D.—2.

In the current financial year my preliminary estimate is for a total net revenue of £1,250,000, and the figures for the first sixteen weeks exceed that preliminary estimate, which, of course, takes into account the general activity in the building and manufacturing industries and the increased passenger traffic anticipated from the Dominion's Centennial Exhibition and Celebrations. AttemptsJ|are sometimes made,||by critics of railway-administration to discount the real improvement in the railway position by separating the " operating " from the "total" revenue. But in a business which obtains over £1,300,000, or nearly 15 per cent, of its total earnings, under the heading of " subsidiary services and miscellaneous," such separation of figures (some of which are kept purely for internal accounting purposes) is useless as a means of judging the real position of the Department —particularly as the proportion of revenue earned by our subsidiary services is likely to grow larger with further development of national resources and the Government's related transport policy. The amount mentioned is practically double that earned under this heading in 1933, and is £500,000 more than the 1930 figure. TRACK IMPROVEMENTS AND ADDITIONS. The railway policy at present being pursued is based on the belief expressed in my 1937 Railways Statement that if the railways were to give a modern service capable of retaining and increasing traffic on a quality basis improvement of the lines to carry the traffic was a first necessity. The use of heavier locomotives, the running of faster and more frequent trains, and the provision of smoother and more comfortable travel are all dependent on line-improvements, including stronger bridges, easier grades, more generous curves, more duplications, and a larger number of extended crossing places to meet the increased density of the traffic. The Government's policy has been to encourage the prosecution of this work, and the following brief summary of the principal line improvements during the past year throughout the Dominion indicates how actively that policy is being implemented:— North of Auckland. North of Auckland extensive grade easements and deviations are being carried out on various portions of the main line between Newmarket and Waitakere in order to speed up traffic and to permit of the haulage of heavier loads between Newmarket and Helensville. North Island Main Trunk. The main line between Huntly and Ngaruawahia was duplicated, and work is in hand on the remaining portion of line between Auckland and Frankton Junction not yet duplicated—i.e., between Papakura and Huntly. North of Napier. The track damaged by floods north of Napier has been restored, and the Department has taken over the Napier-Waikokopu portion of the Napier-Gisborne railway. Wanganui District and Southward to Wellington. In the Wanganui district the Greatford deviation and grade easement was recently completed and opened for traffic. The Palmerston North duplication and deviation and the grade easement and deviation from Turakina to Okoia are being pushed ahead. In the Wellington district the main line is being duplicated from Plimmerton to Paekakariki, except for a short section in the vicinity of the tunnels. South Island Improvements. On the Picton Section the track is being relaid in heavier rails, curve easements are being carried out, and several bridges are being reconstructed in order to carry the heavier engines which will be required on the completion of the ChristchurchPicton Main Trunk railway. At Christchurch the first stages of the reorganization of the station-yard to permit of the erection of a new station building are in hand. The car and wagon

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