The MINISTER OF DEFENCE, as Chairman, brought up the Report of the Select Committee on petitions of Simonstown Municipality and others.

Report and evidence to be printed, and considered on Wednesday.

Mr. SPEAKER announced that the Committee on Standing Rules and Orders had appointed the following members to serve on the Select Committees mentioned, viz.—

Amendment of Public Holidays Act: Messrs. Strachan, Krige, Du Toit, Rockey and the Rev. Mr. Fick.

Old Age and Invalidity Pensions: Dr. Stals, Messrs. D. M. Brown, Strachan, Blackwell, Barlow, Maj. Richards and Dr. Van der Merwe.

The MINISTER OF MINES AND INDUSTRIES laid upon the Table—

The CLERK read letters from the Secretary to the Prime Minister, dated the 9th April, 1925, reporting the election of the following members for the representation of the electoral divisions stated, viz.—

1. (1) Isaac Petrus van Heerden, Esq., for the Electoral Division of Graaff-Reinet in the room of Dr. Karl Bremer, resigned; and
2. (2) Petrus Charles de Villiers, Esq., for the Electoral Division of Klerksdorp in the room of Jacobus Stephanus Smit, Esq., resigned.

Leave was granted to the Minister of Railways and Harbours to introduce the Railways and Harbours Service Bill.

Bill brought up and read a first time; second reading on 20th April.

First, Order read. Adjourned debate on motion for House to go into Committee of Supply, to be resumed.

[Debate, adjourned yesterday, resumed.]

I will now briefly review the revised estimated expenditure for last year—

Railway Expenditure is now expected to total £22,627,781.

Harbour Expenditure is now expected to total £1,034,043.

Steamships Expenditure is now expected to total £214,393, making the revised Grand Total Expenditure £23,876,217, as compared with the original Grand Total of £23,908,128, or a saving of £31,911.

The Railway Expenditure of £22,627,781 represents an increase over the original estimate of £5,819.

The Harbour Expenditure of £1,034,043 represents a saving on the original estimate of £30,413.

The Steamships Expenditure of £214,393 represents a decrease on the original estimate of £7,317.

It has been shown how the revised estimated revenue exceeds the original estimate by £686,648, and also how the revised estimated expenditure, notwithstanding the additional traffic handled which is represented by that increase in the revenue, will be £31,911 less than originally was provided for.

The sum of this additional revenue and this saving in expenditure, makes the total of £718,559, and represents the amount by which the surplus of £212,148 originally forecasted will be exceeded, thus making the final surplus now expected £930,707.

Let me, without burdening the House with unnecessary details, direct attention to one or two important points connected with the Estimates submitted to you for the year 1925-’26.

Firstly, the Estimates of Expenditure; then the Revenue Estimates; and finally the difference between the estimated expenditure and revenue, that is, the net result anticipated for the year.

The expenditure on Railways, Harbours and Steamships for the year 1925-’26 has been estimated at £25,301,143, which, when compared with the estimate framed for 1924-’25 shows an increase of £1,393,015.

That comparison is between two sets of original estimates, viz., the original estimate framed for the financial year which has just closed on the 31st March, and the estimate prepared for the current financial year 1925-’26.

The House will prefer a comparison between the estimate for the ensuing financial year, and the revised estimate of expenditure for 1924-’25. This comparison has been customary, and will be of more assistance to hon. members in grasping the relative expenditure of the two years.

The estimated expenditure for 1925-’26 then is £25,301,143.

The actual expenditure for 1924-’25 is estimated to be £23,876,217, so that an increased expenditure is contemplated of £1,424,926, which is sub-divided as follows:—

Railways (increase) £1,299,688; Harbours (increase), £154,233; Steamships (reduction), £28,995; Total increase, £1,424,926.

Broadly, the basis taken for arriving at the 1925-’26 Estimate has been the approximate expenditure for 1924-’25, increased to provide for the additional tonnage it is expected we shall transport during 1925-’26 and the additional mileage of railways to be operated as a result of the opening of new lines.

The total expenditure, however, is inflated by the inclusion of certain items which are exceptional, and to which the special attention of hon. members is directed.

The estimates before the House show that provision has been made for:—

1. (1) A contribution towards the deficiency in the Pension Fund of £162,000. This is an increase of £78,300 compared with last year.
2. (2) A contribution towards the deficiency in the Superannuation Fund of 1912, £100,000. Nothing whatever has been contributed previously towards the deficiency in this Fund.
3. (3) A contribution of £250,000 towards the reduction of the Administration’s interest-bearing capital. This is an entirely new provision, as hon. members know.

These three items alone account for £428,300 of the increased expenditure, to which must be added the additional charges for Interest on Loan Capital, which amount to in respect of Railways, £351,228; in respect of Harbours, £86,592; total £437,820; less a saving in respect of Steamships of £4,135, or a net increase of £433,685.

If this additional £433,685 is added to the £428,300, the total of these special items amount to £861,985.

As we have made no provision this year for reducing the value of Stores Stock, the total of £861,985 which has just been mentioned should be reduced by £100,000, which was the provision made last year on that account in order to arrive at the net total of what will be called the extraordinary expenditure included in this year’s Estimates, which, therefore, amounts in the aggregate to £761,985.

If from the increase in expenditure already stated of £1,424,926 there is deducted the net total of what has been termed the extraordinary expenditure of £761,985, hon. members will see that a portion of the increase amounting to £662,941 still remains to be explained.

This is the full amount of the increase in ordinary expenditure which Parliament is asked to sanction, and is explained by the following: —(1) Maintenance of permanent way, £498,999; (2) increased traffic expenses, £45,257; (3) additional superannuation contributions, £49,597; (4) grain elevators, £59,726; (5) maintenance and upkeep of harbours, £42,159; (6) depreciation of harbours, £28,907; (7) other small increases, totalling £61,194; the total of these seven heads being £785,839; against which has been set savings under various heads totalling £122,898; making the net increase £662,941, which is the amount of the increased expenditure remaining to be explained.

Included in this net increase of £662,941 is provision for increments to the salaried and daily-paid staff to the extent of £208,000, the cost of working an additional 423 miles of new railways £50,000, and the cost of handling the additional tonnage to be conveyed which is estimated to involve approximately 3,000,000 additional train miles.

Turning for a moment to a consideration of the necessity for the larger increases in expenditure, as hon. members probably know, there are two pension funds in the administration.

We have, firstly, what is known as the Railway and Harbour Pension Fund, consisting of contributors to the pre-Union Cape and Natal Pension Funds, and we have the superannuation fund, constituted under the Railway and Harbour Service Act of 1912, and consisting mainly of contributors who have joined the service since Union.

In my subsequent remarks, I shall refer to the former as the pension fund and to the latter as the superannuation fund.

The financial responsibility for the pension fund rests, under the terms of Act 28 of 1912, as amended by section 5 of Act 33 of 1917, upon the administration, and, since the passing of that Act, the administration has contributed lump sums each year towards the deficiency in that fund, which in 1914 was £824,316 and in 1919 was £1,409,843.

Between the years 1910-’11 and 1919-’20, the total amount contributed towards extinguishing the deficiency was £396,960. The subsequent contributions have been:—1920-’21, £48,480; 1921-’22, £99,000; 1922-’23, £98,220; 1923-’24, £98,220; 1924-’25, £83,700; or a total since 1910-’11 of £824,580.

We have recently received the actuarial valuation of the fund as at 31st March, 1924, and it disclosed that the deficiency which at the 31st March, 1919, stood at £1,409,843 had, in the intervening five years, increased to £1,962,399, or by £552,556. To cope with this position, and without exaggerating it, hon. members will see that it is a serious position—we have increased the contribution of £83,700 made last year to £162,000; an increase of £78,300, which is in accordance with the provisions of the Acts mentioned which provides for the deficiency to be liquidated by 1942.

Now let me deal with the position of the Superannuation Fund. There is a fundamental difference between this fund and the Pension Fund so far as the Government’s legal financial responsibilities are concerned. Whereas we are liable for any deficiency in the Pension Fund, there is no such statutory liability at the moment upon the administration in regard to the Superannuation Fund.

What the administration’s liability is can, perhaps, best be explained by quoting the relative provision in the Service Act of 1912. Section 60 (2) provides—

So that the Government could either ignore the deficiency; or look to the members of the fund to meet it entirely or in part; or could itself shoulder the deficiency.

On a previous occasion, it was indicated to the House that the Government has decided that the responsibility for the deficiency in the fund shall be assumed entirely by the administration and at the moment, beyond saying that in the opinion of the Government no other decision equitably could be come to, if not proposed to enter into that aspect of the matter, as in the New Superannuation Bill, which it is hoped to introduce at an early date, the subject will be fully dealt with.

To-day, it is proposed only to review the financial responsibilities which this decision involves, and hon. members will agree that it is unfortunate that the grave financial position of this fund was not taken in hand and provided for earlier.

The actuarial valuation of the fund as at 31st March, 1919, disclosed a deficiency of £1,854,160. On the 31st March, 1924, the deficiency has increased to £1,944,600. To ensure that the actuarial results should be beyond question, my predecessor devided—and let me add wisely decided—that an independent actuary should be associated with the administration’s actuaries in the next actuarial valuation of the fund.

The reports received are characterised by entire unanimity, so that there can be no question as to the accuracy of the results arrived at, and which, as I have said, reveal a deficiency of nearly £2,000,000.

Having decided to assume entire financial responsibility for that deficiency, provision has been made in the estimates for a contribution of £100,000 as a first instalment towards extinguishing it, in anticipation of the legislative provision which will be contained in the new Bill.

From the figures placed before hon. members, it will be seen that the combined deficiency in the administration’s two pension funds is:—

Railway and Harbour Pension Fund, £1,962,399.

Superannuation Fund, £1,944,600.

Total, £3,906,999.

Towards the extinguishing of which we are this year going to contribute £262,000, or £107,000 more than at any time previously has been contributed in any one year and £178,300 in excess of last year’s contribution.

The next item which will be dealt with is the contribution of £250,000 towards reducing the interest-bearing capital of the administration.

In this case, also, it will be necessary during this session to bring forward a measure to legalize the position because, as hon. members know, the Act of Union provides that the total earnings of the administration shall not be more than are sufficient to meet the necessary outlays for working, maintenance, betterment, depreciation and the payment of interest on capital.

The only reserve funds therein contemplated were the Rates Equalization Fund, the Renewals of Depreciation Fund and the Betterment Fund. The first makes provision for maintaining uniformity of rates by making good losses in working on any one year through granting reduction of rates. The second provides for the replacement of wasting assets, and the last for the improvement or extension of existing assets.

Neither of these funds, however, enables any provision to be made for reducing the total interest-bearing capital of the administration, the growth of which is a matter for serious consideration.

In consequence of this, the Government has decided that something—however modest it may be at the outset—shall be contributed out of the administration’s revenue towards reducing the interest-bearing capital.

There is nothing particularly unique in this. Sinking funds form an integral part in the economy of many transportation businesses and, although it is not, at any rate at this stage, proposed to establish a sinking fund, the course to be followed of utilizing these contributions in reduction of the amount of loan money which otherwise would require to be raised, will achieve the same object, and will enable the administration to employ the contributions to greater advantage than by crediting the moneys to a sinking fund.

These contributions will, of course, figure in the administration’s capital account under the head of non-interest-bearing capital, and will reflect for all time what has been done to prevent the Railways and Harbours from becoming overburdened with capital debt and interest thereon.

It will be convenient if the general question of the capital account and interest charges is now dealt with.

The total capital expenditure on open lines (railways) at the 31st December, 1924, was £117,143,734. The total capital expenditure on harbours and lighthouses at the 31st December, 1924, was £13,003,432.

The combined railway and harbour capital expenditure at the 31st December, 1924, therefore, was £130,147,166, an increase as compared with the 31st December, 1923, of: Railways, £5,833,362; harbours, £588,479; total increase of £6,421,841.

It is interesting to note that of the gross capital expenditure of £130,147,166, the amount on which no interest is paid by the administration by reason of the moneys having been contributed out of revenue, is £8,134,706, leaving the actual debt so far as the administration’s liability to the public debt is concerned at £122,012,460.

The interest charges on the administration’s loan capital involves the payment of £4,495,835 on the railway portion of the debt, and £465,845 on the harbour portion of the debt; or, in all, £4,961,680, which is £433,685 more than had to be provided last year.

The magnitude of this standing charge, which requires £13,594 daily, demands very careful consideration.

Fifteen years ago, at the time of Union, the capital invested in the railways and harbours which now comprise the administration was £87,263,366.

This sum included £75,863,842 in respect of the 7,041 miles of railway and its equipment which existed at Union, equal to £10,775 per mile.

To-day the railway capital is £117,143,734, represented by 11,533 miles of railway and its equipment, or £10,157 per mile, so that, on a purely mileage basis and notwithstanding that much of the railway extension since Union has been carried on during a period of exceptionally high costs, the capital cost per mile is nearly £600 less than at the time of Union.

But this is not all. Improvements have been effected since Union in relaying, strengthening, reducing gradients, eliminating curvature, installing up-to-date signal arrangements, and so forth.

At the end of 1911 there were 1,393 engines in service with average tractive force of 20,673 lbs.; at the 31st March, 1924, there were 1,796 engines in service with average tractive force of 25,625 lbs.; and whereas at Union the total value of the administration’s locomotives was under five million pounds, to-day the value is over twelve million pounds.

Let me carry the comparison a little further. The value of the coaching stock and dining cars at Union was under 2¼ million pounds, while to-day the value of our coaching stock is nearly eight million pounds.

So also in the case of our goods stock, of which at Union we had nearly six million pounds’ worth, to-day we possess stock which has cost more than double that sum and which is of greatly improved types.

In the year 1910 we conveyed 12,414,839 tons of goods and minerals and 33,700,849 passengers. During the year 1923-’24 we conveyed 22,664,421 tons of goods and minerals and 65,811,610 passengers, an increase of 83 per cent. and 96 per cent. respectively.

All this greatly increased traffic was moved more expeditiously, and, so far as the passengers are concerned, also with greater safety and comfort than was experienced 15 years ago.

The completion of the new graving dock at Durban has necessitated provision being made in the Harbour Estimates of Expenditure for the cost of working the dock and for interest and depreciation charges on its capital cost.

All hon. members should have in their possession a copy of the brochure which was prepared and distributed for the purpose of disseminating information regarding this great work, which has cost the Union £1,300,000 to construct and equip—a cost below what originally was estimated would be the final cost of the work.

The opening of this dock—and the official opening we hope will be made by his Royal Highness the Prince of Wales during his forthcoming visit to us—will involve an annual charge of £76,134 for its working, maintenance and for interest and depreciation charges.

The earnings of this dock are not likely—at least for many years to come—to amount to more than a small proportion of the annual cost which its working, maintenance, etc., will involve. That was not, and is not, expected. The construction of this dock and its maintenance constitutes evidence of the recognition by the Union of its responsibilities as a self-governing nation.

This dock ranks second to none in the world in point of length and depth so far as graving docks for purely mercantile shipping purposes are concerned. It is 1,150 feet in length; its breadth at entrance is 110 feet; and the depth at sill at high water ordinary spring tide is 41 feet.

In so far as the estimated expenditure for 1925-’26 is concerned, what has been termed the extraordinary items of increases which account for £761,985 has so far been dealt with.

It has been indicated that the balance of the increase is accounted for by the increase of 423 miles of new lines to be operated and the additional 3,000,000 train and engine miles to be run.

The effects of the provision made for the opening of the 423 miles of new lines and the additional train miles is reflected in most of the working heads of the Estimates in the hands of hon. members, and, where such is not the entire explanation for the increase, as in the case of the maintenance of Permanent Way (head 2), and maintenance of Rolling Stock (head 3) and Running Expenses (head 4), the additional expenditure is due to the fact that works which in the interests of economy have in past years been left in abeyance, must now be carried out and paid for—there being a limit to which economy can wisely be exercised where the interests and welfare of the users of the railways are concerned. My hon. predecessor will acknowledge this.

There still remain several matters to which more than passing reference must be made.

Hon. members will see that provision has been made for a contribution to the renewals fund of £1,500,000, which corresponds with the amount set aside for that purpose last year.

It will be recalled that last year, when introducing the Main Estimates, it was explained that the basis which my predecessor had adopted of basing the contribution to the renewals fund upon 7 per cent. of the revenue had been dropped because such a basis bore no true relationship to the depreciation which occurred—rather might such depreciation be in the inverse ratio to the earnings—and it was submitted that, pending finality in regard to this vexed question, the amount contributed out of revenue to this fund should be the amount which, in the opinion of the administration’s officers, was reasonably adequate.

I am assured that in setting aside £1,500,000 we err—if we err at all—on the side of safety.

It had been hoped, as intimated last year, to have been possible to lay before hon. members to-day definite proposals for establishing a final and lasting basis for determining the amount to be provided annually to cover the depreciation of railway assets.

The subject bristles with difficulties. The incidence of expenditure to provide for which the fund was created is not regular, nor is it yet possible to determine accurately the respective ages of the different class of the administration’s assets.

Investigations are still being made by the administration, and it is hoped to be able to arrive at a sound basis upon which to fix the yearly contribution to this fund.

There are one or two phases of this matter which should be touched upon, but let me first give the House the approximate position of the fund as at the 31st January, 1925.

Between the date of Union and that date the total contributions to the fund amount to £23,969,141; the total disbursements amount to £21,861,820, leaving a credit balance as at 31st January, 1925, of £2,107,321.

Against this credit balance of over 2 millions there are, of course, commitments which amount to £1,719,957, thus leaving an uncommitted balance of £387,364, but as these commitments will not in many instances be expended until the end of this year, by which time further contributions will have been made out of this year’s revenue, the position of the fund cannot be regarded as other than very satisfactory.

The contribution of 1½ million pounds out of railway revenue for 1925-26 covers the permanent way and rolling stock of the railways. Other assets such as harbours, workshops, machinery, etc., contribute on the fixed basis of 2.86 per cent. of the capital cost.

It has been contended that the expenditure out of the Renewals Fund on account of rolling stock has of recent years been excessive, reference being made in particular to the purchase of certain new electric locomotives and special grain trucks out of the Renewals Fund.

While there would appear to be something in the contention that the expenditure from the fund on account of rolling stock has been greater than what a pro rata allocation of the contributions made in respect of rolling stock and permanent way would show, the House will appreciate that the intention of the administration in consolidating the two big sections of the railway assets and making one contribution to cover both, was to enable the balances of the fund to be utilized according to sound business principles.

Provided only that the purchase of new rolling stock—locomotives, wagons, or whatever the type may be—from Renewals Fund is not in excess of the accrued depreciation of such assets, the use of monies contributed in respect of other assets, but which is not at the moment required, is sound.

We have thereby avoided increasing our loan capital carrying interest in perpetuity, which would have involved a material curtailment of the development programme which has been carried out since Union.

The alternative was to have limited the expenditure on rolling stock to a strict pro rata share of the contributions made in respect of those assets; and to have allowed large balances to remain dormant, as they would not, during this period, have been required for permanent way renewals.

I am sure hon. members will agree that the policy in this matter has been productive of the best possible results for the users of the railways and the railways as a whole.

It is estimated that the position of the Betterment Fund at the 31st March, 1925, will be as follows:-

Credit balance at 31st March, 1924, £251,595; Receipts during 1924-25, £250,000; total, £501,595, less estimated expenditure during 1924-25, £248,000; approximate credit balance at 31st March, 1925, £253,595.

The contemplated contribution from revenue for the year 1925-26 is £250,000, so that during 1925-26 there will be available to meet proposals for works involving expenditure out of betterment £503,595.

The commitments against the fund at 31st March, 1925, are estimated to amount to £450,000, so that the net balance available for subsequent expenditure will be £53,595.

It is not necessary to comment further upon the position of this fund, which is perfectly sound.

Before passing on to deal with the two main causes of the increased estimated expenditure, I wish to explain to hon. members that the absence of any provision for writing down the value of the administration’s stores stock is due to the fact that, in the opinion of the administration, sufficient has already been done in that direction.

Since the first contribution was made in the financial year 1922-’23, the total amount appropriated from revenue for this purpose amounts to £850,000.

It is generally conceded by the officers of the department that the provision of that sum has had the effect of reducing the value of stores on hand to present-day prices, and, therefore, that no further contribution is necessary.

The new lines under construction which will be opened for traffic during 1925-’26 total, as previously mentioned, 423 miles.

I will now enumerate the new lines and give mileage and the respective dates it is anticipated they will be opened. They are:— Hercules-Magdliesburg (2nd portion), 33, April, 1925; Touws River-Ladismith (2nd portion). 21, April, 1925; Ermelo-Lothair, 31, April, 1925; Matubatuba-Pongola River (1st portion), 70, June, 1925; Senekal-Marquard, 32, July, 1925; Fort Beaufort-Balfour, 23, August, 1925; Upington-Kakamas, 53, August, 1925; Frankfort-Grootvlei, 39, September, 1925; Nylstroom-Vaalwater, 44, October, 1925; Harrismith-Warden, 36, November, 1925; Touws River-Ladismith (3rd portion), 23, December, 1925; Matubatuba-Pongola (2nd portion), 18, March, 1926.

The completion of these 423 miles of railway will increase the total open mileage from 11,533 to 11,956, and, so far as the new lines authorized by the 1922 programme are concerned, will leave to be completed only 42 miles, represented by the George-Knysna line, the opening of which will take place after the 31st March, 1926. It is not yet possible to fix the date. Work on the line has been commenced.

The estimated train and engine mileage last year was 46,330,749; for this year, we have provided for 49,332,928, an increase of 3,002,179, or 6.48 per cent.

This increased estimate has been framed mainly to provide for the very considerable increase in the maize crop, which we expect to have to transport and which we confidently hope to handle efficiently.

Actual figures are not, of course, available, but it is expected that the Union crop of maize will be approximately 24,000,000 bags and that the quantity available for export will be not less than 10 million bags.

While this accounts for the bulk of the increase in the estimated train mileage, due provision has been made for all other classes of traffic which are expected to expand during the financial year we have just entered upon.

A study of the department’s statistics illustrates not only the expansion which is going on in all parts of the Union, but forcibly brings home the fact that the higher rated traffic is steadily decreasing and that the bulk of the administration’s traffic is of the lower-rated commodities—due in the main to the ever-increasing production in the Union of numerous articles previously imported from overseas.

Were it not that it is not desired to burden hon. members this afternoon with too much detail other aspects, which a close analysis of the administration’s statistics reveal, would be placed before you and would show how, amongst other things, the disparity which may have existed at one time between the respective proportions of the administration’s revenue contributed by the inland residents and those in the coastal areas is rapidly disappearing—a fact which it will be generally conceded is to the advantage of the whole community.

This leads me to the subject of railway rates, in regard to which the Government has been urged to make further reductions, and it has been represented both in this House and outside that the administration’s finances admit of further reductions.

It is realized that, notwithstanding that revenue has been remitted to the extent of £4,476,265 per annum since 1920, of which £2,433,250 is in respect of coal rates, £1,356,000 is in respect of goods rates, and £500,000 is in respect of passenger fares, totalling £4,289,250, our tariffs are still on an average 33 per cent. above pre-war levels, and that the whole industry of the Union is dependent upon efficient and cheap railway transportation.

As indicated, the administration is making provision for meeting extraordinary expenditure which simply must be incurred to put matters right, and cannot at the present time, therefore, introduce lower rates.

Immediately the outlook is sufficiently clear to enable the administration with confidence to sacrifice further revenue, it will be done.

Before leaving this subject of railway tariffs, hon. members will be interested to know that although much still remains to be done to lighten the burden of the cost of rail transport upon the whole community, we still may console ourselves upon the fact that our tariffs compare favourably with those of the outside railway world.

As compared with British railways, our local coal rates are, in almost every instance, below the corresponding British rates. The difference is not large, but it is in our favour.

We are all agreed upon the vital importance of cheap rates for agricultural produce and the requirements of the agricultural industry, such as machinery, implements, seeds, fertilizers, etc.

When the rates for these commodities are compared some astonishing figures are obtained:—

Butter reaches the London markets from all parts of Great Britain, and the railway rates are from 7s. 2d. per ton to as high as 12s: 6d. per ton more than the corresponding Union tariff. Glasgow is, in certain cases, even more disadvantageously placed. The railage from certain of its sources of supply is as much as 21s. 1d. per ton higher than the South African Railways rate for the same mileage (450miles).

Cheese pays in Great Britain even higher rates, and these are in excess of ours from 3s. to 21s. 10d. per ton.

Milk in many cases is also conveyed at lower rates on our lines. In fact, if allowance is made for the fact that we convey the empty milk cans back free, our charges are generally lower.

Eggs in all cases are charged less on the Union than on the British railways—our rates in certain cases being over £3 per ton lower.

Meat is also more favourably treated by us, our rates being in certain instances as much as £3 10s. per ton lower than those of the British railways.

What has been said in regard to butter, cheese, milk eggs and meat also applies in the case of fruit, vegetables, flour and such like commodities, while in the case of agricultural machinery, lime, etc., our farmers are also most favourably situated.

The inference should not be drawn from these comparisons that further reductions of our tariffs are not urgently necessary. They are.

It is solely a question of the opportune moment for making such reductions, and it is hoped that that moment will arrive in the not too distant future.

Reference to Head No. 4—Railway Expenses—will show that several increased items on account of electrified working are provided for. It is only right that hon. members should know the position of the work of electrifying the Maritzburg-Glencoe section of the Natal main line.

Most, if not all, hon. members know that electrified working has been under test since October last. It is, however, hoped to have the several sections of the electrified track in full working order during the current year. That between Daimana and Mooi River at the end of April; the section from Daimana to Glencoe at the end of June; and the third section, Mooi River to Pietermaritzburg at the end of November.

Considerable difficulties have been encountered during the course of the work, and those difficulties have been accentuated by the abnormal rains and floods.

Of the 78 electric locomotives required, 66 have arrived in South Africa, and of these 50 have been completely erected at the administration’s workshops at Maritzburg by our staff under the supervision of the consulting engineers.

The completion of this large work will bring much-needed relief to the Natal main line, and the fact that, notwithstanding the increase of over 3,000,000 train miles, the running expenses for 1925-26 actually are less than the 1924-25 corresponding costs is due in no small measure to the economies we expect as a result of the electrified working.

The position in regard to the Cape Town-Simonstown, Sea Point and Dock lines is that the preliminary layout of the track has been practically completed. Contracts have been placed for the electrical equipment of the coaching stock and for the bogies of the new motor coaches, etc.

The entire work will be regulated so as to enable the electrified services to be introduced as soon as the Electricity Supply Commission is in a position to supply the current from the new power station at Salt River.

Seven road motor services are established in the Union, covering a total mileage of 309¾ miles.

For the year ended 3lst December, 1924, the services were worked at a profit of £1,770.

On page 3 of the printed estimates, the new road motor services which are to be introduced have been detailed and which involve an increase under this heading of £10,547. The administration is continuously occupied considering the expansion of the system.

Most of these services it is hoped will be self supporting, but it is the Government’s policy that these services shall be introduced and continued even if an: initial loss is sustained.

Provided there is justification for the introduction of such feeder services; that the districts served by them are sufficiently developed and that the local authority will provide and maintain the roads in a reasonable condition, the Government is prepared to link up the outlying districts by such services.

It is confidently expected that these feeders, being found to be a material factor in opening up and developing the outlying districts of the Union, will be the forerunners of branch lines in due course.

The question of the civilized labour policy of the administration has been so frequently and so exhaustively discussed recently in this House that it is unnecessary again to go over the whole question.

It is right, however, that the attention of hon. members should be drawn to the fact that the additional cost of employing the civilized labourers who are engaged on work which previously was performed by natives is estimated at £160,000.

That is the price which this policy costs the administration at the moment, and I am satisfied that, as the largest employer of labour in the State, it is a price rightly paid by the administration.

This amount of £160,000 is really not all additional, because it has been clearly demonstrated that, particularly in certain classes of work, the superior intelligence of these labourers over the natives makes for greater efficiency and economy.

It should be added that the responsible officers of the administration are satisfied that the policy being followed is the right policy and that the ultimate interests of the administration as a business concern are wrapped up in the satisfactory solution of the problem of finding work for the civilized section of the community in South Africa.

The 34 country elevators and the Cape Town terminal elevator are not only completed but have been tested under actual working conditions. The experience which has been gained with the comparatively small turnover handled last season will be invaluable, and provided the loyal co-operation of growers, dealers and shippers is secured, the system should prove of the very greatest assistance in fostering the industry. In order to prepare the elevators for the reception of the new season’s crops, it will be necessary to require the owners of last season’s maize now stored in the elevators to remove such maize from the elevators not later than the 15th June, 1925.

The total quantity of maize which passed through the elevators up to the 31st December. 1924, was 900,000 bags, and the quantity shipped through the Cape Town elevator up to the 31st March, 1925, was 45,630 tons. These quantities are much below the average we expected to handle, which is due, of course to the partial failure of last year’s crops which has adversely affected the financial results of working, which are expected to show a total revenue of £50,912 as against a total working expenditure of £130,196 for the year ended 31st March last. There has therefore been a considerable loss of £80,000.

For the current year, we are estimating for a revenue of £170,000, and our estimated expenditure is £189,922. Although this shows a small balance on the wrong side, we can with confidence look forward to the financial results being very much more satisfactory than in the year just ended, while with the completion of the Durban elevator the whole elevator system should prove to be both a revenue earning as well as a very valuable asset to the country in other directions.

The position of the Durban elevator is that the foundations are nearing completion, and it is hoped to make an early start with the superstructure.

The elevators are destined to play a large and important part in the economic life of the Union. Notwithstanding the difficulties and changes which the period of transition following the inauguration of this system involved, it is evident that the agricultural and commercial community already have accommodated themselves to these changes, and that, beyond doubt, a much needed want has been filled. Already, demands are being made for the erection of elevators at other country stations in the maize belt. These representations will receive most careful consideration, but it is too early yet to embark upon any general scheme for constructing additional elevators. I would like, first, to have some experience of the system.

The Estimates of Expenditure for 1925-’26, which have now been fully reviewed and which indicate a total estimated expenditure being required of £25,301,143, are in excess of the revised expenditure for 1924-’25 to the extent of £1,424,926.

It has been made clear to the House that this increase is made up of (a) extraordinary expenditure of £761,985, and (b) ordinary expenditure of £662,941.

If hon. members will bear these amounts in mind, they will readily appreciate the justification for these increases when considering the traffic to be dealt with in 1925-’26 and the revenue therefrom.

I will now briefly review the estimated revenue for 1925-’26, and in a few words may state that the gross revenue from railways, harbours and steamships is estimated to be £25,341,838, made up of railways £23,770,890, harbours £1,364,048, steamships £206,900.

This amount represents an increase of £534,914 over the revenue anticipated for 1924-’25, and is made up of an increase from railways of £574,074, a decrease from harbours of £23,008, and a decrease from steamships of £16,152—£39,160, or a total net increase, as already stated, of £534,914.

Particulars of the estimated revenue for 1925-’26 and of the revised estimated revenue for 1924-’25 under the various heads will be found in the Green Book, which will be distributed to hon. members this afternoon.

In order, however, that the House may readily understand the position anticipated from the revenue of 1925-26, I will now give a few of the outstanding features.

Taking railways first, the total revenue from the various services for 1925-26 is estimated to be £23,770,890, this amount being made up of: Main services, £22,168,450; subsidiary services, i.e., catering, bookstalls, grain elevators, etc., £1,029,515; interest on investments and miscellaneous, £572,925; or a total of £23,770,890.

In the case of the main services, it is anticipated that, compared with 1924-25, the revenue to be derived during 1925-26 will show an increase of £451,970.

The reason for anticipating this substantial increase in railway revenue is due principally to the exceptional traffic that is anticipated in maize, and in a lesser degree to the additional revenue to be obtained from the opening of new railways.

It is to be remembered also that, with effect from the 1st of January of this year, reductions have been made in the rates, involving a surrender of revenue of approximately £500,000 per annum, or, roughly, £10,000 per week.

The average weekly revenue for the year which has just closed has amounted to approximately £418,000.

It is anticipated that after allowing for the sacrifice of revenue by these rate reductions and taking into account the additional revenue that will be received from the exceptional maize crop, and also the opening of new lines, that revenue to the extent of at least £425,000 per week may be reasonably anticipated, and the estimate of revenue has accordingly been based upon this figure.

The healthy state of the wool industry, notwithstanding the recent fall in prices, the development which is going on in the fruit growing areas, the more prosperous outlook in the sugar cane industry, and the confidence which is reflected in the mining industry, all point to a substantial increase in the activities of the railways and in consequence, in budgeting for an increase in revenue for main services alone of roughly £451,000 the administration is erring on the safe side.

Passenger traffic is the slowest to respond to the development which is expected to result from reduced tariffs, and for this reason it is not anticipated that the substantial reductions in passenger fares made in January last will justify any substantial increase in the revenue being expected.

With regard to subsidiary services (railways), the total revenue for the year is estimated at £1.029,515.

Compared with the revised estimate of revenue for the year just closed (1924-25), this revenue shows an advance of £117.359, and is almost entirely due to the anticipated additional revenue to be obtained from the grain elevators (£119,088).

This increase, of course, is due to the elevators being now in full commission, as compared with part commission only during last year.

Interest on investments and miscellaneous receipts are estimated to amount to £572,925, or an increase of £4,745, which is mainly due to the increased amount of monies that will be available for investment on behalf of the Superannuation and Pensions Funds.

In the case of harbours, the total revenue from main services is estimated to amount to £1,330,000 which, compared with 1924-25, shows a decrease of £22,811.

For the period 1st April, 1924, to the 21st March, 1925, i.e., practically the whole of the last financial year, the average weekly revenue for harbours has been £26,073 and the estimate for 1925-26 has accordingly been based on a similar amount, the actual figure being £25,500 per week, the slight reduction being due to abnormal shipping experienced during 1924-25, on the one hand, which it is not anticipated will recur in 1925-26.

The revenue from steamships is estimated to be £206,900, or a decrease, as compared with the previous year, of £16,152.

During last year it was necessary to charter three extra steamers to transport the administration’s supplies of sleepers. It is not anticipated that charters of the same extent will require to be made during 1925-’26, and on account of this a reduction in the revenue must be provided for.

During 1924-’25 the administration’s three steamers and the vessels chartered brought to South Africa 18 full cargoes of sleepers, while the former transported from the Union to India and the East 16 cargoes of South African coal.

It has been the administration’s policy to debit the steamships account with full charges for all services rendered and for dues, etc., incurred, so as to make the steamships account accord with the costs which would be incurred by privately-owned vessels.

The revenue credited to the steamships account, however, has been slightly below the ascertained market rate of freight, so that the published earnings have not been inflated by the adoption of artificial freights.

In 1924-’25 we made on this basis a profit of £8,659. On the same basis, we anticipate to make during 1925-’26 a profit of £21,502.

All of our steamship requirements are purchased in South Africa as far as practicable. All repairs are carried out at Union ports and the crews of all three vessels come under Union articles. Every possible penny of the steamship expenditure is, therefore, expended in the Union. Were the material transported by the administration’s vessels carried by ordinary freighters, very little of the money paid for freight—and it would be more than we incur by carrying our own freight—would be spent in South Africa.

The deck hands required for the Government ships are, by arrangement with the Board of Control of the training ship “General Botha,’ drawn from boys who have successfully completed a two years’ course on the training ship. So far, 22 boys have been started in a practical way in a career which is not a blind alley, but offers reasonable scope for progress. We hope that, in time, the deck ratings on all our ships will be filled by South African-trained seamen.

The Estimates of Expenditure and Revenue for 1925-’26 have now been dealt with, and the various aspects and details of the Estimates in the order in which they arose have been discussed, from which hon. members will have learned that the outstanding amounts are:— Revenue: Railways, £23,770,890; harbours, £1,364,048; steamships, £206,900; total, £25,341,838. Expenditure: Railways, £23,927,469; harbours, £1,188,276; steamships, £185,398; total, £25,301,143. In consequence it is anticipated there will be a deficit on railways of £156,579, a surplus on harbours of £175,772, a surplus on steamships of £21,502. making in the aggregate a net surplus of £40,695.

If the revised Estimates for 1924-’25 are realized, we shall have from that year also a surplus of £160,463, after paying off the whole of the balance of the accumulated deficits which on the 31st March, 1924, stood at £770,244, so that on the basis of the Estimates now before the House there would be an estimated total surplus at the 31st March, 1926, of £201,158.

It will be necessary later, in consequence of the unexpected damage caused by the abnormal washaways, to submit to the House certain Supplementary Estimates. By that time, it will be possible to state definitely the actual surplus for last year.

Earlier in my remarks it was stated that the House would be advised how it was proposed to deal with the surplus.

Well, briefly, we propose to apply the surplus first in writing off £250,000 of the loss sustained on the Durban elevator foundations, and second, in writing off a sum of £42.662, which represents the amount of the capital of the Sea Point Railway which is not represented by any real asset, being what was paid for the running rights acquired when that railway was taken over in 1905.

Few, if any, will question the wisdom of this course. It is true that the total sum required to carry out these proposals is £292,662, as compared with the total surplus of £201,158 which is forecasted, but it is hoped that the final figures for 1924-’25 may yet disclose a surplus even higher than at the moment is included in the estimates.

Except to the extent necessary to explain the expenditure estimates, all reference to staff matters has been left over. I will, therefore, now give a few of the interesting features connected therewith.

Before doing so, however, I desire to inform hon. members that in the beginning of this year the Government decided to accord South-West Africa territory advisory representation on the Railway and Harbour Board when questions affecting that territory are under consideration. With this object in view arrangements have been made whereby the Hon. G. R. Hofmeyr will attend meetings of the Railway Board in the capacity of an advisor when subjects connected with South-West Africa are under discussion. He has already given valuable advice in that capacity.

A new Service Bill has been introduced today. It is not necessary at this stage to deal with the subject except to say that the labours of the Conciliation Board, which, in many important respects have fashioned the lines of that Bill, will go far to facilitate its passage through this House.

Amongst other provisions that Bill will give to the Conciliation Board a statutory status, and thereby meet what has long been held, both by the members of the board and the Railway and Harbour Service generally, to be weakness which gave rise to uncertainty and suspicion.

During the last twelve months, the administration has accepted practically every unanimous recommendation of the board, and as the board has been generally unanimous—which is a striking tribute to the spirit which characterizes the work of both the elected and nominated members—it will be evident that the practical value of the Conciliation Board’s work has been inestimable.

In accordance with the promise given by the administration the Durban special cost of living allowance was reviewed at the end of July last in the light of the conditions then obtaining. It was found that an increased allowance was justified, and it accordingly was granted the basic point allowance being raised from £12 to £18 per annum.

As a result of a recommendation from the Conciliation Board a modified form of allowance also was applied to the Durban artisans who were in receipt of the old rates of pay.

On the 17th November last, short time working in the mechanical shops, which had been introduced in August, 1921, was abolished, and since then the entire staff of the workshops have been working full time.

During the year, an Hours of Duty Committee, consisting of two officers and two representatives of the staff, elected by and from the elected members of the Conciliation Board was appointed by the administration with a view to determining whether any reduction of working hours is justified.

That committee is actively engaged in pursuing its investigations, and has been urged to complete its work as early as possible.

The committee’s investigations must necessarily cover a very wide field and, until its general report is received, no decision can be come to, but when that report is received the committee’s recommendations will be most carefully and sympathetically considered by the administration.

At the close of last session of Parliament, it was decided to appoint a commission to investigate the capabilities of the existing workshops as they exist at present to deal with the repair and manufacturing work required for the administration’s own needs, and also to report as to the desirability of extending the existing workshops to undertake additional repair and manufacturing work and other relevant matters.

The commission has also been asked to report as to the best means of manufacturing the requirements of the administration in preference to importing such in future, and whether this can best be accomplished by the erection of an entirely new workshop or extensions to the existing shops.

The commission met in October and have been engaged on the work unintermittently ever since.

I am reliably informed that the commission has practically completed its investigations and that the report will be presented some time during this month.

The total number of staff employed on the South African railways and harbours, open lines and construction (including South-West Africa). as at 31st December, 1924, was 86,481. In addition to this 1,561 convicts were employed.

At 31st December, 1923, that is the end of the previous year, the number employed was 80,088, with 1,759 convicts, so that there has been an increase of 6,393, but a decrease in convicts of 198.

Last year an amount of £106,807 was included in the estimates for the provision of quarters for the staff throughout the Union, and 81 houses were erected during 1923.

From the date of Union to the 31st December, 1924, the number of houses erected was 3,303, while the number demolished was 435, leaving a net increase of 2,868.

At the present time there are 75 houses in course of erection, or waiting to be commenced.

The number of houses belonging to the administration now totals 10,211, of which 6,753 are let to the staff and 3,458 are provided as free quarters.

Very considerable improvements have been made in recent years in the types of houses, and in the accommodation provided. European labourers’ houses have also been much improved and the number of rooms increased.

Last year, when addressing this House, I appealed to every servant of the administration to render at all times courteous, conscientious and prompt service to the public, whose servants we are. That appeal was not made in vain.

I was confident that the highest traditions of the service would be maintained, and it is with a deep feeling of appreciation that I record, on behalf of the Government, the loyal service which has been rendered by every one of the thousands of officers and employees, from the general manager downwards who comprise the staff of our railways, harbours and steamships. During the year a staff and labour inspector was appointed, by whom good work has already been done. It is hoped that this appointment will help greatly to foster a feeling of contentment amongst the staff.

In order that hon. members may realize the magnitude of the growth of traffic, the following figures are given. The number of passengers carried on the South African Railways during the year 1924, as compared with the number carried during 1923, was: 1924, 69,631,252; 1923, 64,442,041; increase (number), 5,189,211; increase (per cent.), 8.05.

The number of passengers conveyed during 1924 constitutes a record in the history of the South African railways, the total of 69,631,252 representing an increase of 5,175,765 journeys over the previous highest figure of 64,455,467 in 1920.

Compared with 1923, the number of suburban area passengers Carried in 1924 increased by 5,122,350, while the number of passengers carried other than in suburban areas increased by 66,861.

The tonnage and percentage of total tonnage of commercial seaborne traffic passing through the ports to the competitive area during the years 1923 and 1924 were:—Cape Ports (1924), 51,716: Durban, 139.644; Delagoa Bay, 200,160; total, 391.520; (1923) 45.186: 141,904; 168.686: total, 355,776; (1924) 13.21; 35.67; 51.12; (1923) 12.70; 39.89; 47.41.

Quantities.—The entire equipment of the railways in rolling stock at the 31st December, 1924, was:—Locomotives, 1,888; coaches, 3,147; goods stock, 34,092; total, 39,127.

The new additional stock brought into service during 1924 was:—Locomotives, 34; coaches, 81; goods stock, 1,277; total, 1,392; while the stock scrapped or sold was:—Locomotives, 13; coaches, 9; goods stock, 56; total 78.

Improvements were effected during the year by converting one class into another and by fitting stock with additional conveniences and more up-to-date appliances.

The expenditure out of Loan Funds in equip ping the railways with rolling stock at the 31st December, 1924, was £18,954,677, or an increase of £458,509, compared with the corresponding date of the previous year.

In addition to the capital expenditure a sum of £1,204,496 out of Renewals Fund was spent on rolling stock during 1924 to make good depreciation on stock at present in service.

The gross expenditure on rolling stock during the year was, therefore, £1,663,005, and the total original cost of engines and rolling stock in service at the 31st December, 1924, financed from all sources was £31,772,109.

The estimated expenditure to be incurred by the administration during 1925-26 out of Loan and Betterment Funds on new capital works and works which were in progress at 31st March last are at the present moment under consideration.

Present indications point to the fact that an expenditure of approximately £6,000.000 will be required out of Loan Funds. This sum will be augmented by funds to be derived from other sources such as betterment, capital credits, and the special contribution towards the reduction of interest-bearing capital.

Altogether, it is expected that there will be available a total of £7,300,000 towards meeting the cost of new works during 1925-26.

As already mentioned, these works are now under consideration. As soon as possible the Brown Book embodying full details of the expenditure out of Loan and Betterment Funds will be submitted to this House.

In conclusion I only desire to say that the prospects of the railways, harbours and steamships, for the year upon which we have now entered are exceedingly bright, and if all our expectations as to traffic are realized the railways and harbours will be called upon to deal with a volume of traffic which will constitute a record in the history of our railways. We have faith in our country, our People and our staff, and are going forward with a stout heart.

The MINISTER OF RAILWAY AND HARBOURS laid upon the Table—

Third Order read: Second reading, Great Stock Brands Bill.