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Graphic: An Encyclopaedia of New Zealand 1966.


This information was published in 1966 in An Encyclopaedia of New Zealand, edited by A. H. McLintock. It has not been corrected and will not be updated.

Up-to-date information can be found elsewhere in Te Ara.



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Administration of Railways

The Government railway system of New Zealand is administered by a General Manager with headquarters in Wellington. Political responsibility for the operation of the system is vested in a Minister of Railways, who delegates to the General Manager such of his powers, duties, and functions as he considers necessary. The principal statute under which the railway service functions is the Government Railways Act.

The Railways Department is divided into branches, each responsible for a particular aspect of operations, and each controlled by an executive officer in Wellington to whom the General Manager sub-delegates certain of his powers. The principal branches, in alphabetical order, are: Commercial; Finance and Accounts; Mechanical; Publicity and Advertising; Refreshment; Road Services; Stores; Traffic; and Way and Works. Most of these branches are divided into districts and subdistricts for convenience in administration and operation. Traditionally, the Railways Department is responsible only for the working and maintenance of railways. New lines are constructed by the Ministry of Works in accordance with Government policy. When completed, such new lines, together with all capital liabilities, are handed over to the Railways Department.

During their 100 years of existence the railways of New Zealand have experienced many changes in the form of management. In the beginning, the Provincial Councils of Canterbury, Southland, and Otago each had a Railway Department under the control of a General Manager. When the General Government built its own railways, in Canterbury and Otago, it handed them over to the Provincial Councils for operation, but all other sections of line were administered by the Engineer-in-Chief of the Public Works Department. With the abolition of the Provincial Councils, in 1876, all railways came under the control of the Minister for Public Works, although the actual administration was left to the Engineer-in-Chief, and through him to a Superintending Engineer.

In 1878 two Railway Commissioners were appointed, one for each island, but this divided control did not prove satisfactory and 1880 saw the appointment of a General Manager, with administrative responsibility for all opened railways. At the same time the functions of construction and operation were divorced, and the Railways Department came into being. Not until 1895, however, did the railways receive their decree absolute in the form of a Minister of Railways.

With two exceptions – the autonomous Railway Commission of 1889–94, and the quasi-independent Government Railways Board of 1931–36 – the railways have remained under direct ministerial control. Other periods of board or commission management were 1925–28 (Board of Management), and 1953–56 (New Zealand Railways Commission). No satisfactory alternative to a General Manager, working in close liaison with his Minister, has yet been evolved.

The Financial Structure

For the first 45 years of their existence as a self-administered undertaking, the railways of New Zealand were handicapped by an inadequate accounting system which made no provision for depreciation or other reserves. Between 1880, when the Railways Department was established as a separate entity, and 1925, when the financial system was modernised, railway net revenue to the extent of some £36 million was paid into the Consolidated Fund. This amount was almost exactly equal to the capital expenditure on railways during that period, but it was not regarded as a means of reducing the Railways Department's capital liabilities, other than interest due. At the close of the 1964–65 financial year, the capital invested in New Zealand Railways (including all subsidiary services) was £159.4 million. This amount, representing the cost of “open lines” and other assets, was made up as follows:

North Island main line and branches 100,566,828
South Island main line and branches 44,447,081
Lake Wakatipu steamer service 22,781
Cook Strait rail-road ferry service 1,888,680
Subsidiary services 12,433,876
Total capital invested £159,359,246

Interest charges on this capital investment amounted to £6,979,916 for the year.

Pattern of Earnings and Expenditure

By a recent decision of Government, it was decided to reduce the Department's liability by £70,000,000 as from 1 April 1965. It was appreciated that a substantial proportion of the book assets represented lines closed over the years and that other items had become obsolete as a result of technological and other changing circumstances. The new capital structure is allowing for such reductions and will do much to make the railways a progressive force in the national economy.

During the 10 financial years 1954–55 to 1963–64, the gross earnings of the Railways Department consistently exceeded £30 million, and for the year ended 31 March 1965 reached a record total of £42,658,753. Railway operations for the 1964–65 financial year earned £36.4 million, while road services produced a further £3.0 million. Revenue from subsidiary and miscellaneous non-operating sources came to £1.5 million.

Gross working expenditure of the Railways Department during the year ending 31 March 1965 was £41,473,846, leaving an operating surplus of £1,184,907. This represented an operating ratio of 97.2 per cent. By far the heaviest single item of expenditure was wages and salaries (61.6 per cent). Locomotive fuel, by comparison, accounted for only 4.1 per cent.

Generally speaking, railway operations in the North Island return a substantial working surplus. In the South Island, with its smaller population, lighter traffic, and shorter hauls, the annual working loss is almost as great as the North Island surplus. The losses in the South Island will undoubtedly be reduced by closing uneconomic branch lines, by the development of new manufacturing and processing industries, and by increased rail traffic caused by the operations of the Cook Strait ferries Aramoana and Aranui.

Gross Revenue

(Year Ended 31 March 1965)
Railway Operations: £
North Island 25,354,498
South Island 11,038,533
Road Services 3,049,347
Cook Strait Ferry Service 1,683,800
Subsidiary Services:
Lake Wakatipu steamer 19,127
Advertising 103,985
Dwellings 433,366
Buildings 107,832
Miscellaneous Non-operating
Revenue 868,265
Total 42,658,753


(Year Ended 31 March 1965)
Railway Operations: £
North Island 22,831,437
South Island 13,134,883
Road Services 3,026,532
Cook Strait Ferry Service 888,845
Subsidiary Services:
Lake Wakatipu steamer 34,824
Advertising 93,036
Dwellings 1,352,424
Buildings 111,865
Total 41,473,846