Results of audit: Public non-financial corporations Report 6: 2014–15 Queensland Audit Office Location Level 14, 53 Albert Street, Brisbane Qld 4000 PO Box 15396, City East Qld 4002 Telephone (07) 3149 6000 Email [email protected] Online www.qao.qld.gov.au © The State of Queensland. Queensland Audit Office (2014) Copyright protects this publication except for purposes permitted by the Copyright Act 1968. Reproduction by whatever means is prohibited without the prior written permission of the Auditor-General of Queensland. Reference to this document is permitted only with appropriate acknowledgement. Front cover image is an edited photograph of Queensland Parliament, taken by QAO. ISSN 1834-1128 Contents Summary ..................................................................................................................................... 1 Audit opinions and conclusions ......................................................................................... 3 Timeliness and quality of financial reports ........................................................................ 4 Significant financial reporting issues ................................................................................. 5 Financial performance, position and sustainability ............................................................ 7 Net cost of the PNFC sector to government.................................................................... 16 1 Context........................................................................................................................... 21 1.1 Scope of report .................................................................................................... 21 1.2 Legislative framework .......................................................................................... 21 1.3 Legislated deadlines ............................................................................................ 21 1.4 Audit responsibilities ............................................................................................ 22 1.5 Other reporting requirements ............................................................................... 24 1.6 Reference to comments ....................................................................................... 24 1.7 Report structure and cost .................................................................................... 25 2 Energy sector ................................................................................................................ 27 2.1 Background.......................................................................................................... 28 2.2 Conclusions ......................................................................................................... 32 2.3 Audit opinions and conclusions............................................................................ 33 2.4 Timeliness and quality of financial reports ........................................................... 34 2.5 Significant financial reporting issues .................................................................... 35 2.6 Financial performance, position and sustainability............................................... 42 3 Water sector .................................................................................................................. 55 3.1 Background.......................................................................................................... 56 3.2 Conclusions ......................................................................................................... 59 3.3 Audit opinions ...................................................................................................... 60 3.4 Timeliness and quality of financial reports ........................................................... 60 3.5 Significant financial reporting issues .................................................................... 61 3.6 Financial performance, position and sustainability............................................... 62 4 Ports sector ................................................................................................................... 75 4.1 Background.......................................................................................................... 76 4.2 Conclusions ......................................................................................................... 81 4.3 Audit opinions ...................................................................................................... 82 4.4 Timeliness and quality of financial reports ........................................................... 83 4.5 Significant financial reporting issues .................................................................... 85 4.6 Financial performance, position and sustainability............................................... 91 5 Rail sector.................................................................................................................... 105 5.1 Background........................................................................................................ 106 5.2 Conclusions ....................................................................................................... 109 5.3 Audit opinions .................................................................................................... 109 5.4 Timeliness and quality of financial reports ......................................................... 110 5.5 Significant financial reporting issues .................................................................. 110 5.6 Financial performance, position and sustainability............................................. 111 6 Other public non-financial corporations ................................................................... 123 6.1 Background........................................................................................................ 124 6.2 Conclusions ....................................................................................................... 125 6.3 Audit opinions .................................................................................................... 125 6.4 Timeliness and quality of financial reports ......................................................... 126 6.5 Significant financial reporting issues .................................................................. 127 6.6 Financial performance, position and sustainability ............................................. 127 Appendix A— Comments....................................................................................................... 139 Appendix B— Financial sustainability measures ................................................................ 147 Appendix C— Controlled entities for which audit opinions will not be issued ................. 149 Appendix D— Regulatory information notices .................................................................... 153 Appendix E— Bulk water price path ..................................................................................... 155 Results of audit: Public non-financial corporations Summary Summary Public sector entities are classified for financial reporting purposes into three groups: General government sector (GGS) entities—comprising departments and other largely budget-dependent bodies. Public financial corporations (PFC)—that provide insurance services and borrow and invest funds on behalf of government. These are WorkCover Queensland, the Queensland Treasury Corporation and QIC Limited. Public non-financial corporations (PNFC)—government owned corporations (GOCs) and statutory bodies that operate primarily across the energy, water, transport sectors. Most PNFCs sell goods and services on commercial trading terms; they pay taxes and return dividends to the state government. By contrast, most GGS entities do not generate significant own-sourced revenue and rely primarily on annual budget appropriations to fund their activities and services. While we continue to report on each entity and sector separately, this report also summarises the combined results for all PNFCs, to better understand how they affect the financial aggregates of the state in 2013–14. These results should however be understood in the context of the fact that PNFCs operate inherently different businesses, which limits comparisons of financial performance, position, and sustainability between entities and industry sectors. Figure A lists the major PNFCs discussed in this report and how they fit into the state's energy, water and transport networks. PNFCs which were abolished or ceased to exist legally before 1 July 2013 have been excluded from any comparisons between entities and industries in this report. As well as those listed in Figure A, six other entities were classified as PNFCs at 30 June 2014. Last year it was seven, but the Parklands Gold Coast Trust was abolished on 30 September 2013 and its assets and liabilities were transferred to the Department of National Parks, Recreation, Sport and Racing during the year. Of these six other entities, the substantial PNFCs at 30 June 2014 were Stadiums Queensland and Queensland Treasury Holdings Pty Ltd (QTH): Stadiums Queensland manages, operates and promotes the use of major sporting and entertainment facilities on behalf of the Queensland Government. Stadiums Queensland is unlike other PNFCs. It does not recover the majority of the costs it incurs providing venues to hirers and tenants. It also does