VICTORIA

Report

of the

METROPOLITAN TRANSIT AUTHORITY

for the

Year ended 30 June 1987

Ordered by the Legislative Assembly to be printed

MELBOURNE F D ATKINSON GOVERNMENT PRINTER 1987

No.69

ANNUAL REPORT 1987 Reference page 25

GOVERNMENT The Metropolitan Transit Authority receives funding from the Consolidated Fund to subsidise operations. FUNDING FOR Funding arrangements were changed during 1986/87 as a OPERATIONS result of the Government's decision to assume responsibility for the Authority's debt liability in line with its strategy to manage all inner budget sector debt centrally. In 1985/86 funding for finance charges was provided through Recurrent appropriations which were included as Government Deficit Subsidies in the Profit and Loss Statement and through Works and Services appropriations which were reflected in the Balance Sheet. In 1986/87 funding for all finance charges was provided from Treasurer's Appropriation Program 726 and is included in the 1986/87 Profit and Loss Statement. The following table shows the effect of policy changes on Government funding provided in 1985/86. 1985/86 1986/87 Profit and Adjusted for Profit and Loss Comparison Loss Statement Statement $M $M $M Subsidies for Operations 332.8 271.3 271.4 Funding for Finance Charges 136.3 142.5 TOTAL $332.8M $407.6M $413.9M ANNUAL REPORT 1987 Presented to both Houses ofthe Parliament ofVictoria pursuant to the Annual Reporting Act 1983. CONTENTS Letter to Minister 4

The Board 5

Organisation 6

Principal Offices of the Authority and Registered Offices of Subsidiary Corporations 7

The Charter, Goals and Objectives 8

Chairman's Remarks 9

Managing Director's Review 10

Highlights of the Year 15

A Year of Service 15

Performance Indicators 18

Our Passengers 19

The Met's Staff 21

Statutory Information 22

Financial Statements: Metropolitan Transit Authority 26 Melbourne Transit Consulting Services Pty. Ltd. 48 - MTA Investments Pty. Ltd. 53

3 METROPOLITAN TRANSIT AUTHORITY 30 September 1987

616 Little Collins Street, Melbourne, Victoria, 3000.

The Hon. Tom Raper MP Minister for Transport Parliament House Melbourne

Dear Minister

In accordance with Section 9 of the Annual Reporting Act 1983, I am pleased to present the report of the operations of the Metropolitan Transit Authority for the year ended 30 June, 1987 together with the audited financial statements for that year.

Russel lngersoll Chairman

4 RUSSEL INGERSOLL - Chairman THE BOARD

KEVIN P. SHEA - Managing Director

GEOFFREY A. CARKEEK - Director, Co-ordination and Service Development

JENNIFER M. ACTON

JOHN C. USHER

SYBILLE K. KALBITZER

HELEN M. DAVISON

ANTHONY J. TUOHEY - Elected Employee Representative

NORMAN W. MADDOCK - Elected Employee Representative

5 ORGANISATION

CHAIRMAN R. lngersoll --- GENERAL MANAGER INDUSTRIAL RELATIONS B.Shaw --- MANAGER MANAGrNG DIRECTOR EXECUTIVE SERVICES K. P. Shea P. Maley

DEPUTY MANAGING DIRECTOR DEPUTY MANAGING DIRECTOR (RESOURCES) (OPERATIONS) 0'1 N. Walker A. Scott

I I I I I I I I I I I I DIRECTOR DIRECTOR DIRECTOR DIRECTOR DIRECTOR DIRECTOR DIRECTOR DIRECTOR DIRECTOR DIRECTOR DIRECTOR DIRE\TOR CAPITAL DIRECTOR DIRECTOR JOLJMONT CO-ORIJIN. ENGINEER. ENGINEER. FINANCE & HUMAN MANAGEMENI PROJECT RAIL TRAM BliS WORKS MARKETING PLANNING DENCENTRA. & SERVICE MAINT.& SERI!If:ES ADMINISTR. RESOURCES IN FORMAT. MANAGEMENT OPERATION; OPERATIONS OPERATION CO-ORDIN. M. Douglas E. Dotson PROJECT OEVElOP. CONSTRUCT. & DF.VFLOP. J. Compton C. West (Vacant) (Vacant) D. Watson G. Anderson R. Nathan tVacanO P. Kelly G. Carkeek G. Brover G. Swift

1 I GROUP SOLICITOR MANAGER MANAGER TO THE TRANSIT INTERNAL AUTHORITY POLICE AUDIT W.Rowe R.Davis E. Reesel 23rd Septernber,l987 HEAD OFFICE: PRINCIPAL 616 Little Coli ins Street, Melbourne, Vie. 3000. OFFICES Telephone: (03) 618 3333 OF THE Telex: AA33392 AUTHORITY Fax:(03) 62 6463

OFFICE OF MANAGING DIRECTOR: 60 Market Street, Melbourne, Vie. 3000. Telephone: (03) 619 8888 Fax: (03) 62 5023

TRAM & BUS ADMINISTRATION: 616 Little Collins Street, Melbourne, Vie. 3000. Telephone: (03) 618 3333 Telex: AA33392 Fax: (03) 62 6463

RAIL ADMINISTRATION: 50 Market Street, Melbourne, Vie. 3000. Telephone: (03) 619 8888 Fax: (03) 619 8538 MELBOURNE TRANSIT CONSULTING SERVICES REGISTERED PTY. LTD. 616 Little Collins Street, OFFICES OF Melbourne, Vie. 3000. SUBSIDIARY Telephone: (03) 618 3333 CORPORATIONS Telex: AA33392 Fax: (03) 62 6463

MTA INVESTMENTS PTY. LTD. (Trustee ofMTA Superannuation Fund) 616 Little Collins Street, Melbourne, Vie. 3000. Telephone: (03) 618 3333 Telex: AA33392 Fax: (03) 62 6463

LEIGHTON-MTA CONSORTIUM STT 518 Area 19 Lung Mun Road TuenMunNT Hong Kong Telephone: 0-839666 Telex: LMTA 50135 Fax: 0-813771

7 THE CHARTER To provide, manage and operate an integrated, efficient, effective, reliable and safe public transport network in Melbourne by means of regular scheduled services, within policy and financial guidelines set by Government and having regard to the interests of employees and the broad community.

GOALS AND OBJECTIVES • To develop a market-oriented approach supplying quality, integrated services where they will best satisfy travel needs. • To ensure that a specified level of service is provided with maximum cost efficiency. • To improve patronage and the economic viability of services by effective management of assets and realistic fare structures. • To develop new modes of transport to meet changing conditions. • To ensure passenger and staff safety in all areas. • To provide a satisfYing work environment with rewarding and developing employment opportunities. • To maintain levels and quality of staff appropriate to the services supplied. • To exercise responsibility to the community through consultation with Government and S(~nsitivity to community values.

8 During the past 12 months, the Metropolitan Transit CHAIRMAN'S Authority has continued to improve the service it provides to Melbourne people and the manner in which it provides those REMARKS services. Major works have been carried out on the tram and train networks, with considerable expansion of the bus network also undertaken. Work on Melbourne's North-South Transit link commenced and is progressing well. In the year ahead, The Met must persist with its endeavour to provide greater service. It must also ensure that as an organisation it continues to monitor its own effectiveness and search for more ways to improve efficiency. In the current economic climate, the public rightly expects the greatest possible return for its transport dollar. To this end, The Met has instigated a major program to explore all avenues throughout the organisation where improvements can be made. Improvements in efficiency with which The Met can deliver its services can only encourage more people to use public transport, enhancing the future of The Met and its employees.

Russel lngersoll

9 MANAGING Melbourne's public transport system is becoming a show­ place for the development of efficient transport systems overseas. DIRECTOR'S The Authority continued during the year with a series REVIEW of initiatives which pave the way for an exciting future. During the year, the final stage of the Bundoora tram extension was completed and opened by the Premier on 23 April 1987, providing an arterial service to the major growth corridor around Plenty Road. The third rail track between Caulfield and Moorabbin is now completed providing reduced travel time for 30,000 commuters each working day. In February, the Government announced an $8 million program to increase bus services in outer metropolitan areas where needs had become significant. These new services are being gradually phased in and will be operational by Christmas 1987. Vehicle acquisition programs continue. Some 79 of95 'Comeng' airconditioned train sets were delivered by June 1987. Old blue 'Harris' carriages are being progressively scrapped as these new modern trains are acquired. The program to acquire 70 'A' Class rigid trams has been completed. These replaced old trams. In May, the Minister announced the letting of a contract to Comeng to construct 130 airconditioned light rail vehicles at a rate of 20 per year. The light rail vehicles will be used on more heavily patronised routes providing improved travelling comfort. The first 20 vehicles however, will provide services on the new North-South Light Rail System. This project will replace St. Kilda and Port Melbourne rail line services with a light rail system operating through Bourke Street in the city and along the East Brunswick tram route. In May, a contract was signed with M.A.N. Automotive (Australia) Pty. Ltd. for the construction oflOO airconditioned buses for The Met's bus fleet. These will be delivered over the next three years, replacing older vehicles in the fleet and providing additional services to meet demand. The Authority continues to improve on-time running and service delivery targets. In particular, a number of major 'catch­ up' programs to improve the quality of the infrastructure continue. The electrical overhead rehabilitation program will continue untill988/89. During 1986/87, major track upgrading works were also undertaken. Major improvements in train reliability will occur with the decentralisation of maintenance facilities from Jolimont. The Jolimont workshops were built over 60 years ago, are poorly located and have difficulty coping with the highly sophisticated techniques needed for the maintenance of today's modern train fleet.

10 The decentralisation project will also release up to 49 hectares of valuable land on the edge of the central business district. During the year, work began on the first of the decentralised depots at Epping. Due for completion in 1989, the new depot will greatly improve service reliability, efficiency and passenger comfort on the Epping and Hurstbridge lines. An Environmental Effects Statement for the proposed Nunawading depot was prepared. It indicated that with the exception of a decibel exceedance on some occasions, the depot would meet all environmental requirements. To improve security at railway stations, the program to double station lighting continued during 1986/87. A program to fit all suburban trains with vehicle radios will commence next year after investigation and trials. In addition to the security benefits of this scheme, operational control will be enhanced, particularly when interruptions to schedules occur. Passenger, staff and property security was greatly enhanced by the re-organisation of railway security staff in conjunction with the establishment of a new Victoria Police 'Transit' District. Victoria Police and the newly created Victorian Transit patrol are now working closely providing regular patrols and a visible police presence. During 1986/87, The Met completed research into the benefits which advanced computer simulation techniques provide in optimising bus route structure. A demonstration project in the Moorabbin neighbourhood produced a restructuring proposal which would improve service levels while reducing costs by 5%. The project also showed that through restructuring, an improved network of evening and weekend services could be provided with no increase in cost. As part of an on-going review of Melbourne's private bus services, the MTA implemented revised services following neighbourhood reviews in the Greensborough, Frankston, and Werribee areas. Consequently, some services were redeployed, and new services introduced at little cost to the Authority. During the year, 12 articulated buses were introduced into the private bus fleet. Deployment of the vehicles has enabled The Met to resolve a number of loading problems in outer suburban areas, particularly in peak periods. A program of bus service improvements in outer metropolitan and developing areas is presently being introduced. This year the State Government provided $8 million dollars for a bus service expansion program. This program is seeing major service improvements across metropolitan areas, particularly in growing residential areas where little or no public transport previously operated. All new services are due to be operating before the end of 1987.

11 The expansion program represents the most widespread change to bus services since private bus subsidies were introduced in 1973. The implementation of the 150 bus replacement program from late in 1985 through to June 1987 has achieved a significant improvement in the age of the private bus fleet. The average age of buses has dropped from 10 years to 8. However, there are still a number of buses in the outer suburbs which are excessively aged, an issue the Authority is continuing to address. The backbone of The Met is its staff- the people who make transport move in Melbourne. They possess a myriad of skills and each of them is an important cog in the successful running of the system. The Met's diverse employment structure is complemented by its commitment to apprentice training. This year, some 200 apprentices covering many different trades are being trained. The continued updating of skills is seen as the way to make transport competitive and an important part of the strategy of making the system second to none. During the year, a major campaign was specifically targeted at patronage on the off-peak services. The slogan "Get The Met To Get Around" highlighted places and activities throughout Melbourne which are easily accessible by public transport. Although patronage has been increasing steadily, this program remains important because off·peak services are still under-utilised. One of the most outstanding successes of The Met in the past year was undoubtedly the co-ordination of public transport for the Papal tour. More than 130,000 people attended the Ecumenical Service at the Melbourne Cricket Ground on Thursday, November 17, 1986 and a children's Mass on the same day attracted 75,000 school children who had to be moved to the ground in a two-hour period. On the Friday, the Papal Mass at Flemington and the Polish Mass at the MCG also attracted enormous crowds. The problems of moving such a large group of people was exacerbated by the fact that the Flemington service concluded in peak travel time. This made The Met's task of finding the necessary number of vehicles daunting. Added to the challenge was the timing of the Papal tour. The Met was just recovering from the strain on its resources of providing transport for the Show and the football finals matches. Security was a high priority and special patrols of important areas were made. The maintenance and operations personnel closely monitored the system and quickly rectified any trouble spots that occurred.

12 This unique event was an enormous challenge to The Met, which moved well over 100,000 people quickly, efficiently and safely. The meticulous planning, scheduling, and magnificent teamwork of the staff made the 1986 Papal tour a great success for the City of Melbourne and a triumph for The Met.

Financial Performance The Met's operating result for the year, after accounting for Victorian Government grants of$413 million (last year- $332 million), is a loss of$48 million (last year- $140 million). The details are:

This Last Year Year $m $m

Fares & contributions to concessions 197 176 Other revenue (including Rail Loop levies) 38 37 235 213

Operating expenses 578 546 Financing costs 105 170 683 716

Operating loss 448 503 Abnormal items (13) 31 Victorian Government grants 413 332

-··~- Net loss 48 140 ------

The above figures depict the results of The Met's activities in Melbourne. No profit or loss has been recorded in respect of the Hong Kong project. Following the enactment of the Transport (Amendment) Act, all borrowing of the Authority, except its leasing liabilities were transferred to the Victorian Public Authorities Finance Agency ("Vie Fin") on 12 January 1987. It is expected leasing liabilities will be transferred in 1987/88.

13 Vie Fin has now assumed responsibility for the cost of financing these borrowings. During the year, the Government provided the Authority with specific grants to meet its financing costs relating to the borrowings prior to the transfer, and for the leases. Once again, The Met balanced its cash budget by carefully managing its cash resources and controlling cash flows. Operating costs, excluding abnormal items, increased by 5.8% to $578 million, reflecting tight control exercised throughout the year. Fare revenue rose by 11.9% as a result of increases in both patronage and fares. Revenue from other sources including rent, interest, and advertising, has remained virtually constant over the last two years. During the year, The Met's expenditure on Operating Assets was $205 million, $97 million being for passenger vehicles. In addition, trains with a depreciated value of$12 million were taken over by The Met from the State Transport Authority. The Met's interest in the Hong Kong joint venture is included in the balance sheet. Neither partner is required to provide funds to the venture as it is self-funding.

K.P. Shea

14 • 16 modern Comeng trains costing $83 million were introduced HIGHLIGHTS to replace the Harris trains currently being phased out of operation. OF THE • Construction of the North South Light Rail System YEAR commenced. • The last of the 25 new 'A' Class trams valued at $19 million were introduced into the system. The private bus fleet has been enhanced by the expenditure of $20 million on 150 new buses. • Station redevelopment proceeded with works completed on the Highett, Glenhuntly and Hawthorn stations. • The Met's Neighbourhood Bus Reviews continued throughout the year with the Broadmeadows study completed and the Dandenong area assessment under way. • The Bundoora tram extension project was completed and has improved access to LaTrobe University and the Phillip Institute of Technology. • Work continued on the redevelopment ofFlinders Street Railway Station and the Banana Alley Vaults. • Preston Workshops are being redeveloped to cater for the acceptance, repair and maintenance of the new light rail vehicles. • Disabled passenger needs were catered for in the planning stages of the Flinders Street Railway Station redevelopment and a special hotline was set up to help disabled commuters travel on The Met with confidence. • Work was well under way on the first of the new stabling and maintenance depots at Epping to replace Jolimont Rail Yards. • Over two million Americans saw Melbourne's trams in a special NBC television telecast in February. • Work is continuing on the overhead power system for trains and trams and the upgrading of substations to cope with the increased demands for power. • The program to upgrade railway tracks progressed smoothly and when finished is expected to greatly enhance commuter comfort and the efficiency of the service. • The Papal tour - a great success for The Met. • Establishment of the Victoria Transit Police District for increased passenger security and safety.

The Met is meeting the challenge ofkeeping 400,000 A YEAR people a day on the move. In this last year, the combined tram, train and bus OF SERVICE network has clocked up 150 million vehicle kilometres, and serviced an area of more than 6,000 square kilometres. Each day, The Met puts nearly 1,900 vehicles into service. These cover a network of more than 300 train, tram and bus routes, providing a two-minute service on the busiest in peak hour.

15 Elsewhere, the smaller, outer communities were not forgotten, basic services designed to meet these needs provided transport for the outer suburban and rural areas. Initially, The Met was formed to integrate the three modes of transport into one safe, effective service. More importantly, the services had to be made responsive to the needs of the communities in which they operated. This meant moves to increase patronage, to offer routes and timetables which operate etllciently and to achieve a realistic cost recovery rate. To achieve this long range planning, investment is needed. All vehicles in The Met fleet are being gradually converted to The Met's green and gold livery as part of the regular maintenance program. By 30 June 1987, 78 three-carriage Hitachi train sets had been converted to the new livery. All Comeng units running are now in the new colours. This year saw the completion ofthe largest extension to the tram network for many years, 18.6 km to Bundoora. A new shuttle service along William Street and Kingsway from the new passenger interchange at St. Kilda and Domain Roads was also completed. The Met's sophisticated Automatic Vehicle Monitoring (AVM) System is a computer-based control system that automatically determines the location and status of every vehicle in real time. Currently, 200 trams and almost the entire fleet of 315 Government buses are being tracked in this way. When fully operational, the system can monitor up to 2,000 vehicles and trips over 450 bus and tram routes. The system allows the Authority to initiate immediate action to keep vehicles on schedule and thereby to enhance efficiency of operation. It provides a quick response to emergency calls relating to crew and passenger security. The system provides statistics and other data to assist in analysing delays and trouble areas, thus enabling planning for the future development of route services.

METROPOLITAN TRANSIT AUTHORITY SERVICE PROVISION 1986/87 RAIL TRAM GOVT. BUS PRIVATE BUS Kilometres Operated (m.km.) 13.6 24 16 40.6 Route Kilometres 336 332 380 N/A Routes Operated 17 42 52 235 Vehicles in Service 162.5 627 323 966

16 Monitoring train movement calls for equally advanced computer technology, and The Met's Metrol System, commissioned in 1983, was further developed during the last year. A total control system (TDAR) has been implemented. This new integrated system allows controllers to concentrate on problem areas, like late running, as trains running on time are handled automatically. Comeng delivered 16lots of six modern car sets, making a total of79 now running in the fleet. In a program to upgrade the signalling system throughout the rail network, automatic signalling has been introduced on lines which had minimal signalling, or where a third track has been introduced. This increased the number of trains per hour which can be timetabled. Nine more locations have been converted to boom barriers to improve safety for road, rail and pedestrian traffic. In keeping with The Met's commitment to commuter safety, additional pedestrian gates have been installed. An integrated telephone system was installed to replace the existing telephone exchange. This provided improved voice plus data network for rail, tram and bus divisions. Station reconstruction work progressed well with Hawthorn, Glenhuntly and Highett stations completed. These works are securing passenger approval and lifting staff morale. The upgrading of rail, road and foot bridges continued with another four bridges being reconstructed and major works being completed on two more foot bridges. Bus services were expanded with the introduction of eight new articulated buses, used mainly on the Eastern Freeway to serve the residential areas of Don caster. The bus expansion program included new services and some expanded off peak services in Doncaster. Private bus operators supply over 70% of The Met's bus services. Negotiations for improved services and scheduling between The Met and private bus operators have led to significant improvements in bus services, particularly in Melbourne's outer suburbs. It has also been possible to improve integrated services between private bus operators and rail services. The property group, in line with normal commercial practice, is seeking to obtain full market return on its real estate through the periodic review of land held under lease. Where land is not declared surplus and is not immediately required for operational purposes, short term leasing is pursued. The sales budget of around $15 million was achieved in 1986/87. The Property and Services Group co-ordinated development projects at Broadmeadows, Glen Waverley and Frankston. The group successfully completed the contract fit-out of office accommodation for the MT A at 50 and 60 Market Street.

17 A commercial vending contract on Authority property was negotiated together with the successful reletting of an eight­ year contract for advertising on Authority vehicles which should return to the Authority at least $19 million.

PERFORMANCE Throughout the year, the performance of The Met is checked against a number of criteria to ensure that The Met INDICATORS continues to provide an integrated and effective public transport network.

TARGETS ACTUAL

A. PATRONAGE AND FARE REVENUE Patronage (millions) 288.7 291.0(a) Fare Revenue ($m) 174.8 176.0 Fare Revenue per Passenger (cents) 60.5 60.5

B. SERVICE RELIABILITY Suburban Trains within 5 minutes of schedule • All Day (%) 93 92 • A.M. Peak (%) 86 Service Cancellations for: • Suburban Trains -All Day (%trips) 2.8 Peak Periods (%trips) 3.8 •Trams - Peak Periods (%trips) 2.0 3.0 • MTA Buses - Peak Periods (%trips) 2.0 2.2 • Trams and Buses -All Day (%trips) 2.2

C. FINANCIAL PERFORMANCE (b) Operating Expenditure ($m) 490.1 493.7 Operating Revenue ($m) 209.2 211.6(c) ($m) 282.1 Operating Deficit 280.9 -··--

Capital Expenditure ($m) 226.2 219.2

Cost Recovery Ratio (%) -Long Term 50 This Year 43 43

18 D. PERSONNEL Staffing Levels (June 30th) • Corporate 384 473(d) • Tram and Government Bus 4866 4840(e) • Rail 7252 7073 • Total 12502 12386 Man Hours Lost Due to Injuries (per million worked hours) 34374 Man Hours Lost Due to Industrial Disputes 1221

(a) Preliminary only- to be revised following new trip rate survey. (b) Presented on a cash appropriation basis. (c) Excludes $7.0 million from profit on land sales (used to source Capital Expenditure). (d) Includes Personnel Staff transferred to Human Resources Division (105). (e) Excludes equivalent manpower for days off cancelled (140).

After decades of falling patronage on public transport in OUR Melbourne, The Met has achieved its fourth consecutive year of passenger growth since its inception in 1983. During this period, PASSENGERS the number of passengers carried has risen by 14 per cent. This dramatic improvement is in response to the modernisation of public transport which has brought it up to a standard of which Victoria can be proud. The opening of the Loop, the many new trains, trams and buses and The Met flue system have made travel easier and cheaper for everyone. Passengers are getting the message that The Met is looking after their interests. More than one million journeys are made by them each day and the figure is growing. To ensure that this trend continues, The Met is striving to make travel safe, more comfortable and as competitively priced as possible. Suburban electric trains are now operated by The Met between Pakenham and Warragul on behalfofV/Line. Safety has always been number one priority of The Met. During the year, a number of projects were undertaken to protect passengers. This is not just while travelling. The introduction ofthe special warning signs on trams carrying the message "Prepare To Stop" was initiated to save lives on Melbourne's streets .. .in particular, those alighting from a tram. The aim of the $70,000 campaign is to make motorists aware that they must treat a stationary tram like a pedestrian crossing. Security on older trams was improved with The Met spending $140,000 on portable two-way radio equipment.

19 The new radios give the drivers of older trams direct communication in an emergency with The Met's Fleet Operations Centre, which in turn, has direct links with the police. Most Government buses and many of the newer trams are already connected to the Automatic Vehicle Monitoring System. The rail system security was not neglected. A new communications system vital to improved efficiency and passenger and staff safety moved closer to completion. The $1.136 million contract to supply and set up 17 base stations, a central control monitor and fit radios to two test trains is on target with testing of the new radio network in progress. The wiring of the trains with a public address system, an intercom and radio will be a big breakthrough for the efficient running of the service, and comfort to those using the system late at night. As work will not be flnished untill989, The Met has taken an interim measure of providing two-way radios on all late night metropolitan train services. The supply of radios to drivers and guards on all trains operating after 8.00 pm is for the protection of staff and passengers. Action was taken during the year to protect the property of those who cycle to and from the station, from the increasing incidence of theft and vandalism. The Met upgraded bicycle security provisions at 23 stations; initiated a program to install post and chain locking devices at another 19 metropolitan stations; and also gave cyclists permission to lock their bicycles to fences on platforms at another 20 stations for a trial period of three months starting this June. The comfort of those commuters who rely on the buses has not been neglected. The introduction of the articulated buses on many suburban routes is giving Melburnians the latest in high technology transport. The reviews of the Neighbourhood Bus Services are continuing and have resulted in the improvements to buses in the Greensborough and Frankston areas. The Broadmeadows and Werribee areas have also been examined and improvements are ready to be implemented. The new rail timetables on the Lilydale line have been particularly successful. Commuters in the peak period now have a seven to eight minute service instead of the previous 15 to 20 minute service. The needs of special passengers, particularly the disabled, were continually being addressed. New and redeveloped stations are taking the needs of this group into account at the planning stages. Special ramps to help those in wheelchairs are available when booked in advance. A special disabled service hotline is working well and enables intending passengers to find out what

20 facilities are available to them at their point of departure and destination. This rail inquiry and wheelchair assistance number is available 24 hours a day.

The past year has seen some significant developments THE MET'S in The Met's organisation which will enhance the efficiency and STAFF effectiveness of the utilisation of our most important asset- our human resources. A key initiative has been the commencement of the process of integration of staff from the Rail organisation with staff of the Tram and Bus and Corporate areas. The first step in this process, has been the consolidation of the Personnel function through the integration of the former MetRail Personnel Group activities with the former Corporate and Tram and Bus Division Personnel function. A Human Resources Division has been established as a single integrated Personnel activity comprising a composite staff from both Tramway and Railway backgrounds to support the total operations of The Met. In recognition of the need to achieve an integrated Personnel function, investigations were commenced regarding the introduction of computerised systems. An integrated Human Resource Management System has been developed together with a number of minor Personnel systems to assist with work requirements. The Human Resource Management System, which will become fully operational in the near future, will provide an opportunity to rationalise further the functions performed within the Human Resources Division and provide the opportunity for line management to have readily available information concerning their staff. Apart from the formation of an integrated Personnel function, the Industrial Relations activity has been removed as a responsibility of the Human Resources Division and has been centralised under the control of the General Manager, Industrial Relations who has responsibility for both V/Line and The Met. Within the Human Resources Division, the provision of Occupational Health and Safety Services has been expanded as part of The Met's continuing priority in this important field to improve on-the-job safety and staff awareness of health and safety issues. Rehabilitation and health monitoring programs have been developed and are being implemented across all areas of the Authority. Further development has taken place in the provision of the Employee Assistance Service to assist with problems which might cause upset or hardship or contribute to lower work performance. The "Healthful Hints" and "What is EAS?'' brochures advise of the assistance service and are available from the Employee Assistance Counsellor.

21 In the area of training and development ofstatf, as well as ongoing operational and technical training activities, particular emphasis is being placed on the expansion of training activities in the key areas of management development and supervision training. The Supervisors' Training Course, available for all foremen and potential supervisors, has been expanded to include tradesmen. The Station Officers' Course is continuing to fill a vital need. The course helps officers cope with changing conditions in the rail network and it emphasises good management, communications and marketing of services to customers. Station upgrading has greatly improved the work environment at stations including Highett, Glenhuntly and Hawthorn. Pride in the workplace is also being seen in the keen competition for top prize in the garden beautification work. Long-serving staff are valued at The Met, and this year has seen many gain recognition at special presentations, for their service to the industry for 25 years or more.

STATUTORY Overseas Travel In accordance with the guidelines set down in the INFORMATION Department of Premier and Cabinet Circular for official overseas travel by State Government employees and other persons, approval was obtained for Officers of the Authority to undertake trips associated with the following matters: • continuing technical advice in relation to the development of a light rail transit system in Hong Kong; • quarterly meetings in Hong Kong of the Leighton- MTA Consortium and Executive Review Meetings with Kowloon­ Canton Railway Corporation; • attendance at a course conducted by the Railway Industry Association of Great Britain regarding railway track and maintenance thereof; • study of assembly and ongoing maintenance of Du wag articulated tram trucks prior to the introduction of the light rail articulated vehicles into the metropolitan network during the latter part of the financial year; • a visit to Germany to study technological changes which have occurred in the manufacture of the latest buses which are being purchased for the Authority, and to become acquainted with the maintenance techniques used; • a study tour to examine train running operating procedures, train crew rostering, centralised train control functions, location of maintenance/servicing depots and working of trains to and from locations, passenger/staff security measures, ticketing­ revenue protection and on-train radio;

22 • representation at the 47th International Congress of the International Union of Public Transport (U.I.T.P.). This Authority is a member of the Union and attendance at the Congress keeps the Authority up to date with current trends with the majority of the major public transport operators in the world.

Acts of Parliament, Regulations and Judicial Decisions No Acts of Parliament were passed during the year for which the Authority is responsible for administering. The following Acts passed during the year will have some effect on the Authority's operations: 1. Lands Acquisition and Compensation Act 1986: This Act is intended to replace the Lands Compensation Act 1958 and that part of the Valuation ofLand Act 1961 which deals with compulsory acquisition of land, and it makes consequential amendments to the Transport Act 1983. The major objects of the Act are to establish uniform practices to be adopted by acquiring Authorities and to reform, consolidate and codify the law relating to compensation for acquisition of interests in land. The Act introduced major changes to current procedures and seeks to encourage a co-operative relationship between the Government and land owner. The Act had not been proclaimed as at 30 June, 1987. 2. Retail Tenancies Act 1986: This Act, which is expected to come into operation in September 1987, will regulate the letting of retail premises having a floor area of less than 1,000 square metres. It has been designed primarily to protect small business lessees by imposing a number of new obligations on lessors, including requirements for disclosure statements by lessors and five year security of tenure for first lessees and controls for rent fixing, review and dispute resolution. 3. Transfer of Land (Conversion) Act 1986: The object of this Act is to simplify the procedure for converting old law land (conveyed by deed) to land which may be transferred under the Transfer of Land Act 1958. The conversion scheme encompassed in the legislation is an "administrative" scheme and not a "legal" scheme and is based on the certification by a solicitor holding a current practising certificate in the State of Victoria that an owner ofland has acquired "a good safe holding and marketable title to the land". The Act significantly reduces the time cost involved in conversion applications. It is anticipated that all old law land will be converted under the Act within ten years of its commencement. The Act had not been proclaimed as at 30 June, 1987.

23 4. Planning and Environment Act 1987: This Act, which is expected to be proclaimed on 1 September, 1987, revises and updates the Town and Country Planning Act 1961. It introduces a concept of planning and development application approvals with an integration of procedures designed to deal with all aspects of planning and land controls at the one time rather than by different bodies operating under different legislative procedures as at present. 5. Transport Accident Act 1986 : This Act came into operation on 1 January, 1987, and applies to all transport accidents which occur after that date. Under the Act, the Transport Accident Commission will administer a scheme of compensation for persons injured in transport accidents. A "transport accident" is defined as "an incident caused by or arising out of the use of a motor car, a railway train or a tram". It is anticipated there will be disputes as to what constitutes a transport accident. Because the compensation scheme is a no fault scheme, a broader liability will apply to persons injured on the Authority's vehicles. Accidents occurring prior to 1 January, 1987, will continue to be governed by the relevant provisions of the Motor Car Act and the common law and will allow an action to be brought based on the negligence of other persons. No regulations administered by the Authority were made, amended or revoked during the year. The Authority is not aware of any significant judicial decisions given during the year which affect the Authority.

Declaration of Pecuniary Interests All Board Members and Officers of the Authority required to complete a Declaration of Pecuniary Interests did so for the year 1986/87. Freedom of Information The Authority received 96 requests for information under the Freedom oflnformation Act during the year: Access Granted 26 Access Denied 11 Partial Access 20 Transferred 8 No Documents 9 Time Lapsed 4 Dealt with outside the Act 1 Still being processed at 30 June, 1987 17 96

24 Four of the "Access Denied" requests resulted in Internal Reviews. Sixteen requests received during the previous year have been reactivated and are currently being processed. None of the Internal Reviews resulted in appeals to the Administrative Appeals Tribunal. Major Committees Established By The Authority Committees established within the Authority continue to function and report on various aspects associated with the Authority's operations.

25 FINANCIAL Statutory Certificate STATEMENTS We certify that the financial statements of the Authority have been prepared in accordance with Section 11 of the Annual Reporting Act 1983 and the Annual Reporting (Business Undertakings) Regulations 1984 (as amended), and that in our opinion, the financial statements present fairly the financial transactions of the Authority during the year ended 30 June 1987, and the financial position ofthe Authority as at 30 June 1987. We are not aware of any circumstances which would render any particulars included in the statements to be misleading or inaccurate. This statement is made in accordance with a resolution of the Members.

Russel lngersoll Chairman

K.P. Shea Managing Director

J.G. Compton Director- Finance and Administration

Melbourne 30 September 1987

26 Auditor-General's Report The accompanying financial statements comprising balance sheet, profit and loss statement, statement of sources and applications offunds and notes to the financial statements of the Metropolitan Transit Authority have been audited as required by the Annual Reporting Act 1983 and in accordance with Australian Auditing Standards. The Annual Reporting Act 1983 requires the capital component of government contributions to the Authority to be shown as contributed capital in the balance sheet and the recurrent component of such contributions to be shown in the profit and loss statement. During the year the Authority received government contributions for works and services expenditure, appropriated from the Public Account, amounting to $219.2 million of which $201.6 million was deemed by the Authority to be contributed capital and the balance, $17.6 million, was deemed to be for operating purposes. The Authority made this allocation according to how the funds were applied during the year. As the Appropriation (1986-87, No.l) Act did not specify the amounts provided for capital and operating purposes, I am unable to form an opinion whether the government contribution has been disclosed in the financial statements in accordance with the intention at the time the appropriation was made. In my opinion, subject to the effect, if any, of the matter referred to above, the financial statements comply, in all material respects, with the requirements of the Annual Reporting Act 1983 and present fairly the state of the affairs of the Metropolitan Transit Authority as at 30 June 1987 and its financial transactions during the year ended on that date in accordance with Australian Accounting Standards.

Melbourne R.G. Humphry 30 September 1987 Auditor-General

27 PROFIT AND LOSS STATEMENT For the year ended 30 June 1987

Note 1987 1986

Revenue 4 234,982 212,867 Operating Expenses 4 577,702 545,847

Operating Loss before Abnormal Items (342,720) (332,980) Abnormal Items 4 (13,598) 31,200

Operating Loss before Subsidies and Finance Charges (356,318) (301,780) Deficit Subsidies provided by the Victorian Government 5 271,405 332,787

Profiti(Loss) before Finance Charges. (84,913) 31,007 Finance Charges 4 105,571 170,851

Less Government Subsidies for Finance Charges (142,466) 36,895 170,851

NET LOSS FOR THE YEAR (48,018) (139,844)

PriorYears' Adjustment 3h 1,121

Accumulated Loss Brought Forward (450,639) (310,795)

Accumulated Loss at 30 June 1987 (497,536) (450,639)

The Profit and Loss Statement is to be read in conjunction with the explanatory notes.

28 BALANCE SHEET As at 30 June 1987 Note 1987 1986 $'000 $'000 Current Assets Cash on hand and at bank 10 19 Short Term deposits 6 13,266 8,598 Stock 7 10,374 3,598 Debtors and Prepayments 21,139 44,789 21,786

Investments 8 10,705 10,874 Non-Current Assets Fixed Assets 9 1,492,986 1,311,456 Leased Assets 10 174,300 180,249 Deferred Assets 11 9,576 31,418 1,676,862 1,523,12~ TOTAL ASSETS 1,732,356 1,555,783 Current Liabilities Bank Overdraft 3,547 469 Construction Works In Progress 12 3,475 2,292 Creditors, Accruals and Provisions 13 94,638 88,248 Employee Benefits 14 14,466 12,530 Borrowings 15 98,283 Advance by Victorian Government 16 14 Finance Lease Liabilities 17 11,246 8,815 127,372 210,651 Non-Current Liabilities Accruals and Provisions 13 77,581 63,579 Employee Benefits 14 20,048 19,967 Borrowings 15 1,010,823 Advances by Victorian Government 16 1,869 Finance Lease Liabilities 17 162,781 171,781 Inter-Authority Account - State Transport Authority 18 141,826 90,217 Deferred Revenue 19 415,837 ],~75,506 Capital and Reserves Contributed Capital 20 1,552,239 266,243 Vested Capital 21 226,117 245,709 Reserves 22 (91,673) (91,687) Accumulated Loss (497,536) 1450,639) 1,1891147 (30,374) TOTAL EQUITY AND LIABILITIES 1,732,356 1,555,783

The Balance Sheet is to be read in conjunction with the explanatory notes.

29 STATEMENT OF SOURCES AND APPLICATIONS OF FUNDS For the year ended 30 June 1987

1987 1986 $'000 $'000

Sources of Funds Funds from Operations: Inflow ofFunds - Operating Revenue 234,982 208,504 - Government Subsidies _i!?&Z! 648,853 332,787 541,291 Less Outflow of Funds 599,245 618,540 49,608 (77,249) Contributed Capital - Victorian Government 194,336 14,684

Contributed from Non-Government Sources. 20 Proceeds from Disposal of Fixed Assets 7,678 22,676

Increase in: Non-current Liabilities 56,335 285,476 Advances by STA 8,527 2,354

Reduction in: Investment in and Advances to Subsidiaries 169 (348) 316,673 247,593

Applications of Funds Refinancing of Maturing Borrowings 77,454 78,216 Increase in: Current Assets 7,767 16,453 Fixed Assets 205,339 191,661 Leased Assets 2,715 5,020 Deferred Assets 2,391 429 Reduction in: Bank Overdraft 225 (469) Current Liabilities 20,782 (43,717) 316,673 247l593

30 STATEMENT OF SOURCES AND APPLICATIONS OF FUNDS For the year ended 30 June 1987

1987 1986 $'000

Reconciliation of funds from Qperations/ (utilised in operati()ns1 with net loss for the

Net Loss for the year (48,018) (139,850) Less Profit on sale of Fixed Assets 6,461 ______M~J (54,479) (147,313) Add Back non-cash items Depreciation and amortisation 43,182 45,046 Increases in provisions 13,532 19,717 Non-cash charges by ST A 44,363 (1,001) Deferred costs and revenue 3,010 6,302 Net Inflow/(Outflow) of Funds 49,608 (77,249)

The Statement of Sources and Applications of Funds is to be read in conjunction with the explanatory notes.

31 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

1. Form and Content of the Financial Statements The financial statements of the Authority have been prepared in accordance with the requirements of the Annual Reporting Act 1983 (as amended) and the Annual Reporting (Business Undertakings) Regulations 1984 (as amended). All amounts shown in the statements and these notes, unless otherwise indicated, have been expressed by reference to the nearer one thousand dollars. The presentation of the following items in the financial statements have been changed during the year, and accordingly the corresponding items for 1986 are presented in the same manner:- Transfer from Reserves, previously shown as a separate item in the Profit and Loss Statement, has now been included in Revenue. Construction Works in Progress, previously shown gross of progress payments received and receivable, are now shown net. (Refer Note 12) MTA Superannuation Fund, previously reported as Employee Benefits, has now been included in Creditors, Accruals and Provisions. 2. Transfer of Indebtedness Under the provisions of the Transport (Amendment) Act 1986, the indebtedness of the Authority comprising public and private borrowings and advances by the Victorian Government was extinguished on 12 January 1987. The equivalent value of the indebtedness is now recorded as contributed capital of the Victorian Government. 3. Accounting Policies The accounting policies adopted by the Authority are, except where stated, in accordance with the Annual Reporting (Business Undertakings) Regulations 1984 and Australian accounting standards and are consistent with those of the previous year. (a) Historical Cost Accounting The financial statements have been prepared on the basis of historical costs. (b) Wholly-Owned Subsidiary Companies The financial statements reflect the Authority's investment in and advances to its two wholly-owned subsidiary companies - Melbourne Transit Consulting Services Pty. Ltd. and MTA Investments Pty. Ltd. (Refer Note 8). The Treasurer has granted an exemption under the Annual Reporting Act 1983 (as amended) from the requirement to consolidate the financial statements of these companies. The Balance Sheets are reported in Note 24.

32 (c) Leighton-MTA Hong Kong Joint Venture The Authority's 50% interest in the Leighton-MTA Consortium is recognised by including in the financial statements the Authority's share of the assets and liabilities of the joint venture. No profit has been recognised to date. (d) Revenue All items of revenue are brought to account in the year in which they are earned. Fare revenue is reported according to the point of sale. (e) Stock Stores are valued at cost. Cost in respect of work in progress includes a proportion of fixed and variable overheads. Appropriate provision has been made for obsolete stock. (f) Fixed Assets Melbourne The policy of capitalising financing costs on funds expended on major capital items which have a construction period in excess of 12 months, lapsed during the year when the Authority's borrowings and the cost of servicing same, were transferred to VicFin. (g) Depreciation of Fixed Assets (1) Melbourne Assets are depreciated on the straight-line method at rates based on the estimated useful life of each asset. (2) Hong Kong Assets are depreciated on the straight-line method over the remaining life of the Light Rail project. (h) Sale and Lease-Back of Assets In previous years, certain passenger vehicles were sold and leased back at a profit/loss, such profit/loss being initially recorded as deferred revenue/expense. The deferred revenue/expense has previously been brought to account over the life of the assets in accordance with regulation 65 (7). However, this year, the Treasurer has granted an exemption under the Annual Reporting Act 1983 (as amended) from the requirement to comply with the above-mentioned regulation, and the deferred revenue/ expense has now been brought to account over the term of the leases concerned. The effect of this change has been to bring to account a net adjustment in respect of prior years ($1.121 million) and to increase this year's revenue by $1.017 million and costs by $147,000. (i) Leased Assets As lease agreements are of a financial nature, leased assets have been capitalised upon the incurrence of the finance lease liability. (j) Amortisation of Leased Assets Assets are amortised on the straight-line basis at rates based on the estimated useful life of each type of asset. 33 The value of construction works in progress represents all costs incurred to date, less progress payments received and receivable. (I) Employee Benefits (I) Provision for Service Leave This provision, previously based on an actuarial assessment of the probability of all employees accruing long service leave entitlements, has been estimated this year in accordance with employees' entitlements. (2) Provision for Sick Leave This provision is based upon the right of certain employees to receive, upon completion of service, payment in respect of a proportion of accumulated sick leave. (3) MTA Superannuation Fund The MTA Superannuation Fund provides benefits for members upon retirement and for the dependants of a member in the event of death prior to retirement. It has both a contributory element and a non-contributory element. The Fund is governed by a trust deed. MTA Investments Pty. Ltd. is the Trustee. There are six Directors of the Corporate Trustee, three being management representatives of the Authority and three being representatives of members of the Fund. In accordance with actuarial advice received during the year, the Authority's contributions to the Fund continue to equal those of the members. Such contributions for the year were $1,469,000 (last year- $1,313,000). The non-contributory element of the Fund is funded by the Authority as non-contributory benefits are paid. Such payments during the year were $7,563,000 (last year­ $5,956,000). No loans save the unfunded non-contributory element of the fund have been provided by the Fund to the Authority. (Refer Note 13.) (4) Provision for Superannuation This provision recognises the Authority's estimated liability in respect of those employees who are members of the State Superannuation Fund. The liability is estimated to be equivalent to two-and-a-half times the employees' contributions. The amount provided during the year was $204,000 (last year- $186,000). (5) Annual Leave Accrual This accrual is based upon the right of all employees to receive payment in respect of accumulated annual leave.

34 (m) Borrowing~ In previous years, a) the discount arising from borrowings below par and the premiums paid on indexed borrowings have been recorded as a deferred expense, and amortised over the term of the borrowing concerned. b) increments in the value of borrowings subject to indexation agreements have been expensed as incurred. As the transfer of indebtedness during the year to VicFin (Refer Note 2) has been at book value, the balances in the Deferred Discount Account and Premium Account have been transferred to Contributed Capital. (n) Public Liability Since January 1987, when the Transport Accident Commission commenced operations, all claims in respect of bodily injury arising from accidents involving the Authority's vehicles are covered by that Commission. The Authority continues to self-insure for all other public liability claims and, based on experience, has made adequate provision for all claims outstanding at balance date. (o) Contributions from Government Sources 1. Contributions to the operating costs of the Authority are reported in the profit and loss statement as Deficit Subsidies provided by the Victorian Government. 2. Contributions for finance charges are reported in the profit and loss statement as Government Subsidies for finance charges. 3. Contributions for specific projects of a non-capital nature are included in Revenue in the profit and loss statement. 4. Contributions for capital projects undertaken by the Authority are credited to contributed capital. (p) Contributions from Non-Government Sources 1. Contributions for specific projects of a non-capital nature are included in Revenue in the profit and loss statement. 2. Contributions for specific capital projects undertaken by the Authority are credited to reserves (contributions from non-government sources) and then amortised over the life of the asset.

35 4. Qperating Results 1987 1986 $'000 $'000 (a) Revenue Fares: Trains 97,696 83,285 Trams 43,292 41,216 Government Buses 11,772 11,302 Private Buses 23,922 21,730 Contribution towards concessions from Victorian Government 20,410 18,223 Rental of properties 5,916 4,926 Interest on investments 2,590 3,845 Advertising 1,757 1,359 Profit on sale of flXed assets 7,029 7,463 Amortisation of profit on sale and leaseback offixed assets 1,746 729 Contributions from Government sources to offset the cost of rail loop charges, and special projects. (Refer Note 5) 16,070 17,236 Transfer from Reserves 6 6 Other 2,776 1,547 234,982 212,867

(b) Labour 252,869 256,347 Labour Oncost 78,617 71,442 Service and Supplies 102,787 82,545 Private Bus Services 72,630 64,438 Traction Energy and Fuel Oil 27,361 25,751 Depreciation and Amortisation 43,182 45,046 Audit Fees 125 69 Emoluments of Board Members 131 209 545,847

(c) Abnormal Items Adjustment relating to Depreciation upon the reassessment of the estimated useful life of certain trains now vested (13,598) Reversal of prior years' charges by STA relating to superannuation for former employees 31,200 _(13,598) 31,200

(d) Finance Interest on loans and borrowing cost 61,613 120,405 Amortisation of discounts on loans 3,094 4,485 Loan indexation costs 737 2,314 Financing costs under finance leases 43,647 170,851

36 5. Contributions from Government Sources:

$'000 Operating Deficit Finance Capital Total 1987 Revenue Subsidies Subsidies Items Operating Subsidies 75 260,800 260,875 Works and Services Grant 17,557 201,643 219,200 75 278,357 201,643 480,075 Finance Subsidies 118,122 3,696 121,818 Special Grants 619 8,424 24,344 18,512 51,899 Adjustment: Loop Finance Grant 15,376 (15,376) Payments to Government. (29,515) (29,515) 16,070 271,405 142,466 194,336 624,277

1986 Private Bus Subsidies 52,000 52,000 Loop Subsidy 43,787 43,787 Operating Subsidies 237,000 237,000 332,787 332,787 Loop Finance Grant 15,413 15,413 Special Grants 1,823 1,823 Works and Services Grant 285,513 285,513 Payments to Government (279,973) (279,973) 17,236 332,787 5,540 355,563

1. Subsidies for private buses and the loop, previously granted separately, have been included this year in operating subsidies. 2. Because the transfer of indebtedness took place during the year, special grants and subsidies were provided to meet finance charges. This contrasts with prior years' finance charges which were funded by deficit subsidies and capital sources. Finance costs on borrowings relate to the period prior to the transfer. 3. Capital works were funded during the year by works and services grants. Previously capital works were funded primarily by borrowings and lease draw-downs, and from the proceeds ofthe sale of fixed assets. 4. Finance subsidies exceed finance charges by $36.895 million because of funding of accrued interest at 1 July 1986.

6. Short Term Deposits: 1987 1986 $'000 $'000

Melbourne At cost 5,920 6,157

Hong Kong At cost 7,350 2,441 Less overdraft facility 4 13,266 8,598 In the event of default the banker providing the above overdraft facility has the right to offset the short term deposits against the outstanding overdraft. 37 1987 1986 $'000 $'000 7. Stock Stores and Spares 9,975 3,598 Work-in-progress 706 307 10,681 3,905 Less provision for obsolescence 307 307 3,598

8. Investments (1) Investments in Victorian Government Statutory Authorities -at cost 9,114 9,114 -at face value (cost $1.375 million) 1,400 1,400 Australian Savings Bonds 12 12 10,526

These investments (sinking funds) have been made in compliance with certain loan agreements

(2) Investments in and Advances to Subsidiary Companies- Melbourne Transit Consulting Services Pty. Ltd. (incorporated in Victoria) - 100% shareholding at cost* Advances 179 348 MTA Investments Pty. Ltd. (incorporated in Victoria) - 100% shareholding at cost* 179 348 *Amounts rounded to zero. (Refer Note 25) The Balance Sheet of each Company as at 30 June, 1987 is shown in Note 24

Total Investments

38 9. Fixed Assets Depreciation Value ·····································- 1987 1986 1987 1986 $'000 $'000 $'000 $'000

Melbourne Lanct(lf1ctJ~~il

At Cost 883 636 73,892 57,365 Accumulated Depreciation 5,477 Written Down Value 68,415 ~-52,??~

Tunnels and Infrastructure At Valuation 3,332 4,697 118,307 118,307 Accumulated Depreciation 8,438 Written Down Value 109,869 113,201

At 9,538 11,664 629,447 583,580 Accumulated Depreciation 49,744 40,206 Written Down Value 579,703

Vehicles 7,510 5,100 277,312 180,806 Accumulated Depreciation 23,452 Written Down Value 253,860

At Valuation 11,501 Accumulated Depreciation Written Down Value

Plant and At Valuation 965 1,632 21,559 21,559 Accumulated Depreciation Written Down Value 19,778

At Cost 9,131 8,670 194,210 180,217 Accumulated Depreciation 40,092 31,008 Written Down Value 1542118 149,209

39 Depreciation Value --·------1987 1986 1987 1986 $'000 $'000 $'000 $'000 Motor Vehicles At Cost 305 273 4,602 3,809 Accumulated Depreciation ~ ...... 1,626 _11_502 Written Down Value _7,976 __2,307

At Valuation 405 Accumulated Depreciation Written Down Value 405

Capital Works in Progress Railways - at cost 142,756 133,964 Tramways - at cost 40,490 204,433 Total Melbourne 36,707 1,492,924 1,311,366

Hong Kong Join!Venture Motor Vehicles At Cost 32 15 87 71 Accumulated Depreciation 47 15 Written Down Value 40 56

Plant and Equipment At 18 8 48 42 Accumulated Depreciation 26 8 Written Down Value 22 34 Total Hong Kong 50 23 62 90 ~------

Total Fixed Assets _34,791 36,7~0 1,492,986 ),311,456 Depreciation - Capitalised 272 163 -Taken to Profit and Loss 34,791 36,730

40 10. Leased Assets Amortisation Value 1986 1987 1986 --·········- $'000 $'000 $'000 $'000 Passenger Vehicles Capitalised C()~! 8,222 8,204 196,664 196,499 Accumulated Amortisation 32,148 Written Down Value 164,516

Plant.and Equipment Capitalised Cost 441 275 10,500 7,478 Accumulated Amortisation 716 275 Written Down Value 9,784

Work in 473 8,663 8,479 174,300 180,249

11. Deferred Assets 1987 1986 $'000 $'000 (l) Loss on Sale and Lease-Back Opening Value 4,375 4,509 Less Prior Years Adjustment (Refer Note 3h) 802 3,573 4,509 Add Loss incurred during the year 3,798 7,371 4,509 Less Transferred to profit and loss 615 134 Closing Valu~ 6,756 4,375

(2) Qiscount on Borrqyvings Opening Value 25,891 16,046 Add discount arising during the year 14,310 30,151 30,356 Less transferred to profit and loss 3,084 4,465 27,067 25,891 Less Balance Transferred to VicFin. (Refer Note 15) 27,067 Value 25,891

(3) PreiJ!ium on Indexed Bom.)~ings Switch Opening value 407 427 Less transferred to profit and loss during the year 10 20 397 407 Less Balance Transferred to VicFin. (Refer Note 15) 397 Closing Value 407

41 1987 ··········-- 1986 $'000 $'000 11. Deferred (Cont.) (4) Lease Surrender Premium The premium paid as compensation for the surrender of a lease upon the purchase of a business has been brought to account over the unexpired portion of the lease Opening Value 316 414 Less transferred to profit and loss 316 98 Closing Value 316

(5) Retention Money Hong Kong 2,820 429 ____2J_J§ 31,418 12. Construction Works in Work completed at balance date. 43,525 4,852 Less progress payments received and receivable (47,000) (7,144) (3,475) (2,292)

13. Creditors, Accruals and Provisions 1987 1986 Non- Non- Current Current Total Current Current Total $'000 $'000 $'000 $'000 $'000 $'000 Provision for Public Liability 3,705 12,276 15,981 3,336 4,615 7,951 Creditors & Accruals 81,046 2,641 83,687 74,810 74,810 MTA Superannuation Fund 9,887 62,664 10,102 69,066 94,638 77,581 172,219 88,248 151,827 14. Employee Benefits 1987 Non- Non- Current Current Total Current Current Total $'000 $'000 $'000 $'000 $'000 $'000 Provision for: *Long Service Leave 2,321 16,833 19,154 2,480 16,355 18,835 Sick Leave 916 2,620 3,536 995 3,221 4,216 Superannuation 595 595 391 391 Accrued Annual Leave 9,055 9,055 20,048 12,530 32,497 *Estimated legal liability at 30 June 13,750

42 1987 1986 $'000 $'000 Issued at face value 530,694 Issued at a discount, at face value 549,058 Indexed at current value - 29,~~~ 1,109,106

Repayable not later than one year 98,283 Repayable later than one year and not later than two years 115,257 Repayable later than two years and not later than five years 316,772 Repayable later than five years 578,794 ),109,106

Transfer of net borrowings to VicFin. during the year Borrowings 1,119,124 Le~s deferred expenses. (Refer Note 11) 27,464 1,091,660

16. b,dvanct!s byVictorian Gov(;rnmt!J1! In 1974175, the Victorian Government advanced $2 million to finance capital works. During the year, the outstanding balance was transferred to VicFin. Current 14 Non-Current ~~. 1,869 1,883 17. Finance Lease Liabilities Repayable not later than one year 11,246 8,815 Repayable later than one year and not later than two years 12,151 11,556 Repayable later than two years and not later than five years 43,333 39,534 Repayable later than five years 107,297 120,691 174,027 180,596

18. Inter-Authority Account- State Tn.tJ1~0rt Au!hority During the year, the Authority provided funds to STA to operate on the Authority's behalf rail transport services and for capital projects relating to rail. The Authority has brought to profit and loss STA's charge for such services and has offset the charge against the amounts advanced. Capital expenditure incurred by STA in respect of assets of the Authority has also been offset against the amounts advanced. The following is a summary of the major items comprising the outstanding balance at year end. Adjustment to provisions for - Superannuation pensions 50,000 35,000 - Claims and Compensation 3,585 2,788 - Employees' leave entitlements 23,155 14,992 Depreciation and amortisation 46,061 26,794 Other ._l?i025 _}0,643 141,826 _90,2J! 43 1987 1986 ~···---··- $'000 $'000 19. Deferred Revenue - Profit on Sale and Lease Back Opening Value 17,270 17,999 Less Prior Years Adjustments (Refer Note 3h) 1,923 15,347 17,999 -Less Transferred to Profit and Loss 1,746 729 Closing Value 13,601 17,270

20. Contributed Contributions from Government Sources Opening Balance 266,243 251,559 Contributions for Capital Items 18,512 9,144 Contributions for Capital Works 205,339 285,513 Repayments to Government (29,515) (279,973) Transfer of Net Indebtedness (Refer Note 15) 1,091,660 1,552,239 266,243

21. Vested Capital Certain assets and liabilities relating to the Metropolitan Rail Division Operations were vested in the Authority at year-end. Opening Balance 245,709 243,519 Assets vested 23,858 Liabilities vested (47,248) Adjustment of value of assets vested in previous years 3,798 2,190 Closing Balance _126,117 245,709

22. Reserves (1) Contributions from Non-Government sources Opening Balance 218 224 Contributions during the year 20 238 224 Less Transferred to Profit and Loss ---6 6 232 218

(2) MMTB Accumulated Deficit Balance (91,905) (91,905) (There has been no movement in the account during the year.) (91,673) (91,687)

44 1987 1986 ~~~------$'000 $'000 23. Commitments (1) C~ita1 Cp111mit~ents Contracts have been entered into for capital works, the liability for which has not been incurred at 30 June 1987, and is not included in the financial statements. 277,228 145,406 (2) Estimated Commitments not Included in the Accounts

1987 1986 Non- Non- Current Current Total Current Current Total ~ -·······- $'000 $'000 $'000 $'000 $'000 $'000 Finance Leases - Acquisition of Assets 35,617 297,693 333,310 34,651 333,451 368,102 Operating Leases Rental of Premises 883 2,094 ~~~~~~~~~ 2, 977 36,619 299,507 336,126 35,534 335,545 371,079 Less Finance Lease Liabilities _l1,~4§ ~~ 162,78! 174,027 8,815 171,781 180,596 162,099 26,719 163,764 190,483

1987 1986 $'000 $'000

Payable not later than one year 25,373 26,719 Payable later than one year but not later than two years 23,159 24,745 Payable later than two years and not later than five years 59,694 63,719 Payable later than five years ------75,300 162,099 190,483 (3) Contingent liabilities A Supreme Court Writ for $2.6 million has been received since balance date from a private bus operator for services rendered prior to balance date. The action is being defended.

45 1987 1986 $'000 $'000 24. Subsidiary C01npanies' Balance Shee~

Melbourne Transit Ltd.

Current Assets Cash on Hand 54 -* Stock 4 206 Other Current Assets ----11l 42 169 248 Non-Current Assets Other Non-Current Assets 22 103 Total Assets 191 351 -···--

Current Liabilities Accounts Payable 12 3 Owing to Metropolitan Transit Authority 179 348 Equity Paid up Capital * * 191 351 -···-- MTA Investments Ltd

Current ---Assets Cash on Hand -* -* Right oflndemnity to Assets ofMTA Superannuation Fund 80,346 73,507 Total Assets 80,346 73,507

Current Liabilities Accounts Payable 13 69 Funds of Members ofMTA Superannuation Fund 80,333 73,438 80,346 73,507 Equity Paid up Capital -* -* 802346 73,507 *Amounts rounded to zero. Refer Note 25.

46 1987 ----1986 $ $ 25. Amounts Rounded to Nearer Thousand Dollar ~~··--· ·----- The following amounts are rounded to zero in the financial statements: Note 8 - Investment in Subsidiary Companies Melbourne Transit Consulting Services Pty. Ltd. 2 2

MTA Investments Pty. Ltd. 12 -----12 14 14 Note 24 - Subsidiary Companies Balance Sheets Melbourne Transit Consulting Services Pty. Ltd. Cash 2 2 Paid up Capital 2 2 MTA Investments Pty. Ltd. Cash 12 12 Paid up Capital 12 12

47 MELBOURNE Directors' Report: The Directors have pleasure in presenting this report on the TRANSIT results of Melbourne Transit Consulting Services Pty. Ltd. for the CONSULTING year ended 30 June 1987, and the state of affairs ofthe company SERVICES at that date. PTY LTD. Directors: The Directors in office at the date of this report are: K.P. Shea (Chairman) G.A Carkeek WJ. Burns Principal Activities: The principal activities of the Company during the year were the provision of consulting services to light rail transport systems. Trading Result: During the period, the Company derived no income and incurred no loss. No provision for income tax has been made. Dividends: No dividends have been paid or declared since 1 July 1986. Review of Operations: During the year, the Company continued to provide consulting services under the terms of the contract entered into in the previous year. No profit has been derived or loss incurred through this contract at year end. In addition, arrangements are in hand to provide similar consulting services to another party. State of Affairs: There were no significant changes in the state of affairs of the Company during the period. Subsequent Events: Since 30 June 1987 to the date of this report, in the opinion of the Directors, no item, transaction or event of a material and unusual nature has arisen, which is likely to affect significantly the operations of the Company and the results of those operations or the state of affairs of the Company in any future financial years. Likely Developments: At the date of this report, it is not anticipated that the operations of the Company will extend beyond the provision of consulting services referred to above. Directors' Benefits: No Director has received or become entitled to receive a benefit since l July 1986. Signed in accordance with a resolution of the Directors.

Melbourne K.P. Shea G.A Carkeek 1 September 1987 Chairman Director 48 Auditors' Report to the Members of Melbourne Transit Consulting Services Pty. Limited

We have audited the accounts set out on pages 3 to 7 in accordance with Australian Auditing Standards. In our opinion the accounts are properly drawn up: (a) in accordance with the provisions of the Companies (Victoria) Code and so as to give a true and fair view of: (i) the state of affairs of the company at 30 June, 1987 and of the result of the company for the period ended on that date; (ii) the other matters required by Section 269 of that Code to be dealt with in the accounts; (b) in accordance with Australian Accounting Standards and applicable approved accounting standards.

Ernst & Whinney Chartered Accountants

Melbourne, M. D. Crossley 1 September, 1987 Partner

49 Directors' Statement

In the opinion of the Directors of Melbourne Transit Consulting Services Pty. Ltd. a) the Profit and Loss Account of the Company is drawn up so as to give a true and fair view of the profit of the Company for the year ended 30 June 1987; b) the Balance Sheet of the Company is drawn up so as to give a true and fair view of the state of affairs of the Company as at 30 June 1987; c) at the date of this statement there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due; and d) the accounts have been made out in accordance with applicable approved accounting standards. Signed in accordance with a resolution of the Directors

Melbourne K.P. Shea G.A. Carkeek I September 1987 Chairman Director

PROFIT AND LOSS ACCOUNT Year ended 30 June 1987

Note 1987 1986 $ $

Operating revenue 852,967 No profit was derived or loss incurred during the year. 2

The Profit and Loss Account is to be read in conjunction with the explanatory notes.

50 BALANCE SHEET 30 June 1987

Note 1987 1986 $ $ Current Assets Cash 53,650 2 Receivables 3 111,309 41,998 Inventories 4 205,903 168,562 247,903 Non-Current Assets Other 3 103,243 Total Assets 190,789 351,146 Current Liabilities Accounts Payable 11,890 3,000 Owing to Metropolitan Transit Authority 5 178,897 348,144 Total Liabilities 190,787 351,144 Net Assets 2 2 Shareholders' Equity Share Capital 6 2 2

The Balance Sheet is to be read in conjunction with the explanatory notes. STATEMENT OF SOURCES& APPLICATION OF FUNDS Year ended 30 June 1987

1987 1986 --- $ $ Sources of Funds Share lssue 2 Increase in Current Liabilities 8,890 3,000 Reduction in Current Assets 79,341 (247,903) Non-Current Assets 81,016 (103,243) 169,247 (348,144) Applicatiol"lgf Funds Reduction in Amount Owing To Metropolitan Transit Authority 169,247 (348,144) The Statement or Sources and Application of Funds is to be read in conjunction with the explanatory notes.

51 Notes To and Forming Part of the Financial Statements

1. Statement of Significant Accounting Policies A summary of the significant accounting policies adopted by the Company is set out in this note. The policies adopted are in accordance with accounting principles generally accepted in Australia and, unless stated otherwise, are consistent with those applied in the previous year. (a) Basis of the preparation of the financial statements: These Financial Statements have been prepared under the convention of historical cost accounting. (b) Inventory: Work-in-progress in respect of long-term projects is valued at cost less progress claims after adjusting for known profits and anticipated losses at balance date. As these projects are the sole activity of the Company, all operating costs are regarded as project costs and are included in work-in-progress. (c) Foreign Currency Translation: Sales proceeds relating to one contract are payable in Hong Kong currency. Receipts are converted to Australian currency at the exchange rate current on the date of transaction. Funds retained in Hong Kong derived from sales proceeds, and disbursements therefrom, have been converted at the exchange rate applicable at balance date.

1987 1986 ------'-----'-- $ $ 2. Profit/(loss) No profit/(loss) has been recognised to date as projects are not sufficiently advanced to recognise profits. All operating costs have been charged to work-in-progress (refer note 1(b)), including Auditors' remuneration for auditing the accounts ($1,800). No emoluments have been paid to Directors by the Company during the year. 3. Receivables Debtors 59,620 Prepayments 51,689 41,998 111,309 41,998 4. Inventory Work-in-progress 3,603 205,903 5. Owing to Metropolitan Transit Authority Metropolitan Transit Authority holds all the issued capital of the Company and provides funds for its operations. 6. Share Capital Authorised Capital 10,000 ordinary shares of $1.00 10,000 10,000 Issued Capital 2 ordinary shares of $1.00 each 2 2

51: Directors' Report: MTA The Directors have pleasure in presenting this report on the results of MTA Investments Pty. Ltd. for the year ended INVESTMENTS 30 June 1987, and the state of affairs of the company at that date. PTY. LTD. Directors: The Directors ofMTA Investments Pty. Ltd. in office at the date of this report are: G.A. Carkeek (Chairman) C.S. West W.J. Bums C.J. Bliss J. W. Shirley A.J. Tuohey Principal Activities: The principal activity of the Company during the year was acting as Trustee of the MTA Superannuation Fund. Trading Results: The Company did not trade in its own right during the year and neither derived a profit nor incurred a loss. Dividends: No dividend has been paid or declared since the previous year's report. Review of Operations: During the period, the Company acted as Trustee of the MTA Superannuation Fund pursuant to a Trust Deed made between Metropolitan Transit Authority and the Company on 26 February 1986. Significant Changes: There were no significant changes in the state of affairs of the Company during the year. Events Since Balance Date: Since 30 June 1987 to the date ofthis report, in the opinion of the Directors, no item, transaction or event of a material and unusual nature has arisen which is likely to affect significantly the operations of the Company and the results of those operations or the state of affairs of the Company in any future financial years. Future Developments: At the date of this report, it is anticipated that the Company will continue to operate only as the Trustee of the MTA Superannuation Fund. Directors' Benefits: No Director has received or become entitled to receive a benefit since 1 July 1986. Signed in accordance with a resolution of the Directors. Melbourne G.A. Carkeek W.J. Burns 10 September 1987 Chairman Director

53 Auditors' Report to the Members of MTA Investments Pty. Ltd.

We have audited the accounts set out on pages 3 to 6 in accordance with Australian Auditing Standards. In our opinion the accounts are properly drawn up: (a) in accordance with the provisions orthe Companies (Victoria) Code and so as to give a true and fair view of: (i) the state of affairs of the company at 30 June, 1987 and of the results of the company for the period ended on that date; (ii) the other matters required by Section 269 of that Code to be dealt with in the accounts; (b) in accordance with Australian Accounting Standards and applicable approved accounting standards.

Ernst & Whinney Chartered Accountants

Melbourne, M. D. Cross1ey 30 September, 1987 Partner

54 Directors' Statement In the opinion of the Directors of MTA Investments Pty. Ltd. - (a) the Profit and Loss Account of the Company is drawn up so as to give a true and fair view of the profit and loss of the Company for the year to 30 June 1987; (b) the Balance Sheet of the Company is drawn up so as to give a true and fair view of the state of affairs of the Company as at 30 June 1987; (c) at the date of this report there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due; and (d) the accounts have been made out in accordance with applicable approved accounting standards. Signed in accordance with a resolution of the Directors.

Melbourne G.A. Carkeek W.J. Burns 10 September 1987 Chairman Director

55 PROFIT AND LOSS ACCOUNT Year ended 30 June 1987

1987 1986 -----'- $ $

Operating revenue

No profit was derived or loss incurred during the period

The Profit and Loss Account is to be read in conjunction with the explanatory notes

BALANCE SHEET 30 June 1987 "

Note 1987 1986 $ $

Current Assets Cash in hand. 12 12 Right of Indemnity out ofTrust Assets. 1 80,345,981 73,506,905 Total Assets. 80,345,993 73,506,917

Current Liabilities Trade creditors - incurred as Trustee. 1 80,345,981 73,506,905

Net Assets. 2 12 12

Shareholders' Equity Share Capital. 2 12 12

The Balance Sheet is to be read in conjunction with the explanatory notes.

56 Notes to and forming part of the Financial Statements

1. Statement of§igB:ifi<.:ant Accounting Policies A summary of the significant accounting policies adoptedby the Company is set out in this note. The policies adopted are in accordance with accounting principles generally accepted in Australia and, unless stated otherwise, are consistent with those applied in the previous year. (a) Basis of the preparation ofthe Financial Statements. These Financial Statements have been prepared under the convention of historical cost accounting. (b) Trustee's responsibility for liabilities ofMTA Superannuation Fund. The Company acts solely as Trustee for the MTA Superannuation Fund, and has incurred liabilities only in its capacity as Trustee. All such liabilities, as recorded in the audited balance sheet of the MTA Superannuation Fund (which has been prepared on the accruals basis) at 30 June 1987, are included in the Company's balance sheet at that date. (c) Right oflndemnity. The Company has a continuing right of indemnity out of the assets ofMTA Superannuation Fund in respect of the liabilities incurred as Trustee and that right is recorded in the balance sheet ofthe Company. Based on the valuation of the assets in the audited balance sheet of the MTA Superannuation Fund at 30 June 1987, sufficient trust assets existed to fully indemnify the Company against the liabilities incurred by the Company in its capacity as Trustee.

1987 1986 $ $ 2. Share Capital Authorised Capital $10,000 ordinary shares of$1 each 10,000 Issued Capital $12 ordinary shares of$1 each 12 12

3. Contingent Liabilities No claim has been made or threatened against the Company by any party regarding alleged breach of trust or other obligation of the Company as Trustee of the MTA Superannuation Fund and there are no known circumstances likely to give rise to any such claim.

57