Annual Report 2012-2013

LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 1 Published by Linking Melbourne Authority Building 1 Level 1 Brandon Business Park 540 Springvale Road Glen Waverley Victoria 3150 September 2013 Also published on www.linkingmelbourne.vic.gov.au © State of Victoria 2013 This publication is copyright. No part may be reproduced by any process except in accordance with provisions of the Copyright Act. Authorised by the Victorian Government 121 Exhibition Street Melbourne Victoria 3000

Printed on Australian made, carbon neutral, recycled paper using waterless printing. Contents

Chairman’s report ...... 4 Around the world, CEO’s report ...... 5 there are few other Delivering for Melbourne ...... 6 organisations with LMA’s depth Our purpose and priorities ...... 6 of expertise Government priorities ...... 6 and experience Governance ...... 8 in planning, Our Board ...... 9 designing and Our people ...... 9 delivering large- Peninsula Link ...... 10 scale road Peninsula Link opens ...... 10 transport projects. Getting to opening day ...... 10 Environment ...... 12 Social benefits ...... 12 Engaging the community ...... 14 Availability Public Private Partnership ...... 15 East West Link ...... 16 Project benefits ...... 16 Planning for the East West Link ...... 18 Kick starting the market process ...... 20 Keeping communities informed ...... 21 EastLink service centres ...... 22 Supporting our people ...... 23 Abbreviations ...... 24 Financial statements ...... 25 Statutory information ...... 70 Disclosure index ...... 73 Chairman’s report

Linking Melbourne Authority’s (LMA) achievements and record continue to demonstrate the advantages of using a specialist, multi-disciplinary body to oversee the delivery of PPP road projects.

Around the world, there are few other placing most of the road in tunnel translates organisations with LMA’s depth of expertise into major improvements in the surface and experience in planning, designing and environment, including improvements to delivering large-scale road transport projects. the overall road network, reduced traffi c Our combination of engineering, planning, on parallel roads, better conditions for legal, commercial and communications skills walking and cycling, more attractive places us in a unique position to oversee all pedestrian environments and streetscapes, aspects of these projects, from inception improvements to tram and bus services, and planning through to construction and and support for urban renewal and new operation. commercial and residential development.

LMA has convincingly demonstrated its LMA is well-suited to implementing this capabilities by delivering EastLink and integrated approach to the delivery of the Peninsula Link on schedule. On each of East West Link Stage One, as well as having these projects, the organisation has set the range and combination of skills needed new benchmarks for the delivery of modern to successfully deliver all other aspects of transport infrastructure, including innovative the project, including planning work for future fi nancing arrangements, outstanding stages. urban design and high levels of community engagement and participation. Each It is clear that the next 12 months will be an project has been accompanied by a major exciting, challenging and rewarding time new cycling and walking trail, extensive for LMA. I know that the organisation’s landscaping and high quality urban design. highly experienced and dedicated staff are more than equal to the task of planning The success of our approach to these and delivering the East West Link, and that projects shows that, with careful planning – as with EastLink and Peninsula Link – the and design, the benefi ts of investing in major ultimate result will be one that will be of benefi t road infrastructure can extend well beyond to residents, businesses and communities motorists and deliver signifi cant social, across the State. environmental, economic and community outcomes. I extend my thanks to our Chief Executive Offi cer Ken Mathers and the LMA team for Now, LMA is applying its expertise to their unwavering commitment to delivering delivering the fi rst stage of Melbourne’s new high quality transport projects. I also thank East West Link. Planning and building this the Minister for Roads and his staff for their fi rst stage poses particular challenges as it support throughout the year. needs to be fi tted into a well-established and highly developed inner city area. Finally, I would like to thank Tony Darvall, who served as Acting Chairman for most of In delivering EastLink, LMA oversaw the 2012-13. Tony’s leadership was instrumental construction of Melbourne’s fi rst outer in delivering Peninsula Link on schedule and suburban road tunnels to protect the completing the business case for the East Mullum Mullum Valley. In delivering the East West Link. I look forward to working with Tony, West Link Stage One, LMA will oversee the and my other fellow Board members over the construction of Melbourne’s longest road coming 12 months as LMA leads the way in tunnels to minimise the project’s impacts on taking Melbourne’s new East West Link from communities across the city’s inner-north. We the planning stages to reality. are committed to setting new benchmarks for this project, not only in tunnel design and Ken Scott-Mackenzie construction, but also in making sure that Chairman

4 LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 CEO’s Report With Peninsula Link now operating, we have turned our attention to developing the East West Link – one of the largest infrastructure projects ever undertaken in Australia and one that promises to deliver substantial and lasting benefi ts to Melbourne and Victoria. The beginnings of Peninsula Link stretch back more than 40 years to 1969 when land was fi rst reserved on the Mornington Peninsula for a freeway corridor. While the wait for a freeway standard connection between central Melbourne and the Peninsula has been a long one, the period between turning the fi rst sod at Frankston in 2010 and the opening of the road was just three years.

Delivering a new 27 kilometre freeway – with nine interchanges, connections to 11 surrounding roads, 28 bridges and associated high quality urban design and landscaping – in such a short timeframe is a remarkable achievement that required a coordinated, consistent and The link is committed effort from LMA and our project partners. It is a particularly signifi cant achievement changing the given the challenging weather conditions that continually hampered construction activities – and I congratulate Southern Way and Abigroup for managing these conditions successfully way people and delivering the project on schedule. travel around Since opening to traffi c, the benefi ts of Peninsula Link have become apparent. The link is Frankston and changing the way people travel around Frankston and the Mornington Peninsula and between the Mornington the Peninsula and Melbourne’s CBD, with travelling on the freeway saving time in peak periods and relieving congestion on existing roads. The economic benefi ts generated by the new link Peninsula and will also become more apparent over the coming years. between the With Peninsula Link now open, our attention and energies have turned to delivering the fi rst Peninsula and stage of the East West Link. This exciting project is truly a once-in-a-generation endeavour Melbourne’s CBD, that is vital to Melbourne’s and Victoria’s future, and LMA is proud and pleased to have been nominated as the proponent for the East West Link by the Victorian Government. with travelling on the freeway During 2012-13, we assisted the Department of Transport, Planning and Local Infrastructure to prepare a business case for the East West Link and commenced the formal planning and saving time in consultation process for the section between the Eastern Freeway and CityLink (Stage One), peak periods with a further connection to the Port of Melbourne area. To ensure that LMA is able to meet and relieving the Victorian Government’s timeframes for delivering Stage One, we have also undertaken signifi cant engagement with industry ahead of the project’s intensive procurement period that congestion on will take place in 2013-14. I am confi dent that LMA’s unique combination of specialist skills existing roads. will enable us to design, develop and implement this important project in a way that meets community needs and expectations, and that delivers major transport, social and economic benefi ts.

I thank the LMA Board, our Executive Management Team and our entire staff for their guidance, support and hard work throughout 2012-13. I also thank the Minister for Roads for giving LMA the opportunity to deliver the East West Link on behalf of the Victorian Government.

We look forward to overseeing yet another important transport project and continuing to play our part in delivering the vital infrastructure Melbourne needs to secure its future economic prosperity and liveability.

Ken Mathers Chief Executive Offi cer

LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 5 Delivering for Melbourne

LMA is a Victorian Government authority with responsibility for overseeing the planning and delivery of complex road projects in Melbourne. Since its creation in 2003, LMA has overseen the delivery of EastLink and Peninsula Link, and has now commenced developing the fi rst stage of the new East West Link.

Our purpose and priorities Government priorities LMA was established in 2003 as the Southern LMA is dedicated to delivering high quality, and Eastern Integrated Transport Authority well-planned and well-designed projects in (SEITA) to oversee the delivery of the $2.5 support of Victorian Government priorities. billion EastLink project. After the opening of With Melbourne’s population forecast to reach EastLink in 2008, the authority was renamed fi ve million by 2030, and with the volume of Linking Melbourne Authority to refl ect its role freight moved by the road network expected in delivering integrated transport projects that to double, the Government is implementing better link communities across Melbourne. planning and transport strategies to protect the city’s liveability and prosperity, and to LMA has overseen the construction of the 27 sustain the competitiveness of Melbourne’s kilometre Peninsula Link project by private economy. company Southern Way as an Availability Public Private Partnership (PPP). Peninsula Metropolitan Planning Strategy Link opened to traffi c in January 2013 and is This strategy will guide Melbourne’s growth providing signifi cant travel time savings and and development over the next 30 to 40 other benefi ts to road users and communities years. As part of preparing the strategy, on the Mornington Peninsula, as well as the Government released the Melbourne, generating broader economic benefi ts for let’s talk about the future discussion Melbourne and Victoria. LMA will continue paper in November 2012. The discussion its oversight role during the operation of paper identifi es the East West Link as an Peninsula Link until such time as it is handed essential piece of metropolitan infrastructure over to VicRoads. that will boost mobility across the city, improve business-to-business and social During 2012, LMA assisted the Department of interactions, increase access to economic Transport, Planning and Local Infrastructure gateways, and enhance Melbourne’s global (DTPLI) to prepare a detailed business competitiveness. case for the largest and most signifi cant road project proposed for Melbourne in Economic and Fiscal Strategy a generation: the East West Link – an 18 The Victorian Government’s economic and kilometre inner-urban freeway extending fi scal strategy was outlined in the 2013-14 across Melbourne from the Eastern Freeway Budget and addresses the challenges facing to the Western Ring Road. Victoria to drive future economic growth and In March 2013, the Minister for Roads prosperity by: appointed LMA the ‘project proponent’ • Rebuilding budget capacity for the Eastern Section of the East West • Improving productivity, including through Link. Following the Victorian Government’s the provision of major infrastructure, more announcement of funding for the project responsive and productive service delivery, in May 2013, LMA commenced the formal and continuing to build the skills and planning and consultation process for this capabilities of the Victorian workforce section, which will run from the Eastern • Ensuring Victoria is a competitive and low- Freeway to CityLink and then on to the Port of cost place to do business. Melbourne area. LMA has also commenced preparations to procure the East West Link More broadly, LMA is committed to ensuring Stage One from the Eastern Freeway to that our projects contribute to the aims set out CityLink. in the economic and fi scal strategy through:

6 LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 LMA is dedicated to delivering high quality, well-planned and well-designed projects in support of Victorian Government priorities.

• Helping to grow Victoria’s freight and Integrated transport and land use logistics sector by signifi cantly increasing planning the effi ciency and capacity of the freight LMA also aims to contribute to the network and supporting the expansion of development of an integrated and sustainable the Port of Melbourne transport system that aligns with Victoria’s • Enhancing Melbourne’s and Victoria’s land use planning framework, including global links and competitiveness by requirements to: establishing high-capacity connections to • Ensure an integrated and sustainable domestic and international gateways and transport system that provides access to major freight precincts social and economic opportunities • Contributing to sustained productivity • Manage the road system to achieve improvements and a more competitive integration, choice and balance, and business environment by addressing the selectively expand and upgrade the road problems associated with poor transport network to provide high quality connections connectivity in Melbourne between metropolitan Melbourne and • Opening up new business and job regional cities opportunities by providing greater • Plan for appropriate access to major ports connectivity between Melbourne’s large and airports centres of business and other parts of the • Develop key freight links and transport city gateways to maintain Victoria’s position as • Using infrastructure to redevelop key the nation’s premier logistics centre. precincts across Melbourne, unlock land use change and maximise the development Planning and transport policies and of important employment and economic strategies in Victoria are brought together locations. under the Transport Integration Act 2010. This legislation unifi es the transport portfolio Victoria - the Freight State under one framework to ensure that all Victoria - the Freight State is the Government’s components of the State’s transport system plan to improve freight effi ciency, grow are considered together and that transport productivity and better connect business to and land use planning are fully integrated. their local, national and international markets. Along with other transport agencies, LMA The plan contains strategies and actions to considers the guiding principles of the Act in ensure Victoria remains Australia’s freight and planning, overseeing and delivering projects. logistics capital and that Melbourne’s rapidly This includes: growing freight task is managed effi ciently • Basing decisions on a triple bottom line and sustainably. The plan nominates the (social, economic and environmental) East West Link as the Government’s highest assessment, taking account of market priority and notes the link’s critical role in demand and value for money, with a long- reducing reliance on the M1 corridor and term outlook on the wider transport and improving freight connections to the Port of land use systems Melbourne. The plan also notes that, over • Providing for the effective integration of the longer term, the combination of the East transport and land use and facilitating West Link, the North East Link and the Outer access to social and economic Metropolitan Ring Road would generate opportunities benefi ts for the freight industry of $4.3 billion (2012 dollars) to 2050. • Ensuring that the purpose, value and justifi cation for any investments and other interventions are transparent and that the public has access to reliable information to foster a good understanding of transport issues and the process by which decisions about the transport system are made.

LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 7 Governance

Our Board The LMA Board is appointed by the Governor-in-Council and is responsible to the Minister for Roads. The Board draws on the expertise and extensive experience of its members to provide strategic advice to LMA and the Victorian Government, and oversight and governance of LMA’s activities and operations.

Ken Scott-Mackenzie, Chairman Board. He is also Chair of the Australian Ken Scott-Mackenzie is an engineer with Chapter of the Road Engineering Association over 36 years’ experience in construction and of Asia and Australasia (REAAA), a member mining services in Australia and Southern of the REAAA Governing Council and a Board Africa, as well as in the fi nancial, legal and member of Roads Australia. commercial aspects of delivering major Claire Filson public infrastructure. Previously, he was the CEO of a major Australian construction Claire Filson is a lawyer with 30 years’ group and Vice President of the Australian experience in the fi nancial services and Constructors Association. construction industries. She is a Non Executive Director of the Port of Hastings Ken is the Chairman of Macmahon Holdings Development Authority, a Non Executive Limited (appointed a director in May 2009 and Director of the Victorian Pharmacy Authority, Chairman in November 2009) and a Director a member of the Independent Compliance of Adelaide Brighton Limited (appointed Committee of Sandhurst Trustees and in July 2010). He is a former Chairman of a member of the Independent Audit Murchison Metals Limited (appointed a Committees of the Cities of Kingston and Director in May 2011 and Chairman in July Hume. Claire is experienced in infrastructure 2011, resigned in November 2012). development and management, and is a former Non Executive Director of the Tony Darvall AM Southern Cross Station Authority. Tony Darvall was a practising lawyer and a partner of the law fi rm Corrs Chambers Robert Cameron Westgarth from 1967 to 2003. He was a Robert Cameron is a barrister with over LMA people are Commissioner of the Victorian Essential three decades of legal experience, including dedicated to Services Commission for fi ve years until more than 20 years at the bar. His previous 2011. Tony was chairman of VicUrban (now experience includes Senior Associate at ensuring that Places Victoria) for seven years and was also Madden Butler Elder & Graham specialising Melbourne and on the board of Melbourne City Link Authority. in commercial litigation in the Supreme and Victoria enjoy the Tony was chairman of the Melbourne Federal Courts. Robert has practiced as University Law School Foundation, Werribee a barrister in a wide variety of cases in all full benefi ts of well- Park Advisory Board, the Legal Practitioners’ jurisdictions, including contract, corporations, designed and well- Liability Committee and Australia’s Open equity, insolvency, transport, freedom of Garden Scheme. information, building and construction. planned transport infrastructure. We are Tony is the chairman of the Audit Committee of Yvonne von Hartel AM strongly committed VicRoads. He is also a member of the Ethics Yvonne von Hartel is a founding principal Committee of the Royal Melbourne Research of the national architectural practice, to community Foundation and chairman of the Maud Gibson peckvonhartel. She has extensive experience engagement Trust. Tony was made a member of the Order in the practice of architecture having worked of Australia (AM) in 2008. on major projects in Australia and South East and consultation, Asia, including commercial and mixed use recognising that Gary Liddle developments, institutional projects, historic public participation Gary Liddle is a civil engineer and the current building refurbishment and adaptive reuse, Chief Executive of VicRoads, an organisation and as Design Advisor to Australia’s largest in our projects he has served for more than 41 years. Gary corporations and government agencies. is essential for is Chair of Austroads, the Australasian She has held positions on several industry, organisation of road authorities, and a Board regulation and standards boards and is achieving high Member of the Australian Road Research currently Chair of the Southbank Arts Precinct quality results.

8 LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 Working Group, Founding Director/Company Our people Secretary of the Melbourne Forum, Trustee of the Melbourne Convention and Exhibition LMA people are dedicated to ensuring that Centre, Director of the Queen Victoria Melbourne and Victoria enjoy the full benefi ts Market and a member of the University of of well-designed and well-planned transport Wollongong, SMART Infrastructure Advisory infrastructure. We are strongly committed to Council. As former Chair of the Victorian Skills community engagement and consultation, Commission, Yvonne is a member of the recognising that public participation in our TAFE Advisory Panel, advising government projects is essential for achieving high quality on skills reform. Yvonne previously served results. as a Director of the publicly listed company ConnectEast. Our team capabilities include a range of engineering, planning, technical, commercial, legal, fi nancial and communications skills. Audit Committee Staff work under the guidance and direction of the Board and maintain strong and effective The Audit Committee’s objective is to working relationships with the Minister support the Board by overseeing LMA’s for Roads, VicRoads, the Department of fi nancial management, internal and external Transport, Planning and Local Infrastructure audit activities, compliance requirements and Public Transport Victoria. and the effectiveness of the internal control environment. In May 2013, a review of LMA’s organisational structure resulted in some changes to the Members of the Audit Committee are LMA authority’s existing directorates. These Board Directors and two (Claire Filson and changes refl ect the skills and expertise Tony Darvall) are independent members needed to deliver one of Melbourne’s biggest in accordance with the requirements of ever projects in the East West Link, while also section 2.2(f) of the Standing Directions of recognising that Peninsula Link is nearing the Minister for Finance under the Financial its handover phase to VicRoads. The new Management Act 1994. structure will be implemented throughout 2013-14.

Organisational Chart 2012-13

Minister for Roads

LMA Board Department of Transport, Planning and Local Infrastructure

Chief Executive Offi cer Department of Treasury and Finance

Department of Premier and Cabinet

Chief Operating Offi cer

Engineering and Commercial and Communications Corporate Services Planning Legal

LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 9 Peninsula Link

Peninsula Link opened to motorists on 18 January 2013 and has already signifi cantly improved travel around Frankston and the Mornington Peninsula, while also generating transport, economic and social benefi ts for people and businesses across the region.

The 27 kilometre Peninsula Link completes Getting to opening day a missing link in Melbourne’s freeway Opening Peninsula Link on schedule and network. Running between Carrum Downs in time for the busy summer holiday period and Mt Martha, and connecting EastLink required a coordinated, consistent effort from with the Mornington Peninsula Freeway, the LMA and our project partners, and a strong link enables motorists to travel from central commitment to achieving the objectives set Melbourne to the Mornington Peninsula for the project at the start of the planning without encountering any traffi c lights. process in 2007.

Peninsula Link opens Project objectives The objectives set for Peninsula Link were Peninsula Link has been more than 40 years designed to deliver benefi ts to Frankston, in the making, with land fi rst reserved for the Mornington Peninsula, Melbourne and the freeway corridor in 1969. Three years Victoria: after the fi rst sod was turned in February 2010, Peninsula Link opened to traffi c on 1. Deliver an integrated, safe and effi cient 18 January 2013 – meeting its operational transport network by: deadline of early 2013 despite signifi cant • Reducing travel times and improving weather challenges over the last three years. travel time reliability The fi rst cars rolled onto the new road • Improving freight and commercial vehicle around 5.00am, with sections of the link access within the corridor opening progressively over 90 minutes. • Reducing traffi c congestion Since its opening, motorists have reported • Delivering the project and related traffi c positive experiences of the new link, noting information systems signifi cant travel time savings and greater ease in commuting to the central city from • Retaining fl exibility for future enhancement the Mornington Peninsula. of Peninsula Link

Peninsula Link features • A 27 kilometre freeway standard connection between EastLink and the Mornington Peninsula Freeway, running between Carrum Downs and Mt Martha • Two traffi c lanes in each direction • Nine interchanges with on and off ramps to 11 roads, including three freeway-to-freeway connections • 28 bridges (45 separate structures) • High quality urban and rural design, combining architectural features, landscaping, lighting and public art • A 25 kilometre walking and cycling path • 1.7 million new trees, plants and shrubs • New wetlands to treat water from the roadway prior to release to waterways • Wildlife underpasses, revegetation works and creek improvements in the Pines Flora and Fauna Reserve.

10 LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 Peninsula Link has been more than 40 years in the making, with land fi rst reserved for the freeway corridor in 1969.

• Integrating the project with the existing Construction surrounding transport network In the months leading up to opening, • Providing fl exibility to improve public construction on Peninsula Link continued transport services both within the seven days a week (and, in some instances, project and on the surrounding transport 24 hours a day), despite unfavourable weather network. conditions for construction throughout much of the year. 2. Protect and enhance environmental sustainability whilst adhering to applicable Highlights of Peninsula Link construction government laws, guidelines and standards include: concerning environmental protection • A bridge building program of 45 structures (including noise, water and air quality). • Construction of 11 local road connections, 3. Increase social amenity along the corridor including major interchanges at EastLink through high quality urban design, noise and also at the Mornington Peninsula attenuation solutions and socially sensitive Freeway in Mount Martha construction and operations management. • Three million cubic metres of earthworks moved on the project, which is enough 4. Provide value for money for the State and earth to fi ll 1,200 Olympic sized swimming road users through innovative design, pools optimum risk allocation between the project • 380,000 tonnes of asphalting, the parties and a whole-of-life approach to the equivalent weight of around 1,000 fully design and operation of the road. laden Boeing 747 jumbo jets 5. Engage with stakeholders to ensure • Planting more than 1.7 million trees along transparent and effi cient dealings with all the corridor, with some planting occurring parties associated with the project. after opening to provide a greater chance for plants to thrive after the summer heat 6. Timeliness by delivering a fully operational • Construction of the 25 kilometre Peninsula Peninsula Link by early 2013. Link walking and cycling trail. Property Thousands of people contributed to this LMA staff worked in a professional and massive construction achievement, with sensitive manner to settle the six remaining more than 7,000 workers inducted onto land compensation claims with landowners. the project and a total of nearly four million All the original 39 land acquisition and working hours invested to make the freeway compensation cases have now been a reality. concluded. The freeway and associated local road declarations were also concluded, as were the freeway lease and maintenance licence processes. Identifi cation of surplus project land was also completed and a land disposal program commenced.

LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 11 Environment Peninsula Link has a strong focus on protecting, managing and enhancing the local environment, with environmental standards and safeguards built into the project during planning and design.

Special efforts continued to be made in several areas: • Native vegetation – Peninsula Link secured a signifi cant native vegetation offset, resulting in the protection of 180 hectares of native vegetation within two parcels of land located in Boneo and Nar Nar Goon. While every effort was made to minimise disturbance to the environment during construction, vegetation was removed to make way for the new Peninsula Link. To offset these losses, the highly signifi cant vegetation at the sites in Boneo and Nar Nar Goon have been set aside for conservation. These sites were selected after an exhaustive search of more than 4,000 locations in the region. LMA is continuing to investigate a further offset adjacent to the Belvedere Reserve in Frankston. • Pines Flora and Fauna Reserve – Located just north of Frankston, the 240 hectare Pines Flora and Fauna Reserve is an important asset for the local community. LMA has continued to work closely with Parks Victoria and the Department of Environment and Primary Industries to improve the reserve, and is revegetating 16 hectares of former orchard in the Pines, as well as undertaking weed and pest animal control to improve conditions for native wildlife. During 2012-13, the revegetation program included weed control, windrow tree removal, rabbit control and planting. • Southern Brown Bandicoot – The Southern Brown Bandicoot is a medium-sized, ground dwelling marsupial native to southern, eastern and south-western Australia. Once common, it has declined considerably in the last decade. As a population of Southern Brown Bandicoots previously existed in the Pines, monitoring for the endangered species continued during the year. However, no signs of the Southern Brown Bandicoot were found. The Southern Brown Bandicoot Management Plan developed for the project was updated during the year. The new management plan suggests that funding to protect the Southern Brown Bandicoot would be better allocated to an area where the species is still in existence. This is currently being considered by the Commonwealth Department of Sustainability, Environment, Water, Population and Communities (DSEWPaC). • Landscaping – Landscaping has been a key feature of Peninsula Link. In June 2013, Southern Way completed planting of 1.7 million trees and shrubs along the Peninsula Link alignment.

Social benefi ts Peninsula Link is more than a road. As well as reducing travel times and improving connectivity, it delivers a range of social benefi ts. These include a 25 kilometre shared use path known as the Peninsula Link Trail between Patterson Lakes and Moorooduc, and a public art program in partnership with the McClelland Gallery and Sculpture Park. • Public art program – Three major sculptures were installed along the Peninsula Link route. These sculptures were funded by the project developers and delivered by Southern Way in partnership with the McClelland Gallery and Sculpture Park. Panorama Station by Louise Paramor is located permanently at the Peninsula Link/EastLink interchange; Dean Colls’ Rex Australis: The King is dead, long live the King features at Skye Road; and Phil Price’s Tree of Life is positioned at Cranbourne Road. Every two years, on a rotational basis, new artwork will be displayed at either Skye Road or Cranbourne Road.

12 LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 • School sculpture completion – Linking Melbourne Authority and Southern Way ran a Peninsula Link school sculpture competition in November 2012, which gave schools the opportunity to work with McClelland Gallery to design their own mini-sculpture. The competition also allowed students and their parents to learn more about Peninsula Link. • Graffi ti program – LMA worked with Frankston Council and local schools to paint a mural on the Peninsula Link underpass within the Pines Flora and Fauna Reserve. This included workshops with professional artists, followed by a painting day. The aim was to help students to develop respect for the project and its urban design components, and to discourage graffi ti on Peninsula Link. • Baxter-Tooradin Road improvement works – During the year, LMA continued to deliver a package of enhancement works in the township of Baxter. New pedestrian signals are operating outside the Baxter shops on Baxter-Tooradin Road and construction continued on new bike lanes, footpaths, kerbing and channelling, and drainage. VicRoads is managing these works on behalf of LMA with completion expected in late 2013.

Peninsula Link Trail Around 17.5 kilometres of the 25 kilometre Peninsula Link Trail opened to cyclists and walkers alongside the opening of the freeway in January.

The remaining sections, including pedestrian bridges, the southern section near the Moorooduc Tourist Train station and a temporary track through the Pines Flora and Fauna Reserve, were completed by June 2013.

The trail is a major addition to the Frankston and Mornington Peninsula walking and cycling networks. Beginning in Patterson Lakes, the path connects to the Dandenong Creek Trail (which in turn joins the EastLink trail), before terminating in Moorooduc at the Mt Eliza Regional Park.

The trail provides access to central Frankston and Baxter township, and attractions along the route include the McClelland Gallery and Sculpture Park, Ballam Park Homestead, Belvedere Bushland Reserve and Sages Cottage in Baxter.

Peninsula Link is more than a road. As well as reducing travel times and improving connectivity, it delivers a range of social benefi ts.

LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 13 Engaging the community As Peninsula Link construction came to an end, LMA continued to inform and involve the local community through meetings and events. • Community Advisory Group (CAG) – Seven CAG meetings were held during the year to facilitate communication between the community and the project team. The group helped to identify community concerns, particularly in relation to construction impacts. The fi nal CAG meeting was held on Tuesday 26 February 2013. The group members were positive about their involvement in the project and recommended that similar groups be formed for future projects. • Community information – Abigroup continued to operate a 24-hour community line and issue advance notices of construction to residents and businesses likely to be affected by any works. Two editions of the Peninsula Link newsletter were distributed via direct mail to 70,000 households along the corridor, providing information about the latest project news and construction progress. A special edition of the newsletter was distributed to 800 residents in Baxter leading up to the Baxter Community Day in April. Monthly email updates were issued by LMA to more than 2,000 people who had registered to receive them. • Peninsula Link Info Hub – The Peninsula Link Info Hub in Frankston continued to welcome hundreds of visitors during the year to view maps, scale models, images and videos, samples of construction material and the interactive environment corner. Several thousand people received presentations on the project delivered to community groups in Frankston and on the Mornington Peninsula. After three years of operation, the Info Hub closed in March 2013. • Community events – LMA conducted a number of community events during the year to keep the local community informed about the progress of Peninsula Link: • LMA hosted a marquee at Pets Day Out in Frankston on Sunday 14 October to promote the Peninsula Link Trail to locals and to distribute the Peninsula Link Trail brochure and map. The event attracted 10,000 attendees and more than 200 people completed a survey about Peninsula Link at LMA’s stand during the event. • Five community information sessions were held during November 2012 in Baxter, Moorooduc, Frankston, Patterson Lakes and Seaford, with a total of around 250 people attending across all sessions. Community feedback at each event was extremely positive with a distinct shift from construction- related issues towards opening and operational queries. The majority of queries related to the shared use path, landscaping and the timing of opening. • The Peninsula Link Community Day held on Sunday 25 November 2012 attracted an estimated 10,000 people to Cranbourne Road to get an early look at the freeway before it was opened. • The Premier and Minister for Roads formally announced the opening date on Wednesday 16 January 2013 at an event held on Peninsula Link near Skye Road. • A Baxter Community Day was held on Sunday 14 April 2013 to celebrate the end of major construction on Peninsula Link while also providing information about enhancements to Baxter-Tooradin Road being completed in 2013. • Road operations – The role of communicating with the community was transferred from construction company Abigroup to road operators Lend Lease Infrastructure Services (LLIS). LLIS operates a community line, responds to community enquiries and is responsible for any future communications and community engagement for Peninsula Link.

14 LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 A series of Using social and online media interchange education videos Many people looking to keep up-to-date with Peninsula Link news connected with LMA through social media channels. was released on LMA’s YouTube Social and online media was a critical component of communications about the opening of Peninsula Link, with LMA resourcing its social media channels 24 hours a day over the two channel prior days of opening (17-18 January). to opening to The use of social and online communications has grown signifi cantly since the opening encourage of EastLink in 2008 where no such activity occurred. Key highlights include over 96,000 motorists to visits to the LMA website in January and 2,300 mentions of Peninsula Link on Twitter and Facebook in January. YouTube videos were viewed 30,685 times in January. familiarise themselves with A series of interchange education videos was released on LMA’s YouTube channel prior to opening to encourage motorists to familiarise themselves with Peninsula Link and its key Peninsula Link and interchanges in advance. The videos were promoted largely via social media channels and its key interchanges attracted over 30,000 views. These videos can be viewed at www.youtube.com/linkingmelb. in advance.

Availability Public Private Partnership Peninsula Link is the fi rst road project in Australia to be delivered as an Availability Public Private Partnership (PPP). Private company Southern Way was responsible for fi nancing, designing and building Peninsula Link and will oversee the operation and maintenance of the freeway for 25 years. Now that the road is open, Southern Way receives quarterly payments from the Victorian Government subject to meeting key performance indicators covering traffi c access, incident response, road maintenance and environmental management.

This PPP model allows Peninsula Link to be toll-free for users, while making use of private sector expertise and resources to deliver the project.

Our Peninsula Link partners Southern Way fi nanced, built and will now operate and maintain Peninsula Link toll-free for 25 years, in return for quarterly payments from the Victorian Government. Abigroup designed and constructed Peninsula Link on behalf of Southern Way. Lend Lease Infrastructure Services is operating and maintaining the road for Southern Way.

LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 15 East West Link

One of the largest transport infrastructure projects ever undertaken in Australia, the East West Link is a once in a generation, city shaping project that will change the way people move around the city, relieve pressure on some of Melbourne’s busiest roads and make cross-city travel easier and faster.

The East West Link is an 18 kilometre cross-city road connection, extending from the Eastern Freeway to the Western Ring Road, with connections to CityLink and the Port of Melbourne area.

The project will cater for strong population growth in Melbourne and the corresponding increase in travel across the city, providing an alternative to the heavily used Monash and West Gate Freeways (the M1 corridor) and relieving pressure on the West Gate Bridge. It will alleviate congestion at critical points across the city’s road network and boost accessibility to important economic gateways and employment centres. It will improve amenity in inner urban areas by removing heavy trucks and through traffi c from local streets, increasing the potential of these areas for new commercial and residential development.

The Victorian Government has announced that the section between the Eastern Freeway and CityLink will be the fi rst stage for delivery, with the planning work currently underway also considering a future stage to the Port of Melbourne area. This second stage will run alongside CityLink to the Port area, eventually linking to the project’s western section, before extending out to the Western Ring Road.

Project benefi ts The East West Link has the potential to deliver substantial and lasting benefi ts for Melbourne and Victoria. Key benefi ts include: • Improving cross-city connections – With existing cross-city road links having insuffi cient capacity during peak periods – and most connections also under pressure in non-peak periods – the East West Link will accommodate the growing demand for cross-city travel in Melbourne. Melburnians travelling regularly around the city by road will enjoy better connectivity, faster trips, reduced travel times and lower vehicle operating costs. There will be fewer crashes as more road users change to the freeway-standard East West Link, which will be safer than local streets and arterial roads. • Reducing Melbourne’s over-reliance on the Monash-CityLink-West Gate (M1) corridor – Melbourne currently relies heavily on the M1 as the only high-capacity east- west road connection giving access to the Port of Melbourne, industrial areas and interstate highways. This means that Melbourne’s transport system and economy is highly vulnerable to disruption from even a minor incident along this corridor. The East West Link will provide a much needed alternative route to the M1. • Improving freight effi ciency – The East West Link will move trucks away from local streets and improve the fl ow of freight across the city, reducing costs for businesses. It will also be a vital part of the national land freight network, moving freight more effi ciently from regional areas to markets and export gateways in Melbourne. • Contributing to economic development – Constrained connections to some of the city’s most important economic and employment nodes (such as Melbourne Airport and the Port of Melbourne) restrict the ability of fi rms to attract skilled workers, as well as eroding employment opportunities for Melburnians who cannot readily access the jobs being generated in these areas. The East West Link will improve access to these employment centres.

16 LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 The East West Link has the potential to deliver substantial and lasting benefi ts for Melbourne and Victoria.

• Enhancing amenity and liveability – The East West Link has the potential to remove a signifi cant amount of through traffi c – and heavy trucks – from local streets in inner urban areas. This will make it easier for people to move around their local areas and make many communities quieter, safer places to live. This redirection of through traffi c opens up opportunities to expand walking and cycling links, and to develop well-connected suburban commercial centres with more jobs closer to where people live. • Contributing to urban renewal – In combination with other initiatives being delivered by the Victorian Government, the East West Link will generate opportunities for urban renewal, and support new commercial and residential development in the inner city. • Supporting central Melbourne – The East West Link will support Melbourne’s expanding central city, giving businesses based in the city’s core better connections to clients, customers and skilled labour. Access will be improved to commercial destinations such as Lygon, Smith, Brunswick and High Streets and to the growing Parkville knowledge precinct. • Improving public transport – Some of the city’s busiest tram routes through the inner- north to the CBD are becoming less reliable due to congestion caused by east-west traffi c on arterial and local roads. The East West Link provides the opportunity to improve the reliability and travel times of these services.

LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 17 Planning for the East West Link Business case preparation During 2012-13, LMA assisted the Department of Transport, Planning and Local Infrastructure to prepare a business case for the East West Link. Recognising the importance of adopting a whole-of-government approach to the planning and development phase of a project of such signifi cance in shaping Melbourne’s future, the business case was developed under a project governance structure that comprised all major Victorian Government stakeholders, including the Department of Treasury and Finance. A Steering Committee chaired by DTPLI (and attended by LMA) oversaw the development of the business case, ensuring coordinated transport planning.

Planning process The Victorian Government has decided to proceed fi rst with the construction of the section between the Eastern Freeway at Hoddle Street and CityLink in Parkville, while still planning for a future stage to the Port of Melbourne area. In December 2012, this section was declared a major project of State signifi cance under the Major Transport Projects Facilitation Act 2009. In March 2013, LMA was appointed as the ’project proponent’ and instructed by the Minister for Roads to commence the formal statutory planning and environmental approvals process.

The statutory planning for the East West Link’s western section was undertaken previously, although further planning is required before statutory approvals are obtained.

Following receipt of a project proposal from LMA, the Minister for Planning determined that a Comprehensive Impact Statement (CIS) is required for the project. In late May 2013, the Minister for Planning released scoping directions for the CIS, including requirements for assessing the transport, land use, environmental and heritage impacts of the project. These directions are available at www.dpcd.vic.gov.au/planning/environment-assessment/projects/ east-west-link.

East West Link tunnels The area through which the Stage One tunnels will run is a long-established and highly developed urban area with no signifi cant greenfi eld zones and no existing land reservations.

An indicative corridor has been developed based on the results of geotechnical drilling, the detailed business case and other background work. This involves the link going into tunnel just past the Eastern Freeway and running underneath Alexandra Parade, the Melbourne General Cemetery and Royal Park before surfacing to connect with CityLink.

The Victorian Government has indicated its preference for placing most of the project in tunnel, recognising that surface or elevated freeway options, while much less costly, would have signifi cant negative visual and amenity impacts, create a physical barrier between communities in Melbourne’s inner-north and require the acquisition of a substantially greater number of properties. Around the world, road tunnels are being used increasingly in urban areas to provide much needed transport infrastructure while − at the same time − improving local amenity by moving traffi c underground and allowing communities to make better use of areas above the tunnel.

This approach will be refl ected by LMA in the planning process.

18 LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 The Victorian LMA has commenced work on the CIS, also concluded that the project is unlikely Government including commissioning independent to impact signifi cantly on any matters of technical specialists (through its advisors national environmental signifi cance given has decided to GHD) to investigate and assess the full range most of the project will be constructed in proceed fi rst with of potential impacts and issues associated a tunnel and due to the project’s highly with the project. The fi nal CIS documentation urbanised setting. the construction is expected to be exhibited for public • European cultural heritage assessment of the section comment by the end of 2013. – There are no National or World Heritage places within the indicative project corridor between the In March 2013, the project was referred to the and the project is not expected to impact Eastern Freeway Commonwealth Department of Sustainability, on other heritage listed buildings of Environment, Water, Population and and CityLink, signifi cance as the road will be in a tunnel Communities (DSEWPaC) to determine in the vicinity of these buildings. while still whether approval is required under the • Cultural Heritage Management Plan – planning for Environment Protection and Biodiversity Conservation Act 1999 before it can proceed. As required by the Aboriginal Heritage Act a future stage The referral included the results of preliminary 2006, a Cultural Heritage Management to the Port of fl ora and fauna and heritage assessments Plan is being prepared for the project. Key carried out by LMA. DSEWPaC has activities include establishing the extent, Melbourne area. determined that the project will not require nature and signifi cance of Aboriginal further approval under the Act because cultural heritage sites; determining the there are unlikely to be any impacts on potential impacts of proposed works on ecological matters of national environmental any Aboriginal cultural heritage sites; signifi cance provided appropriate mitigation identifying mitigation measures to reduce measures are adopted. impacts; and developing contingency arrangements for managing the discovery Other preparatory work of sites during construction. During 2012-13, LMA commissioned • Geotechnical investigations – engineering surveys, preliminary geotechnical Between May and December 2012, 43 drilling and other specialist assessments to geotechnical boreholes were drilled along obtain valuable background information for the indicative project corridor to determine the development of the East West Link. the subsurface soil and conditions under • Engineering – To inform the development which the tunnels will be constructed. The of an indicative project corridor, LMA boreholes also provided rock and soil engaged a joint venture team comprised samples which were tested to determine of John Holland, Leighton and Dragados their strength and material properties, (the JHLD-JV). The JHLD-JV reviewed and to measure the water table depth, all the concepts presented in the 2008 East of which are important factors in tunnel West Link Needs Assessment, developed design and construction. potential route options for the project and In December 2012, LMA invited Australian recommended a fi nal corridor and design and international companies in the fi elds of scheme that will deliver the best results for geotechnical design and tunnel construction Melbourne. to view the rock samples and geotechnical • Preliminary fl ora and fauna assessment investigation compiled to date. These industry – A preliminary fl ora and fauna assessment representatives provided feedback about was carried out in the project area based the key construction challenges and areas on desktop research and fi eld surveys requiring further investigation. As a result of undertaken in May 2012, October 2012 and this industry feedback, and in consultation March 2013. The assessment concluded with a panel of geotechnical and construction that no ecological communities listed under experts, LMA recommenced geotechnical the Environment Protection and Biodiversity testing in 2013 with approximately 50 Conservation Act 1999 will be affected by the additional boreholes to be completed by the project and no Commonwealth protected end of the year. sites or nationally signifi cant wetlands are present in the project area. The report

LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 19 As demonstrated during the construction of Peninsula Link, LMA has a strong commitment to of keeping communities and stakeholders informed about the progress of our projects.

Kick starting the market process LMA has a strong track record in engaging with the private sector on major projects, having delivered some of Australia’s most successful PPPs in EastLink and Peninsula Link. A key focus of 2012-13 was engaging with private industry on the East West Link. The East West Link Stage One is one of the biggest tenders to be released globally in 2013 and domestic and international interest in the project is strong.

Formal industry briefi ngs were held in July 2012 and June 2013 attracting around 500 people representing domestic and international fi nanciers, engineering consultancies, construction companies and architectural fi rms. Following the June 2012 briefi ng, direct meetings were held with 43 potential market participants to gain feedback on delivery models for the project and issues facing the private sector. This valuable information fed into the development of the business case and resulted in a recommendation to deliver the project as an Availability PPP, with the State to retain traffi c risk and toll revenue generated by the roadway.

LMA has now turned its attention to procuring the East West Link Stage One and preparing an Invitation for Expression of Interest, marking the commencement of the competitive bidding process, which will continue throughout 2013-14.

20 LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 Keeping communities informed As demonstrated during the construction of Peninsula Link, LMA has a strong commitment to communities and stakeholders informed about the progress of our projects. LMA recognises that public consultation across all phases of developing the project is essential to building trust, gathering information about community concerns and expectations, and encouraging community participation in the project’s design and development.

Commencing in May 2012, LMA undertook communications activities designed to raise community awareness and understanding about the preliminary works program, including ensuring that residents and businesses in the vicinity of geotechnical investigations were aware in advance of these works and knew where to fi nd more information. These activities included letters to residents and businesses, signage on drilling rigs in high pedestrian traffi c locations and a fact sheet explaining the geotechnical works and why they are needed. Information and updates about the investigations were provided on the LMA website and social media platforms. Several meetings were held with local resident and community groups to explain the works, particularly in the vicinity of Royal Park.

Formal planning and consultation As the project proponent, LMA has commenced a comprehensive program of stakeholder and community engagement as part of the formal planning process. This includes consultation activities during the preparation of the CIS, formal consultation and submissions as part of the statutory approvals process, and ongoing engagement to identify and respond to stakeholder and community concerns as the project moves to the implementation phase. • An Agency Liaison Group (ALG) was established by the former Department of Planning and Community Development in February 2013 to advise on technical matters that should be considered during the CIS. The ALG comprises representatives of government departments and agencies with a regulatory role on the project. LMA is not a member of the ALG, but has been invited to report on key milestones to the group. • A newsletter was sent to 80,000 households in Melbourne’s inner-north in May 2013 to introduce the project, while also explaining the planning process and inviting community involvement. • To support the commencement of the formal planning process, LMA held a series of public information displays in June 2013 in Flemington, Collingwood, North Carlton and Royal Park attracting around 400 people in total. Further sessions are planned throughout the planning process. • Since the announcement of the project funding in May 2013, LMA has made contact with 412 stakeholders through phone calls, meetings and emails to explain details of the project and opportunities for involvement. • In June 2013, LMA established an online consultation hub to encourage discussion about various topics associated with the project, accessible through the Authority’s website. • The LMA website had over 260,000 visits in 2012-13 with signifi cant activity occuring around the opening of Peninsula Link. • On social media, LMA had 353 page likes on Facebook, 830 followers on Twitter and 113 subscribers on YouTube.

LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 21 EastLink service centres

EastLink opened in June 2008 and continues to attract over 200,000 trips per weekday. LMA has facilitated the construction of two service centres on EastLink between Wellington Road and Ferntree Gully Road.

The northbound service centre opened to customers in December 2011 and the southbound facility opened on 20 September 2012.

In addition to the service centres, LMA coordinated the connection of the northbound service centre to the EastLink walking and cycling trail, and to the City of Knox path network. This joint initiative has involved LMA, Melbourne Water, Parks Victoria, the City of Knox and AA Holdings (developer of the service centres). The works include over 3.5 kilometres of concrete pathway and three bridges.

The works were funded by LMA, the City of Knox and AA Holdings. The path connections will be opened in the second half of 2013.

In addition to the service centres, LMA has coordinated the connection of the northbound service centre to the EastLink walking and cycling trail, and to the City of Knox path network.

22 LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 Supporting our people LMA’s people are our greatest asset. Their commitment, dedication, experience and skills are essential to our ability to deliver high quality infrastructure projects for Melbourne. During 2012-13, LMA continued to focus on developing the capabilities of our people, strengthening our organisational effectiveness and delivering strong fi nancial management and effective corporate governance.

Corporate Plan A new corporate plan was developed to respond to the challenges and opportunities facing LMA. It outlines our strategy for success over the next three years.

Developing our people Throughout 2012-13, our training and development programs focused on addressing common skills and knowledge gaps identifi ed in individual Performance Plans.

The health and wellbeing of our staff continues to be a high priority for LMA, with initiatives undertaken during the year including work health checks and fl u vaccinations.

Managing information Managing large volumes of often highly technical information is a critical element in LMA’s operations. As the completion of Peninsula Link approached, a major effort was undertaken to ensure all project records were captured in LMA’s system.

Following the introduction of Victoria’s Independent Broad-Based Anti-Corruption Commissioner (IBAC), LMA reviewed all policies and procedures to ensure they are aligned with the new legislation.

Financial management LMA has implemented internal controls and procedures that are consistent with best practice fi nancial management. During the year, we undertook several activities, including: • Holding information sessions for staff on fi nance-related policies and procedures to increase staff understanding and facilitate compliance • Maintaining full compliance with the Financial Management Compliance Framework.

Improving information technology In 2012-13, LMA’s systems were upgraded to Windows 7, a major exercise that involved the rollout of a new standard operating system (SOE) across our organisation.

LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 23 Abbreviations

AAS Australian Accounting Standards

ALG Agency Liaison Group

ATO Australian Tax Offi ce

CAG Community Advisory Group

CIS Comprehensive Impact Statement

DEPI Department of Environment and Primary Industries

DPC Department of Premier and Cabinet

DPCD Department of Planning and Community Development

DSEWPaC Department of Sustainability, Environment, Water, Population and Communities (Commonwealth)

DTF Department of Treasury and Finance

DTPLI Department of Transport, Planning and Local Infrastructure

FRD Financial Reporting Direction

GPC Government Purpose Classifi cation

GST Goods and Services Tax

LMA Linking Melbourne Authority

LSL Long Service Leave

PPP Public Private Partnership

SCA Service Concession Arrangement

SEITA Southern and Eastern Integrated Transport Authority

QSP Quarterly Service Payments

24 LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 Financial Statements 30 June 2013

CONTENTS Comprehensive operating statement 26 Balance sheet 27 Statement of changes in equity 28 Cash fl ow statement 29 Notes to the fi nancial statements 30 Auditor-General’s report 68

The Financial Statements cover Linking Melbourne Authority (LMA) as an individual entity. LMA is a Victorian State Government Authority and is located at: Building 1, Level 1 Brandon Business Park 540 Springvale Road Glen Waverley VIC 3150 A description of the nature of LMA’s operations and its principal activities is included in the Annual Report. For queries in relation to LMA’s Financial Statements please call (03) 8562 6800.

LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 25 Comprehensive operating statement for the fi nancial year ended 30 June 2013

($ thousand) Note 2013 2012 Continuing operations Income from transactions Grants from DTPLI 2 101,964 16,075 Independent Reviewer 2 3,078 3,809 Interest 2 169 140 Fair value of assets received free of charge 2 1,353 - Other income 2 1,170 572 Total income from transactions 107,734 20,596

Expenses from transactions Employee expenses 2 (6,728) (5,100) Independent Reviewer 2 (3,144) (3,809) Professional and consultancy services 2 (9,715) (5,674) Net gain offset credits 2 (11,158) - Occupancy expense 2 (867) (828) Depreciation 2 (7,080) (303) Interest expense 2 (44,098) (28) Operation and maintenance Peninsula Link 2 (8,579) - Fair value of assets given free of charge 2 (3,247) - Other operating expenses 2 (16,185) (6,631) Total expenses from transactions (110,801) (22,373)

Net result from transactions (net operating balance) (3,067) (1,777)

Other economic fl ows included in net result Net gain/(loss) on non-fi nancial assets 2 (13) 19 Net gain/(loss) on property revaluation 2 (16,562) (1,480) Total other economic fl ows included in net result (16,575) (1,461)

Net Result (19,642) (3,238)

Comprehensive result – total change in net worth (19,642) (3,238)

The above Comprehensive Operating Statement should be read in conjunction with the accompanying notes.

26 LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 Balance sheet as at 30 June 2013

($ thousand) Note 2013 2012 Assets Financial assets Cash and deposits 3 3,523 2,399 Receivables 4 47,187 18,552 Total fi nancial assets 50,710 20,951

Non-fi nancial assets Property, plant and equipment 5 849,412 8,021 Property acquired for roads 6 - 69,468 Land held for transfer 7 9,511 - Land under declared roads 8 44,400 - Works-in-progress 9 10,351 21,929 Property acquired for environmental net gain offset purposes 10 1,182 1,182 Other non-fi nancial assets 24 1 Total non-fi nancial assets 914,880 100,601 Total assets 965,590 121,552

Liabilities Payables 11 38,003 2,645 Interest bearing liabilities 12 834,423 443 Provision for compulsory land acquisitions 13 181 1,524 Other provisions 14 2,121 1,994 Total liabilities 874,728 6,606

Net assets 90,862 114,946

Equity Accumulated surplus/(defi cit) 21 (29,559) (9,918) Contributed capital 21 120,421 124,864 Net worth 90,862 114,946

Leases 16 Commitments 17 Contingent assets and liabilities 18

The above Balance Sheet should be read in conjunction with the accompanying notes.

LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 27 Statement of changes in equity for the fi nancial year ended 30 June 2013

($ thousand) Note Accumulated Contributed Total surplus capital Balance at 1 July 2011 (6,680) 126,212 119,532 Net result for the year (3,238) - (3,238) Contributed capital - (1,348) (1,348) Balance as at 30 June 2012 (9,918) 124,864 114,946 Net result for the year (19,642) - (19,642) Contributed capital - 2,899 2,899 Transferred to VicRoads 21 - (7,341) (7,341) Balance as at 30 June 2013 (29,559) 120,421 90,862

The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.

28 LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 Cash fl ow statement for the fi nancial year ended 30 June 2013

($ thousand) Note 2013 2012 Cash fl ows from operating activities Receipts Receipts from DTPLI 69,810 14,900 Receipts from other entities 4,317 4,578 Goods and Services Tax received from the ATO (i) 2,518 - Interest received 169 140 Total receipts 76,814 19,618 Payments Payments to suppliers and employees (21,094) (21,154) Goods and Services Tax paid to the ATO (i) - (587) Interest and other costs of fi nance paid (44,098) (28) Total payments (65,192) (21,769) Net cash fl ows from/(used in) operating activities 20 11,622 (2,151)

Cash fl ows from investing activities Payments for land and infrastructure 7,334 (13,536) Payments for property, plant and equipment (7,080) (276) Net cash fl ows from/(used in) investing activities 255 (13,812)

Cash fl ows from fi nancing activities Proceeds from capital contributions by State Government 4,000 16,500 Repayment of fi nance leases (14,752) 68 Net cash fl ows from/(used in) fi nancing activities (10,752) 16,568

Net increase/(decrease) in cash and cash equivalents 1,124 605

Cash and cash equivalents at the beginning of the fi nancial year 2,399 1,794

Cash and cash equivalents at the end of the fi nancial year 3 3,523 2,399

The above Cash Flow Statement should be read in conjunction with the accompanying notes.

(i) Goods and Services Tax paid to the ATO is presented on a net basis.

LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 29 Notes to the fi nancial statements for the fi nancial year ended 30 June 2013

Table of contents

Note 1: Summary of accounting policies ...... 31 Note 2: Income and expenses by nature and major activity ...... 42 Note 3: Cash and deposits ...... 44 Note 4: Receivables ...... 44 Note 5: Property, plant and equipment ...... 45 Note 6: Property acquired for roads ...... 46 Note 7: Land held for transfer ...... 46 Note 8: Land under declared roads ...... 46 Note 9: Works-in-progress ...... 47 Note 10: Property acquired for environmental net gain offset purposes ...... 47 Note 11: Payables ...... 48 Note 12: Interest bearing liabilities ...... 48 Note 13: Provision for compulsory land acquisition ...... 48 Note 14: Other provisions ...... 49 Note 15: Superannuation ...... 51 Note 16: Leases ...... 51 Note 17: Commitments ...... 53 Note 18: Contingent assets and contingent liabilities ...... 55 Note 19: Financial instruments ...... 56 Note 20: Reconciliation of comprehensive result to net cash fl ows from operating activities ...... 61 Note 21: Movements in equity ...... 61 Note 22: Responsible persons ...... 62 Note 23: Remuneration of executives ...... 63 Note 24: Remuneration of auditors ...... 63 Note 25: Subsequent events...... 64 Note 26: State initiated modifi cations and other works ...... 64

30 LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 Notes to the fi nancial statements for the fi nancial year ended 30 June 2013

Note 1: Summary of accounting policies

These annual Financial Statements represent the audited general purpose Financial Statements for Linking Melbourne Authority (LMA).

(a) Statement of compliance These general purpose Financial Statements have been prepared in accordance with the Financial Management Act 1994 (FMA) and applicable Australian Accounting Standards (AAS) which include Interpretations, issued by the Australian Accounting Standards Board (AASB). In particular, they are presented in a manner consistent with the requirements of the AASB 1049 Whole of Government and General Government Sector Financial Reporting. Where appropriate, those AAS paragraphs applicable to not-for-profi t entities have been applied. Accounting policies are selected and applied in a manner which ensures that the resulting fi nancial information satisfi es the concepts of relevance and reliability, thereby ensuring that the substance of the underlying transactions or other events is reported. The annual Financial Statements were authorised for issue by the Chairman of the Board on 13 August 2013.

(b) Basis of preparation and measurement The accrual basis of accounting has been applied in the preparation of these Financial Statements whereby assets, liabilities, equity, income and expenses are recognised in the reporting period to which they relate, regardless of when cash is received or paid. Judgements, estimates and assumptions are required to be made about the carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on professional judgements derived from historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. Revisions to accounting estimates are recognised in the period in which the estimate is revised and also in future periods that are affected by the revision. Judgements and assumptions made by management in the application of AASs that have signifi cant effects on the Financial Statements and estimates, with a signifi cant risk of material adjustments in the next year, are disclosed throughout the notes to the Financial Statements. In particular the provision for compulsory land acquisition (Note 13) is a source of estimation uncertainty based on management’s judgement. This can also impact on the carrying value of property acquired for roads (Note 6). These Financial Statements are presented in Australian dollars and prepared in accordance with the historical cost convention except for non-fi nancial physical assets which, subsequent to acquisition, are measured at a revalued amount being their fair value at the date of the revaluation less any subsequent accumulated depreciation and subsequent impairment losses. Revaluations are made with suffi cient regularity to ensure that the carrying amounts do not materially differ from their fair value.

(c) Reporting entity The Financial Statements cover LMA as an individual reporting entity. LMA was created by the Transport Integration Act 2010. LMA is the successor in law to the Southern and Eastern Integrated Transport Authority which ceased to exist on 30 June 2010. LMA’s principal address is: Building 1, Brandon Business Park 540 Springvale Road Glen Waverley VIC 3150

The Financial Statements include all the controlled activities of LMA.

LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 31 Notes to the fi nancial statements for the fi nancial year ended 30 June 2013

Note 1: Summary of accounting policies (continued)

(d) Objectives and funding LMA oversees the construction and delivery of the Peninsula Link project as a Public Private Partnership (PPP). Peninsula Link is a 27 kilometre freeway connection between EastLink and the Mornington Peninsula Freeway in Carrum Downs and the Mornington Peninsula Freeway in Mt Martha. The management of the Peninsula Link project is predominantly funded by grants from DTPLI and is delivered as an Availability PPP. During 2012-13, LMA assisted the Department of Transport, Planning and Local Infrastructure to prepare a detailed business case for the largest and most signifi cant road project proposed for Melbourne in a generation: the East West Link – an 18 kilometre inner-urban freeway extending across Melbourne from the Eastern Freeway to the Western Ring Road. In March 2013, the Minister for Roads appointed LMA the ‘project proponent’ for the Eastern Section of the East West Link. Following the Victorian Government’s announcement of funding for the project in May 2013, LMA commenced the formal planning and consultation process for this section, which will run from the Eastern Freeway to CityLink and then on to the Port of Melbourne area. LMA has also commenced preparations to procure the East West Link Stage One from the Eastern Freeway to CityLink.

(e) Scope and presentation of Financial Statements Comprehensive Operating Statement Income and expenses in the Comprehensive Operating Statement are classifi ed according to whether or not they arise from ‘transactions’ or ‘other economic fl ows’. This classifi cation is consistent with the whole of government reporting format and is allowed under AASB 101 Presentation of Financial Statements. ‘Transactions’ and ‘other economic fl ows’ are defi ned by the Australian System of Government Finance Statistics: Concepts, Sources and Methods 2005 and Amendments to Australian of Government Statistics, 2005 (ABS Catalogue No. 5514.0). ‘Transactions’ are those economic fl ows that are considered to arise as a result of policy decisions, usually interactions between two entities by mutual agreement. Transactions also include fl ows within an entity, such as depreciation where the owner is simultaneously acting as the owner of the depreciating asset and as the consumer of the service provided by the asset. Taxation is regarded as mutually agreed interactions between the Government and taxpayers. Transactions can be in kind (e.g. assets provided/given free of charge or for nominal consideration) or where the fi nal consideration is cash. ‘Other economic fl ows’ are changes in the volume or changes arising from market re-measurements. They include: • gains and losses from disposals; and • revaluations and impairments of non-current physical and intangible assets. The net result is equivalent to profi t or loss derived in accordance with AASs. Balance Sheet Assets and liabilities are presented in liquidity order with assets aggregated into fi nancial assets and non-fi nancial assets. Current and non-current assets and liabilities (non-current being those assets or liabilities expected to be recovered or settled beyond 12 months) are disclosed in the notes, where relevant. Cash Flow Statement Cash fl ows are classifi ed according to whether or not they arise from operating activities, investing activities, or fi nancing activities. This classifi cation is consistent with requirements under AASB 107 Statement of Cash Flows. Statements of Changes in Equity The Statement of Changes in Equity presents reconciliations of non-owner and owner changes in equity from the opening balance at the beginning of the reporting period to the closing balance at the end of the reporting period. It also shows separate changes due to amounts recognised in the ‘comprehensive result’ and amounts recognised in ‘other economic fl ows – other movements in equity’ related to ‘transactions with owner in its capacity as owner’. Rounding Amounts in the Financial Statements have been rounded to the nearest thousand dollars, unless otherwise stated. Minor discrepancies in totals of tables are due to rounding.

32 LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 Notes to the fi nancial statements for the fi nancial year ended 30 June 2013

Note 1: Summary of accounting policies (continued)

(f) Income from transactions Income is recognised to the extent that it is probable that the economic benefi ts will fl ow to LMA and the income can be reliably measured at fair value. Grants from State Government The State provides funding to LMA and revenue relevant to expenditure is recognised when expenditure is incurred. Funds are drawn down by LMA over the periods necessary to meet related expenditure. Independent Reviewer income Southern Way provides the funding for the Independent Reviewer’s expenses relating to the Peninsula Link project. LMA recognises revenue, relevant to expenditure, when expenditure is incurred. Fair value of assets received free of charge Contributions of resources received free of charge or for nominal consideration are recognised at fair value when LMA obtains control of them, irrespective of whether these contributions are subject to restrictions or conditions over their use. Interest income Interest income includes interest received on bank deposits. Other income Other income includes income recognised for rendering of services as they are delivered.

(g) Expenses from transactions Expenses from transactions are recognised as they are incurred and reported in the fi nancial year to which they relate. Employee expenses These expenses include all costs related to employment (other than superannuation which is accounted for separately) including wages and salaries, fringe benefi ts tax, leave entitlements, redundancy payments and WorkCover premiums. Superannuation The amount recognised in the Comprehensive Operating Statement is the employer contributions for members of both defi ned benefi t and defi ned contribution superannuation plans that are paid or payable during the reporting period. The Department of Treasury and Finance (DTF), in its Annual Financial Statements, discloses on behalf of the State as the sponsoring employer the net defi ned benefi t cost related to the members of these plans as an administered liability. Refer to DTF’s Annual Financial Statements for more detailed disclosures in relation to these plans. Independent Reviewer Expenses from the Independent Reviewer are recognised as they are incurred. The Independent Reviewer’s expenses are recovered from Southern Way except for specifi c reports commissioned and paid for by LMA. Net Gain Offset Credits Expenditure LMA is required to provide for net gain offsets for the Peninsula Link project pursuant to section 6(2)(j) of the Planning and Environment Act 1987, section 5.3(c) of the Peninsula Link Project Incorporated Document and Victoria’s Native Vegetation Management, A Framework for Action (Department of Natural Resources and Environment, 2002). Payments were made to Trust for Nature to secure these net gain offsets credits and these are expensed in the year they are incurred (Note 2). Depreciation All infrastructure assets, property, plant and equipment and other non-fi nancial physical assets that have fi nite useful lives are depreciated. Depreciation is generally calculated on a straight-line basis, at rates that allocate the asset’s value, less any estimated residual value, over its estimated useful life. Leasehold improvements are depreciated over the period of the lease or estimated useful life, whichever is the shorter, using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each annual reporting period, and adjustments made where appropriate.

LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 33 Notes to the fi nancial statements for the fi nancial year ended 30 June 2013

Note 1: Summary of accounting policies (continued) The following are typical estimated useful lives for the different asset classes for current and prior years.

Asset class Useful life Infrastructure assets Bridges 90 years Roads 60 years Initial direct costs associated with the Peninsula Link Finance Lease 25 years Life cycle expenditure (including road resurfacing) 25 years Plant and equipment 3–5 years Motor vehicles 3 years Leasehold improvements over the useful life of the lease Intangible assets 5 years

Land, earthworks and land under declared roads, which are considered to have an indefi nite life are not depreciated. Depreciation is not recognised in respect of these assets as their service potential has not, in any material sense, been consumed during the reporting period. Intangible produced assets with fi nite useful lives are depreciated as an expense from transactions on a systematic (typically straight-line) basis over the useful life of the asset. Depreciation begins when the asset is available for use; that is, when it is in the location and condition necessary for it to be capable of operating in the manner intended by management. The consumption of intangible non produced assets with fi nite useful lives is not classifi ed as a transaction, but as amortisation and is included in the net result as an ‘other economic fl ow’. Intangible assets with indefi nite useful lives are not depreciated or amortised, but are tested annually for impairment. Interest expense Interest expenses are recognised as expenses in the period in which they are incurred. Other operating expenses Other operating expenses generally represent the day-to-day running costs, including maintenance costs, incurred in the normal operations of LMA. These items are recognised as an expense in the reporting period in which they are incurred.

(h) Other economic fl ows included in net result Other economic fl ows measure the change in volume or value of assets or liabilities that do not result from transactions. Net gain/(loss) on non-fi nancial assets Net gain/(loss) on non-fi nancial assets includes realised and unrealised gains and losses from revaluations, impairments and disposals of all physical assets and intangible assets. Disposal of non-fi nancial assets Any gain or loss on the disposal of non-fi nancial assets is recognised at the date of disposal and is determined after deducting from the proceeds the carrying value of the asset at that time. Impairment of non-fi nancial assets Non-fi nancial assets are assessed annually for impairment and whenever there is an indication that the asset may be impaired. If there is an indication of impairment, the assets concerned are tested as to whether their carrying value exceeds their recoverable amount. Where an asset’s carrying value exceeds its recoverable amount, the difference is written off as another economic fl ow, except to the extent that the write-down can be debited to an asset revaluation surplus amount applicable to that class of assets. It is deemed that, in the event of the loss or destruction of an asset, the future economic benefi ts arising from the use of the asset will be replaced unless a specifi c decision to the contrary has been made. The recoverable amount for most assets is measured at the higher of depreciated replacement cost or fair value less costs to sell. The recoverable amount for assets held primarily to generate net cash infl ows is measured at the higher of the present value of future cash fl ows expected to be obtained from the asset or fair value less costs to sell.

34 LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 Notes to the fi nancial statements for the fi nancial year ended 30 June 2013

Note 1: Summary of accounting policies (continued) (i) Financial assets Cash and deposits Cash and deposits, including cash equivalents, comprise cash on hand and cash at banks which are held for the purpose of meeting short-term cash commitments rather than for investment purposes and are subject to an insignifi cant risk of changes in value. Receivables Receivables consist of: • contractual receivables, which include mainly debtors in relation to goods and services; and • statutory receivables, which include predominantly amounts owing from the Victorian Government in relation to the Peninsula Link and East West Link projects and GST input tax credit recoverable. Receivables that are contractual are classifi ed as fi nancial instruments. Statutory receivables are not classifi ed as fi nancial instruments. Contractual receivables are classifi ed as fi nancial instruments and categorised as loans and receivables. Statutory receivables are recognised and measured similarly to contractual receivables (except for impairment), but are not classifi ed as fi nancial instruments because they do not arise from a contract. Receivables are subject to impairment testing as described below. A provision for doubtful debts is recognised where there is objective evidence that the debts may not be collected and bad debts are written off when identifi ed. Impairment of fi nancial assets At the end of each reporting period, LMA assesses whether there is objective evidence that a fi nancial asset or group of fi nancial assets is impaired. All fi nancial instrument assets, except those measured at fair value through profi t or loss, are subject to annual review for impairment. Bad and doubtful debts for fi nancial assets are assessed on a regular basis. Those bad debts considered as written-off by mutual consent are classifi ed as a transaction expense. Bad debts not written-off by mutual consent and the allowance for doubtful receivables are classifi ed as ‘other economic fl ows’ in the net result.

(j) Non-fi nancial assets Property, plant and equipment Property, plant and equipment are measured initially at cost and subsequently revalued at fair value less accumulated depreciation and impairment. Road network assets are measured at fair value, determined by reference to the asset’s depreciated replacement cost. Land under declared roads Land under declared roads is measured initially at cost of acquisition and subsequently at fair value. Land held for transfer Land held for transfer is land surplus to LMA requirements which LMA intends to transfer to other State entities in the next fi nancial year. Land held for transfer is measured initially at cost of acquisition and subsequently at fair value. Leasehold improvements The cost of leasehold improvements is capitalised as an asset and depreciated over the remaining term of the lease or the estimated useful life of the improvements, whichever is the shorter. Acquisitions of assets The cost method of accounting is used for all acquisitions of assets. Cost is measured as the fair value of the assets given up or liabilities undertaken at the date of acquisition plus incidental costs directly attributable to the acquisition. In the case of land, control is assumed by LMA, when a Notice of Acquisition is issued for land that is compulsorily acquired. Assets acquired at no cost, or for nominal consideration, are initially recognised at their fair value at the date of acquisition.

LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 35 Notes to the fi nancial statements for the fi nancial year ended 30 June 2013

Note 1: Summary of accounting policies (continued) Revaluations of non-current physical assets Non-current physical assets measured at fair value are revalued in accordance with FRD 103D issued by the Minister for Finance. A full revaluation normally occurs every fi ve years, based upon the asset’s Government Purpose Classifi cation, but may occur more frequently if fair value assessments indicate material changes in values. Revaluation increases or decreases arise from differences between an asset’s carrying value and fair value. Net revaluation increases are recognised in ‘other economic fl ows – other movements in equity’ and accumulated in equity under the revaluation surplus. However, the net revaluation increase is recognised in the net result to the extent that it reverses a net revaluation decrease in respect of the same class of property, plant and equipment. Net revaluation decreases are recognised in ‘other economic fl ows – other movements in equity’ to the extent that a credit balance exists in the asset revaluation surplus in respect of the same class of property, plant and equipment. Otherwise, the net revaluation decreases are recognised immediately as ‘other economic fl ows’ in the net result. The net revaluation decrease recognised in ‘other economic fl ows – other movements in equity’ reduces the amount accumulated in equity under the asset revaluation surplus. Revaluation increases and decreases relating to individual assets within a class of property, plant and equipment are offset against one another within that class but are not offset in respect of assets in different classes. Any asset revaluation surplus is not normally transferred to accumulated funds on de-recognition of the relevant asset. Non-current physical assets constructed by LMA The cost of non-current physical assets constructed by LMA includes the cost of all materials used in construction, direct labour, consultant costs on the project and an appropriate proportion of variable and fi xed overheads. Property acquired for roads Property acquired for roads includes property acquired directly or indirectly as a result of an intention to construct a road within the vicinity of the property and which has not been transferred for an alternate use. Land acquired is measured initially at cost of acquisition and subsequently at fair value less any impairment. The valuation basis is consistent with the entire class of property, plant and equipment, except land under roads. All costs directly associated with the acquisition of the land are capitalised into the acquisition cost. The property is classifi ed in this sub-category of land until such time as a road is constructed and declared under section 14 of the Road Management Act 2004 and then the asset is re-classifi ed as land under declared roads. When such land is re-classifi ed, it is transferred at its carrying amount at that time. Property acquired for environmental net gain offset purposes Pursuant to section 6(2)(j) of the Planning and Environment Act 1987 and section 5.3(c) of the Peninsula Link Project Incorporated Document, LMA is required to comply with Victoria’s Native Vegetation Management, A Framework for Action (Department of Natural Resources and Environment, 2002) and provide for net gain offsets for the project. Land acquired to secure net gain offset credits is recognised at acquisition cost in the year it is acquired following the signing of an unconditional contract. Leased assets Leases are classifi ed at their inception as either operating or fi nance leases based on the economic substance of the agreement so as to refl ect the risks and rewards incidental to ownership. Leases of infrastructure, property, plant and equipment are classifi ed as fi nance infrastructure leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership from the lessor to the lessee. All other leases are classifi ed as operating leases. LMA as lessee At the commencement of the lease term, fi nance leases are initially recognised as assets and liabilities at amounts equal to the fair value of the lease property or, if lower, the present value of the minimum lease payments, each determined at the inception of the lease. The lease asset is depreciated over the term of the lease. Minimum lease payments are apportioned between reduction of the outstanding lease liability and periodic fi nance expense which is calculated using the interest rate implicit in the lease and charged directly to the Comprehensive Operating Statement. Contingent rentals associated with fi nance leases are recognised as an expense in the period in which they are incurred. Operating lease payments, including any contingent rentals, are recognised as an expense in the Comprehensive Operating Statement on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern of the benefi ts derived from the leased assets.

36 LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 Notes to the fi nancial statements for the fi nancial year ended 30 June 2013

Note 1: Summary of accounting policies (continued) Peninsula Link project During the 2009-10 fi nancial year, Southern Way was awarded the contract to build and deliver the Peninsula Link project. Design and construction continued in 2012; the road was completed in January 2013. The component of the contract relating to the design and construction of the road infrastructure is accounted for by LMA as a fi nance lease agreement (Note 16). Works-in-progress Works-in-progress is stated at cost and not depreciated. Depreciation on works-in-progress commences when the asset is ready for its intended use. Other non-fi nancial assets Other non-fi nancial assets include prepayments which represent payments in advance of receipt of goods or services or that part of expenditure made in one accounting period covering a term extending beyond that period. Intangible assets Intangible assets are initially measured at cost. Subsequently, intangible assets with fi nite useful lives are carried at cost less accumulated amortisation and accumulated impairment losses. Costs incurred subsequent to initial acquisition are capitalised when it is expected that additional future economic benefi ts will fl ow to LMA.

(k) Liabilities Payables Payables consist of: • contractual payables such as accounts payable. Accounts payable represent liabilities for goods and services provided to LMA prior to the end of the fi nancial year that are unpaid and arise when LMA becomes obliged to make future payments in respect of the purchase of those goods and services; and • statutory payables, such as goods and services tax and fringe benefi ts tax payables. Contractual payables are classifi ed as fi nancial instruments and categorised as fi nancial liabilities at amortised cost. Statutory payables are recognised and measured similarly to contractual payables, but are not classifi ed as fi nancial instruments and not included in the category of fi nancial liabilities at amortised cost, because they do not arise from a contract. Interest bearing liabilities Interest bearing liabilities are recorded initially at fair value, net of transaction costs. Subsequent to initial recognition, interest bearing liabilities are measured at amortised cost with any difference between the initial recognised amount and the redemption value being recognised in profi t and loss over the period of the interest bearing liability using the effective interest rate method. Provisions Provisions are recognised when LMA has a present obligation, the future sacrifi ce of economic benefi ts is probable and the amount of the provision can be measured reliably. For the land acquisition provision, the present obligation is created when a Notice of Acquisition is issued. The land acquisition provision contains signifi cant estimates based on management’s best judgement. As such, a material adjustment to the carrying amount of the land acquisition provision within the next fi nancial year is possible. 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. Employee benefi ts Provision is made for benefi ts accruing to employees in respect of wages and salaries, annual leave and long service leave for services rendered to the reporting date. Wages, salaries and annual leave Liabilities for wages and salaries, including non-monetary benefi ts and annual leave expected to be settled within 12 months of the reporting date, are recognised in the provision for employee benefi ts in respect of employee services up to the reporting date, classifi ed as current liabilities and measured at their nominal values. Those liabilities that are not expected to be settled within 12 months are also recognised in the provision for employee benefi ts as current liabilities, but are measured at present value of the amounts expected to be paid when the liabilities are settled using the remuneration rate expected to apply at the time of settlement.

LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 37 Notes to the fi nancial statements for the fi nancial year ended 30 June 2013

Note 1: Summary of accounting policies (continued) Long service leave Liability for long service leave (LSL) is recognised in the provision for employee benefi ts. Unconditional LSL (representing seven or more years of continuous service for Public Sector staff and executives) is disclosed as a current liability even where LMA does not expect to settle the liability within 12 months because it will not have the unconditional right to defer the settlement of the entitlement should an employee take leave within 12 months. The components of this current LSL liability are measured at: • present value - component that LMA does not expect to settle within 12 months; and • nominal value - component that LMA expects to settle within 12 months. Conditional LSL (representing less than seven years of continuous service for Public Sector staff and executives) is disclosed as a non-current liability. There is an unconditional right to defer the settlement of the entitlement until the employee has completed the requisite years of service. This non-current LSL liability is measured at present value. Employee benefi ts on-costs Employee benefi ts on-costs such as payroll tax, workers compensation and superannuation are recognised separately from the provision for employee benefi ts.

(l) Equity Contributions by owners Additions to net assets which have been designated as contributions by owners are recognised as contributed capital. Other transfers that are in the nature of contributions or distributions have also been designated as contributions by owners. Transfers of net assets arising from administrative restructurings are treated as distributions to or contributions by owners.

(m) Commitments Commitments for future expenditure include operating and capital commitments arising from contracts. These commitments are disclosed by way of a note at their nominal value and inclusive of the goods and services tax (GST) payable. In addition, where it is considered appropriate and provides additional relevant information to users, the net present values of signifi cant individual projects are stated. These future expenditures cease to be disclosed as commitments once the related liabilities are recognised in the balance sheet.

(n) Contingent assets and contingent liabilities Contingent assets and contingent liabilities are not recognised in the Balance Sheet, but are disclosed by way of a note and, if quantifi able, are measured at nominal value. Contingent assets and liabilities are presented inclusive of GST receivable or payable respectively.

(o) Service concession arrangements The State sometimes enters into certain arrangements with private sector participants to design and construct or upgrade an asset used to provide public services. These arrangements are typically complex and usually include the provision of operational and maintenance services for a specifi ed period of time. These arrangements are often referred to as either Public Private Partnerships (PPPs) or Service Concession Arrangements (SCAs). The SCA involves the State paying the operator over the period of the arrangement, subject to specifi ed performance criteria being met. At the date of commitment to the principal provisions of the arrangement, these estimated periodic payments are allocated between a component related to: 1. the design and construction, which is accounted for as a lease payment; 2. upgrading of the asset (lifecycle expenditure including road resurfacing), which is accounted for as a commitment; and 3. the ongoing operation and maintenance of the asset, which is accounted for as a commitment for operating costs. These are expensed in the Comprehensive Operating Statement as they are incurred. The Peninsula Link project, which was awarded to Southern Way during the 2009/10 fi nancial year, is consistent with the SCA model described above. Refer to Note 16 for a detailed description of the project.

38 LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 Notes to the fi nancial statements for the fi nancial year ended 30 June 2013

Note 1: Summary of accounting policies (continued) There is currently no authoritative accounting guidance applicable to grantors (the State) on the recognition and measurement of the right of the State to receive assets from such concession arrangements. Due to the lack of such guidance, LMA has accounted for the project in accordance with FRD 19. The Peninsula Link project is accounted for by LMA as a fi nance lease, therefore in January 2013 (the lease commencement date), a lease asset and leased liability were recognised on the balance sheet.

(p) Goods and services tax (GST) Income, expenses and assets are recognised net of the amount of associated GST, except where GST incurred is not recoverable from the taxation authority. In this case, the GST payable is recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the Balance Sheet. Cash fl ows are presented on a net basis. The GST component of cash fl ows arising from investing or fi nancing activities which are recoverable from, or payable to, the taxation authority are presented as an operating cash fl ow. Commitments and contingent assets and liabilities are also stated inclusive of GST.

(q) Events after the reporting period Assets, liabilities, income or expenses arise from past transactions or other past events. Where the transactions result from an agreement between LMA and other parties, the transactions are only recognised when the agreement is irrevocable at or before the end of the reporting period. Adjustments are made to amounts recognised in the Financial Statements for events which occur after the reporting date and before the date the statements are authorised for issue, where those events provide information about conditions which existed at the reporting date. Note that disclosure is made about events between the balance date and the date the statements are authorised for issue where the events relate to conditions which arose after the reporting date and which may have a material impact on the results of subsequent years.

(r) New accounting standards and interpretations Certain new AASs have been published that are not mandatory for the 30 June 2013 reporting period. DTF assesses the impact of all these new standards and advises LMA of their applicability and early adoption where applicable. As at 30 June 2013, the following AASs have been issued by the AASB but are not yet effective. They become effective for the fi rst Financial Statements for the reporting period commencing after the stated operative dates as follows:

LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 39 Notes to the fi nancial statements for the fi nancial year ended 30 June 2013

Note 1: Summary of accounting policies (continued) Standard/ Summary Applicable Impact on the fi nancial Interpretation for annual statements reporting periods beginning on AASB 9 Financial This Standard simplifi es requirements for 1 Jan 2015 Subject to AASB’s further instruments the classifi cation and measurement of modifi cations to AASB 9, together fi nancial assets resulting from Phase 1 with the anticipated changes resulting of the IASB’s project to replace IAS 39 from the staged projects on Financial Instruments: Recognition and impairments and hedge accounting, Measurement (AASB 139 Financial details of impacts will be assessed. Instruments: Recognition and Measurement). AASB 13 Fair Value This Standard outlines the requirements 1 Jan 2013 Disclosure for fair value Measurement for measuring the fair value of assets and measurements using unobservable liabilities and replaces the existing fair inputs are relatively detailed value defi nition and guidance in other compared to disclosure for fair value AASs. AASB 13 includes a ‘fair value measurements using observable hierarchy’ which ranks the valuation inputs. Consequently, the Standard technique inputs into three levels using may increase the disclosures unadjusted quoted prices in active markets required for assets measured using for identical assets or liabilities, other depreciated replacement cost. observable inputs and unobservable inputs. AASB 119 In this revised Standard for defi ned benefi t 1 Jan 2013 Not-for-profi t entities are not permitted Employee Benefi ts superannuation plans, there is a change to apply this Standard prior to the to the methodology in the calculation of mandatory application date. While superannuation expenses. In particular, the total superannuation expense is there is now a change in the split between unchanged, the revised methodology superannuation interest expense is expected to have a negative impact (classifi ed as transactions) and actuarial on the net result from transactions for gains and losses (classifi ed as ‘Other those few Victorian public sector economic fl ows – other movements in entities that report superannuation equity’) reported on the comprehensive defi ned benefi t plans. operating statement. AASB 1053 This Standard establishes a differential 1 July 2013 The Victorian Government is currently Application of Tiers fi nancial reporting framework consisting considering the impacts of Reduced of Australian of two tiers of reporting requirements for Disclosure Requirements (RDRs) for Accounting preparing general purpose fi nancial certain public sector entities and has Standards statements. not decided if RDRs will be implemented in the Victorian public sector. AASB 1055 AASB 1055 extends the scope of 1 Jan 2014 This Standard is not applicable as no Budgetary budgetary reporting that is currently budget disclosure is required. Reporting applicable for the whole of government and general government sector (GGS) to NFP entities within the GGS, provided that these entities present separate budget to the parliament.

40 LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 Notes to the fi nancial statements for the fi nancial year ended 30 June 2013

Note 1: Summary of accounting policies (continued) In addition to the new standards above, the AASB has issued a list of amending standards that are not effective for the 2012-13 reporting period (as listed below). In general, these amending standards include editorial and references changes that are expected to have insignifi cant impacts on public sector reporting. The two AASB Interpretations in the list below are also not effective for the 2012-13 reporting period and considered to have insignifi cant impacts on public sector reporting. • AASB 10 Consolidated Financial Statements. • AASB 11 Joint Arrangements. • AASB 12 Disclosure of Interests in Other Entities. • AASB 127 Separate Financial Statements. • AASB 128 Investments in Associates and Joint Ventures. • AASB 2009-11 Amendments to Australian Accounting Standards arising from AASB 9. • AASB 2010-2 Amendments to Australian Accounting Standards arising from Reduced Disclosure Requirements. • AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2010). • AASB 2010-10 Further Amendments to Australian Accounting Standards – Removal of Fixed Dates for First-time Adopters. • AASB 2011-2 Amendments to Australian Accounting Standards arising from the Trans-Tasman Convergence Project – Reduced Disclosure Requirements. • AASB 2011-4 Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel Disclosure Requirements. • AASB 2011-6 Amendments to Australian Accounting Standards – Extending Relief from Consolidation, the Equity Method and Proportionate Consolidation – Reduced Disclosure Requirements. • AASB 2011-7 Amendments to Australian Accounting Standards arising from the Consolidation and Joint Arrangements Standards. • AASB 2011-8 Amendments to Australian Accounting Standards arising from AASB 13. • AASB 2011-10 Amendments to Australian Accounting Standards arising from AASB 119 (September 2011). • AASB 2011-11 Amendments to AASB 119 (September 2011) arising from Reduced Disclosure Requirements. • AASB 2011-12 Amendments to Australian Accounting Standards arising from Interpretation 20. • 2012-1 Amendments to Australian Accounting Standards - Fair Value Measurement - Reduced Disclosure Requirement. • 2012-2 Amendments to Australian Accounting Standards – Disclosures – Offsetting Financial Assets and Financial Liabilities. • 2012-3 Amendments to Australian Accounting Standards – Offsetting Financial Assets and Financial Liabilities. • 2012-5 Amendments to Australian Accounting Standards arising from Annual Improvements 2009–2011 Cycle. • 2012-7 Amendments to Australian Accounting Standards arising from Reduced Disclosure Requirements. • 2012-9 Amendment to AASB 1048 arising from the Withdrawal of Australian Interpretation 1039. • 2012-10 Amendments to Australian Accounting Standards – Transition Guidance and Other Amendments. • 2012-11 Amendments to Australian Accounting Standards – Reduced Disclosure Requirements and Other Amendments. • 2013-1 Amendments to AASB 1049 – Relocation of Budgetary Reporting Requirements. • 2013-2 Amendments to AASB 1038 – Regulatory Capital. • 2013-3 Amendments to AASB 136 – Recoverable Amount Disclosures for Non-Financial Assets. • AASB Interpretation 20 Stripping Costs in the Production Phase of a Surface Mine. • AASB Interpretation 21 Levies.

LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 41 Notes to the fi nancial statements for the fi nancial year ended 30 June 2013 169 140 ($ thousand) 2013 2012 (398) (401) (300) (867) (828) 3,078 3,809 1,353 - 1,170 572 (6,030) (4,699) (3,144) (3,809) (9,715) (5,674) 101,964 16,075 (11,158) - (6,728) (5,100) cations (SIMS) cations

Salaries and wages (3,858) (4,141) - - - - (2,172) (558) (2,172) (4,141) - wages (3,858) and Salaries Total other income 27 56 1,143 516 - - - - 1,170 572 1,170 516 - income 1,143 56 27 other Total ts (300) benefi Superannuation Termination (401) - (398) Total income from Total transactions 20,596 12,780 1,143 107,734 78,447 516 9,519 18,625 6,775 525 Note 2: Income and expenses by nature major activity transactions ts from benefi Expenses Employee (Peninsula Link) Modifi Link) 1,353 - received transactions assets operations (Peninsula from DTPLI of Continuing Reviewer 3,809 - Income from Revenue 3,078 73,820 8,775 value Grants - Independent income (558) Interest - 9,519 income 18,625 6,775 525 Fair (2,172) free of charge 140 - Project Management 516 - 169 Other (4,542) - 1,143 2013 2012 Sundry State Initiated ts 56 (4,556) 27 Environmental benefi Link East West credits employee (4,990) (11,158) - and Other Works (3,809) - (8,705) Reviewer (156) consultancy Total (472) (12) (56) - (986) (3,144) offset Total and Independent gain Professional expense services (828) - Net (867) Occupancy

42 LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 Notes to the fi nancial statements for the fi nancial year ended 30 June 2013

- (16) (28) (13) 19 ($ thousand) 2013 2012 (244) (184) (7,080) (303) (7,080) (303) (8,579) - (3,247) (5,284) (2,356) (44,082) - (44,098) (28) (10,657) (4,091) (16,185) (6,631) (16,562) (1,480) (16,575) (1,461) cations (SIMS) cations (16,575) (1,461) - (16,575) (75,368) (12,037) (5,307) (3,036) (11,501) (525) (18,625) (110,801) (22,373) (6,775) ows ows ows included ows Peninsula Link fi nance lease (44,082) - - (44,082) - - lease assets nance intangible fi Amortisation Link Peninsula (4,553) (573) (2,980) (331) (369) (5,201) (572) (169) professional expenses and (9) - (184) - Contract (235) Travel Motor vehicle fi nance lease (16) (28) - (16) lease (c)) nance (303) - (7,080) 5 fi plant, and equipment Property, (Note vehicle Motor (654) (3,186) (94) - (1,702) (2,004) Administration

(Peninsula Link) Modifi Link) (303) - (7,080) amortisation amortisation and and (Peninsula (3,247) - charge (8,579) - Depreciation depreciation charges (28) - charges of (44,098) maintenance Total interest Interest 19 - free (13) expenses and Project Management Link 2013 2012 Total assets given State Initiated operating Operation Peninsula (1,480) - Environmental nancial Assets services (16,562) Other 11) Link East West (2,811) (2,055) (5,295) (2,980) and (331) non-fi (369) (7,748) (1,227) supplies and Other Works 8, result Total Total on expenses from transactions Total balance) 6, net operating Net result from transactions gain/(loss) 3,079 (net 743 (4,164) (2,520) (1,982) Other economic fl (Note in - Net Net gain/(loss) on property revaluation - other economic fl Total - (3,067) (1,777) Comprehensive result included in net result Comprehensive (13,496) (718) (4,164) (2,520) (1,982) - - (19,642) (3,238) -

LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 43 Notes to the fi nancial statements for the fi nancial year ended 30 June 2013

Note 2: Income and expenses by nature and major activity (continued)

Description of major activities (applied to Note 2): Project management LMA has a major task to facilitate and administer development of the Peninsula Link project on behalf of the State. Project management for Peninsula Link includes assets received free of charge. This is for land that has now been recognised by LMA at its fair value as LMA is in control of this land. State Initiated Modifi cations (SIMS) and other works During the 2012-13 fi nancial year, LMA managed works adjacent to Peninsula Link that have been constructed by various contractors. Environmental LMA has a number of environmental obligations in relation to Peninsula Link. These are related to conditions of approval for the project under the Planning and Environment Act 1981 and the Environment Protection and Biodiversity Conservation Act 1999. East West Link LMA is assisting the Department of Transport, Planning and Local Infrastructure to develop the business case and undertake early planning work for East West Link. In March 2013, the Minister for Roads appointed LMA the ‘project proponent’ for Stage One of the East West Link.

Note 3: Cash and deposits ($ thousand) 2013 2012 Total cash and deposits disclosed in the Balance Sheet 3,523 2,399 Cash and deposits at the end of the fi nancial year as per Cash Flow Statement 3,523 2,399

Note 4: Receivables ($ thousand) 2013 2012 Current receivables Contractual Trade debtors 580 361 580 361 Statutory Goods and services tax receivable 520 3,038 Accrued income – Peninsula Link 5,400 12,970 Accrued income – Peninsula Link QSP 33,999 - Accrued income – East West Link 6,501 1,875 Accrued income – Independent Reviewer Peninsula Link 103 307 Accrued income – SIMS and other works 84 1 46,607 18,191 Total current receivables 47,187 18,552

LMA allows for 30 day terms on its receivables. LMA has no doubtful debts and no bad debts were written off. (a) Ageing analysis of receivables Please refer to Note 19 for the ageing analysis of receivables. (b) Nature and extent of risk arising from receivables Please refer to Note 19 for the nature and extent of credit risk arising from receivables.

44 LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 Notes to the fi nancial statements for the fi nancial year ended 30 June 2013

Note 5: Property, plant and equipment Classifi cation by ‘Transportation and Communications’ Purpose Group

(a) Carrying amounts ($ thousand) 2013 2012 Sub-classifi cation by nature

Buildings: Leasehold improvements At fair value 1,695 1,725 Less: accumulated amortisation (1,695) (1,725) Infrastructure asset: At cost 855,831 7,522 Less: accumulated amortisation (6,827) (104) Plant, equipment and vehicles: At fair value 779 1,090 Less: accumulated depreciation (371) (487) Net carrying amount of property, plant and equipment 849,412 8,021

(b) Movements in carrying amounts ($ thousand) Leasehold Infrastructure Plant, equipment Total at cost at cost and vehicles improvements at cost 2013 2012 2013 2012 2013 2012 2013 2012 Opening balance - 20 7,418 7,501 603 527 8,021 8,048 Transferred from work in progress - - 11,578 - - - 11,578 - Additions - - 844,812 - 170 394 845,282 394 Adjustment - - (560) - - - (860) 1 Disposals - - - - (188) (119) (188) (119) Depreciation expense (Note 2) - (20) (6,903) (84) (177) (199) (7,080) (303) Allocated to VicRoads (Note 21) - - (7,341) - - - (7,341) - Closing balance - - 849,004 7,418 408 603 849,412 8,021

Property, plant and equipment are classifi ed primarily by the ‘purpose’ for which the assets are used, according to one of six ‘Purpose Groups’ based upon Government Purpose Classifi cations (GPC). All assets within a ‘Purpose Group’ are further sub-categorised according to the asset’s ‘nature’ (i.e. buildings, plant and equipment, etc), with each sub-category being classifi ed as a separate class of asset for fi nancial reporting purposes.

LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 45 Notes to the fi nancial statements for the fi nancial year ended 30 June 2013

Note 5: Property, plant and equipment (continued)

(c) Aggregate depreciation recognised as an expense during the year ($ thousand) 2013 2012 Buildings - 20 Infrastructure assets 6,903 84 Plant, equipment and vehicles 177 199 7,080 303

Note 6: Property acquired for roads ($ thousand) 2013 2012 Balance at beginning of fi nancial year 69,468 72,296 Transferred to land held for transfer (Note 7) (9,549) - Transferred to land under roads (Note 8) (58,025) - Assets given free of charge (3,247) - Assets received free of charge 1,353 - Net gain/(loss) from fair value adjustments - (2,828) Balance at end of fi nancial year - 69,468

Property acquired for roads relates to land acquired for the purpose of constructing the Peninsula Link project. Now that Peninsula Link has been constructed and declared under Section 14 of the Road Management Act 2004, it was reclassifi ed as ‘land under declared roads’ and was transferred at its carrying amount at that time. Land surplus to LMA’s requirements was identifi ed and transferred to land held for transfer at its carrying amount at that time. The land acquisition provision (Note 13) is a source of estimation uncertainty based on management’s judgement.

Note 7: Land held for transfer ($ thousand) 2013 2012 Balance at beginning of fi nancial year - - Transferred from properties acquired for roads (Note 6) 9,549 - Net gain/(loss) from fair value adjustments (38) - Balance at end of fi nancial year 9,511 -

All land held for transfer is Crown land.

Note 8: Land under declared roads ($ thousand) 2013 2012 Balance at beginning of fi nancial year - - Transferred from properties acquired for roads (Note 6) 58,025 - Net gain/(loss) from fair value adjustments (13,625) - Balance at end of fi nancial year 44,400 -

46 LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 Notes to the fi nancial statements for the fi nancial year ended 30 June 2013

Note 8: Land under declared roads (continued) LMA engaged the Valuer General Victoria (VGV) to carry out an independent valuation as per the guidelines in FRD103D. The valuation was conducted in accordance with the relevant statutes and accounting standards and completed with an effective date of 30 June 2013. The fair value of assets is measured having regard to the highest and best use of the asset and is usually determined from market based evidence. Where the value cannot be determined by market evidence, the asset’s fair value is measured at the market buying price being the depreciated replacement cost (DRC). The DRC is the current replacement cost less the already consumed or expired future economic benefi t. The fair value of land under declared roads is based on average rateable value per hectare within each municipal site, discounted to refl ect the value prior to subdivision. The discount factors range from 30% for public, park and recreation land to 80% for residential and industrial land under freeways. A community service obligation (CSO) allowance between 30% - 60% is made to refl ect the difference between unrestricted freehold land and land under declared roads. The CSO refl ects the difference between the Highest and Best Use on an alternative basis and the value on the restricted basis.

Note 9: Works-in-progress Classifi cation by ‘Transportation and Communications’ Purpose Group

(a) Carrying amounts ($ thousand) 2013 2012 Works-in-progress: Works-in-progress - at cost 10,351 21,929 Net carrying amount of works in progress 10,351 21,929

(b) Movements in carrying amounts ($ thousand) Works-in-progress Works-in-progress Total (Peninsula Link) (WestLink) 2013 2012 2013 2012 2013 2012 Opening balance 11,578 11,578 10,351 10,351 21,929 21,929 Capital contribution ------Additions ------Transferred to infrastructure asset (11,578) - - - (11,578) - Closing balance - 11,578 10,351 10,351 10,351 21,929

Note 10: Property acquired for environmental net gain offset purposes ($ thousand) 2013 2012 Balance at beginning of fi nancial year 1,182 1,182 Additions - - Balance at end of fi nancial year 1,182 1,182

LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 47 Notes to the fi nancial statements for the fi nancial year ended 30 June 2013

Note 11: Payables ($ thousand) 2013 2012 Contractual - current Trade creditors 1,833 273 Accrued expenses 36,170 2,372 Total payables 38,003 2,645

LMA allows for 14 day terms on its payables. (a) Maturity analysis of payables Please refer to Note 19 for the ageing analysis of payables. (b) Nature and extent of risk arising from payables Please refer to Note 19 for the nature and extent of risk arising from payables.

Note 12: Interest bearing liabilities ($ thousand) 2013 2012 Current Secured: Finance lease liabilities motor vehicles 183 224 Finance lease liabilities Peninsula Link 29,343 - Total current interest bearing liabilities 29,526 224 Non-current Secured: Finance lease liabilities motor vehicles 76 219 Finance lease liabilities Peninsula Link 804,822 - Total non-current interest bearing liabilities 804,898 219 Total interest bearing liabilities (i) (Note 16) 834,423 443 (i) Secured by the assets leased.

(a) Maturity analysis of interest bearing liabilities Please refer to Note 19 for the ageing analysis of interest bearing liabilities. (b) Nature and extent of risk arising from interest bearing liabilities Please refer to Note 19 for the nature and extent of risk arising from interest bearing liabilities. (c) Defaults and breaches During the current and prior year, there were no defaults and breaches of any of the loans.

Note 13: Provision for compulsory land acquisition ($ thousand) 2013 2012 Balance at beginning of fi nancial year 1,524 16,398 Land acquisitions invoiced during the period (3,942) (13,526) Revision of estimate provision for compulsory land acquisitions 2,599 (1,348) Provision for compulsory land acquisition 181 1,524

48 LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 Notes to the fi nancial statements for the fi nancial year ended 30 June 2013

Note 13: Provision for compulsory land acquisition (continued) The provision for compulsory land acquisition represents the remaining ‘estimate’ of land costs to complete the acquisition of land required for the Peninsula Link project. By nature the estimate of this provision will continually be revised throughout the life of the project as new information becomes available and settlements occur. It is expected that this would generally be due to changes in the land requirements of the project and ongoing revisions in the fi nal settlement value of properties. The land acquisition provision is a source of estimation uncertainty based on management’s judgement. As such there is a risk of a material adjustment to the carrying amount of the land acquisition provision within the next fi nancial year. This also impacts on the fair value of property acquired for roads (Note 6).

Note 14: Other provisions ($ thousand) 2013 2012 Current provisions Employee benefi ts (i) – annual leave Unconditional and expected to be settled within 12 months (ii) 188 138 Unconditional and expected to be settled after 12 months (iii) 127 104

Employee benefi ts (i) – long service leave Unconditional and expected to be settled within 12 months (ii) 192 174 Unconditional and expected to be settled after 12 months (iii) 658 780 1,165 1,196 Provisions related to employee benefi t on-costs Unconditional and expected to be settled within 12 months (ii) 48 53 Unconditional and expected to be settled after 12 months (iii) 113 152 Termination benefi ts provision 168 - Performance incentive provision 280 238 609 443 Other provisions Make-good provision 203 21 203 21

Total current provisions 1,977 1,660

Non-current provisions Employee benefi ts 125 114 Employee benefi ts on-costs 19 17 Make-good provisions - 203 Total non-current provisions 144 334 Total provisions 2,121 1,994 Note: (i) Provisions for employee benefi ts consist of amounts for annual leave and long service leave accrued by employees, not including on-costs. (ii) The amounts disclosed are nominal amounts. (iii) The amounts disclosed are discounted to present values.

LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 49 Notes to the fi nancial statements for the fi nancial year ended 30 June 2013

Note 14: Other provisions (continued)

(a) Employee benefi ts and related on-costs ($ thousand) 2013 2012 Current employee benefi ts Annual leave entitlements 315 242 Long service leave entitlements 850 954

Non-current employee benefi ts Long service leave entitlements 125 114 Total employee benefi ts 1,290 1,310 Current on-costs 161 204 Non-current on-costs 19 17 Total on-costs 180 221 Total employee benefi ts and related on-costs 1,470 1,531

(b) Movement in provisions ($ thousand) Employee Performance Employee Make good Termination Total benefi ts incentive benefi ts on-costs benefi ts provision Opening balance 1,310 238 222 224 - 1,994 Additional provisions recognised/ reduction from payments (20) 42 (42) (21) 168 127 Closing balance 1,290 280 180 203 168 2,121

Current 1,165 280 161 203 168 1,977 Non-current 125 - 19 - - 144 1,290 280 180 203 168 2,121

Current employee benefi ts comprise all annual leave entitlements as well as long service leave entitlements representing seven or more years of continuous service. As explained in Note 1(k) the amount for long service leave is measured at its present value. The following assumptions were adopted in measuring present value:

2013 2012 Weighted average rates of increase in annual employee entitlements to settlement of the liabilities 3.40% 2.87% Weighted average terms to settlement of the liabilities 15 years 15 years

Employee numbers 2013 2012 The number of employees as at 30 June. 41 39

50 LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 Notes to the fi nancial statements for the fi nancial year ended 30 June 2013

Note 15: Superannuation ($ thousand) Contribution Contribution for the Year for the Year 2013 2012 Defi ned benefi ts plans: State Government Superannuation Scheme – revised and new 41 32 Defi ned contribution plans: Victorian Superannuation Fund – Vic Super Scheme 304 296 Private funds 103 67 Total 448 395

The basis for contributions is determined by the various schemes. The above amounts were measured as at 30 June of each year or, in the case of employer contributions, they relate to the period ended 30 June 2013. There are no contributions outstanding to the above funds at 30 June 2013.

Note 16: Leases

(a) Finance leases Finance leases relate to motor vehicles with lease terms of three years. LMA does not have an option to purchase the motor vehicles at the conclusion of the lease agreement. ($ thousand) Minimum future Present value of lease payments minimum future lease payments 2013 2012 2013 2012 Finance lease liabilities payable Not longer than 1 year 194 245 183 224 Longer than 1 year and not longer than 5 years 79 229 76 219 Minimum lease payments 273 474 259 443 Less: future fi nance charges (14) (31) - - Present value of minimum lease payments 259 443 259 443

Included in the Financial Statements as: Current interest bearing liabilities (Note 12) 183 224 Non-current interest bearing liabilities (Note 12) 76 219 259 443

LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 51 Notes to the fi nancial statements for the fi nancial year ended 30 June 2013

Note 16: Leases (continued)

(b) Finance leases – Peninsula Link project During the 2009-10 fi nancial year, Southern Way was awarded the contract to build and deliver the toll-free Peninsula Link project. The component of the contract relating to the design and construction of the road infrastructure is to be accounted for by LMA as a Finance Lease agreement in accordance with the current Government accounting policy for availability based Private Provision for Public Infrastructure (PPPI) projects in 2012-13. The component of the contract relating to the operation and maintenance of the road infrastructure is considered a service contract. The remaining component of the contract is a lifecycle commitment (this includes road resurfacing). Under the arrangement of the contract with Southern Way, the component of service payments to be paid by LMA relating to design and construction of the road infrastructure represents the minimum lease payments over the project term. These design and construction service payments as specifi ed in the project agreement were agreed at the inception of the lease agreement and are not subject to variations during the project term (i.e. Southern Way bears any construction risks). There is no contingent rent payable under the agreement. During the project term, Southern Way is required to operate the road infrastructure with the objective of making the road available for public use on behalf of the State. The Government retains the residual interest in the road infrastructure at the end of the project term and will take ownership of the road infrastructure at that time. Accordingly, the design and construction component of the contract with Southern Way is considered a Finance Lease agreement, whereby LMA is the lessee. There is no purchase option under the agreement. The contract was awarded to Southern Way on 20 January 2010 and fi nancial close was achieved on 8 February 2010. The construction and design of the project infrastructure was completed in January 2013 and thus this was the commencement date of the lease. A leased asset and liability of $844,812,000 was recognised on LMA’s balance sheet in January. Details of the contractual lease liability and leased asset has been included in Note 5 and Note 12 of the fi nancial statements respectively. The total contracted minimum future lease payments at 30 June 2013 are presented below together with the present value of the minimum future lease payments at 30 June 2013. The commitments in relation to the Peninsula Link Project at 30 June 2013 are as follows: ($ thousand) Minimum future lease payments 2013 2012 Finance lease payable as at 30 June 2013 Not longer than 1 year 123,412 38,487 Longer than 1 year but not longer than 5 years 439,190 460,163 Later than 5 years 1,676,800 1,796,639 Minimum future lease payments (nominal) 2,239,403 2,295,289 Less: future fi nance charges (1,405,238) (1,450,477) Present value of minimum lease payments 834,165 844,812

Present value of minimum lease payments as at 30 June 2013 (i) Not longer than 1 year 29,343 90,847 Longer than 1 year but no longer than 5 years 92,376 316,357 Later than 5 years 712,446 437,608 Present value of minimum lease payments 834,165 844,812

Included in the fi nancial statement as: Current interest bearing liabilities (note 12) 29,343 - Non-current interest bearing liabilities (note 12) 804,822 - 834,165 -

52 LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 Notes to the fi nancial statements for the fi nancial year ended 30 June 2013

Note 16: Leases (continued) (i) Key assumptions in calculating the net present value of the minimum lease payments include: The Finance Lease will run over a 25 year period with quarterly payments to Southern Way. The minimum lease payments relate to the design and construction component. The phasing of the minimum lease payments (in time brackets) are calculated from the reporting date (30 June 2013). The discount rate implicit in the Finance Lease is 11.43%.

(c) Operating leases Operating leases relate to offi ce facilities with lease terms of between two to three years with no option to extend. LMA does not have an option to purchase the leased assets at the expiry of the lease period. ($ thousand) 2013 2012 Non-cancellable operating leases payable: offi ce facilities Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as follows: Within 1 year 283 549 Later than 1 year but not later than 5 years - 94 283 643

(i) Maturity analysis of fi nance lease liabilities Please refer to Note 19 for the ageing analysis of fi nance lease liabilities. (ii) Nature and extent of risk arising from fi nance lease liabilities Please refer to Note 19 for the nature and extent of risks arising from fi nance lease liabilities.

Note 17: Commitments The main obligation of LMA under the Project Deed is the Quarterly Service Payments (QSPs) that it has to pay Southern Way in consideration for the delivery of the various components of the project. The total estimated QSPs over the life of the project comprise a Finance Lease component of $2,239.4 million (refer Note 16), a Lifecycle component of $90.3 million and an Operation & Maintenance component of $362.6 million (all fi gures are nominal and exclusive of GST). The following commitments have not been recognised as liabilities in the Financial Statements:

(a) Commissioned Service Concession (Public Private Partnership) related commitments ($ thousand) 2013 2012 Present Nominal Present Nominal value value value value Lifecycle expenditures of Peninsula Link – including road resurfacing. 23,472 (i) 90,265 18,963 (ii) 79,265

The Operation & Maintenance of Peninsula Link - service contract. 124,600 (i) 362,625 118,085 (ii) 367,961

(i) Present value as at 30 June 2013 (ii) Present value as at 30 June 2012

LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 53 Notes to the fi nancial statements for the fi nancial year ended 30 June 2013

Note 17: Commitments (continued)

(b) Commitments payable ($ thousand) 2013 2012 Lifecycle commitments (a) Not longer than 1 year - - Longer than 1 year but not longer than 5 years - - Longer than 5 years 99,292 87,190 Less GST recoverable from the Australian Tax Offi ce (9,027) (7,925) Total lifecycle expenditure commitments exclusive of GST 90,265 79,265 (a) Represents the Lifecycle commitment

($ thousand) 2013 2012 Present value of lifecycle commitments Not longer than 1 year - - Longer than 1 year but not longer than 5 years - - Longer than 5 years 25,819 20,859 Less GST recoverable from the Australian Tax Offi ce (2,347) (1,896) Present value of lifecycle commitments 23,472 18,963

($ thousand) 2013 2012 Other commitments in relation to the Peninsula Link Project (b) Not longer than 1 year 9,773 4,674 Longer than 1 year but not longer than 5 years 38,658 38,218 Longer than 5 years 350,456 361,865 Less GST recoverable from the Australian Tax Offi ce (36,262) (36,796) Total other commitments inclusive of GST 362,625 367,961 (b) Represents Operating and Maintenance commitment

($ thousand) 2013 2012 Present value of other commitments in relation to the Peninsula Link Project Not longer than 1 year 8,991 4,300 Longer than 1 year but not longer than 5 years 28,873 28,598 Longer than 5 years 99,196 96,996 Less GST recoverable from the Australian Tax Offi ce (12,460) (11,809) Present value of capital commitments 124,600 118,085

Also refer to lease commitments disclosed in Note 16.

54 LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 Notes to the fi nancial statements for the fi nancial year ended 30 June 2013

Note 18: Contingent assets and contingent liabilities

Project Deed As disclosed in the Annual Report, the State has entered into a Project Deed with Southern Way for private sector delivery of the design, construction, fi nance, operation and maintenance of Peninsula Link under the Partnerships Victoria framework. The Project Deed is a public document and can be obtained on the internet at www.linkingmelbourne.vic.gov.au. The Project Deed creates certain rights and obligations for the State. The most signifi cant right is the right to receive the completed project in the future.

Contingent assets Project bonds The project documents provide for a bond to protect the State’s interest in its arrangements with Southern Way. The bond is a handover bond which Southern Way may provide as security for the performance of any maintenance and repair work to achieve handover of Peninsula Link to the State (as an alternative to depositing funds in an escrow account). This option does not arise until three years before the expected expiry of the operations and maintenance term. ConnectEast As part of the approval to the EastLink State Initiated Modifi cation to the Frankston Bridges, it was agreed that ConnectEast would refund 12.5% overheads ($717,000) within 12 months of completion of Peninsula Link. Peninsula Link opened to motorists in January 2013. Revegetation Project LMA is revegetating a former orchard in the Pines Flora and Fauna Reserve as part of its Peninsula Link environmental obligations. The works are being undertaken by Felix Botanica Pty Ltd. Under the contractual agreement, the contractor is required to provide security for 5% of the contract sum. The security is made up of one $16,418 bank guarantee and the other 2.5% is retained from each contract payment at a rate of 5% until a further $16,418 is withheld. 50% of the security will be released when Practical Completion is achieved, with the fi nal 50% released at Final Completion.

Contingent liabilities Peninsula Link The State has retained some specifi ed risks associated with the project. Certain events such as compensable relief events and force majeure events, as well as some changes in law, enable Southern Way to submit a change notice to the State. If Southern Way’s obligations are suspended because of a compensable relief event, or if a change in law has an effect on the cost of performing the operating and maintenance activities, then subject to a number of conditions, Southern Way may be entitled to be paid an amount calculated in accordance with the change compensation principles. No such claims have been established to date. Southern Way is required to minimise the duration and consequences of relief events and to insure against certain such events. Claim Southern Way has settled a design and construction claim with the design and construction contractor and has advised LMA that it does not intend to further pursue this claim against the State. However, Southern Way has not formally released the State from this claim, so it will remain dormant until the limitation of the action date expires (January 2028).

LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 55 Notes to the fi nancial statements for the fi nancial year ended 30 June 2013

Note 19: Financial instruments

(a) Financial risk management objectives and policies LMA’s principal fi nancial instruments comprise: • cash assets; • receivables (excluding statutory receivables); • payables (excluding statutory payables); and • fi nance lease liabilities payables. Details of the signifi cant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised with respect to each class of fi nancial asset, fi nancial liability and equity instrument are disclosed in Note 1 to the Financial Statements. The main purpose in holding fi nancial instruments is to prudentially manage LMA’s fi nancial risks within the Government’s policy parameters.

(b) Categorisation of fi nancial instruments ($ thousand) Contractual fi nancial assets Note Category Carrying amount 2013 2012 Cash and deposits 3 Contractual fi nancial assets - receivables 3,523 2,399

Receivables (i) 4 Contractual fi nancial assets - receivables 580 361

Total contractual fi nancial assets 4,103 2,760 Contractual fi nancial liabilities

Payables (ii) 11 Contractual fi nancial liabilities 38,003 2,645 measured at amortised cost Finance Lease liabilities 12, 16 Contractual fi nancial liabilities 834,424 443 measured at amortised cost Total contractual fi nancial liabilities 872,427 3,088

Notes: (i) The amount of receivables disclosed here excludes statutory receivables which are the amounts receivable from the Department of Transport, Planning and Local Infrastructure and the ATO. (ii) The amount of payables disclosed here excludes statutory payments which are the amounts payable to the ATO and that arise as a result of the statutory requirements of the Land Acquisition and Compensation Act 1986.

Net holding gain/(loss) on fi nancial Note instruments by category Lease liability at amortised cost 2 Total interest income/(expense) 44,098 28

Total contractual fi nancial liabilities 44,098 28

(c) Credit risk Credit risk arises from the fi nancial assets of LMA, which comprise cash and cash equivalents, trade and other receivables. Credit risk arises when there is the possibility of LMA’s debtors defaulting on their contractual obligations, resulting in fi nancial loss to LMA. LMA measures credit risk on a fair value basis and monitors risk on a regular basis.

56 LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 Notes to the fi nancial statements for the fi nancial year ended 30 June 2013

Note 19: Financial instruments (continued) Credit risk associated with LMA’s fi nancial assets is minimal because the main debtor is the Department of Transport, Planning and Local Infrastructure. In addition, the majority of LMA’s receivables relate to statutory obligations rather than contractual obligations. ($ thousand) Financial institutions Others Total AA credit rating 2013 Cash and deposits 3,523 - 3,523 Receivables (i) - 580 580 Total contractual fi nancial assets 3,523 580 4,103

2012 Cash and deposits 2,399 - 2,399 Receivables - 361 361 Total contractual fi nancial assets 2,399 361 2,760

Notes: (i) The amount of receivables disclosed here excludes statutory receivables which are the amounts receivable from the Department of Transport, Planning and Local Infrastructure and the ATO.

Financial assets that are either past due or impaired Currently, LMA does not hold any collateral as security or any credit enhancements relating to any of its fi nancial assets. Refer to Note 4, Receivables, for further information. As at the reporting date, there is no event to indicate that any of the fi nancial assets are impaired. There are no fi nancial assets that have had their terms renegotiated so as to prevent them from being past due or impaired and they are stated at the carrying amounts as indicated. The following table discloses the ageing only of fi nancial assets that are past due but not impaired:

Interest rate exposure and ageing analysis of fi nancial assets table ($ thousand) Weighted Carrying Interest Not past Past due but not impaired Impaired average amount rate due Financial effective exposure and not Less 1 – 3 3 months 1 -5 assets interest impaired than 1 months – 1 year years rate % month

2013 Financial assets Cash and deposits 3.14% 3,523 3,523 3,523 - - - - - Receivables (i) - 580 580 172 - - 408 - - 4,103 4,103 4,103 - - 408 - - 2012 Financial assets Cash and deposits 4.31% 2,399 2,399 2,399 - - - - - Receivables (i) - 361 361 361 - - - - - 2,760 2,760 2,760 - - - - -

Note: (i) Ageing analysis of receivables excludes statutory receivables (i.e. amounts owing from The Department of Transport, Planning and Local Infrastructure and GST input tax credit recoverable).

LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 57 Notes to the fi nancial statements for the fi nancial year ended 30 June 2013

Note 19: Financial instruments (continued)

(d) Liquidity risk Liquidity risk arises when LMA is unable to meet its fi nancial obligations as they fall due. LMA settles fi nancial obligations within 14 days. LMA’s maximum exposure to liquidity risk is the carrying amounts of fi nancial liabilities as disclosed on the Balance Sheet. It continuously manages risk through monitoring future cash fl ows and maturities planning to ensure adequate holding of high quality liquid assets. LMA’s exposure to liquidity risk is deemed insignifi cant based on data from prior periods and current assessment of risk. The following table discloses the contractual maturity analysis for LMA’s fi nancial liabilities. Maturity analysis of contractual fi nancial liabilities ($ thousand) Carrying Nominal Maturity dates amount amount Less than 1 1 – 3 3 months – 1 -5 years 5+ years month months 1 year 2013 Financial liabilities Other Payables (i): 38,003 38,003 38,003 Finance Lease Liabilities 834,165 2,239,403 10,284 20,569 92,559 439,190 1,676,801 Peninsula Link Finance Lease Liabilities 259 273 32 18 144 79 - Motor Vehicles 872,427 2,277,679 48,319 20,587 92,703 439,269 1,676,801 2012 Financial liabilities Other Payables (i): 2,645 2,645 2,645 - - - - Finance Lease Liabilities 443 474 20 41 184 229 - 3,088 3,119 2,655 41 184 229 -

Note: The amounts disclosed are the contractual undiscounted cash fl ows for each class of fi nancial liabilities. (i) Maturity analysis of payables excludes statutory payables (i.e. amounts payable as a result of the statutory requirements of the Land Acquisition and Compensation Act 1986 and GST input tax payment).

(e) Market risk LMA’s exposure to market risk is primarily through interest rate risk. Objectives, policies and processes used to manage each of these risks are disclosed in the paragraphs below.

Interest rate risk Fair value interest rate risk is the risk that the fair value of a fi nancial instrument will fl uctuate because of changes in market interest rates. LMA does not hold any interest-bearing fi nancial instruments that are measured at fair value and therefore has no exposure to fair value interest rate risk. Cash fl ow interest rate risk is the risk that the future cash fl ows of a fi nancial instrument will fl uctuate because of changes in market interest rates. LMA has minimal exposure to cash fl ow interest rate risks through its cash and deposits that are at fl oating rate. LMA has fi xed interest rates for its fi nance leases; thus, the impact of a movement in interest rates will have a minimal impact on LMA.

58 LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 Notes to the fi nancial statements for the fi nancial year ended 30 June 2013

Note 19: Financial instruments (continued)

Sensitivity disclosure analysis Taking into account past performance, future expectations, economic forecasts and management’s knowledge and experience of the fi nancial markets, LMA believes that interest rate and CPI movements, either way, will have a minimal impact on its fi nancial instruments. The movement considered is a parallel shift of +1% and -1% on both interest rates issued by the Reserve Bank and CPI movements as reported by the Bureau of Statistics. There is no interest rate risk on the Peninsula Link Finance Lease Liability as the interest rate is fi xed. The impact on net operating result and equity for each category of fi nancial instruments held by LMA at year-end as presented to key management personnel, if the above movements were to occur, is immaterial for the 2012 and 2013 fi nancial years. ($ thousand) Weighted Interest rate exposure average interest Carrying Fixed Variable Non-interest rate % amount interest rate interest rate bearing

2013 Financial liabilities Other payables (i): 38,003 - 38,003 Finance lease liabilities Peninsula Link 11.43% 834,165 834,165 - - Motor vehicles 6.52% 259 259 - - 872,427 834,424 - 38,003 2012 Financial liabilities Other payables (i): 2,645 - - 2,645 Finance lease liabilities Peninsula Link - - - - Motor vehicles 6.37% 443 443 - - 3,088 443 - 2,645

(i) The carrying amount excludes statutory payables (i.e. amounts payable as a result of the statutory requirements of the Land Acquisition and Compensation Act 1986 and GST input tax payment).

LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 59 Notes to the fi nancial statements for the fi nancial year ended 30 June 2013

Note 19: Financial instruments (continued)

(f) Fair value LMA considers that the carrying amount of fi nancial instrument assets and liabilities recorded in the Financial Statements to be a fair approximation of their fair values, because of the short-term nature of the fi nancial instruments and the expectation that they will be paid in full. The following table shows the fair value and net fair value of cash and deposits and non-interest bearing monetary fi nancial assets and fi nancial liabilities of LMA, approximating their carrying amounts. ($ thousand) Carrying amount Net fair value 2013 2012 2013 2012 On-balance sheet fi nancial instruments Financial assets Cash 3,523 2,399 3,523 2,399 Receivables (i) 580 361 580 361 4,103 2,760 4,103 2,760 Financial liabilities Payables (ii) 38,003 2,645 38,003 2,645 Finance lease liabilities Peninsula Link(iii) 834,165 - 834,165 - Motor vehicles 259 443 259 443 872,427 3,088 872,427 3,088

Notes: (i) The amount of receivables disclosed here excludes statutory receivables which are the amounts receivable from the Department of Transport, Planning and Local Infrastructure and the ATO. (ii) The amount of payables disclosed here excludes statutory payments which are the amounts payable to the ATO and that arise as a result of the statutory requirements of the Land Acquisition and Compensation Act 1986. (iii) The Peninsula Link Finance Lease Liability is not based on discounted cash fl ow analysis using unobservable market inputs but is determined based on construction cost which includes direct construction cost of the operator, professional advisory fees, borrowing costs during the period of construction and profi t margin on funding of the construction. All of these have standard terms and conditions and are traded in active liquid markets (prices determined with reference to quoted market prices). Therefore, reconciliation of Level 3 fair value movements is not applicable.

60 LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 Notes to the fi nancial statements for the fi nancial year ended 30 June 2013

Note 20: Reconciliation of comprehensive result to net cash fl ows from operating activities ($ thousand) 2013 2012 Comprehensive result (19,642) (3,238) Non-cash movements Depreciation and amortisation of non-current assets 7,080 303 Asset given free of charge 3,247 - Asset received free of charge (1,353) - Gain/loss on property revaluation (Note 6, 7, 8, 13) 16,562 1,480

Movements in assets and liabilities (Increase)/decrease in debtors and receivables (29,734) (1,740) Increase/(decrease) in employee provisions 127 (396) (Decrease)/increase in creditors and accruals 35,358 1,389 (Increase)/decrease in other operating assets (23) 51 Net cash from operating activities 11,622 (2,151)

Note 21: Movements in equity ($ thousand) 2013 2012 (a) Contributed capital Balance at beginning of fi nancial year 124,864 126,212 Net assets transferred to VicRoads (7,341) - Capital contributions during the year by Victorian State Government Peninsula Link land freehold land acquisition 2,899 (1,348) Total capital contributions 2,899 (1,348) Balance at end of the fi nancial year 120,421 124,864 (b) Accumulated surplus/(defi cit) Balance at beginning of fi nancial year (9,918) (6,680) Net result (19,642) (3,238) Balance at end of fi nancial year (29,559) (9,918)

LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 61 Notes to the fi nancial statements for the fi nancial year ended 30 June 2013

Note 22: Responsible persons Remuneration received for Responsible Persons in the 2013 year. In accordance with the Ministerial Directions issued by the Minister for Finance under the Financial Management Act 1994, the following disclosures are made regarding Responsible Persons for the reporting period.

Names The persons who held the positions of Responsible Persons in LMA are as follows:

Responsible Minister Minister for Roads The Hon Terry Mulder, MP 1 July 2012 to 30 June 2013

Accountable Offi cer Chief Executive Offi cer Ken Mathers 1 July 2012 to 30 June 2013

Board Members Chairman, LMA Board Ken Scott-Mackenzie 23 April 2013 to 30 June 2013 Member, LMA Board Tony Darvall 1 July 2012 to 30 June 2013 Member, LMA Board Gary Liddle 1 July 2012 to 30 June 2013 Member, LMA Board Claire Filson 1 July 2012 to 30 June 2013 Member, LMA Board Yvonne von Hartel 21 August 2012 to 30 June 2013 Member, LMA Board Robert Cameron 21 August 2012 to 30 June 2013 Tony Darvall was acting chairman from 1 July 2012 to 22 April 2013.

Remuneration Remuneration received or receivable by the Accountable Offi cer in connection with the management of LMA during the year was in the range $440,000 - $449,999 ($450,000 - $459,999 in 2011-12). Remuneration received or receivable by other Responsible Persons in connection with LMA during the year was in the range: Income Band 2013 2012 $80,000 - $89,999 1 1 $60,000 - $69,999 - 1 $50,000 - $59,999 1 $40,000 - $49,999 1 1 $30,000 - $39,999 2 $10,000 - $19,999 1 $0 - $9,999 1 1 Total numbers 6 5 Total amount $212,543 $252,359

As outlined in the terms of conditions of their appointment to LMA, Directors are entitled to receive $2,300 per committee per annum for service on major Board committees. This was back paid in the 2012 fi nancial year. Amounts relating to Ministers are reported in the Financial Statements of the Department of Premier and Cabinet.

Other transactions Other related transactions and loans requiring disclosure under the Directions of the Minister for Finance for Responsible Persons have been considered and there are no matters to report.

62 LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 Notes to the fi nancial statements for the fi nancial year ended 30 June 2013

Note 23: Remuneration of executives The number of executive offi cers, other than the Minister and the Accountable Offi cer, and their total remuneration during the reporting period is shown in the fi rst column in the table below in their relevant income bands. The base remuneration of executive offi cers is shown in the second column. Base remuneration includes superannuation but is exclusive of bonus payments, long service leave payments, redundancy payments and retirement benefi ts. Total remuneration represents the actual remuneration paid or payable.

Income Band Total Remuneration Base Remuneration 2013 2012 2013 2012 No. No. No. No. $320,000 – $329,999 1 1 $310,000 – $319,999 1 $280,000 – $289,999 1 1 $270,000 – $279,999 1 $250,000 – $259,999 1 $240,000 – $249,999 1 $220,000 – $229,999 1 $210,000 – $219,999 1 1 $190,000 – $199,999 2 1 1 $180,000 – $189,999 1 $170,000 – $179,999 2 $160,000 – $169,999 1 1 2 $150,000 – $159,999 1 $140,000 – $149,999 1 $130,000 – $139,999 1 1 1 1 $120,000 – $129,999 1 $100,000 – $109,999 1 $0 – $99,999 4 1 4 1 Total numbers 12 8 12 8 Total annualised employee equivalent 9.0 6.9 9.0 6.9 Total amount $2,011,916 $1,419,943 $1,784,781 $1,249,164

Note 24: Remuneration of auditors Amounts received, or due and receivable, by the Victorian Auditor General’s Offi ce for the audit of LMA’s Financial Statements: ($ thousand) 2013 2012 Victorian Auditor-General’s Offi ce Audit of the Financial Statements 64 62

LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 63 Notes to the fi nancial statements for the fi nancial year ended 30 June 2013

Note 25: Subsequent events East West Link In July 2013, LMA issued letters to the community informing property owners or occupiers that their property is likely to be required for the construction of the East West Link. The letter noted that the design is not yet fi nalised and may be amended following consultation with the community, relevant regulatory authorities and ultimately potential builders of the project. The letter was not a formal notice of property acquisition. The planning process needs to be completed, which is expected to occur in early to mid-2014. Only after the planning process is completed will LMA be in a position to advise if and when and which properties will be compulsorily acquired. At that stage, formal notices of property acquisition will be issued. Given these uncertainties, at this point in time LMA is not in a position to quantify what the fi nancial effect would be.

Note 26: State initiated modifi cations and other works LMA has managed works on land adjacent to Peninsula Link that are being constructed by private contractors. LMA receives an amount from the Department of Transport, Planning and Local Infrastructure (DTPLI) and engages these contractors to undertake these works. The amount received from DTPLI is shown as income and the amount paid to the Concessionaire and other contractors is shown as expenditure. LMA used retained earnings to partially fund some of the other works. At completion of these works, the relevant State Authority will be advised to take up the fair value of these works in its accounts.

64 LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 Notes to the fi nancial statements for the fi nancial year ended 30 June 2013

LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 65 Notes to the fi nancial statements for the fi nancial year ended 30 June 2013

Ministerial Standing Direction 4.5.5.1 Insurance Attestation

66 LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 Notes to the fi nancial statements for the fi nancial year ended 30 June 2013

LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 67 Notes to the fi nancial statements for the fi nancial year ended 30 June 2013

68 LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 Notes to the fi nancial statements for the fi nancial year ended 30 June 2013

LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 69 Statutory Information

Freedom of Information Publications LMA is subject to the provisions and Publications and statements produced requirements of the Freedom of Information by LMA are principally located within Act 1982 (FOI Act). Amendments to electronic domains and can be found at the FOI Act in November 2012 saw the www.linkingmelbourne.vic.gov.au. introduction of the FOI Commissioner. Further information on the Act and the role of the FOI Commissioner can be found at: Functions www.foicommissioner.vic.gov.au Section 138 of the Transport Integration Act LMA received 15 new requests under the 2010 prescribes the functions of Linking Act from 1 July 2012 to 30 June 2013. Two Melbourne Authority as follows: decisions made during the 12 months were (a) to facilitate, on behalf of the State, the referred to the Commissioner for review. scoping, development, construction, No decisions progressed to appeal at the delivery and operation of any Road Victorian Civil and Administrative Tribunal Transport-Related Project; (VCAT). (b) to seek and evaluate submissions from Access to documents (as defi ned in section persons interested in undertaking any 5 of the Act) may be obtained only through Road Transport-Related Project; written request as detailed in section 17 of the (c) to negotiate with persons interested in Freedom of Information Act 1982. Requests undertaking any Road Transport-Related should be addressed to: Project; (d) to make recommendations in relation Freedom of Information Offi cer to contractual arrangements between Linking Melbourne Authority Melbourne the State and any other person for the Authority Building 1, Level 1 development, delivery or operation of 540 Springvale Road any Road Transport-Related Project; Glen Waverley VIC 3150 Telephone: (03) 8562 6800 (e) to administer and manage agreements Email: [email protected] and arrangements between the State and any other person for, or relating to, the development, delivery or operation of Whistleblowers Protection any Road Transport-Related Project; (f) to facilitate and co-ordinate consultations Act 2001 with public entities and other bodies or LMA is subject to the provisions and persons involved in, or affected by, the requirements of the Whistleblowers Protection development, delivery or operation of Act 2001. During the reporting year, no staff of any Road Transport-Related Project; the Authority sought to disclose information (g) to negotiate and enter into arrangements in accordance with the Act. with public entities and other bodies or persons involved in, or affected by, the development, delivery or operation of Protected Disclosures any Road Transport-Related Project; Act 2012 (h) to make recommendations to the Minister in relation to facilitating any LMA is subject to the provisions and Road Transport- Related Project and requirements of the Protected Disclosure Act co ordinating with public entities and 2012 and has established procedures for other bodies or persons involved in, or protecting persons against whom detrimental affected by, the development, delivery or action might be taken in reprisal for the operation of the Road Transport-Related making of protected disclosures. During the Project; reporting year, no disclosures were made.

70 LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 (i) to ensure that agreements and Compliance with the arrangements between the State and any other person for, or relating to, the Building Act 1993 development, delivery or operation of LMA does not own or control any any Road Transport-Related Project government buildings. are performed in accordance with their terms; (j) to enter into contractual arrangements National competition policy with any other person for the provision of any infrastructure or services in Under the National Competition Policy, the connection with or relating to the guiding principle is that legislation, including development, delivery or operation of future legislative proposals, should not any Road Transport-Related Project; and restrict competition, unless it can be shown (k) to perform any other functions or duties that the benefi ts of the restriction to the conferred on the Linking Melbourne community as a whole outweigh the costs Authority by any other Act or any and that the objectives of the legislation can regulations under any other Act. only be achieved by restricting competition. LMA complied with the requirements of the National Competition Policy. Pecuniary interest Declarations of pecuniary interest were Disclosure of major executed by all Board members, senior offi cers and other relevant employees of the contracts Authority. LMA has not entered into any new major contracts (defi ned in FRD 12A as being in excess of $10 million) during the reporting Victorian Industry period. Participation Policy The Victorian Industry Participation Policy Availability of other Act 2003 requires LMA to report on the implementation of the Victorian Industry information Participation Policy (VIPP). The Directions of the Minister for Finance, pursuant to the Financial Management Act During 2012-13, LMA commenced one 1994, require a range of information to be contract to which the VIPP applied. The total prepared in relation to the fi nancial year. value was $5,900,000. This material is itemised below and, where Data on the overall level of local content is not published in this report, is retained by not available, as this contract resulted from the Accountable Offi cer and can be made a tender that was released in the transition available to Ministers, Members of Parliament period leading to the operation of the revised and the public on request, subject to the VIPP. limitations of the Freedom of Information Act 1982: There were no contracts completed in • a statement that declarations of pecuniary this period to which the Victorian Industry interest have been completed by all Participation Policy Act 2003 applied. relevant offi cers; • LMA is again compliant with the whole- of-Government’s Ministerial Standing Directions regarding fi nancial management; and • LMA complies with all Victorian Government occupational health and safety requirements.

LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 71 LMA Consultancy Disclosures 2012-13 Financial Year $,000 (excl GST)

Consultant Purpose of Consultancy Start End Total Expend- Future Date Date Approved iture expendi- project fee 2012-13 ture AGA Joint Venture Professional services associated 17-Nov-09 30-Jun-13 5,820 4 - with planning the East West Link Western Section Aecom Engineering advice on 01-Sep-13 30-Jun-13 159 159 - East West Link Aquenta Consulting East West Link review 08-Nov-12 29-Mar-13 313 313 - Pty Ltd Clayton Utz Legal advice 01-Jan-11 01-Jan-15 2,979 2,979 - Ecocentric Environmental advice for the 01-Aug-12 30-Apr-13 45 45 - Environmental Peninsula Link Project Consulting Dr M.G. Lay Engineering advice on 27-Jul-12 30-Jun-13 38 38 - East West Link Manidis Roberts East West Link sustainability 28-Aug-12 13-Dec-12 37 37 - Pty Ltd framework Halber Pty Ltd Engineering advice on 20-Aug-12 30-Apr-13 45 45 - East West Link JHDL- JV Engineering advice on 07-Feb-12 31-Jan-13 1,081 182 - East West Link Macdonald Project Engineering advice on 20-Aug-12 10-May-13 34 34 - Consulting Pty Ltd East West Link Parsons Brinckerhoff Planning and engineering advice 09-Aug-12 14-Mar-13 34 34 - Australia Pty Ltd on East West Link PricewaterhouseCoopers Commercial and fi nancial advice 01-Oct-10 30-Sep-14 4,094 4,094 - SGS Economics and Demographic impacts of 03-Jan-13 01-Feb-13 28 28 - Planning Pty Ltd East West Link Sinclair Knight Merz Advice on East West Link 16-Nov-12 19-Apr-13 48 48 - The Boston Consulting Strategic advisory services 08-Apr-13 30-Jun-13 818 818 - Group Pty Ltd Veitch Lister Traffi c modelling advice for 01-Jan-13 30-Jun-14 450 326 124 Consulting Pty Ltd the East West Link Lovell Chen Advice on cultural heritage 18-Oct-12 18-Aug-13 53 26 15 aspects Roger Olds Consulting Engineering advice on 04-Oct-12 30-Jun-13 44 44 - Pty Ltd East West Link GHD Technical advice on LMA projects 03-May-13 03-May-15 5,979 1,358 4,621 Ken Ogden and Engineering advice on 23-Jul-12 21-Aug-12 14 14 - Associates Pty Ltd East West Link

Consultancies under $10,000 In 2012-13, LMA engaged seven consultants where the total fees payable to the consultants were less than $10,000, with a total expenditure of $34,000 (exl GST).

72 LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 Disclosure Index The Annual Report of the Linking Melbourne Authority is prepared in accordance with all relevant Victorian legislation. This index has been prepared to facilitate identifi cation of the Authority’s compliance with statutory disclosure requirements.

Ministerial Directions Report of Operations – Financial Reporting Direction (FRD) Guidance*

Legislation Requirement Page

Charter and Purpose FRD 22D Manner of establishment and the relevant Ministers ...... 6, 9 FRD 22D Objectives, functions, powers and duties ...... 6, 9, 70 FRD 22D Nature and range of services provided ...... 6

Management and Structure FRD 22D Organisational structure ...... 9

Financial and other information FRD 10 Disclosure index ...... 73 FRD 12A Disclosure of major contracts ...... 71 FRD 22D Operational and budgetary against objectives ...... 6 FRD 22D Employment and conduct principles ...... 23 FRD 22D Occupational health and safety policy ...... 71 FRD 22D Summary of fi nancial results for the year ...... 26 FRD 22D Major changes or factors affecting performance ...... - FRD 22D Subsequent events ...... 64 FRD 22D Application and operation of Freedom of Information Act 1982 ...... 70 FRD 22D Compliance with building and maintenance provisions of Building Act 1993 ...... 71 FRD 22D Statement on National Competition Policy ...... 71 FRD 22D Application of Whistleblowers Protection Act 2001 ...... 70 FRD 22D Details of consultancies over $10,000 ...... 72 FRD 22D Details of consultancies under $10,000 ...... 72 FRD 22D Statement of availability of other information ...... 71 FRD 25A Victorian Industry participation Policy disclosures ...... 71 FRD 29 Workforce data disclosures ...... 50 SD 4.5.5 Risk management compliance attestation ...... 67 SD 4.5.5.1 Ministerial Standing Direction 4.5.5.1 compliance attestation ...... 66 SD 4.2(g) Specifi c information requirements ...... 4-24 SD 4.2(j) Sign off requirements ...... 65

LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 73 Financial statement required under Part 7 of the FMA SD 4.2(a) Statement of changes in equity ...... 28 SD 4.2(b) Operating statement ...... 26 SD 4.2(b) Balance Sheet ...... 27 SD 4.2(b) Cash fl ow statement ...... 29

Other requirements under Standing Directions 4.2 SD 4.2(c) Compliance with Australian accounting standards and other authoritative pronouncements ...... 39-41 SD 4.2(c) Compliance with Ministerial Directions ...... 31 SD 4.2(d) Rounding of amounts ...... 32 SD4.2 (c) Accountable offi cer’s declaration ...... 65

Other disclosures as required by FRDs in notes to the fi nancial statements FRD 21B Disclosure of responsible persons, executive offi cers and other personnel (contractors with signifi cant management responsibilities) in the Financial Report ...... 62-63 FRD 102 Inventories ...... - FRD 103D Non-current physical assets ...... 45-47 FRD 106 Impairment of assets...... - FRD 109 Intangible assets ...... - FRD 110 Cash fl ow statements ...... 29 FRD 112C Defi ned benefi t superannuation obligations ...... 51 FRD 114A Financial Instruments – General government entities and public non-fi nancial corporations ...... 56-60 FRD 119 Contributions by owners ...... 28

Legislation Freedom of Information Act 1982 Building Act 1983 Whistleblowers Protection Act 2001 Victorian Industry Participation Policy Act 2003 Financial Management Act 199

74 LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 LINKING MELBOURNE AUTHORITY ANNUAL REPORT 2012-13 75