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The New Zealand Railways Magazine, Volume 4, Issue 11 (June 1, 1930)

Ultimate Cost Of Transport

Ultimate Cost Of Transport.

The transport costs to the community were not necessarily what any individual might pay, but what it cost to produce the transport, because that sum total of costs had to be paid in some way. It was only a matter of distribution. It might be paid by the users or the taxpayer. The cost in respect to one commodity might be apparently paid for by the charge on another commodity, but the point he was making was this: that the sum total that had to be paid, whether by way of railway charges or otherwise, was measured by the cost of producing the transport.

“Last year the railway management would have squared the railway accounts, including developmental costs, at 2.86d. per ton mile average. Could any motor carrier produce transport by motor of the commodities of this country at that figure? The actual revenue came to 2.41d. per ton mile; the balance required was .45d.—less than ½d. per ton mile—to square the ledger.”—Mr. H. H. Sterling.

The Alternative.

He wished to deal with the alternative. It appealed to him, as he hoped it would appeal to his audience, that, if the railways were to be judged more and more from a commercial standpoint, if the people were to say they were not prepared to make up that deficit as taxpayers and the users of the railways should make it up, then obviously to the extent that the capacity of the Railways Department to give the low-rate goods the low rates was reduced by the higher-rate goods being taken away, inevitably the result must be that the lower-rated goods could not have the advantages they had hitherto enjoyed. That raised the important question as to whether a general increase of these rates was a desirable thing. He personally felt that, if it could be avoided, it ought to be avoided, and he himself had endeavoured to avoid it, more particularly when he observed that there were many people in the community requiring transport who, recognising the position, remained loyal to the railways and gave their business to the railways, the whole of it their high-rate as well as their low-rate goods.

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Consideration of Loyal Users.

Obviously in any action that might be taken in the direction of a general increase in the low-rate of goods they were going to put an impost on that man who had been loyal to the institution because of the fact that his neighbour had not been able to make such a detailed analysis of the position and had deserted the institution with his better - rate goods, while leaving the lower-rate goods to the Railways Department.

How could that inequity be fought? There seemed to be only one way in which to do it, and that was to say to the man who could not recognise the advantages that he or the community received in respect of the low rates: “If you are going to adopt some other form of transport, let that be your standard, but let us be consistent and make it the standard of transport throughout. You cannot have the benefit of the low rate on the low-rate commodities if you are prepared to go to some other form of transport with your high-rate commodities.” That seemed to be a perfectly fair and equitable position to take up, not only from the point of view of the railways, but from the point of view of the users of the railways.

That was the position the railways had reached. The capacity of the country to carry a deficiency on account of the railways was, as in other countries, limited. With a deficiency approaching £1,000,000 for a country with a population of 1 ½ million it was apparent that New Zealand was reaching the limit of its resources in that regard. It had to be recognised that there was a limit to the ability of the country to pay for those low rates through taxation. When all was said and done, it reduced itself to a question of the distribution of the transport costs.