Developing Transport Service Contracts AusRail Plus 2003 Wednesday 19th November Robert Moffat Manager Transport Service Contracts Network Access, QR

Queensland Rail A GOC with a private sector board Board reports to the QLD Govt Treasurer and Minister for Transport Workforce 13,700 Assets valued at $7.7 billion Revenue of over $2 billion Approx 160 million tonnes of freight Almost 50 million passenger journeys

Network Access Australia’s largest track manager 9,713 km narrow gauge track, plus 132 km standard & dual gauge track $3.8 bn assets (50% QR’s total assets) More than 900 train movements daily 38 billion net tonne kilometres per year 70% of network attracts direct Government support 75% of revenue from 2 sources Access fees from rail operators hauling coal Transport Service Contracts (TSCs)

QLD’s Competitive Environment Govt Owned Corporations Act ACCC & QCA Legislation Undertaking accepted March 2001 Network Access Ringfenced from QR’s Operational Business Groups Public Reporting of Information

Queensland Transport Three roles: Policy & Legislation Joint Shareholder Safety Regulator Purchaser of Rail Transport Outcomes Policy & Legislation Increased Pressure for Treasury $’s against Competing Social Portfolios

QLD’s Government Supported & Regulated Framework QUEENSLAND COMPETITION AUTHORITY GOVERNMENT OBJECTIVES QUEENSLAND TRANSPORT RAIL NETWORK STRATEGY TRANSPORT SERVICE CONTRACTS QR PLANS

QR’s Historical Business Model Vertically Integrated Government Department of Railways Social v Commercial Outcomes Coal & Mt Isa Revenue Underpins Wider QR Low Volume Traffics Passenger Movements No Transparency on Above & Below Rail Operations

The Need for Change Corporatisation Review 1997 CSO – A Policy Framework 1999 Competition Policy Historical Model Not Repeatable Managing for Outcomes

QLD’s Transport Service Contracts Negotiations began with QT in 1997/98 Examples of Services Purchased to date – suburban passenger services, long distance passenger services and below rail asset manager services Network Access Responsible for Below Rail Contract – Transport Service Contract (Rail Infrastructure)

Why Transport Service Contracts? “Defined Service” Budgetary Certainty Environment for Targeted Investment to Meet Policy Outcomes Supports Capital Value of Infrastructure Assets Repeatable Framework Transparency

Transport Service Contract (Rail Infrastructure) Approx 70% of QR’s track network Serves Low Volume Markets Annuity Funding for Efficient Full Economic Cost of Assets Forecast model over 7 years Capital Funding Framework Significant Output Performance Regime with Financial Consequences

TSC(RI) – Performance Regime Base Service Levels Overall Track Condition Index Temporary Speed Restrictions Below Rail Delays Below Rail Track Availability Financial Consequences Output Focus

TSC(RI) – Investment Framework Annuity Funded & Asset Value Recognised Projects Supported: Regional Rerailing Metropolitan Development Signalling Timber Bridge Elimination Fencing Noise Amelioration Open Level Crossings Electrical Distribution & Supply System Repeatable & Sustainable

Track Access in Government Supported Networks Competition Policy Principles Upheld Funding support to attract new traffics and increase existing tonnages/journeys. Access charged on competitive rates against alternative transport modes. Future government support reduces as access increases and further efficiencies established. Managing Track Access as a Business

Progress Update Annual Base Service Level Targets are being met to QT’s satisfaction Investment Program Providing Positive Outcomes No Penalties Evoked Continuous Improvement Passenger Journeys Increasing Safety Performance Continuing to Improve Collaborative Relationship with QT Preliminary work now underway to assess funding mechanisms beyond current contract

Thank You and Any Questions? www.qr.com.au www.transport.qld.gov.au