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Queensland RailAnnual and Financial Report 2015-16

| Queensland Rail Annual and Financial Report 2015-16

General informationThis is the consolidated Annual and Financial Report 2015-16 (“the report”) of Queensland Rail (ABN 68 598 268 528) and its subsidiaries, Queensland Rail Limited (ABN 71 132 181 090) (QRL) and On Track Insurance Pty Ltd (ABN 18 095 032 670) (OTI). Queensland Rail is a statutory authority established under the Queensland Rail Transit Authority Act 2013 (Qld) (QRTA Act) and is a statutory body for the purposes of the Financial Accountability Act 2009 (Qld) and the Statutory Bodies Financial Arrangements Act 1982 (Qld).

Queensland Rail’s functions are detailed in Section 9 of the QRTA Act. Queensland Rail discharges its statutory functions through its wholly owned subsidiary QRL. QRL does not employ any personnel, but owns all non-employee related assets and contracts. It performs the role of rail transport operator under the Transport (Rail Safety) Act 2010 (Qld).

OTI is a wholly-owned subsidiary of QRL. It provides insurance cover for claims on Queensland Rail, QRL and the Aurizon group of companies in respect of events up until 30 June 2010.

Unless the context otherwise requires, Queensland Rail together with its subsidiaries QRL and OTI, are collectively referred to as “Queensland Rail” for the purposes of the report. A general description of the nature of Queensland Rail’s operations and principal activities is included in the report.

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

For further information on Queensland Rail: Phone: 13 16 17

Mail: GPO Box 1429, Brisbane, Queensland, 4001

Registered Office Queensland Rail Level 14, Rail Centre 1 305 Edward Street Brisbane, Queensland, 4000 Queensland Rail ABN 68 598 268 528

Translation and interpreting assistance Queensland Rail is committed to providing accessible services to Queenslanders from all culturally and linguistically diverse backgrounds.

If you have difficulty in understanding the report, please contact Queensland Rail on 13 16 17 and we will arrange an interpreter to share the report with you.

Copyright © Queensland Rail Limited 2016.

Disclaimer While all care has been taken in preparing the report, Queensland Rail accepts no responsibility for decisions or actions taken as a result of any data, information, statement or advice, expressed, implied or contained in this report. Queensland Rail is committed to minimising the impact on the environment by printing a limited numbers of copies of this report. An electronic version of this report is available at queenslandrail.com.au

Queensland Rail Annual and Financial Report 2015-16 |

305 Edward Street GPO Box 1429 Brisbane QLD 4001

T 07 3072 0565 F 07 3072 0090 queenslandrail.com.au

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

The Honourable Stirling Hinchliffe MP Minister for Transport and the Commonwealth Games Member for Sandgate Level 13, Mineral House 41 George Street BRISBANE QLD 4000

Dear Treasurer and Minister for Transport and the Commonwealth Games

Queensland Rail Annual and Financial Report 2015-16I am pleased to present the Queensland Rail Annual and Financial Report 2015-16.

I certify that this annual report complies with:

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

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

The report outlines Queensland Rail’s strong operational performance as well as the financial efficiencies that have been achieved during the 2015-16 financial year. The Queensland Rail Board and Executive Leadership Team are confident that the organisation can continue to sustain its operational performance in the next financial year while pursuing further opportunities for cost optimisation. As outlined in the report, a dividend of $182.2 million was declared for the year ended 30 June 2016.

The Board unanimously endorses the Queensland Rail Annual and Financial Report 2015-16.

Yours sincerely

Michael Klug AM Chairman


Table of contentsQueensland Rail Annual and Financial Report 2015-16

About us 5

Chairman’s and CEO’s outlook 7

Year at a glance 9

Operational performance 11

Financial performance 12

Our safety and security 14

Our people 20

Our environment 24

Our community 28

Citytrain 32

Regional Network and Freight 36

Travel and Tourism 40

Governance structure 42

Organisational structure 43

Board 44

Executive Leadership Team 47

Corporate governance 50

Summary of the 2015-16 Operational Plan 60

Compliance checklist 61

Glossary and acronyms 63

Queensland Rail Financial Report 2015-16 65


About usQueensland Rail has a proud 151 year history of being a safe and reliable railway operator and contributing to Queensland’s economic, social and regional development.

With more than 6000 employees, approximately $7 billion in fixed and other assets, and more than 6500 kilometres of track, Queensland Rail is an integrated customer and rail infrastructure business servicing the passenger, tourism, resources and freight customer markets throughout Queensland.

The organisation aims to be the safest, highest performing and best customer focused railway in Australia.

Queensland Rail’s expansive network of long distance, tourist and city tracks has played a major part in shaping the history of Queensland and continues to connect communities.

Queensland Rail’s vision

Queensland Rail’s vision is ‘Connecting Communities and Communities Connecting’, which acknowledges the essential role it plays in providing jobs, delivering passenger rail services, transporting commodities, and supporting industry across the state.

The vision demonstrates Queensland Rail’s responsibility in delivering the infrastructure and services to ‘connect communities’. These products allow Queensland Rail’s customers to connect to the things that matter – family, friends, jobs, recreation and travel opportunities.

The vision also illustrates the organisation’s role in the tourism industry, providing connection to regional Queensland and its key tourist destinations.

The flow on effect of providing a safe, reliable and efficient transport service results in ‘communities connecting’, facilitating social outcomes and economic prosperity for the state.

Queensland Rail’s purpose

Queensland Rail is committed to providing a safe, reliable, on-time, value for money and efficient rail service that benefits the community and supports industry.

To achieve this, Queensland Rail aligns its business activity to three strategic objectives:

• People – improving safety outcomes and increasing productivity

• Progress – optimising operational expenditure and targeting capital investment

• Performance – sustaining operational performance.

Queensland Rail’s operating environment

Queensland Rail was established as a statutory authority in accordance with the QRTA Act with the objective of delivering significant benefits to the community including improved operation and more efficient delivery of rail services for customers.

Queensland Rail performs its railway operations via the wholly owned subsidiary Queensland Rail Limited. The Queensland Rail Board is ultimately responsible for setting the strategic direction of Queensland Rail and the exercise of its powers and functions.

The Board has in turn appointed a Chief Executive Officer (CEO) and Executive Leadership Team (ELT) who are responsible for Queensland Rail’s day-to-day operations. Members of the Queensland Rail Board are appointed by responsible Ministers under the QRTA Act.

The Queensland Rail Board is accountable to two responsible Ministers:

• The Honourable Curtis Pitt MP, Treasurer, Minister for Aboriginal and Torres Strait Islander Partnerships and Minister for Sport

• The Honourable Stirling Hinchliffe MP, Minister for Transport and the Commonwealth Games.

Each year, the Board submits Operational and Strategic Plans for approval by the responsible Ministers. The Queensland Rail Operational Plan 2015-16 is a formal performance agreement between the Board and responsible Ministers with regard to service delivery and performance.

Queensland Rail’s products

With more than 6500 kilometres of track and 216 stations across the state, Queensland Rail’s business consists of three primary products: Citytrain, Travel and Tourism, and Regional Network (including Freight).

CitytrainQueensland Rail’s Citytrain network is an integrated passenger and rail access service covering more than 800 kilometres of track in South East Queensland. The network extends from Brisbane’s Central station:

• south to Beenleigh and Varsity Lakes on the Gold Coast

• north to Ferny Grove, Shorncliffe, Doomben, Caboolture and Gympie

• east to Cleveland

• west to Richlands, Ipswich, Springfield Central and Rosewood.


Across the network, Queensland Rail has 146 Citytrain stations and carries approximately 150,000 passengers per day. Each weekday, it operates more than 900 services on the Citytrain network.

Regional Network and FreightQueensland Rail’s regional network supports industries on the Mount Isa, North Coast, Western, West Moreton, South Western and Central Western rail lines and covers more than 5700 kilometres of track. Queensland Rail has invested significantly to improve the performance of its regional network.

This investment has delivered Queensland Rail improved regional network performance in 2015-16, in terms of reliability, safety and value for money.

Queensland Rail is committed to improving supply chain solutions, developing partnerships and fostering new business opportunities to help meet the needs of the resources, agricultural, construction and tourism industries.

Travel and TourismThe Queensland Rail travel network plays an important role in connecting regional Queensland and offers the largest and most comprehensive network of long distance and tourist trains in Australia. Queensland Rail operates eight different travel and tourism services across the state, each year carrying around 700,000 long distance commuters and tourists seeking unique Australian rail experiences.

Its services extend along the Queensland coastline from Brisbane to Cairns and west to Charleville, Longreach and Mount Isa. The fleet includes outback services (Spirit of the Outback, Inlander, Westlander) and coastal services (Spirit of Queensland, Rockhampton Tilt Train and Bundaberg Tilt Train).

In addition, Queensland Rail operates two tourist services – Kuranda Scenic Railway (KSR) and the Gulflander – offering unique and world renowned rail travel experiences.

The organisation also retains a fleet of Heritage steam locomotives and wooden carriages for charters and special operations.

In 2015-16, the KSR celebrated 125 years since its very first passenger service. The tourist train continues to be a major contributor to local economies and is one of Queensland’s most popular and highly awarded tourist attractions.


Chairman’s and CEO’s outlookCelebration of our past and future has been the hallmark of the 2015-16 financial year.

Helen Gluer PSM CEO


Embracing the future of Queensland Rail

This year, Queensland Rail made great strides on its journey to become a truly modern ‘new generation’ railway.

While the new physical infrastructure – Rail Management Centre (RMC), Moreton Bay Rail Link (MBRL) and New Generation Rollingstock (NGR) – were the most visible signs of the generational change, it was the raft of initiatives to modernise the organisation’s culture and work practices that were the most significant achievement on Queensland Rail’s journey into the future.

And while the year was defined by embracing the future, a special part of our rich history provided one of the highlights of the past 12 months. His Excellency the Honourable Paul de Jersey AC, and Mrs Kaye de Jersey travelled to the Outback in June. The Vice Regal and heritage carriages were connected to the Spirit of the Outback to showcase the link between the role of the Governor and our vibrant rail history.

Our operational performance

In 2015-16, Queensland Rail’s operational performance was focussed on maintaining momentum built up over recent years. We know our customers expect us to deliver safe, reliable, on-time and customer focussed services and, this year, we consistently continued to deliver a sustained high performance in key areas.

We should be proud that we have posted our best on-time running 24/7 customer impact results in at least a decade with 96.24 per cent of all services we operate arriving on time. And like all high performing railways, we have achieved high levels of customer satisfaction again this year.

The organisation also continued to perform strongly in many key areas throughout 2015-16. Benchmarking indicates that Queensland Rail’s performance compared with other

Australian rail operators is better than average across key measures.

In July, Queensland Rail launched its new Enterprise Safety Strategy. The strategy is designed to take our safety culture and performance to the next level as we recognise we can always do better.

Our commitment to the safety of our customers and employees will never change – and as we look to take the next step on our journey to a mature safety culture, Queensland Rail must engage our people as key drivers of safety in their own local workplace.

A key part of our plan to drive continuous improvement across all areas of the business is challenging the status quo and identifying best practice rail operations from Australian and international railways through benchmarking activities. These activities have established where Queensland Rail’s practices have been recognised as best in class and other areas where further progress may be achieved.

Our financial performance

While Queensland Rail’s revenue has been affected this year by the downturn in the mining industry, we have again achieved excellent financial results with a $426.8 million return on Earnings Before Interest and Tax (EBIT). This was the result of an ongoing focus on operating costs to help deliver a value for money product for our customers.

Our people performance

From a people perspective, we implemented a number of key programs to better manage workforce continuity and flexibility, deliver improved recruitment practices and facilitate a more diverse and inclusive workforce. These are all attributes we know are required in a modern workforce.

We recruited new graduates and trainees to business critical roles in key areas of identified


future skill shortages and were delighted to welcome four refugees for placement in different roles across the business.

We are also proud to have a member of our Executive Leadership Team, Tim Ripper, leading the way in flexible work arrangements to balance family and work responsibilities. The fact that Tim successfully works flexibly while leading a workforce of more than 2000 employees spread right across Queensland Rail’s network demonstrates the many possibilities for flexible working arrangements throughout the organisation.

We faced one of the year’s biggest challenges during the Christmas/New Year break when a freight train carrying sulphuric acid derailed near Julia Creek. While most Queenslanders were relaxing and enjoying time with their families, many of our people returned to work early and worked around the clock to manage this incident. It was incredibly humbling for the leadership team and Board to hear how our people went above and beyond to support communities in the North West who rely on the Mount Isa line for passenger services and to transport freight. It’s times like these when our commitment to safety and that incredible Queensland Rail spirit shines.

Our future

This year, there were some exciting announcements from our responsible Ministers regarding infrastructure projects that will improve our network for the future.

Funding for the $100 million North Coast Line Capacity Improvement project was approved and will improve connections between South East Queensland and communities in the north, and the first sod was turned on the Coomera to Helensvale rail duplication, marking the start of work on the $163 million project.

The Mount Isa line will also receive a boost with a $25 million investment to continue the extensive program of resleepering works on this critical line.

Next year will mark the next step in generational change at Queensland Rail. In 2016-17 the Citytrain network will extend by an additional 12.6 kilometres and six new stations with the Moreton Bay Rail Link’s opening and the New Generation Rollingstock fleet will begin to rollout across

South East Queensland.

We will also start delivering the European Train Control System (ETCS) on the Sunshine Coast line and inner-Citytrain network, ramp up preparations for the 2018 Commonwealth Games, and start revamping our flagship Central station.

Acknowledgments

In 2015-16 we welcomed David Marchant to the Board and farewelled Wendy McMillan, David George and Glenn Poole, who all made significant contributions to Queensland Rail during their time as directors.

We would also like to acknowledge Deputy Premier Jackie Trad who relinquished the transport portfolio as part of a cabinet reshuffle in December 2015. We continue to work closely with our responsible Ministers, Treasurer Curtis Pitt and Transport Minister Stirling Hinchliffe, to deliver safe, reliable and value for money rail services throughout the state.

Queensland Rail has achieved high levels of sustained operational performance while reducing its cost to service. These results simply do not happen without all areas of the business working together as a team – we are extremely proud of and grateful for the effort put in by every single team member.

The key challenge ahead for the organisation is to maintain momentum in continuing to deliver that and more as we get ready for our next journey as a modern ‘new generation’ railway.

We are confident the organisation can sustain this performance while delivering numerous important and high profile projects for Queenslanders over the coming years.


Helen Gluer PSM CEO


Year at a glance

July August

SeptemberOctober

November December

February January

March April

June May

• Queensland Rail celebrated 150 years with a week-long celebration across the state

• Awarded the top award at the 2015 Australasian Rail Industry Awards in the Customer Service category for efforts in improving on-time running and service reliability

• Roma Street station building awarded the Don Roderick Award for Heritage work at the Queensland State Architecture Awards.

• Launched Rail Safety Week with the ‘Railways are not playgrounds’, campaign featuring railway accident survivor David Williams

• Awarded gold at the Queensland National Trust Awards for the Roma Street station, Heritage Building, Stage 1 stabilisation project

• Hosted a series of rail safety workshops with key stakeholders from across Australia and New Zealand.

• New lounge area introduced on the Inlander service.• Awarded Highly Commended at the National Safety Council of Australia Awards of Excellence for the ‘Great Catch’ campaign initiative

• Awarded the Silver Challenge Shield at the State Final for Railway First Aid Volunteers

• Roma Street station opened its doors as part of the sixth annual Brisbane Open House

• Committed to an additional eight Queensland Police Service (QPS) Railway Squad officers.

• Awarded gold at the Queensland Tourism Awards in the Cultural Tourism category for Rail150 celebrations

• KSR awarded bronze at the Queensland Tourism Awards in the Specialist Tourist Service category

• Launched the Queensland Rail Mobile App providing customers with an additional channel to report maintenance issues and lost property.

• Awarded contract to Golding to duplicate rail tracks between Coomera and Helensvale stations

• Launched the 2015 Christmas Appeal which was a joint partnership with Queensland State Government and 612 ABC Brisbane.

• Undertook a major recovery of the Mount Isa line at Quarrells following a freight train derailment.

• Officially opened the $40 million state-of-the-art RMC

• Introduced tablet entertainment onboard the Inlander service

• Celebrated 10th anniversary of Rail Safety Orientation Day.

• All six Queensland Rail Enterprise Agreements voted up

• Visited more than 1500 school students throughout the Bundaberg region to deliver crucial rail safety messages.

• Awarded the X-tra Mile Award for the South Pine River and Tributary Creek Bridge Replacement Project

• Spirit of Queensland notched up two million kilometres

• Officially opened the SkillsTech training facility.

• Hosted Young Professionals Annual Conference with the Minister for Transport.

• Celebrated KSR’s 125th birthday

• Coordinated the Governor’s trip on the Spirit of the Outback to Longreach

• Announced funding for the ETCS.


In 2015-16, Queensland Rail spent $142 million on the maintenance of the South East Queensland network to improve network reliability and support strong OTR performance and customer satisfaction.


Summary of non-financial measures

Unit 2015-16 Actual 2015-16 Target 2014-15 Actual

Unscheduled absence (Days/FTE) Rate 10.47 10.50 11.17

Total Recordable Injury Frequency Rate Rate 8.87 8.70 10.16

Safeworking Breaches as a Rail Infrastructure Manager Count 78.00 44.00 84.00

Operational cost per Revenue Train Kilometres – SEQ Above Rail $ 21.76 25.20 22.64

Operational cost per Revenue Train Kilometres – SEQ Below Rail $ 14.07 13.92 11.12

Operational cost per thousand GTK – Regional $ 12.28 11.90 10.68

Capital Plan scheduling* % 37.50 80.00 N/A

On-time running – Citytrain 24/7 (adjusted for Force Majeure) % 97.16 95.00 97.24

Reliability – Citytrain 24/7 (adjusted for Force Majeure) % 99.74 99.50 99.79

Signal Passed At Danger per MTK – Operator Rate 2.10 2.05 2.28

Customer injuries per million passenger journeys Rate 11.12 10.15 11.28

Customer satisfaction – Citytrain (TransLink index) Rate 70.00 70.00 70.00

Customer satisfaction – Traveltrain Rate 81.30 81.00 81.50

* This measure was introduced within the 2015-16, no further history is available.

The performance indicators listed above are as per those included in the Queensland Rail Operational Plan 2015-16.

Operational performance


Financial performanceFinancial summary Consolidated income statement for the year ended 30 June 2016

2015-16 Actual ($M) 2014-15 Actual ($M)

Revenue 1,920.7 1,933.0

Operating expenses (1,100.9) (1,058.1)

Earnings before interest, tax, depreciation and amortisation (EBITDA) 819.8 874.9

Depreciation and amortisation expense (393.0) (368.0)

Earnings before interest and tax (EBIT) 426.8 506.9

Net finance costs (190.7) (187.0)

Income tax expense (70.8) (96.2)

Net profit 165.3 223.7

The Queensland Rail consolidated entities’ EBIT decreased by $80.1 million.

Revenue reduction on the prior year was mainly attributable to lower rail access revenue.

Operating expenses increased by 4.0 per cent on the prior year, primarily due to higher labour costs with a majority of employees earning a 3.0 per cent indexation pursuant to their Enterprise Agreement, an increase in full time equivalents and an increase in employee leave provisions attributable to a lower bond (discount) rate, partly offset by an increase in capitalised labour and a reduction in consumable expenses.

Depreciation and amortisation expense increased 6.8 per cent driven by accelerated depreciation associated with revising down the residual value of regional railway track assets due to a reduction in scrap metal prices.

A dividend of $182.2 million was declared in respect of the year ended 30 June 2016. This dividend will be paid during 2016-17.

Financial performance measures compared to the 2015-16 Operational Plan

Unit 2015-16 Actual 2015-16 Target

Return on operating assets % 6.62 5.78

Debt to debt plus equity % 51.48 52.42

The performance indicators listed above are as per those included in the Queensland Rail Operational Plan 2015-16.


Consolidated balance sheet as at 30 June 2016

2015-16 Actual ($M) 2014-15 Actual ($M)

Current assets 255.5 474.9

Non-current assets 6,619.9 6,409.5

Total assets 6,875.4 6,884.4

Current liabilities 646.0 613.1

Non-current liabilities 3,401.8 3,426.7

Total liabilities 4,047.8 4,039.8

Net assets 2,827.6 2,844.6

Contributed equity 2,591.9 2,591.9

Reserves - 0.1

Retained earnings 235.7 252.6

Total equity 2,827.6 2,844.6

The consolidated entities’ current assets decreased by $219.4 million to $255.5 million as a result of decreased cash deposits.

The consolidated entities’ current liabilities increased by 5.4 per cent to $646.0 million as a result of an increase in trade and other payables and an increase in employee benefit provisions, offset by a reduction in current tax liabilities.

Total equity for Queensland Rail decreased by 0.6 per cent to $2,827.6 million as a result of the declared dividend of $182.2 million greater than current year earnings of $165.3 million due to non-cash adjustments.

Consolidated cash flows for the year ended 30 June 2016

2015-16 Actual ($M) 2014-15 Actual ($M)

Net cash inflow from operating activities 501.3 570.5

Net cash outflow from investing activities (538.8) (474.6)

Net cash outflow from financing activities (179.0) (170.9)

Net decrease in cash and cash equivalents (216.5) (75.0)

The decrease in cash inflows from operating activities in the current year is due to a reduction in cash inflows from customers, an increase in outflows to suppliers and employees and an increase in outflows for income tax payments, offset by an increase in cash inflows from Transport Services Contracts.

The increase in cash outflows from investing activities in the current year is a result of increased expenditure on fixed assets and a reduction in inflows from proceeds for disposal of assets.

The increase in cash outflows from financing activities is attributable to an increased dividend payment. The consolidated entities’ net debt position increased by $266.5 million and total equity decreased by $17.0 million resulting in an increase in the gearing ratio from 51.5 per cent to 53.7 per cent.


Our safety and security

Queensland Rail continues its partnership with the Queensland Police Railway Squad to keep its customers safe. The Railway Squad increased by eight officers to a total of 78 in 2015-16.


Our safety and securityIn the 2015-16 financial year, Queensland Rail was voted the safest railway operator in Australia by its customers in a CANSTAR Blue survey. Safety is Queensland Rail’s highest priority and a number of key initiatives and improvements were delivered throughout the year to enhance the safety and security of the network for Queensland Rail’s customers, employees and the community.

Key highlights for 2015-16 include:

• Delivered the second annual Queensland Rail Signal Passed at Danger (SPAD) conference

• Boosted the Railway Squad to 78 officers, and increased Authorised Officers to 20

• January marked the lowest SPAD rate ever.

Queensland Rail’s ‘ZERO Harm’ strategy was implemented in 2008 and over the past eight years significant safety improvements have been achieved. These include a reduction in customer and employee injuries, decrease in SPADs and enhancements to safety management systems and processes. Queensland Rail is now recognised as having a strong and resilient safety culture.

Over the past five years, Queensland Rail has also seen a significant improvement in its safety performance with a 70 per cent improvement in the Total Recordable Injury Frequency Rate (TRIFR) and a 13 per cent improvement in TRIFR achieved during 2015-16.

Employee safety initiatives

‘Great Catch’ campaign

Queensland Rail is focussed on creatively engaging employees on the safety journey. The ‘Great Catch’ campaign was implemented in 2015 and encouraged employees to earn runs for their team by reporting near misses and hazards in the workplace.

The program delivered a significant increase in the number of near misses and hazards reported in the 2015-16 financial year, as well as driving improvements in the quality of reports received.

Queensland Rail received a Highly Commended award, from more than 150 entries across Australia, at the National Safety Council Awards in October 2015 for this innovative campaign.

‘Flip the Trip’ campaign

In Safe Work Australia Month, Queensland Rail introduced a new education and engagement campaign called ‘Flip the Trip’ to tackle the issue of employee slips, trips and falls.

The ‘Flip the Trip’ campaign educated employees about the impacts of slips, trips and falls and provided an engaging series of activities to reinforce desired behaviours and encourage employees to discuss the campaign at toolbox talks and through safety interactions.

Following the completion of the campaign, Queensland Rail achieved its longest period of sustained improvement with only one employee slip, trip or fall injury in the four months from December 2015 to March 2016.

‘SPAD Men and Women Creative Challenge’

Preventing SPADs is an important part of keeping Queensland Rail’s network safe. In October 2015, Queensland Rail launched a competition inviting all train crew across the organisation to develop their own advertising campaign, through the ‘SPAD Men and Women Creative Challenge’.

With a great response from train crew across both the Citytrain and regional networks, the competition saw a clear decrease in SPAD incidents, with Queensland Rail experiencing its lowest ever SPAD rates since the campaign commenced.

The success of the campaign emphasised the importance of consistently talking to staff about SPADs and SPAD prevention and engaging drivers in self and peer education. The initiative has helped Queensland Rail to achieve an outstanding SPAD performance with January marking the lowest SPAD rate ever.

2016 Queensland Rail SPAD Conference

Queensland Rail held its second annual SPAD Conference in April 2016. The conference was attended by approximately 100 participants from across the organisation. CEO Helen Gluer opened the event and was followed by a safety presentation from former National Rugby League great Shane Webcke. The conference reinforced Queensland Rail’s commitment to continuous performance improvement, emerging technologies and sharing information.

A series of interactive workshops were also conducted to share knowledge in relation to signal sighting, operational planning, human factors and SPAD analysis.

‘Every Safe Second Counts’ campaign

Finding new and creative ways to improve safety performance across the Citytrain network led to the introduction of a new digital game for employees, ‘Every Safe Second Counts’.

The game provided an interactive experience designed to improve active platform management at stations on the Citytrain network and brings together some of the organisation’s highest priorities: safety and on-time running.


Alcohol and Other Drugs (AOD) program

Queensland Rail’s AOD testing program is among the most rigorous in the Australian rail industry. In 2015-16, 8112 tests were conducted on Queensland Rail employees and contractors as part of the organisation’s AOD testing process. The number of tests increased by over 33 per cent compared to the 2014-15 financial year. The rate of positive tests improved from 0.57 per cent in 2014-15 to 0.33 per cent in 2015-16.

To ensure Queensland Rail’s AOD program continues to reflect best practice, the organisation engaged Dr Jeremy Davey, Professor at Queensland University of Technology and Deputy Director of CARRS-Q, to review Queensland Rail’s existing AOD management policies, testing regime, historical test results and post-test management practices.

The review found Queensland Rail’s existing AOD management program has many industry leading characteristics. The review also highlighted some opportunities for improvement to move closer towards best practice including a focus on cultural change, ongoing education and awareness programs for employees. Additionally, testing is being expanded to increase visibility of the program and the associated deterrent effect.

David Williams, a double amputee rail accident survivor shared his story to remind customers about the dangers of overhead powerlines.


Safety and security initiatives for customers and the community

In the 2015-16 financial year, Queensland Rail continued its focus on customer safety through a number of new and existing initiatives including its long-standing partnership with Queensland Police Service (QPS) and its dedicated Railway Police Squad.

Security personnel

Queensland Rail employs a range of security personnel to enhance the safety and security of the rail network.

Queensland Rail continues its partnership with the QPS to boost security on the rail network with a total of 78 Railway Police Squad. Other initiatives include the enabling of remote access to 7000 rail station based Closed Circuit Television (CCTV) cameras at Police Headquarters.

This means QPS can now access our extensive CCTV network in real-time at their Police Communications Centre, improving responses to anti-social behaviour on the rail network.

In February 2016, Queensland Rail also recruited six new Authorised Officers, equipped with the skills to maintain safety and security and provide outstanding customer service on the Queensland Rail network. This has increased the total number of Authorised Officers to 20.

CCTV

In 2015-16, Queensland Rail installed an additional 500 CCTV cameras at various locations across the network to increase the total number of CCTV cameras state-wide to more than 9000.

CCTV cameras are monitored in real time at Queensland Rail’s 24-hour security monitoring facility located in the new RMC. The 24-hour security monitoring includes a new media wall, more than triple the size of the previous one. The Security Monitoring Team is now able to better monitor CCTV footage with technological enhancements improving Queensland Rail’s ability to detect and respond to crime on the network.

Emergency preparedness

Throughout 2015-16, Queensland Rail conducted 25 emergency exercises with employees and other agencies including the Queensland Fire and Emergency Service, QPS and the Queensland Ambulance Service.

The simulated exercises are an important part of emergency training and ensure procedures, protocols and communications are well practised in the unlikely event there is a major incident.

This year, field exercises were conducted in Brisbane, Cairns and Townsville and included emergency response training to a range of incidents including a vehicle striking the KSR and an emergency incident requiring specialised assistance on Citytrain rollingstock and at various locations throughout the network.

Level crossing safety

Queensland Rail is heavily focussed on level crossing safety and delivered a range of initiatives to reduce the number of near miss incidents at level crossings across the network.

In March 2016, a $12.5 million investment was announced to upgrade 15 level crossings across regional Queensland and improve safety at road and rail interfaces. Key level crossings being upgraded include Stewart Road in Fishery Falls, Assmen-Aloomba Road in Aloomba, Deppeller Road in Edmonton and Kate Street in Portsmith.

Queensland Rail was pleased to record a 25 per cent reduction in the number of level crossing collisions with road vehicles when compared to the previous financial year, with just three incidents occurring in 2015-16.

Bridge strike protection

Queensland Rail continues with a bridge protection program to prevent over-height vehicles from colliding with rail bridges and to reduce the likelihood of vehicle roll-overs.

As part of this program, new protection beams were installed at Allwood Street at Indooroopilly, Price Street at Nambour and Back Woombye Road at Woombye.

Queensland Rail also installed technology at a number of key locations to help detect, record and provide alarms when vehicles impact a bridge. The technology records photos and video footage of an incident, which allows Queensland Rail to conduct a basic initial remote inspection and potentially decrease delays to services resulting from a bridge strike incident.

Industry collaboration

Queensland Rail played host to a series of rail safety workshops on behalf of the Australasian Railway Association (ARA) and the Rail Industry Safety Standards Board (RISSB).

Representatives from the Office of the National Rail Safety Regulator, the Australian Transport Safety Bureau, RISSB, the ARA and all major railways in Australia and New Zealand came together to build upon an existing body of work and knowledge on a range of topics, including safety management, SPAD prevention and safeworking rule development.

The workshops provided an excellent opportunity to work with the broader rail industry to improve safety and hear lessons learnt from interstate and international colleagues about incident case studies, innovative safety solutions and emerging safety issues.

Community education

This year, Queensland Rail celebrated its 10th anniversary of hosting Rail Safety Orientation Days for schools and community groups. The milestone was marked with an outstanding attendance of 100 Milpera State High School students from 29 different countries, accompanied by 12 bilingual assistants and staff at Roma Street station.


Queensland Rail’s operations team access world class technologies in train control to safely move customers from home to work every day.


Through the program, Queensland Rail aims to positively influence the attitudes and behaviours of school students and communities to act safely and respectfully at railway stations and level crossings.

Throughout the 2015-16 financial year, Queensland Rail delivered 122 rail safety presentations to youth groups, early learning centres and community organisations. Queensland Rail also visited community groups and schools in Mount Isa and Bundaberg to address regional level crossing safety. Throughout 2015-16, the community education team delivered the safety message to more than 23,549 students in Queensland.

Rail Safety Week

Each year, Queensland Rail participates in Rail Safety Week, a national campaign to promote safety around the rail network.

In August 2015, Queensland Rail launched its #railwaysarenotplaygrounds online safety campaign, which featured a double amputee rail accident survivor who lost his limbs as a result of falling onto overhead power lines at Manly station in 2000.

The campaign reached more than 150,000 social media accounts and was viewed in excess of 40,000 times within South East Queensland.

The campaign message was also supported through traditional media and featured at the Queensland Rail Ekka pavilion.

Enterprise Safety Strategy

While Queensland Rail performed strongly in many key safety areas and metrics throughout 2015-16, performance in some areas has started to plateau.

To deliver further improvements in its safety performance, Queensland Rail conducted a review of its Corporate Safety Strategy during the 2015-16 financial year.

This review delivered a new Enterprise Safety Strategy designed to reflect and enhance the significant work performed over the past eight years as part of Queensland Rail’s previous ‘ZERO Harm’ strategy.

The new strategy will ensure Queensland Rail’s safety focus remains strong, delivering improved safety for customers and employees through targeted improvement and engagement programs.

The Enterprise Safety Strategy will focus on areas of improvement in 2016-17. For those metrics Queensland Rail has been performing well against, such as SPADs, more aggressive targets will be set. For those areas which require sustained improvement, for example safeworking breaches, targets will be reviewed to stretch performance and also reflect more realistic and achievable outcomes in order to promote positive safety behaviour.


Our people

“Reuniting Trey with his long lost friend Ted and seeing his smile, is all in a day’s work.”

Aidan – Group Station Master


Our peopleQueensland Rail encourages a safe, inclusive environment where its people not only deliver quality service, but achieve their own career aspirations. Queensland Rail strives to inspire teamwork and forward thinking.

As at 30 June 2016, there were 5959 full-time equivalents (FTEs) employed at Queensland Rail, of which:

• 88 per cent were employed in core functions (Citytrain, Regional Network and Freight, Travel and Tourism)

• The top three occupations were Train Driver (11 per cent), Station Manager and Officer (10 per cent), and Trackworker (10 per cent)

• 21 per cent were women (49 per cent in enabling functions and 16 per cent in core functions)

• 2 per cent identified as being Aboriginal or Torres Strait Islander

• 5 per cent identified as having a disability and 8 per cent as coming from a non-English speaking background

• 93 per cent were employed on a permanent basis

• The average length of service was 15 years and the average age of employees was 45 years.

Embracing a diverse and inclusive workforce

Queensland Rail is committed to creating a diverse and inclusive workforce to deliver better outcomes for its people and customers. Throughout the 2015-16 financial year, Queensland Rail commenced a number of new programs focussed on increasing diversity.

Key initiatives included workplace flexibility workshops to promote more flexible working arrangements, consultation with the National Disability Recruitment Coordinator to enhance workplace facilities for people working with a disability, and partnering with the Multicultural Development Association to implement the ‘Work and Welcome’ program for refugees.

Queensland Rail has continued its focus on programs and events that raise awareness and foster diversity and inclusion, including providing mentoring and bursaries for students from a refugee background and supporting events such as International Women’s Day, NAIDOC Week, Multicultural Week and International Day of People with a Disability.

Enterprise Agreements

In April 2016, the Fair Work Commission provided formal approval of Queensland Rail’s six new 2016 Enterprise Agreements.

This approval followed productive workplace bargaining with rail unions and an Australian Electoral Commission (AEC) ballot where 98 per cent of Queensland Rail eligible staff who voted, were in favour of the Enterprise Agreements.

The Agreements are in place until 2019 and deliver a range of employee benefits, including a wage increase of 12 per cent over the next four years.

Queensland Rail also began negotiations for a new Traincrew Enterprise Agreement in May.

Rail Centre of Excellence

In 2016, Queensland Rail relocated its off-site employee training facility to TAFE’s Acacia Ridge campus, to provide employees and TAFE Queensland apprentices and trainees with unique access to rail-based training.

The new facility, known as the ‘Rail Centre of Excellence’, will be used by Queensland Rail as part of its ongoing in-house training program, which educates around 300 employees each year in track infrastructure, railway signalling and overhead traction maintenance.

The centre will also be used by TAFE students and support new and existing trade training requirements in areas such as electrotechnology, engineering, metalwork and fabrication.

Leadership

A key focus this financial year has been on the development of our 400 frontline leaders through the design of Leadership Fundamentals, a program of learning that provides for targeted capability development as well as an option for an accredited outcome to achieve a Certificate IV in Leadership and Management.

Queensland Rail continues to develop its enterprise leadership capability through the quarterly Leader’s Forum designed to keep its top 120 leaders abreast of results, key projects and initiatives. Its monthly Senior Leadership Forum provides an opportunity for 43 of Queensland Rail’s Senior Leaders to “bring the outside in” and discuss topics linked to its business strategies with input from external leaders and experts.

Talent development and succession planning continues with a number of leaders involved in job rotations, executive mentoring and shadowing, external courses and individual coaching assignments.


‘Behind our Network’

This year, Queensland Rail provided customers and the community a sneak peek behind the scenes with an online campaign, ‘Behind our Network’.

The video campaign provides the community with the opportunity to learn more about Queensland Rail and the different jobs people perform within the business.

Queensland Rail has showcased a number of roles, including both males and females in various positions including Train Driver Peter, Train Guard Anita, Electrician Amber, Train Controller Tori and Central station Communications Officer James.

Young Professionals

The Young Professionals network provides a way for young employees within Queensland Rail to develop their career.

The group is run by the Young Professionals leadership team and provides opportunities for people to learn and connect with other professionals within the business.

The group was delighted to host the Minister for Transport and the Commonwealth Games, Stirling Hinchliffe MP, at the Young Professionals 5th Annual Conference held in Brisbane in May 2016.

Apprentices, trainees and graduates

Queensland Rail recruited 34 apprentices, trainees and graduates in the 2015-16 financial year.

Apprentices, graduates and trainees provide an opportunity for Queensland Rail’s experienced employees to mentor and share their technical skills and rail knowledge with the next generation.

Queensland Rail’s new apprentices, graduates and trainees are located across the state in Brisbane, Ipswich, Toowoomba, Gracemere, Bundaberg, Townsville and Cairns.

Train Guard Anita, featured in the heavily popular ‘Behind our Network’ online campaign which provides customers with an insight into what occurs behind the scenes at Queensland Rail.


Tom’s vigilance and commitment to level crossing safety has made a difference to his customers at

Wynnum Central station.


Our environment

A bird’s eye view of the koala habitat trees at Mutdapilly. Queensland Rail planted approximately 34,000 trees as part of its fauna management initiatives.


Our environmentQueensland Rail is committed to managing its services and operational activities in an environmentally responsible manner to meet not only legal obligations but also community expectations.

Sustainability of rail travel

Rail is an efficient and sustainable mode of transport due to its ability to carry a large number of people in one journey.

Last year, 290,000 passenger train services were operated across the network. Queensland Rail’s six-car trains have a service capacity ranging from 450 to 750 passengers.

Noise management

Queensland Rail is committed to implementing a range of noise management and mitigation measures to aid noise reduction within the communities it operates.

Queensland Rail is focussed on continually reviewing noise mitigation techniques to deliver further improvements where practical.

In the 2015-16 financial year, Queensland Rail commissioned an independent assessment of the safeworking requirements for rail traffic to sound the klaxon (horn) on the Queensland Rail network and is currently reviewing the recommendations made as part of this assessment.

Fauna management

Queensland Rail continues to investigate and implement a range of initiatives which aid in the protection of native wildlife across the rail corridor, including during construction and maintenance activities.

As part of this commitment and at the end of April 2016, Queensland Rail finalised the planting of approximately 34,000 koala habitat trees as part of the Darra to Springfield Stage 2 project environmental offset. The planting was conducted at Mutdapilly, located in the Scenic Rim area South West of Brisbane.

Queensland Rail also works closely with wildlife care groups and the Royal Society for the Prevention of Cruelty to Animals (RSPCA) to undertake rescue and relocation of injured and at risk native animals encountered within the rail corridor.

Environmental compliance

On 27 December 2015, a third party operator’s train, consisting of one locomotive and 26 freight tanker wagons owned by another third party carrying concentrated sulfuric acid derailed on the Mount Isa line, approximately 20 kilometres east of Julia Creek.

Around the time of the derailment, the area had received significant rainfall and subsequently there was localised flooding. The product owner calculated that approximately 60,873 litres of concentrated sulphuric acid was spilled after the derailment. While much of the acid was contained within a ponded area constructed immediately following the incident to mitigate the environmental harm, acid runoff also flowed along a drainage pathway to the north of the rail corridor and onto neighbouring properties.

Queensland Rail worked quickly and collaboratively with the Department of Environment and Heritage Protection (EHP), the third party operator and the owner of the product, to effectively manage the environmental impacts from the incident.

The cause of derailment is still under investigation. The Australian Transport Safety Bureau (ATSB) is conducting an investigation into the incident and Queensland Rail is cooperating fully with that investigation. The ATSB released its preliminary report on 21 April 2016, with the final report expected later in 2016.

The ATSB’s preliminary finding suggests scouring of the ballast and formation by floodwater was a contributing factor to the derailment, and noted that Queensland Rail’s management of operations in response to the wet weather event preceding the incident was generally in accordance with its existing policies and procedures.

Environmental innovation

Queensland Rail is committed to improving the efficiency of its infrastructure and services to deliver positive environmental outcomes.

This year, to improve road fleet capabilities Queensland Rail installed light-emitting diode (LED) work lights to provide brighter, more efficient lighting for night work and trialled a new solar panel charging system on 10 of its trucks to maintain the battery’s charge through regular start/stop activities. A key reason for the solar trial was the increasing number of breakdowns due to failed batteries and an increasing reliance on the vehicles 12V system for running accessories fitted to the trucks such as lights, fridges, power tools and tablets. The trial has proven successful with the vehicles showing a reduction of more than 90 per cent in battery breakdown issues. Queensland Rail is now working to make the solar fitout a standard installation in new as required vehicles, which also delivers a considerable cost reduction by removing the costs for additional batteries and upgraded alternators.


In addition, Queensland Rail is investigating the possibility of using solar to power remote level crossings. Solar power is currently used in conjunction with batteries at a number of sites, however a new solution is now being trialled at Lane Road near Rosewood and Thallon, to solely operate the crossing by solar.

Environmental workshops

Queensland Rail commenced the roll out of environmental training and awareness workshops in May 2016 with a selection of teams in North Queensland.

The specialist workshops sought to help employees better understand the relevance of diverse environmental legislation and the impact their activities may have on the environment and community. A selection of new practical environmental management tools were workshopped with the team and Queensland Rail plans to roll out further workshops in 2016-17.

Coal dust management on the West Moreton line

Queensland Rail, as a part of the South West System User Group, continues to support the implementation of the South West System Coal Dust Management Plan, including coordinating with the Department of Science Information Technology and Innovation to conduct real time air quality monitoring adjacent to the West Moreton line.

Live air quality data from the monitoring site is made available to the public via the Live Air Data portal on the Department of Environment and Heritage Protection’s website, and is regularly monitored by Queensland Rail. Airborne particulate concentrations continue to be within ambient air quality objectives, and are consistently comparable to other ambient air quality monitoring stations within South East Queensland.

KSR line stabilisation

The KSR travels within the Wet Tropics World Heritage Area, which is recognised as being of significant scientific and cultural value and also through Barron Gorge National Park, one of Queensland’s most iconic protected area estates.

To ensure the protection of the surrounding environment and stability of the rail line, Queensland Rail commenced a $12.6 million stabilisation project in April.

The project was the result of a detailed five year geotechnical assessment to understand environmental conditions. Throughout this time, geotechnical engineers monitored and conducted inspections to identify any requirement for stabilisation works.

There were 13 locations identified as benefiting from reinforcement and work began this year to stabilise these sites. The stabilisation works will future proof the iconic rail line, minimise the risk of rock falls and landslides and reduce ongoing maintenance costs.

Queensland Rail engaged local environmental consultants, with specialist skills in rainforest ecology, to assess the ecological communities within and adjoining the KSR before commencing works. The assessment identified locally important plants and fauna habitat, which guided the development of a site specific environmental management plan.

Queensland Rail also consulted with the Wet Tropics Management Authority and Queensland National Parks and Wildlife Service to ensure protection and appropriate environmental management of the area.

Gemma, a botanist assesses the ecological community within the Wet Tropics World Heritage Area.


“No day is ever the same – we may get called out to retrieve an item off the track, rescue and release wildlife or resolve a complex network issue to ensure the safety of our customers.”

Tyrone – Rail Operations Response Unit


Our community

“I value the opportunity to engage with our local communities and help raise awareness about the importance of rail safety on our network.”

Dylan – Customer and Community Engagement Coordinator


Our communityQueensland Rail is passionate about community involvement and is a railway industry leader for practical, innovative ways of working with communities. This commitment is delivered through a wide range of programs and events that connect the business with customers, schools, not-for-profit organisations and Queensland communities.

Key highlights in 2015-16 include:

• Donated more than 7000 gifts and $20,000 in gift cards from customers and employees to support the Queensland Government Department of Communities 2015 Christmas Care Appeal

• Educated more than 23,000 students about rail safety.

Charity and community partnerships

Queensland Rail continued its proud support of community groups, charity partners and not-for-profit organisations through a range of initiatives.

Donation collections at key stations on the network showcased the generosity of Queensland Rail customers and employees, raising more than $500,000 for Queensland Rail’s top five charity partners – beyondblue, Cancer Council Queensland, Guide Dogs Queensland, The Prince Charles Hospital Foundation and The Starlight Children’s Foundation.

Other station collections saw the Queensland Rail community generously donate to a number of other worthy causes, including Autism Queensland, MS Queensland and the Endeavour Foundation.

In February 2016, Queensland Rail also supported the Prince Charles Hospital Foundation Cycle of Giving event, providing two charter services for more than 500 cyclists who participated in the annual charity ride. Queensland Rail provides this service every year to help riders get to the starting lines for the event, which promotes organ and tissue donation and raises funds for life changing medical research.

Throughout the past 12 months, Queensland Rail has joined forces with community groups, government departments and media organisations to raise awareness about domestic violence and deliver support to the many thousands of people affected by this issue.

In August 2015, Queensland Rail donated more than 3000 essential items to RizeUp (formerly Assist a Sista), dedicated to supporting hundreds of families experiencing domestic violence. In addition, more than 1800 donated items including blankets, sleeping bags and warm clothing items were delivered to the Brisbane homeless support service, the 139 Club in September.

Rail150 wrap up

Throughout July 2015, Queensland Rail continued celebrations for its 150th anniversary with a re-enactment of Queensland’s first train journey, from Ipswich to Bigges Camp (Grandchester) in 1865.

The Rail150 celebrations culminated on 31 July 2015, when Ipswich line customers were surprised by a steam train replacing their regular Citytrain service. The pride of Queensland Rail’s heritage fleet, BB18¼ 1079, better known as ‘Bety’, transported customers to Central station, where the birthday celebrations continued with a band and steam train inspired cake.

In December, Queensland Rail produced a limited edition coffee table book to commemorate the special moments captured during the 150th celebrations.

Accessibility

Queensland Rail is committed to providing rail services that enable all customers to carry out their journey without barriers. The organisation takes great pride in its track record of improving accessibility and continues to invest heavily in this area.

The State Government has committed $212 million to deliver accessibility upgrades to 14 high priority stations within the next five years.

This year, works began at Alderley, Dinmore, Graceville, Nambour and Newmarket stations, the first five of the station upgrades, which will significantly improve access and facilities for customers.

Engaging with customers with disabilities is an integral part of planning for accessible rail services. Queensland Rail works together with the disability sector to identify and remove barriers and pioneer solutions that support inclusive communities.

Established in 2003, Queensland Rail’s Accessibility Reference Group is the primary forum for engagement with various disability sector organisations. Its members comprise of Vision Australia, Blind Citizens Australia, Guide Dogs Queensland, Better Hearing Australia, Deaf Services Queensland, Cerebral Palsy League, Endeavour Foundation, Queenslanders with Disabilities Network and the MS Society.


The reference group meets on a quarterly basis to ensure the voices of customers and the community are heard. In turn, this work provides valuable input into decision making to deliver a more accessible rail network.

Positive pARTnerships Program

Through its ongoing Positive pARTnerships Program, Queensland Rail collaborates with communities and local artists to transform rail infrastructure with high quality public art. The program aims to instil community pride in Queensland Rail’s infrastructure and to date, has delivered more than 100 projects, covering more than 20,000 square metres of the rail network.

New projects in 2015-16 brightened locations right across the Citytrain network, including Loganlea, Petrie, Milton and Doomben stations, as well as Brunswick Street in Fortitude Valley and Merivale Street in South Brisbane.

Governor’s regional trip

In June this year, Queensland Rail hosted His Excellency the Honourable Paul de Jersey AC on a unique Spirit of the Outback service that took Queensland Rail’s historic ‘Vice-Regal’ carriage to Western Queensland.

The whistle-stop tour included community events at Emerald, Barcaldine and Longreach, as part of an initiative with the Queensland Governor to connect with rural Queenslanders and lift the spirits of the drought-stricken area.

The Vice-Regal carriage, known as Special Car 445, was built at the Ipswich Railway Workshops in 1903 using Queensland timbers and original artworks and was used as part of the Royal trains for the visits of the Duke and Duchess of York in 1927, the Duke of Gloucester in 1934 and Princess Alexandra in 1959.

The mural of train driver Dave Hogan by internationally-renowned street artists Guido van Helten and Fintan Magee features in the rail corridor under the Inner-City Bypass.


Students from St Benedict’s College were given a special sneak peek at

Mango Hill East station.


Citytrain

Approximately 950 services operate across the Citytrain network each weekday.


CitytrainQueensland Rail’s Citytrain network delivers sustainable, safe, reliable, on-time and value for money metropolitan rail services for South East Queensland. This year, Queensland Rail delivered a range of customer focused initiatives to ensure the Citytrain network continued to perform strongly and support its customers.


• Best on-time running (OTR) 24/7 customer impact results in at least a decade with 96.24 per cent of all services arriving on time

• 52.44 million passengers travelled on the Citytrain network, up 1.65 per cent from 2014-15

• Approximately 290,000 services operated throughout the South East Queensland network

• Customer satisfaction results remained strong against a target of 70

• 1.6 million hours were spent maintaining the South East Queensland network.

OTR performance

Queensland Rail exceeded its on-time running performance target of 95 per cent this financial year and is on track to record its fourth consecutive year of annual OTR performance above that target.

In addition, Queensland Rail had its best on-time running 24/7 customer impact results in at least a decade with 96.24 per cent of all services arriving on time.

Significant on-time running improvement has been achieved over recent years primarily due to the initiatives of the OTR Taskforce, established in August 2012.

The OTR Taskforce continues to act as an integral part of Queensland Rail’s OTR management practices, providing a point of escalation and accountability for new and existing on-time running issues and continues to oversee and support ongoing and new initiatives and improvements.

Platform dwell time remains a strong focus for further improvement and the realisation of maximum capacity benefits.

Customer satisfaction

Overall customer satisfaction with the Citytrain network remained strong this financial year as Queensland Rail continued its focus on delivering a safe, reliable and on-time rail service.

In particular, Queensland Rail’s OTR performance contributed to high levels of customer satisfaction compared to other Australian rail operators, with Queensland Rail achieving four out of a possible five stars for overall customer satisfaction in a 2015 CANSTAR Blue survey.

RMC

The $40 million state-of-the-art RMC was officially opened in Bowen Hills in February 2016. The train control hub is the most advanced rail operations centre in the country and has revolutionised railway command in Queensland Rail, as well as industry-wide.

More than 250 employees work at the centre, managing approximately 900 passenger services, more than 800 kilometres of track and 150,000 customers passing through the South East Queensland network each weekday.

The new RMC has greatly improved capabilities for network controllers and response teams and assists in ensuring Queensland Rail continues its outstanding OTR performance. The new facility boasts world class technologies, including the second largest LG mimic panel in the world and enhanced incident management tools for faster decision making and communication in the event of an unforeseen incident occurring on the network.

Customer communications

In 2015-16, Queensland Rail expanded its engagement with customers and its presence in the community through its online digital strategy.

The strategy included the delivery of Queensland Rail’s new website in July 2015. With a fresh look and feel, the website now meets the Government’s Web Content Accessibility Guidelines.

In December 2015, Queensland Rail launched a new mobile app giving South East Queensland customers instant access to a range of features, including the ability to report maintenance issues and lost property enroute, as well as access to location station information and the TransLink journey planner. Since launching there has been more than 8500 downloads to mobile devices.

Also in 2015, the Customer Systems and Communication Taskforce was formed with the objective of improving service information and communication to customers.

The Taskforce identified a number of ‘quick win’ initiatives and is continuing to work on long-term improvements designed to enhance customer communication, particularly during service disruptions.


The Taskforce has engaged industry experts to review Queensland Rail’s current communication systems and create a road map to improve customer communication.

Queensland Rail looks forward to delivering further improvements in the way it communicates with customers as part of this work in the 2016-17 financial year.

Network maintenance and enhancement programs

Queensland Rail is committed to delivering projects which enhance the South East Queensland rail network and ensuring it continues to deliver a high performing, reliable and safe railway.

In 2015-16, Queensland Rail spent $142 million on the maintenance of the South East Queensland network, which spans over 800 kilometres of track. This work was aimed at improving network reliability and supporting strong OTR performance and customer satisfaction.

Queensland Rail also directly spent $292 million on capital works projects (South East Queensland Network Performance Program), to modernise the network and deliver a world-class rail service to meet community needs. This work also focussed on unlocking network capacity and meeting the challenges of population growth.

ETCS

Queensland Rail will invest almost $700 million over the next five years in a new world-class ETCS which when implemented, will deliver significant train capacity and safety performance improvements for the Citytrain network.

The new signalling system will be installed between Milton and Northgate stations and between Caboolture and Gympie North on the North Coast line. The new system will provide an automatic braking system which will ensure there is a safe distance between trains at all times and will enable trains to travel more closely together thereby increasing train capacity without compromising safety.

The Milton and Northgate section is a critical project to deliver Cross River Rail (CRR). It will boost capacity and address demand while Cross River Rail is being built.

Coomera to Helensvale Duplication Project

In March 2016, the first sod was turned on the $163 million Coomera to Helensvale Duplication Project.

The 8.2 kilometre rail duplication, including eight new rail bridges, will significantly improve the capacity and reliability of the Gold Coast line in the lead up to the 2018 Gold Coast Commonwealth Games.

The works are projected to be completed by late 2017, weather and construction conditions permitting, in time for the Commonwealth Games in April 2018.

Gold Coast line station refurbishments

Queensland Rail is delivering a $10 million refurbishment program for six stations on the Gold Coast line to improve station facilities ahead of the 2018 Gold Coast Commonwealth Games.

Ormeau, Coomera, Helensvale, Nerang, Robina and Varsity Lakes stations will undergo a refresh, including the painting of station buildings, an upgrade of toilet facilities, new signage, CCTV cameras and Passenger Information Display screens.

Station upgrade program

As part of Queensland Rail’s commitment to improve accessibility, Queensland Rail has commenced a $212 million program to upgrade 14 South East Queensland railway stations over the next four years.

Major construction works are underway at Alderley, Newmarket, Dinmore, Graceville and Nambour stations. Improvements include new footbridges and lifts, high level platforms to provide easier access where the assisted boarding point is located, accessible toilets, extended waiting shelters and a range of other accessibility features, such as hearing aid loops.

The upgrade of these stations will assist in improving transport options for passengers with accessibility requirements and helps to ensure all passengers can travel on the Queensland Rail network safely and easily.

Shorncliffe and Palmwoods station restoration

Heritage restorations were also announced in the 2015-16 financial year, for Shorncliffe and Palmwoods stations.

The works at Shorncliffe will restore the station to its original 1897 appearance and preserve its place in the local history of Shorncliffe.

The works at Palmwoods station include a repaint in the traditional heritage colour scheme and minor timber works.

Transit Orientated Developments (TODs)

In 2015-16, Queensland Rail worked closely with the Department of Transport and Main Roads (DTMR) to support the development of TODs.

TODs support Queensland Rail’s strategy to grow public transport patronage and work is underway to support developments at South Bank, Buranda, Cleveland, Albion, Ferny Grove, and Varsity Lakes.

Temporary platform extensions

Queensland Rail is committed to improving station facilities to ensure a comfortable and enjoyable commute for its customers.

The temporary platform extensions at Pomona, Cooran and Eumundi stations have reached the end of their life and in January 2016, Queensland Rail announced a $3 million upgrade to build permanent station platforms at these stations.

Work is currently underway and is expected to be completed in 2016-17 financial year.


Merivale Bridge overhaul

The Merivale Bridge is one of Brisbane’s most recognised structures, spanning 130 metres across the Brisbane River from Roma Street to South Brisbane, and provides a crucial link for train passengers travelling south of the city.

More than 420 trains run across the bridge each weekday and important works commenced early in 2016 to refurbish the rail bridge.

Work is due to be completed by mid-2018 and will include replacing the bridge’s current wooden sleepers with new composite sleepers.

Queensland Rail crews will also take the time to undertake extensive cleaning of the bridge, and for the first time since it was constructed in the late 1970s, the bridge will be repainted.

Queensland Government rail projects

In 2015-16, Queensland Rail continued its work with DTMR to deliver a number of key projects. The major projects include delivery of the MBRL and NGR.

The MBRL will deliver a 12.6 kilometre dual-track passenger rail line between Petrie and Kippa-Ring, including six new railway stations. The new line will significantly improve public transport in the area providing an incentive for people to switch from private vehicles to public transport.

The NGR project will include the delivery of 75 new passenger trains, significantly increasing South East Queensland’s train fleet to meet the growing demand for rail services.

To support the delivery of the NGR project, Queensland Rail has implemented an NGR Operational Readiness Program, which will ensure the seamless introduction of the new fleet on Queensland Rail’s Citytrain network. As part of this project, Queensland Rail is also working to deliver new infrastructure upgrades to accommodate the new trains and implementing new business systems and procedures to support their operation.

The Queensland Government’s NGR project will see a significant increase in the South East Queensland fleet to meet the growing demand for rail services.


Regional Networkand Freight

“Our crews understand how important it is to regularly maintain the network to keep our freight customers and community members safe in Far North Queensland.”

Doug – Track Worker


Regional Network and FreightQueensland Rail’s regional network is one of the state’s largest economic enabling assets, comprising seven rail systems that convey passenger and freight services across Queensland to support the state’s economy in the tourism, mining, agriculture, construction, wholesale and retail sectors.


• $213.8 million access revenue received

• $218.3 million in operational expenditure on track maintenance and stations for all Supply Chain South and North systems.

Regional network

Queensland Rail’s regional network spans more than 5700 kilometres of track and includes the Mount Isa, North Coast, Western, West Moreton, South Western and Central Western lines. In 2015-16, Queensland Rail spent $225 million on maintaining the regional network.

Mount Isa line improvements

The Mount Isa line extends from Townsville to Mount Isa and each year, Queensland Rail spends approximately $50 million maintaining the line to ensure its ongoing safety and reliability.

In 2015-16, Queensland Rail announced an additional $25 million investment in the line to replace 41 kilometres of sleepers at high priority locations between Richmond and Julia Creek. Work commenced in May 2016 and will ensure that Queensland Rail delivers a more stable and reliable track structure for freight services, by replacing steel sleepers with concrete.

Other works throughout the year included an upgrade of the Acid Junction to Mount Isa section of track, with new rail, ballast and concrete sleepers. This also included a full track relay of the Cape River Bridge, between Homestead and Pentland, and a one kilometre of full track relay between Cloncurry and Marimo.

North Coast line improvements

The North Coast line extends from South East Queensland to Cairns and each year, Queensland Rail spends approximately $86.91 million maintaining this asset.

This year, a further $100 million of expenditure was allocated as part of the North Coast Line Capacity Improvement project, to enhance connections between South East Queensland and communities in the north. The project will increase the capacity of the North Coast line, by improving infrastructure that will permit increased train lengths. The North Coast line upgrade project will ensure that the line can accommodate a growth in demand on this vital part of the freight network.

Significant capital investment was made to upgrade rail infrastructure in Bundaberg and the Wide Bay region, to safeguard the reliability and safety of rail services. The critical work included providing a new signalling system for Bundaberg and Bundaberg North stations, as well as upgrading the Burnett, Boyne and Kolan Bridges and replacing the Cabbage Tree Creek and Redbank Road bridges.

West Moreton system improvements

The West Moreton system extends from Rosewood to Miles, to Cunnamulla and Quilpie and branches off at Toowoomba, travelling to Wallangarra and Thallon and Wyreema to Millmerran.

Each year, Queensland Rail invests approximately $13 million on the maintenance of the West Moreton line to keep western communities connected by rail and ensure a safe and reliable network for both freight services and the Westlander passenger service.

This year, the Minister for Transport announced that Queensland Rail would spend $2.5 million to upgrade rail facilities on the West Moreton system, to support industry. This work will allow for the expansion of Oakey Beef Exports and includes upgrading rail sidings, track signalling and level crossing protections. It also involves replacing 80 per cent of the sleepers and some of the ballast on the old Cecil Plains branch line, so that it can be reopened for operation.

Central Western system improvements

The Central Western system takes in Springsure Angle to Winton and branch lines, including Emerald to Clermont to Blair Athol and Wurba Junction to Springsure.

Queensland Rail is continuing with a program of work to upgrade and replace timber bridges in the Central West, to achieve reduced maintenance costs and ensure it continues to deliver a safe and reliable network.

This year, Queensland Rail invested $17.5 million on this system, including the replacement of 22 timber bridges with concrete structures.


South Western and Western system improvements

The South Western system comprises Toowoomba to Warwick, Wyreema to Brookstead, Warwick to Wallangarra and Warwick to Thallon.

The Western system comprises Miles to Charleville then Quilpie and lies to the west of the West Moreton system.

This year, Queensland Rail allocated $2.5 million to commence the replacement of the 100 year old Kings Creek rail bridge between Warwick and Toowoomba with a more durable, reliable and easy to maintain concrete structure.

This work was a part of Queensland Rail’s commitment to replace timber bridges, to reduce ongoing maintenance costs and provide safe, timely and adequate rail services between Toowoomba and Warwick.

In 2015-16, Queensland Rail also spent $700,000 on improving the condition of timber sleepers in the western and south western areas of the network. This is in addition to $500,000 which was spent on improving the rail alignment and track stability between Morven and Charleville.

Investment in the South Western system was supported by an increase from 473,000 gross tonnes railed in 2014-15 to 669,771 gross tonnes in 2015-16. This equates to a 42 per cent increase in railings across all traffic on the system.

Queensland Rail supports approximately 40,000 freight services annually to connect communities.


Regional freight

Queensland Rail facilitates approximately 40,000 regional freight services annually. Products hauled include:

• Intermodal/general freight, industrial products and rural commodities on the North Coast line

• Bulk minerals, acid, fertiliser and mining inputs on the Mount Isa line and a selection of the North Coast line from Stuart to the Port of Townsville branch

• Rural commodities on the Western, South Western and Central Western systems

• Coal on the West Moreton system (with freight traffic from the Western and South Western systems also travelling across the West Moreton system).

Queensland Rail continues to work closely with DTMR and industry to implement the Regional Freight Strategy and help drive a modal shift from road to rail.

The regulatory framework

Access to Queensland Rail’s below rail network is regulated by the Queensland Competition Authority (QCA) under the Queensland Competition Authority Act 1997.

In February 2015, the QCA exercised its powers under the Queensland Competition Authority Act 1997 to require Queensland Rail to submit a draft access undertaking for the QCA’s approval.

A draft access undertaking, which sets out the terms and conditions under which Queensland Rail provides access to its rail network, was submitted to the QCA in May 2015.

On 17 June 2016, the QCA issued a final decision refusing to approve Queensland Rail’s draft access undertaking, and asked Queensland Rail to amend and re-submit it.

Queensland Rail is now working towards incorporating the QCA’s required amendments and will submit a further draft access undertaking by 15 September 2016.

Access revenue

Queensland Rail derives approximately 11 per cent of its revenue from third party access charges levied upon users of the below rail network. The transportation of freight and commodities to domestic and international markets on behalf of end customers, such as Woolworths, Coles, Glencore, Incitec Pivot and New Hope contributes significantly to the regional labour market and other positive economic outcomes for Queensland.

In 2015-16, $213.8 million in revenue was generated by providing rail paths to operators such as Aurizon and Pacific National on behalf of the above named end customers.

Freight movements

In 2015-16, Queensland Rail had total railings of approximately 20 billion gross tonne kilometres (GTKs) of freight by operators Pacific National and Aurizon (inclusive of Brisbane Service Area movements). The regional system and commodity details of these freight movements are:

• Mount Isa line - 5.7 billion GTKs of mineral concentrates, intermodal and general freight, sulphuric acid, fertiliser and cattle generating $91.06 million access revenue. This also includes access revenue from maintenance services, light engine/shunts and project repayments

• West Moreton system - 2.1 billion GTKs of coal, wheat and sorghum generating $46.39 million access revenue. This also includes access revenue from maintenance services, light engine/shunts and Access Facilitation Deeds ($8.52M). It does not include the South East Queensland portion of coal services

• North Coast line - 6.8 billion GTKs railing containerised and general freight, industrial products, sugar and molasses generating $44.89 million access revenue. This also includes revenue from maintenance services, light engine/shunts, on track vehicles, and project repayments. It also includes the NCL portion of revenue from Mount Isa services

• Central West line - 85 million GTKs of livestock and Gypsum generating $170,000 access revenue. This also includes revenue from maintenance services and ASSCO (Australian Society of Section Car Operators)

• Regional West line - 30.7 million GTKs of livestock generating $43,000 access revenue. This also includes revenue from maintenance services

• South Western line - 139.5 million GTKs of agri-business freight generating $957,000 access revenue. This also includes revenue from maintenance services, Southern Downs Steam railway and ASSCO.


Travel and Tourism

During April, the Spirit of Queensland celebrated travelling two million kilometres between Brisbane and Cairns.


Travel and TourismThe Queensland Rail Travel and Tourism network plays an important role in connecting regional Queensland and offers the largest and most comprehensive network of long distance and tourist trains in Australia. Queensland Rail’s services extend along the Queensland coastline from Brisbane to Cairns and west to Charleville, Longreach and Mount Isa.


• More than 735,000 passengers travelled on the Travel and Tourism network

• 85.56 per cent of Traveltrains arrived at their destination on time

• 2340 services operated across the Travel network throughout the year

• Customer satisfaction levels performed above a target of 81.00 out of 100 index score.

Customer satisfaction

To meet customers’ needs, the Travel and Tourism business continued to roll out products and service enhancements across its long distance services.

New offerings included a trial of tablet devices on the iconic Inlander service, which has transformed onboard entertainment with passengers now able to enjoy hours of movies, television shows and music streamed wirelessly to tablet devices.

Bundaberg and Rockhampton Tilt Train overhaul

The Bundaberg and Rockhampton Tilt Trains are the most popular services of the Traveltrain fleet carrying 180,000 passengers. In 2015-16, the entire Traveltrain fleet carried nearly 320,000 passengers.

Queensland Rail is continuing with its mid-life overhaul of the Tilt Trains to extend their service life and ensure they continue to perform safely and reliably for many more years to come.

The first refurbished Tilt Train was completed and re-entered service in mid-2016 and the final train is expected to return to service in 2017.

Enhancements include upgrades to key mechanical, electrical and control components and internal refurbishments including new carpet and curtains.

KSR – 125 year celebrations

In June 2016, Queensland Rail celebrated the 125th birthday of the KSR.

The KSR is one of the state’s most iconic tourist destinations, with more than 400,000 people taking a ride each year.

Constructed between 1882 and 1891, it is still considered a remarkable engineering feat. The railway is carved around the spectacular Barron Gorge National Park to Kuranda and the Heritage wooden carriages are

hauled more than 328 metres above sea level, travelling past waterfalls and one of Queensland’s most beautiful rainforests.

The 125th birthday was celebrated with local people, including school children who were encouraged to join in a poetry competition to recognise the iconic railway.

Improved Inlander timetable

In 2016, Queensland Rail introduced a new timetable for the Inlander service to boost outback tourism and improve connections for people travelling by train between Brisbane and Mount Isa.

The departure days of the twice weekly service were altered to provide better connections for customers with the southbound Spirit of Queensland service at Townsville. This alteration means that customers are now able to interchange with the Spirit of Queensland bound for Brisbane within a matter of hours.

Steam Heritage fleet

In 2015-16, Queensland Rail showcased its Heritage fleet throughout the Rail150 celebrations and also a special Spirit of Outback service which took the historic ‘Vice-Regal’ carriage to western Queensland.

Queensland Rail supplied more than 60 heritage charter services throughout the year to external parties who transported more than 25,000 passengers.

Queensland Tourism Awards

Last year’s Rail150 celebrations received the gold award in the ‘Cultural Tourism’ category at the Queensland Tourism Awards. This category recognises tourism operations that promote an appreciation of Queensland culture and history.

Thousands of people took part in Queensland Rail’s Rail150 celebrations, which included a series of events that showcased the state’s rail history including an epic steam train journey that visited more than 100 towns, the donation of 150 gifts to communities throughout Queensland, and the re-enactment of the first ever steam train journey to Grandchester.

The KSR was also successful at the awards for the second year in a row, winning bronze in the ‘Specialised Tourism’ service category. This category recognises the outstanding delivery of specialised tourism services that enhance the visitor experience and integrate with other tourism products.


Governance structure as at 30 June 2016

State of Queensland – Responsible Ministers

Treasurer, Minister for Aboriginal and Torres Strait Islander Partnerships and Minister for Sport

The Hon. Curtis Pitt MP

Minister for Transport and the Commonwealth Games The Hon. Stirling Hinchliffe MP

Queensland Rail

Board Members Michael Klug AM – Chairman

Aivars Blums David Marchant AM

Hon. John Mickel Paul Wallis

CEO Helen Gluer PSM

People and Safety Committee

Hon. John Mickel – Chair Michael Klug AM

David Marchant AM Paul Wallis

Audit and Risk Committee

Aivars Blums – Chair Michael Klug AM

David Marchant AM

Major Projects and Procurement

Committee

Paul Wallis – Chair Michael Klug AM

Aivars Blums Hon. John Mickel

Queensland Rail Limited

On Track Insurance Pty Ltd


Organisational structure as at 30 June 2016

Executive General Manager Projects

Liam Gordon

Chief Operating OfficerKevin Wright PSM

Executive General Manager Commercial and Strategy

and Chief Financial Officer (CFO)Mark Hope

Executive General Manager NetworkTim Ripper

Executive General Manager Human Resources

Nicholle Duce

General Counsel and Executive General

Manager GovernanceDiana Farrelly

CEOHelen Gluer PSM


BoardMichael Klug AM Chairman, Independent Non-Executive Director Appointed 1 October 2013

Experience: Michael is a well-respected solicitor with more than 40 years’ experience. He completed three terms as Partner in Charge of the Brisbane office of Clayton Utz.

Michael is a leader in the area of Alternative Dispute Resolution and is one of the original founders of LEADR (Lawyers Engaged in Alternative Dispute Resolution).

Michael is a nationally recognised practitioner, public speaker and lecturer in negotiation, having taught in Australia and overseas to university students, the business and public sector communities.

Michael has extensive board experience across a diverse range of fields including education, health care and transport, and is the immediate past Chairman of Autism Queensland. In 2014, Michael was appointed a

Member of the Order of Australia (AM) for significant service to the law in the field of alternative dispute resolution and to the community.

Qualifications: LLB, FAICD

Member of: Audit and Risk Committee, Major Projects and Procurement Committee, People and Safety Committee

Other Board and Committee Memberships: Chairman – Queensland Health Advisory Committee, Immediate Past President – Brisbane Club, Member – Lord Mayor’s Infrastructure Council.

Aivars Blums Independent Non-Executive Director Appointed 30 January 2014

Experience: Aivars is an economist with experience in the public and private sectors. He has an extensive government and industry policy background and worked with the Commonwealth Department of Trade, the Australian Trade Commission and served in a number of overseas trade and diplomatic postings.

In 1988 Aivars was recruited to Queensland as the Chief Executive of the Private Sector Economic Advisory Committee to the then Premier. Subsequently he moved to the private sector as Chief Executive of GWA Trading Corporation and then to the Visy Group as Special Advisor on Asia.

Aivars has previously served as the Deputy Chair of the Commonwealth Government’s Sugar Industry Oversight Committee and as a Member of the Deputy Prime Minister’s Regional Economic Development Advisory Panel. He

was the inaugural Chief Executive of the Gladstone Economic and Industry Development Board.

Qualifications: BEc

Member of: Audit and Risk Committee (Chair), Major Projects and Procurement Committee

Other Board and Committee Memberships: None other than Queensland Rail.


David Marchant AM Independent Non-Executive Director Appointed 7 October 2015

Experience: David has extensive Board experience and has held a number of executive and non-executive roles across a range of sectors including road, rail, water, gas, electricity, logistics and supply chain management. He is a former Chief Executive Officer of the Australian Rail Track Corporation and Director and Chair of the Australian Railway Association. David also served as a Director of the Rail Industry Safety and Standards Board.

David has worked as Managing Director of Lend Lease Engineering and Managing Director of Lend Lease Infrastructure Services, and as a Director of the Hunter Valley Coal Chain Coordination Company Pty Ltd.

David was appointed a Member of the General Division of the Order of Australia for significant service to the rail industry through national structural reform and infrastructure upgrades and has been a member of the Australian

Institute of Company Directors since 2000.

Qualifications: GAICD

Member of: Audit and Risk Committee, People and Safety Committee.

Other Board and Committee Memberships: Director - Airservices Australia.

Hon. John Mickel Independent Non-Executive Director Appointed 1 October 2013

Experience: The Honourable John Mickel entered Queensland Parliament in June 1998 as the Member for Logan and was appointed Minister for State Development, Employment and Industrial Relations from September 2006 to September 2007 and then Minister for Transport, Trade, Employment and Industrial Relations from September 2007 to March 2009. John was also the 36th Speaker of the Legislative Assembly of the Queensland Parliament.

John was first elevated to the Cabinet as Minister for Environment in February 2004 and appointed Minister for Energy in August 2004. He gained the additional portfolio of Aboriginal and Torres Strait Islander Policy in March 2005. He has represented Australia on the Executive of the Commonwealth Parliamentary Association and represented Queensland businesses on trade missions to Asia, India and the Middle East.

He oversaw major reforms to the Queensland energy sector as Minister for Energy, continued the Smart State initiative as Minister for State Development, implemented new technology reforms to the public transport sector as Minister for Transport and is recognised for his skills in diplomatic protocols and public speaking in domestic and international forums. Before entering the Queensland Parliament, John held a number of senior Government roles including Chief of Staff to the Queensland Premier. John has established the Vietnamese Orphans and Disability Trust with his wife, is an honorary member of Rotary and has been awarded Honorary Citizenship of Boystown. John is also an Adjunct Associate Professor for the school of justice, Faculty of Law at QUT and undertakes public speaking engagement for community organisations.

Qualifications: M. Lit St, BA, B Ed. St, Dip T

Member of: People and Safety Committee (Chair), Major Projects and Procurement Committee

Other Board and Committee Memberships: Advisory Board Member – Sisters of St Paul de Chartres Aged Care Facility and Member – School of Justice Committee, Queensland University of Technology.


Paul Wallis Independent Non-Executive Director Appointed 30 July 2014

Experience: Paul is a Chartered Professional Engineer with 40 years’ experience in the planning, design and delivery of key infrastructure projects. In June 2016 he retired after 30 years with global consulting firm Arup Pty Limited, where he was the Brisbane Office leader and the regional Energy Business leader. Prior to joining Arup in 1986, he worked as a specialist geotechnical engineering consultant in Australia and as an Engineering Project Manager on major public housing projects with the Hong Kong Housing Authority.

Paul is experienced in leading engineering teams to achieve results through innovation and challenging conventional design solutions to solve problems. He has contributed to many significant projects across Queensland and internationally, especially in large scale transport infrastructure and energy development projects. These include the Airport Link and Northern Busway project in Brisbane, LNG facilities on Curtis Island at

Gladstone, and the Kogan Power Station on Queensland’s Darling Downs.

Paul previously served on an advisory council to the Faculty of Engineering, Architecture and IT at the University of Queensland and was also a Director of Green Cross Australia and Kidsafe Queensland Inc. Paul remains a Kidsafe Ambassador.

Qualifications: BA MSc, FIEAust, CPEng, RPEQ, GAICD

Member of: Major Projects and Procurement Committee (Chair), People and Safety Committee

Other Directorships: None other than Queensland Rail.

Board (cont)


Executive Leadership TeamHelen Gluer PSM Chief Executive Officer

Helen has had an extensive and diverse career, with more than 30 years’ experience gained in the banking, financial, transport and infrastructure industries.

Helen served as Under Treasurer for the Queensland Government and as Director- General of Health Corporate Services (HSCA). Prior roles include CEO of Stanwell Corporation and Tarong Energy – where she maintained a strong focus on safety – and as Chief Financial Officer for Brisbane City Council.

During her career, Helen has held numerous Board positions and directorships including Director of Brisbane Airport Corporation Pty Limited, TransLink Transit Authority and as Chair of the Central Queensland Ports Authority.

Helen is an Adjunct Professor at the Queensland University of Technology with a previous appointment as Deputy Chancellor and Council member for the Queensland University of Technology. She has also been involved in community issues as a Trustee of the Lord Mayor’s Community Disaster Relief Appeal Fund and a member of the Local Government Remuneration Tribunal.

In January 2016 Helen was awarded a Public Service Medal in recognition of her leadership skills and service excellence to the public.

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

Mark has acquired more than 20 years of extensive financial and commercial experience within the private and public sectors, including both chartered and commercial financial roles. Mark is a professional who uses his strong leadership and contemporary management skills to deliver significant organisational change which is achieved through innovation, skilled commercial acumen and a demonstrated partner-focused approach.

As Executive General Manager Commercial and Strategy and CFO, Mark has responsibility for monitoring the overall financial performance of the business, third party rail access revenue agreements and the business service groups of Strategy and Planning, ICT, Property, Road Fleet and Procurement.

Tim Ripper Executive General Manager Network

Tim has been in the rail industry for close to 30 years, both in Australia and Hong Kong. During this time he has performed a variety of roles in design, construction, maintenance, asset management and more recently as a business leader and network manager.

In his current role as Executive General Manager Network, Tim is responsible for the operational and strategic management of the network. His team ensures Queensland Rail provides a safe and reliable network for the people of Queensland, and delivers progressive commercial outcomes for the government and Queensland Rail.


Nicholle Duce Executive General Manager Human Resources

Nicholle is an experienced human resources executive with nearly 20 years’ experience gained through leadership and human resources roles, including strategic and operational positions in major organisations such as Suncorp, Rio Tinto and Tourism Queensland.

Nicholle is responsible for establishing the vision for Queensland Rail’s people and culture including the development of strategic programs and frameworks that foster high performance and ensure the organisation has the right mix of people and capability to achieve its business goals. She leads a team of HR professionals across a range of functions including community and government relations, learning and development, employee relations, HR advice and support, recruitment, organisational development, health services, media and internal communications.

Liam Gordon Executive General Manager Projects

Prior to his appointment with Queensland Rail, Liam was Deputy Under Treasurer at Queensland Treasury where he was responsible for the economics functions of the department, including macroeconomic forecasting, microeconomic policy and Government Owned Corporations oversight.

Prior to that, Liam had spent more than 10 years working in the infrastructure sector within Queensland Treasury and Trade.

As Executive General Manager Projects, Liam is accountable for the operational, commercial and strategic management and performance of Queensland Rail’s project delivery, ensuring high service standards are upheld and supported by efficient and effective resource utilisation, appropriate engineering standards and safety performance. He also leads the team that manages the Transport Services Contract with the state.

Kevin Wright PSM Chief Operating Officer

Kevin is responsible for safe and efficient day-to-day operations, ensuring the quality, movement and delivery of train services, customer service and safety. This includes overseeing the areas of rollingstock engineering and maintenance, South East Queensland and Far North Queensland operations, Travel and Tourism

network operations, strategic operational planning, operations facilities and program coordination and train service delivery. Kevin is also responsible for workplace health and safety, environment and emergency management across the organisation.

He has more than 50 years of experience in rail operations, safety and customer service, including more than 18 years in Queensland Rail. Kevin was recognised for his career achievements when he was awarded a NSW Public Service Medal in 2003 and an Australian Public Service Medal in 2008 for services to the rail industry.

Executive Leadership Team (cont)


Diana Farrelly General Counsel and Executive General Manager Governance

As General Counsel, Diana brings more than 15 years of legal experience to Queensland Rail. In her role, Diana is responsible for the provision of legal advice to the organisation and the Board of directors as well as the establishment and maintenance of an appropriate corporate governance framework covering risk, audit and compliance.

Diana’s qualifications include a Bachelor of Laws with First Class Honours and a Bachelor of Commerce. She was awarded the University Medal for Law in 1998. Diana was admitted as a solicitor to the Supreme Court of Queensland and the High Court of Australia in 2001.

Diana’s professional experience has been both in private practice and in-house legal roles. She has advised on a wide range of legal issues including litigation and dispute resolution, contract law, industrial relations, corporate

governance, projects, operations, procurement, environment and safety. In addition to her qualifications, Diana brings to Queensland Rail an in-depth knowledge of the mining and resources industry, having recently held the position of Senior Counsel - Operations at Peabody Energy Australia. Her previous roles included Deputy Corporate Counsel at Tarong Energy Corporation Ltd and Senior Associate at Clayton Utz.


Corporate governanceQueensland Rail is committed to ensuring that its systems, procedures and practices reflect the highest standards of corporate governance. Processes have been established to ensure that Queensland Rail’s corporate governance practices are reviewed regularly and are continually refined in accordance with its enterprise governance framework.

Guidelines

The responsible Ministers have requested that while Queensland Rail is no longer a government owned corporation, Queensland Rail will continue to apply the Corporate Governance Guidelines for Government Owned Corporations, issued by the Queensland Government.

The guidelines reference the Australian Securities Exchange (ASX) Corporate Governance Principles and Recommendations and they provide the framework for government owned corporations to develop, implement, review and report on their corporate governance arrangements.

An overview of existing corporate governance practices in line with the above guidelines is set out below.

Corporate Governance Statement 2015-16

Principle 1 – Foundations for management and oversight

The roles and responsibilities of the Board and individual members are defined in the Board Charter. These roles and responsibilities are reviewed by the Board annually and a copy of the charter is available at queenslandrail.com.au

In accordance with section 15 of the QRTA Act the Board’s specific functions include:

• deciding the strategies and the operational, administrative and financial policies of Queensland Rail

• ensuring Queensland Rail performs its functions and exercises its powers in a proper, effective and efficient way

• ensuring that, so far as is practicable, Queensland Rail acts under, and achieves the objects in, the strategic and operational plans

• accounting to the responsible Ministers, as required under the QRTA Act, for the performance of Queensland Rail; and

• reviewing annually the performance of the Chief Executive Officer.

In exercising its functions and powers, the Board’s key responsibilities include:

• business strategy and expenditure

• delegation of authority to senior executive

• relations with responsible Ministers and key stakeholders

• financial matters and risk management

• ethics, governance and policy

• senior executive appointments.

The Board has delegated responsibility for the day-to-day operation of Queensland Rail to the CEO including the implementation and delivery of the Board’s strategic direction. The CEO is supported by the senior executive team with management responsibilities clearly defined and documented through formal position descriptions, performance plans and the Board approved Authorities, Approvals and Accountabilities Policy.

Newly appointed members are taken through a formal induction process to provide them with an overview of business operations, strategies and information in relation to the Board and committee functions. The induction process assists the members to understand their roles and responsibilities within Queensland Rail and includes an overview of key corporate expectations, existing governance arrangements and the culture and values of the organisation. The induction process is also relevant to new senior executives to allow them to participate fully and actively in management decision making at the earliest opportunity.

Members are issued with a comprehensive Board handbook that details Queensland Rail and Board operational information, governance requirements and policies. The Board handbook assists with the induction process and also supports existing members with their ongoing governance responsibilities. The handbook is reviewed and updated annually.

Performance evaluations for the CEO and senior executives are carried out each financial year in accordance with Queensland Rail’s remuneration framework and the Board approved Performance Payment Policy: Chief and Senior Executives. The performance evaluation for the CEO is conducted by the Board and is based on the achievement of agreed Key Performance Indicators (KPIs), which are set annually by the Board and are linked to the strategic and operational objectives of Queensland Rail. The performance evaluation for senior executives is carried out in accordance with the same process based on the achievement of agreed KPIs. The evaluation is conducted by the CEO and the Board.

The outcome of annual performance evaluations for the CEO and senior executives are provided to responsible Ministers in accordance with the Policy for Government Owned Corporation Chief and Senior Executives Employment Arrangements.


Principle 2 – Structure the Board to add value

All members of the Board, including the Chairman, are non-executive members. Queensland Rail members are appointed by the responsible Ministers in accordance with the QRTA Act. As such, the size and composition of the Board is determined by the responsible Ministers.

The Board considers that all Board members who held office during the year are independent as defined under the ASX Corporate Governance Principles and Recommendations. In assessing the ongoing independence of each member, the Board considers the assessment criteria outlined in the ASX recommendations. Materiality in relation to independence is considered on a case-by-case basis with reference to each member’s individual circumstances.

Board members are required to keep the Board advised, on an ongoing basis, of any business interests and other directorship and employment roles that could potentially conflict with those of Queensland Rail.

In circumstances where a conflict is believed to exist, the member concerned does not take part in any decision or consideration of the issue. In addition, the member will not receive copies of the relevant Board papers. Members must notify the Board via the Company Secretary of changes to business interests and appointments which could potentially conflict with their role as Board member for Queensland Rail.

Details of the current Board members’ experience and expertise are disclosed in this annual report as is information on attendance at Board and committee meetings. Information in relation to composition of the Board and terms of appointment for all members who held office during the financial year is set out on pages 55-57 of the Annual Report 2015-16 and page 34 of the Financial Report 2015-16.

A process is in place whereby members, either collectively or individually, may seek independent professional advice where it is considered necessary to fulfil their duties and responsibilities. This is done at Queensland Rail’s expense. A member wishing to seek such advice must first obtain the approval from the Chairman.

Members are encouraged to further their knowledge through participation in industry, governance and government forums and attend seminars hosted by the Australian Institute of Company Directors, Governance Institute of Australia and other peak professional bodies. In addition to peer review, interaction and networking with other directors and industry leaders, Queensland Rail Board members participate in Queensland Rail leadership forums and actively engage with Queensland Rail employees and visit Queensland Rail operations to gain an understanding of operational employee requirements, challenges and issues.

The ongoing provision of timely and relevant information to the Board is of critical importance in enabling the Board to effectively discharge their obligations in accordance with the requirements of the QRTA Act. The structure, format and content of Board agendas and Board papers presented to Board members for consideration and approval, along with

Board paper quality and timeliness, is reviewed on an ongoing basis with a formal review annually.

The Board reviews its own performance and that of the committees of the Board on a regular basis to ensure they are working effectively. The Board participates in regular Board member-only sessions that provide an opportunity for the Board members to review and analyse their current performance as a Board and discuss any issues that may exist.

A formal Board performance evaluation is conducted on an annual basis to achieve and maintain corporate governance best practice and continual improvement. An independent consultant is engaged to assist with the evaluation every second year, with the latest independent review undertaken during 2015-16.

The performance evaluation process generally includes the evaluation of the Board as a whole, the chair and the effectiveness of the Board committees. The process is undertaken through a formal questionnaire completed by each member and members of the senior executive team. The review considers a range of issues including Board role, strategy, monitoring performance, risk and compliance oversight, stakeholder communication, Board structure and processes. The independent Board evaluation review for 2015-16 was undertaken in June 2016 with written advice of the outcome of the evaluation provided to the responsible Ministers on 5 August 2016.

Principle 3 – Promote ethical and responsible decision making

Queensland Rail has well established policies, procedures and practices that seek to promote ethical standards of behaviour and a culture of compliance that is risk aware and embraces good governance practices in accordance with corporate, legal and community obligations.

These expected standards of integrity, honesty and accountability are reflected in the formal Code of Conduct, which applies to all Board members, employees, consultants and contractors and is aligned with the organisation’s strategic objectives. The Code of Conduct is supported by other policy related documents in relation to ethics, privacy, dealing with conflicts of interest, trading in securities and official misconduct.

While as a statutory authority, no member or employee holds or trades securities in Queensland Rail, the organisation has established standards and procedures that set out the legal duties that apply to members and employees in relation to the potential misuse of information including the insider trading prohibition under the Corporations Act 2001 (Cth).

Ongoing training in relation to ethical business practices is provided by the organisation and the Queensland Rail Code of Conduct also forms part of the induction process for new employees, consultants and contractors. A copy of the Code of Conduct is available on the Queensland Rail website.

Queensland Rail also has in place related processes and policy documents setting out the requirements of the Public Interest Disclosure Act 2010 (Cth), which facilitates disclosure of public interest information and provides protection for those who make public disclosures.


Corporate governance (cont)

Principle 4 – Safeguard integrity in financial reporting

The Board has established an Audit and Risk Committee that reviews the integrity of Queensland Rail’s financial reporting systems. The committee is governed by its own charter, which is approved by the Board and reviewed annually. A copy of the Audit and Risk Committee charter is available on the Queensland Rail website. The committee assists the Board by reviewing and monitoring assurance activities over business operations, the effectiveness of internal controls, regulatory reporting, financial risks, compliance issues and enterprise risk management frameworks. The committee is responsible for oversight and monitoring both internal and external audit functions.

The role of the chair of the committee is not held by the Chairman of the Board and all committee members are independent non-executive members. Membership of the committee and details of attendance at meetings is disclosed on pages 55-56 of the Annual and Financial Report 2015-16.

The CEO and CFO certify in writing that the Queensland Rail financial report represents a true and fair view of Queensland Rail’s financial position and performance, and that it has been prepared in accordance with the appropriate Australian Accounting Standards, Statement of Accounting Concepts, Interpretations and Framework for the Preparation and Presentation of Financial Statements in all material respects.

Queensland Rail’s internal audit function provides independent assurance to key stakeholders including the Audit and Risk Committee, CEO and senior executives regarding the adequacy and effectiveness of the organisation’s system of internal controls, risk management procedures and governance processes throughout the organisation.

To maintain independence the internal audit function is governed by the Queensland Rail internal audit charter which is approved by the Audit and Risk Committee.

Queensland Rail has a detailed internal audit plan that is managed by the Senior Manager Internal Audit and General Counsel and Executive General Manager Governance. The risk based internal audit plan is developed through extensive internal and external consultation and a review of the organisation’s risk register. This plan is ultimately approved and monitored by the Audit and Risk Committee through regular reporting provided by the Senior Manager Internal Audit.

In addition to the annual internal audit plan the internal audit function completes management request audits throughout the year.

In accordance with the Auditor-General Act 2009 (Qld), the external audit function of Queensland Rail is performed by the Queensland Audit Office. The Audit and Risk Committee monitors the performance of the external auditors on an annual basis.

Principle 5 – Make timely and balanced disclosure

Queensland Rail has established communication protocols and standards in relation to the disclosure of public information and regularly assesses the information needs of all stakeholders to ensure that they continue to be informed about activities in a timely and accurate manner.

In addition, the organisation has a dedicated Government and Community Relations team to assist with management of government and regulatory relationships and the co-ordination of information and reporting requests.

Regular communications are initiated with key stakeholders including responsible Ministers and government representatives. The Chairman and CEO meet with responsible Ministers and/or their representatives on a regular basis. Queensland Rail management also meets with representatives of the responsible Ministers after each Board meeting to provide an update on the agenda items considered and discuss any relevant governance matters. Information needs of these stakeholders are also discussed at Board meetings. As required by the QRTA Act, detailed quarterly reports are provided to responsible Ministers and their representatives, as well as individual ministerial briefings on specific issues. These reports include information regarding financial performance, updates on major capital programs, key operational matters, risk management and governance issues as well as information required to be given in accordance with Queensland Rail’s operational and strategic plans.

Principle 6 – Respect the rights of shareholders

Queensland Rail respects the rights of responsible Ministers as the ultimate owners of the business. The Board and senior executives of Queensland Rail engage with responsible Ministers and their representatives on a regular basis. As at 30 June 2016, Queensland Rail’s responsible Ministers were the Honourable Curtis Pitt MP, Treasurer, Minister for Aboriginal and Torres Strait Islander Partnerships and Minister for Sport and the Honourable Stirling Hinchliffe MP, Minister for Transport and the Commonwealth Games.

Queensland Rail is committed to ensuring that responsible Ministers and their representatives are provided with information to make informed assessments of Queensland Rail’s operational and financial performance and position.

Queensland Rail prepares an operational plan and strategic plan for responsible Ministers’ approval in accordance with the QRTA Act. The operational plan and strategic plan are formal performance contracts between Queensland Rail and the responsible Ministers detailing proposed undertakings and target performance for the year ahead.

In line with the requirements of the QRTA Act, responsible Ministers are advised in a timely manner of all issues likely to have a significant


financial, operating, employee, community or environmental impact including those matters that may prevent or significantly affect achievement of the performance objectives outlined in the operational plan.

Approval of responsible Ministers is sought for major investments and expenditure outlays, as well as Queensland Rail’s entry into significant supply or customer contracts in accordance with agreed Investment Guidelines.

Principle 7 – Recognise and manage risk

Queensland Rail recognises that effective risk management and compliance frameworks are a key element of an organisation’s corporate governance process. The Board has approved a Risk Management Policy and associated framework for identifying, assessing and managing Queensland Rail’s strategic, operational, financial and reputation risks.

The objectives of the policy are to:

• Maintain an integrated, fit for purpose, leading practice risk management framework which facilitates the effective management of risks and also provides assurance that risks are being effectively managed and controls are effective

• Ensure the risk management system, together with associated risk tools, allow for the consistent and reliable application of the risk management framework

• Ensure that there are clearly defined roles and responsibilities for managing risk within Queensland Rail

• Ensure that risk management related roles and adequate resources are allocated throughout the business to meet the requirements of the Risk Management Policy

• Ensure that risk management is an integral part of Queensland Rail decision making and business planning

• Document all risks, risk assessments and related controls into risk registers in an agreed business system

• Based on the Board’s approved risk appetite, apply risk tolerance levels to ensure the appropriate management and reporting of risk

• Provide risk management training and support to employees to ensure education and awareness of risk management requirements to improve the knowledge, skills and proficiency of risk practitioners, risk champions and others within the organisation

• Assess and continuously improve the effectiveness of the risk management framework and related processes and controls via on-going monitoring, periodic reviews, communication and consultation

• Promote a culture of accountability and responsibility for risk management by including risk related performance measures in individual performance and development plans.

The approach defined within the Risk Management Policy is consistent with the Australian and New Zealand risk management standards (ISO 31000:2009). Supporting the policy is a framework prepared to guide the various business functions in addressing their particular risks through a structured risk management approach. The framework is designed to

ensure risks are regularly identified, assessed, monitored and reported to the Board on a periodic basis, along with appropriate risk mitigation and management plans.

The Board evaluates reported risks reaching a defined enterprise risk tolerance level and actively monitors these risks and associated controls, including any additional risk mitigation treatments that are proposed. Assurance activities are undertaken to ensure that the controls are operating effectively.

The Board has charged management with the responsibility for managing risk within the organisation and the implementation of mitigation measures, under the direction of the CEO and supported by senior executives. The group risk management function, led by the Senior Manager – Risk, Insurance and Compliance and General Counsel and Executive General Manager Governance has been established to facilitate the process by providing a centralised role in advising the various business functions on executing risk management and mitigation strategies, as well as consolidating risk reporting to senior executives and the Board.

The CEO and CFO have declared in writing to the Board that Queensland Rail’s risk management and control system is operating efficiently, effectively and economically in all material respects based on representations by management.

Queensland Rail has established an appropriate fraud control framework for the ongoing monitoring and co-ordination of fraud control activities. The framework is supported by the Code of Conduct and associated governance principles, standards and procedures that outline employee obligations in relation to ethical behaviour and the process for reporting, recording and investigating allegations of fraud.

A dedicated ethics hotline has been established to enable employees to report any concerns regarding unethical conduct, breaches of the law and suspected fraud or corrupt conduct. A dedicated Crime and Corruption Commission (CCC) Liaison Officer manages the obligations under the Crime and Corruption Act 2001 (Qld) in relation to notification of suspected corrupt conduct to the CCC.

Principle 8 – Remunerate fairly and responsibly

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


Membership of the committee and details of attendance at meetings is disclosed on page 56 of the Annual and Financial Report 2015-16. Queensland Rail recognises that the achievement of its corporate objectives is dependent on the efforts of its people and has established remuneration policies, procedures and frameworks designed to attract and retain high calibre employees and to align individual and team efforts to agreed KPIs linked to the operational and strategic plans of the organisation.

The senior executive remuneration arrangements are subject to approval or endorsement by the Board in accordance with the Policy for Government Owned Corporation Chief and Senior Executive Employment Arrangements. Remuneration for Board members is established by the responsible Ministers in accordance with the QRTA Act.

Details of the nature and amount of payments to each Queensland Rail Board member and specified Queensland Rail senior executives are set out in the Annual and Financial Report 2015-16.

Government policies and guidelines

Queensland Rail complies with relevant government policies and guidelines in accordance with the requirements of the responsible Ministers.



Board meetings

The Board held 10 meetings during the financial year. Typically, at Board meetings, the agenda will include the following:

• disclosure of member interests

• minutes of the previous meeting and any outstanding issues raised by members at previous meetings

• CEO and CFO reports

• ongoing strategic business improvement

• reports on major projects and current business issues

• transactions requiring Board approval in accordance with the delegations framework

• updates from committee chairs on matters considered at committee meetings

• the minutes of previous committee meetings

• correspondence, executed contracts and powers of attorney register review.

A private session involving only non-executive Board members is held at the beginning of each Board meeting and is chaired by the Chairman. The CEO, CFO, General Counsel and Company Secretary are also present at all Board meetings. Senior executives attend Board meetings when an issue under their area of responsibility is being considered or as otherwise requested by the Board. Member attendance at 2015-16 Board meetings are detailed below:

Board Member Attended Meetings Eligible to Attend

Michael Klug ( Chair) 10 10

Aivars Blums 10 10

David George1 3 3

David Marchant2 5 7

Wendy McMillan3 7 8

John Mickel 10 10

Glenn Poole1 3 3

Paul Wallis 10 10

1 Ceased to be a Board Member 30 September 2015 2 Appointed to the Board 7 October 2015 3 Ceased to be a Board Member 29 April 2016

Board committees

The Board has established committees to assist with meeting its responsibilities. The Audit and Risk Committee, the People and Safety Committee and the Major Projects and Procurement Committee are governed by their own charters.

The membership of each Board committee is made up of a minimum of three members from the Board.

The CEO and senior executives attend meetings at the discretion of the committee.

An annual evaluation of committee performance forms part of the Board’s overall performance review.

Audit and Risk Committee

The Audit and Risk Committee is a Board committee created to assist the Board in the effective discharge of its governance and oversight responsibilities relating to the financial reporting and risk management of Queensland Rail.

The committee oversees and monitors the preparation of financial statements, internal control structures, compliance and risk management frameworks and the internal and external audit functions of Queensland Rail.

The committee’s key responsibilities include:

• the integrity of Queensland Rail’s financial reporting and disclosure procedures and processes

• review of significant accounting policies and alternative treatments available

• the effectiveness of Queensland Rail’s systems of accounting and internal controls

• the scope of Queensland Rail’s internal audit and external audit programs and any material issues arising from these audits

• the effectiveness of the processes and assurance activities used by management to monitor and ensure Queensland Rail’s compliance with laws, regulations, ethical guidelines and obligations for external reporting of financial information

• review of risk mitigation policies and associated risk assessment documentation adopted by Queensland Rail

• evaluating the effectiveness of risk management protocols and frameworks used to implement Queensland Rail’s risk management policies, procedures and documentation

• review and monitor key risk exposures, control mitigations and residual risks of Queensland Rail including the annual insurance program

• evaluating the effectiveness of the risk management and control structures in place to identify and monitor Queensland Rail’s compliance with applicable laws, regulations and governance obligations

• evaluating the performance and independence of the Internal Audit function.


Mr Aivars Blums is the current Committee Chair. Committee member attendance at 2015-16 Audit and Risk Committee meetings is detailed below:

Committee Member Attended Meetings Eligible to Attend

Aivars Blums1 (Chair) 4 4

Michael Klug 4 4

Wendy McMillan2 3 3

David Marchant3 2 2

Glenn Poole4 1 1

1 Appointed Committee Chair 29 October 2015 2 Ceased to be a Committee Member 29 April 2016 3 Appointed as Committee Member 15 December 2015 4 Ceased to be a Committee Member 30 September 2015

People and Safety Committee

The People and Safety Committee is a Board committee created to assist the Board in the effective discharge of its governance and oversight responsibilities relating to the human resources and safety practices of Queensland Rail.

The committee oversees and monitors the remuneration and performance framework for Queensland Rail’s senior executives and other employees and the development of human resources policies and practices to enhance employee engagement and workforce productivity and performance. The committee also provides strategic direction and oversight of Queensland Rail’s safety policies, frameworks and practices.


• the appointment and termination of the CEO and senior executives (direct reports to CEO)

• the annual remuneration and performance review of the CEO and senior executives including the establishment of appropriate performance measures and incentive targets

• the development and review of human resource policies and practices which enhance organisational performance, workforce productivity, leadership and succession planning in line with Queensland Rail’s expected values and behaviours

• the adequacy and effectiveness of Queensland Rail’s code of conduct, remuneration, learning and development and industrial relations strategies and plans

• employee and external stakeholder engagement (including responsible Ministers, government and community) and external corporate communications strategies and plans

• development and review of policies, frameworks and practices relating to the security and safety of Queensland Rail’s network and trains

• reviewing and monitoring frameworks and practices dealing with the health, safety and welfare of Queensland Rail’s customers, employees and the public

• the adequacy and effectiveness of Queensland Rail’s compliance systems with relevant safety legislation, regulations, engineering standards and accreditation requirements

• providing direction and oversight of safety related risks, controls and assurance processes.

Mr John Mickel is the current Chair of the committee. Committee member attendance at 2015-16 People and Safety Committee meetings is detailed below:


John Mickel1 (Chair) 3 4

David George2 1 1

Michael Klug 4 4

David Marchant3 2 2

Paul Wallis 4 4

1 Appointed Committee Chair 29 October 2015 2 Ceased to be a Committee Member 29 April 2016 3 Appointed as Committee Member 15 December 2015

Major Projects and Procurement Committee

The Major Projects and Procurement Committee is a Board committee created to assist the Board in the effective discharge of its governance and oversight responsibilities relating to the delivery of major projects and procurement decisions within Queensland Rail.


• evaluating and endorsing Queensland Rail’s major project proposals and delivery of approved capital investment program and funding to ensure alignment with Queensland Rail’s approved operational and strategic plans

• ensuring that major project implementation is in a manner consistent with Queensland Rail’s strategy and the expectations of responsible Ministers

• oversight of project management frameworks to ensure appropriate governance structures, capabilities and resources are in place for the efficient and cost effective delivery of projects

• reviewing major project plans as they relate to capital works, operations, asset replacement and maintenance to achieve prudent and efficient project delivery within budget and agreed timeframes

• reviewing the adequacy and effectiveness of internal controls and risks as they relate to major projects, procurement and investment considerations

• oversight of tender methodologies and appropriate probity processes to ensure the ethical procurement of goods and services to ensure compliance with the Queensland Rail and State Government Procurement Policy

• ensuring strategic procurement objectives are developed and implemented through a procurement strategy to ensure that major investment decisions are formulated strategically to enable prudent


and efficient outcomes through market engagement

• development of strategic business initiatives to ensure procurement policies, procedures and frameworks are consistent with the strategic planning and performance objectives of Queensland Rail

• evaluating and monitoring procurement performance to ensure alignment with Queensland Rail’s strategic objectives relating to service quality, efficiency, profitability and growth.

Mr Paul Wallis is the current chair of the committee. Committee member attendance at 2015-16 Major Projects and Procurement Committee meetings is detailed below:


Paul Wallis1 (Chair) 4 4

Aivars Blums 4 4

Michael Klug 4 4

Wendy McMillan2 4 4

Glenn Poole3 1 1

John Mickel4 0 0

1 Appointed Committee Chair 26 May 2016 2 Ceased to be a Committee Member 29 April 2016 3 Ceased to be a Committee Member 30 September 2015 4 Appointed Committee Member 26 May 2016



Notifications by Responsible Ministers

1. Cairns Freehold Property

By letter dated 1 February 2016, pursuant to section 54 of the QRTA Act, the responsible Ministers directed Queensland Rail to do all things necessary to transfer the assets, identified as Lots 3 and 6 on RP7011980, from Queensland Rail’s equity to the Cairns and Hinterland Hospital and Health Service in freehold.

2. Rollingstock Maintenance and Overhaul Works

By letter dated 5 May 2016, pursuant to section 12 of the QRTA Act, the responsible Ministers directed Queensland Rail to enter into negotiations with both Downer EDI Rail Pty Ltd and UGL group in relation to the potential rollingstock maintenance and overhaul works.

The direction requires Queensland Rail to:

a. enter into negotiations with the Companies in relation to the potential Rollingstock Maintenance and Overhaul Works

b. advise the Interdepartmental Review Committee if, in the Authority’s view, the negotiations are unlikely to achieve the outcomes and objectives as specified in the Negotiations Framework

c. provide the Interdepartmental Review Committee with information in relation to the matters in (a), on a regular (at least quarterly) basis

d. not enter into any legally binding arrangements with either of the Companies in relation to the matters set out in paragraph (a) without the prior written approval of the responsible Ministers.

For the purposes of this direction:

e. Act means the Queensland Rail Transit Authority Act 2013

f. Authority means the Queensland Rail Transit Authority established under the Act

g. Companies mean Downer EDI Rail Pty Ltd (ACN 000 002 031) and UGL

h. Interdepartmental Review Committee means the committee comprising members as advised by responsible Ministers

i. Negotiations Framework means the framework, comprising the objectives and outcomes (e.g. demonstrated value for money) to guide the negotiations between Authority and Companies described in paragraph (a), as approved by the Under Treasurer or responsible Ministers

j. Rollingstock Maintenance and Overhaul Works means the following potential scope of works:

• Overhaul and modifications to 21 L Series carriages

• Modifications to an additional 6 L Series carriages

• Overhaul of 15 locomotives (mixture of 1720 and 2400 class locomotives)

• Overhaul of 56 bogies sets (34 in the 120/220 class and 22 in the 100/200 class);

• Overhaul of IMU100/SMU200 units

• Traction package upgrade aligned to IMU100/SMU200 overhaul program

• Overhaul of IMU120/SMU220 units

• Diesel Tilt Train’s 1 and 2 mid-Life overhaul; and

• Component change out for the IMU160/SMU260 vehicles as indicated in the vehicle maintenance manuals and component overhaul to support the component change out.

k. UGL mean UGL Limited (ABN 85 009 180 287), UGL Engineering Pty Ltd (ABN 96 096 365 972), and UGL Rail Pty Ltd (ABN 30 097 323 852)

l. Other words and expression used in the direction which are defined in the Act have the same meaning as given in the Act

m. Words in the singular include the plural and vice versa, unless the context otherwise requires.

By letter dated 27 June 2016, the responsible Ministers approved an amendment to the direction issued on 5 May 2016 pursuant to s12 of the QRTA Act, giving the Interdepartmental Review Committee the authority to approve contracts below the responsible Minister approval thresholds under the Investment Guidelines.

3. Queensland Rail dividends

By the letter dated 27 June 2016, pursuant to section 56(2) of the QRTA Act, the responsible Ministers directed Queensland Rail pay a dividend equal to 100 per cent of Queensland Rail Group’s 2015-16 adjusted final audited Net Profit After Tax (NPAT). The dividend is to be paid to the Consolidated Fund no later than 30 November 2016.


Information systems and recordkeeping

Managing Queensland Rail’s information and performing appropriate recordkeeping functions are integral to risk mitigation. The organisation has a requirement to meet legislative and statutory obligations regarding the creation, management, custodianship and disposal of our information assets.

Initiatives throughout 2015-16 included:

• Progressing the upgrade of the electronic document and records management system to the latest supported version, which is due for completion in October 2016

• Completed the introduction of digital personnel files

• Maintaining Payment Card Industry Compliance

• Descriptive data capture of physical record objects in archival storage.

Queensland Rail has commenced an enterprise wide initiative to develop a corporate information management strategy throughout 2016-17. This strategy will provide a pathway to further enhance Queensland Rails information maturity and manage its information governance challenges by ensuring:

• An enterprise-wide risk-based approach to Information Management is applied

• Information Management is viewed as a business requirement and enabler

• Roles, responsibilities and segregation of duties are clearly defined

• Adequate and appropriate resources are committed to the task

• Staff are aware and trained how to manage information in their work context

• Information management is planned, managed, measurable, and measured

• Information management is reviewed, assured and audited.

Open data

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

Corporate Entertainment and Hospitality

Queensland Rail did not undertake any individual corporate entertainment and hospitality activities throughout 2015-16 that involved costs greater than $5000.


Summary of the FY2015-16 Operational PlanThe Operational Plan is the formal statement of Queensland Rail’s strategic direction, including objectives, strategies and performance outcomes for FY2015-16 and represents the performance agreement between the Board of Queensland Rail and responsible Ministers departments. The Operational Plan is consistent with Queensland Rail’s four-year Strategic Plan and reflects the strategic activity in year one of this planning horizon.

The Annual Report provides a summary of Queensland Rail’s performance outcomes against the FY2015-16 Operational Plan relating to the delivery of strategic and operational objectives.

Queensland Rail measures performance against these objectives to focus efforts upon achieving its strategy. Key performance indicator measures and related targets were identified within the Operational Plan to track the success of strategies during this financial year. Key components of the FY2015-16 Operational Plan are summarised below.

Performance Monitoring The FY2015-16 Operational Plan contains a framework for performance monitoring that ensures the Queensland Rail Board is accountable to its responsible Ministers for Queensland Rail’s performance. This framework enables Queensland Rail to report on a number of mandatory financial and non-financial performance indicators to present a balanced perspective on Queensland Rail’s overall performance. Queensland Rail reports to its responsible Ministers on a quarterly basis in relation to performance against each of its Operational Plan KPIs.

Government Revenues and Funding The Operational Plan outlines funding for:

• Citytrain

• Traveltrain, with the exception of KSR

• Network Infrastructure (for agreed rail infrastructure network standards and capacity).

The FY2015-16 Operational Plan highlights Queensland Rail’s focus on delivering a safe, efficient, high performing, value for money commuter rail service through:

• sustaining operational performance

• optimising financial performance

• delivering improved customer experiences

• integrating MBRL and NGR into the Citytrain service model

• improving service delivery through technology.

Employment and Industrial Relations Plan The Operational Plan includes an Employment and Industrial Relations Plan (E&IR Plan), which guides Queensland Rail in developing and maintaining conditions of employment for employees, including labour market based remuneration. Queensland Rail’s E&IR Plan for FY2015-16 is underpinned by the following objectives:

• Optimise productivity and performance

• Simplify people frameworks and practices

• Manage and develop capability

• Attract and retain key talent.

The organisation works proactively and collaboratively with Union stakeholders to effectively manage industrial issues.

Organisational and industrial changes are managed through leader driven engagement and consultation processes encouraging feedback from employees through the communication and implementation phases.

Modifications to the Operational Plan The QRTA Act 2013 (Qld) requires that Queensland Rail’s Annual Report include particulars of any direction given to Queensland Rail to modify its Operational Plan during the relevant year. Queensland Rail did not modify its Operational Plan during this financial year.


Compliance checklist

Summary of Requirement Basis for requirement Annual report reference

Letter of Compliance• A letter of compliance from the

accountable officer or statutory body to the relevant Minister/s

ARRs – section 8 Page 3

Accessibility • Table of contents

• Glossary

ARRs – section 10.1 Page 4 Pages 63-64

• Public availability ARRs – section 10.2 Page 2

• Interpreter service statement Queensland Government Language Services Policy

ARRs – section 10.3

Page 2

• Copyright notice Copyright Act 1968


Page 2

• Information Licensing QGEA – Information Licensing


N/A

General information • Introductory Information ARRs – section 11.1 Pages 5-6

• Agency role and main functions ARRs – section 11.2 Pages 2, 5-6, 7-8

• Operating environment ARRs – section 11.3Pages 5-6, 11, 17, 21-22, 29, 33-34, 37-39, 41, 50-59, 60

Non-financial performance • Government’s objectives for the community

ARRs – section 12.1Pages 5-6, 29-30, 33-41, 60

• Other whole-of-government plans / specific initiatives

ARRs – section 12.2 Pages 7-8

• Agency objectives and performance indicators

ARRs – section 12.3 Pages 5-6, 7, 11-13, 15-41, 60

• Agency service areas and service standards

ARRs – section 12.4 Pages 11-13, 60

Financial performance • Summary of financial performance ARRs – section 13.1 Pages 12-13, 65-120

Governance – management and structure

• Organisational structure ARRs – section 14.1 Pages 42-43

• Executive management ARRs – section 14.2 Pages 44-49

• Government bodies (statutory bodies and other entities)

ARRs – section 14.3 Page 2

• Public Sector Ehtics Act 1994 (Qld) Public Sector Ethics Act 1994

ARRs – section 14.4N/A

• Queensland public service values ARRs – section 15.1 Pages 5-8, 15-35


Summary of Requirement Basis for requirement Annual report reference

Governance – risk management and accountability

• Risk management ARRs – section 15.1 Pages 50-59

• Audit committee ARRs – section 15.2 Pages 42, 52-57, 65

• Internal audit ARRs – section 15.3 Pages 51-53

• External scrutiny ARRs – section 15.4 Pages 15, 25, 39, 65

• Information systems and recordkeeping

ARRs – section 15.5 Page 59

Governance – human resources

• Workforce planning and performance

ARRs – section 16.1 Pages 21, 53, 60

• Early retirement, redundancy and retrenchment

Directive No. 11/12 Early Retirement, Redundancy and Retrenchment ARRs – section 16.2

N/A

Open Data • ConsultanciesARRs – section 17

ARRs – section 34.1Page 59

• Overseas travel ARRs – section 17


Page 59

• Queensland Language Services Policy

ARRs – section 17


Pages 2, 59

Financial statements • Certification of financial statements FAA – section 62

FPMS – sections 42, 43 and 50


See Financial Report attached – Pages 65-120

• Independent Auditors Report FAA – section 62

FPMS – section 50


See Financial Report attached – Pages 119-120

FAA Financial Accountability Act 2009 (Qld)

FPMS Financial and Performance Management Standard 2009

ARRs Annual Report requirements for Queensland Government Agencies

Compliance checklist (cont)


Glossary

Citytrain network A collective term for the tracks, stations, trains and infrastructure providing train services in south-east Queensland bounded by the Gold Coast in the south, Rosewood in the west and the Sunshine Coast in the north

Customer A term used for any passenger utilising Citytrain or Traveltrain services, or a rail operator in the context of the freight network

Freight General freight that is not transported in a bulk train and does not include intermodal and industrial products

Lost Time Injury Frequency Rate (LTIFR) A measure of the number of lost time injuries per million hours worked, used by Queensland Rail to monitor and report employee health and safety

Network Queensland’s rail system, including all main railway lines, marshalling yards, bulk freight loading and unloading points and customer stations

On-Time Running (OTR) Measure of trains arriving at their destination on time

Positive pARTnerships Program A Queensland Rail program involving work with community groups, local schools and stakeholders to collaborate and produce high quality public artwork projects on Queensland Rail property

Return on Assets (ROA) Defined as EBIT less income from investments, divided by average operating assets

Return on Equity (ROE) Defined as operating profit after tax divided by average equity

Rollingstock Rail locomotives and wagons

Transport Oriented Development (TOD) A planning concept promoting the creation of well-designed and sustainable urban communities focused around public transport modes

TransLink A division of the Department of Transport and Main Roads, that facilitates passenger transport services for Queenslanders and aim to provide a single integrated transport network accessible to everyone

Travel and Tourism network A collective term for Queensland Rail’s eight different travel and tourism services

Acronyms

AOD Alcohol and other drugs

ARR Annual report requirements for Queensland Government agencies

ASX Australian Securities Exchange

ARA Australian Railway Association

CARRS-Q The Centre for Accident Research and Road Safety Queensland

CCTV Closed Circuit Television

CEO Chief Executive Officer

CFO Chief Financial Officer

Corporations Act Corporations Act 2001 (Cth)

DDA Disability Discrimination Act 1992 (Cth)

DTMR Department of Transport and Main Roads

EBIT Earnings Before Interest and Tax

EBITDA Earnings Before Interest, Tax, Depreciation and Amortisation

ETCS European Train Control System

ELT Executive Leadership Team

FAA Financial Accountability Act 2009 (Qld)

FPMS Financial and Performance Management Standard 2009

FTE Full-time equivalent (employee)

Glossary and Acronyms


GTK Gross Tonne Kilometres

KSR Kuranda Scenic Railway

MBRL Moreton Bay Rail Link

NGR New Generation Rollingstock

QCA Queensland Competition Authority

QPS Queensland Police Service

QRL Queensland Rail Limited

QTC Queensland Treasury Corporation

TSC Transport Services Contract

PSM Public Service Medal

RISSB Rail Industry Safety Standards Board

RMC Rail Management Centre

SPAD Signal Passed at Danger

TRIFR Total Recordable Injury Frequency Rate


Queensland RailFinancial Report 2015-16

Queensland RailABN 68 598 268 528

Financial reportfor the year ended 30 June 2016

Queensland Rail ABN 68 598 268 528

Financial report - 30 June 2016

ContentsPage

Financial statements

Statement of comprehensive income 1

Balance sheet 2

Statement of changes in equity 3

Statement of cash flows 5

Notes to the financial statements 6

Management certificate 51

Independent auditor's report 52

These financial statements cover Queensland Rail and its controlled entities.

Queensland Rail is an unincorporated statutory body established under the Queensland Rail Transit Authority Act2013.

The statutory body is controlled by the State of Queensland which is the ultimate parent.

The head office and principal place of business of the statutory body is:

Level 14, Rail Centre 1305 Edward StreetBrisbane, Qld 4000

A description of the nature of the statutory body's operations and its principal activities is included in the notes tothe financial statements.

Queensland RailStatement of comprehensive income

For the year ended 30 June 2016

Consolidated Parent

Notes2016$'000

2015$'000

2016$'000

2015$'000

Revenue from continuing operations 1 1,917,057 1,928,652 914,859 919,837Other income 3,609 4,336 - -

Revenue 1,920,666 1,932,988 914,859 919,837

Supplies and services 2 (406,538) (426,672) - -Employee benefits expense 3 (662,887) (618,450) (738,444) (694,287)Depreciation and amortisation expense (392,946) (367,991) - -Other expenses (31,408) (13,018) (10,982) (2,678)

Expenses (1,493,779) (1,426,131) (749,426) (696,965)

Operating profit 426,887 506,857 165,433 222,872

Finance income 6,416 15,357 - -Finance expenses (197,141) (202,309) - -

Net finance costs (190,725) (186,952) - -

Profit before income tax 236,162 319,905 165,433 222,872

Income tax expense 4 (70,836) (96,156) - -

Profit for the year 165,326 223,749 165,433 222,872

Other comprehensive incomeItems that may be reclassified to profit orloss

Changes in the fair value of cash flowhedges (206) 157 - -Income tax relating to components ofother comprehensive income 4 62 (47) - -

Other comprehensive income for theyear, net of tax (144) 110 - -

Total comprehensive income for theyear 165,182 223,859 165,433 222,872

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

1

Queensland RailBalance sheet

As at 30 June 2016

Consolidated Parent

Notes2016$'000

2015$'000

2016$'000

2015$'000

ASSETSCurrent assetsCash and cash equivalents 117,776 334,262 - -Trade and other receivables 43,234 46,836 432,594 429,817Inventories 84,434 86,876 - -Derivative financial instruments 14 128 - -Other current assets 10,073 6,835 - -

Total current assets 255,531 474,937 432,594 429,817

Non-current assetsReceivables 3,036 3,169 27,510 29,039Inventories 24,711 17,883 - -Derivative financial instruments - 11 - -Property, plant and equipment 5 6,548,797 6,336,769 - -Intangible assets 38,074 47,041 - -Deferred tax assets 6 - - 70,262 66,620Investment in subsidiary - - 2,845,324 2,845,324Other non-current assets 5,266 4,631 16,108 47,048

Total non-current assets 6,619,884 6,409,504 2,959,204 2,988,031

Total assets 6,875,415 6,884,441 3,391,798 3,417,848

LIABILITIESCurrent liabilitiesTrade and other payables 7 401,709 351,740 212,704 210,639Provisions 8 215,176 202,915 210,895 193,372Derivative financial instruments 46 - - -Current tax liabilities 14,105 41,403 14,105 41,403Other current liabilities 15,002 17,028 17 65

Total current liabilities 646,038 613,086 437,721 445,479

Non-current liabilitiesBorrowings 12 3,000,000 3,000,000 - -Provisions 8 47,555 55,194 27,510 29,039Derivative financial instruments 28 - - -Deferred tax liabilities 9 337,698 350,058 - -Other non-current liabilities 16,534 21,527 - -

Total non-current liabilities 3,401,815 3,426,779 27,510 29,039

Total liabilities 4,047,853 4,039,865 465,231 474,518

Net assets 2,827,562 2,844,576 2,926,567 2,943,330

EQUITYContributed equity 2,591,946 2,591,946 2,834,642 2,834,642Reserves (34) 110 - -Retained earnings 10 235,650 252,520 91,925 108,688

Total equity 2,827,562 2,844,576 2,926,567 2,943,330

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

2

Queensland RailStatement of changes in equity


Consolidated Notes

Contributedequity$'000

Reserves$'000

Retainedearnings

$'000

Totalequity$'000

Balance at 1 July 2015 2,591,946 110 252,520 2,844,576

Profit for the year - - 165,326 165,326Other comprehensive income - (144) - (144)

Total comprehensive income for the year - (144) 165,326 165,182

Transactions with owners in their capacityas owners:Distributions of equity - - - -Dividends provided 10 - - (182,196) (182,196)

- - (182,196) (182,196)

Balance at 30 June 2016 2,591,946 (34) 235,650 2,827,562

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

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

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

Transactions with owners in their capacityas owners:Distributions of equity (2,926) - - (2,926)Dividends provided 10 - - (178,999) (178,999)

(2,926) - (178,999) (181,925)

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

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

3

Queensland RailStatement of changes in equity

For the year ended 30 June 2016(continued)

Parent Notes

Contributedequity$'000

Reserves$'000

Retainedearnings

$'000

Totalequity$'000

Balance at 1 July 2015 2,834,642 - 108,688 2,943,330

Profit for the year - - 165,433 165,433Other comprehensive income - - - -

Total comprehensive income for the year - - 165,433 165,433

Transactions with owners in their capacityas owners:Distributions of equity - - - -Dividends provided 10 - - (182,196) (182,196)

- - (182,196) (182,196)

Balance at 30 June 2016 2,834,642 - 91,925 2,926,567

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

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

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

Transactions with owners in their capacityas owners:Distributions of equity (2,926) - - (2,926)Dividends provided 10 - - (178,999) (178,999)

(2,926) - (178,999) (181,925)

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

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

4

Queensland RailStatement of cash flows


Consolidated Parent

Notes2016$'000

2015$'000

2016$'000

2015$'000

Cash flows from operating activitiesReceipts from customers* 384,727 461,349 749,426 696,965Receipts from Transport Service Contract* 1,723,611 1,642,435 - -Dividends received from subsidiaries - - 222,872 212,932Interest received 6,435 15,657 - -Payments to suppliers and employees* (1,194,335) (1,148,735) (735,129) (701,925)Interest and other costs of finance paid (208,865) (216,223) - -GST input tax credits 90,376 82,436 521 609GST remitted (190,177) (192,424) - -Other (5) 4 (5) 4Income taxes paid (110,432) (74,006) (110,432) (74,006)Net cash inflow from operatingactivities 11 501,335 570,493 127,253 134,579

Cash flows from investing activitiesProceeds from the disposal of assets 8,577 24,244 - -Payments for fixed assets (547,399) (498,825) - -Repayments of loans by related parties - - 51,746 36,305Net cash (outflow) / inflow frominvesting activities (538,822) (474,581) 51,746 36,305

Cash flows from financing activitiesDividends paid 10 (178,999) (170,884) (178,999) (170,884)Net cash outflow from financingactivities (178,999) (170,884) (178,999) (170,884)

Net decrease in cash and cashequivalents (216,486) (74,972) - -Cash and cash equivalents at thebeginning of the financial year 334,262 409,234 - -Cash and cash equivalents at end ofyear 117,776 334,262 - -

* Inclusive of goods and services tax (GST).

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

5

Queensland RailNotes to the financial statements

30 June 2016

Contents of the notes to the financial statements

Page

Notes to the statement of comprehensive income

1 Revenue from continuing operations 7

2 Supplies and services 8

3 Employee benefits expense 9

4 Income tax expense 10

Notes to the balance sheet

5 Property, plant and equipment 12

6 Deferred tax assets 17

7 Trade and other payables 18

8 Provisions 18

9 Deferred tax liabilities 22

10 Retained earnings and dividends 23

Notes to the statement of cash flows

11 Reconciliation of profit after income tax to net cash inflow from operating activities 24

Risk

12 Financial risk management 25

13 Correction of errors and revision of estimates 30

Unrecognised items

14 Contingencies 31

15 Commitments 32

16 Events occurring after the reporting period 32

Other items

17 Key management personnel disclosures 33

18 Related party transactions 41

19 Subsidiaries 43

20 Remuneration of auditors 44

21 Special payments 44

22 Queensland Rail Limited consolidated financial information 45

Policies

23 Summary of significant accounting policies 47

6


30 June 2016(continued)

Notes to the statement of comprehensive income

1 Revenue from continuing operations

Consolidated Parent2016$'000

2015$'000

2016$'000

2015$'000

Transport Service Contract revenue 1,570,020 1,531,535 - -Passenger transport revenue 69,852 72,475 - -Network access revenue 213,814 234,609 - -Other revenue 63,371 90,033 - -Managed services revenue - - 749,426 696,965Inter-company dividend revenue - - 165,433 222,872

1,917,057 1,928,652 914,859 919,837

The consolidated entity recognises revenue when the amount of revenue can be reliably measured, it is probablethat future economic benefits will flow to the consolidated entity and specific criteria have been met for each ofthe consolidated entity's major business activities as described below.

(a) Transport Service Contract

A Transport Service Contract (TSC) was entered into between Queensland Rail Limited and the State ofQueensland on 20 July 2015. This contract covers the provision of funding to Queensland Rail Limited from theDepartment of Transport and Main Roads (DTMR), on behalf of the State of Queensland, for services performedby Queensland Rail Limited associated with:

• Citytrain and City Network ServicesQueensland Rail Limited receives payment for the delivery of train services on the City Network inaccordance with the timetable and for maintenance of the City Network infrastructure. Payment for agreedservices is fixed under the contract.

• Travel and Tourism ServicesQueensland Rail Limited receives payments associated with travel services provided to the public on Traveland Tourism Services. Payment for agreed services is fixed under the contract.

• Regional Infrastructure ServicesQueensland Rail Limited receives payment for the maintenance of the Regional Network infrastructure.Payment for agreed services is fixed under the contract.

(b) Passenger Transport

Other train passenger service revenue comprises ticket and travel related sales and is recognised as revenueonce the service has been rendered.

Government concession revenue is recognised in the period in which the service is provided based on apredetermined formula as agreed with the local authority.

(c) Network Access

Revenue generated from rail network access is recognised as the services are provided and is calculated basedon a number of operating parameters (such as tonnage hauled) applied to either regulator approved tariffs ornegotiated access agreements. In some circumstances where paths are not utilised by customers, a take or payfee is charged. This fee is subject to individual access contracts.

(d) Managed Services Agreement

Revenue generated from the provision of personnel services to Queensland Rail Limited is recognised when theservice is provided and includes direct and indirect costs as per the Managed Services Agreement.

7



2 Supplies and services

Consolidated2016$'000

2015$'000

Materials and consumable items 117,908 112,957Trade and other services 146,173 125,452Capital and external works 13,978 23,522Lease and hire charges 34,784 52,956Traction electricity and train fuel 39,181 40,069Utilities 24,503 30,430Vehicle running expenses 18,003 18,416Other supplies and services 12,008 22,870

406,538 426,672

The parent entity does not have any supplies and services.

8



3 Employee benefits expense


2015$'000

2016$'000

2015$'000

Wages and salaries 466,848 446,461 538,128 519,225Annual leave 50,767 45,247 50,767 45,247Long service leave 26,788 10,132 26,788 10,132Superannuation

Defined benefit superannuation expense 15,578 15,620 15,578 15,620Defined contribution superannuation expense 45,456 41,705 45,456 41,705

Other employee benefits 22,537 27,553 22,537 27,553Employee related expenses 34,913 31,732 39,190 34,805

662,887 618,450 738,444 694,287

Employee benefits expense recognised in the consolidated entity excludes all employee related expenditure thatis capitalised. In accordance with accounting standards and Queensland Rail capitalisation policy, all employeeexpenses directly attributable to the acquisition or construction of an asset are recognised directly in property,plant and equipment.

The number of full-time equivalent (FTE) employees as at reporting date was 5,958.6 (2015: 5,778.4). FTEsinclude full-time, part-time and casual employees based on a thirty-eight hour week.

(a) High Court decision

CEPU & ORS v QUEENSLAND RAIL & ANOR [2015] HCA 11

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

As a consequence of the determination by the High Court:

• the federal enterprise agreements that applied to Queensland Rail employees under the Fair Work Act (Cth)immediately prior to 3 May 2013 continued to apply at all times since 3 May 2013. As those agreements hadexpired, the agreements needed to be renegotiated or replaced under the Fair Work Act. New enterpriseagreements, for all relevant employees other than traincrew employees, have since been negotiated andapproved by the workforce in accordance with the requirements of the Fair Work Act (Cth). The newenterprise agreements were certified by the Fair Work Commission on 1 April 2016.

• the Queensland Rail Traincrew Certified Agreement 2013 approved by the relevant employees and certifiedby the Queensland Industrial Relations Commission under the Industrial Relations Act 1999 (Qld) on 21October 2013 was invalid. The federal enterprise agreement applicable to the relevant employeesimmediately prior to 3 May 2013 (the QR Passenger Pty Limited Traincrew Union Collective WorkplaceAgreement 2009) continued to apply and, as that agreement had expired, it needed to be renegotiated orreplaced under the Fair Work Act 2009. Negotiations for a replacement traincrew enterprise agreementcommenced in May 2016. Prior to the determination by the High Court on 8 April 2015, and in compliancewith the express terms of the State Certified Queensland Rail Traincrew Certified Agreement 2013,Queensland Rail paid employees covered by that agreement a pay rate increase of 2.25% from 1 August2013, a further pay rate increase of 2.5% from 1 August 2014 and a further pay rate increase of 2.5% from 1August 2015. The total amounts paid for those pay rate increases was $2.7 million for the 2013/14 year, $5.8million for the 2014/15 year and $9.4 million for the 2015/16 year. Pay rate increases from 8 April 2015 havebeen recognised in the statement of comprehensive income as other expenses for the amount of $9.4 million(2015: $1.4 million) as they meet the definition of a special payment (refer to note 21).

9



4 Income tax expense

Income tax expense comprises current and deferred tax and is recognised in the statement of comprehensiveincome except to the extent that it relates to items recognised directly in equity. The income tax expense orbenefit for the period is the tax payable or receivable on the current period's taxable income based on the incometax rate, adjusted by changes in deferred tax assets and liabilities attributable to temporary differences betweenthe tax bases of assets and liabilities and their carrying amounts in the financial statements.

(a) Income tax expense


2015$'000

2016$'000

2015$'000

Current tax 84,457 89,208 3,642 (1,682)Deferred tax (13,591) 6,004 (3,642) 1,682Adjustments for current tax of prior periods (30) 561 - -Utilisation of capital tax loss - 383 - -

70,836 96,156 - -

Deferred income tax expense / (benefit) includedin income tax expense comprises:(Increase) / decrease in deferred tax assets (note6) 965 3,977 (3,642) 1,682Increase / (decrease) in deferred tax liabilities(note 9) (14,556) 2,027 - -

(13,591) 6,004 (3,642) 1,682

(b) Numerical reconciliation of income tax expense to prima facie tax payable


2015$'000

2016$'000

2015$'000

Profit from continuing operations before incometax expense 236,162 319,905 165,433 222,872

Tax at the Australian tax rate of 30% (2015: 30%) 70,849 95,972 49,630 66,862Tax effect of amounts which are not deductible /(taxable) in calculating taxable income:

Entertainment 1 - - -Dividends received from subsidiaries - - (49,630) (66,862)Capital losses (6) (395) - -Other 22 18 - -

Adjustments for current tax of prior periods (30) 561 - -(13) 184 (49,630) (66,862)

Total income tax expense 70,836 96,156 - -

10



4 Income tax expense (continued)

(c) Amounts recognised directly in equity


2015$'000

2016$'000

2015$'000

Aggregate current and deferred tax arising in thereporting period and not recognised in net profitor loss but directly debited or credited to equity:

Net deferred tax - debited / (credited) directlyto equity (notes 6 and 9) (62) 47 - -

(62) 47 - -

(d) Income tax consolidation

Queensland Rail and its wholly owned Australian subsidiaries Queensland Rail Limited and On Track InsurancePty Ltd are entities which are members of the Queensland Rail National Tax Equivalents Regime (NTER) incometax consolidated group. Income tax equivalent payments are made to the Queensland Government.

In accordance with UIG Interpretation 1052 the specified subsidiary members each recognise the tax effect oftheir own transactions in their financial statements and the head entity recognises the aggregate current incometax liability of the consolidated entity and the benefit of any tax losses arising in the consolidated entity in itsfinancial statements.

The income tax consolidated group compensates Queensland Rail for any current tax payable assumed and iscompensated by Queensland Rail for any current tax receivable and deferred tax assets relating to unused taxlosses or unused tax credits that are transferred to Queensland Rail under income tax consolidation legislation.The funding amounts are recognised as non-current inter-company receivables or payables.

11



Notes to the balance sheet

5 Property, plant and equipment

(a) Movements in property, plant and equipment

Consolidated

Work inprogress

$'000Land$'000

Buildings$'000

Plant andequipment

$'000

Major plantand

equipment$'000

Infrastructure$'000

Total$'000

At 1 July 2015Cost 347,122 113,637 629,078 263,792 2,164,276 4,858,995 8,376,900Accumulated depreciation and impairment losses - (783) (175,427) (142,251) (805,152) (916,518) (2,040,131)

Net book amount 347,122 112,854 453,651 121,541 1,359,124 3,942,477 6,336,769

Year ended 30 June 2016Opening net book amount 347,122 112,854 453,651 121,541 1,359,124 3,942,477 6,336,769Additions 623,990 - - 3 1,181 - 625,174Transfers between asset classes (447,139) - 36,216 27,960 55,140 320,405 (7,418)Transfers to supplies and services (7,120) - - - - - (7,120)Transfers to State Government - - - - - - -Disposals - (3,858) (4,533) (1,912) (4,117) (7,609) (22,029)Impairment reversal - - - 35 150 - 185Depreciation expense - - (25,831) (20,294) (159,796) (170,843) (376,764)

Closing net book amount 516,853 108,996 459,503 127,333 1,251,682 4,084,430 6,548,797

At 30 June 2016Cost 516,853 109,779 656,835 281,266 2,185,355 5,156,455 8,906,543Accumulated depreciation and impairment losses - (783) (197,332) (153,933) (933,673) (1,072,025) (2,357,746)

Net book amount 516,853 108,996 459,503 127,333 1,251,682 4,084,430 6,548,797

12



5 Property, plant and equipment (continued)

Consolidated

Work inprogress

$'000Land$'000

Buildings$'000

Plant andequipment

$'000

Major plantand

equipment$'000

Infrastructure$'000

Total$'000

At 1 July 2014Cost 244,839 124,979 619,818 245,956 1,973,657 4,752,155 7,961,404Accumulated depreciation and impairment losses - (1,789) (152,585) (121,890) (673,604) (781,289) (1,731,157)

Net book amount 244,839 123,190 467,233 124,066 1,300,053 3,970,866 6,230,247

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

Closing net book amount 347,122 112,854 453,651 121,541 1,359,124 3,942,477 6,336,769

At 30 June 2015Cost 347,122 113,637 629,078 263,792 2,164,276 4,858,995 8,376,900Accumulated depreciation and impairment losses - (783) (175,427) (142,251) (805,152) (916,518) (2,040,131)

Net book amount 347,122 112,854 453,651 121,541 1,359,124 3,942,477 6,336,769

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

13




(b) Initial recognition

Items of expenditure in excess of $2,000 which are expected to provide future economic benefits are capitalised,with the exception of the purchase of office equipment and other items of a similar nature that provide limitedquantifiable benefits. The threshold applies to all asset classes except capital spares and intangibles.

Capital spares have a threshold of $20,000. If capital spares are under $20,000, the item is recorded in inventory.Expenditure not capitalised is treated as an operating expense in the period in which the expenditure is incurred.

Property, plant and equipment is measured at cost less accumulated depreciation.

Work in progress

The cost of fixed assets constructed by the consolidated entity includes the cost of all materials used inconstruction, direct labour, site preparation, interest and foreign currency gains and losses incurred whereapplicable and an appropriate proportion of variable and fixed overheads based on direct labour hours.

The transfers between asset classes represents property, plant and equipment and intangibles commissionedduring the period.

The transfers to supplies and services represent expenditure incurred in prior years that are expensed in thecurrent year on the basis that they are operational in nature or comprise expenditure on capital works on behalfof third parties.

Land

The Transport Infrastructure Act 1994 stipulates that the consolidated entity only retains ownership of itsnon-corridor land. As such, only non-corridor land is recorded in these accounts. Ownership of corridor landremains with the Department of Natural Resources and Mines on behalf of the State. This land is leased to theDepartment of Transport and Main Roads and subsequently sub-leased to the consolidated entity for no cost.The sub-lease term is for an initial term of 100 years with a renewal option for an additional 100 years.

Buildings

The capitalised fit out costs of leased properties is disclosed under buildings.

Major plant and equipment

Rollingstock is considered to be major plant and equipment.

Gifted and Donated Assets

Assets acquired from government at no cost are measured at fair value as government grants. Fair value meansthe price that would be received to sell an asset or paid to transfer a liability in an orderly transaction betweenmarket participants at the measurement date.

(c) Subsequent and maintenance costs

Costs related to repairs and maintenance activities are expensed when such repairs are performed. Subsequentcosts are only capitalised when it is probable that future economic benefits associated with the item will flow tothe consolidated entity and the cost of the item can be measured reliably. The carrying amount of any componentaccounted for as a separate asset is derecognised when replaced.

14




(d) Depreciation

Assets are depreciated from the date of acquisition, or, in respect of internally constructed or manufacturedassets, from the time an asset is completed and held ready for use.

Where assets have separately identifiable components that are subject to regular replacement, thesecomponents are assigned useful lives distinct from the asset to which they relate. Any expenditure that increasesthe originally assessed capacity or service potential of an asset is capitalised and the new depreciable amount isdepreciated over the remaining life of the asset.

Buildings, plant and equipment, major plant and equipment and infrastructure are depreciated on a straight-linebasis over the useful life net of the residual value. Motor vehicles are depreciated using the diminishing valuebasis (percentages range from 13.64% to 35.00%).

Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or theestimated useful lives of the improvements.

Major spares purchased specifically for particular assets are capitalised and depreciated in line with standardasset class lives.

Land and work in progress are not depreciated.

The depreciation rates used during the year were based on the following range of useful lives:• Buildings 10 - 50 years• Major plant and equipment 8 - 40 years• Plant and equipment 4 - 25 years• Infrastructure* 6 - 100 years

The remaining useful lives of assets are reviewed annually and adjusted if appropriate.

* Longer life infrastructure includes bridges, tunnels and other long lived civil works. Approximately 39% of thecost of infrastructure assets comprise assets with useful lives of 100 years. Shorter life infrastructure includestelecommunications and security and surveillance equipment. Approximately 34% of the cost of infrastructureassets comprise railway track. The useful life of this class of asset is between 40-50 years.

Judgements and estimates

Management estimates the useful lives of property, plant and equipment based on the expected period of timeover which economic benefits from use of the asset will be derived. Management reviews useful life assumptionson an annual basis having given consideration to variables including historical and forecast usage rates,technological advancements and changes in legal and economic conditions. Management also assesses thecondition of the assets when physical stock takes are undertaken. The condition of the assets may result in arevision of their useful lives.

The residual value of assets is estimated when the asset is first capitalised onto the fixed asset register. Thevalue represents an estimate of the consideration to be received from a willing buyer at the end of the asset’suseful life. This value is revised annually subject to movements in market indices or contractual prices.

(e) Transfers to State Government

The transfers to State Government comprise work in progress or commissioned assets that have beentransferred to other State Government owned entities external to the Queensland Rail consolidated entity.Settlement of these transfers is via an adjustment to Queensland Rail’s contributed equity.

15




(f) Impairment

Assets (including work in progress) are reviewed for impairment annually to determine if there are indications thatthe carrying amount may not be recoverable.

An impairment assessment on all CGUs was undertaken prior to reporting date. No further impairment wasrecognised in the current or prior reporting period.

An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverableamount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For thepurposes of assessing impairment, assets are grouped at the lowest levels for which there are separatelyidentifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets(cash generating units). Value in use is based on the estimated future cash flows, discounted to their presentvalue using a pre-tax discount rate that reflects current market assessment of the time value of money and therisks specific to the asset or cash generating unit.

Non-financial assets that have suffered impairment are reviewed for possible reversal of the impairment at eachreporting date.


Value in use calculations require the use of assumptions. These assumptions include the allocation ofmanagement's assessment of future cash flows for the next five years for the consolidated entity to each cashgenerating unit and the discounting of nominal amounts using the weighted average cost of capital applicable tothat cash generating unit. The cash flows include a terminal value which is determined using a perpetuitycalculation after adjusting for annual growth.

Impairment reversal

Prior to 1 July 2015, Queensland Rail identified three Cash Generating Units (CGUs) being SEQ, Regional andOther. The Other CGU comprised the Heritage and Kuranda assets and was not included in the prior TransportService Contract (TSC) arrangements. Therefore the assets were fully impaired and all new expenditure onHeritage and Kuranda was immediately expensed post commissioning.

From 1 July 2015, the TSC between Queensland Rail and the Department of Transport and Main Roads includesfunding for Kuranda and Heritage operations. From this date, the Kuranda and Heritage operations are includedin the Regional CGU.

The impact of this change is that the impairments in prior periods for the Kuranda and Heritage assets arereversed by the current recoverable amount.

(g) Non-current assets pledged as security

No assets have been pledged as security by the consolidated entity.

16



6 Deferred tax assets


2015$'000

2016$'000

2015$'000

The balance comprises temporary differencesattributable to:Accrued expenses 7,002 11,337 2,467 4,239Provisions 79,214 76,683 66,825 61,225Superannuation contributions 970 1,156 970 1,156Unearned revenue 4,515 3,110 - -Foreign exchange gains 3 5 - -Cash flow hedges 15 - - -Total deferred tax assets 91,719 92,291 70,262 66,620

Set-off of deferred tax liabilities pursuant to set-offprovisions (note 9) (91,719) (92,291) - -

Net deferred tax assets - - 70,262 66,620

Movements:Opening balance - - 66,620 68,302Prior year adjustments 378 - - -Credited / (charged) to the consolidatedstatement of comprehensive income (note 4) (965) (3,977) 3,642 (1,682)Cash flow hedges 15 - - -Utilisation of capital losses - (881) - -Set-off of deferred tax liabilities pursuant to set-offprovisions (note 9) 572 4,858 - -

Closing balance at 30 June - - 70,262 66,620

Deferred tax assets expected to be recoveredwithin 12 months - - 65,167 62,451Deferred tax assets expected to be recoveredafter more than 12 months - - 5,095 4,169

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assetsand liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets andtax liabilities are offset where the entity has a legally enforceable right to offset and intends to either settle on anet basis, or to realise the assets and settle the liability simultaneously.


The consolidated entity's accounting policy for taxation requires management's judgement as to the types ofarrangements considered to be subject to a tax. Judgement is also required in assessing whether deferred taxassets and certain deferred tax liabilities are recognised on the balance sheet. Deferred tax assets, includingthose arising from unrecouped tax losses, capital losses and temporary differences, are recognised only when itis considered probable that they will be recovered. Recoverability is dependent on the generation of sufficientfuture taxable profits.

17



7 Trade and other payables


2015$'000

2016$'000

2015$'000

Trade payables 202,018 159,582 22,692 24,595Dividend payable 182,196 178,999 182,196 178,999Other payables 9,085 8,228 7,867 7,090

393,299 346,809 212,755 210,684

GST input tax credits receivable (8,664) (10,166) (51) (45)GST payable 17,074 15,097 - -

8,410 4,931 (51) (45)

Total trade and other payables 401,709 351,740 212,704 210,639

These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end offinancial year which are unpaid. The amounts are unsecured and are usually paid within the terms set by thesupplier.

8 Provisions

2016 2015

ConsolidatedCurrent

$'000Non-current

$'000Total$'000

Current$'000

Non-current$'000

Total$'000

Employee benefits 204,746 16,982 221,728 188,745 13,897 202,642Provision for insurance claims 1,000 - 1,000 1,000 - 1,000Litigation and workers' compensationprovision 7,184 10,878 18,062 5,119 15,335 20,454Land rehabilitation provision 289 6,068 6,357 41 4,139 4,180Make good provision - 2,567 2,567 - 1,938 1,938Onerous contracts provision 1,957 11,060 13,017 8,010 19,885 27,895

215,176 47,555 262,731 202,915 55,194 258,109

2016 2015

ParentCurrent

$'000Non-current

$'000Total$'000

Current$'000

Non-current$'000

Total$'000

Employee benefits 204,746 16,982 221,728 188,745 13,897 202,642Provision for insurance claims - - - - - -Litigation and workers' compensationprovision 6,149 10,528 16,677 4,627 15,142 19,769Land rehabilitation provision - - - - - -Make good provision - - - - - -Onerous contracts provision - - - - - -

210,895 27,510 238,405 193,372 29,039 222,411

Provisions are recognised when the consolidated entity has a present legal or constructive obligation as a resultof past events, it is probable that an outflow of resources will be required to settle the obligation and the amounthas been reliably estimated. Provisions are not recognised for future operating losses.

18



8 Provisions (continued)

The amount recognised as a provision is the best estimate of the consideration required to settle the presentobligation at reporting date, taking into account the risks and uncertainties surrounding the obligation. Where aprovision is measured using the cash flows estimated to settle the present obligation, its carrying amount is thepresent value of those cash flows. The discount rate used to determine the present value is a pre-tax rate thatreflects current market assessments of the time value of money and the risks specific to the liability.

(a) Employee benefits

Employee obligations are presented as current liabilities in the balance sheet if the entity does not have anunconditional right to defer settlement for at least 12 months after the reporting period, regardless of when theactual settlement is expected to occur. The remaining unvested employee obligations are included as non-currentliabilities.

(i) Wages and salaries, annual leave, leave loading and long service leave

Liabilities for wages and salaries, including non-monetary benefits, annual leave, leave loading and long serviceleave expected to be settled wholly within 12 months after the end of the period in which the employees renderthe related service are recognised as short-term benefits. These liabilities are in respect of employees' servicesup to the reporting date and are measured at the nominal amount plus related on-costs (where applicable).

(ii) Other long-term employee benefit obligations

Liabilities for annual leave, leave loading and long service leave not expected to be settled wholly within 12months after the end of the period in which the employee renders the service, based on experience of leavehistory are recognised as long-term benefits.

The liabilities are measured using the expected future payments to be made in respect of services provided byemployees up to the reporting date. Consideration is given to expected future wage and salary levels, experienceof employee departures and periods of service.

Expected future long-term payments are discounted using market yields at the reporting date on Australianhigh-quality corporate bonds (G100) with terms to maturity that match, as closely as possible, the estimatedfuture cash outflows.

(iii) Retirement allowance

Retirement allowance is payable to employees that retire or are paid according to Voluntary EmployeeRedundancy Scheme (VERS) or Medical Separation who:• are not members of a QSuper contributory or defined benefit superannuation fund;• were employed prior to 1 February 1995;• have 10 or more years of continuous service; and• have reached the retirement attainment age of 55.

Liabilities for retirement allowance where employees fulfil all of the above requirements are recognised as currentliabilities at nominal values. The remaining unvested liabilities are included as non-current liabilities.

The liability for retirement allowance is measured using the expected future payments to be made in respect ofservices provided by employees up to the reporting date. Consideration is given to the history of employeedepartures, expected future wage and salary levels as well as expected age of retirement.

Expected future non-current payments are discounted using market yields at the reporting date on Australianhigh-quality corporate bonds (G100) with terms to maturity that match, as closely as possible, the estimatedfuture cash outflows.

These conditions continue to apply to employees who have transferred from Aurizon Operations Limited (formerlyQR National Limited) and Aurizon Network Pty Ltd (formerly QR Network Pty Ltd) to Queensland Rail.

(iv) Sick leave

Sick leave is not provided for on the grounds that it is non-vesting.

19




(v) Superannuation

Contributions are expensed as they are made.

The entity pays an employer subsidy to the Government Superannuation Office in respect of employees who arecontributors to either the Public Sector Superannuation (QSuper) scheme or State Service Superannuation.

Employer contributions to the Super Defined Benefit Fund are determined by the State Actuary. The most recentactuarial investigation was completed in 2013 and the actuary’s recommendation to leave the employercontribution rate unchanged was approved by the Treasurer. No liability is recognised for accruingsuperannuation benefits as this liability is held on a Whole-of-Government basis and reported in theWhole-of-Government financial statements. The entity also makes superannuation guarantee payments into theQSuper Accumulation Fund (RailSuper) and QSuper Accumulation Fund (Contributory) administered by theGovernment Superannuation Office.

No liability / asset is recognised for the entity's share of any potential deficit of the Super Defined Benefit Fund ofQSuper.


The determination of the employee provisions required is dependent on a number of assumptions includingexpected wage increases, probability of meeting the conditions of the benefit and the estimation of the length oftime before the benefit is utilised. Wage increases are based on the current agreements in place and both theprobability of meeting the conditions and the estimated time until utilised are based on the three year history.Australia is considered to have a deep market for corporate bonds. The consolidated entity uses the publishedyield curve bond rates that are applicable to the period when it is expected the leave will be taken.

(b) Litigation and workers' compensation provision

Provision is made for the estimated liability for workers' compensation and litigation claims. Independent actuarialvaluations are used to estimate the provisions required for self-insured workers' compensation. Litigation claimsare assessed separately for common law, statutory and asbestos claims. The outstanding liability is determinedafter factoring future claims inflation and discounting future claim payments.


The determination of the provisions required is dependent on a number of assumptions including the total futurecost to finalise existing open claims, wage increases that will impact existing claims, inflation and the amount ofclaims that have been incurred but not yet reported. Estimates are made based on the average number of claimsand average claim payments over a specified period of time. Claims Incurred But Not Reported (IBNR) are alsoincluded in the estimate. Claims are expected to be paid over a period exceeding more than one year.

(c) Onerous contracts provision

This provision represents the net unavoidable costs expected to be incurred on commitments for property leasesconcerning commercial office space in Brisbane. The net unavoidable costs comprise the commitments under thelease contracts for offices that are currently vacated by the consolidated entity less expected revenue to bereceived from the sub-lease of office space under the same contracts. The onerous provision is equivalent to thepresent value of the future net unavoidable costs.


In the determination of the onerous contract provision for the commercial property leases in Brisbane, estimationswere required for the timing of future rental income that can offset future rental commitments, the likelihood ofwhether floors will be utilised by Queensland Rail Limited and the relevant discount rates.

20




(d) Movements in provisions

Movements in each class of provision during the financial year, other than employee benefits, are set out below:

Consolidated2016

Provisionfor

insuranceclaims$'000

Litigation andworkers'

compensationprovision

$'000

Landrehabilitation

provision$'000

Makegood

provision$'000

Onerouscontractsprovision

$'000Total$'000

Current and non-currentCarrying amount at start of year 1,000 20,454 4,180 1,938 27,895 55,467Charged / (credited) to profit orloss

- additional provisionsrecognised 133 5,885 2,054 814 - 8,886

- unused amounts released - (2,768) - (232) (3,414) (6,414)- unwind discount - - 123 47 70 240

Amounts used during the year (133) (5,509) - - (11,534) (17,176)

Carrying amount at end of year 1,000 18,062 6,357 2,567 13,017 41,003

Parent2016

Provisionfor

insuranceclaims$'000

Litigation andworkers'

compensationprovision

$'000

Landrehabilitation

provision$'000

Makegood

provision$'000

Onerouscontractsprovision

$'000Total$'000

Current and non-currentCarrying amount at start of year - 19,769 - - - 19,769Charged / (credited) to profit orloss

- additional provisionsrecognised - 4,674 - - - 4,674

- unused amounts released - (2,768) - - - (2,768)- unwind discount - - - - - -

Amounts used during the year - (4,998) - - - (4,998)

Carrying amount at end of year - 16,677 - - - 16,677

21



9 Deferred tax liabilities


2015$'000

The balance comprises temporary differencesattributable to:Accrued income 6 50Consumables and spare parts 8,947 6,024Property, plant and equipment 420,464 436,111Prepayments - 117Cash flow hedges - 47Total deferred tax liabilities 429,417 442,349

Set-off of deferred tax liabilities pursuant to set-offprovisions (note 6) (91,719) (92,291)

Net deferred tax liabilities 337,698 350,058

Movements:Opening balance 350,058 343,126Prior year adjustments 1,671 -Charged / (credited) to the consolidatedstatement of comprehensive income (note 4) (14,556) 2,027Cash flow hedges (47) 47Set-off of deferred tax liabilities pursuant to set-offprovisions (note 6) 572 4,858

Closing balance at 30 June 337,698 350,058

Deferred tax liabilities expected to be settledwithin 12 months (66,698) (70,150)Deferred tax liabilities expected to be settled aftermore than 12 months 404,396 420,208

The parent entity does not have any deferred tax liabilities.

22



10 Retained earnings and dividends

(a) Movements in retained earnings


2015$'000

2016$'000

2015$'000

Opening balance 252,520 207,770 108,688 64,815Profit for the year 165,326 223,749 165,433 222,872Dividends provided (182,196) (178,999) (182,196) (178,999)

Balance 30 June 235,650 252,520 91,925 108,688

(b) Dividends


2015$'000

2016$'000

2015$'000

Dividend declared 182,196 178,999 182,196 178,999Dividend paid 178,999 170,884 178,999 170,884

All dividends declared / paid were unfranked.

Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at thediscretion of the consolidated entity, on or before the end of the financial year but not distributed at reportingdate.

23



Notes to the statement of cash flows

11 Reconciliation of profit after income tax to net cash inflow from operatingactivities


2015$'000

2016$'000

2015$'000

Profit for the year 165,326 223,749 165,433 222,872Depreciation and amortisation 392,946 367,991 - -Net impairment of non-current assets (185) - - -Amortisation of prepaid access facilitationcharges (1,064) (1,387) - -(Gains) / losses on sale of non-current assets 10,767 (1,594) - -Unrealised (gain) / loss on derivatives (7) 18 - -Impairment of trade receivables 38 81 - -Inventory obsolescence 4,295 8,190 - -Change in operating assets and liabilities:

(Increase) / decrease in trade debtors 3,698 38,722 57,439 (9,940)(Increase) / decrease in inventories (8,680) (3,782) - -(Increase) / decrease in other operatingassets (3,748) (246) (83,134) (89,271)Increase / (decrease) in trade creditors (21,132) (51,649) (1,133) 2,813Increase / (decrease) in other liabilities (45,541) 6,616 (27,346) 15,307Increase / (decrease) in other provisions 4,622 (16,216) 15,994 (7,202)

Net cash inflow from operating activities 501,335 570,493 127,253 134,579

24



Risk

12 Financial risk management

The consolidated entity's activities expose it to a variety of financial risks including market risk, credit risk andliquidity risk. The consolidated entity's financial risk management program focuses on the unpredictability offinancial markets and seeks to minimise potential adverse effects on the financial performance of theconsolidated entity. The consolidated entity uses derivative financial instruments such as foreign exchangecontracts to hedge significant risk exposures. Trading for profit is strictly prohibited.

Financial risk management is being carried out by the central treasury section of the Financial Compliance unitwithin the consolidated entity under policies approved by the Members of the Board (the Board). Any breaches ofpolicy are reported to the Board.

(a) Market risk

(i) Foreign exchange risk

Foreign exchange risk arises from expenditures that are denominated in a currency that is not the consolidatedentity's functional currency. The consolidated entity is exposed to foreign exchange risk arising from variouscurrency exposures, primarily with respect to the US Dollar (USD), the Euro (EUR) and the Japanese Yen (JPY).

The consolidated entity's foreign exchange risk management policy dictates the level of hedging to beundertaken within the Board approved limits. At reporting date, the Board approved trading range for the foreignexchange risk hedging is:0 - 1 year: 80% - 100%1 - 2 years: 60% - 100%2 - 3 years: 40% - 100%

The consolidated entity applies hedge accounting to transactions which are highly probable.

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and aresubsequently remeasured to their fair value.

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flowhedges is recognised in other comprehensive income. The gain or loss relating to the ineffective portion isrecognised immediately in the statement of comprehensive income.

Amounts accumulated in equity are recycled in the statement of comprehensive income in the periods when thehedged item will affect profit or loss. However, when the forecast transaction that is hedged results in therecognition of a non-financial asset, the gains and losses previously deferred in equity are transferred from equityand included in the measurement of the initial cost or carrying amount of the asset.


Management's judgement is necessary when determining whether a derivative financial instrument qualifies forhedge accounting, such as whether forecast transactions are highly probable as required by AASB 139 FinancialInstruments: Recognition and Measurement. The assessment of whether forecast transactions are highlyprobable is judgmental and is subject to changes to the timing and magnitude of underlying purchases.

The consolidated entity's exposure to foreign exchange risk at reporting date was as follows:

30 June 2016 30 June 2015

ConsolidatedUSD$'000

EUR€'000

JPY¥'000

USD$'000

EUR€'000

JPY¥'000

Cash and cash equivalents 113 2 150,622 212 - 1,024Forward exchange contracts (qualifying forhedge accounting) 2,253 - - 1,086 49 -

Net exposure 2,366 2 150,622 1,298 49 1,024

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

25



12 Financial risk management (continued)

(ii) Cash flow and fair value interest rate risk

The consolidated entity's main interest rate risk arises from long-term borrowings. Borrowings issued at variablerates expose the consolidated entity to cash flow interest rate risk. Borrowings issued at fixed rates expose theconsolidated entity to fair value interest rate risk. The Queensland Treasury Corporation (QTC) has beenauthorised to manage the interest rate risk of the consolidated entity within limits in accordance with the riskprofile approved by the Board.

Debt is drawn from facilities with the Queensland Treasury Corporation (QTC) incorporating fixed and floatingdebt and is initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequentlymeasured at amortised cost, using the effective interest rate method. Interest is accrued and paid monthly.

Interest costs are calculated and advised by QTC in accordance with an agreed book rate methodology, whichequates with amortised cost using the effective interest rate method. The effective interest rate is the rate thatexactly discounts estimated future cash payments or receipts through the expected life of the financialinstrument.

Borrowing costs which are directly attributable to the construction of material qualifying assets are capitalised.Qualifying assets are assets not funded from other sources with a cost of more than $1.0 million and which take asubstantial period of time to prepare for intended use or sale. The rate used to determine the amount ofborrowing cost to be capitalised is the QTC interest rate applicable to the consolidated entity’s outstandingborrowings during the year, in this case 6.84% (2015: 7.12%). During the year, interest costs of $10.3 millionwere capitalised (2015: $14.3 million).

Borrowings are classified as current liabilities unless the consolidated entity has an unconditional right to defersettlement of the liability for at least 12 months after the reporting date.

At reporting date the consolidated entity had the following exposure to variable rate borrowings:

30 June 2016 30 June 2015

Consolidated

Weightedaverage

interest rate%

Balance$'000

Weightedaverage

interest rate%

Balance$'000

Overdrafts and loans 6.8 3,000,000 7.1 3,000,000

Net exposure to cash flow interest rate risk 3,000,000 3,000,000

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

The fair value of borrowings is determined by reference to pricing models and valuation techniques as advised byQTC. The carrying amounts and fair values of current and non-current borrowings at reporting date are:

2016 2015

Consolidated

Carryingamount

$'000Fair value

$'000

Carryingamount$'000

Fair value$'000

Non-traded financial liabilitiesNon-current borrowings (unsecured) 3,000,000 3,440,497 3,000,000 3,371,427

3,000,000 3,440,497 3,000,000 3,371,427

The parent entity does not have any borrowings.

26




The following table summarises the sensitivity of the consolidated entity’s debt with QTC to interest rate risk:

Interest rate risk-1% +1%

Consolidated30 June 2016

Carryingamount

$'000Profit$'000

Equity$'000

Profit$'000

Equity$'000

Client Specific Debt Pool 3,000,000 2,754 2,754 (2,640) (2,640)

Total increase / (decrease) 2,754 2,754 (2,640) (2,640)

30 June 2015

Client Specific Debt Pool 3,000,000 2,622 2,622 (2,528) (2,528)

Total increase / (decrease) 2,622 2,622 (2,528) (2,528)


(b) Credit risk

The maximum exposure to credit risk, excluding the value of any collateral or other security, at reporting date torecognised financial assets is the carrying amount, net of any allowances for impairment of those assets, asdisclosed in the balance sheet and notes to the consolidated financial statements.

The consolidated entity does not have any material credit risk exposure to any single receivable or group ofreceivables under financial instruments entered into by the consolidated entity, other than amounts owing by theState of Queensland.

Policies are in place to ensure that sales of products and services are only made to customers with anappropriate credit history.

Derivative counterparties and cash transactions are limited to high credit quality financial institutions and areapproved by the Board. The consolidated entity has policies that limit the amount of credit exposure to any onefinancial institution.

The parent entity does not have any cash and cash equivalents or derivative financial instruments.

(c) Liquidity risk

Liquidity risk management within the consolidated entity ensures sufficient cash to meet short-term and long-termfinancial commitments.

Financing arrangements

The short-term borrowing arrangements with QTC are interest bearing, refer to note 12(a)(ii). The borrowingarrangements are subject to annual review.

The amount of undrawn short-term borrowing facilities with QTC available at reporting date is $150.0 million(2015: $150.0 million).

Long-term borrowings are sourced from the Client Specific Debt Pool subject to annual approval of theQueensland State Treasurer. The consolidated entity may draw up to the amount of the approved borrowingprogram.

Borrowings are not secured.


27




Maturity Analysis

The amounts disclosed in the maturity table below are the contractual undiscounted cash flows.

QTC borrowings are interest only with no fixed repayment date for the principal component. For the purposes ofcompleting the maturity analysis, the principal component of this loan has been included in the over five yearstime band with no interest payment assumed in this time band.

Consolidated30 June 2016

Less than1 year$'000

Between1 and 5 years

$'000

Over5 years$'000

Totalcontractualcash flows

$'000

Non-derivativesNon-interest bearing 197,169 - - 197,169Variable rate 22,344 - - 22,344Duration based 186,743 747,485 3,010,041 3,944,269

Total non-derivatives 406,256 747,485 3,010,041 4,163,782

30 June 2015

Non-derivativesNon-interest bearing 148,599 - - 148,599Variable rate 24,142 - - 24,142Duration based 205,665 820,972 2,985,450 4,012,087

Total non-derivatives 378,406 820,972 2,985,450 4,184,828

Parent30 June 2016

Less than1 year$'000

Between1 and 5 years

$'000

Over5 years$'000

Totalcontractualcash flows

$'000

Non-derivativesNon-interest bearing 30,508 - - 30,508Variable rate - - - -Duration based - - - -

Total non-derivatives 30,508 - - 30,508

30 June 2015

Non-derivativesNon-interest bearing 31,640 - - 31,640Variable rate - - - -Duration based - - - -

Total non-derivatives 31,640 - - 31,640

28




(d) Fair value measurements

The fair value of financial assets and financial liabilities must be estimated for recognition and for disclosurepurposes. The derivative financial assets and liabilities held by the consolidated entity have been classified aslevel 2 on the fair value hierarchy as values are indirectly derived from market indices.

The parent entity does not hold any derivative financial instruments.

The carrying amounts of trade receivables and payables are assumed to approximate their fair values due totheir short-term nature. The fair value of financial liabilities for disclosure purposes is estimated by discountingthe future contractual cash flows at the current market interest rate that is available to the consolidated entity forsimilar financial instruments. The carrying amount of current borrowings approximates the fair value, as theimpact of discounting is not significant.

(e) Capital risk management

The consolidated entity's objectives when managing capital are to safeguard its ability to continue as a goingconcern so that it can continue to provide returns for shareholders and benefits for other stakeholders and tomaintain an optimal capital structure to reduce the cost of capital.

The responsible Ministers advise the appropriate methodology in determining the dividend payable annually.

The consolidated entity monitors capital on the basis of the gearing ratio. This ratio is calculated as net debtdivided by total capital. Net debt is calculated as total borrowings (including 'borrowings' and external ‘trade andother payables' as shown in the balance sheet) less cash and cash equivalents (including bank overdraft). Totalcapital is calculated as ‘equity’ as shown in the balance sheet plus net debt.

The consolidated entity's gearing ratios are as follows:


2015$'000

2016$'000

2015$'000

Total borrowings 3,401,709 3,351,740 212,704 210,639Less: cash and cash equivalents (117,776) (334,262) - -Net debt 3,283,933 3,017,478 212,704 210,639

Total equity 2,827,562 2,844,576 2,926,567 2,943,330

Total capital 6,111,495 5,862,054 3,139,271 3,153,969

Consolidated ParentGearing ratio 54% 51% N/A N/A

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

29



13 Correction of errors and revision of estimates

There have been no corrections of errors in the current reporting period.

During the prior reporting period the consolidated entity changed the discount rate used for the calculation oflong-term employee benefits from the Australian government bond rate to the Australian high-quality corporatebond rate (G100) and applied this change as a change in accounting estimate. The Australian bond market hasdemonstrated sufficient depth and liquidity over recent years to justify adopting this change to high-qualitycorporate bond rates.

The consolidated entity decreased the carrying amounts of long service leave, annual leave (including leaveloading), retirement allowance and related payroll tax by $10.98 million, $0.54 million, $0.02 million and $0.55million, respectively in the prior year upon application of this change is estimate.

There were no other material revisions of estimates during the current reporting period.

30



Unrecognised items

14 Contingencies

The consolidated entity had contingencies at reporting date in respect of:

(a) Contingent assets

2016 2015

ConsolidatedFair value

$'000Fair value

$'000

Third party guarantees 83,106 153,880Bank guarantees 121,698 121,936Insurance company guarantees 15,648 16,326

220,452 292,142

All contingent assets are unrecognised financial assets measured at fair value.

The parent entity does not hold any guarantees.

(b) Contingent liabilities

Issues relating to common law claims and product warranties are dealt with as they arise. There were no materialcontingent liabilities requiring disclosures in the financial statements other than as set out below.

2016 2015

ConsolidatedFair value

$'000Fair value

$'000

Third party guarantees 5,073 5,311Bank guarantees 25,483 25,850

30,556 31,161

All contingent liabilities are unrecognised financial liabilities measured at fair value.

The parent entity has not issued any guarantees.

Litigation

A number of common law claims are pending against the consolidated entity. Provisions are taken up for some ofthese exposures based on the Board's determination and are included as such in note 8.

As at reporting date, the following cases were filed in the courts naming Queensland Rail as defendant:

Consolidated Parent2016 2015 2016 2015

Number of cases before the High Court - 1 - 1

Number of cases before the Supreme Court 4 3 - -

Number of cases before the District Court 10 9 - -

Number of cases before the Magistrates Court 1 1 - -

It is not possible to make a reliable estimate of the final amount payable, if any, in respect of the litigation beforethe courts at this time.

31



14 Contingencies (continued)

(i) Environmental incident - Julia Creek derailment

On 27 December 2015, a third party operator’s locomotive hauling concentrated sulfuric acid, derailed on theMount Isa line, approximately 28 kilometres east of Julia Creek township. It is advised that 60,873 litres ofconcentrated sulfuric acid was released to the ground and into surface water present at the time, due to a periodof rainfall that had occurred prior to the derailment.

Queensland Rail has worked closely with the Department of Environment & Heritage Protection, the third partyoperator and the product owner throughout the phases of containment, investigation and remediation.Remediation of the derailment site within the rail corridor is now complete, with final validation reports expected inJuly 2016.

The incident is currently under investigation by the Australian Transport Safety Bureau (ATSB).

15 Commitments

The future commitments of the consolidated entity (excluding GST) at reporting date were as follows:

(a) Commitments payable

2016 2015

ConsolidatedCapital$'000

Lease$'000

Capital$'000

Lease$'000

Within one year 192,155 6,811 306,805 5,349Later than one year but not later than five years 108,031 20,348 8,271 21,070Later than five years - 654 - 1,379

300,186 27,813 315,076 27,798

The parent entity does not have any commitments payable.

(b) Commitments receivable

2016 2015

ConsolidatedLease$'000

Lease$'000

Within one year 5,343 4,339Later than one year but not later than five years 14,227 11,614Later than five years 76,918 15,665

96,488 31,618

The parent entity does not have any commitments receivable.

16 Events occurring after the reporting period

No matters or circumstances have arisen since the end of the financial year which significantly affected, or maysignificantly affect the operations of the consolidated entity, the results of those operations, or the state of affairsof the consolidated entity in future financial years.

32



Other items

17 Key management personnel disclosures

(a) Members, directors and specified executives

Compensation and other terms of employment for the specified executives are formalised in service agreements.

Details of the compensation of each specified member, director and executive are as follows:

2016$'000

2015*$'000

Short-term benefits 3,580 3,597Post-employment benefits 348 338Long-term benefits 43 16

3,971 3,951

* The prior year aggregate includes all compensation provided to individuals who held a key managementpersonnel role, however, the remuneration tables for directors and specified executives only includesinformation for individuals holding key management personnel roles during the current reporting period.

Short-term benefits includes cash salary, at risk performance incentives (for specified executives only), fees andnon-monetary benefits. Non-monetary benefits represent the value of Exempt and Reportable Fringe Benefits forthe respective Fringe Benefits Tax year.

33



17 Key management personnel disclosures (continued)

(b) Key management personnel compensation

(i) Members and directors of Queensland Rail and subsidiaries

2016Short-term

benefitsPost-

employmentbenefits

Members

Memberfees and

allowancesSuper-

annuation Total$'000 $'000 $'000

M Klug AM Chairman 132 12 144Appointment term: 3 yearsExpiry date: 30 September 2016

BlankA Blums Member 45 4 49

Appointment term: 2 years 8 monthsExpiry date: 30 September 2016

BlankD George Member 11 1 12

Ceased: 30 September 2015Blank

W McMillan Member 38 3 41Ceased: 29 April 2016

BlankD Marchant AM Member 30 3 33

Appointment term: 3 yearsExpiry date: 30 September 2018

BlankJ Mickel Member 41 4 45

Appointment term: 3 yearsExpiry date: 30 September 2016

BlankG Poole Member 12 1 13

Ceased: 30 September 2015Normal

P Wallis Member 44 4 48Appointment term: 2 years 2 monthsExpiry date: 30 September 2016

Blank

Total 353 32 385

34




2015Short-term

benefitsPost-

employmentbenefits

Members

Memberfees and

allowancesSuper-

annuation Total$'000 $'000 $'000

M Klug AM Chairman 137 12 149Blank

A Blums Member 45 4 49Blank

D George Member 43 4 47Blank

W McMillan Member 47 4 51Blank

J Mickel Member 41 4 45Blank

G Poole Member 47 4 51Blank

P Wallis Member 39 4 43Blank

All the members listed above are members of the Queensland Rail Board and directors of the Queensland RailLimited Board.

J Benstead is appointed as Managing Director of On Track Insurance Pty Ltd, with no set appointment date. Asan employee of Queensland Rail, J Benstead did not receive additional remuneration in his capacity as directorof On Track Insurance Pty Ltd.

These amounts are not in addition to the amounts disclosed in the Key Management Personnel note of theQueensland Rail Limited financial statements as they were recharged by the entity in accordance with theManaged Services Agreement.

Members' and directors' remuneration and terms of appointment are set by responsible Ministers. Members' anddirectors' remuneration is subsequently reviewed annually by responsible Ministers.

Members and directors are not entitled to termination payments on termination of their period of service.

35




(ii) Specified executives of the consolidated entity

2016Short-term benefits Post-

employmentbenefits

Long-term

benefits

Specified executives

Cashsalary

and feesCash

bonuses

Non-monetarybenefits

Super-annuation

Longserviceleave Total

$'000 $'000 $'000 $'000 $'000 $'000

H Gluer* 666 - 6 63 - 735Chief Executive OfficerAppointment term: 3 yearsExpiry date: 3 April 2018

BlankN Duce*** 302 48 6 38 - 394

Executive General Manager HumanResourcesAppointment term: 3 years + 2 yearsextensionExpiry date: 30 June 2016

BlankD Farrelly* 353 - - 38 - 391

General Counsel and Executive GeneralManager GovernanceAppointment term: 3 yearsExpiry date: 9 March 2017

BlankL Gordon** 376 56 6 48 - 486

Executive General Manager ProjectsBlank

M Hope** 359 44 6 34 - 443Chief Financial Officer and ExecutiveGeneral Manager Commercial & Strategy

BlankT Ripper** 341 61 6 49 43 500

Executive General Manager NetworkBlank

K Wright** 507 77 7 46 - 637Chief Operating Officer

Blank

Total 2,904 286 37 316 43 3,586

* These specified executives do not participate in the bonus scheme as per their employment contracts.** These specified executives are tenured and have no expiry date.*** This specified executive is tenured from 1 July 2016 and will have no expiry date.

36




2015Short-term benefits Post-

employmentbenefits

Long-term

benefits

Specified executives

Cashsalary

and feesCash

bonuses

Non-monetarybenefits

Super-annuation

Longserviceleave Total

$'000 $'000 $'000 $'000 $'000 $'000

BlankH Gluer 665 - 6 63 - 734

Chief Executive OfficerBlank

N Duce 315 42 6 36 - 399Executive General Manager HumanResources

BlankD Farrelly 349 - - 44 - 393

General Counsel and Executive GeneralManager Governance

BlankL Gordon 357 - 4 23 - 384

Executive General Manager Projects(from 21 July 2014)

BlankM Hope 369 37 6 35 - 447

Chief Financial Officer and ExecutiveGeneral Manager Commercial & Strategy

BlankT Ripper 385 47 6 51 16 505

Executive General Manager NetworkBlank

K Wright 507 62 6 46 - 621Chief Operating Officer

Blank

The appointment authority for all specified executives is section 35 of the Queensland Rail Transit Authority Act2013, with the exception of the Chief Executive Officer who is appointed under section 29. The responsibilities foreach specified executive position are detailed in the Annual Report.

These amounts are not in addition to the amounts disclosed in the Key Management Personnel note of theQueensland Rail Limited financial statements as they were recharged by the entity in accordance with theManaged Services Agreement.

The above are the key executives representing the consolidated entity. These executives provide advice inrelation to strategy and future direction of the consolidated entity under the business model adopted. On TrackInsurance Pty Ltd does not have any senior executives who are involved in setting strategy or future direction forthe entity and no On Track Insurance Pty Ltd executives are disclosed above for this reason.

Termination of the employment of an executive can be made by Queensland Rail to the specified executive eitherwith notice, without notice or due to the incapacity of the specified executive. The formal policy concerning thetermination of employment of Queensland Rail chief and senior executives is the Policy for Government OwnedCorporation Chief and Senior Executive Employment Arrangements v 1.0. This policy was issued by theGovernment in the 2013/14 period and is applicable to arrangements issued from this period. In prior periods,Queensland Rail complied with the Government Owned Corporations - Governance Arrangements for Chief andSenior Executives v3.0 publication.

37




Chief Executive provisions

The employment of the Chief Executive may be terminated by the Board at any time in accordance with section30(3) of the Queensland Rail Transit Authority Act 2013.

The employment of the Chief Executive may also be terminated by either party at any time giving the other party3 months written notice of termination. When such termination occurs, the Chief Executive is entitled to thefollowing:• any accrued leave; and• salary for the balance of the notice period (if Queensland Rail elects to make payment in lieu of the notice

period).

No other termination or compensation payments are payable to the Chief Executive.

The employment of the Chief Executive may be terminated by Queensland Rail immediately, and withoutcompensation, if the Chief Executive engages in misconduct or other unethical behaviour.

Senior Executive provisions under the Policy for Government Owned Corporation Chief and Senior ExecutiveEmployment Arrangements v 1.0

Under the policy, all new appointments to senior executives are on an ongoing (tenured) basis with no specificend date. Termination by notice can be made by the specified executive or Queensland Rail at any time by eitherparty giving to the other 1 month written notice. When such termination occurs, specified executives that aretenured are entitled to the following:• any accrued leave;• salary for the balance of the notice period (if Queensland Rail elects to make payment in lieu of the notice

period); and• if the termination is by Queensland Rail in circumstances other than serious misconduct, a termination

payment of 3 months salary.

Senior Executive provisions under the Government Owned Corporations - Governance Arrangements for Chiefand Senior Executives v3.0

Under the previous policy, existing contracts with outer limits for specified executives can continue until the expiryof the current contract term. Reappointments are to be on a tenured basis. Termination by notice can be made bythe specified executive or Queensland Rail at any time by either party giving to the other 3 months written notice.Where termination occurs on the agreed termination date, and no offer of further employment at Queensland Railis made to the specified executive, the specified executive is entitled to a severance payment of 12 weeks salary.

For specified executives with outer limit contracts, when a termination occurs prior to the termination dateQueensland Rail will pay the specified executive the following:• any accrued leave;• salary for the balance of the notice period (if Queensland Rail elects to make payment in lieu of the notice

period); and• if the termination is by Queensland Rail in circumstances other than serious misconduct, unsatisfactory

performance or incapacity,• a service payment equal to the greater of 4 weeks salary or 2 weeks salary per year of continuous

service with Queensland Rail up to a maximum 52 weeks salary; and• a separation payment equal to 20% of the salary that the specified executive would have earned had the

employment continued from the day after the notice period ceased until the termination date.

The Queensland Rail Board has also implemented the Performance Payment Policy - Chief and Senior Executivewhich reflects the expectations of the Queensland State Government as outlined in the stated policy.

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The Performance Payment Policy - Chief and Senior Executive provides for a performance pay process that isadministered on a 12 month (financial year) cycle and aligns the executives with Queensland Rail enterprise wideand Individual Key Performance Indicators (KPIs). Performance Payment pays up to a maximum payment of15% per annum of an eligible Chief or Senior Executive’s total fixed remuneration on the achievement of stretchtargets. The Queensland Rail wide KPIs are set by the Board at the beginning of the financial year in alignmentwith the Queensland Rail Operational Plan and the delivery of our organisational performance outcomesincluding safety, reliability, customer outcomes and financial performance.

The performance agreement components are weighted as follows:

• Queensland Rail wide 50%

• Individual 50%The Individual KPIs are set by the Chief Executive Officer on the recommendation of the relevant executivemember. Individual KPIs are reflective of Queensland Rail wide and Functional KPIs for which the executivehas direct accountability and / or reflective of strategic business plans, budgets and capital / infrastructureprojects. Eligible executives must also meet minimum expectations for the consistent demonstration of theQueensland Rail Values and Behaviours.

The Chief and Senior Executives participate in the Queensland Rail performance management process withquarterly and annual performance reviews. Annual performance results of the Executives are assessed andcalibrated by the Chief Executive Officer and Executive General Manager Human Resources. The Board isresponsible for the assessment of the Chief Executive Officer’s performance. The Queensland Rail Boardapproves the calculation and payment of the Chief and Senior Executive Performance Payments and provideswritten advice to the responsible Ministers in accordance with the Government Arrangements.

2016 2015$'000 $'000

Aggregate performance bonus compensation

Aggregate performance bonus compensation paid 7,782 6,386

Aggregate performance bonus compensation accrued for current period 7,578 8,789

Aggregate compensation (including performance bonus compensation) toemployees eligible for performance bonus compensation 78,783 79,048

2016 2015

Number of employees eligible for performance bonus compensation 408 434

The following categories of employees are eligible for performance based, at risk, incentive bonus compensation:• specified executives;• other executives;• salaried employees; and• specified award employees.

Performance bonus compensation paid to specified executives is granted upon approval by the Queensland RailBoard. Performance bonus compensation paid to other employees is granted upon approval by the ChiefExecutive Officer or in accordance with a subsidiary agreement. The amount of the compensation is determinedby performance against key performance indicators set at the start of the year for employees or conditions of asubsidiary agreement for work units.

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(c) Transactions with key management personnel

During the current and prior reporting periods, M Klug, chairman of Queensland Rail and Queensland RailLimited, was a consultant at Clayton Utz. Queensland Rail Limited engaged Clayton Utz during these periods forlegal advice however these payments are not related party transactions.

During the current and prior reporting periods, P Wallis, member of Queensland Rail and director of QueenslandRail Limited, was a principal of the global consulting firm Arup Pty Ltd that provided consultancy services toQueensland Rail Limited.

During the current reporting period, D George, member of Queensland Rail and director of Queensland RailLimited until 30 September 2015, was a board member of Rail Industry Safety and Standards Board. QueenslandRail Limited paid corporate memberships to this organisation during this period.

During the prior reporting period, K Wright, specified executive of Queensland Rail and Queensland Rail Limited,was a board member of Rail Industry Safety and Standards Board, from August 2014 to March 2015. During thecurrent and prior periods K Wright was a board member of the Australasian Railway Association and a boardmember of the TrackSAFE Foundation. Queensland Rail Limited paid contributions and corporate membershipsto these organisations during these periods.

All figures displayed below are exclusive of GST.


2015$'000

Consultancy fees - Arup Pty Ltd 1,963 1,206Corporate membership - Australasian Railway Association 58 406Contribution - TrackSAFE Foundation 60 60Corporate membership - Rail Industry Safety and Standards Board 298 261

2,379 1,933

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18 Related party transactions

The consolidated entity does not have any related party transactions or loans to disclose as these transactionsand balances are eliminated on consolidation.

(a) Transactions with related parties

The following transactions occurred with related parties:

Parent2016$'000

2015$'000

Sale of goods and services to subsidiaries 749,426 696,965Dividend revenue from subsidiaries 165,433 222,872BlankDividend receivable from subsidiaries 165,433 222,872Receivables from subsidiaries - current 267,161 206,945Receivables from subsidiaries - non-current 27,510 29,039BlankShares in subsidiaries 2,845,324 2,845,324Blank

(b) Loans to / from related parties

Parent2016$'000

2015$'000

Loans to subsidiariesBeginning of the year 47,048 30,100Loans advanced 80,890 90,954Loans repayments received (111,830) (74,006)

End of year 16,108 47,048

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18 Related party transactions (continued)

(c) Transactions and outstanding balances with State of Queensland controlled entities

The entity is an unincorporated statutory body and is owned by the Queensland State Government.

The consolidated entity transacted with other State of Queensland controlled entities during the year as set outbelow:

Consolidated ParentNotes 2016

$'0002015$'000

2016$'000

2015$'000

Nature of transaction

Revenue from continuingoperations

1 1,619,362 1,548,060 - - Transport ServiceContract, governmentconcessions and sales

Supplies and services 2 53,930 86,234 - - Consumables

Employee benefitsexpense

3 33,124 30,604 33,107 30,547 Payroll tax

Other expenses 3,883 5,033 - - Land tax and audit fees

Finance income 6,229 13,904 - - Interest revenue

Finance expenses 207,065 214,287 - - Interest and financingcosts

Income tax expense 4 70,836 96,156 - - Income tax

Cash and cashequivalents

114,192 324,049 - - Short-term investments

Trade and otherreceivables

6,734 5,229 - - Transport Service Contractand other accountsreceivables

Trade and other payables 7 245,698 213,762 182,196 178,999 Interest payable, capitalworks payable, payroll taxpayable and dividendpayable

Current tax liabilities 14,105 41,403 14,105 41,403 Current tax payable

Other current liabilities 1,300 1,561 - - Asset funding and otherincome in advance

Non-current borrowings 12 3,000,000 3,000,000 - - Long-term borrowings

Other non-currentliabilities

10,830 11,034 - - Asset funding in advance

Contributed equity - (2,926) - (2,926) Capital distributions

Dividend declared 10 182,196 178,999 182,196 178,999 Dividend declared

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19 Subsidiaries

The consolidated financial statements incorporate the assets and liabilities of the subsidiaries of Queensland Railas at reporting date and the results of the subsidiaries for the year then ended.

Name of entityCountry of

incorporation Class of shares Equity holding2016

%2015

%

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

The principal activities of Queensland Rail Limited are to carry out the key objectives of its parent, QueenslandRail, in accordance with the Queensland Rail Transit Authority Act 2013. Queensland Rail Limited retains title ofall non-employee related assets, liabilities and contracts. The management of its assets are effected through theprovision of employee services from Queensland Rail under a Managed Services Agreement.

The principal activities of On Track Insurance Pty Ltd are the provision of insurance coverage for all claimsrelating to events for both former parent, Aurizon Operations Limited (formerly QR National Limited) andQueensland Rail Limited up until 30 June 2010.

The Auditor-General of Queensland is the authorised auditor of Queensland Rail Limited and On Track InsurancePty Ltd.

Inter-company transactions, balances and unrealised gains on transactions between consolidated entitycompanies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of theimpairment of the asset transferred.

Non-current inter-company loans may not be demanded by the other entity and do not become payable otherthan through settlement of obligations associated with the loans or one of the entities exits the wholly-ownedconsolidated entity.

The Managed Services Agreement between Queensland Rail and its subsidiary, Queensland Rail Limited,permits all inter-company balances between both entities to be legally offset and settled on a net basis at the endof each reporting period.

Accounting policies have been adopted consistently across the consolidated entity.

Investment in the subsidiary is accounted for at cost in the financial records of the parent entity.

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20 Remuneration of auditors

During the year the following fees were paid or payable for services provided by the auditor of the consolidatedentity:


2015$'000

2016$'000

2015$'000

Audit and review of financial reports 472 458 65 65472 458 65 65

21 Special payments


2015$'000

2016$'000

2015$'000

Ex-gratia payments 10,982 2,678 10,982 2,67810,982 2,678 10,982 2,678

Special payments include ex-gratia expenditure and other expenditure that the consolidated entity is notcontractually or legally obligated to make to other parties. The total of all special payments is disclosed withinother expenses.

Special payments greater than $5,000 include:• A pay rate increase paid to Queensland Rail employees covered by the State Certified Queensland Rail

Traincrew Certified Agreement 2013 which was determined to be invalid by the High Court on 8 April 2015.Queensland Rail has elected to honour the terms, including pay rate increases, specified in the StateCertified Traincrew Certified Agreement, pending negotiation of a new enterprise agreement under the FairWork Act 2009 (Cth) to replace the federal enterprise agreement that was applicable to relevant employeesimmediately prior to 3 May 2013. Pay rate increases for these employees from 8 April 2015 meet thedefinition of a special payment. Refer to note 3(a) for further information in relation to the outcome of the HighCourt proceedings.

• Ex-gratia payments made to employees in the form of medical separations which are not required under theirrespective employment agreements in the current and prior reporting periods.

• Ex-gratia payments made to employees as compensation for rostering amendments in the current and priorreporting periods.

• Ex-gratia payments made to employees as deeds of settlement subsequent to dismissal in the currentreporting period.

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22 Queensland Rail Limited consolidated financial information

The Queensland Rail Limited consolidated entity, comprising Queensland Rail Limited and its subsidiary, OnTrack Insurance Pty Ltd, is wholly owned by Queensland Rail.

Queensland Rail is required to provide the annual report, which includes the Queensland Rail financialstatements, to responsible Ministers for tabling in Parliament. This is in accordance with section 62 of theFinancial Accountability Act 2009.

The financial statements of Queensland Rail Limited are not required to be included in the Queensland Railannual report.

The financial results of the Queensland Rail Limited consolidated entity are significant and represent asubstantial portion of the Queensland Rail consolidated entity’s results. This note is disclosed to provide users ofthese financial statements more clarity concerning the financial results of the Queensland Rail consolidatedentity.

A summarised version of the Queensland Rail Limited consolidated financial statements are disclosed below:

2016$'000

2015$'000

Consolidated statement of comprehensive income

Revenue 1,920,666 1,932,988Expenses (1,493,779) (1,426,131)

Operating profit 426,887 506,857

Net finance costs (190,725) (186,952)

Profit before income tax 236,162 319,905

Income tax expense (70,836) (96,156)

Profit for the year 165,326 223,749

Other comprehensive income for the year, net of tax (144) 110

Total comprehensive income for the year 165,182 223,859

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22 Queensland Rail Limited consolidated financial information (continued)

2016$'000

2015$'000

Consolidated balance sheet

Current assets 255,531 474,937Non-current assets 6,619,884 6,409,504

Total assets 6,875,415 6,884,441

Current liabilities 640,912 597,424Non-current liabilities 3,488,184 3,540,447

Total liabilities 4,129,096 4,137,871

Net assets 2,746,319 2,746,570

Total equity 2,746,319 2,746,570

(13,750,830) (13,768,882)

2016$'000

2015$'000

Consolidated statement of changes in equity

Balance at the beginning of the financial year 2,746,570 2,745,583

Total comprehensive income for the year 165,182 223,859Transactions with owners in their capacity as owners (165,433) (222,872)

Balance at end of year 2,746,319 2,746,570

2016$'000

2015$'000

Consolidated statement of cash flows

Cash flows from operating activities 596,954 648,846Cash flows from investing activities (590,568) (510,886)Cash flows from financing activities (222,872) (212,932)

Net decrease in cash and cash equivalents (216,486) (74,972)

Cash and cash equivalents at the beginning of the financial year 334,262 409,234

Cash and cash equivalents at end of year 117,776 334,262

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Policies

23 Summary of significant accounting policies

The principal accounting policies adopted in the preparation of these consolidated financial statements are setout below. These policies have been consistently applied to all the years presented, unless otherwise stated. Thefinancial statements are for the consolidated entity consisting of Queensland Rail and its subsidiaries,Queensland Rail Limited and On Track Insurance Pty Ltd.

Queensland Rail is an unincorporated statutory body domiciled in Australia and owned by the Queensland StateGovernment. Queensland Rail is required to carry out its functions as a commercial enterprise, as specified insection 10 of the Queensland Rail Transit Authority Act 2013. These financial statements are denominated inAustralian dollars.

Queensland Rail is referred to in this financial report as the "entity" or the "parent". Queensland Rail together withits subsidiaries, Queensland Rail Limited and On Track Insurance Pty Ltd, are collectively referred to as the"consolidated entity".

Queensland Rail is committed to providing a safe, reliable, on-time, value for money and efficient rail service thatbenefits the community and supports industry.

To achieve this, Queensland Rail aligns its business activity to three strategic objectives:(a) People - improving safety outcomes and increasing productivity;(b) Progress - optimising operational expenditure and targeting capital investment; and(c) Performance - sustaining operational performance.

The principal activities of the consolidated entity consists of:(a) South East Queensland (SEQ) above and below rail services;(b) Traveltrain services throughout Queensland; and(c) Network access services throughout regional Queensland.

These financial statements were approved for issue by the members on 30 August 2016.

(a) Basis of preparation

(i) Statement of compliance

These financial statements are general purpose financial statements which have been prepared in accordancewith:• applicable Australian Accounting Standards (AASBs) (including Australian Interpretations) adopted by the

Australian Accounting Standards Board (AASB);• the Financial and Performance Management Standard 2009;• Queensland Treasury and Trade’s Financial Reporting Requirements for Queensland Government Agencies

to the extent relevant; and• other authoritative pronouncements.

(ii) New and amended standards adopted by the consolidated entity

The new standards and amendments to standards, that are mandatory for the first time for the financial yearbeginning on 1 July 2015, do not have a material impact on the financial statements of the consolidated entityand were not early adopted.

(iii) Early adoption of standards

The consolidated entity was directed to early adopt AASB 2015-2 Amendments to Australian AccountingStandards - Disclosure Initiative: Amendments to AASB 101 (AASB 7, AASB 101, AASB 134, AASB 1049) for thecurrent annual reporting period. The application of this standard allows flexibility in the presentation and locationof note disclosures and significant accounting policies within the financial statements.

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23 Summary of significant accounting policies (continued)

The application of the remaining standards and amendments that are available for early adoption for the currentfinancial year beginning 1 July 2015 were not early adopted and are not expected to have a material impact onthe accounts of the consolidated entity in future periods.

AASB 16 Leases

AASB 16 Leases is applicable to all annual reporting periods beginning on or after 1 January 2019. AASB 16introduces on balance sheet lessee accounting requiring a lessee to recognise assets and liabilities for all leaseswith a term of more than 12 months, unless the underlying asset is of low value. A lessee is required to recognisea right-of-use asset representing its right to use the underlying leased asset and a lease liability representing itsobligations to make lease payments.

The right-of-use asset and the lease liability will be measured at the present value of future lease payments. Theasset will be depreciated over the life of the lease. The finance charge associated with the lease liability and thedepreciation will be recognised in the statement of comprehensive income. The lease payments will reduce thelease liability and will no longer be recognised in the statement of comprehensive income. This will result in somevolatility in the financial statements.

Management have assessed the impact of AASB 16 on existing lease contracts and conclude that the impact ofrecognising operating leases in the balance sheet will not have a material impact on the consolidated entity fromthe date of application.

Accounting for leases as a lessor has not been amended.

There are no other standards that are not yet effective that are expected to have a material impact on theconsolidated entity in future reporting periods.

(iv) Historical cost convention

These financial statements have been prepared under the historical cost convention, except for certain assetswhich, as stated, are at fair value.

(v) Going Concern

The financial report for the consolidated entity is prepared on a going concern basis. Current liabilities exceedcurrent assets by $390.5 million. The consolidated entity has access to short-term borrowing facilities up to theamount of $150.0 million which are undrawn as at reporting date (refer note 12(c)). The consolidated entity hasalso secured approval from the Queensland Government to source additional long-term borrowings in the2016/17 financial year up to the amount of $250.0 million to fund operational, capital and dividend paymentsthroughout that year. In addition funding through the Transport Service Contract, adequate interest coverage anda low gearing ratio provides further assurance of the consolidated entity's status as a going concern.

The parent is a going concern as all costs incurred in providing employees to its subsidiary, Queensland RailLimited, is recharged by the parent under a Managed Services Agreement with Queensland Rail Limited. Alltransactions for operating activities of the parent are undertaken through the Queensland Rail Limited bankingfacilities.

(b) Foreign currency translation

(i) Functional and presentation currency

Items included in the financial statements of each of the consolidated entity's entities are measured using thecurrency of the primary economic environment in which the entity operates (i.e. the functional currency). Theconsolidated financial statements are presented in Australian dollars, which is the consolidated entity's functionaland presentation currency.

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(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates at the dates ofthe transactions. Foreign exchange gains and losses resulting from the settlement of these transactions and fromthe translation at year end exchange rates of monetary assets and liabilities denominated in foreign currenciesare recognised in profit or loss, except when they are deferred in equity as qualifying cash flow hedges andqualifying net investment hedges.

(c) Rounding of amounts / Comparative restatements

Amounts included in the financial statements have been rounded to the nearest thousand dollars unlessdisclosure of the full amount is specifically required.

Comparative information has been restated where necessary to be consistent with disclosures in the currentreporting period.

(d) Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of associated GST, except where the amountof GST incurred is not recoverable from the Australian Taxation Office (ATO). In these circumstances, the GST isrecognised as part of the cost of acquisition of the asset or as part of the expense.

Trade receivables and trade payables in the balance sheet are shown inclusive of GST. The net amount of GSTrecoverable from, or payable to, the ATO is included with other receivables or payables in the balance sheet.

Cash flows are presented in the cash flow statement on a gross basis, except for the GST component ofinvesting or financing activities, which are disclosed as operating cash flow.

Queensland Rail and its subsidiaries are grouped for GST purposes. This means that any inter-companytransactions within the Queensland Rail consolidated entity do not attract GST. Queensland Rail is therepresentative member of the GST group and is responsible for reporting all GST liabilities and credits on behalfof the consolidated entity.

(e) Trade receivables

Trade receivables are initially recorded at fair value less any allowance for uncollectible amounts. Tradereceivables generally have credit terms ranging from 7 to 31 days.

Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible arewritten off. An allowance for impairment of trade receivables is established when there is objective evidence thatthe consolidated entity will not be able to collect all amounts due according to the original terms of the debt.

(f) Investments and other financial assets

The consolidated entity classifies its non-derivative financial assets based on the purpose for which theinvestments were acquired. Management determines the classification of its investments at initial recognition. Atreporting date, the consolidated entity has only one type of non-derivative financial asset: loans and receivables.

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are notquoted in an active market. They are included in current assets, except for those with maturities greater than 12months after the reporting date which are classified as non-current assets. Loans and receivables are included incurrent trade and other receivables and non-current receivables in the balance sheet.

(g) Intangible assets

(i) IT development and software

Costs incurred in developing products or systems and costs incurred in acquiring software and licenses that willcontribute to future period financial benefits are capitalised to software and systems.

Intangibles have a threshold of $50,000. If intangibles are under $50,000, expenditure is not capitalised and istreated as an operating expense in the period in which the expenditure is incurred.

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(h) Contributed equity

Equity injections and distributions of equity are treated as a change in the value of contributed equity.

(i) Leases

Leases in which a significant portion of the risks and rewards of ownership are not transferred to the consolidatedentity as lessee are classified as operating leases (note 15). Operating lease rental (net of any incentive receivedfrom the lessor) is expensed on a straight-line basis over the lease term and is charged to the statement ofcomprehensive income.

Leases of property, plant and equipment where the consolidated entity, as lessee, assumes substantially all therisks and benefits of ownership are classified as finance leases. The consolidated entity did not have any financeleases at reporting date.

Expected rental revenue from operating leases where the consolidated entity is a lessor is recognised as incomeon a straight-line basis over the lease term (note 15).

(j) Insurance

The consolidated entity insures against risks which are largely uncontrollable, have significant or catastrophicconsequences for assets and / or revenue and the aggregate costs of which would exceed the limit of exposurethe organisation is prepared to accept.

Insurance cover has accordingly been effected for a variety of such risks. Other areas of risk exposure areself-insured, including workers' compensation.

Until 30 June 2010, self-insurance and other underwriting activities were performed by Queensland Rail'swholly-owned subsidiary, On Track Insurance Pty Ltd. On Track Insurance Pty Ltd was transferred from AurizonOperations Limited (formerly QR National Limited) on 6 October 2010 and will continue to provide cover forclaims relating to events up until 30 June 2010 for both Queensland Rail and the Aurizon Operations Limitedgroup.

(k) Environmental regulation

The consolidated entity is subject to a variety of laws and regulations in the jurisdiction in which it operates ormaintains land. Where remediation measures are probable and can be reliably measured, such costs incurred incomplying with relevant laws and regulations are accounted for in accordance with the policy in note 8.

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Queensland RailManagement certificate

30 June 2016

These general purpose financial statements have been prepared pursuant to section 62(1) of the FinancialAccountability Act 2009 (the Act), relevant sections of the Financial and Performance Management Standard2009 and other prescribed requirements. In accordance with section 62(1)(b) of the Act we certify that in ouropinion:

(a) the prescribed requirements for establishing and keeping the accounts have been complied with in allmaterial aspects; and

(b) the statements have been drawn up to present a true and fair view, in accordance with prescribedaccounting standards, of the transactions of Queensland Rail and its controlled entities for the financialyear ended 30 June 2016 and of the financial position at the end of that year.

M Klug AMChairman

Brisbane, Qld30 August 2016

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Queensland RailIndependent auditor's report

30 June 2016

To the Members of Queensland Rail

Report on the Financial Report

I have audited the accompanying financial report of Queensland Rail, which comprises the consolidated balancesheet as at 30 June 2016, the consolidated statement of comprehensive income, consolidated statement ofchanges in equity and consolidated statement of cash flows for the year then ended, notes comprising asummary of significant accounting policies and other explanatory information, and certificates given by theChairman of the entity and the consolidated entity comprising the entity and the entities it controlled at the year’send or from time to time during the financial year.

The Board's Responsibility for the Financial Report

The Board is responsible for the preparation of the financial report that gives a true and fair view in accordancewith prescribed accounting requirements identified in the Financial Accountability Act 2009 and the Financial andPerformance Management Standard 2009, including compliance with Australian Accounting Standards. TheBoard’s responsibility also includes such internal control as the Board determines is necessary to enable thepreparation of the financial report that gives a true and fair view and is free from material misstatement, whetherdue to fraud or error. The Board also states, in accordance with Accounting Standard AASB 101 Presentation ofFinancial Statements, that the financial statements comply with International Financial Reporting Standards.

Auditor’s Responsibility

My responsibility is to express an opinion on the financial report based on the audit. The audit was conducted inaccordance with the Auditor-General of Queensland Auditing Standards, which incorporate the AustralianAuditing Standards. Those standards require compliance with relevant ethical requirements relating to auditengagements and that the audit is planned and performed to obtain reasonable assurance about whether thefinancial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in thefinancial report. The procedures selected depend on the auditor’s judgement, including the assessment of therisks of material misstatement of the financial report, whether due to fraud or error. In making those riskassessments, the auditor considers internal control relevant to the entity’s preparation of the financial report thatgives a true and fair view in order to design audit procedures that are appropriate in the circumstances, but notfor the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit alsoincludes evaluating the appropriateness of accounting policies used and the reasonableness of accountingestimates made by the Board, as well as evaluating the overall presentation of the financial report.

I believe that the audit evidence obtained is sufficient and appropriate to provide a basis for my audit opinion.

Independence

The Auditor-General Act 2009 promotes the independence of the Auditor-General and all authorised auditors.The Auditor-General is the auditor of all Queensland public sector entities and can be removed only byParliament.

The Auditor-General may conduct an audit in any way considered appropriate and is not subject to direction byany person about the way in which audit powers are to be exercised. The Auditor-General has for the purposesof conducting an audit, access to all documents and property and can report to Parliament matters which in theAuditor-General’s opinion are significant.

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Queensland RailIndependent auditor's report


Opinion

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

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

(b) In my opinion -

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

(ii) the financial report presents a true and fair view, in accordance with the prescribed accountingstandards, of the transactions of Queensland Rail for the financial year 1 July 2015 to 30 June2016 and of the financial position as at the end of that year.

Other Matters - Electronic Presentation of the Audited Financial Report

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

A M GREAVES FCA FCPA Queensland Audit OfficeAuditor-General of Queensland Brisbane

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