Annual and Financial Report 2014-15

General information

This is the consolidated Annual and Financial Report 2014-15 Translation and interpreting assistance: (“the report”) of Rail (ABN 68 598 268 528) and its is committed to providing accessible services to subsidiaries, Queensland Rail Limited (ABN 71 132 181 090) (QRL) and Queenslanders from all culturally and linguistically diverse backgrounds. On Track Insurance Pty Ltd (ABN 18 095 032 670) (OTI). If you have difficulty in understanding the report, please contact Queensland Rail is a statutory authority established under the Queensland Rail on 13 16 17 and we will arrange an interpreter to Queensland Rail Transit Authority Act 2013 (Qld) (QRTA Act) and share the report with you. is a statutory body for the purposes of the Financial Accountability Act 2009 (Qld) and the Statutory Bodies Financial Arrangements Act 1982 (Qld). Queensland Rail’s functions are detailed in Section 9 of the QRTA Act. Queensland Rail discharges its statutory functions through its wholly- owned subsidiary QRL. QRL does not employ any personnel, but owns all non-employee related assets and contracts. It performs the role of rail transport operator under the Transport (Rail Safety) Act 2010 (Qld). OTI is a wholly-owned subsidiary of QRL. It provides insurance cover for claims on Queensland Rail, QRL and the group of companies in respect of events up until 30 June 2010. Unless the context otherwise requires, Queensland Rail together with its subsidiaries QRL and OTI, are collectively referred to as “Queensland Rail” for the purposes of the report. A general description of the nature of Queensland Rail’s operations and principal activities is included in the report.

This report is available, along with other useful resources, via the Queensland Rail website: queenslandrail.com.au

For further information on Queensland Rail: Phone: 13 16 17 Copyright © Queensland Rail Limited 2015. Mail: GPO Box 1429, , Queensland, 4001 Disclaimer

Registered Office While all care has been taken in preparing the report, Queensland Rail Queensland Rail accepts no responsibility for decisions or actions taken Level 14, Rail Centre 1 as a result of any data, information, statement or advice, expressed, 305 Edward Street implied or contained in this report. Queensland Rail is committed Brisbane, Queensland, 4000 to minimising the impact on the environment by printing a limited Queensland Rail ABN 68 598 268 528 numbers of copies of this report. An electronic version of this report is available at queenslandrail.com.au

Page 2 | Queensland Rail Annual and Financial Report 2014-15 Bety departing Emerald, April 2015

Queensland Rail Annual and Financial Report 2014-15 | Page 3 305 Edward Street T 07 3072 0565 GPO Box 1429 F 07 3072 0090 Brisbane QLD 4001 www.queenslandrail.com.au

The Honourable Jackie Trad MP Deputy Premier Minister for Transport Minister for Infrastructure, Local Government and Planning Minister for Trade and Member for South Brisbane Level 12, Executive Building 100 George Street BRISBANE QLD 4000

The Honourable Curtis Pitt MP Treasurer Minister for Employment and Industrial Relations Minister for Aboriginal and Torres Strait Islander Partnerships and Member for Mulgrave Level 9, Executive Building 100 George Street BRISBANE QLD 4000

Dear Deputy Premier and Treasurer Queensland Rail Annual and Financial Report 2014-15

I am pleased to present the Queensland Rail Annual and Financial Report 2014-15.

I certify that this annual report complies with:

• the requirements prescribed by the Financial Accountability Act 2009 (Qld), the Financial and Performance Management Standard 2009 (Qld), the Queensland Rail Transit Authority Act 2013 (Qld) and the Corporations Act 2001 (Cth)

• the guidelines set out in the annual report requirements for Queensland Government agencies.

The report outlines Queensland Rail’s strong operational performance as well as the financial efficiencies that have been achieved during the 2014-15 financial year. The Queensland Rail Board and Executive Leadership Team are confident that the organisation can continue to sustain its operational performance in the next financial year while pursuing further opportunities for cost optimisation. As outlined in the report, a dividend of approximately $179 million will be declared for this financial year.

The Board unanimously endorses the Queensland Rail Annual and Financial Report 2014-15.

Yours sincerely

Michael Klug AM Chairman

Page 4 | Queensland Rail Annual and Financial Report 2014-15 Table of contents Queensland Rail Annual and Financial Report 2014-15

About us 6

Chairman’s and CEO’s outlook 8

Year at a glance 10

Operational performance 11

Financial performance 12

Our history, our future 14

Our safety and security 18

Our people 22

Our environment 24

Our community 26

Citytrain 30

Regional Network and Freight 34

Travel and Tourism 38

Governance structure 42

Organisational structure 43

Board 44

Executive Leadership Team 46

Corporate governance 48

Summary of the 2014-15 Operational Plan 56

Compliance checklist 57

Glossary and acronyms 60

Queensland Rail Financial Report 2014-15 62

Queensland Rail Annual and Financial Report 2014-15 | Page 5 About us Queensland Rail has a proud 150 year history of being a safe and reliable railway operator and contributing to Queensland’s economic, social and regional development.

With approximately 5800 staff, more than $6 billion in fixed and other Queensland Rail performs its railway operations via a wholly owned assets, and more than 6500 kilometres of track, Queensland Rail is subsidiary Queensland Rail Limited. Queensland Rail has a Board which an integrated customer and rail infrastructure business servicing the is ultimately responsible for setting its strategic direction and for the passenger, tourism, resources and freight customer markets throughout exercise of its powers and functions. Queensland. The Board has in turn appointed a Chief Executive Officer (CEO) and The organisation aims to be the safest, best performing and customer Executive Leadership Team (ELT) who are responsible for Queensland focused railway in Australia. Rail’s day-to-day operations. Members of the Queensland Rail Board are appointed by responsible Ministers under the QRTA Act. Throughout 2015, Queensland is celebrating 150 years of rail in the state. Queensland Rail’s expansive network of long distance, tourist The Queensland Rail Board is accountable to two responsible Ministers: and city tracks has played a major part in shaping the history of • The Honourable Jackie Trad MP, Deputy Premier, Minister for Queensland and connecting communities. Transport, Minister for Infrastructure, Local Government and Planning and Minister for Trade Queensland Rail’s vision • The Honourable Curtis Pitt MP, Treasurer, Minister for Employment Queensland Rail’s vision is ‘Connecting Communities and Communities and Industrial Relations and Minister for Aboriginal and Torres Strait Connecting’, which acknowledges the essential role it plays in providing Islander Partnerships. jobs, delivering passenger rail services, transporting commodities, and supporting industry across the state. Each year, the Board submits an operational and strategic plan for approval by the responsible Ministers. The Queensland Rail Operational The vision demonstrates Queensland Rail’s responsibility in delivering Plan 2014-15 is a formal performance agreement between the the infrastructure and services to ‘connect communities’. These Board and responsible Ministers with regard to service delivery and products allow Queensland Rail’s customers to connect to the things performance. that matter – family, friends, jobs, recreation and travel opportunities.

The vision also illustrates the organisation’s role in the tourism industry, Queensland Rail’s products providing connection to regional Queensland and its key tourist With more than 6500 kilometres of track and 216 stations across the destinations. state, Queensland Rail’s business consists of three primary products: The flow on effect of providing a safe, reliable and efficient transport Citytrain, Travel and Tourism, and Regional Network (including Freight). service results in ‘communities connecting’, facilitating social outcomes and economic prosperity for the state. Citytrain Queensland Rail’s Citytrain network is an integrated passenger and Queensland Rail’s purpose rail access service covering more than 800 kilometres in south-east Queensland Rail is committed to providing a safe, reliable, on-time, Queensland. The network extends from Brisbane’s Central Station: value for money and efficient rail service that benefits the community • south to Beenleigh and Varsity Lakes on the Gold Coast and supports industry. • north to Ferny Grove, Shorncliffe, Doomben, Caboolture and Gympie To achieve this, Queensland Rail aligns its business activity to three • east to Cleveland strategic objectives: • west to Richlands, Ipswich, Springfield Central and Rosewood. • People – improving safety outcomes and increasing productivity Across the network, Queensland Rail has 146 Citytrain stations and • Progress – optimising operational expenditure and targeting carries approximately 140,000 passengers per day. Each weekday, it capital investment operates more than 900 services on the Citytrain network. • Performance – sustaining operational performance. Regional Network and Freight Queensland Rail’s operating environment Queensland Rail’s regional network supports industries on the Mount Queensland Rail was established as a statutory authority in accordance Isa, North Coast, Western, West Moreton, South Western and Central with the QRTA Act with the objective of delivering significant benefits Western rail lines and covers more than 5700 kilometres of track. to the community including improved operation and more efficient Queensland Rail has invested significantly to improve the performance delivery of rail services for customers. of its regional network. This investment has delivered Queensland Rail’s best regional network performance in 2014-15 in terms of reliability and safety, with decreases in the number of faults on the network.

Page 6 | Queensland Rail Annual and Financial Report 2014-15 Queensland Rail is committed to improving supply chain solutions, Its services extend along the Queensland coastline from Brisbane to developing partnerships and fostering new business opportunities to Cairns and west to Charleville, Longreach and Mount Isa. The fleet help meet the needs of the resources, agricultural, construction and includes outback services (, Inlander, Westlander) tourism industries. and coastal services (, Rockhampton and Bundaberg Tilt Train). Travel and Tourism In addition, Queensland Rail operates two tourist train services – The Queensland Rail travel network plays an important role in and the – offering unique and world connecting regional Queensland and offers the largest and most renowned rail travel experiences. comprehensive network of long distance and tourism trains in Australia. The organisation also retains a fleet of heritage steam locomotives Queensland Rail operates eight different travel and tourism services and wooden carriages for charters and special operations, such as the across the state, each year carrying around 700,000 long distance celebration of 150 years of rail in Queensland. commuters and tourists seeking unique Australian rail experiences.

“I started my apprenticeship as Queensland Rail’s only female traction linesperson in 2006 and haven’t looked back since.” Julie Julie and Pavil – Electricians

Queensland Rail Annual and Financial Report 2014-15 | Page 7 Chairman’s and CEO’s outlook Celebration of our past and future has been the hallmark of the 2014-15 financial year.

Queensland Rail looked back at its rich We were very pleased to be recognised for and proud history throughout the year our operational improvements at the 2014 and embraced the bright and exciting Premier’s Awards for Excellence, where we future to come; while sustaining a program won both the Customer Focus category of continuous improvement across and also the overall award for a team who important aspects of our business – safety had excelled in contributing to a modern, performance, operational performance, efficient, customer-orientated public financial performance, and development and service. We were also recognised with the engagement with our people. Australasian Railway Association’s (ARA) 2015 Award for Customer Service. Rail transport has been an integral part of the economic and social development However, the feedback we receive from our of Queensland for 150 years and we were customers is our best measure for success privileged to share our 150th birthday and our overall customer satisfaction with celebrations with tens of thousands of the Citytrain reached its highest levels Queenslanders. to date in 2014-15, while our travel and tourism network continued to perform above We marked the occasion with steam train expectations as we rolled out product and Michael Klug AM journeys and events right across the state service enhancements. Chairman and gave rail enthusiasts, both young and old, the chance to experience the unique This year the Customer Service Institute thrill of a journey 150 years in the making. of Australia (CSIA) confirmed Queensland To celebrate our birthday, we also donated Rail’s strong customer service orientation, 150 historical gifts throughout the year to increasing our International Customer local councils, community groups, charities, Service Standard (ICSS) health check score historical societies, railway groups and from 7.12 to 7.32 out of a possible 10. museums. Results over time highlight that improved ICSS scores are directly linked to the These pieces, including railway sleepers and implementation of customer initiatives, rollingstock no longer required by Queensland in particular those related to improving Rail, have been recycled and given a second reliability and frequency of train services. life with communities throughout the state. While a considerable part of the year was Our financial performance spent celebrating our history, it did not Financially, Queensland Rail produced its detract from our focus on delivering a safe, best year on record since separating from reliable, on-time and value for money rail QR National in 2010 with earnings before service that benefits the community and interest and tax (EBIT) of $506.9 million. This supports industry. was the result of a strong focus on reducing operating costs in an effort to reduce the Our operational performance subsidy provided for public transport and Helen Gluer This year our key performance indicators therefore delivering a value for money CEO showed our safety performance continued to product for our customers. improve with reductions in signals passed at Queensland Rail is committed to supporting danger and customer injuries. We are proud government priorities and has continued of our strong safety record, and equally to pursue best practice by analysing our proud that we delivered a safe network in financial and operational performance and 2014-15 against a backdrop of operational comparing our results with similar businesses performance improvements. and industries. Utilising benchmarking Queensland Rail’s diligent focus on on-time information, Queensland Rail has running performance, in combination with a fundamentally changed the way in which vigilant approach to safety has translated to it does business by focusing on sustaining a significant improvement in reliability, with our strong operational performance and more than 95 per cent of all Citytrain services providing a high quality service while running on time this financial year. examining and refining our cost base.

Page 8 | Queensland Rail Annual and Financial Report 2014-15 This dedication to improve our service and Responding safely and swiftly to reinstate In 2014, we welcomed new Director Paul our cost to serve has resulted in significant vital infrastructure confirmed Queensland Wallis who has led a very large engineering efficiency gains. To leverage off this success, Rail’s important role as an essential service firm and managed major engineering Queensland Rail will continue our business connecting Queensland communities. projects over many years. Along with fellow improvement program to reduce the cost directors Aivars Blums, David George, Wendy Our future of our rail operations to deliver efficient McMillan, John Mickel and Glenn Poole, this rail services for the people of Queensland, The future of rail in Queensland continues skills based Board is committed to driving making every dollar count to support to be very bright with a range of exciting performance improvements and cultural patronage growth. projects – including the Moreton Bay Rail change across our business. Link, New Generation Rollingstock and the We would like to sincerely thank Queensland Our people performance state of the art Rail Management Centre – Rail employees for their dedication, hard work well underway and set to be delivered over Improvements in operational performance, and enthusiasm. For 150 years, our people the next few years. sustained throughout the year are testimony have been our greatest asset. They remain to the hard work of our dedicated people. These new trains and infrastructure will the key to our success in the future. Their commitment to delivering safe and increase our capacity to meet the demand We are enthusiastic and proud of on-time services is unwavering, as is the for rail services in south-east Queensland, one Queensland Rail’s performance in organisation’s commitment to providing a of the fastest growing regions in Australia. supportive, inclusive and engaged workplace. 2014-15 and prospects for the future. We Despite our optimism for the future, have a clear vision and a robust strategy and A richly diverse employee group translates to Queensland Rail also faces challenges with appropriate investment in rollingstock, greater opportunities for innovation, business ahead in continuing to meet the demand infrastructure and technology we are improvement and engagement, providing a for rail services. confident of achieving – and exceeding – strong foundation for any modern business the expectations of our owners, the people We will continue to work with our partners to achieve its strategic objectives. of Queensland. in government to further increase capacity, Ensuring the diversity of our workforce is a upgrade our rollingstock and invest in strong focus of the Queensland Rail Board infrastructure that improves the reliability of and Executive Leadership Team in the future. trains and tracks, and ensure customers have The leadership team has a strong female access to a safe and reliable rail network that representation with Helen Gluer being the meets their current and future requirements. first female CEO in Queensland Rail’s 150 year history. With a growing population and concern about climate change, we continue to offer a Michael Klug AM While we acknowledge our workforce profile vital service in decreasing urban congestion, Chairman will not change overnight, an increase in by encouraging a modal shift from cars, women participating in non-traditional consequently reducing pollution and carbon roles and a diverse range of applicants emissions. for apprenticeships and traineeships put Queensland Rail on track to build a more This year saw a change in state government diverse workforce. We will continue to and, as a result, new responsible Ministers diversify our profile by welcoming people into for Queensland Rail. We would like to thank Helen Gluer the organisation from a variety of different the outgoing responsible Ministers, Scott CEO backgrounds, bringing a broad range of ideas Emerson and Tim Nicholls, who both shared and diverse views. our passion for rail transport in Queensland. Throughout our 150 year history, difficult We welcome our new responsible Ministers times have always brought out the best in – Deputy Premier and Minister for Transport the Queensland Rail team and our response Jackie Trad and Treasurer Curtis Pitt – and to Queensland’s significant weather events look forward to working with them. We and this year was no exception. Our teams have already built positive and productive swung into action in late November 2014 relationships with key stakeholders in the new when south-east Queensland experienced government and look forward to developing its worst storm in almost 30 years, and strong working relationships well into the in February 2015 when Cyclone Marcia future. devastated the Rockhampton area.

Queensland Rail Annual and Financial Report 2014-15 | Page 9 Year at a glance

July August

• Turned the first sod for the new state-of-the-art Rail Management Centre • Opened the sixth railway police outpost on the Citytrain network at Ipswich at Mayne Station • Proudly celebrated NAIDOC week with events showcasing stories, music, • As part of Rail Safety Week, rail accident survivor Jonathan Beninca addressed dance and art from indigenous Queensland Rail employees and the wider 6900 students to raise their awareness of rail safety Aboriginal and Torres Strait Islander community

October September

• Recognised at the 2014 Customer Service Institute of Australia (CSIA) awards, • Won the top engineering prize at the 2014 Queensland Engineering winning three awards for excellence in customer service Excellence Awards for the Richlands to Springfield project • Recognised at Australia’s National Safety Council of Australia Awards of Excellence for the Safety Motivated Action Resources Teams (SMARTs) initiative • Tickets went on sale for Queenslanders to be part of steam train journeys to commemorate 150 years of rail throughout the state

November December

• Successfully implemented the G20 Summit operations plan alongside Queensland • Awarded the top award at the 2014 Premier’s Awards for Excellence for Police Service and other government agencies commitment to on-time running • Extreme weather events resulted in damage to the network with Queensland Rail • Launched the third and final Spirit of Queensland train as part of a recovering the network quickly $200 million investment in regional services • Kuranda Scenic Railway awarded gold in the Specialised Tourist Service category at the Queensland Tourism Awards

February January

• Undertook a major recovery of the regional rail network between Rockhampton • Heritage steam train Bety embarked on her sold out journey to Cairns, with and Mackay following devastating Cyclone Marcia more than 12,000 people taking part on the journey • Hosted 100 key stakeholders from across the Australian and New Zealand rail • Iconic Sunlander train retired after 61 years of service and more than industries for the 2015 SPAD Conference 3.5 million passenger journeys recorded over her time • Work began on major overhauls of the Rockhampton and Bundaberg Tilt Trains

March April

• CSIA reviewed customer service standards and recertified Queensland Rail with an • Helen Gluer appointed CEO of Queensland Rail for another three years improved score of 7.32 out of 10 • Kuranda Station, visited by more than 350,000 passengers each year, celebrated its 100th birthday • Unveiled a new-look platform at Milton Station, following a $4.6 million upgrade • Steam train Bety embarked on local trips in Rockhampton to thank emergency service workers who helped with the Cyclone Marcia recovery efforts

June May

• Announced a multi-million dollar rail contract to Downer to maintain the wagon • Appointed a contractor to build four new train stabling facilities at Woombye, fleet for the next five years Banyo, Elimbah and Robina • Queensland Rail recognised with the Australasian Railway Association’s (ARA) • Launched the 150 gifts initiative with a donation of care packages to 2015 Awards for Customer Service Women’s House at Woolloongabba • Heritage steam train journey began with the AC16 ‘Yank’ from Brisbane to Charleville

Page 10 | Queensland Rail Annual and Financial Report 2014-15 Operational performance

Summary of non-financial measures

Unit 2014-15 Actual 2014-15 Target Lost Time Injury Frequency Rate Rate 4.53 3.99 Employee initiated turnover % 3.40 4.20 Unscheduled absence (Days/FTE) Rate 11.17 11.76 Signal Passed At Danger per MTK - Operator Rate 2.28 2.34 Reliability - Citytrain 24/7 (adjusted for Force Majeure) % 99.79 99.87 Reliability - Traveltrain 24/7 (adjusted for Force Majeure) % 97.62 98.00 On-time running - Citytrain 24/7 (adjusted for Force Majeure) % 97.24 94.17 On-time arrival - Traveltrain % 85.09 75.00 Customer satisfaction - Citytrain (TransLink index) Rate 70.00 70.00 Customer satisfaction - Traveltrain Rate 81.60 81.00 Customer injuries per million passenger journeys Rate 11.28 11.57 Track utilisation per million track km - Regional Access Rate 2.47 2.34

The performance indicators listed above are as per those included in the Queensland Rail Operational Plan 2014-15. Queensland Rail performed well against its operational key performance indicators in 2014-15 across areas including on-time running, customer satisfaction, customer injuries, and employee turnover and absenteeism. While the five year Lost Time Injury Frequency Rate (LTIFR) trend has improved by 51 per cent, there was an increase in the LTIFR during 2014-15. Queensland Rail will put in place strategies and programs to address workplace and employee safety in 2015-16. More information about Queensland Rail’s safety performance and programs is detailed on pages 18-21 of this report.

Queensland Rail Annual and Financial Report 2014-15 | Page 11 Financial performance

Financial summary Consolidated income statement for the year ended 30 June 2015

2014-15 Actual ($M) 2013-14 Actual ($M) Revenue 1,933.0 1,969.2 Operating Expenses (1,058.1) (1,158.6) Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) 874.9 810.6 Depreciation and Amortisation Expense (368.0) (317.6) Earnings Before Interest and Tax (EBIT) 506.9 493.0 Net Finance Costs (187.0) (183.3) Income Tax Expense (96.2) (96.1) Net profit 223.7 213.6

The Queensland Rail consolidated entities’ EBIT increased by $13.9 million. Revenue decreased by $36.2 million principally due to a reduction in the Transport Services Contract. Operating expenses in the prior year included a $30 million onerous contract provision for surplus office space. Queensland Rail delivered additional train kilometres and underlying operating expenses reduced by 6.2 per cent on the prior year primarily due to a reduction in employee expenditure. Depreciation and amortisation expense increased 15.9 per cent due to accelerated depreciation from the revision of asset lives. A dividend of approximately $179 million was declared in respect of the year ended 30 June 2015. This dividend will be paid during 2015-16.

Financial performance measures compared to the 2014-15 Operational Plan

Unit 2014-15 Actual 2014-15 Target Operational cost per thousand revenue GTK $ 46.62 50.87 Return on operating assets % 7.57 6.35 Debt to (debt + equity) % 51.33 51.44

The performance indicators listed above are as per those included in the Queensland Rail Operational Plan 2014-15.

Page 12 | Queensland Rail Annual and Financial Report 2014-15 Consolidated balance sheet as at 30 June 2015

2014-15 Actual ($M) 2013-14 Actual ($M) Current Assets 474.9 582.8 Non-current Assets 6,409.5 6,320.4 Total Assets 6,884.4 6,903.2 Current Liabilities 613.1 666.8 Non-current Liabilities 3,426.7 3,433.8 Total Liabilities 4,039.8 4,100.6 Net Assets 2,844.6 2,802.6 Contributed Equity 2,592.0 2,594.9 Reserves 0.1 - Retained Earnings 252.5 207.7 Total Equity 2,844.6 2,802.6

The consolidated entities’ current assets decreased by $107.9 million to $474.9 million as a result of decreased cash deposits and a reduction in trade and other receivables. The consolidated entities’ current liabilities decreased by 8.1 per cent to $613.1 million as a result of a reduction in trade and other payables. Total equity for Queensland Rail increased by 1.5 per cent to $2,844.6 million as a result of profit for the year of $223.7 million. This was offset by the declared dividend of approximately $179 million.

Consolidated cash flows for the year ended 30 June 2015

2014-15 Actual ($M) 2013-14 Actual ($M) Net cash inflow from operating activities 570.5 675.8 Net cash outflow from investing activities (474.6) (313.4) Net cash outflow from financing activities (170.9) (215.7) Net increase/(decrease) in cash and cash equivalents (75.0) 146.7

The decrease in cash inflows from operating activities in the current year is due to a reduction in cash inflows from the Transport Services Contract, offset by a reduction in cash outflows to suppliers and employees as a result of decreased expenses. The increase in cash outflows from investing activities in the current year is a result of increased expenditure on fixed assets. The decrease in cash outflows from financing activities is attributable to no repayment of debt this financial year, offset by an increased dividend payment. The consolidated entities’ net debt position increased by $25.3 million and total equity increased by $42 million resulting in a decrease in the gearing ratio from 51.6 per cent to 51.5 per cent.

Queensland Rail Annual and Financial Report 2014-15 | Page 13 Our history, our future

Page 14 | Queensland Rail Annual and Financial Report 2014-15 150 years in the making

Queensland Rail Annual and Financial Report 2014-15 | Page 15 150 years of rail in Queensland Since 1865, Queensland Rail has been connecting communities throughout the state of Queensland. From transporting commuters, tourists, freight, resources, livestock and mail, rail has played a significant role in building the backbone of the state.

The story of Queensland’s railways began in 1861. Queensland’s Along with nine restored wooden carriages, Bety travelled from fledgling Parliament was presented with a bill for a wooden-railed, Brisbane up the east coast to Mareeba, stopping at communities all horse-drawn tramway. It was never built. But in 1863, Irish engineer, along the way. Abram Fitzgibbon, proposed a radical engineering solution in the form Bety carried more than 12,000 passengers and travelled more than of a narrow gauge railway. Substantially cheaper to build and operate 2300 kilometres on her trip up north and back, with locals giving her a due to its smaller than standard track width, it was considered a perfect warm welcome as she pulled into their towns with hundreds of people solution to serve the fast developing colony of Queensland. lining roads, streets and train platforms. Work on Queensland’s first ever rail line began in earnest in February Bety arrived back into Roma Street Station in February 2015 before she 1864, when Lady Roma Bowen, the wife of the then governor, was headed out west on her next celebratory journey to Longreach in April. given the pleasure of turning the first sod. The first line would run from Ipswich to Bigges Camp, now known as Grandchester. Bety visited several local towns in the outback including Emerald, Barcaldine and Longreach. Her return leg from Winton had extra As the entire state shook during World Wars I and II, rail was pivotal significance as she commemorated the ANZAC 100th anniversary. to the war effort, moving soldiers, military equipment and the injured. The ‘Troop Train’ as it was known, arrived to a warm welcome from rail The demand on the railway was so great during World War II that in enthusiasts. 1943, 20 AC16 steam locomotives had to be imported from the United States to ease the strain on the busy network. The final leg of the journey left Roma Street Station in late May, and travelled to Charleville in the west and took in many communities In more recent times, rail has been at the centre of Queensland’s including Toowoomba and Roma. This time the AC16 ‘Yank’ was used. resources boom. Everything from coal to iron ore has been carried In testimony to the popularity of the heritage fleet, many of the trips to port on Queensland Rail tracks then exported to all corners of the were completely sold out and locals and enthusiasts lined the streets globe. Right through to opening up the treasures of the outback to and level crossings all along the route to take photos and cheer on the tourists from around the world; the railway has proven itself central to train as she whistled her way through the landscape. As well as being Queensland’s story. part of Queensland Rail’s 150th anniversary, the trips were a poignant reminder of the rich history the railway has right throughout the state. Celebrating 150 years of rail in Queensland The celebrations continued throughout the first six months of the year Queensland Rail kicked off 2015 with a series of events to mark 150 with the donation of 150 gifts to communities throughout the state. years of connecting communities throughout Queensland. Celebrations These gifts ranged from old railway seats, storyboards, sleepers and started in January with the departure of the pride of the heritage fleet, railway infrastructure, giving historic rail pieces a second life in towns the BB18 ¼ 1079 otherwise known as ‘Bety’, on an historic journey to across Queensland. north Queensland.

Page 16 | Queensland Rail Annual and Financial Report 2014-15 Timeline 1865-2015

1865 1875 1879

Queensland’s first railway line opens from Ipswich to Brisbane railway opened for use Emerald line opened Ipswich to Grandchester (Bigges Camp)

1888 1887 1882

Opening of railway to Charleville First passenger journeys from Brisbane via Charters Towers railway opened Wallangarra to Sydney

1890 1891 1892

Brisbane to Bundaberg line is connected Barron Gorge Railway (Cairns to Kuranda) The Central Railway to Longreach is opened opened

1923 1910 1908

Brisbane to linked by North Coast Railway and Great Western Opening of railway to Cloncurry North Coast Railway Railway acts passed by Parliament

1935 1952 1953

New tourist train the Sunshine Express is First diesel electric locomotives come into enters service introduced service

1961 1958 1954

Stainless steel carriages introduced on Last steam locomotive is put into service enters service Brisbane’s suburban trains

1969 1979 1989

Steam era ends in Queensland First electric trains enter operation in First electric train service (Spirit of Capricorn) Queensland Brisbane to Rockhampton

2013 2003 1998

Spirit of Queensland is introduced Cairns Tilt Train is introduced to the fleet Rockhampton Tilt Train comes into service to the fleet

20152015 150 years of rail in Queensland 150 years of rail in Queensland

Queensland Rail Annual and Financial Report 2014-15 | Page 17 Our safety and security

“We patrol trains and stations, targeting crime and anti-social behaviour.” Peter Julie and Peter - Senior Constables, Queensland Police Service Railway Squad

Page 18 | Queensland Rail Annual and Financial Report 2014-15 Our safety and security Safety is, and always will be, Queensland Rail’s highest priority. The 2014-15 financial year saw significant improvement in the safety of Queensland Rail’s operations as it strives to be Australia’s safest railway. This is reflected in improvements in a number of safety and security key performance indicators.

Key highlights for 2014-15 include: Emergency preparedness • Queensland Rail’s Signal Passed At Danger (SPAD) count Queensland Rail conducted 30 emergency training exercises with decreased by 10.6 per cent over the past year employees throughout 2014-15 to ensure the organisation is well • An increase in safety reporting of hazards and near misses by prepared to respond to any emergency or incident. These exercises 10 per cent over the past year provide employees and emergency services with the ability to train for emergency incidents in a realistic simulation. In July 2014, the Rail • A reduction in the number of level crossing near misses by 6.3 per Operations Emergency Preparedness team simulated an emergency cent over the past year exercise at the Portsmith facility in Cairns. The exercise tested the • The level of serious crime on the Citytrain network remained low, emergency response to a diesel spill, including the environmental with less than three police reported assaults per million passenger incident response. journeys In December 2014, an emergency training exercise was held with the Safety initiatives for employees steam locomotive Bety at the Ipswich Rail Workshops in preparation for the steam train journeys throughout the state to celebrate 150 years Queensland Rail’s number one priority is safety. During 2014-15, of rail in Queensland. This exercise was supported by Queensland Police Queensland Rail undertook a range of initiatives to reduce the Service Railway Squad and emergency services (Queensland Fire and number of lost-time and medically-treated injuries in the workplace. Emergency Services and Queensland Ambulance Service) crews from the Ipswich area, providing more than 30 personnel plus emergency ‘Great Catch’ campaign response vehicles. During the past financial year, Queensland Rail implemented a number of initiatives aimed at building on its strong safety record, including the In May 2015, far-north employees were put to the test in responding ‘Great Catch’ campaign which ran through February, March and April to a mock emergency involving the iconic Kuranda Scenic Rail service. 2015 and encouraged employees to report near misses and hazards in Exercise ‘First Strike’ involved more than 60 local emergency services the workplace. personnel and provided an opportunity for both Queensland Rail and response agencies to be trained in dealing with a multi-casualty All reports submitted were considered a ‘Great Catch’ and the higher incident. the quality of the reports, the more runs earned for each team. Across the board, Queensland Rail saw an 80 per cent increase in reporting Safety Motivated Action Resource Teams (from 315 to 573 hazards and near misses) thanks to efforts of keen The Safety Motivated Action Resource Teams (SMARTs) program ‘fielders’ throughout the business. Through this increased vigilance in draws on the knowledge of our employees and empowers them, reporting hazards and near misses the organisation observed a six through the provision of a budget and coaching, to implement safety per cent reduction in the number of injuries compared to the same improvements at a local level. SMARTs allow employees to identify period in the previous financial year. and risk assess their own hazards and control the identification and implementation of a health and safety solution. SMARTs facilitate not Alcohol and other drugs (AOD) program only a reduction in workplace injuries but also improve productivity in Queensland Rail’s alcohol and other drug testing program is among the the workplace. most rigorous in the Australian rail industry. To ensure that Queensland Rail continues to deliver best practice, in 2015 it engaged Dr Jeremy There are currently 128 teams registered to participate in SMARTs to Davey, Professor at Queensland University of Technology and Deputy further embed the safety culture in the organisation. In February 2015, Director of CARRS-Q, to review the organisation’s existing alcohol and a video for employees was developed to showcase the success stories other drugs management policies, systems, testing regime, historical where change has been embedded in the organisation. test results, and post-test management practices. Queensland Rail was recognised at the National Safety Council of Dr Davey has extensive knowledge and experience in the area of alcohol Australia’s (NSCA) 22nd Annual National Safety Awards of Excellence and other drugs management systems and processes, particularly those as Member of the Year. This category provides members with the utilised within large, diverse organisations as well as the public sector. Dr opportunity to demonstrate their commitment and leadership in Davey will provide recommendations to Queensland Rail in September workplace health and safety. Queensland Rail was recognised for its 2015 for the management of AOD in the workplace to reduce the risk of implementation of the SMARTs and ErgoSMARTs integrated safety safety incidents as a result of AOD. programs. These programs are a bottom up approach to safety. ErgoSMARTs specifically target potentially hazardous manual tasks as this is Queensland Rail’s number one causal factor for workplace injuries. ErgoSMARTs utilise an innovative online risk assessment tool.

Queensland Rail Annual and Financial Report 2014-15 | Page 19 Our safety and security (cont)

Safety and security initiatives for customers G20 preparation and the community Queensland Rail undertook preparations early for the G20 events In 2014-15 the organisation implemented a number of security including the Finance Ministers and Central Bank Governors Meeting initiatives, which helped to ensure the level of serious crime on the in Cairns in September and the November G20 Leaders’ Summit in Citytrain network remained low, with less than three police reported Brisbane. Dedicated security plans were developed for each event assaults per million passenger journeys. based on threat assessments and implemented in partnership with the Queensland Police Service Railway Squad and G20 group. Signal Passed At Danger (SPAD) prevention Queensland Rail delivered a range of enhanced security training Queensland Rail has a robust SPAD prevention strategy in place and products to employees in the lead up to the event. A dedicated G20 this year it saw a 10.6 per cent reduction in the number of SPADs. exercise series was also conducted to test Queensland Rail’s response to Queensland Rail is committed to leading the way when it comes to a range of scenarios in partnership with emergency services. safety and in February 2015 it hosted the 2015 SPAD Conference Dedicated security operations were implemented for both events which was attended by railways from both Australia and New Zealand. involving the deployment of Authorised Officers, Railway Squad Police The theme of the conference was ‘Industry Partnering in SPAD and security technologies to key locations, all while operating under Prevention’ and it provided an opportunity for the industry to discuss a special timetable. Queensland Rail’s contribution to the event was the many factors involved in SPAD management and share both formally recognised with a police award. challenges and success stories. An impressive speaker line up was led by keynote speaker Mike Carr Level crossing safety from the Rail Safety and Standards Board in the United Kingdom (UK). In a continued bid to improve safety at level crossings in Queensland, Rail operators agreed that SPAD prevention is about creating error in late 2014 Queensland Rail developed and trialled a new, low-cost tolerant systems and procedures, and understanding that everyone technology at two high risk pedestrian level crossings. Cannon Hill and plays a role, not just train drivers. Coorparoo Stations were upgraded with paint markings and signage designed to safely guide pedestrians across the level crossings by Security personnel indicating where it is safe to walk. Additional pavement level warning Queensland Rail has a longstanding partnership with the Queensland messages informed customers of the risk of incurring a fine if they Police Service, including a dedicated Railway Police Squad. In 2014- strayed from the path. 15, Queensland Rail and the Queensland Police Service signed a These sites had been identified as having high volumes of reported memorandum of understanding for the next four financial years. The near misses and pedestrian violations, however during the trial period operational strength of the railway squad was increased over the past there was a significant 40 per cent reduction in reported level crossing financial year to 70 officers, with plans to add more officers in 2015-16. violations. In August 2014 the sixth railway police outpost opened at Ipswich Station, further boosting safety and security for Ipswich line Bridge strike protection commuters. Queensland Rail is committed to reducing the likelihood and impact of In July 2014, Queensland Rail established the Authorised Officer Unit, bridge strikes through engineering solutions and working with police which works closely with the Queensland Police Service, more than on enforcement. Bridges across the network are fitted with a variety 200 private security guards and TransLink’s Senior Network Officers of protection measures, ranging from signage to height gauges, to manage anti-social behaviour on the Citytrain network. Authorised protection beams, and a state-of-the-art Bridge Impact Detection Officers also patrol Queensland Rail’s long-distance services and System at two locations, which uses infrared laser detectors and CCTV conduct rail safety operations at level crossings and other locations as to detect over-height vehicles and provide a visual warning to drivers guided by intelligence analysis. via active signage. In September 2014, Queensland Rail installed new protection beams Closed Circuit Television (CCTV) on both approaches to the Annerley Road rail bridge at Dutton Park. In addition to Queensland Rail’s security personnel, the organisation The specially designed beams not only prevent over-height vehicles now has more than 8900 CCTV cameras across its network. These from colliding with a bridge, but also reduce the likelihood of a vehicle cameras are monitored remotely at Queensland Rail’s 24-hour security rolling over should it strike the beam. monitoring facility and all cameras record images that can assist Queensland Rail is committed to ensuring road users and rail Queensland Rail and police in their investigations. commuters are as safe as possible and is currently working with local Queensland Rail is committed to working closely with the Queensland councils to investigate the roll out of these protection beams at other Police Service to reduce anti-social behaviour on the rail network and key locations across the south-east Queensland Rail network. in the broader community. In 2014-15, Queensland Rail processed 2066 CCTV requests by the Queensland Police Service to assist in the identification and prosecution of people committing crime in the broader community.

Page 20 | Queensland Rail Annual and Financial Report 2014-15 Improving customer safety Queensland Rail is committed to constantly improving the personal safety and the security of its customers. This year, Queensland Rail employees had a strong focus on customer safety, with employees out and about at key stations talking to customers about safety. This commitment to customer safety resulted in a 7.7 per cent reduction in the number of customer injuries from 607 in 2013-14 to 560 this financial year.

“We take pride in our role providing a safety and security presence on Queensland Rail trains, stations and other assets.” Ed Ed and John – Authorised Officers

Queensland Rail Annual and Financial Report 2014-15 | Page 21 Our people

“We take great pride knowing we are connecting communities and helping get customers to their destination safely and on time.” Colleen Colleen and Paul - Train Guards

Page 22 | Queensland Rail Annual and Financial Report 2014-15 Our people As one of the state’s largest employers, Queensland Rail understands that its success is dependent on leveraging the capability of its people.

As at 30 June 2015, there were 5778 full-time equivalents (FTEs) The group encourages sharing of knowledge to support enhanced employed at Queensland Rail, of which: opportunities within the safety and environment discipline to deliver better business outcomes. • 88 per cent were employed in core functions (Citytrain, Regional Network and Freight, Travel and Tourism) Queensland Rail’s Inspiring Women events also provide employees with • The top three occupations were train drivers (10.8 per cent), the opportunity to hear from a range of speakers on their experiences, station managers and officers (10.3 per cent), and trackworkers opportunities and challenges, and current industry issues. Speakers (10.2 per cent) such as Julie Bullas, Executive Director Policy, Communications and Planning in the Office of the National Rail Safety Regulator, shared • 20 per cent were women (48 per cent in enabling functions and valuable knowledge with attendees from across Queensland Rail. 16 per cent in core functions) • 2 per cent identified as being Aboriginal or Torres Strait Islander, Recognising the traditional owners of the land on which Queensland 5 per cent as having a disability and 8 per cent as coming from a Rail operates was the key focus of NAIDOC week celebrations in July non-English speaking background 2014, with a strong focus on the Yagara people in the Springfield area. One of the highlights of the celebrations was the creation of a • 94 per cent were employed on a permanent basis permanent display of precious Aboriginal artefacts discovered during • The permanent separation rate was 5.6 per cent construction of the Richlands to Springfield rail extension, with replicas • The average length of service was 15 years and the average age now on display at Springfield Central Station. of employees was 44.6 years Queensland Rail’s commitment to accessible facilities was highlighted in the celebrations of International Day of People with Disability. An Embracing a diverse workforce interactive display was provided for employees, demonstrating some of In 2014-15, a key aspect of Queensland Rail’s people strategy focussed the innovative technologies available that improve accessibility for all. on further developing an inclusive work environment for all employees and supporting those who are traditionally under-represented in the Sharing diversity stories organisation, such as women, Aboriginal and Torres Strait Islander The ‘Step Into My Shoes’ initiative was launched in 2014 to provide an people, people from a non-English speaking background and people opportunity to increase the awareness and appreciation of the diverse with a disability. cultures and experiences of Queensland Rail employees. The response Queensland Rail’s policies, procedures and programs support the to this initiative has been fantastic and the stories shared by employees development of an inclusive culture which promotes equal employment inspiring. opportunity, employee engagement and attracts the best talent. A number of employees shared their stories about the impact Autism Spectrum Disorder (ASD) has had on their lives. Employees have also Growing diversity shared their insight about identifying as Aboriginal or Torres Strait Queensland Rail recognises and values the contribution made by Islander and shared their stories about their culture and traditions. people with diverse backgrounds, experiences and perspectives. Enterprise agreements The organisation’s Human Resources team develops and implements programs and initiatives to create an inclusive and flexible working In April 2015, the High Court handed down its decision regarding environment, where everyone is treated fairly and with respect and the Queensland Rail’s status as a Statutory Authority. abilities and skills of all employees are valued. Queensland Rail was declared to be a trading corporation for the Human Resources also strives to provide a framework which facilitates purposes of the Commonwealth Constitution and subject to the federal prompt and effective resolution of employee issues. industrial relations regime (rather than the Queensland State industrial relations regime). Celebrating diversity As a result, all Queensland Rail enterprise agreements will be Key to Queensland Rail’s diversity strategy is the visible celebration of negotiated under the federal industrial relations regime moving the unique qualities that each employee brings to the organisation forward. and recognition of the vital roles that these diverse qualities play in its In June 2015, Queensland Rail commenced enterprise bargaining business success. negotiations with unions under the Fair Work Act 2009 (Cth) In 2015, Queensland Rail marked International Women’s Day with a jurisdiction for a replacement to the current agreements. forum attended by more than 80 male and female employees from across the business. Guest speakers from Queensland Rail spoke openly Flexible working practices about their career journeys, challenges and personal experiences, Flexible working arrangements benefit Queensland Rail by allowing relevant to all employees regardless of gender. all employees to balance their family and work responsibilities. Women in the workplace were also celebrated through groups such Queensland Rail is committed to assisting employees to balance work as the Women in Safety and Environment (WISE) group which was and life by providing a range of flexible work/life options. formed to foster workplace diversity. Queensland Rail Annual and Financial Report 2014-15 | Page 23 Our environment

“Queensland Rail is determined to minimise its impact on the environment and to develop environmentally sustainable practices.” Brian – Environmental Officer

Page 24 | Queensland Rail Annual and Financial Report 2014-15 Our environment Queensland Rail is committed to managing its services and operational activities in an environmentally responsible manner to meet legal obligations and community expectations.

Key highlights for 2014-15 include: Ballast recycling • More than 26,000 tonnes of ballast spoil recycled for In 2015, Queensland Rail renewed its ballast recycling contract for the beneficial re-use third year running to facilitate the removal, processing and beneficial • No enforceable environmental compliance breaches were re-use of ballast stone. In 2014-15, approximately 69,000 tonnes of recorded ballast spoil was produced by Queensland Rail maintenance works. Of this 69,000 tonnes, 26,000 tonnes was diverted from landfill and • Maintained positive working relationships with processed for beneficial re-use. Beneficial re-use included aggregate environmental regulators and road base being supplied back to the civil construction and building industries. Sustainability of rail travel

Moving people by rail is well recognised as an environmentally Environmental offsets sustainable form of transport because of the ability to carry large Environmental offsets apply to developments where there is an numbers of passengers efficiently. The capacity of a motor car is usually unavoidable impact on significant environmental values such as koala five people, but the practical average occupancy of cars per journey is habitat in south-east Queensland, protected vegetation, wetlands of estimated at less than one and a half passengers. high ecological significance, fish habitat areas or native wildlife. In A six-carriage Queensland Rail train can carry approximately 480 coordination with offset providers, Queensland Rail works to determine people. Therefore, one train has the capacity to take approximately offset obligations and opportunities to provide offsets as a land-based 320 cars off the road. The benefits include reduced greenhouse gas offset, financial settlement offset or a combination of both. emissions and pollution, decreased congestion on roads, and greatly As part of the Caboolture to Beerburrum upgrade project, Queensland reduced requirements for CBD car parking space. Rail established a vegetation offset area located at Morayfield. Throughout 2014-15, Queensland Rail continued to manage the 3.83 Noise management hectare offset area that was secured following the upgrade project. Queensland Rail is aware that those living close to railway lines can As part of the Darra to Springfield Transport Corridor project (Stage 2 experience varying levels of noise. While noise from the operation of – Richlands to Springfield), Queensland Rail entered into a services a railway is exempt from environmental nuisance provisions under contract in April 2015 with Ipswich City Council and Cherish the the Queensland Environment Protection Act 1994 (Qld), Queensland Environment Foundation (a not-for-profit organisation) to deliver a Rail strives to manage noise associated with its operations wherever koala habitat offset. This offset will see more than 22,500 koala habitat reasonable and practical. trees planted and protected. In January 2015, Queensland Rail commenced a review of the safeworking requirements for rail traffic to sound the horn on the National greenhouse and energy reporting Queensland Rail network and infrastructure. The rail traffic horn Queensland Rail monitors its energy use and greenhouse gas (often referred to as a whistle or klaxon) is an audible signalling device emissions and reports annually to the Federal Government’s Clean used to warn workers, customers and members of the public that rail Energy Regulator. The largest portion of Queensland Rail’s carbon traffic is approaching or is about to move, and to communicate with emissions arises from the supply of traction electricity to electric trains. rail workers. Throughout 2014-15, Queensland Rail’s environment team continued The review was undertaken to provide an independent assessment to collaborate with technical experts throughout the business to of Queensland Rail’s current use of rail traffic horns, a comparison identify and investigate energy efficiency and emissions reduction of current and potential future scenarios to other Australian and opportunities. international railway standards, and recommendations and advice on potential changes that might shape the future state of rail traffic Environmental compliance horn use. The outcome of the review will be finalised in the 2015-16 No Environmental Regulator enforcement actions occurred in 2014-15. financial year. Queensland Rail continues to work proactively and co-operatively with all relevant environmental regulatory agencies. Fauna management on rail corridors To enhance the safety of native fauna, in 2014-15 Queensland Rail continued its program to retro-fit parts of the Citytrain’s security fencing with fauna exclusion panels and installed reflective tags to deter flying fauna in high priority areas.

Queensland Rail Annual and Financial Report 2014-15 | Page 25 Our community

“My role is to work with our customers to make sure everyone can access our stations and trains safely and easily.” Ben – Community Engagement Officer

Page 26 | Queensland Rail Annual and Financial Report 2014-15 Our community Queensland Rail values the important role that rail plays in many communities throughout the state, keeping them connected and linking them with both social and economic opportunities. Each day, the Queensland Rail network connects communities with goods, employment, friends and family, education and medical facilities, and social, cultural and sporting events. Queensland Rail recognises and embraces the role its business plays throughout Queensland, and has a strong commitment to engage and support the communities in which it operates wherever possible.

Key highlights for 2014-15 include: 150 gifts initiative • Raised more than $570,000 for charity and community partners As part of the state’s celebrations of 150 years of rail, this year • Educated 30,000 students about rail safety Queensland Rail launched its 150 gifts initiative to say thank you and recognise communities who have contributed to the rail industry since • Donated more than 150 gifts to Queensland communities, its establishment in 1865. including many household items to domestic violence not-for-profit organisations These 150 pieces, including railway sleepers and rollingstock no longer required by Queensland Rail, have been recycled and given a second Charity and community partnerships life with communities throughout the state. This year, Queensland Rail continued its proud support of its charity The first of the 150 gifts was kicked off with the restoration of two and community partners and other not-for-profit organisations through heritage steam locomotives and nine wooden carriages, which were a number of initiatives. shared with more than 14,000 passengers through special steam Through collections at its busiest stations, Queensland Rail helped to train experiences throughout Queensland. Rail history storyboards raise more than $70,000 throughout the year to support its top five and commemorative bench seats which replicate a Queensland charity partners – Guide Dogs Queensland, the Starlight Children’s Government Railways platform seat from the 1920s were also gifted Foundation, Prince Charles Hospital Foundation, Cancer Council to councils where the rail industry has played a large role in the Queensland and beyondblue. establishment of their region over the years. In addition, Queensland Rail has supported other valuable partners Other gifts included the donation of timber railway sleepers surplus (including the Salvation Army, Endeavour Foundation, Autism to Queensland Rail’s needs to community groups for garden beds Queensland, Daniel Morcombe Foundation, Wounded Heros, Returned and landscaping, and care packages of unclaimed lost property items and Services League, Youngcare, Surf Lifesaving Queensland, Mater to Women’s House which supports families who have experienced Foundation and MS Australia) to raise funds and provide opportunities domestic violence. worth in excess of $500,000. Citytrain commuters were also encouraged to get behind the fight In September, Queensland Rail and Cancer Council Queensland joined against domestic violence with the ‘Gift of Comfort’ initiative and forces to host a culinary cook off between My Kitchen Rules celebrities donated many thousands of everyday household items at stations for Paul Bullpitt and Blair Tonkin and two Queensland Rail chefs. The chefs not-for-profit organisations DV Connect, Assist A Sista and Women’s were put to the test, with their meals tasted and judged by residents of House. Ellis Lodge who were undergoing cancer treatment. Community education To continue Queensland Rail’s support for the Starlight Children’s Foundation, in September more than 60 children and family of the Through its Railsmart Community Education Program, Queensland Foundation boarded a special steam train from Roma Street Station Rail aims to positively influence the attitudes and behaviours of school to Ipswich for a fun day of exploring and activities at the Ipswich students and communities to act safely and respectfully at railway Workshops Rail Museum. stations and level crossings. Queensland Rail also operated a steam train for Autism Queensland in In the 2014-15 financial year, Queensland Rail delivered 134 rail October, with more than 100 children and their families enjoying this safety presentations to youth groups, community organisations and special day out. more than 30,000 students, including those from early and alternate learning centres. Throughout December, Queensland Rail appealed to customers to purchase a decoration to hang on the Queensland Rail Christmas This year, Queensland Rail also continued its quarterly Rail Safety tree in order to grant a child a Starlight wish in time for Christmas. and Orientation Days for customers with a disability and students More than $10,000 was raised thanks to the generosity of Citytrain from culturally and linguistically diverse backgrounds. The events customers. help attendees to become familiar and comfortable with rail facilities and train services, and educate them on how to act safely on the rail network.

Queensland Rail Annual and Financial Report 2014-15 | Page 27 Our community (cont)

To further spread the rail safety messages, in July and August 2014 Accessibility Queensland Rail enlisted rail accident survivor Jonathan Beninca to Queensland Rail is committed to providing accessible rail services that help educate urban and regional communities across the state of the allow all customers to travel safely and easily. potentially deadly consequences of trespassing in the rail corridor. Almost 7000 students heard Jonathan’s powerful messages, which Since 2003, Queensland Rail has actively engaged and consulted a detailed the consequences and his learnings of being struck by a train cross-section of the state’s peak disability sector organisations through while trespassing on a rail corridor in New South Wales 10 years ago. its Accessibility Reference Group. The meetings provide a forum to This included sessions to at risk youth in south-east Queensland and obtain community input in the development of non-discriminatory and the Brisbane Youth Detention Centre. accessible procedures, design work, construction and customer service. In May 2015, Queensland Rail’s Community Education Coordinator This year Queensland Rail has been heavily involved in several also delivered rail safety presentations to more than 4137 students initiatives at a national level, taking a lead role in the development in south-west Queensland, where 40 level crossing near misses were and submission of the Australasian Railways Association exemption reported last financial year. application to the Australian Human Rights Commission (AHRC). In June 2015, Queensland Rail also made a submission to the Federal Government’s review of the Disability (Access to Buildings – Premises) Standards, and continues to advocate for modernisation of these and related standards in order to achieve certainty for operators and the best possible access outcomes for customers. Late 2014 also saw the finalisation and submission to the AHRC of Queensland Rail’s updated Accessibility Action Plan. The plan is a critical document for the organisation that provides information on its achievements to date in providing accessible, non-discriminatory rail services, and details its future plans for improving access to stations and trains.

Caroline, supporting the ‘Gift of Comfort’ initiative at Central Station

Page 28 | Queensland Rail Annual and Financial Report 2014-15 Positive pARTnerships Program To prepare Milton Station for the opening of a transit oriented development in 2015, platform one received a $4.6 million upgrade Through its ongoing Positive pARTnerships Program, Queensland including a new, 100-metre long street art mural. The abstract artwork Rail partners with communities across the state to transform rail features the text ‘Milton’ and uses geometric shapes to symbolise infrastructure with high quality art work. The program aims to instill various stations on the Ipswich/Springfield line and the bustling city life community pride in Queensland Rail’s infrastructure and to date, has of Milton. delivered almost 100 artwork projects which cover more than 20,000 square metres of the rail network. In early June 2015, Queensland Rail also completed a mural on the underpass of a rail bridge on Annerley Road, Dutton Park to honour a In July 2014, Queensland Rail partnered with Brisbane City Council to cyclist who tragically lost his life at the site in 2013. Queensland Rail deliver a striking, contemporary wall mural at Wooloowin Station and worked closely with the cyclist’s wife to develop the mural concept and in November 2014, Queensland Rail unveiled a new, beautiful art mural design. at Hemmant Station which was completed in partnership with female students from the nearby Hemmant Flexible Learning Centre.

Dan, Graffiti Prevention Coordinator, at the Annerley Road rail bridge mural

Queensland Rail Annual and Financial Report 2014-15 | Page 29 Citytrain

“I genuinely love coming to work every day and working with different train crew or experiencing different stations and customers.” Geni – Train Driver

Page 30 | Queensland Rail Annual and Financial Report 2014-15 Citytrain Each year, more than 50 million customer trips are taken on Queensland Rail’s Citytrain network. Stretching more than 800 kilometres, each day the bustling network connects thousands of commuters to employment, education, and the many cultural and social events held regularly across the region.

Key highlights for 2014-15 include: International Customer Service Standard (ICSS) • 95.05 per cent of all trains arrived at their destination on time Since 2009, Queensland Rail has used the International Customer • 97.24 per cent of trains (adjusted for force majeure events) arrived Service Standard (ICSS) as an independent business improvement tool at their destination on time to benchmark its customer service progress and identify opportunities for improvement. • 51.59 million passengers travelled on the Citytrain network, up 1.4 per cent from 2013-14 In 2014, Queensland Rail achieved an audit result of 7.32 out of 10 • Approximately 345,000 services operated across the Citytrain placing the organisation in the highest tier of the standard (Integration network Level). Queensland Rail has continued to improve its score across the past six years and has positioned itself as a leader in customer service • Customer satisfaction levels continued to perform strongly against delivery within the rail industry and across all organisations assessed. a target of 70 The review in particular recognised Queensland Rail’s commitment to • 2.6 million hours were spent maintaining the network communicating with customers and the engagement of all employees in the customer experience. On-time running (OTR) performance In 2014, Queensland Rail took out three awards at the prestigious Queensland Rail maintains a strong focus on being the best and most Australian Service Excellence Awards including Organisation of the reliable rail network in Australia and sets the highest on-time running Year. The State Customer Service Team of the Year was awarded to targets in the country. In the 2014-15 financial year figures show 95.05 Queensland Rail’s dedicated On-Time Running Taskforce, and Customer per cent of all Citytrain services arrived at their destination on time. Service Executive Queensland of the Year was awarded to Executive In December, these efforts were recognised when Queensland Rail General Manager Travel and Tourist Martin Ryan. and the Department of Transport and Main Roads received the top In 2015, Queensland Rail was awarded the Australasian Railway award at the annual Premier’s Awards for Excellence for the continued Association’s (ARA) 2015 Customer Service Award. commitment to ensuring train customers arrive at their destination safe, satisfied and on-time. Network maintenance program The award specifically recognised Queensland Rail’s dedicated On-Time As part of Queensland Rail’s commitment to reliability, the organisation Running Taskforce, whose efforts over the past two years to identify invests in a comprehensive scheduled maintenance program across the and drive performance improvements have seen the company achieve Citytrain network each year. its best OTR results in more than a decade. To limit the impact to customers and event organisers, maintenance In addition to the taskforce, Queensland Rail continues a number work is scheduled well in advance, outside of peak times or on weekends. of initiatives behind the scenes to keep trains running to schedule, including: This year, more than 2.6 million hours of maintenance work was undertaken across the Citytrain network. During this time Queensland • the ‘Every Safe Second Counts’ internal campaign that highlights Rail resurfaced 527 kilometres of track and 340 turnouts, reconditioned the role all staff can play in keeping trains running safely and on 17 level crossings and undercut eight kilometres of track. time This year, Queensland Rail also replaced almost 200,000 timber • procedures introduced at level crossings to keep trains moving safely sleepers across the Citytrain network. This completed an ongoing and reduce knock on disruptions if a vehicle hits the boom gates piece of work to transition the more than 500,000 sleepers across the • specialised rail operational response units to ensure any issues on Citytrain network to a more durable and reliable concrete model. the network are dealt with quickly The project aimed to increase the strength and reliability of track • active platform management to reduce dwell times at stations. on the Citytrain network while also increasing its serviceable life and significantly reducing the time spent on maintenance. Customer satisfaction Overall customer satisfaction with the Citytrain network reached its highest levels to date in 2014-15 as Queensland Rail continued to enhance its product and service delivery to meet customer expectations and improve the overall journey experience. The implementation of the sector two timetable had a significant positive impact on overall customer satisfaction as improved frequency of services was realised across the network.

Queensland Rail Annual and Financial Report 2014-15 | Page 31 Citytrain (cont)

Coomera to Helensvale The unique artwork features modern pictures of the bustling Central Station and each of Queensland Rail’s Citytrain line colours to draw The Gold Coast line is a key gateway from the Brisbane Domestic and customers to the platform from which their train departs. Throughout International Airports to the Gold Coast region. the subway revamp, the rich history of the tunnel was not forgotten This year, planning commenced for a $163 million duplication of the with a number of historic items found when works first began preserved only remaining single section of track on the Gold Coast line between along the walkway in glass cabinets. Coomera and Helensvale. These items provide interesting insights into the tunnel’s past and The project will involve the duplication of 8.2 kilometres of track between include early station signs and wall linings, colour schemes and tiles Coomera and Helensvale train stations, including the duplication of believed to date back to 1901. track across eight rail bridges, one of which spans 860 metres across the Coomera River, Hope Island Road and Saltwater Creek. Rail Management Centre This project will not only support the Gold Coast region to host one In 2015, Queensland Rail will complete construction and commission of the world’s largest sporting events — 2018 Commonwealth a new Rail Management Centre (RMC). This centre has been planned Games — but will also cater for the region’s growing number of for many years and will take over from the existing facility, Mayne residents and visitors. Control Centre (MCC), that is at capacity. The RMC has been designed to support the Queensland Rail network for the next 30 years, with At the end of 2014, Queensland Rail engaged the market for technical capacity for more employees and new systems to enable this function. input and geotechnical investigations. Civil and structural works are In addition to the control floor, the new building features significant expected to commence by early 2016, with the project expected to be office space and provides the potential to co-locate employees who finished in late 2017. contribute to train operations. Station Upgrade Program Transit Orientated Developments (TODs) Through Queensland Rail’s Station Upgrade Program, the organisation Queensland Rail is proactively working with the Department of is committed to continually improving its station facilities to provide Transport and Main Roads to develop innovative partnerships with equitable access for all customers. industry to identify new TODs over and/or adjacent to the rail corridor. As part of this program, the first four stations for which detailed Transit based development in and around the corridor and stations will design work is currently underway are Graceville, Dinmore, Alderley create value uplift for Queensland Rail assets, enhance the customer and Newmarket. At the end of the projects, the four stations will be experience and promote patronage growth. independently accessible without the use of stairs. In March, Queensland Rail completed a $4.6 million upgrade to With 146 stations on the Citytrain network, the prioritisation of platform 1 at Milton Station to prepare the station for the opening accessibility upgrades is determined by considering a range of factors of the adjacent TOD by private developers. The upgrade delivered a including patronage, nearby community facilities, existing degree of raised platform for improved access to trains, in addition to new stairs, accessibility, proximity of the station to alternative accessible stations escalators, shelter, lighting, seating and information displays. Upon or services, function of the station in the overall transport network and completion of the TOD in 2015, Milton Station customers will also projected population growth. receive an upgraded $5 million station entrance, including new lifts, funded and delivered by the private developer. A new-look Central Station In 2014-15, work also continued on a mixed-use hotel, residential and As south-east Queensland’s population continues to grow, Queensland commercial development currently under construction, adjoining the Rail is committed to improving station infrastructure to ensure rail corridor at South Bank Station. The Queensland Rail upgrade of customers can continue to catch their train safely and on-time. platform 1 to a high level platform will occur in the first half of 2016 This year, work was completed to double the number of fare gates at and will integrate with the opening of the adjoining development. Central Station from 18 to 36 and increase the number of wide access Queensland Government rail projects gates from four to seven for wheelchairs, prams and baggage. The project aimed to improve customer flow for the 80,000 customers who Queensland Rail is working with DTMR to expand and upgrade the swipe on and off at Central Station each day. Citytrain network to meet the growing demand for rail services in south-east Queensland. In 2014-15, Queensland Rail supported the The project also delivered a new ticket office in the heritage station Department of Transport and Main Roads in delivering a number of building to make way for the extra fare gates, and a new customer key projects and studies including Moreton Bay Rail Link and the New service window within the station to assist customers with enquiries Generation Rollingstock project. and ticket purchases. Security improvements were also made including upgrades to the station lighting and CCTV cameras around the fare gates and the ticket office. Later in the year, works were also undertaken to improve the station’s more than 120-year-old underground subway with modern wall linings, lighting, way-finding signage and contemporary artwork stretching more than 50 metres.

Page 32 | Queensland Rail Annual and Financial Report 2014-15 “I love working at Queensland Rail as it has given me an opportunity to explore and sharpen my skills which I obtained at university.” Jaswinder – Assistant Station Master

Queensland Rail Annual and Financial Report 2014-15 | Page 33 Regional Network and Freight

“It’s tough country out here, and the weather can get hot, but I’m lucky I get to work with great people.” David David and Sam – Cloncurry track team

Page 34 | Queensland Rail Annual and Financial Report 2014-15 Regional Network and Freight Queensland Rail is committed to upgrading and maintaining rail infrastructure across regional Queensland to provide a safe and reliable network for travel customers and to grow rail freight by optimising asset management.

Key highlights for the 2014-15 year include: Further south on the North Coast line, Queensland Rail invested $1.75 million re-railing 3.1 kilometres between Tamaree and Parana, • $235 million in revenue from third party access charges including laying 3900 new pandrol sleepers. • $252 million invested in maintenance and asset renewal works • More than 22 million tonnes of freight were hauled on the West Moreton system improvements regional network More than $25 million was invested in the West Moreton system in • Decrease in below rail delays on the regional network by 2014-15 to ensure the long term reliability of the line, including the 5.4 per cent in the financial year replacement of two bridges, formation work along a five kilometre length of the system, and an asset replacement program for corridor Regional network upgrade between Rosewood-Jondaryan-Columboola. Queensland Rail’s regional rail network spans more than 5700 Queensland Rail is replacing the timber rail bridge over Oakey Creek, kilometres of track including the Mount Isa, North Coast, Western, approximately 30 kilometres west of Toowoomba. The Oakey Creek West Moreton, South Western and Central Western rail lines. In Bridge is nearing its end of life and is a critical piece of infrastructure 2014-15, Queensland Rail invested more than $250 million which is used by all freight traffic going to the Port of Brisbane. The maintaining its regional network to improve its reliability. $3.4 million project is expected to be completed by December 2015. Mount Isa line improvements In May 2015, Queensland Rail called for tenders to undertake the replacement of wooden sleepers in the West Moreton and Toowoomba 2014-15 was a busy year for the Queensland Rail employees working West regions. Approximately 100,000 sleepers will be replaced over on the Mount Isa line. Track reliability and performance continues 440 kilometres of track. to be better than historic best levels as the maintenance teams executed their asset management plans. The significant works included Central West system improvements 780 kilometres of track resurfacing, major formation renewals near Julia Creek and Corella Creek, track upgrades between Duchess and In 2014-15, Queensland Rail continued its timber bridge replacement Woonigan, ballast cleaning across three bridges and repainting of strategy. By the end of 2015 Queensland Rail will have replaced 22 the historic Macrossan Bridge that stretches across the Burdekin River. bridges in the central west region at an approximate capital cost of Queensland Rail partnered with the local rural fire brigades to grade $18.8 million. This is in addition to the 68 timber bridges replaced in firebreaks, access roads, and manage vegetation with controlled burn the Central West system since 2013 and is in line with Queensland offs in large areas across the corridor. Rail’s current regional network timber bridge strategy which will see the progressive elimination of the remaining 35 kilometres of timber North Coast line improvements bridges. The 1681 kilometre North Coast line stretches from Nambour in the In addition, Queensland Rail replaced 333,000 sleepers between south to Cairns in the north and is a critical piece of infrastructure for Emerald and Winton and a further 25,000 between Emerald and Queensland Rail’s freight and travel customers. In 2014-15 Queensland Clermont. A trial of 3000 composite polymer sleepers commenced Rail invested more than $17 million into the track infrastructure between Emerald and Clermont. between Townsville and Cairns to support important regional rail freight, including a $7 million upgrade of the track between Townsville South West and Western system improvement and Cobarra to provide a more reliable rail supply chain linkage to Throughout 2014-15, Queensland Rail undertook upgrade works the Palmer Nickel refinery. Queensland Rail also upgraded diamond on the South West and Western lines, including track and level rail crossings at critical sugar cane tramway interfaces in the Innisfail crossing reconditioning, turnout replacements, culvert replacement area to improve the safety of sugar cane services railed to the South and formation upgrades. These works are essential to ensuring the Johnstone Sugar Mill. From Bilyana to south of Cairns, rail and sleepers reliability of the network. were upgraded on many of the rail curves making the ride smoother for Queensland Rail’s freight and travel customers. Tablelands system improvements In April 2015, Queensland Rail began a $3.1 million construction Queensland Rail employees and engineers from Golder Associates project to replace the Babinda Creek rail bridge on the North Coast conducted an annual geo-technical survey of the Kuranda Range rail line. line between Cairns and Townsville. Babinda Creek is part of a series The inspection was conducted over three days in May by helicopter, then of ageing timber rail bridges that are being replaced with steel and on foot over two days from Kuranda to Redlynch. The survey involves the concrete structures. Replacement of the Babinda Creek bridge was inspection of approximately 250 key sites along the line which may have completed in June 2015. Two additional timber rail bridges in Babinda been impacted by the preceding wet season. The survey ensures the safe will be replaced in late 2015. and reliable operation of the line is maintained, and any works required on the line can be carried out efficiently and safely.

Queensland Rail Annual and Financial Report 2014-15 | Page 35 Regional Network and Freight (cont)

Level crossing innovation Cyclone Marcia recovery In July 2014, Queensland Rail began trials of cutting-edge technologies Queensland Rail activated its emergency plan as category five Cyclone at level crossings in western and northern Queensland. It installed Marcia approached the coastline near Rockhampton. Trains were solar-powered, active warning systems at railway level crossings at Lane stowed on higher ground and level crossing boom gates were secured. Road, Lanefield (west of Ipswich) and on the Carnarvon Highway at While the majority of the network was unaffected, tracks between Thallon (west of Goondiwindi). The innovative safety technology called Mackay and Rockhampton suffered local power outages, debris on ‘Railnet’ is part of a $2 million project in south-west Queensland to the tracks and a washout north of Rockhampton. Queensland Rail and improve safety at railway crossings for passengers and motorists. The Ergon Energy crews worked around the clock to repair the lines and ‘Railnet’ system uses a combination of early warning trackside signs all services resumed as normal 48 hours after the cyclone crossed the with flashing lights to provide added warning to motorists if there is a coast. train approaching the railway crossing.

“Being the only female blacksmith in Queensland Rail, I take great pride in my work making tools for the track gangs to keep the regional network running smoothly.” Raine – Blacksmith Raine, Judy and Michelle – Ipswich Workshops

Page 36 | Queensland Rail Annual and Financial Report 2014-15 Regional Freight Freight movements Queensland Rail works closely with the Department of Transport and In 2014-15, Queensland Rail had total railings of approximately 18,128 Main Roads and industry to implement the Regional Freight Strategy million gross tonne kilometres (GTKs) of freight by operators Pacific for agricultural products to increase tonnage and promote efficient National and Aurizon. The regional system and commodity details of modal shift from road to rail. these freight movements are: Products hauled on the Queensland Rail regional network include: • Mount Isa line – $94.73 million revenue railing mineral • Intermodal/general freight, industrial products and rural concentrate, intermodal freight, sulphuric acids and fertilizer commodities on the North Coast line • West Moreton system – $58.11 million revenue railing coal, wheat • Bulk minerals, acid, fertiliser and mining inputs on the Mount Isa and sorghum line and a section of the North Coast line from Stuart to the Port of • North Coast line – $45.73 million revenue railing minerals, sugar Townsville branch and molasses and containerised freight • Rural commodities on the Western, South Western and Central • Regional system – $1.81 million revenue railing sorghum, wheat Western systems and live cattle.

• Coal on the West Moreton system (with freight traffic from the Over-length freight train trials Western and South Western systems also travelling across the West Moreton system). In July 2014, Queensland Rail facilitated a trial of a 1000 metre train between Townsville and Cairns. This was in addition to trials earlier The regulatory framework in 2014 between Brisbane and Townsville with rail operators Aurizon and Pacific National. The running of longer trains provides efficiency Queensland Rail’s below rail network is an open access railway gains for the rail operators and makes rail freight more competitive. regulated by the 2008 Access Undertaking (2008 AU) approved by the Queensland Rail is currently consulting with all stakeholders with a view Queensland Competition Authority (QCA). The 2008 AU was assigned to incorporating limited long train services into the master timetable. to Queensland Rail via a government transfer notice on 30 June 2010 as part of the separation of QR Limited into QR National (now Aurizon) Enterprise Asset Management System (EAMS) and Queensland Rail. During the last three years, Queensland Rail has embarked on Below rail (access) customers implementing an Enterprise Asset Management System (EAMS). This enterprise-wide system provides Queensland Rail with greater visibility Customers of the below rail business can be categorised into the of its assets, helping to deliver a safer, more efficient and sustainable following three main groups: service to its customers. • Above rail operators – such as Aurizon, Pacific National, Rail Corp The system has been rolled out with two major implementation and Cairns Kuranda Steam and other heritage operators releases. Release 1 went live in April 2014 within the network part of • End users – such as Glencore, Yancoal, Palmer Nickel Corporation , the organisation and in February 2015, release 2 went live across the New Hope, Incitec Pivot, MMG, Wlimar and South32 whole of Queensland Rail. • Other customers – Queensland Rail works with a number of Queensland Rail has also successfully deployed more than 600 other customers in a variety of ways, including on the design, mobile devices to employees in the field. Mobile users can now receive development, installation and/or connection of their adjoining and record work from anywhere in the field as well as immediately infrastructure to the Queensland Rail network. report on defects, improving safety management through quicker response times. Access revenue The launch of EAMS is producing great outcomes by improving Queensland Rail derives approximately 11 per cent of its revenue from operational efficiency and better management of Queensland Rail’s third party access charges to the below rail network. The transportation assets, aligning with its strategic objectives and supporting the of freight and commodities to domestic and international markets organisation into the future. on behalf of end customers – such as Woolworths, Coles, Glencore, Incitec Pivot and New Hope – contributes significantly to the regional labour market and other positive economic outcomes for Queensland. In 2014-15, $235 million in revenue was generated by providing reliable rail paths for commercial customers such as Aurizon and Pacific National.

Queensland Rail Annual and Financial Report 2014-15 | Page 37 Travel and Tourism

“I am part of a great team that maintains our long- distance services so customers can be assured of a safe and relaxing experience on their travels.” Amber – Rollingstock Electrician

Page 38 | Queensland Rail Annual and Financial Report 2014-15 Travel and Tourism Queensland Rail is proud of its 150-year contribution to connecting regional communities and is committed to providing improved travel and tourism services for Queensland. Each day, the organisation’s Travel network fosters links between economic centres and connects long distance passengers to family and friends, work, travel and essential health services. The company also continues to support local tourism by bringing thousands of local and international visitors to the regions each year. Iconic tourist attractions such as the Kuranda Scenic Railway and the Gulflander are embedded within and valued by their communities, providing employment and small business opportunities.

Key highlights in 2014-15 include: Bundaberg and Rockhampton Tilt Train overhaul • More than 700,000 passengers travelled on the Travel and In early 2015, Queensland Rail started a major overhaul of the Tourism network Rockhampton and Bundaberg Tilt Trains, including upgrades to • 85.09 per cent of Traveltrains arrived at their destination on time key mechanical, electrical and control components and internal refurbishments. • 2480 services were scheduled for operation across the Travel network throughout the year Annually, the trains travel approximately 350,000 kilometres between • Customer satisfaction levels performed above target at Brisbane, Bundaberg and Rockhampton and have travelled more than 81.60 out of 100 rate score five million kilometres since their introduction in 1998. The Tilt Trains are among the most popular trains in Queensland Rail’s Customer satisfaction long distance fleet and last year they connected more than 225,000 Overall customer satisfaction with the travel network continued to people to the wide bay and central Queensland regions. perform above target as Queensland Rail rolled out product and service This overhaul will ensure the trains continue to perform safely and enhancements across its long-distance services. A significant focus reliably and will significantly extend their serviceable life. on safety and customer service elements was reflected in a strong performance for these metrics. Spirit of Outback, Inlander and Westlander improvements

Sunlander farewell Queensland Rail’s western services also received adjustments to their operating fleet this year with internal revamps to several carriages. This year, Queensland Rail farewelled its iconic Sunlander service These services had a number of 60-year-old carriages — known as following its final journey from Cairns to Brisbane on New Year’s M-series carriages — that had reached the end of their serviceable Eve. The Sunlander was one of Australia’s longest running and most life. The $7.9 million project involved transforming the interior of 11 endearing rail journeys and recorded more than 3.5 million passenger of the younger L-series carriages into a variety of operational fitouts journeys since its introduction in 1953. After 61 years of service, the including double roomette sleepers, staff communication cars, club cars Sunlander’s retirement not only marked a significant milestone in and standard service cars. These western services continue to provide Queensland Rail’s history, but it also made way for a new era in long important connections for family and friends and tourism industries. distance rail travel with the introduction of the Queensland Rail’s state- of-the-art Spirit of Queensland fleet. Kuranda Station’s 100th birthday

A new era of rail travel In 2015, Queensland Rail commemorated the 100th birthday of one of Queensland’s unique tourism icons, Kuranda Station near Cairns. December 2014 saw the completion of the new $200 million Spirit The station has come a long way since it opened in early 1915 and of Queensland fleet, which was gradually introduced from October is now enjoyed by around 350,000 passengers each year, more than 2013. The new fleet is one of Queensland Rail’s largest investments in half of which are international visitors. Kuranda Station, and the long distance travel across the state in recent years and involved a full Kuranda Scenic Railway, remain one of Queensland’s most popular overhaul of two Tilt Trains and the construction of one brand new tourist attractions and are a key part of far north Queensland’s tourism Tilt Train. industry, supporting jobs for the community and contributing to the The Spirit of Queensland service has allowed Queensland Rail to enter local economy. a new era of rail travel, offering revolutionary facilities including lie-flat In 2014, the Kuranda Scenic Railway took out the ‘Specialised Tourism rail beds and personal entertainment systems. The fleet now travels Services’ top award at the Queensland Tourism Awards. The category return between Brisbane and Cairns five times a week, and since its recognised the outstanding delivery of specialised tourism services introduction more than 90,000 customers have jumped on board the that enhance the visitor experience and integrate with other tourism state-of-the-art trains. products.

Queensland Rail Annual and Financial Report 2014-15 | Page 39 Travel and Tourism (cont)

Newest train driver recruits • BB18 ¼ 1079 and 1089, which were used for steam train journeys to Cairns in January and February. BB18 ¼ 1079 also travelled to With the expiry of Queensland Rail’s hook and pull services contract Longreach in April, and performed a Troop Train re-enactment for with Aurizon on 30 June 2015, the organisation welcomed 14 new the RSL from Winton to Brisbane for the ANZAC Centenary. train drivers to operate its long-distance fleet. The new drivers will be based at two new depots in Roma and Emerald and will operate the • AC16 221A, known as the ‘Yank’, which was used in May and June Westlander and Spirit of the Outback fleet. for a commemorative steam train trip to Charleville. AC16s have a historical connection to south-west Queensland as they were one of Steam heritage fleet just several types of locomotive able to be used on the tracks west of Roma up until the 1960s. 2014-15 was a significant year for Queensland Rail’s steam heritage fleet, with 2015 marking 150 years of rail across the state. Through • C17 974, the C17 locomotives were the most prolific in the a number of commemorative steam train journeys in the first half Queensland Rail fleet and were nicknamed ‘Brown Bombers’. of 2015, the fleet collectively transported more than 14,000 people • DD17 1051, was built in the Ipswich workshops in 1953. This while many thousands more welcomed the trains to towns throughout locomotive is nicknamed the ‘Blue Baby’. Queensland. The fleet consists of six operating trains, including: A 25-member team based at the railway workshops in Ipswich invested • A10 No.6, which is believed to be the oldest operating main line thousands of hours of work to ensure the fleet was in pristine condition steam train in the southern hemisphere. and operating reliably ahead of the milestone year.

Spirit of Queensland, connecting regional coastal communities throughout Queensland

Page 40 | Queensland Rail Annual and Financial Report 2014-15 “Driving steam trains is one of the greatest privileges a train driver can have in their career and to be part of our 150th birthday celebrations has been an honour.” Adrian – Steam Train Driver

Queensland Rail Annual and Financial Report 2014-15 | Page 41 Governance structure as at 30 June 2015

State of Queensland – Responsible Ministers

Deputy Premier, Minister for Transport, Minister for Infrastructure, Local Government and Planning and Minister for Trade The Hon. Jackie Trad MP

Treasurer, Minister for Employment and Industrial Relations and Minister for Aboriginal and Torres Strait Islander Partnerships The Hon. Curtis Pitt MP

Queensland Rail

Board Members Michael Klug – Chairman Aivars Blums David George Wendy McMillan John Mickel Glenn Poole Paul Wallis

CEO Helen Gluer

Major Projects Audit and Risk People and Safety and Procurement Committee Committee Committee Glenn Poole – Chair David George – Chair Wendy McMillan - Chair Aivars Blums Michael Klug Aivars Blums Michael Klug John Mickel Michael Klug Wendy McMillan Paul Wallis Glenn Poole Paul Wallis

Queensland Rail Limited

On Track Insurance Pty Ltd

Page 42 | Queensland Rail Annual and Financial Report 2014-15 Organisational structure as at 30 June 2015

Executive General Manager Projects

Liam Gordon

Chief Operating Officer

Kevin Wright

CEO Executive General Manager

Helen Gluer Network Tim Ripper

Executive General Manager Commercial and Strategy and Chief Financial Officer (CFO)

Mark Hope

Executive General Manager Human Resources

Nicholle Duce

General Counsel and Executive General Manager Governance

Diana Farrelly

Queensland Rail Annual and Financial Report 2014-15 | Page 43 Board

Michael Klug AM David George Chairman, Independent Non-Executive Independent Non-Executive Director Director Appointed 20 December 2012 Appointed 1 October 2013 Experience: David has 40 years’ experience Experience: Michael is a well-respected solicitor in the rail industry. This includes being Chief with more than 40 years’ experience. He Executive of the Co-operative Research Centre completed three terms as Partner in Charge of (CRC) for Rail Innovation (2007-2014), Vice the Brisbane office of Clayton Utz. Chair of the International Railway Research Board (2007-2013), Chief Executive of Michael is a leader in the area of Alternative ONTRACK / New Zealand Rail Corporation (2004-2007) and heading Dispute Resolution and is one of the original founders of LEADR up Queensland Rail’s coal and freight businesses (1998-2004). (Lawyers Engaged in Alternative Dispute Resolution). Prior to this, he was Director of European Business for British Rail Michael is a nationally recognised practitioner, public speaker and (freight) in the run-up to the opening of the Channel Tunnel. lecturer in negotiation, having taught in Australia and overseas to university students, the business and public sector communities. David is currently a Director of TasRail and has (from 1 July 2015) been appointed Director of the Rail Industry Safety & Standards Board. Michael has extensive Board experience across a diverse range of fields including education, health care and transport. He is currently a Qualifications: MA (Hons), FAICD, FCILT member of the Lord Mayor’s Infrastructure Council and the immediate Member of: People and Safety Committee (Chair) past Chairman of Autism Queensland. In 2014, Michael was appointed Other Board and committee memberships: Director of Tasmanian a Member of the Order of Australia (AM) for significant service to the Railway Pty Ltd, Director of Rail Industry Safety & Standards Board law in the field of alternative dispute resolution and to the community. (from 1 July 2015). Qualifications: LLB, FAICD Member of: Audit and Risk Committee, Major Projects and Procurement Committee, People and Safety Committee Wendy McMillan Independent Non-Executive Director Other Board and committee memberships: Chairman – Queensland Appointed 20 December 2012 Health Advisory Committee, President – Brisbane Club, Experience: Wendy has over 20 years’ Member – Lord Mayor’s Infrastructure Council. experience in executive management positions within the transport, infrastructure, construction, resource, agribusiness and government sectors. Aivars Blums Independent Non-Executive Director Wendy is currently a principal with EIG, Appointed 30 January 2014 which provides strategic commercial advisory, capital investment and Experience: Aivars is an economist with transaction advice, as well as whole of life advisory services for major experience in the public and private sectors. infrastructure and service projects, encompassing all aspects of capital He has an extensive government and industry investment and infrastructure operation. EIG has undertaken key policy background and worked with the roles in the largest and most complex public infrastructure projects Commonwealth Department of Trade, the in Australia including rail, rolling stock, ticketing systems, highways Australian Trade Commission and served in a and motorways, ports, civic facilities, telecommunications, hospitals, number of overseas trade and diplomatic postings. airports and desalination plants. In 1988 Aivars was recruited to Queensland as the Chief Executive of Her previous positions include Director of Infrastructure for QC the Private Sector Economic Advisory Committee to the then Premier. Resources Investments, Manager Strategic Projects and Ports Subsequently he moved to the private sector as Chief Executive of O&M, Transport Services with the John Holland Group, Manager GWA Trading Corporation and then to the Visy Group as Special Strategic Development with the John Holland Group, General Advisor on Asia. Manager of Australia TradeCoast, various other senior management roles at the Port of Brisbane, Carter & Spencer International and Aivars has previously served as the Deputy Chair of the Commonwealth Gambaro’s Seafood. Wendy is also currently Deputy Chair of St Aidan’s Government’s Sugar Industry Oversight Committee and as a Member School Council. of the Deputy Prime Minister’s Regional Economic Development Advisory Panel. He was the inaugural Chief Executive of the Gladstone Qualifications:BBus, BA, MAICD, FAIM, AFAMI Economic and Industry Development Board. Member of: Audit and Risk Committee, Major Projects and Procurement Committee (Chair) Qualifications: BEc Other Board and committee memberships: Deputy Chair - Member of: Audit and Risk Committee, Major Projects and St. Aidan’s School Council. Procurement Committee Other Board and committee memberships: None other than Queensland Rail.

Page 44 | Queensland Rail Annual and Financial Report 2014-15 Hon. John Mickel Glenn has also successfully undertaken senior executive positions in the Independent Non-Executive Director Queensland Treasury Department providing influential policy advice Appointed 1 October 2013 on economic, financial management and corporate governance issues Experience: The Honourable John Mickel impacting on the public sector and the community and most recently entered Queensland Parliament in June 1998 was the Auditor-General of Queensland from 2004 to 2011. as the Member for Logan and was appointed Qualifications: BEc, GradDip Bus Admin, FCPA, FCA, FAICD Minister for State Development, Employment and Industrial Relations from September 2006 Member of: Audit and Risk Committee (Chair), Major Projects and to September 2007 and then Minister for Procurement Committee Transport, Trade, Employment and Industrial Relations from September Other Board and committee memberships: Chairman – Advisory 2007 to March 2009. John was also the 36th Speaker of the Legislative Board, Australian Centre for Philanthropy and Non-Profit Studies, Assembly of the Queensland Parliament. Member – Local Government Association of Queensland Audit and Compliance Committee, Member – Public Trustee of Queensland Audit John was first elevated to the Cabinet as Minister for Environment in and Risk Management Committee, Member – Board of Governors February 2004 and appointed Minister for Energy in August 2004. of the Queensland Community Foundation, Member – Governance, He gained the additional portfolio of Aboriginal and Torres Strait Nomination and Remuneration Committee of the Queensland Synod Islander Policy in March 2005. He has represented Australia on the of the Uniting Church in Australia. Executive of the Commonwealth Parliamentary Association and represented Queensland businesses on trade missions to Asia, India and the Middle East. Paul Wallis He oversaw major reforms to the Queensland energy sector as Minister Independent Non-Executive Director for Energy, continued the Smart State initiative as Minister for State Appointed 30 July 2014 Development, implemented new technology reforms to the public Experience: Paul is a Chartered Professional transport sector as Minister for Transport and is recognised for his Engineer with 40 years’ experience in skills in diplomatic protocols and public speaking in domestic and the planning, design and delivery of key international forums. Before entering the Queensland Parliament, John infrastructure projects. He is a principal of the held a number of senior government roles including Chief of Staff to global consulting firm Arup Pty Limited, and is the Queensland Premier. the regional leader of the Energy Business. Paul has served as the Brisbane office leader for ten years to March 2014. John has established the Vietnamese Orphans and Disability Trust Prior to joining Arup in 1986, he worked as a specialist geotechnical with his wife, is an honorary member of Rotary and has been awarded engineering consultant in Australia and as an Engineering Project Honorary Citizenship of Boystown. John is also an Adjunct Associate Manager on major public housing projects with the Hong Kong Professor for the School of Justice, Faculty of Law at QUT and Housing Authority. undertakes public speaking engagement for community organisations. Paul is experienced in leading engineering teams to achieve results M. Lit St, BA, B Ed. St, Dip T Qualifications: through innovation and challenging conventional design solutions to Member of: People and Safety Committee solve problems. He has contributed to many significant projects across Other Board and committee memberships: Honorary Member Queensland and internationally, especially in large scale transport – Queensland Catholic Education Commission Political Advisory Sub- infrastructure and energy development projects. These include the Committee, Advisory Board Member – Sisters of St Paul de Chartres Airport Link and Northern Busway project in Brisbane, LNG facilities Aged Care Facility, Member – School of Justice Committee, Queensland on Curtis Island at Gladstone, and the Kogan Power Station on University of Technology. Queensland’s Darling Downs. Paul previously served on an advisory council to the Faculty of Engineering, Architecture and IT at the University of Queensland. Paul Glenn Poole was also a Director on the Boards of Green Cross Australia and Kidsafe Independent Non-Executive Director Appointed 30 October 2013 Queensland Inc. and remains a Kidsafe Ambassador. Experience: Glenn is a professional senior Qualifications: BA MSc, FIEAust, CPEng, RPEQ, GAICD executive and Board member with over 30 Member of: Major Projects and Procurement Committee, People and years’ experience in strategic leadership, Safety Committee governance and management across the public Other Board and committee memberships: None other than and not-for-profit sectors. Queensland Rail Glenn has significant practical experience in corporate governance and financial management through appointments as a director of Boards and audit committees in the government and not-for-profit sectors.

Queensland Rail Annual and Financial Report 2014-15 | Page 45 Executive Leadership Team

Helen Gluer Mark Hope CEO Executive General Manager Commercial Helen has had an extensive and diverse and Strategy and CFO career, with more than 28 years’ experience Mark has acquired more than 20 years of gained in the banking, financial, transport and extensive financial and commercial experience infrastructure industries. within the private and public sectors, including both chartered and commercial financial roles. Helen served as Under Treasurer for the Mark is a professional who uses his strong Queensland Government and as Director- leadership and contemporary management General of Health Corporate Services (HSCA). Prior roles include CEO skills to deliver significant organisational change which is achieved of Stanwell Corporation and Tarong Energy – where she maintained a through innovation, skilled commercial acumen and a demonstrated strong focus on safety – and as Chief Financial Officer for Brisbane City partner-focused approach. Council. As Executive General Manager Commercial and Strategy and CFO, During her career, Helen has held numerous Board positions and Mark has responsibility for monitoring the overall financial performance directorships including Director of Brisbane Airport Corporation of the business, third party rail access revenue agreements and the Pty Limited, TransLink Transit Authority and as Chair of the Central business service groups of Strategy and Planning, ICT, Property, Road Queensland Ports Authority. Fleet and Procurement. Helen is an Adjunct Professor at the Queensland University of Technology with a previous appointment as Deputy Chancellor and Council member for the Queensland University of Technology. She has Liam Gordon also been involved in community issues as a Trustee of the Lord Mayor’s Executive General Manager Projects Community Disaster Relief Appeal Fund and a member of the Local Liam was appointed Executive General Manager Government Remuneration Tribunal. Projects in July 2014. Prior to his appointment with Queensland Rail, Liam was Deputy Under Treasurer at Tim Ripper Executive General Manager Network Queensland Treasury where he was responsible for the economics functions of the department, Tim has been in the rail industry for close to 30 including macroeconomic forecasting, microeconomic policy and years, both in Australia and Hong Kong. During Government Owned Corporations oversight. this time he has performed a variety of roles in design, construction, maintenance, asset Prior to that, Liam had spent more than 10 years working in the management and more recently as a business infrastructure sector, including as part of the establishment of Projects leader and network manager. Queensland in 2012 as a standalone unit within Queensland Treasury and Trade. In his current role as Executive General Manager Network, Tim is responsible for the operational and strategic management of the As Executive General Manager Projects, Liam is accountable for the network. His team ensures Queensland Rail provides a safe and operational, commercial and strategic management and performance reliable network for the people of Queensland, and delivers progressive of Queensland Rail’s project delivery, ensuring high service standards commercial outcomes for the government and Queensland Rail. are upheld and supported by efficient and effective resource utilisation, appropriate engineering standards and safety performance. He also leads teams that manage the Transport Services Contract with the state.

Page 46 | Queensland Rail Annual and Financial Report 2014-15 Nicholle Duce Diana Farrelly Executive General Manager Human General Counsel and Executive General Resources Manager Governance Nicholle is an experienced senior human As General Counsel, Diana brings 15 years of resources executive with over 15 years’ legal experience to Queensland Rail. In her experience gained through leadership and role, Diana is responsible for the provision of human resources roles, including strategic and legal advice to the organisation and the Board operational positions in major organisations of directors as well as the establishment and such as Suncorp and Rio Tinto. maintenance of an appropriate corporate governance framework covering risk, audit and compliance. Nicholle is responsible for establishing the vision for human resource management, including the development of a strategic framework, Diana’s qualifications include a Bachelor of Laws with First Class supporting governance and programs that facilitate cultural change Honours and a Bachelor of Commerce. She was awarded the University and fosters a high performing culture. Medal for Law in 1998. Diana was admitted as a solicitor to the Supreme Court of Queensland and the High Court of Australia She leads a team who specialise in a range of human resources in 2001. functions to ensure Queensland Rail has the right mix of people and capability to achieve its business goals. Diana’s professional experience has been both in private practice and in-house legal roles. She has advised on a wide range of legal issues including litigation and dispute resolution, contract law, industrial Kevin Wright relations, corporate governance, projects, operations, procurement, Chief Operating Officer environment and safety. In addition to her qualifications, Diana brings to Queensland Rail an in-depth knowledge of the mining and Kevin is responsible for safe and efficient rail resources industry, having recently held the position of Senior Counsel operations, ensuring the quality, movement - Operations at Peabody Energy Australia. Her previous roles included and delivery of train services. This includes Deputy Corporate Counsel at Tarong Energy Corporation Ltd and overseeing the areas of rollingstock engineering Senior Associate at Clayton Utz. and maintenance, south-east Queensland and far north Queensland operations, Travel network operations, train service delivery and operations facilities and program coordination. He has more than 49 years of experience in rail operations, safety and customer service, including more than 16 years in Queensland Rail. Kevin was recognised for his career achievements when he was awarded a NSW Public Service Medal in 2003 and an Australian Public Service Medal in 2008 for services to the rail industry.

Queensland Rail Annual and Financial Report 2014-15 | Page 47 Corporate governance Queensland Rail is committed to ensuring that its systems, procedures and practices reflect the highest standards of corporate governance. Processes have been established to ensure that Queensland Rail’s corporate governance practices are reviewed regularly and are continually refined in accordance with its enterprise governance framework.

Guidelines Newly appointed members are taken through a formal induction The responsible Ministers have requested that while Queensland process to provide them with an overview of business operations, Rail is no longer a government owned corporation, Queensland strategies and information in relation to the Board and committee Rail will continue to apply the Corporate Governance Guidelines functions. The induction process assists the members to understand for Government Owned Corporations, issued by the Queensland their roles and responsibilities within Queensland Rail and includes Government. an overview of key corporate expectations, existing governance arrangements and the culture and values of the organisation. The The guidelines reference the Australian Securities Exchange (ASX) induction process is also relevant to new senior executives to allow Corporate Governance Principles and Recommendations and they them to participate fully and actively in management decision making provide the framework for government owned corporations to at the earliest opportunity. develop, implement, review and report on their corporate governance arrangements. Members are issued with a comprehensive Board handbook that details Queensland Rail and Board operational information, An overview of existing corporate governance practices in line with the governance requirements and policies. The Board handbook assists above guidelines is set out below. with the induction process and also supports existing members with their ongoing governance responsibilities. The handbook is reviewed Corporate governance statement 2014-15 and updated annually. Principle 1 – Foundations for management and oversight Performance evaluations for the CEO and senior executives are The roles and responsibilities of the Board and individual members carried out each financial year in accordance with Queensland Rail’s are defined in the Board charter. These roles and responsibilities are remuneration framework and the Board approved Performance reviewed by the Board annually and a copy of the charter is available Payment Policy: Chief and Senior Executives. The performance at queenslandrail.com.au evaluation for the CEO is conducted by the Board and is based on the achievement of agreed Key Performance Indicators (KPIs), which In accordance with section 15 of the QRTA Act, the Board’s specific are set annually by the Board and are linked to the strategic and functions include: operational objectives of Queensland Rail. The performance evaluation • deciding the strategies and the operational, administrative and for senior executives is carried out in accordance with the same process financial policies of Queensland Rail based on the achievement of agreed KPIs. The evaluation is conducted • ensuring Queensland Rail performs its functions and exercises its by the CEO and the Board. powers in a proper, effective and efficient way The outcome of annual performance evaluations for the CEO and • ensuring that, so far as is practicable, Queensland Rail acts, under senior executives are provided to responsible Ministers in accordance and achieves the objects in, its operational and strategic plans with the Policy for Government Owned Corporation Chief and Senior • accounting to the responsible Ministers, as required under the Executives Employment Arrangements. QRTA Act, for Queensland Rail’s performance Principle 2 – Structure the Board to add value • reviewing annually the performance of the CEO. All members of the Board, including the Chairman, are non-executive In exercising its functions and powers, the Board’s key responsibilities members. Queensland Rail members are appointed by the responsible include: Ministers in accordance with the QRTA Act. As such, the size and composition of the Board is determined by the responsible Ministers. • business strategy and planning • delegation of authority to senior executive The Board considers that all Board members who held office during the year are independent as defined under the ASXCorporate Governance • relations with responsible Ministers and key stakeholders Principles and Recommendations. In assessing the ongoing • major capital projects and expenditure independence of each member, the Board considers the assessment • financial reporting and risk management criteria outlined in the ASX recommendations. Materiality in relation to • ethics, governance and policy independence is considered on a case-by-case basis with reference to each member’s individual circumstances. • senior executive appointments. Board members are required to keep the Board advised, on an ongoing The Board has delegated responsibility for the day-to-day operation of basis, of any business interests and other directorship and employment Queensland Rail to the CEO including the implementation and delivery roles that could potentially conflict with those of Queensland Rail. of the Board’s strategic direction. The CEO is supported by the senior executive team with management responsibilities clearly defined and In circumstances where a conflict is believed to exist, the member documented through formal position descriptions, performance plans and concerned does not take part in any decision or consideration of the the Board approved Authorities, Approvals and Accountabilities Policy. issue. In addition, the member will not receive copies of the relevant Page 48 | Queensland Rail Annual and Financial Report 2014-15 Board papers. Members must notify the Board via the Company These expected standards of integrity, honesty and accountability are Secretary of changes to business interests and appointments which reflected in the formalCode of Conduct, which applies to all Board could potentially conflict with their role as a Board member for members, employees, consultants and contractors and is aligned Queensland Rail. with the organisation’s strategic objectives. The Code of Conduct is Details of the current Board members’ experience and expertise are supported by other policy related documents in relation to ethics, disclosed in this annual report as is information on attendance at Board privacy, dealing with conflicts of interest, trading in securities and and committee meetings. Information in relation to composition of official misconduct. While as a statutory authority, no member or the Board and terms of appointment for all members who held office employee holds or trades securities in Queensland Rail, the organisation during the financial year is set out in theFinancial Report 2014-15. has established standards and procedures that set out the legal duties A process is in place whereby members, either collectively or that apply to members and employees in relation to the potential individually, may seek independent professional advice where it is misuse of information including the insider trading prohibition under considered necessary to fulfil their duties and responsibilities. This is the Corporations Act 2001 (Cth). done at Queensland Rail’s expense. A member wishing to seek such Ongoing training in relation to ethical business practices is provided advice must first obtain approval from the Chairman. by the organisation and the Queensland Rail Code of Conduct also Members are encouraged to further their knowledge through forms part of the induction process for new employees, consultants participation in industry, governance and government forums and and contractors. A copy of the Code of Conduct is available on the attend seminars hosted by the Australian Institute of Company Queensland Rail website. Directors, Governance Institute of Australia and other peak professional Queensland Rail has related processes and policy documents setting bodies. In addition to peer review, interaction and networking with out the requirements of the Public Interest Disclosure Act 2010 (Cth), other directors and industry leaders, Queensland Rail Board members which facilitates disclosure of public interest information and provides participate in Queensland Rail leadership forums and actively engage protection for those who make public disclosures. with Queensland Rail employees and visit Queensland Rail operations to gain an understanding of operational employee requirements, challenges and issues. Principle 4 – Safeguard integrity in financial reporting The Board has established an Audit and Risk Committee that reviews The ongoing provision of timely and relevant information to the Board the integrity of Queensland Rail’s financial reporting systems. The is of critical importance in enabling the Board to effectively discharge their obligations in accordance with the requirements of the QRTA Act. committee is governed by its own charter, which is approved by the The structure, format and content of Board agendas and Board papers Board and reviewed annually. A copy of the Audit and Risk Committee presented to members for consideration and approval, along with charter is available on the Queensland Rail website. The committee Board paper quality and timeliness is reviewed on an ongoing basis assists the Board by reviewing and monitoring assurance activities over with a formal review annually. business operations, the effectiveness of internal controls, regulatory reporting, financial risks, compliance issues and enterprise risk The Board reviews its own performance and that of the committees of the Board on a regular basis to ensure they are working effectively. The management frameworks. The committee is responsible for oversight Board participates in regular Board member-only sessions that provide and monitoring both internal and external audit functions. an opportunity for the Board members to review and analyse their The role of the chair of the committee is not held by the Chairman of current performance as a Board and discuss any issues that may exist. the Board and all committee members are independent non-executive A formal Board performance evaluation is conducted on an annual members. Membership of the committee and details of attendance at basis to achieve and maintain corporate governance best practice meetings is disclosed below in the Board committees section. and continual improvement. An independent consultant is engaged to assist with the evaluation every second year, with the latest The CEO and CFO certify in writing that the Queensland Rail financial independent review completed during 2014-15. report represents a true and fair view of Queensland Rail’s financial position and performance, and that it has been prepared in accordance The performance evaluation process generally includes the evaluation with the appropriate Australian Accounting Standards, Statement of the Board as a whole, the chair and the effectiveness of the Board of Accounting Concepts, Interpretations and Framework for the committees. The process is undertaken through a formal questionnaire completed by each member and members of the senior executive Preparation and Presentation of Financial Statements in all material team. The review considers a range of issues including Board role, respects. strategy, monitoring performance, risk and compliance oversight, Queensland Rail’s internal audit function provides independent stakeholder communication, Board structure and processes. The assurance to key stakeholders including the Audit and Risk Committee, independent Board evaluation review for 2014-15 was completed in CEO and senior executives regarding the adequacy and effectiveness January 2015 with written advice of the outcome of the evaluation provided to responsible Ministers upon completion of the review. of the organisation’s system of internal controls, risk management procedures and governance processes throughout the organisation. Principle 3 – Promote ethical and responsible decision making To maintain independence the internal audit function is governed by Queensland Rail has well established policies, procedures and practices the Queensland Rail internal audit charter which is approved by the that seek to promote ethical standards of behaviour and a culture of Audit and Risk Committee. compliance that is risk aware and embraces good governance practices in accordance with corporate, legal and community obligations.

Queensland Rail Annual and Financial Report 2014-15 | Page 49 Corporate governance (cont)

Queensland Rail has a detailed internal audit plan that is managed Queensland Rail prepares an operational plan and strategic plan for by the Senior Manager Internal Audit, and General Counsel and responsible Ministers’ approval in accordance with the QRTA Act. The Executive General Manager Governance. The risk based internal audit operational plan and strategic plan are formal performance contracts plan is developed through extensive internal and external consultation between Queensland Rail and the responsible Ministers detailing and a review of the organisation’s risk register. This plan is ultimately proposed undertakings and target performance for the year ahead. approved and monitored by the Audit and Risk Committee through In line with the requirements of the QRTA Act, responsible Ministers regular reporting provided by the Senior Manager Internal Audit. are advised in a timely manner of all issues likely to have a significant In addition to the annual internal audit plan the internal audit function financial, operating, employee, community or environmental impact completes management request audits throughout the year. including those matters that may prevent or significantly affect achievement of the performance objectives outlined in the In accordance with the Auditor-General Act 2009 (Qld), the external operational plan. audit function of Queensland Rail is performed by the Queensland Audit Office. The Audit and Risk Committee monitors the performance Approval of responsible Ministers is sought for major investments and of the external auditors on an annual basis. expenditure outlays, as well as Queensland Rail’s entry into significant supply or customer contracts. Principle 5 – Make timely and balanced disclosure Queensland Rail has established communication protocols and Principle 7 – Recognise and manage risk standards in relation to the disclosure of public information and Queensland Rail recognises that effective risk management and regularly assesses the information needs of all stakeholders to ensure compliance frameworks are a key element of an organisation’s that they continue to be informed about activities in a timely and corporate governance process. The Board has approved a accurate manner. Risk Management Policy and associated framework for identifying, assessing and managing Queensland Rail’s strategic, operational, In addition, the organisation has a dedicated Government and financial and reputation risks. Community Relations team to assist with management of government and regulatory relationships and the co-ordination of information and The objectives of the policy are to: reporting requests. • Maintain an integrated, fit for purpose, leading practice Regular communications are initiated with key stakeholders including risk management framework which facilitates the effective responsible Ministers and government representatives. The Chairman management of risks and also provides assurance that risks are and CEO meet with responsible Ministers and/or their representatives being effectively managed and controls are effective on a regular basis. Queensland Rail management also meets with • Ensure the risk management system, together with associated representatives of the responsible Ministers after each Board meeting risk tools, allow for the consistent and reliable application of the to provide an update on the agenda items considered and discuss any risk management framework relevant governance matters. Information needs of these stakeholders • Ensure that there are clearly defined roles and responsibilities for are also discussed at Board meetings. As required by the QRTA Act, managing risk within Queensland Rail detailed quarterly reports are provided to responsible Ministers and their representatives, as well as individual ministerial briefings on • Ensure that risk management related roles and adequate resources specific issues. These reports include information regarding financial are allocated throughout the business to meet the requirements of performance, updates on major capital programs, key operational the Risk Management Policy matters, risk management and governance issues as well as • Ensure that risk management is an integral part of Queensland Rail information required to be given in accordance with Queensland Rail’s decision making and business planning operational and strategic plans. • Document all risks, risk assessments and related controls into risk registers in an agreed business system Principle 6 – Respect the rights of shareholders • Based on the Board’s approved risk appetite, apply risk tolerance Queensland Rail respects the rights of responsible Ministers as the levels to ensure the appropriate management and reporting of risk ultimate owners of the business. The Board and senior executives • Provide risk management training and support to employees to of Queensland Rail engage with responsible Ministers and their ensure education and awareness of risk management requirements representatives on a regular basis. As at 30 June 2015, Queensland to improve the knowledge, skills and proficiency of risk practitioners, Rail’s responsible Ministers were the Honourable Jackie Trad MP, risk champions and others within the organisation Deputy Premier, Minister for Transport, Minister for Infrastructure, Local Government and Planning and Minister for Trade and the • Assess and continuously improve the effectiveness of the risk Honourable Curtis Pitt MP, Treasurer, Minister for Employment and management framework and related processes and controls via Industrial Relations and Minister for Aboriginal and Torres Strait on-going monitoring, periodic reviews, communication and Islander Partnerships. consultation • Promote a culture of accountability and responsibility for risk Queensland Rail is committed to ensuring that responsible Ministers management by including risk related performance measures in and their representatives are provided with information to make individual performance and development plans. informed assessments of Queensland Rail’s operational and financial performance and position.

Page 50 | Queensland Rail Annual and Financial Report 2014-15 The approach defined within theRisk Management Policy is consistent Membership of the committee and details of attendance at meetings with the Australian and New Zealand risk management standards is disclosed below in the Board committees section. (ISO 31000:2009). Supporting the policy is a framework prepared to Queensland Rail recognises that the achievement of its corporate guide the various business functions in addressing their particular risks objectives is dependent on the efforts of its people and has established through a structured risk management approach. The framework is remuneration policies, procedures and frameworks designed to attract designed to ensure risks are regularly identified, assessed, monitored and retain high calibre employees and to align individual and team and reported to the Board on a periodic basis, along with appropriate efforts to agreed KPIs linked to the operational and strategic plans of risk mitigation and management plans. the organisation. The Board evaluates reported risks reaching a defined enterprise The senior executive remuneration arrangements are subject to risk tolerance level and actively monitors these risks and associated approval or endorsement by the Board in accordance with the Policy controls, including any additional risk mitigation treatments that for Government Owned Corporation Chief and Senior Executive are proposed. Assurance activities are undertaken to ensure that the Employment Arrangements. Remuneration for Board members is controls are operating effectively. established by the responsible Ministers in accordance with the The Board has charged management with the responsibility for QRTA Act. managing risk within the organisation and the implementation of Details of the nature and amount of payments to Queensland Rail’s mitigation measures, under the direction of the CEO and supported Board members and specified Queensland Rail senior executives are set by senior executives. The group risk management function, led by the out in the Financial Report 2014-15. Senior Manager – Risk, Insurance & Compliance and General Counsel and Executive General Manager Governance has been established Government policies and guidelines to facilitate the process by providing a centralised role in advising the various business functions on executing risk management and Queensland Rail complies with relevant government policies and mitigation strategies, as well as consolidating risk reporting to senior guidelines in accordance with the requirements of the responsible executives and the Board. Ministers. The CEO and CFO have declared in writing to the Board that Queensland Rail’s risk management and control system is operating efficiently, effectively and economically in all material respects based on representations by management. Queensland Rail has established an appropriate fraud control framework for the ongoing monitoring and co-ordination of fraud control activities. The framework is supported by the Code of Conduct and associated governance principles, standards and procedures that outline employee obligations in relation to ethical behaviour and the process for reporting, recording and investigating allegations of fraud. A dedicated ethics hotline has been established to enable employees to report any concerns regarding unethical conduct, breaches of the law and suspected fraud or corrupt conduct. A dedicated Crime and Corruption Commission (CCC) Liaison Officer manages the obligations under the Crime and Corruption Act 2001 (Qld) in relation to notification of suspected corrupt conduct to the CCC.

Principle 8 – Remunerate fairly and responsibly The Board has established a People and Safety Committee that, among other things, oversees and monitors Queensland Rail’s remuneration framework. The committee is governed by its own charter, which is approved by the Board and reviewed annually. A copy of the People and Safety Committee charter is available on the Queensland Rail website. The committee assists the Board in the effective discharge of its governance and oversight responsibilities relating to human resource and safety practices. It achieves this, in part, by reviewing, overseeing and providing recommendations on the recruitment, termination, retention, succession planning and annual remuneration and performance review of the CEO and senior executives including the establishment of appropriate performance measures.

Queensland Rail Annual and Financial Report 2014-15 | Page 51 Corporate governance (cont)

Board meetings Audit and Risk Committee The Board held 11 meetings during the financial year. Typically, at The Audit and Risk Committee is a Board committee created to assist Board meetings, the agenda will include the following: the Board in the effective discharge of its governance and oversight responsibilities relating to the financial reporting and risk management • disclosure of member interests of Queensland Rail. • minutes of the previous meeting and any outstanding issues raised by members at previous meetings The committee oversees and monitors the preparation of financial statements, internal control structures, compliance and risk • CEO and CFO reports management frameworks and the internal and external audit functions • ongoing strategic business improvement of Queensland Rail. • reports on major projects and current business issues The committee’s key responsibilities include: • transactions requiring Board approval in accordance with the delegations framework • the integrity of Queensland Rail’s financial reporting and disclosure procedures and processes • updates from committee chairs on matters considered at committee meetings • review of significant accounting policies and alternative treatments available • the minutes of previous committee meetings • the effectiveness of Queensland Rail’s systems of accounting and • correspondence, executed contracts and powers of attorney register internal controls review. • the scope of Queensland Rail’s internal audit and external audit A private session involving only non-executive Board members is held at programs and any material issues arising from these audits the beginning of each Board meeting and is chaired by the Chairman. • the effectiveness of the processes and assurance activities used by The CEO, CFO, General Counsel and Company Secretary are also management to monitor and ensure Queensland Rail’s compliance present at all Board meetings. Senior executives attend Board meetings with laws, regulations, ethical guidelines and obligations for external when an issue under their area of responsibility is being considered or reporting of financial information as otherwise requested by the Board. Member attendance at 2014-15 Board meetings are detailed below: • review of risk mitigation policies and associated risk assessment documentation adopted by Queensland Rail Board Member Attended Meetings Eligible • evaluating the effectiveness of risk management protocols and to Attend frameworks used to implement Queensland Rail’s risk management policies, procedures and documentation Michael Klug ( Chair) 11 11 • review and monitor key risk exposures, control mitigations and Aivars Blums 11 11 residual risks of Queensland Rail David George 10 11 • evaluating the effectiveness of the risk management and control structures in place to identify and monitor Queensland Rail’s Wendy McMillan 10 11 compliance with applicable laws, regulations and John Mickel 11 11 governance obligations.

Glenn Poole 10 11 Mr Glenn Poole is the current committee chair. Committee member attendance at 2014-15 Audit and Risk Committee meetings is detailed Paul Wallis1 10 11 below:

1 Appointed to the Board 30/07/14 Board Member Attended Meetings Eligible Board committees to Attend The Board has established committees to assist with meeting its Glenn Poole (Chair) 4 4 responsibilities. The Audit and Risk Committee, the People and Safety Michael Klug 3 4 Committee and the Major Projects and Procurement Committee are governed by their own charters. Wendy McMillan 4 4

The membership of each Board committee is made up of a minimum Aivars Blums1 3 3 of three members from the Board. 1 Appointed to the Committee 25/09/14 The CEO and senior executives attend meetings at the discretion of the committee. An annual evaluation of committee performance forms part of the Board’s overall performance review.

Page 52 | Queensland Rail Annual and Financial Report 2014-15 People and Safety Committee Major Projects and Procurement Committee The People and Safety Committee is a Board committee created The Major Projects and Procurement Committee is a Board committee to assist the Board in the effective discharge of its governance and created to assist the Board in the effective discharge of its governance oversight responsibilities relating to the human resources and safety and oversight responsibilities relating to the delivery of major projects practices of Queensland Rail. and procurement decisions within Queensland Rail. The committee oversees and monitors the remuneration and The committee’s key responsibilities include: performance framework for Queensland Rail’s senior executives and • evaluating Queensland Rail’s major project proposals and delivery of other employees and the development of human resources policies approved capital investment program and funding to ensure and practices to enhance employee engagement and workforce alignment with Queensland Rail’s approved operational and productivity and performance. The committee also provides strategic strategic plans direction and oversight of Queensland Rail’s safety policies, frameworks and practices. • ensuring that major project implementation is in a manner consistent with Queensland Rail’s strategy and the expectations of The committee’s key responsibilities include: responsible Ministers • the appointment and termination of the CEO and senior executives • oversight of project management frameworks to ensure appropriate (direct reports to CEO) governance structures, capabilities and resources are in place for the • the annual remuneration and performance review of the CEO efficient and cost effective delivery of projects and senior executives including the establishment of appropriate • reviewing major project plans as they relate to capital works, performance measures and incentive targets operations, asset replacement and maintenance to achieve prudent • the development and review of human resource policies and and efficient project delivery within budget and agreed timeframes practices which enhance organisational performance, workforce • reviewing the adequacy and effectiveness of internal controls and productivity and leadership capability in line with Queensland Rail’s risks as they relate to major projects, procurement and investment expected values and behaviours considerations • the adequacy and effectiveness of Queensland Rail’s code of • oversight of tender methodologies and appropriate probity conduct, remuneration, learning and development and industrial processes to ensure the ethical procurement of goods and services relations strategies and plans to ensure compliance with the Queensland Rail and State • employee and external stakeholder engagement (including Government Procurement Policy responsible Ministers, government and community) and external • ensuring strategic procurement objectives are developed and corporate communications strategies and plans implemented through a procurement strategy to ensure that major • development and review of policies, frameworks and practices investment decisions are formulated strategically to enable prudent relating to the security and safety of Queensland Rail’s network and efficient outcomes through market engagement and trains • development of strategic business initiatives to ensure procurement • reviewing and monitoring frameworks and practices dealing with policies, procedures and frameworks are consistent with the the health, safety and welfare of Queensland Rail’s customers, strategic planning and performance objectives of Queensland Rail employees and the public • evaluating and monitoring procurement performance to ensure • the adequacy and effectiveness of Queensland Rail’s compliance alignment with Queensland Rail’s strategic objectives relating to systems with relevant safety legislation, regulations, engineering service quality, efficiency, profitability and growth. standards and accreditation requirements Ms Wendy McMillan is the current chair of the committee. Committee • providing direction and oversight of safety related risks, controls and member attendance at 2014-15 Major Projects and Procurement assurance processes. Committee meetings is detailed below: Mr David George is the current chair of the committee. Committee Board Member Attended Meetings Eligible member attendance at 2014-15 People and Safety Committee to Attend meetings is detailed below: Wendy McMillan (Chair) 4 4 Board Member Attended Meetings Eligible Aivars Blums 4 4 to Attend Michael Klug 4 4 David George (Chair) 4 5 Glenn Poole 4 4 Michael Klug 5 5 Paul Wallis1 3 3 Wendy McMillan 1 1 1 Appointed to the Committee 25/09/14 John Mickel 5 5

Paul Wallis1 3 3

1 Appointed to the Committee 25/09/14

Queensland Rail Annual and Financial Report 2014-15 | Page 53 Corporate governance (cont)

Notifications by Responsible Ministers 2. Toowoomba freehold property By letter dated 25 August 2014, pursuant to section 54 of the QRTA 1. Mount Isa Rail line Act, the responsible Ministers directed Queensland Rail to do all things By letter dated 14 August 2014, pursuant to section 12 of the QRTA necessary to transfer to the Department of Transport and Main Roads, Act, the responsible Ministers notified Queensland Rail of the decision Queensland Rail land, identified as freehold land comprising: to undertake due diligence, preparatory and investigatory activities in relation to the potential divestment by way of a long term lease on (a) part of Lot 12 on SP136500 that becomes proposed Lot 16 on an integrated supply chain comprising of the Port of Townsville and SP264496 to be transferred from Queensland Rail in freehold to the Mount Isa Rail line (Project) and directed Queensland Rail and its the Department of Transport and Main Roads subsidiaries and their Boards: (b) cancelling Lot 13 on SP136500 and Lot 1052 on AG3913, to become proposed Lots 17, 18 and 19 on SP264498, to be (a) to give effect to a written request of the Under Treasurer or transferred from Queensland Rail in freehold to the Department Project Directors(s) for the purposes of this direction, if and when of Transport and Main Roads; and with Lot 17 and Lot 19 to be given converted to rail corridor land. (b) to provide full cooperation and assistance to the state and its advisors for the purposes of the Project 3. Queensland Rail dividends By the letter dated 25 June 2015, pursuant to section 56(2) of the (c) use their best endeavour to require the employees, servants, QRTA Act, the responsible Ministers approved Queensland Rail’s agents and contractors of Queensland Rail and its subsidiaries to dividend recommendation and directed that Queensland Rail pay a provide full cooperation and assistance to the state and its dividend equal to 80 per cent of Queensland Rail Group’s consolidated advisors for the purposes of the Project Net Profit After Tax (NPAT) for the 2014-15 period. The dividend is to (d) as part of, but without limiting, clauses (a), (b) and (c) above: be paid to the Consolidated Fund no later than 31 December 2015. i. are authorised and required to disclose and cause Queensland Rail and its subsidiaries to disclose to the state or its advisors such documents and information of Queensland Rail and its subsidiaries or such classes of documents and information of Queensland Rail and its subsidiaries as requested by the Under Treasurer or the Project Director(s) from time to time for the purposes of the Project, and to retain copies of any documents disclosed pursuant to such a request for such period as required pursuant to the Public Records Act 2002 (Qld) or any longer period specifically required by the Under Treasurer; ii. to assist and cause Queensland Rail and its subsidiaries to assist the state and its advisors with the identification of assets, liabilities and instruments used or incurred by Queensland Rail and its subsidiaries for the purposes of the Project iii. to permit and cause Queensland Rail and its subsidiaries to permit access by the state and its advisors to all premises, assets, documents and records of Queensland Rail and its subsidiaries that the Under Treasurer or Project Director(s) deem necessary for the purposes of the Project (e) to execute such instruments as required by the Under Treasurer or Project Director(s) for the purposes of the Project (f) to carry out any other tasks or take such other actions for the purposes of the project as required by the Under Treasurer or the Project Director(s) (g) that where documents or information may contain the personal information and/or sensitive information, they are authorised and required to do all things necessary to disclose the personal information and/or sensitive information to the state and its advisors as requested by the Under Treasurer or the Project Director(s) from time to time (h) that where there is an ambiguity or doubt about the meaning or intent of this direction, they follow the interpretation of the Under Treasurer about the matter as advised to them in a written clarifying statement.

Page 54 | Queensland Rail Annual and Financial Report 2014-15 Corporate governance (cont)

Information systems and recordkeeping Managing Queensland Rail’s information and performing appropriate recordkeeping functions are integral to risk mitigation. The organisation has a responsibility to meet legislative and statutory obligations by improving the reliability of its information systems and the authenticity of its information assets. Initiatives throughout 2014-15 included: • Completing the data capture and ongoing management of all existing and newly created physical records in the corporate system (TRIM) • Initiating the creation and management of digital personnel files • Introducing the digital capture and management of all internal credit card receipts • Committing to a greater reliance on digital information with a reduction in the creation of paper based information and records. In 2015-16, Queensland Rail will undertake a major upgrade of the eDRMS to the latest version and complete revision of existing information governance tools and ongoing scrutiny of their relevance and application, including the investigation of technological solutions to information governance. There will be a continuing emphasis on the management of data in compliant business systems including the corporate document management system as Queensland Rail strives to achieve enhanced information management. Queensland Rail will undertake an assessment of its information maturity and develop strategies to manage its information governance challenges and further develop opportunities for the organisation to achieve its goals. These opportunities include improved discovery, information asset management, information sharing, knowledge transfer and defensible disposal of obsolete information.

Open data Information relating to consultancies, overseas travel and Queensland Languages Services Policy is published through the Queensland Government Open Data website (https://data.qld.gov.au).

Queensland Rail Annual and Financial Report 2014-15 | Page 55 Summary of the 2014-15 Operational Plan The operational plan is the formal statement of Queensland Rail’s strategic direction, including objectives, strategies and performance outcomes for 2014-15 and represents the performance agreement between the Board of Queensland Rail and responsible Ministers’ departments. The operational plan is consistent with Queensland Rail’s four-year strategic plan and reflects the strategic activity in year one of this planning horizon.

The annual report provides a summary of Queensland Rail’s Employment and Industrial Relations Plan performance outcomes against the 2014-15 Operational Plan relating The operational plan includes an Employment and Industrial Relations to the delivery of strategic and operational objectives. Plan (E&IR Plan), which guides Queensland Rail in developing and Queensland Rail measures performance against objectives to focus maintaining conditions of employment for employees, including labour efforts upon achieving its strategy. Key performance indicator measures market based remuneration. and related targets were identified within the operational plan to track Queensland Rail’s E&IR Plan for 2014-15 is underpinned by the following the success of strategies during this financial year. Key components of objectives: the 2014-15 Operational Plan are summarised below. • Optimise productivity and performance Performance monitoring • Simplify people frameworks and practices The operational plan contains a framework for performance • Manage and develop capability monitoring that ensures the Queensland Rail Board is accountable to its responsible Ministers for Queensland Rail’s performance. • Attract and retain key talent. This framework enables Queensland Rail to report on a number The organisation works proactively and collaboratively with union of mandatory financial and non-financial performance indicators stakeholders to effectively manage industrial issues. to present a balanced perspective on Queensland Rail’s overall Organisational and industrial changes are managed through leader driven performance. Queensland Rail reports to its responsible Ministers on a engagement and consultation processes encouraging feedback from quarterly basis in relation to its performance against the performance employees through the communication and implementation phases. indicators. Examples of financial indicators included in the2014-15 Operational Modifications to the operational plan Plan are: The QRTA Act requires that Queensland Rail’s annual report includes • Operational cost per thousand revenue GTK particulars of any directions given to Queensland Rail to modify its operational plan during the relevant year. Queensland Rail did not modify • Return on operating assets its operational plan during this financial year. • Debt to (debt plus equity) Examples of non-financial indicators included in the 2014-15 Operational Plan are: • Citytrain network on-time running (OTR) adjusted for force majeure • Customer satisfaction (Citytrain network and Traveltrain) • Signals Passed at Danger per million train kilometres • Lost Time Injury Frequency Rate • Reliability (Citytrain network and Traveltrain) adjusted for force majeure • Track utilisation per million track kilometres - regional access. Government revenues and funding The operational plan outlines the funding of the following services: • Citytrain network • Traveltrain, with the exception of Kuranda Scenic Railway • Network infrastructure (for agreed rail infrastructure network standards and capacity).

Page 56 | Queensland Rail Annual and Financial Report 2014-15 Compliance checklist

Summary of Requirement Basis for requirement Annual report reference

• A letter of compliance from the ARRs – section 8 Page 4 Letter of Compliance accountable officer or statutory body to the relevant Minister

Accessibility • Table of contents ARRs – section 10.1 Page 5 • Glossary Pages 60-61

• Public availability ARRs – section 10.2 Page 2

• Interpreter service statement Queensland Government Language Page 2 Services Policy ARRs – section 10.3

• Copyright notice Copyright Act 1968 Page 2 ARRs – section 10.4

• Information Licensing QGEA – Information Licensing N/A ARRs – section 10.5

General information • Introductory Information ARRs – section 11.1 Pages 6-7

• Agency role and main functions ARRs – section 11.2 Pages 2, 6-7, 8-9

Pages 6-7, 9, 11, 20-21, • Operating environment ARRs – section 11.3 23, 27-28, 31-32, 35-37, 39-40, 48-55, 56

• Machinery of government changes ARRs – section 11.4 Pages 2, 23

Non-financial performance • Government’s objectives for the Pages 6-7, 16-17, 27-29, ARRs – section 12.1 community 31-40, 56

• Other whole-of-government plans / ARRs – section 12.2 Pages 8-9 specific initiatives

• Agency objectives and performance ARRs – section 12.3 Pages 6-7, 8, 11-13, indicators 19-40 , 56

• Agency service areas and service ARRs – section 12.4 Pages 11-13, 56 standards

Financial performance • Summary of financial performance ARRs – section 13.1 Pages 12-13, 62-124

Governance – management • Organisational structure ARRs – section 14.1 Pages 42-43 and structure • Executive management ARRs – section 14.2 Pages 44-47

• Government bodies (statutory ARRs – section 14.3 Page 2 bodies and other entities)

• Public Sector Ehtics Act 1994 (Qld) Public Sector Ethics Act 1994 N/A ARRs – section 14.4

• Risk management ARRs – section 15.1 Pages 48-55

Queensland Rail Annual and Financial Report 2014-15 | Page 57 Summary of Requirement Basis for requirement Annual report reference

Governance – risk • External scrutiny ARRs – section 15.2 Pages 19, 25, 37, 62 management and accountability • Audit committee ARRs – section 15.3 Pages 42, 50-53, 62

• Internal audit ARRs – section 15.4 Pages 49-50

• Information systems and ARRs – section 15.5 Page 55 recordkeeping

Governance – human • Workforce planning, attraction, ARRs – section 16.1 Pages 23, 51, 56 resources retention and performance • Early retirement, redundancy and Directive No. 11/12 Early Retirement, N/A retrenchment Redundancy and Retrenchment ARRs – section 16.2

ARRs – section 17 Open Data • Consultancies Page 55 ARRs – section 34.1

• Overseas travel ARRs – section 17 Page 55 ARRs – section 34.2

• Queensland Language Services ARRs – section 17 Pages 2, 55 Policy ARRs – section 34.3

• Government bodies ARRs – section 17 Page 55 ARRs – section 34.4

Financial statements • Certification of financial statements FAA – section 62 See Financial Report attached – FPMS – sections 42, 43 and 50 Pages 62-124 ARRs – section 18.1

• Independent Auditors Report FAA – section 62 See Financial Report attached – FPMS – section 50 Pages 123-124 ARRs – section 18.2

Financial Reporting Requirements for See Financial Report • Remuneration disclosures Queensland Government Agencies attached – Pages 94-102 ARRs – section 18.3

FAA Financial Accountability Act 2009 (Qld) FPMS Financial and Performance Management Standard 2009 ARRs Annual Report requirements for Queensland Government Agencies

Page 58 | Queensland Rail Annual and Financial Report 2014-15 Old Central Station

Queensland Rail Annual and Financial Report 2014-15 | Page 59 Glossary and Acronyms

Glossary Acronyms

Citytrain network AICD A collective term for the tracks, stations, trains and infrastructure Australian Institute of Company Directors providing train services in south-east Queensland bounded by the Gold AOD Coast in the south, Rosewood in the west and the Sunshine Coast in Alcohol and other drugs the north ASX Customer Australian Securities Exchange A term used for any passenger utilising Citytrain or Traveltrain services, or a rail operator in the context of the freight network ATO Australian Taxation Office Freight General freight that is not transported in a bulk train and does not CCTV include intermodal and industrial products Closed Circuit Television

Lost Time Injury Frequency Rate (LTIFR) CEO A measure of the number of lost time injuries per million hours worked, Chief Executive Officer used by Queensland Rail to monitor and report employee health and CFO safety Chief Financial Officer Network CCC Queensland’s rail system, including all main railway lines, marshalling Crime and Corruption Commission yards, bulk freight loading and unloading points and customer stations Corporations Act On-Time Running (OTR) Corporations Act 2001 (Cth) Measure of trains arriving at their destination on time CSIA Positive pARTnerships Program Customer Service Institute of Australia A Queensland Rail program involving work with community groups, local schools and stakeholders to collaborate and produce high quality DDA public artwork projects on Queensland Rail property Disability Discrimination Act 1992 (Cth)

Return on Assets (ROA) DTMR Defined as EBIT less income from investments, divided by average Department of Transport and Main Roads operating assets EAMS Return on Equity (ROE) Enterprise Asset Management System Defined as operating profit after tax divided by average equity EBIT Rollingstock Earnings Before Interest and Tax Rail locomotives and wagons EBITDA Transport Oriented Development (TOD) Earnings Before Interest, Tax, Depreciation and Amortisation A planning concept promoting the creation of well-designed and ELT sustainable urban communities focused around public transport modes Executive Leadership Team

TransLink FTE A division of the Department of Transport and Main Roads, that Full-time equivalent (employee) facilitates passenger transport services for Queenslanders and aim to provide a single integrated transport network accessible to everyone ICSS International Customer Service Standard Travel and Tourism network A collective term for Queensland Rail’s eight different travel and tourism KPIs services Key Performance Indicators KSR Kuranda Scenic Railway

MCC Mayne Control Centre

MOU Memorandum of Understanding

NSCA National Safety Council of Australia Page 60 | Queensland Rail Annual and Financial Report 2014-15 NGR New Generation Rollingstock

QCA Queensland Competition Authority

QTC Queensland Treasury Corporation

RMC Rail Management Centre

SPAD Signal Passed at Danger

Queensland Rail Annual and Financial Report 2014-15 | Page 61 Financial Statements 2014-15

Page 62 | Queensland Rail Annual and Financial Report 2014-15 Queensland Rail ABN 68 598 268 528 Financial report for the year ended 30 June 2015 Queensland Rail ABN 68 598 268 528 Financial report - 30 June 2015

Contents Page Financial statements Statement of comprehensive income 1 Balance sheet 2 Statement of changes in equity 3 Statement of cash flows 5 Notes to the financial statements 6 Management certificate 58 Independent auditor's report 59

These financial statements cover Queensland Rail and its controlled entities. Queensland Rail is an unincorporated statutory body established under the Queensland Rail Transit Authority Act 2013. The statutory body is controlled by the State of Queensland which is the ultimate parent. The head office and principal place of business of the statutory body is: Level 14, Rail Centre 1 305 Edward Street Brisbane, Qld 4000 A description of the nature of the statutory body's operations and its principal activities is included in the notes to the financial statements. Queensland Rail Statement of comprehensive income For the year ended 30 June 2015

Consolidated Parent 2015 2014 2015 2014 Notes $'000 $'000 $'000 $'000

Revenue from continuing operations 1 1,928,652 1,967,638 919,837 971,699 Other income 4,336 1,545 - - Revenue 1,932,988 1,969,183 919,837 971,699

Supplies and services 2 (426,672) (433,151) - - Employee benefits expense 3 (619,855) (681,620) (695,692) (756,450) Depreciation and amortisation expense (367,991) (317,584) - - Other expenses (11,613) (43,793) (1,273) (2,317) Expenses (1,426,131) (1,476,148) (696,965) (758,767)

Operating profit 506,857 493,035 222,872 212,932

Finance income 15,357 14,460 - - Finance expenses (202,309) (197,770) - - Net finance costs (186,952) (183,310) - -

Profit before income tax 319,905 309,725 222,872 212,932

Income tax expense 4 (96,156) (96,120) - -

Profit for the year 223,749 213,605 222,872 212,932

Other comprehensive income Items that may be reclassified to profit or loss Changes in the fair value of cash flow hedges 157 (449) - - Income tax relating to components of other comprehensive income 4 (47) 135 - - Other comprehensive income for the year, net of tax 110 (314) - -

Total comprehensive income for the year 223,859 213,291 222,872 212,932

The above statement of comprehensive income should be read in conjunction with the accompanying notes.

1 Queensland Rail Balance sheet As at 30 June 2015

Consolidated Parent 2015 2014 2015 2014 Notes $'000 $'000 $'000 $'000

ASSETS Current assets Cash and cash equivalents 5 334,262 409,241 - - Trade and other receivables 46,836 85,155 429,817 382,806 Inventories 86,876 81,862 - - Derivative financial instruments 128 - - - Other current assets 6,835 6,501 - - Total current assets 474,937 582,759 429,817 382,806

Non-current assets Receivables 3,169 3,647 29,039 31,335 Inventories 17,883 27,306 - - Derivative financial instruments 11 - - - Property, plant and equipment 6 6,336,769 6,230,247 - - Intangible assets 47,041 54,336 - - Deferred tax assets 7 - - 66,620 68,302 Investment in subsidiary - - 2,845,324 2,845,324 Other non-current assets 4,631 4,856 47,048 30,100 Total non-current assets 6,409,504 6,320,392 2,988,031 2,975,061

Total assets 6,884,441 6,903,151 3,417,848 3,357,867

LIABILITIES Current liabilities Trade and other payables 8 351,740 401,396 210,639 199,710 Provisions 9 202,915 205,756 193,372 198,278 Current tax liabilities 41,403 26,138 41,403 26,138 Other current liabilities 17,028 33,456 65 23 Total current liabilities 613,086 666,746 445,479 424,149

Non-current liabilities Borrowings 13 3,000,000 3,000,000 - - Provisions 9 55,194 68,570 29,039 31,335 Deferred tax liabilities 10 350,058 343,126 - - Other non-current liabilities 21,527 22,067 - - Total non-current liabilities 3,426,779 3,433,763 29,039 31,335

Total liabilities 4,039,865 4,100,509 474,518 455,484

Net assets 2,844,576 2,802,642 2,943,330 2,902,383

EQUITY Contributed equity 2,591,946 2,594,872 2,834,642 2,837,568 Reserves 110 - - - Retained earnings 11 252,520 207,770 108,688 64,815

Total equity 2,844,576 2,802,642 2,943,330 2,902,383

The above balance sheet should be read in conjunction with the accompanying notes.

2 Queensland Rail Statement of changes in equity For the year ended 30 June 2015

Contributed Retained Total equity Reserves earnings equity Consolidated Notes $'000 $'000 $'000 $'000

Balance at 1 July 2014 2,594,872 - 207,770 2,802,642

Profit for the year - - 223,749 223,749 Other comprehensive income - 110 - 110 Total comprehensive income for the year - 110 223,749 223,859

Transactions with owners in their capacity as owners: Distributions of equity (2,926) - - (2,926) Dividends provided 11 - - (178,999) (178,999) (2,926) - (178,999) (181,925)

Balance at 30 June 2015 2,591,946 110 252,520 2,844,576

Balance at 1 July 2013 2,602,628 314 165,049 2,767,991

Profit for the year - - 213,605 213,605 Other comprehensive income - (314) - (314) Total comprehensive income for the year - (314) 213,605 213,291

Transactions with owners in their capacity as owners: Distributions of equity (7,756) - - (7,756) Dividends provided 11 - - (170,884) (170,884) (7,756) - (170,884) (178,640)

Balance at 30 June 2014 2,594,872 - 207,770 2,802,642

The above statement of changes in equity should be read in conjunction with the accompanying notes.

3 Queensland Rail Statement of changes in equity For the year ended 30 June 2015 (continued)

Contributed Retained Total equity Reserves earnings equity Parent Notes $'000 $'000 $'000 $'000

Balance at 1 July 2014 2,837,568 - 64,815 2,902,383

Profit for the year - - 222,872 222,872 Other comprehensive income - - - - Total comprehensive income for the year - - 222,872 222,872

Transactions with owners in their capacity as owners: Distributions of equity (2,926) - - (2,926) Dividends provided 11 - - (178,999) (178,999) (2,926) - (178,999) (181,925)

Balance at 30 June 2015 2,834,642 - 108,688 2,943,330

Balance at 1 July 2013 2,845,324 - 22,767 2,868,091

Profit for the year - - 212,932 212,932 Other comprehensive income - - - - Total comprehensive income for the year - - 212,932 212,932

Transactions with owners in their capacity as owners: Distributions of equity (7,756) - - (7,756) Dividends provided 11 - - (170,884) (170,884) (7,756) - (170,884) (178,640)

Balance at 30 June 2014 2,837,568 - 64,815 2,902,383

The above statement of changes in equity should be read in conjunction with the accompanying notes.

4 Queensland Rail Statement of cash flows For the year ended 30 June 2015

Consolidated Parent 2015 2014 2015 2014 Notes $'000 $'000 $'000 $'000

Cash flows from operating activities Receipts from customers* 461,349 439,279 696,965 758,774 Receipts from Transport Service Contracts* 1,642,435 1,868,467 - - Dividends received from subsidiaries - - 212,932 138,610 Interest received 15,657 14,360 - - Payments to suppliers and employees* (1,148,735) (1,264,911) (701,925) (780,055) Interest and other costs of finance paid (216,223) (220,139) - - GST input tax credits 82,436 82,054 609 413 GST remitted (192,424) (206,787) - (5,605) Other 4 3 4 16 Income taxes paid (74,006) (36,534) (74,006) (36,534) Net cash inflow from operating activities 12 570,493 675,792 134,579 75,619

Cash flows from investing activities Proceeds from the disposal of assets 24,244 10,705 - - Payments for fixed assets (498,825) (324,165) - - Repayments of loans by related parties - - 36,305 40,224 Net cash (outflow) / inflow from investing activities (474,581) (313,460) 36,305 40,224

Cash flows from financing activities Repayments of borrowings - (99,817) - - Dividends paid 11 (170,884) (115,843) (170,884) (115,843) Net cash (outflow) from financing activities (170,884) (215,660) (170,884) (115,843)

Net (decrease) / increase in cash and cash equivalents (74,972) 146,672 - - Cash and cash equivalents at the beginning of the financial year 409,234 262,562 - - Cash and cash equivalents at end of year** 5 334,262 409,234 - -

* Inclusive of goods and services tax (GST). ** Net of bank overdraft and monies held in trust.

The above statement of cash flows should be read in conjunction with the accompanying notes.

5 Queensland Rail Notes to the financial statements 30 June 2015

Contents of the notes to the financial statements Page

Notes to the statement of comprehensive income 1 Revenue from continuing operations 7 2 Supplies and services 7 3 Employee benefits expense 8 4 Income tax expense 9

Notes to the balance sheet 5 Cash and cash equivalents 11 6 Property, plant and equipment 12 7 Deferred tax assets 15 8 Trade and other payables 15 9 Provisions 16 10 Deferred tax liabilities 18 11 Retained earnings and dividends 19

Notes to the statement of cash flows 12 Reconciliation of profit after income tax to net cash inflow from operating activities 20

Risk 13 Financial risk management 21 14 Critical accounting estimates and judgements 26 15 Correction of error and revision of estimates 27

Unrecognised items 16 Contingencies 28 17 Commitments 29 18 Events occurring after the reporting period 29

Other items 19 Key management personnel disclosures 30 20 Related party transactions 39 21 Subsidiaries 41 22 Remuneration of auditors 41 23 Special payments 42 24 Queensland Rail Limited consolidated financial information 43

Policies 25 Summary of significant accounting policies 45

6 Queensland Rail Notes to the financial statements 30 June 2015 (continued)

Notes to the statement of comprehensive income

1 Revenue from continuing operations Consolidated Parent 2015 2014 2015 2014 $'000 $'000 $'000 $'000

Transport Service Contract revenue 1,531,535 1,566,714 - - Passenger transport revenue 72,475 74,211 - - Network access revenue 234,609 217,514 - - Other revenue 90,033 109,199 - - Managed services revenue - - 696,965 758,767 Inter-company dividend revenue - - 222,872 212,932 1,928,652 1,967,638 919,837 971,699

2 Supplies and services Consolidated 2015 2014 $'000 $'000

Materials and consumable items 112,957 105,136 Trade and other services 125,452 112,333 Capital and external works 23,522 55,596 Lease and hire charges 52,956 52,224 Traction electricity and train fuel 40,069 41,688 Utilities 30,430 28,307 Vehicle running expenses 18,416 19,078 Other supplies and services 22,870 18,789 426,672 433,151

The parent entity does not have any supplies and services.

7 Queensland Rail Notes to the financial statements 30 June 2015 (continued)

3 Employee benefits expense Consolidated Parent 2015 2014 2015 2014 $'000 $'000 $'000 $'000

Wages and salaries 447,866 456,415 520,630 528,393 Annual leave 45,247 49,431 45,247 49,432 Long service leave 10,132 6,780 10,132 6,780 Superannuation Defined benefit superannuation expense 15,620 17,055 15,620 17,055 Defined contribution superannuation expense 41,705 43,887 41,705 43,887 Other employee benefits 27,553 72,448 27,553 72,456 Employee related expenses 31,732 35,604 34,805 38,447 619,855 681,620 695,692 756,450

The number of full-time equivalent (FTE) employees as at reporting date was 5,778.4 (2014: 5,879.0). FTEs include full-time, part-time and casual employees based on a thirty-eight hour week. (a) High Court decision CEPU & ORS v QUEENSLAND RAIL & ANOR [2015] HCA 11

On 8 April 2015 the High Court determined that Queensland Rail Transit Authority (Queensland Rail) is a trading corporation for the purposes of s. 51 (xx) of the Commonwealth Constitution and consequently a “national system employer” for the purposes of the Fair Work Act 2009 (Cth). The effect of the High Court determination is that relations between Queensland Rail and its employees are (and have since 3 May 2013 been) governed by the Fair Work Act 2009 (Cth), not the Industrial Relations Act 1999 (Qld), and provisions in the Queensland Rail Transit Authority Act 2013 (Qld) that are inconsistent with that position are invalid. As a consequence of the determination by the High Court:

(a) the federal enterprise agreements that applied to Queensland Rail employees under the Fair Work Act (Cth) immediately prior to 3 May 2013 have continued to apply at all times since 3 May 2013. As those agreements have expired, the agreements need to be renegotiated or replaced under the Fair Work Act;

(b) the Queensland Rail Traincrew Certified Agreement 2013 approved by the relevant employees and certified by the Queensland Industrial Relations Commission under the Industrial Relations Act 1999 (Qld) on 21 October 2013 is invalid. The federal enterprise agreement applicable to the relevant employees immediately prior to 3 May 2013 (the QR Passenger Pty Limited Traincrew Union Collective Workplace Agreement 2009) continues to apply and, as that agreement has expired, it will need to be renegotiated or replaced under the Fair Work Act 2009. Prior to the determination by the High Court on 8 April 2015, and in compliance with the express terms of the State Certified Queensland Rail Traincrew Certified Agreement 2013, Queensland Rail paid employees covered by that agreement a pay rate increase of 2.25% from 1 August 2013 and a further pay rate increase of 2.5% from 1 August 2014. The total amounts paid for those pay rate increases was $2.74 million for the 2013/14 year and $5.83 million for the 2014/15 year.

All Queensland Rail enterprise agreements are now being renegotiated in accordance with the requirements of the Fair Work Act 2009 (Cth).

In the proceedings, the High Court also ordered Queensland Rail to pay the plaintiffs’ legal costs of the proceeding. The quantum of the legal costs is unknown as at 30 June 2015.

8 Queensland Rail Notes to the financial statements 30 June 2015 (continued)

4 Income tax expense (a) Income tax expense Consolidated Parent 2015 2014 2015 2014 $'000 $'000 $'000 $'000

Current tax 89,208 64,265 (1,682) (5,117) Deferred tax 6,004 28,684 1,682 5,117 Adjustments for current tax of prior periods 561 3,171 - - Utilisation of capital tax loss 383 - - - 96,156 96,120 - -

Deferred income tax expense / (benefit) included in income tax expense comprises: Increase in deferred tax assets (note 7) 3,977 169 1,682 5,117 Increase in deferred tax liabilities (note 10) 2,027 28,516 - - 6,004 28,685 1,682 5,117

(b) Numerical reconciliation of income tax expense to prima facie tax payable Consolidated Parent 2015 2014 2015 2014 $'000 $'000 $'000 $'000

Profit from continuing operations before income tax expense 319,905 309,725 222,872 212,932 Tax at the Australian tax rate of 30% (2014: 30%) 95,972 92,918 66,862 63,880 Tax effect of amounts which are not deductible / (taxable) in calculating taxable income: Dividends received from subsidiaries - - (66,862) (63,880) Non-assessable income - (9) - - Capital losses (395) - - - Other 18 40 - - Adjustments for current tax of prior periods 561 3,171 - - 184 3,202 (66,862) (63,880)

Total income tax expense 96,156 96,120 - -

9 Queensland Rail Notes to the financial statements 30 June 2015 (continued)

4 Income tax expense (continued) (c) Amounts recognised directly in equity Consolidated Parent 2015 2014 2015 2014 $'000 $'000 $'000 $'000

Aggregate current and deferred tax arising in the reporting period and not recognised in net profit or loss but directly debited or credited to equity: Net deferred tax - debited / (credited) directly to equity (notes 7 and 10) 47 (135) - - 47 (135) - -

(d) Income tax consolidation Queensland Rail (the head entity) and its wholly owned Australian subsidiaries consisting of Queensland Rail Limited and On Track Insurance Pty Ltd (the specified subsidiary members) are entities which are members of the Queensland Rail National Tax Equivalents Regime (NTER) income tax consolidated group for the purposes of the Income Tax Act 1997 from 3 May 2013. In accordance with UIG Interpretation 1052 the specified subsidiary members each recognise the tax effect of their own transactions in their financial statements and the head entity recognises the aggregate current income tax liability of the consolidated entity and the benefit of any tax losses arising in the consolidated entity in its financial statements. Under the terms of the tax funding agreement, the income tax consolidated group compensates Queensland Rail for any current tax payable assumed and is compensated by Queensland Rail for any current tax receivable and deferred tax assets relating to unused tax losses or unused tax credits that are transferred to Queensland Rail under income tax consolidation legislation. The funding amounts are recognised as non-current inter-company receivables or payables.

10 Queensland Rail Notes to the financial statements 30 June 2015 (continued)

Notes to the balance sheet

5 Cash and cash equivalents Consolidated 2015 2014 $'000 $'000

Cash on hand 129 133 Bank balances (AA) 10,084 16,761 Short-term investments (AA+) 324,049 392,340 Trust monies - 7 Total cash and cash equivalents 334,262 409,241

Less: trust monies - (7) Balance as per statement of cash flows 334,262 409,234

The parent entity does not hold any cash or cash equivalents.

11 Queensland Rail Notes to the financial statements 30 June 2015 (continued)

6 Property, plant and equipment Major plant Work in Plant and and progress Land Buildings equipment equipment Infrastructure Total Consolidated $'000 $'000 $'000 $'000 $'000 $'000 $'000

At 1 July 2014 Cost 244,839 124,979 619,818 245,956 1,973,657 4,752,155 7,961,404 Accumulated depreciation and impairment losses - (1,789) (152,585) (121,890) (673,604) (781,289) (1,731,157) Net book amount 244,839 123,190 467,233 124,066 1,300,053 3,970,866 6,230,247

Year ended 30 June 2015 Opening net book amount 244,839 123,190 467,233 124,066 1,300,053 3,970,866 6,230,247 Additions 498,679 - - 5 - (1,003) 497,681 Transfers between asset classes (391,510) - 12,716 19,454 209,000 135,780 (14,560) Transfers to supplies and services (c) (4,886) - - - - - (4,886) Transfers to State Government (d) - (2,926) - - - - (2,926) Disposals - (7,410) (2,268) 1,342 (1,350) (12,964) (22,650) Depreciation expense - - (24,030) (23,326) (148,579) (150,202) (346,137) Closing net book amount 347,122 112,854 453,651 121,541 1,359,124 3,942,477 6,336,769

At 30 June 2015 Cost 347,122 113,637 629,078 263,792 2,164,276 4,858,995 8,376,900 Accumulated depreciation and impairment losses - (783) (175,427) (142,251) (805,152) (916,518) (2,040,131) Net book amount 347,122 112,854 453,651 121,541 1,359,124 3,942,477 6,336,769

12 Queensland Rail Notes to the financial statements 30 June 2015 (continued)

6 Property, plant and equipment (continued) Major plant Work in Plant and and progress Land Buildings equipment equipment Infrastructure Total Consolidated $'000 $'000 $'000 $'000 $'000 $'000 $'000

At 1 July 2013 Cost 574,487 129,002 540,597 233,999 1,907,339 4,320,286 7,705,710 Accumulated depreciation and impairment losses - (1,789) (130,853) (116,276) (570,098) (646,824) (1,465,840) Net book amount 574,487 127,213 409,744 117,723 1,337,241 3,673,462 6,239,870

Year ended 30 June 2014 Opening net book amount 574,487 127,213 409,744 117,723 1,337,241 3,673,462 6,239,870 Additions 379,823 - - 92 - - 379,915 Transfers between asset classes (666,473) 84 81,209 35,324 79,874 442,870 (27,112) Transfers to supplies and services (c) (36,971) - - - - - (36,971) Transfers to State Government (d) (6,027) (1,729) - - - - (7,756) Disposals - (2,378) (577) (5,750) (3,255) (7,267) (19,227) Depreciation expense - - (23,143) (23,323) (113,807) (138,199) (298,472) Closing net book amount 244,839 123,190 467,233 124,066 1,300,053 3,970,866 6,230,247

At 30 June 2014 Cost 244,839 124,979 619,818 245,956 1,973,657 4,752,155 7,961,404 Accumulated depreciation and impairment losses - (1,789) (152,585) (121,890) (673,604) (781,289) (1,731,157) Net book amount 244,839 123,190 467,233 124,066 1,300,053 3,970,866 6,230,247

The parent entity does not hold any property, plant and equipment.

13 Queensland Rail Notes to the financial statements 30 June 2015 (continued)

6 Property, plant and equipment (continued) (a) Non-current assets pledged as security No assets have been pledged as security by the consolidated entity. (b) Impairment An impairment assessment was undertaken prior to reporting date. No impairment was recognised in the current or prior reporting period. (c) Transfers to supplies and services The transfers to supplies and services represent expenditure incurred in prior years that are expensed in the current year on the basis that they are operational in nature or comprise expenditure on capital works on behalf of third parties. A significant portion of the transfers in the prior period relate to pre-feasibility expenditure on the New Generation Rollingstock program that was recharged to the State Government in the prior period. (d) Transfers to State Government The transfers to State Government comprise work in progress or commissioned assets that have been transferred to other State Government owned entities external to the Queensland Rail consolidated entity. These transfers are settled via a distribution of Queensland Rail’s contributed equity to its shareholders, the responsible Ministers.

14 Queensland Rail Notes to the financial statements 30 June 2015 (continued)

7 Deferred tax assets Consolidated Parent 2015 2014 2015 2014 $'000 $'000 $'000 $'000

The balance comprises temporary differences attributable to: Accrued expenses 11,337 12,152 4,239 4,781 Capital losses - 881 - - Provisions 76,683 79,890 61,225 62,461 Superannuation contributions 1,156 1,060 1,156 1,060 Unearned revenue 3,110 3,166 - - Foreign exchange gains 5 - - - Total deferred tax assets 92,291 97,149 66,620 68,302

Set-off of deferred tax liabilities pursuant to set-off provisions (note 10) (92,291) (97,149) - - Net deferred tax assets - - 66,620 68,302

Movements: Opening balance - - 68,302 73,419 Charged to the consolidated statement of comprehensive income (note 4) (3,977) (169) (1,682) (5,117) Utilisation of carried forward tax losses - (2,011) - - Utilisation of capital losses (881) (2,330) - - Set-off of deferred tax liabilities pursuant to set-off provisions (note 10) 4,858 4,510 - - Closing balance at 30 June - - 66,620 68,302

Deferred tax assets expected to be recovered within 12 months - - 62,451 63,806 Deferred tax assets expected to be recovered after more than 12 months - - 4,169 4,496

8 Trade and other payables Consolidated Parent 2015 2014 2015 2014 $'000 $'000 $'000 $'000

Trade payables 159,582 207,721 24,595 22,116 Dividend payable 178,999 170,884 178,999 170,884 Other payables 8,228 11,949 7,090 6,839 346,809 390,554 210,684 199,839

GST input tax credits receivable (10,166) (7,763) (45) (129) GST payable 15,097 18,605 - - 4,931 10,842 (45) (129)

Total trade and other payables 351,740 401,396 210,639 199,710

15 Queensland Rail Notes to the financial statements 30 June 2015 (continued)

9 Provisions 2015 2014 Current Non-current Total Current Non-current Total Consolidated $'000 $'000 $'000 $'000 $'000 $'000

Employee benefits (a) 188,745 13,897 202,642 191,703 14,987 206,690 Provision for insurance claims 1,000 - 1,000 2,220 - 2,220 Litigation and workers' compensation provision 5,119 15,335 20,454 7,067 16,704 23,771 Land rehabilitation provision 41 4,139 4,180 - 8,562 8,562 Make good provision - 1,938 1,938 - 3,127 3,127 Onerous contracts provision 8,010 19,885 27,895 4,766 25,190 29,956 202,915 55,194 258,109 205,756 68,570 274,326

2015 2014 Current Non-current Total Current Non-current Total Parent $'000 $'000 $'000 $'000 $'000 $'000

Employee benefits (a) 188,745 13,897 202,642 191,703 14,987 206,690 Provision for insurance claims ------Litigation and workers' compensation provision 4,627 15,142 19,769 6,575 16,348 22,923 Land rehabilitation provision ------Make good provision ------Onerous contracts provision ------193,372 29,039 222,411 198,278 31,335 229,613

(a) Employee benefits Consolidated Parent 2015 2014 2015 2014 $'000 $'000 $'000 $'000

Annual leave and leave loading 54,780 57,065 54,780 57,065 Long service leave 132,152 133,572 132,152 133,572 Other 15,710 16,053 15,710 16,053 202,642 206,690 202,642 206,690

The current provision for long service leave covers all unconditional entitlements where employees have completed the required period of service and also those where employees are entitled to pro-rata payments in certain circumstances. This portion of the provision is presented as current, since the consolidated entity does not have an unconditional right to defer settlement for any of these obligations. However, based on past experience, the consolidated entity does not expect all employees to take the full amount of accrued leave or require payment within the next 12 months. The non-current provision for long service leave covers all conditional entitlements where employees have not completed the required period of service and are not entitled to pro-rata payments. Other employee benefits includes payroll tax and retirement allowances.

16 Queensland Rail Notes to the financial statements 30 June 2015 (continued)

9 Provisions (continued) (b) Movements in provisions Movements in each class of provision during the financial year, other than employee benefits, are set out below: Provision Litigation and for workers' Land Make Onerous insurance compensation rehabilitation good contracts Consolidated claims provision provision provision provision Total 2015 $'000 $'000 $'000 $'000 $'000 $'000

Current and non-current Carrying amount at start of year 2,220 23,771 8,562 3,127 29,956 67,636 Charged / (credited) to profit or loss - additional provisions recognised - 5,411 - - 3,159 8,570 - unused amounts released (742) (3,598) (4,514) (1,283) (454) (10,591) - unwind discount - - 132 94 117 343 Amounts used during the year (478) (5,130) - - (4,883) (10,491) Carrying amount at end of year 1,000 20,454 4,180 1,938 27,895 55,467

Provision Litigation and for workers' Land Make Onerous insurance compensation rehabilitation good contracts Parent claims provision provision provision provision Total 2015 $'000 $'000 $'000 $'000 $'000 $'000

Current and non-current Carrying amount at start of year - 22,923 - - - 22,923 Charged / (credited) to profit or loss - additional provisions recognised - 4,911 - - - 4,911 - unused amounts released - (3,598) - - - (3,598) - unwind discount ------Amounts used during the year - (4,467) - - - (4,467) Carrying amount at end of year - 19,769 - - - 19,769

17 Queensland Rail Notes to the financial statements 30 June 2015 (continued)

10 Deferred tax liabilities Consolidated 2015 2014 $'000 $'000

The balance comprises temporary differences attributable to: Accrued income 50 34 Consumables and spare parts 6,024 6,042 Property, plant and equipment 436,111 434,080 Prepayments 117 119 Cash flow hedges 47 - Total deferred tax liabilities 442,349 440,275

Set-off of deferred tax liabilities pursuant to set-off provisions (note 7) (92,291) (97,149) Net deferred tax liabilities 350,058 343,126

Movements: Opening balance 343,126 310,235 Charged to the consolidated statement of comprehensive income (note 4) 2,027 28,516 Cash flow hedges 47 (135) Set-off of deferred tax liabilities pursuant to set-off provisions (note 7) 4,858 4,510 Closing balance at 30 June 350,058 343,126

Deferred tax liabilities expected to be settled within 12 months (70,150) (68,261) Deferred tax liabilities expected to be settled after more than 12 months 420,208 411,387

The parent entity does not have any deferred tax liabilities.

18 Queensland Rail Notes to the financial statements 30 June 2015 (continued)

11 Retained earnings and dividends (a) Movements in retained earnings Consolidated Parent 2015 2014 2015 2014 $'000 $'000 $'000 $'000

Opening balance 207,770 165,049 64,815 22,767 Profit for the year 223,749 213,605 222,872 212,932 Dividends provided (b) (178,999) (170,884) (178,999) (170,884) Balance 30 June 252,520 207,770 108,688 64,815

(b) Dividends Consolidated Parent 2015 2014 2015 2014 $'000 $'000 $'000 $'000

Dividend declared 178,999 170,884 178,999 170,884 Dividend paid 170,884 115,843 170,884 115,843

All dividends declared / paid were unfranked.

19 Queensland Rail Notes to the financial statements 30 June 2015 (continued)

Notes to the statement of cash flows

12 Reconciliation of profit after income tax to net cash inflow from operating activities Consolidated Parent 2015 2014 2015 2014 $'000 $'000 $'000 $'000

Profit for the year 223,749 213,605 222,872 212,932 Depreciation and amortisation 367,991 317,584 - - Amortisation of prepaid access facilitation charges (1,387) (1,577) - - (Gains) / losses on sale of non-current assets (1,594) 9,174 - - Unrealised (gain) / loss on derivatives 18 - - - Impairment of trade receivables 81 84 - - Inventory obsolescence 8,190 930 - - Change in operating assets and liabilities: (Increase) / decrease in trade debtors 38,722 97,454 (9,940) (74,322) (Increase) / decrease in inventories (3,782) (26,328) - - (Increase) / decrease in other operating assets (246) 813 (89,271) (61,519) Increase / (decrease) in trade creditors (51,649) 18,021 2,813 (1,147) Increase / (decrease) in other liabilities 6,616 60,460 15,307 24,941 Increase / (decrease) in other provisions (16,216) (14,428) (7,202) (25,266) Net cash inflow from operating activities 570,493 675,792 134,579 75,619

20 Queensland Rail Notes to the financial statements 30 June 2015 (continued)

Risk

13 Financial risk management The consolidated entity's activities expose it to a variety of financial risks including market risk, credit risk and liquidity risk. The consolidated entity's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the consolidated entity. The consolidated entity uses derivative financial instruments such as foreign exchange contracts to hedge significant risk exposures. Trading for profit is strictly prohibited. Financial risk management is being carried out by the central treasury section of the Financial Compliance unit within the consolidated entity under policies approved by the Members of the Board (the Board). The treasury section identifies, evaluates and hedges financial risks in close co-operation with the consolidated entity's operating units. The Board approves the Finance Policy for overall risk management, as well as principles covering specific areas, such as mitigating foreign exchange, commodity price, interest rate and credit risks, use of derivative financial instruments and investing excess liquidity. Any breaches of policy are reported to the Board. (a) Market risk (i) Foreign exchange risk Foreign exchange risk arises from expenditures that are denominated in a currency that is not the consolidated entity's functional currency. The consolidated entity is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US Dollar (USD), the Euro (EUR) and the Japanese Yen (JPY). The consolidated entity's foreign exchange risk management policy dictates the level of hedging to be undertaken within the Board approved limits. At reporting date, the Board approved trading range for the foreign exchange risk hedging is: 0 - 1 year: 80% - 100% 1 - 2 years: 60% - 100% 2 - 3 years: 40% - 100% The consolidated entity designates forward foreign currency derivatives for hedging foreign exchange forecast transactions which are highly probable. At reporting date, 100% (2014: nil) of foreign exchange hedges were designated for hedge accounting purposes. At reporting date, contracts recognised directly in equity were net gains of $0.2 million (2014: nil). During the year ended 30 June 2015, gains of $0.13 million (2014: $0.57 million) were removed from equity and included in the acquisition cost of capital and gains of $0.06 million (2014: $0.04 million) were removed from equity and included in the acquisition cost of components. The consolidated entity's exposure to foreign currency risk at reporting date was as follows: 30 June 2015 30 June 2014 USD EUR JPY USD EUR JPY Consolidated $'000 €'000 ¥'000 $'000 €'000 ¥'000

Cash and cash equivalents 212 - 1,024 100 96 30 Forward exchange contracts (qualifying for hedge accounting) 1,086 49 - - - - Net exposure 1,298 49 1,024 100 96 30

The parent entity does not have any exposure to foreign currency risk.

21 Queensland Rail Notes to the financial statements 30 June 2015 (continued)

13 Financial risk management (continued) (ii) Cash flow and fair value interest rate risk The consolidated entity's main interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the consolidated entity to cash flow interest rate risk. Borrowings issued at fixed rates expose the consolidated entity to fair value interest rate risk. The Queensland Treasury Corporation (QTC) has been authorised to manage the interest rate risk of the consolidated entity within limits in accordance with the risk profile approved by the Board. At reporting date the consolidated entity had the following exposure to variable rate borrowings: 30 June 2015 30 June 2014 Weighted Weighted average average interest rate Balance interest rate Balance Consolidated % $'000 % $'000

Overdrafts and loans 7.1 3,000,000 7.3 3,000,000 Net exposure to cash flow interest rate risk 3,000,000 3,000,000

The parent entity does not have any exposure to variable rate borrowings.

The fair value of borrowings is determined by reference to pricing models and valuation techniques as advised by QTC. The carrying amounts and fair values of current and non-current borrowings at reporting date are: 2015 2014 Carrying Carrying amount Fair value amount Fair value Consolidated $'000 $'000 $'000 $'000

Non-traded financial liabilities Non-current borrowings (unsecured) 3,000,000 3,371,427 3,000,000 3,337,340 3,000,000 3,371,427 3,000,000 3,337,340

The parent entity does not have any borrowings. The following table summarises the sensitivity of the consolidated entity’s debt with QTC to interest rate risk: Interest rate risk -1% +1% Carrying Consolidated amount Profit Equity Profit Equity 30 June 2015 $'000 $'000 $'000 $'000 $'000

Client Specific Debt Pool 3,000,000 2,622 2,622 (2,528) (2,528) Total increase / (decrease) 2,622 2,622 (2,528) (2,528)

30 June 2014

Client Specific Debt Pool 3,000,000 2,583 2,583 (2,485) (2,485) Total increase / (decrease) 2,583 2,583 (2,485) (2,485)

The parent entity does not have any borrowings.

22 Queensland Rail Notes to the financial statements 30 June 2015 (continued)

13 Financial risk management (continued) (b) Credit risk The maximum exposure to credit risk, excluding the value of any collateral or other security, at reporting date to recognised financial assets, is the carrying amount, net of any allowances for impairment of those assets, as disclosed in the balance sheet and notes to the consolidated financial statements. The consolidated entity does not have any material credit risk exposure to any single receivable or group of receivables under financial instruments entered into by the consolidated entity, other than amounts owing by the State of Queensland. Policies are in place to ensure that sales of products and services are only made to customers with an appropriate credit history. Derivative counterparties and cash transactions are limited to high credit quality financial institutions and are approved by the Board. The consolidated entity has policies that limit the amount of credit exposure to any one financial institution. The consolidated entity's credit risk exposure due to cash transactions in outlined in note 5. The parent entity does not have any cash and cash equivalents or derivative financial instruments. (c) Liquidity risk Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. Liquidity risk management within the consolidated entity ensures sufficient cash to meet short-term and long-term financial commitments. The consolidated entity manages liquidity risk by monitoring forecast cash flows and ensuring that adequate cash flow is maintained. Financing arrangements The short-term borrowing arrangements with QTC are interest bearing, refer to note 13(a)(ii). The borrowing arrangements are subject to annual review. The amount of undrawn short-term borrowing facilities with QTC available at reporting date is $150.0 million (2014: $150.0 million). Long-term borrowings are sourced from the Client Specific Debt Pool subject to annual approval of the Queensland State Treasurer. The consolidated entity may draw up to the amount of the approved borrowing program. Borrowings are not secured. The parent entity does not have any borrowings.

23 Queensland Rail Notes to the financial statements 30 June 2015 (continued)

13 Financial risk management (continued) Maturity Analysis The tables below analyse the consolidated entity's financial liabilities into relevant maturity groupings based on the remaining period at the reporting date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. QTC borrowings are interest only with no fixed repayment date for the principal component. For the purposes of completing the maturity analysis, the principal component of this loan has been included in the over five years time band with no interest payment assumed in this time band.

Total Less than Between Over contractual Consolidated 1 year 1 and 5 years 5 years cash flows 30 June 2015 $'000 $'000 $'000 $'000

Non-derivatives Non-interest bearing 148,599 - - 148,599 Variable rate 24,142 - - 24,142 Duration based 205,665 820,972 2,985,450 4,012,087 Total non-derivatives 378,406 820,972 2,985,450 4,184,828

30 June 2014

Non-derivatives Non-interest bearing 205,217 - - 205,217 Variable rate 25,296 - - 25,296 Duration based 213,336 853,931 3,021,152 4,088,419 Total non-derivatives 443,849 853,931 3,021,152 4,318,932

Total Less than Between Over contractual Parent 1 year 1 and 5 years 5 years cash flows 30 June 2015 $'000 $'000 $'000 $'000

Non-derivatives Non-interest bearing 31,640 - - 31,640 Variable rate - - - - Duration based - - - - Total non-derivatives 31,640 - - 31,640

30 June 2014

Non-derivatives Non-interest bearing 28,826 - - 28,826 Variable rate - - - - Duration based - - - - Total non-derivatives 28,826 - - 28,826

24 Queensland Rail Notes to the financial statements 30 June 2015 (continued)

13 Financial risk management (continued) (d) Fair value measurements The fair value of financial assets and financial liabilities must be estimated for recognition and for disclosure purposes. The derivative financial assets and liabilities held by the consolidated entity have been classified as level 2 on the fair value hierarchy as values are indirectly derived from market indices. The parent entity does not hold any derivative financial instruments. The carrying amounts of trade receivables and payables are assumed to approximate their fair values due to their short-term nature. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the consolidated entity for similar financial instruments. The carrying amount of current borrowings approximates the fair value, as the impact of discounting is not significant. (e) Capital risk management The consolidated entity's objectives when managing capital are to safeguard its ability to continue as a going concern so that it can continue to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. The responsible Ministers advise the appropriate methodology in determining the dividend payable annually. The consolidated entity monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including 'borrowings' and external ‘trade and other payables' as shown in the balance sheet) less cash and cash equivalents (including bank overdraft). Total capital is calculated as ‘equity’ as shown in the balance sheet plus net debt. The consolidated entity's gearing ratios are as follows: Consolidated Parent 2015 2014 2015 2014 $'000 $'000 $'000 $'000

Total borrowings 3,351,740 3,401,397 210,639 199,710 Less: cash and cash equivalents (334,262) (409,241) - - Net debt 3,017,478 2,992,156 210,639 199,710

Total equity 2,844,576 2,802,642 2,943,330 2,902,383 Total capital 5,862,054 5,794,798 3,153,969 3,102,093

Consolidated Parent Gearing ratio 51% 52% N/A N/A

The consolidated entity is also required by QTC to maintain an Earnings Before Interest and Tax (EBIT) Interest Coverage of greater than 1.25:1, except where the total debt to capital is greater than 70%, in which case the EBIT Interest Coverage must be at least 2:1. The consolidated entity has complied with this requirement for both the current and prior reporting periods.

25 Queensland Rail Notes to the financial statements 30 June 2015 (continued)

14 Critical accounting estimates and judgements Estimates and judgements are evaluated annually and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the consolidated entity and that are believed to be reasonable under the circumstances. The consolidated entity makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. (a) Estimated impairment of property, plant and equipment The consolidated entity tests annually whether property, plant and equipment has suffered any impairment, in accordance with the accounting policy stated in note 25(p). The recoverable amounts of cash generating units have been determined based on value in use calculations or fair value less costs to sell. Value in use calculations require the use of assumptions. These assumptions include the allocation of management's assessment of future cash flows for the next five years for the consolidated entity to each cash generating unit and the discounting of nominal amounts using the weighted average cost of capital applicable to that cash generating unit. (b) Long service leave provision The determination of the provisions required is dependent on a number of assumptions including expected wage increases, length of employee service and bond rates. Refer to note 9 for more information. (c) Workers' compensation self-insurance provision Independent actuarial valuations are used to estimate the provisions required for self-insured workers' compensation. The determination of the provisions required is dependent on a number of assumptions including the total future cost to finalise existing open claims, wage increases that will impact existing claims, inflation and the amount of claims that have been incurred but not yet reported. Refer to note 25(s)(i) for more information. (d) Provision for onerous contracts In the current reporting period, the provision for onerous contracts provides for two outstanding contracts for Queensland Rail Limited, a provision concerning commercial property leases in Brisbane and a provision concerning the purchase of inventory from Aurizon Operations Limited. In the determination of the onerous contract provision for the commercial property leases in Brisbane, estimations were required for the timing of future rental income that can offset future rental commitments, the likelihood of whether floors will be utilised by Queensland Rail Limited and the relevant discount rates. In the determination of the onerous contract provision for the purchase of inventory, an estimation of surplus and redundant stock was required. Refer to note 25(s)(ii) for more information.

26 Queensland Rail Notes to the financial statements 30 June 2015 (continued)

14 Critical accounting estimates and judgements (continued) (e) Taxation The consolidated entity's accounting policy for taxation requires management's judgement as to the types of arrangements considered to be subject to a tax. Judgement is also required in assessing whether deferred tax assets and certain deferred tax liabilities are recognised on the balance sheet. Deferred tax assets, including those arising from unrecouped tax losses, capital losses and temporary differences, are recognised only when it is considered probable that they will be recovered. Recoverability is dependent on the generation of sufficient future taxable profits. Refer to notes 7 and 10 for carrying amounts of deferred tax assets and deferred tax liabilities. (f) Depreciation Management estimates the useful lives and residual values of property, plant and equipment based on the expected period of time over which economic benefits from use of the asset will be derived. Management reviews useful life assumptions on an annual basis having given consideration to variables including historical and forecast usage rates, technological advancements and changes in legal and economic conditions. Refer to note 25(n) for details of current depreciation rates used. (g) Hedge accounting Management's judgement is necessary when determining whether a derivative financial instrument qualifies for hedge accounting, such as whether forecast transactions are highly probable as required by AASB 139 Financial Instruments: Recognition and Measurement. The assessment of whether forecast transactions are highly probable is judgmental and is subject to changes to the timing and magnitude of underlying purchases.

15 Correction of error and revision of estimates There have been no corrections of error in the current reporting period. During the reporting period the consolidated entity changed the discount rate used for the calculation of long-term employee benefits from the Australian government bond rate to the Australian high-quality corporate bond rate (G100) and applied this change as a change in accounting estimate. The Australian bond market has demonstrated sufficient depth and liquidity over recent years to justify adopting this change to high-quality corporate bond rates. The consolidated entity has decreased the carrying amounts of long service leave, annual leave (including leave loading), retirement allowance and related payroll tax by $10.98 million, $0.54 million, $0.02 million and $0.55 million, respectively in the current year upon application of this change is estimate. Due to the inherent uncertainty in both the government bond rates and the high-quality corporate bond market, the consolidated entity is unable to predict the impact of the change to a high-quality bond discount rate in periods beyond the current reporting period. There were no other material revisions of estimates during the current reporting period.

27 Queensland Rail Notes to the financial statements 30 June 2015 (continued)

Unrecognised items

16 Contingencies The consolidated entity had contingencies at reporting date in respect of: (a) Contingent assets 2015 2014 Fair value Fair value Consolidated $'000 $'000

Third party guarantees 153,880 295,680 Bank guarantees 121,936 96,189 Insurance company guarantees 16,326 20,100 292,142 411,969

All contingent assets are unrecognised financial assets measured at fair value. The parent entity does not hold any guarantees. (b) Contingent liabilities Issues relating to common law claims and product warranties are dealt with as they arise. There were no material contingent liabilities requiring disclosures in the financial statements other than as set out below. Litigation A number of common law claims are pending against the consolidated entity. Provisions are taken up for some of these exposures based on the Board's determination and are included as such in note 9. As at reporting date, the following cases were filed in the courts naming Queensland Rail as defendant: Consolidated Parent 2015 2014 2015 2014

Number of cases before the High Court 1 1 1 1 Number of cases before the Supreme Court 3 3 - 1 Number of cases before the District Court 9 8 - - Number of cases before the Magistrates Court 1 1 - -

It is not possible to make a reliable estimate of the final amount payable, if any, in respect of the litigation before the courts at this time. 2015 2014 Fair value Fair value Consolidated $'000 $'000

Third party guarantees 5,311 16,176 Bank guarantees 25,850 36,015 31,161 52,191

All contingent liabilities are unrecognised financial liabilities measured at fair value. The parent entity has not issued any guarantees.

28 Queensland Rail Notes to the financial statements 30 June 2015 (continued)

17 Commitments The future commitments of the consolidated entity (including GST) at reporting date were as follows: (a) Commitments payable 2015 2014 Capital Lease Operating Capital Lease Operating Consolidated $'000 $'000 $'000 $'000 $'000 $'000

Within one year 337,486 5,884 94,653 96,048 11,192 104,707 Later than one year but not later than five years 9,098 23,177 1,436 817 29,321 2,617 Later than five years - 1,517 - - 10,901 - 346,584 30,578 96,089 96,865 51,414 107,324

Operating commitments include inventory commitments of $29.3 million (2014: $33.6 million). The parent entity does not have any commitments payable. (b) Commitments receivable 2015 2014 Lease Lease Consolidated $'000 $'000

Within one year 4,773 5,430 Later than one year but not later than five years 12,775 10,470 Later than five years 17,232 39,574 34,780 55,474

The parent entity does not have any commitments receivable.

18 Events occurring after the reporting period No matters or circumstances have arisen since the end of the financial year which significantly affected, or may significantly affect the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in future financial years.

29 Queensland Rail Notes to the financial statements 30 June 2015 (continued)

Other items

19 Key management personnel disclosures (a) Members, directors and specified executives Compensation and other terms of employment for the specified executives are formalised in service agreements. Details of the compensation of each specified member, director and executive are as follows: 2015 2014* $'000 $'000

Short-term benefits 3,597 4,211 Post-employment benefits 338 456 Long-term benefits 16 300 Termination benefits - 135 3,951 5,102

* The prior year aggregate includes all compensation provided to individuals who held a key management personnel role, however, the remuneration tables for directors and specified executives only includes information for individuals holding key management personnel roles during the current reporting period. Short-term benefits includes cash salary, at risk performance incentives (for specified executives only), fees and non-monetary benefits. Non-monetary benefits represent the value of Exempt and Reportable Fringe Benefits for the respective Fringe Benefits Tax year.

30 Queensland Rail Notes to the financial statements 30 June 2015 (continued)

19 Key management personnel disclosures (continued) (b) Key management personnel compensation (i) Members and directors of Queensland Rail and subsidiaries Short-term Post- 2015 benefits employment benefits Member fees and Super- Members allowances annuation Total $'000 $'000 $'000

M Klug Chairman 137 12 149 Appointment term: 3 years Expiry date: 30 September 2016 Blank A Blums Member 45 4 49 Appointment term: 2 years 8 months Expiry date: 30 September 2016 Blank D George Member 43 4 47 Appointment term: 2 years 5 months Expiry date: 30 September 2015 Blank W McMillan Member 47 4 51 Appointment term: 2 years 5 months Expiry date: 30 September 2015 Blank J Mickel Member 41 4 45 Appointment term: 3 years Expiry date: 30 September 2016 Blank G Poole Member 47 4 51 Appointment term: 2 years 11 months Expiry date: 30 September 2016 Normal P Wallis Member 39 4 43 Appointment term: 2 years 2 months Expiry date: 30 September 2016 Blank Total 399 36 435

31 Queensland Rail Notes to the financial statements 30 June 2015 (continued)

19 Key management personnel disclosures (continued) Short-term Post- 2014 benefits employment benefits Member fees and Super- Members allowances annuation Total $'000 $'000 $'000

M Klug Chairman 93 9 102 Blank A Blums Member 14 1 15 Blank D George Member 40 4 44 Blank W McMillan Member 45 4 49 Blank J Mickel Member 27 3 30 Blank G Poole Member 27 3 30 Blank All the members listed above are members of the Queensland Rail Board and directors of the Queensland Rail Limited Board. J Benstead and G Pringle are appointed as Managing Director and Director of On Track Insurance Pty Ltd respectively, with no set appointment date. As an employee of Queensland Rail, J Benstead did not receive additional remuneration in his capacity as director of On Track Insurance Pty Ltd. As an executive of former parent company, Aurizon Operations Limited (formerly QR National Limited), G Pringle did not receive additional remuneration in his capacity as director of On Track Insurance Pty Ltd. These amounts are not in addition to the amounts disclosed in the Key Management Personnel note of the Queensland Rail Limited financial statements as they were recharged by the entity in accordance with the Managed Services Agreement. Members' and directors' remuneration and terms of appointment are set by responsible Ministers. Members' and directors' remuneration is subsequently reviewed annually by responsible Ministers. Members and directors are not entitled to termination payments on termination of their period of service.

32 Queensland Rail Notes to the financial statements 30 June 2015 (continued)

19 Key management personnel disclosures (continued) (ii) Specified executives of the consolidated entity Short-term benefits Post- Long- 2015 employment term benefits benefits Cash Non- Long salary Cash monetary Super- service Specified executives and fees bonuses benefits annuation leave Total $'000 $'000 $'000 $'000 $'000 $'000

H Gluer*** 665 - 6 63 - 734 Chief Executive Officer Appointment term: 3 years Expiry date: 3 April 2018 Blank J Benstead** 29 - - 4 - 33 Acting Executive General Manager Projects (until 21 July 2014) Appointment term: 3 years + 2 years extension Expiry date: 30 June 2015 Blank N Duce 315 42 6 36 - 399 Executive General Manager Human Resources Appointment term: 3 years + 2 years extension Expiry date: 30 June 2016 Blank D Farrelly*** 349 - - 44 - 393 General Counsel and Executive General Manager Governance Appointment term: 3 years Expiry date: 9 March 2017 Blank L Gordon* 357 - 4 23 - 384 Executive General Manager Projects (from 21 July 2014) Blank M Hope* 369 37 6 35 - 447 Chief Financial Officer and Executive General Manager Commercial & Strategy Blank T Ripper* 385 47 6 51 16 505 Executive General Manager Network Blank K Wright* 507 62 6 46 - 621 Chief Operating Officer Blank Total 2,976 188 34 302 16 3,516

* These specified executives are tenured and have no expiry date. ** The appointment terms provided are for this officer's substantive position. *** These specified executives do not participate in the bonus scheme as per their employment contracts.

33 Queensland Rail Notes to the financial statements 30 June 2015 (continued)

19 Key management personnel disclosures (continued) Short-term benefits Post- Long- 2014 employment term benefits benefits Cash Non- Long salary Cash monetary Super- service Specified executives and fees bonuses benefits annuation leave Total $'000 $'000 $'000 $'000 $'000 $'000

H Gluer 270 - 3 30 - 303 Chief Executive Officer (from 3 April 2014) Acting Chief Executive Officer (from 10 January 2014 until 2 April 2014) Blank J Benstead 389 - 6 48 - 443 Acting Executive General Manager Projects (from 21 May 2014) Acting Executive General Manager Commercial and Corporate Services (from 2 August 2013 until 20 May 2014) Acting Chief Executive Officer (from 1 July 2013 until 1 August 2013) Blank N Duce 282 - 5 27 - 314 Executive General Manager People and Performance Blank D Farrelly 89 - 2 11 - 102 General Counsel (from 10 March 2014) Blank M Hope 307 - 7 26 - 340 Chief Financial Officer (from 27 March 2014) Acting Chief Financial Officer (from 29 August 2013 until 26 March 2014) Blank T Ripper 343 - 8 45 8 404 Acting Executive General Manager Network (from 16 December 2013) Executive General Manager Access and Business Strategy (until 15 December 2013) Blank K Wright 520 - 11 43 - 574 Executive General Manager Rail Operations Blank The appointment authority for all specified executives is section 35 of the Queensland Rail Transit Authority Act 2013, with the exception of the Chief Executive Officer who is appointed under section 29. The responsibilities for each specified executive position are detailed in the Annual Report.

34 Queensland Rail Notes to the financial statements 30 June 2015 (continued)

19 Key management personnel disclosures (continued) These amounts are not in addition to the amounts disclosed in the Key Management Personnel note of the Queensland Rail Limited financial statements as they were recharged by the entity in accordance with the Managed Services Agreement. The above are the key executives representing the consolidated entity. These executives provide advice in relation to strategy and future direction of the consolidated entity under the business model adopted. On Track Insurance Pty Ltd does not have any senior executives who are involved in setting strategy or future direction for the entity and no On Track Insurance Pty Ltd executives are disclosed above for this reason. Termination of an executive can be made by the consolidated entity to the specified executive either with notice, without notice or due to the incapacity of the specified executive. Formal policy concerning the application to terminations for Queensland Rail chief and senior executives are governed by the Policy for Government Owned Corporation Chief and Senior Executive Employment Arrangements v 1.0. This policy was issued by the Government in the 2013/14 period and is applicable to arrangements issued from this period. In prior periods, Queensland Rail complied with the Government Owned Corporations - Governance Arrangements for Chief and Senior Executives v3.0 publication. Chief Executive provisions The employment of the Chief Executive may be terminated by either party at any time giving the other party 3 months written notice of termination. The Chief Executive is entitled to 3 months salary where termination occurs on the agreed termination date. When a termination occurs, the Chief Executive is entitled to the following: • any accrued leave; and • salary for the balance of the notice period, if the employment is terminated by the consolidated entity immediately or during the notice period. No other termination or compensation payments are payable to the Chief Executive. Senior Executive provisions under the Policy for Government Owned Corporation Chief and Senior Executive Employment Arrangements v 1.0 Under the policy, all new appointments to senior executives are on an ongoing (tenured) basis with no specific end date. Termination by notice can be made by the specified executive or the consolidated entity at any time by either party giving to the other 1 month written notice. When a termination occurs, specified executives that are tenured are entitled to the following: • any accrued leave; • salary for the balance of the notice period, if the employment is terminated by the consolidated entity immediately or during the notice period; and • a termination payment of 3 months salary for senior executives. Senior Executive provisions under the Government Owned Corporations - Governance Arrangements for Chief and Senior Executives v3.0 Under the previous policy, existing contracts with outer limits for specified executives can continue until the expiry of the current contract term. Reappointments are to be on a tenure basis. Termination by notice can be made by the specified executive or the consolidated entity at any time by either party giving to the other 3 months written notice. Where termination occurs on the agreed termination date, specified executives are entitled to a severance payment of 12 weeks salary.

35 Queensland Rail Notes to the financial statements 30 June 2015 (continued)

19 Key management personnel disclosures (continued) For specified executives with outer limit contracts, when a termination occurs prior to the termination date (assuming no gross misconduct), the consolidated entity will pay the specified executive the following: • any accrued leave; • salary for the balance of the notice period; • a service payment equal to the greater of 4 weeks salary or 2 weeks salary per year of continuous service with the consolidated entity up to a maximum 52 weeks salary; and • a separation payment equal to 20% of the salary that the specified executive would have earned had the employment continued from the day after the notice period ceased until the termination date. Queensland Rail Chief and Senior Executive Officers are compensated in accordance with the above mentioned Policy for Government Owned Corporation Chief and Senior Executive Employment Arrangements v 1.0 publication. The Queensland Rail Board has also implemented the Performance Payment Policy - Chief and Senior Executive which reflects the expectations of the Queensland State Government as outlined in the stated policy. The Performance Payment Policy - Chief and Senior Executive provides for a performance pay process that is administered on a 12 month (financial year) cycle and aligns the executives with Queensland Rail wide, Functional and Individual Key Performance Indicators (KPIs). Performance Payment pays up to a maximum payment of 15% per annum of a Chief or Senior Executive’s total fixed remuneration on the achievement of stretch targets. The Queensland Rail wide and Functional KPIs are set by the Board at the beginning of the financial year in alignment with the Queensland Rail Operational Plan and the delivery of our organisational performance outcomes including safety, reliability, customer outcomes and financial performance. The performance agreement components are weighted as follows: • Queensland Rail wide 50% The Queensland Rail wide KPIs are aligned to the organisational performance outcomes as follows: Reliability • On Time Running Citytrain 24/7 Financial • Earnings before interest and tax Customer • Customer satisfaction Citytrain • Functional 30% Functional KPIs are set by the Board, on recommendation from the Chief Executive Officer and are relevant to the performance of the specific function. • Individual 20% The Individual KPIs are set by the Chief Executive Officer on the recommendation of the relevant executive member. Individual KPIs are reflective of Queensland Rail wide and Functional KPIs for which the executive has direct accountability and / or reflective of strategic business plans, budgets and capital / infrastructure projects. Eligible executives must also meet minimum expectations for the consistent demonstration of the Queensland Rail Values and Behaviours. The Chief and Senior Executives participate in the Queensland Rail performance management process with quarterly and annual performance reviews. Annual performance results of the Executives are assessed and calibrated by the Chief Executive Officer and Executive General Manager Human Resources. The Board is responsible for the assessment of the Chief Executive Officer’s performance. The Queensland Rail Board approves the calculation and payment of the Chief and Senior Executive Performance Payments and provides written advice to the responsible Ministers in accordance with the Government Arrangements.

36 Queensland Rail Notes to the financial statements 30 June 2015 (continued)

19 Key management personnel disclosures (continued) 2015 2014 $'000 $'000

Aggregate performance bonus compensation Aggregate performance bonus compensation paid 6,386 - Aggregate performance bonus compensation accrued for current period 8,789 10,437 Aggregate compensation (including performance bonus compensation) to employees eligible for performance bonus compensation 79,048 129,100

2015 2014

Number of employees eligible for performance bonus compensation 434 1,071

The accrued 2013 bonuses were reversed in full in the 2014 period as the consolidated entity did not meet all of its performance targets. The following categories of employees are eligible for performance based at risk incentive bonus compensation: • specified executives; • other executives; • salaried employees; and • award employees. Performance bonus compensation paid to specified executives is granted upon approval by the Queensland Rail Board. Performance bonus compensation paid to other employees is granted upon approval by the Chief Executive Officer or in accordance with a subsidiary agreement. The amount of the compensation is determined by performance against key performance indicators set at the start of the year for employees or conditions of a subsidiary agreement for work units.

37 Queensland Rail Notes to the financial statements 30 June 2015 (continued)

19 Key management personnel disclosures (continued) (c) Transactions with key management personnel During the current reporting period, P Wallis, member of Queensland Rail and director of Queensland Rail Limited from 30 July 2014, was a principal of the global consulting firm Arup Pty Ltd that provided consultancy services to Queensland Rail Limited. During the current and prior reporting periods, K Wright, specified executive of Queensland Rail and Queensland Rail Limited, was a director of Rail Industry Safety and Standards Board, from July 2010 to December 2013 and August 2014 to March 2015, a board member of the Australasian Railway Association, from 13 June 2014 and in the current reporting period was a board member of the TrackSAFE Foundation. Queensland Rail Limited paid contributions and corporate memberships to these organisations during these periods. During the prior reporting period, the role of M Klug, chairman of Queensland Rail and Queensland Rail Limited, changed from partner to consultant at Clayton Utz. There were no transactions with Clayton Utz during this period. In 2015-15 Queensland Rail Limited engaged Clayton Utz for legal advice however these payments are not related party transactions. During the prior reporting period, D George, member of Queensland Rail and director of Queensland Rail Limited, was the Chief Executive Officer of Rail CRC Limited that provided key innovation services to Queensland Rail Limited. Queensland Rail Limited provided rental accommodation to Rail CRC Limited. During the prior reporting period, from 17 February until 9 March 2014, R Franklin, acting specified executive of Queensland Rail and Queensland Rail Limited, was a principal of the corporation Franklin Athanasellis Cullen Pty Ltd that had provided key management personnel and consultancy services to Queensland Rail and Queensland Rail Limited. During the prior reporting period, G Ford, specified executive of Queensland Rail and Queensland Rail Limited, was a director of the corporation Rail Industry Safety and Standards Board that had provided corporate memberships to Queensland Rail Limited. During the prior reporting period, a family member of M Ryan, specified executive of Queensland Rail and Queensland Rail Limited, received reimbursement for the Vince O’Rourke scholarship from Queensland Rail. All figures displayed below are exclusive of GST. Consolidated 2015 2014 $'000 $'000

Consultancy fees - Arup Pty Ltd 1,206 - Corporate membership - Australasian Railway Association 406 - Contribution - TrackSAFE Foundation 60 - Corporate membership - Rail Industry Safety and Standards Board 261 244 Professional services - Rail CRC Limited - 509 Rental revenue - Rail CRC Limited - (180) Consultancy fees - Franklin Athanasellis Cullen Pty Ltd - 74 Vince O'Rourke scholarship - 4 1,933 651

38 Queensland Rail Notes to the financial statements 30 June 2015 (continued)

20 Related party transactions The consolidated entity does not have any related party transactions or loans to disclose as these transactions and balances are eliminated on consolidation. (a) Transactions with related parties The following transactions occurred with related parties: Parent 2015 2014 $'000 $'000

Sale of goods and services to subsidiaries 696,965 758,767 Dividend revenue from subsidiaries 222,872 212,932 Blank Dividend receivable from subsidiaries 222,872 212,932 Receivables from subsidiaries - current 206,945 169,874 Receivables from subsidiaries - non-current 29,039 31,335 Blank Shares in subsidiaries 2,845,324 2,845,324 Blank (b) Loans to / from related parties Parent 2015 2014 $'000 $'000

Loans to subsidiaries Beginning of the year 30,100 - Loans advanced 90,954 113,461 Loans repayments received (74,006) (83,361) End of year 47,048 30,100

39 Queensland Rail Notes to the financial statements 30 June 2015 (continued)

20 Related party transactions (continued) (c) Transactions and outstanding balances with State of Queensland controlled entities The entity is an unincorporated statutory body and is owned by the Queensland State Government. The consolidated entity transacted with other State of Queensland controlled entities during the year as set out below: Consolidated Parent Notes 2015 2014 2015 2014 Nature of transaction $'000 $'000 $'000 $'000

Revenue from continuing 1 1,548,060 1,618,193 - - Sales, Transport Service operations Contracts and government concessions

Other expenses 152,453 154,956 30,547 32,136 Income tax, payroll tax, audit fees, land tax and consumables

Finance income 13,904 10,979 - - Interest revenue

Finance expenses 214,287 219,251 - - Interest and financing costs

Cash and cash 5 324,049 392,340 - - Short-term investments equivalents

Trade and other 5,229 12,316 - - Transport Service receivables Contracts and other accounts receivables

Work in progress 6 65,574 3,975 - - Capitalised expenditure

Trade and other payables 8 213,762 196,225 178,999 170,884 Interest payable, capital works payable, payroll tax payable and dividend payable

Current tax liabilities 41,403 26,138 41,403 26,138 Current tax payable

Other current liabilities 1,561 2,760 - - Transport Service Contracts and asset funding in advance

Non-current borrowings 13 3,000,000 3,000,000 - - Long-term borrowings

Other non-current 11,034 8,082 - - Asset funding in advance liabilities

Contributed equity (2,926) (7,756) (2,926) (7,756) Capital distributions

Dividend declared 11 178,999 170,884 178,999 170,884 Dividend declared

40 Queensland Rail Notes to the financial statements 30 June 2015 (continued)

21 Subsidiaries The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiary in accordance with the accounting policy described in note 25(b). Country of Name of entity incorporation Class of shares Equity holding 2015 2014 % %

Queensland Rail Limited Australia Ordinary 100 100 On Track Insurance Pty Ltd Australia Ordinary 100 100

The principal activities of Queensland Rail Limited are to carry out the key objectives of its parent, Queensland Rail, in accordance with the QRTA Act. Queensland Rail Limited retains title of all non-employee related assets, liabilities and contracts. The management of its assets are effected through the provision of employee services from Queensland Rail under a Managed Services Agreement. The principal activities of On Track Insurance Pty Ltd are the provision of insurance coverage for all claims relating to events for both former parent, Aurizon Operations Limited (formerly QR National Limited) and Queensland Rail Limited up until 30 June 2010. The Auditor-General of Queensland is the authorised auditor of Queensland Rail Limited and On Track Insurance Pty Ltd.

22 Remuneration of auditors During the year the following fees were paid or payable for services provided by the auditor of the consolidated entity: Consolidated Parent 2015 2014 2015 2014 $'000 $'000 $'000 $'000

Audit and review of financial reports 425 519 65 55 425 519 65 55

41 Queensland Rail Notes to the financial statements 30 June 2015 (continued)

23 Special payments Consolidated Parent 2015 2014 2015 2014 $'000 $'000 $'000 $'000

Ex-gratia payments* 2,678 2,329 2,678 2,317 2,678 2,329 2,678 2,317

* Ex-gratia payments: - Ex-gratia payments were made to employees in the form of medical separations which are not required under their respective employment agreements in the current and prior period. - Ex-gratia payments were made to employees as compensation for rostering amendments in the current period. - A pay rate increase was paid to Queensland Rail employees covered by the State Certified Queensland Rail Traincrew Certified Agreement 2013 which was determined to be invalid by the High Court on 8 April 2015. Pay increases for these employees from 8 April 2015 to the reporting date meet the definition of a special payment. Refer to Note 3(a). - An out-of-court settlement was paid to a private individual impacted by a level crossing incident in the prior period.

42 Queensland Rail Notes to the financial statements 30 June 2015 (continued)

24 Queensland Rail Limited consolidated financial information The Queensland Rail Limited consolidated entity, comprising Queensland Rail Limited and its subsidiary, On Track Insurance Pty Ltd, is wholly owned by Queensland Rail. Queensland Rail is required to provide the annual report, which includes the Queensland Rail financial statements, to responsible Ministers for tabling in Parliament. This is in accordance with section 62 of the Financial Accountability Act 2009. The financial statements of Queensland Rail Limited are not required to be included in the Queensland Rail annual report. The financial results of the Queensland Rail Limited consolidated entity are significant and represent a substantial portion of the Queensland Rail consolidated entity’s results. This note is disclosed to provide users of these financial statements more clarity concerning the financial results of the Queensland Rail consolidated entity. A summarised version of the Queensland Rail Limited consolidated financial statements are disclosed below: 2015 2014 $'000 $'000

Consolidated statement of comprehensive income

Revenue 1,932,988 1,969,183 Expenses (1,426,131) (1,476,148) Operating profit 506,857 493,035

Net finance costs (186,952) (183,310) Profit before income tax 319,905 309,725

Income tax expense (96,156) (96,120)

Profit for the year 223,749 213,605

Other comprehensive income for the year, net of tax 110 (314)

Total comprehensive income for the year 223,859 213,291

43 Queensland Rail Notes to the financial statements 30 June 2015 (continued)

24 Queensland Rail Limited consolidated financial information (continued) 2015 2014 $'000 $'000

Consolidated balance sheet

Current assets 474,937 582,759 Non-current assets 6,409,504 6,320,392 Total assets 6,884,441 6,903,151

Current liabilities 597,424 625,403 Non-current liabilities 3,540,447 3,532,165 Total liabilities 4,137,871 4,157,568

Net assets 2,746,570 2,745,583

Total equity 2,746,570 2,745,583

(13,768,882) (13,806,302) 2015 2014 $'000 $'000

Consolidated statement of changes in equity

Balance at the beginning of the financial year 2,745,583 2,745,224

Total comprehensive income for the year 223,859 213,291 Transactions with owners in their capacity as owners (222,872) (212,932)

Balance at end of year 2,746,570 2,745,583

2015 2014 $'000 $'000

Consolidated statement of cash flows

Cash flows from operating activities 648,846 738,783 Cash flows from investing activities (510,886) (353,684) Cash flows from financing activities (212,932) (238,427) Net increase / (decrease) in cash and cash equivalents (74,972) 146,672

Cash and cash equivalents at the beginning of the financial year 409,234 262,562

Cash and cash equivalents at end of year 334,262 409,234

44 Queensland Rail Notes to the financial statements 30 June 2015 (continued)

Policies

25 Summary of significant accounting policies The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial statements are for the consolidated entity consisting of Queensland Rail and its subsidiaries, Queensland Rail Limited and On Track Insurance Pty Ltd. Queensland Rail is an unincorporated statutory body domiciled in Australia and owned by the Queensland State Government. Queensland Rail is a for-profit entity. These financial statements are denominated in Australian dollars. Queensland Rail is referred to in this financial report as the "entity" or the "parent". Queensland Rail together with its subsidiaries, Queensland Rail Limited and On Track Insurance Pty Ltd, are collectively referred to as the "consolidated entity". Queensland Rail is committed to providing a safe, reliable, on-time, value for money and efficient rail service that benefits the community and supports industry. To achieve this, Queensland Rail aligns its business activity to three strategic objectives: (a) People - improving safety outcomes and increasing productivity; (b) Progress - optimising operational expenditure and targeting capital investment; and (c) Performance - sustaining operational performance. The principal activities of the consolidated entity consists of: (a) (SEQ) above and below rail services; (b) Traveltrain services throughout Queensland; and (c) Network access services throughout regional Queensland. These financial statements were approved for issue by the members on 27 August 2015. (a) Basis of preparation (i) Statement of compliance These financial statements are general purpose financial statements which have been prepared in accordance with: • applicable Australian Accounting Standards (AASBs) (including Australian Interpretations) adopted by the Australian Accounting Standards Board (AASB); • the Financial and Performance Management Standard 2009; • Queensland Treasury and Trade’s Financial Reporting Requirements for Queensland Government Agencies to the extent relevant; and • other authoritative pronouncements. (ii) New and amended standards adopted by the consolidated entity The new standards and amendments to standards, that are mandatory for the first time for the financial year beginning on 1 July 2014, do not have a material impact on the financial statements of the consolidated entity and were not early adopted. (iii) Early adoption of standards The consolidated entity has elected not to early adopt any pronouncements for the current annual reporting period. The application of standards and amendments that are available for early adoption for the financial year beginning 1 July 2014 are not expected to have a material impact on the accounts of the consolidated entity in future periods.

45 Queensland Rail Notes to the financial statements 30 June 2015 (continued)

25 Summary of significant accounting policies (continued) There are no other standards that are not yet effective and that are expected to have a material impact on the consolidated entity in the current or future reporting periods and on foreseeable future transactions. (iv) Historical cost convention These financial statements have been prepared under the historical cost convention, except for certain assets which, as stated, are at fair value. (v) Critical accounting estimates The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 14. (vi) Going Concern The financial report for the consolidated entity is prepared on a going concern basis. Funding through Transport Service Contracts, adequate interest coverage and a low gearing ratio provides adequate assurance of the consolidated entity's status as a going concern. The parent is a going concern as all costs incurred in providing employees to its subsidiary, Queensland Rail Limited, is recharged by the parent under a Managed Services Agreement with Queensland Rail Limited. All transactions for operating activities of the parent are undertaken through the Queensland Rail Limited banking facilities. (b) Principles of consolidation (i) Subsidiaries The consolidated financial statements incorporate the assets and liabilities of the subsidiaries of Queensland Rail as at reporting date and the results of the subsidiaries for the year then ended. A subsidiary is an entity (including a structured entity) over which the consolidated entity has control. The consolidated entity controls an entity when the consolidated entity is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Inter-company transactions, balances and unrealised gains on transactions between consolidated entity companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Non-current inter-company loans may not be demanded by the other entity and do not become payable other than through settlement of obligations associated with the loans or one of the entities exits the wholly-owned consolidated entity. The Managed Services Agreement between Queensland Rail and its subsidiary, Queensland Rail Limited, permits all inter-company balances between both entities to be legally offset and settled on a net basis at the end of each reporting period. Accounting policies have been adopted consistently across the consolidated entity. Investment in the subsidiary is accounted for at cost in the financial records of the parent entity. (c) Foreign currency translation (i) Functional and presentation currency Items included in the financial statements of each of the consolidated entity's entities are measured using the currency of the primary economic environment in which the entity operates (i.e. the functional currency). The consolidated financial statements are presented in Australian dollars, which is the consolidated entity's functional and presentation currency.

46 Queensland Rail Notes to the financial statements 30 June 2015 (continued)

25 Summary of significant accounting policies (continued) (ii) Transactions and balances Foreign currency transactions are initially translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss, except when they are deferred in equity as qualifying cash flow hedges and qualifying net investment hedges. (d) Rounding of amounts / Comparative restatements The financial statements are presented in Australian dollars, which is the consolidated entity’s functional currency. Amounts included in the financial statements have been rounded to the nearest thousand dollars unless disclosure of the full amount is specifically required. Comparative information has been restated where necessary to be consistent with disclosures in the current reporting period. (e) Goods and Services Tax (GST) Revenues, expenses and assets are recognised net of the amount of associated GST, except where the amount of GST incurred is not recoverable from the Australian Taxation Office (ATO). In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of the expense. Trade receivables and trade payables in the balance sheet are shown inclusive of GST. The net amount of GST recoverable from, or payable to, the ATO is included with other receivables or payables in the balance sheet. Cash flows are presented in the cash flow statement on a gross basis, except for the GST component of investing or financing activities, which are disclosed as operating cash flow. Queensland Rail and its subsidiaries are grouped for GST purposes. This means that any inter-company transactions within the Queensland Rail consolidated entity do not attract GST. Queensland Rail is the representative member of the GST group and is responsible for reporting all GST liabilities and credits on behalf of the consolidated entity. (f) Revenue recognition Revenue is measured at the fair value of the consideration received or receivable after taking into account any discounts allowed. Amounts disclosed as revenue are net of indirect taxes. The consolidated entity recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the consolidated entity and specific criteria have been met for each of the consolidated entity's activities as described below. Exchanges of goods and services of the same nature and value without any cash consideration are not recognised as revenues. Revenue is recognised for the major business activities as follows: (i) Services revenue Services revenue comprises revenue earned from Transport Service Contracts, the provision of passenger transport and track access. In addition to Transport Service Contracts, the State Government reimburses the consolidated entity for concessions provided to senior citizens, pensioners and students.

47 Queensland Rail Notes to the financial statements 30 June 2015 (continued)

25 Summary of significant accounting policies (continued) Transport Service Contracts A Rail Transport Service Contract (TSC) 2013/14 was executed between Queensland Rail, Queensland Rail Limited and the State of Queensland in July 2013. This contract covers funding to Queensland Rail Limited from the Department of Transport and Main Roads (DTMR), on behalf of the State of Queensland, for services undertaken by Queensland Rail Limited associated with: • Rail Infrastructure DTMR compensates the consolidated entity for the capital and operational requirements on the TSC supported network. The capital funding is in the form of a payment being the sum of Return on Assets (RoA), depreciation and capital works expense. The RoA and depreciation are paid for TSC supported commissioned assets. • Citytrain The consolidated entity receives payment for the delivery of train services on the suburban network in accordance with the timetable. Revenue is determined as the sum of the operating shortfall plus RoA, depreciation and capital works expense. The RoA and depreciation are paid for TSC supported commissioned assets. • Traveltrain The consolidated entity receives payments associated with travel services provided to the public on the Travel Network. Revenue is determined as the sum of the operating shortfall plus RoA, depreciation and capital works expense. The RoA and depreciation are paid for TSC supported commissioned assets. Passenger Transport Other train passenger service revenue comprises ticket and travel related sales and is recognised as revenue once the service has been rendered. Government concession revenue is recognised in the period in which the service is provided based on a predetermined formula as agreed with the local authority. Network Access Revenue generated from rail network access is recognised as the services are provided and is calculated based on a number of operating parameters (such as tonnage hauled) applied to either regulator approved tariffs or negotiated access agreements. In some circumstances where paths are not utilised by customers, a take or pay fee is charged. This fee is subject to individual access contracts. Managed Services Agreement Revenue generated from the provision of personnel services to Queensland Rail Limited is recognised when the service is provided and includes direct and indirect costs as per the Managed Services Agreement. (ii) Other revenue Other revenue comprises revenue earned from the sale of goods and services. Revenue for sale of goods is recognised when the significant risks and rewards are passed to the buyer and the costs incurred, or to be incurred in respect of the transaction can be measured reliably. Risks and rewards are considered passed to the buyer at the time of delivery. (iii) Interest income Interest income is recognised using the effective interest method.

48 Queensland Rail Notes to the financial statements 30 June 2015 (continued)

25 Summary of significant accounting policies (continued) (g) Special payments Special payments include ex-gratia expenditure and other expenditure that the consolidated entity is not contractually or legally obligated to make to other parties. The total of all special payments (including those of $5,000 or less) is disclosed within employee benefits expense and other expenses. For details of special payments refer to note 23. However, descriptions of the nature of special payments are only provided for special payments greater than $5,000. (h) Income tax The income tax expense or benefit for the period is the tax payable / receivable on the current period's taxable income based on the national income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements and by unused tax losses. Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities are settled, based on those tax rates that are enacted. The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability. Deferred tax assets are recognised for deductible temporary differences, unused tax losses and tax credits, only if it is probable that future taxable amounts will be available to utilise those temporary differences, losses and credits. Deferred tax liabilities and assets are not recognised for the temporary differences between the carrying amount and tax bases of investments in controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends to either settle on a net basis, or to realise the assets and settle the liability simultaneously. Current and deferred tax is recognised as an expense or income in the statement of comprehensive income, except when it relates to items credited or debited directly to equity, in which case the deferred tax is also recognised directly in equity. (i) Tax consolidation legislation Queensland Rail (the head entity) and its wholly owned Australian subsidiaries have implemented a National Tax Equivalents Regime (NTER) income tax consolidated group. In accordance with UIG Interpretation 1052 the specified subsidiary members each recognise the tax effect of their own transactions in their financial statements and the head entity recognises the aggregate current income tax liability of the consolidated entity and the benefit of any tax losses arising in the consolidated entity in its financial statements. Assets or liabilities arising under the tax funding agreement with the income tax consolidated group members are recognised as amounts receivable from or payable to other members in the consolidated entity. In addition to its own current and deferred tax amounts, Queensland Rail also recognises the current tax liabilities (or assets) and the deferred tax assets arising from any unused tax losses and unused tax credits assumed from the specified subsidiary members in the income tax consolidated group. (ii) Income tax equivalents The consolidated entity is required to make income tax equivalent payments to the Queensland Government, based upon the value of benefits derived and rulings set out in the National Tax Equivalent Regime (NTER) which is administered by Australian Taxation Office (ATO).

49 Queensland Rail Notes to the financial statements 30 June 2015 (continued)

25 Summary of significant accounting policies (continued) These payments are made pursuant to the Queensland Rail Transit Authority Act 2013 and instruction from the Treasurer. The NTER gives rise to obligations which reflect in all material respects those obligations for taxation which would be imposed by the Income Tax Assessment Act 1936, the Income Tax Assessment Act 1997 and associated legislation, as well as Rulings and other pronouncements by the ATO to determine the tax payable by the consolidated entity. (i) Cash and cash equivalents For the statements of cash flows and balance sheet presentation purposes, cash and cash equivalents include cash on hand, deposits held at call with financial institutions and other short-term highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. (j) Trade receivables Trade receivables are initially recorded at fair value less any allowance for uncollectible amounts. Trade receivables generally have credit terms ranging from 7 to 31 days. Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off. An allowance for impairment of trade receivables is established when there is objective evidence that the consolidated entity will not be able to collect all amounts due according to the original terms of the debt. (k) Inventories The value of inventories reported includes items held in centralised stores, workshops and infrastructure and rollingstock depots. Cost comprises cost of purchase, cost of conversion and other costs incurred in bringing the inventory to its present location and condition. Inventories held for distribution are measured at lower of cost and net realisable value. The cost of inventories is assigned on the first-in, first-out principle or weighted average cost formula. In the case of manufactured inventories and work in progress, cost includes an appropriate share of production overheads based on normal operating capacity. Items expected to be consumed after more than one year are classified as non-current. (l) Investments and other financial assets The consolidated entity classifies its non-derivative financial assets based on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition. At reporting date, the consolidated entity has only one type of non-derivative financial asset: loans and receivables. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for those with maturities greater than 12 months after the reporting date which are classified as non-current assets. Loans and receivables are included in current trade and other receivables and non-current receivables in the balance sheet. (i) Recognition and derecognition Regular purchases and sales of financial assets are recognised on trade-date which is the date on which the consolidated entity commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the consolidated entity has transferred substantially all the risks and rewards of ownership. (ii) Subsequent measurement Loans and receivables are carried at amortised cost using the effective interest method. Details on the determination of the fair value of financial instruments are disclosed in note 13.

50 Queensland Rail Notes to the financial statements 30 June 2015 (continued)

25 Summary of significant accounting policies (continued) (iii) Impairment The consolidated entity assesses at each reporting date whether there is objective evidence that a financial asset or group of financial assets are impaired. If there is evidence of impairment for any of the consolidated entity’s financial assets carried at amortised cost, the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows, excluding future credit losses that have not been incurred. The cash flows are discounted at the financial asset’s original effective interest rate. The loss is recognised in the statement of comprehensive income. (m) Derivatives and hedging activities The consolidated entity enters into derivative contracts to hedge exposures to foreign exchange rates as described in note 13. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument and, if so, the nature of the item being hedged. The consolidated entity designates certain derivatives as hedges of the cash flows of recognised assets and liabilities and highly probable forecast transactions (cash flow hedges). At inception, the consolidated entity documents the relationship between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. The consolidated entity also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions have been and will continue to be, highly effective in offsetting future cash flows of hedged items. The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining maturity of the hedged item is more than 12 months; it is classified as a current asset or liability when the remaining maturity of the hedged item is less than 12 months. The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in other comprehensive income. The gain or loss relating to the ineffective portion is recognised immediately in the statement of comprehensive income. Amounts accumulated in equity are recycled in the statement of comprehensive income in the periods when the hedged item will affect profit or loss. However, when the forecast transaction that is hedged results in the recognition of a non-financial asset, the gains and losses previously deferred in equity are transferred from equity and included in the measurement of the initial cost or carrying amount of the asset. When a hedging instrument expires or is sold or terminated, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time is recognised when the forecast transaction is ultimately recognised in the statement of comprehensive income. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the statement of comprehensive income. (n) Property, plant and equipment Initial recognition Items of expenditure in excess of $2,000 which are expected to provide future economic benefits are capitalised, with the exception of the purchase of office equipment and other items of a similar nature that provide limited quantifiable benefits. The threshold applies to all asset classes except capital spares and intangibles. Capital spares have a threshold of $20,000. If capital spares are under $20,000, the item is recorded in inventory. Expenditure not capitalised is treated as an operating expense in the period in which the expenditure is incurred.

51 Queensland Rail Notes to the financial statements 30 June 2015 (continued)

25 Summary of significant accounting policies (continued) Methodology for valuation Property, plant and equipment is measured at cost less accumulated depreciation. Cost is the amount of cash or cash equivalents paid or the fair value of the other consideration given to acquire an asset at the time of its acquisition or construction. Cost may also include transfers from other comprehensive income of any gain or loss on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment. The cost of fixed assets constructed by the consolidated entity includes the cost of all materials used in construction, direct labour, site preparation, interest and foreign currency gains and losses incurred where applicable and an appropriate proportion of variable and fixed overheads based on direct labour hours. Gifted and Donated Assets Assets acquired from government at no cost are measured at fair value as government grants. Fair value means the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets acquired from customers at no cost are recorded at fair value. Land Land is carried at cost. The Transport Infrastructure Act 1994 stipulates that the consolidated entity only retains ownership of its non-corridor land. As such, only non-corridor land is recorded in these accounts. Ownership of corridor land remains with the Department of Natural Resources and Mines on behalf of the State. This land is leased to the Department of Transport and Main Roads and subsequently sub-leased to the consolidated entity for no cost. The sub-lease term is for an initial term of 100 years with a renewal option for an additional 100 years. Buildings, plant and equipment and major plant and equipment Buildings, plant and equipment and major plant and equipment are carried at cost less accumulated depreciation. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the consolidated entity and the cost of the item can be measured reliably. Rollingstock is considered to be major plant and equipment. The capitalised fit out costs of leased properties is disclosed under buildings. Infrastructure Infrastructure assets are carried at cost and represent capitalised expenditure that directly relates to the construction of the asset. This may include materials, labour and equipment, in addition to an allocation of a portion of indirect costs that clearly relate to the construction of the asset. Subsequent and maintenance costs Costs related to repairs and maintenance activities are expensed when such repairs are performed. Subsequent costs are only capitalised when it is probable that future economic benefits associated with the item which flow to the consolidated entity and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. Work in progress The cost of fixed assets constructed by the consolidated entity includes the cost of all materials used in construction, direct labour, site preparation, interest and foreign currency gains and losses incurred where applicable and an appropriate proportion of variable and fixed overheads based on direct labour hours. Depreciation Assets are depreciated from the date of acquisition, or, in respect of internally constructed or manufactured assets, from the time an asset is completed and held ready for use.

52 Queensland Rail Notes to the financial statements 30 June 2015 (continued)

25 Summary of significant accounting policies (continued) Where assets have separately identifiable components that are subject to regular replacement, these components are assigned useful lives distinct from the asset to which they relate. Any expenditure that increases the originally assessed capacity or service potential of an asset is capitalised and the new depreciable amount is depreciated over the remaining life of the asset. Buildings, plant and equipment, major plant and equipment and infrastructure are depreciated on a straight-line basis over the useful life net of the residual value. Motor vehicles are depreciated using the diminishing value basis (percentages range from 13.64% to 35.00%). Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements. Major spares purchased specifically for particular assets are capitalised and depreciated in line with standard default asset class lives. Land and work in progress not depreciated. The depreciation rates used during the year were based on the following range of useful lives: - Buildings 10 - 50 years - Major plant and equipment 8 - 40 years - Plant and equipment 4 - 25 years - Infrastructure* 6 - 100 years The remaining useful lives of assets are reviewed annually and adjusted if appropriate. * Longer life infrastructure includes bridges, tunnels and other long lived civil works. Shorter life infrastructure includes telecommunications and security and surveillance equipment. (o) Intangible assets (i) IT development and software Costs incurred in developing products or systems and costs incurred in acquiring software and licenses that will contribute to future period financial benefits are capitalised to software and systems. Intangibles have a threshold of $50,000. If intangibles are under $50,000, expenditure is not capitalised and is treated as an operating expense in the period in which the expenditure is incurred. (p) Impairment of assets Assets (including work in progress) are reviewed for impairment annually to determine if there are indications that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash generating units). Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessment of the time value of money and the risks specific to the asset or cash generating unit. Non-financial assets that have suffered impairment are reviewed for possible reversal of the impairment at each reporting date. (q) Trade and other payables These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of financial year which are unpaid. The amounts are unsecured and are usually paid within the terms set by the supplier.

53 Queensland Rail Notes to the financial statements 30 June 2015 (continued)

25 Summary of significant accounting policies (continued) (r) Borrowings and borrowing costs Debt is drawn from facilities with the Queensland Treasury Corporation (QTC) incorporating fixed and floating debt and is initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost, using the effective interest rate method. Interest is accrued and paid monthly. Interest costs are calculated and advised by QTC in accordance with an agreed book rate methodology, which equates with amortised cost using the effective interest rate method. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument. Borrowing costs, which includes interest calculated using the effective interest method and administration fees, are expensed in the period in which they arise. Borrowing costs which are directly attributable to the construction of material qualifying assets are capitalised. Qualifying assets are assets not funded from other sources with a cost of more than $1.0 million and which take a substantial period of time to prepare for intended use or sale. The rate used to determine the amount of borrowing cost to be capitalised is the QTC interest rate applicable to the consolidated entity’s outstanding borrowings during the year, in this case 7.12% (2014: 7.31%). During the year, interest costs of $14.3 million were capitalised (2014: $25.8 million). Borrowings are classified as current liabilities unless the consolidated entity has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. (s) Provisions Provisions are recognised when the consolidated entity has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount has been reliably estimated. Provisions are not recognised for future operating losses. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. (i) Litigation and workers' compensation provision Provision is made for the estimated liability for workers' compensation and litigation claims. Independent actuarial valuations are used to estimate the provisions required for self-insured workers' compensation. Litigation claims are assessed separately for common law, statutory and asbestos claims. The outstanding liability is determined after factoring future claims inflation and discounting future claim payments. Estimates are made based on the average number of claims and average claim payments over a specified period of time. Claims Incurred But Not Reported (IBNR) are also included in the estimate. Claims are expected to be paid over a period exceeding more than one year. (ii) Onerous contracts provision This provision represents the net unavoidable costs expected to be incurred on commitments for property leases concerning commercial office space in Brisbane and the contract to purchase inventory from Aurizon Operations Limited. The net unavoidable costs comprise the commitments under the lease contracts for offices that are currently vacated by the consolidated entity less expected revenue to be received from the sub-lease of office space under the same contracts. The net unavoidable costs comprise the commitments under the inventory purchase contract less the useable stock. The onerous provision is equivalent to the present value of the future net unavoidable costs.

54 Queensland Rail Notes to the financial statements 30 June 2015 (continued)

25 Summary of significant accounting policies (continued) (t) Employee benefits Employee obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer settlement for at least 12 months after the reporting period, regardless of when the actual settlement is expected to occur. The remaining unvested employee obligations are included as non-current liabilities. Employee benefits expense recognised in the statement of comprehensive income and disclosed in note 3 excludes all employee related expenditure that is capitalised. In accordance with accounting standards and Queensland Rail capitalisation policy, all employee expenses directly attributable to the acquisition or construction of an asset is recognised directly in property, plant and equipment. (i) Wages and salaries, annual leave, leave loading and long service leave Liabilities for wages and salaries, including non-monetary benefits, annual leave, leave loading and long service leave expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognised as short-term benefits. These liabilities are in respect of employees' services up to the reporting date and are measured at the nominal amount plus related on-costs (where applicable). (ii) Other long-term employee benefit obligations Liabilities for annual leave, leave loading and long service leave not expected to be settled wholly within 12 months after the end of the period in which the employee renders the service, based on experience of leave history are recognised as long-term benefits. The liabilities are measured using the expected future payments to be made in respect of services provided by employees up to the reporting date. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future long-term payments are discounted using market yields at the reporting date on Australian high-quality corporate bonds (G100) with terms to maturity that match, as closely as possible, the estimated future cash outflows. (iii) Retirement allowance Retirement allowance is payable to employees that retire or are paid according to Voluntary Employee Redundancy Scheme (VERS) or Medical Separation who: • are not members of a QSuper contributory or defined benefit superannuation fund; • were employed prior to 1 February 1995; • have 10 or more years of continuous service; and • have reached the retirement attainment age of 55. Liabilities for retirement allowance where employees fulfil all of the above requirements are recognised as current liabilities at nominal values. The remaining unvested liabilities are included as non-current liabilities. The liability for retirement allowance is measured using the expected future payments to be made in respect of services provided by employees up to the reporting date. Consideration is given to the history of employee departures, expected future wage and salary levels as well as expected age of retirement. Expected future non-current payments are discounted using market yields at the reporting date on Australian high-quality corporate bonds (G100) with terms to maturity that match, as closely as possible, the estimated future cash outflows. These conditions continue to apply to employees who have transferred from Aurizon Operations Limited (formerly QR National Limited) and Aurizon Network Pty Ltd (formerly QR Network Pty Ltd) to Queensland Rail. (iv) Sick leave Sick leave is not provided for on the grounds that it is non-vesting and on average, no more than the annual entitlement is taken each year.

55 Queensland Rail Notes to the financial statements 30 June 2015 (continued)

25 Summary of significant accounting policies (continued) (v) Superannuation Contributions are expensed as they are made. The entity pays an employer subsidy to the Government Superannuation Office in respect of employees who are contributors to either the Public Sector Superannuation (QSuper) scheme or State Service Superannuation. Employer contributions to the Super Defined Benefit Fund are determined by the State Actuary. The most recent actuarial investigation was completed in 2013 and the actuary’s recommendation to leave the employer contribution rate unchanged was approved by the Treasurer. No liability is recognised for accruing superannuation benefits as this liability is held on a Whole-of-Government basis and reported in the Whole-of-Government financial statements. The entity also makes superannuation guarantee payments into the QSuper Accumulation Fund (RailSuper) and QSuper Accumulation Fund (Contributory) administered by the Government Superannuation Office. No liability / asset is recognised for the entity's share of any potential deficit of the Super Defined Benefit Fund of QSuper. (u) Contributed equity Equity injections and distributions of equity are treated as a change in the value of contributed equity. (v) Dividends Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the consolidated entity, on or before the end of the financial year but not distributed at reporting date. (w) Leases Leases in which a significant portion of the risks and rewards of ownership are not transferred to the consolidated entity as lessee are classified as operating leases (note 17). Operating lease rental (net any incentive received from the lessor) is expensed on a straight-line basis over the lease term and is charged to the statement of comprehensive income. Leases of property, plant and equipment where the consolidated entity, as lessee, assumes substantially all the risks and benefits of ownership are classified as finance leases. The consolidated entity did not have any finance leases at reporting date. Expected rental revenue from operating leases where the consolidated entity is a lessor is recognised as income on a straight-line basis over the lease term (note 17). The consolidated entity does not have any finance leases. (x) Insurance The consolidated entity insures against risks which are largely uncontrollable, have significant or catastrophic consequences for assets and / or revenue and the aggregate costs of which would exceed the limit of exposure the organisation is prepared to accept. Insurance cover has accordingly been effected for a variety of such risks. Other areas of risk exposure are self-insured, including workers' compensation. Until 30 June 2010, self-insurance and other underwriting activities were performed by Queensland Rail's wholly-owned subsidiary, On Track Insurance Pty Ltd. On Track Insurance Pty Ltd was transferred from Aurizon Operations Limited (formerly QR National Limited) on 6 October 2010 and will continue to provide cover for claims relating to events up until 30 June 2010 for both Queensland Rail and the Aurizon Operations Limited group.

56 Queensland Rail Notes to the financial statements 30 June 2015 (continued)

25 Summary of significant accounting policies (continued) (y) Environmental regulation The consolidated entity is subject to a variety of laws and regulations in the jurisdiction in which it operates or maintains land. Where remediation measures are probable and can be reliably measured, such costs incurred in complying with relevant laws and regulations are accounted for in accordance with the policy in note 25(s). (z) Authorisation for issue The financial statements are authorised for issue by the chairman at the date of signing the management certificate.

57 Queensland Rail Management certificate 30 June 2015

These general purpose financial statements have been prepared pursuant to section 62(1) of the Financial Accountability Act 2009 (the Act), relevant sections of the Financial and Performance Management Standard 2009 and other prescribed requirements. In accordance with section 62(1)(b) of the Act we certify that in our opinion:

(a) the prescribed requirements for establishing and keeping the accounts have been complied with in all material aspects; and (b) the statements have been drawn up to present a true and fair view, in accordance with prescribed accounting standards, of the transactions of Queensland Rail and its controlled entities for the financial year ended 30 June 2015 and of the financial position at the end of that year.

M Klug Chairman

Brisbane, Qld 27 August 2015

58 Queensland Rail Independent auditor's report 30 June 2015

To the Members of Queensland Rail

Report on the Financial Report I have audited the accompanying financial report of Queensland Rail, which comprises the consolidated balance sheet as at 30 June 2015, the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and certificates given by the Chairman of the entity and the consolidated entity comprising the entity and the entities it controlled at the year’s end or from time to time during the financial year. The Board's Responsibility for the Financial Report The Board is responsible for the preparation of the financial report that gives a true and fair view in accordance with prescribed accounting requirements identified in the Financial Accountability Act 2009 and the Financial and Performance Management Standard 2009, including compliance with Australian Accounting Standards. The Board’s responsibility also includes such internal control as the Board determines is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. The Board also states, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements comply with International Financial Reporting Standards. Auditor’s Responsibility My responsibility is to express an opinion on the financial report based on the audit. The audit was conducted in accordance with the Auditor-General of Queensland Auditing Standards, which incorporate the Australian Auditing Standards. Those standards require compliance with relevant ethical requirements relating to audit engagements and that the audit is planned and performed to obtain reasonable assurance about whether the financial report is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of the financial report that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board, as well as evaluating the overall presentation of the financial report. I believe that the audit evidence obtained is sufficient and appropriate to provide a basis for my audit opinion. Independence The Auditor-General Act 2009 promotes the independence of the Auditor-General and all authorised auditors. The Auditor-General is the auditor of all Queensland public sector entities and can be removed only by Parliament. The Auditor-General may conduct an audit in any way considered appropriate and is not subject to direction by any person about the way in which audit powers are to be exercised. The Auditor-General has for the purposes of conducting an audit, access to all documents and property and can report to Parliament matters which in the Auditor-General’s opinion are significant.

59 Queensland Rail Independent auditor's report 30 June 2015 (continued)

Opinion

In accordance with s.40 of the Auditor-General Act 2009 -

(a) I have received all the information and explanations which I have required; and

(b) In my opinion -

(i) the prescribed requirements in relation to the establishment and keeping of accounts have been complied with in all material respects; and

(ii) the financial report presents a true and fair view, in accordance with the prescribed accounting standards, of the transactions of Queensland Rail for the financial year 1 July 2014 to 30 June 2015 and of the financial position as at the end of that year.

Other Matters - Electronic Presentation of the Audited Financial Report

Those viewing an electronic presentation of these financial statements should note that audit does not provide assurance on the integrity of the information presented electronically and does not provide an opinion on any information which may be hyperlinked to or from the financial statements. If users of the financial statements are concerned with the inherent risks arising from electronic presentation of information, they are advised to refer to the printed copy of the audited financial statements to confirm the accuracy of this electronically presented information.

A M GREAVES FCA FCPA Queensland Audit Office Auditor-General of Queensland Brisbane

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