at the end of the 1924-25 financial year, and, from the Ist of 1925, the department became responsible, as a business concern, for its own finances, its relations with the Treasury becoming strictly those of banker and 'client. For the first time’ this year the railways accounts have been presented to Parliament separately, and in such detail as to leave little room for complaint, if any. Whatever may be said of the accounts of other departments the railways, under the new system, cannot be accused of withholding any necessary information which would enable the public to gather just what the system' is costing the country. No less than fifteen pages of the Eailways Statement for 1926 are covered by balance-sheets and statements of accounts, beginning with a general balance-sheet and covering income and expenditure of the whole undertaking ; income and expenditure in respect of railway operation under eight different headings; income and

expenditure in respect of tlie Lake Wakatipu steamers; the refreshment services; the advertising service; the departmental dwellings and buildings occupied by refreshment service bookstall proprietors, etc., and the railway sawmills and bush accounts. Other accounts dealt with are covered by statements of the subsidy payable from the Consolidated Fund in respect of services rendered by non-payable developmental branch lines and isolated sections; cash receipts and payments —working railways account; renewals and equalisation funds (these covering slips, floods and accident equalisation fund; workers’ compensation fund; fire insurance fund; general renewals fund; and betterment fund); the expenditure on the construction of railways, rolling stock, etc., and the net revenue and rate of interest earned on capital expended on open lines; the expenditure under the vote for “additions to open lines,” charged to capital account, and under the Eailways Improvement Authorisation Act, etc. An examination of these accounts leaves very little to be desired in the way of further information; indeed it may be questioned whether as much is actually necessary to a correct understanding of the position the railways of the Dominion occupy to-day.

A BETTEE UNDEESTANDING NEEDED.

Om- no previous occasion has such a full and complete statement been forthcoming of the railway finances than is afforded in this 1926 statement, and it is therefore unfortunate that “Taxpayer,” in the article we published on Saturday, should have spoken of the Eailway Department as “one of the chief delinquents” among the “recalcitrant departments” failing to comply with the late Mr Massey’s demand for the preparation of proper accounts. We use the term “unfortunate” advisedly, because the citation of the department in this respect destroys, to a very large extent, the force of “Taxpayer’s” arguments in other directions, assuming they correctly represent the position he desires to see remedied. Under the new policy which the Board of Management has to carry out it is handicapped in many ways, and while it is giving the public greatly improved services and is honestly laying itself out to study the comfort and convenience of the users of the railways, it is required to pay a higher rate of interest on the capital expenditure on lines constructed by the Public Works Department, and a still higher rate of interest on moneys expended under the vote for "additions to open lines” and the Eailways Improvement Authorisation Act. It has also to finance its own superannuation fund, the subsidy tor which was previously found by the Government; to make provision for renewals, betterment and insurance funds, etc., and, apart from the payments it receives in respect of services rendered to other departments, it has to finance its own business, with the help of the subsidy paid to it for maintaining and operating the non-paying branch lines and isolated sections. Allowing for the feeder value of these branch lines, the net loss incurred in their working last year was £43,030 14s 7d, the interest charges which the department has to make good bringing the total loss up to £35.9,540 8s 6d, which was the amount of the subsidy paid over by the Government to the department last year. On the other hand it paid in interest £1,913,310 14s 9d more than the similar payment in 1924-25, and saved the Government the cost of the subsidy to the superannuation fund amounting to £145,000. These two items alone more than cover the amount of the Subsidy and leave £43,925 to the good. But the department is also able to show that its renewals and equalisation funds are in credit to the extent of £375,139 as per statement No. 12 in its statements of accounts, that being the total of the balances in the five accounts falling under that heading. Why, under these circumstances, it should be alleged, as certain critics of the department have done, that the board has failed to substantiate its claim that the railways paid their way during their first year of working under the new system and left a small balance to the good, we are unable to understand, nor can we sympathise with ’ ill-judged criticism which ignores such essential facts as we have dealt with.