-3-
16
A
contribution on a life basis would have been £355,846.
contribution somewhat smaller than a full life contribution
was considered adequate as a Renewals Fund was established
in 1920 and £1,000,000. has been accumulated in the Fund which,
it is thought, is sufficient for purely renewal purposes.
Further, most of the capital cost of the Railway was provided
out of loans raised in England and payments to a Sinking Fund
at 1% are also made in addition to the Renewals contribution.
8.
On the South African Railways the annual contribution
for renewals of permanent way and rolling stock assets is 60%
of the sum arrived at by applying the various percentages,
corresponding to the respective lives of each class of assets, tò
the full original cost of all such assets in service. This
contribution is subject to a minimum contribution from Revenue
equal to 6% of the current year's earnings and in this way the
contribution in prosperous years may be greater than in years
of low revenues. The South African Railways Administration
does not make provision for the full depreciation which is taking
place on its wasting assets but is content with contributing
from revenue a sum per annum estimated to be sufficient to meet
the expenditure of the replacement of worn out assets as the need
arises from time to time. This principle would, of course,
be less satisfactory if applied to a small railway system. We
attach a Statement showing the estimated life of each class of
asset falling under the category of permanent way, works and
rolling stock on which the Renewals Fund on the South African
Railways is based.
9.
We trust the accompanying information will furnish
the Governor of Hong Kong with the particulars he requires.
We
could doubtless obtain similar information regarding other
railways if required but the Kowloon-Canton Railway has now been
/in