Queensland Treasury and Trade...Brisbane Qld 4000 Dear Treasurer I am pleased to present the Annual Report 2012-2013 and ﬁ nancial statements for Queensland Treasury and Trade. I

Queensland Treasury and TradeAnnual Report 2012–13 www.treasury.qld.gov.au

Queensland Treasury and Trade

17 September 2013

The Honourable Tim Nicholls MPTreasurer and Minister for Trade GPO Box 611Brisbane Qld 4000

Dear Treasurer

I am pleased to present the Annual Report 2012-2013 and fi nancial statements for Queensland Treasury and Trade.

I certify that this Annual Report complies with:

• the prescribed requirements of the Financial Accountability Act 2009 and the Financial and Performance Management Standard 2009, and

• the detailed requirements set out in the Annual report requirements for Queensland Government agencies.

A checklist outlining the annual reporting requirements can be found at www.treasury.qld.gov.au.

Yours sincerely

Helen GluerUnder Treasurer

© The State of Queensland (Queensland Treasury and Trade) 2013

Licence:

This annual report is licensed by the State of Queensland (Queensland Treasury and Trade) under a Creative Commons Attribution (CC BY) 3.0 Australia licence.

In essence, you are free to copy, communicate and adapt this annual report as long as you attribute the work to the State of Queensland (Queensland Treasury and Trade).

To view a copy of this licence, visit http://creativecommons.org/licenses/by/3.0/au/deed.en

Attribution:

Content from this annual report should be attributed as:The State of Queensland (Queensland Treasury and Trade) Annual Report 2012-13

ISSN 1837-2848

Translating and interpreting assistance

The Queensland Government is committed to providing accessible services to Queenslanders from culturally and linguistically diverse backgrounds.

If you have diffi culty in understanding the annual report, you can contact us on +61 7 3035 3503 between 9am-5pm, Monday to Friday (except for public holidays).

We will arrange an interpreter to effectively communicate the report to you.

Queensland Treasury and Trade Annual Report 2012-13 1

Letter of compliance Inside front cover

Under Treasurer’s report 2

2012-13 highlights and the year ahead 3

About usWho we are 4

Our organisation 5

Delivering the Government’s priorities 6

The year in review 7

Our servicesFiscal 12

Economic 16

Commercial services/Projects Queensland 21

Revenue management 26

Trade and investment 31

Our people 35

Managing our organisation 39

Financial summary 46

Financial statements 51

AppendicesPublications 132

Statutory bodies 132

Legislation 133

Glossary 134

Contact us 136

Contents

About our annual reportThe Queensland Treasury and Trade Annual Report 2012-13 is an integral part of our corporate governance framework and one of the main tools we use to ensure we are accountable to the Queensland Parliament and the community about our activities.

This report details our achievements, performance and financial position for the 2012–13 financial year. It aligns with the Queensland Treasury and Trade Strategic Plan 2012-16, Service Delivery Statement 2012–13, and the Queensland Government’s objectives for the community. It also provides information on our future direction, people management and corporate governance processes.

Find our report online

This report is available online: www.treasury.qld.gov.au/about/annual_report/

For enquiries about this annual report, contact the Principal Consultant, Communication Services, telephone 61 7 3035 3532 or [email protected].

2

Under Treasurer’s report

A strategy for fiscal repair was the single most important driver of our operations during 2012-13.

As the State’s fiscal and economic managers, it was our primary task during the year to implement a new fiscal strategy:

• stabilisingthenreducingdebt

• achievingafiscalbalanceby2014-15

• maintainingacompetitivetaxenvironment for business

• targetingfullyfundinglongtermliabilities.

This work has produced a significantly better outlook in the State’s debt position. Borrowing projections are approximately$6.2billionlessin2014-15andaround$8.7billionlessin 2015-16 than previously forecast. Although encouraging, this does impose pressure to maintain that position. We understand that ‘business as usual is not an option’, and this will be top of mind in the days ahead.

The imperative for change was a central theme of the independent Commission of Audit. The commission’s final report proposed a new direction for the Government’s role in service delivery. The Government’s response, A Plan: Better Services for Queenslanders, applies to virtually every aspect of service delivery. Our ongoing role will be in developing models that make better use of the private and not-for-profit sectors, and finetuning Government policy settings.

An early run on the board for us in 2012-13 was the establishment of Projects Queensland to investigate and evaluate funding, financing, procurement and delivery models for key infrastructure projects. PQ’s work is already changing the Brisbane cityscape with the 1 William Street development. The Queensland Schools Project will see 10 new schools developed in growth areas of our State’s south east.

More impact will be felt over the coming year with the Government Wireless Network in place for the G20 Summit, and Queensland’s new train fleet, the latter now in the procurement stage.

We continued fulfilling the Government’s cost of living commitments during the year:

• Theamalgamationofthethreebulkwater entities – Seqwater, Linkwater and the South East Queensland Water Grid Manager – took effect from 1 January 2013.

• WecontributedtotheGovernment’selectricity sector reform agenda to support a more efficient industry and reduce long term pressure on prices.

• Forthe$15,000GreatStartGrant,aStatewide advertising campaign ensuredmaximumreachforthisvaluable initiative for first homebuyers.

Since joining our portfolio, Trade and Investment Queensland has continued to make inroads into global markets for Queensland business, attracting investment and now business and skilled migration into the State. Those functions will be enhanced when TIQ becomes a statutory body from 1 October 2013. This will facilitate a better focus on these core roles of TIQ.

To meet the Government’s high priority on accountability and performance, our new Commercial Monitoring Team is focussing on the commercial performance of Queensland’s Government-owned corporations. This group is applying a rigorous regime to the GOCs, monitoring their performance monthly and formally engagingwithourexecutiveeachquarter. With a thorough understanding of GOCs’ commercial drivers, cross referenced with up-to-date benchmarking, we will deliver an accurate assessment of GOC performance against their Statements of Corporate Intent.

With growing community and business expectationsof‘better’regulationandless red tape, we established the Office of Best Practice Regulation in the Queensland Competition Authority.

With OBPR, we have already achieved real regulatory reform, with more to come as we move toward a 20 per cent reductioninredtapeby2018.

Organisational reform will be another focus of our work over the medium-term,inextricablylinkedwithfiscaldiscipline in a more effective public sector. In accordance with commitments in the 2012-13 State Budget, The Fiscal Discipline and Reform Unit has been established and charged with finetuning our fiscal and organisational capabilities.

There is still progress to be made in renewing Queensland’s public sector. Our own renewal review has begun. We are asking some fundamental questions about our role, our services and how best to deliver them, including how our own services can be exposedtothedisciplineofcontestability.Toleadbyexample,weareexamininghowourownservicescanbeexposedtothedisciplineofcontestability.

It has been a year of significant challenge and reform. Once again, I thank Treasury and Trade staff for their continuing high standards of dedication and performance, and look forward to new challenges in the year ahead.

Helen Gluer Under Treasurer


2012-13 highlightsMuch of our work during 2012-13 has been driven by the need for a fundamental shift in the way the public sector delivers services and infrastructure. In this environment, our achievements throughout the year included:

• developingthe2012-13and2013-14 State Budgets

• developingarevisedfiscalstrategy,which focussed on reducing debt, achieving a fiscal balance, stabilising then maintaining a competitivetaxenvironmentforbusiness and targeting fully funding long term liabilities

• establishingtheOfficeofBestPractice Regulation to play a lead role in reducing the burden of regulation and red tape

• implementingthe$15,000GreatStart Grant for first homebuyers buying or building a new home

• establishingProjectsQueensland,and commencing the 1 William Street development in the Brisbane CBD

• makingcriticalcontributionstotheCommission of Audit’s final report

• amalgamatingthethreebulkwaterentities – Seqwater, Linkwater and the South East Queensland Water Grid Manager.

The year aheadReform, innovation in service delivery and economic growth will guide our programs for 2013-14, which will include:

• developingthe2014-15StateBudget

• assistingGovernmentinimplementing recommendations from the independent Commission of Audit

• continuingourfocusonfosteringinvestment partnerships through cooperative funding models and delivering infrastructure on time and on budget

• continuingourworkonQueensland’s commitments under the new national competition and regulatory reform agenda

• supportingTradeandInvestmentQueensland’s transition to a stand-alone statutory body from 1 October 2013.

Our visionTo make Queensland a great place to live, work and prosper.

Our missionTo facilitate a progressive and inclusive environment for the State that attracts investment and is financially stable and secure.

Our values• Weleadbyexample.

• Ourcommunicationisopenandhonest.

• Wetakeresponsibility.

• Werecogniseandreward.

• Weperformanddeliver.

4

About us

Who we areQueensland Treasury and Trade provides a fiscal, commercial and economic leadership role for the Queensland Government to enhance our State’s financial position and economic performance. We also take a lead role in the Government’s accountability and transparency in delivering services to the community.

We are responsible for two statutory authorities: the Motor Accident Insurance Commission and Queensland Treasury Corporation. These authorities produce their own annual reports.

The Queensland Future Growth Corporation was abolished from 1 July 2013, and will separately produce a final annual report for the 2012-13 financial year.

How we beganQueensland Treasury and Trade has no single legislative charter. The Treasury Departmentcameintoexistencein1859withtheseparationoftheColonyof Queensland from the Colony of New South Wales. The appointment of the first Colonial Treasurer, Mr Robert Ramsay Mackenzie, was gazetted on 15December1859.

In 2012, with the inclusion of the State Government’s trade and investment portfolio, we became Queensland Treasury and Trade.

What we doIn 2012-13, we delivered the following services:

Fiscal

Our fundamental role is to provide whole-of-Government policies, strategies and advice to promote value-for-money service delivery, and manage the State’s finances.

Economic

We advance the performance of the Queensland economy by providing statistical, economic and demographic research and advice across Government, managing the State’s interest in the Government-owned corporations sector, achieving best-practice regulation and reducing red tape, advising on microeconomic and competition reform, and managing intergovernmental fiscal relations.

Commercial services/Projects Queensland

Projects Queensland investigates and evaluates funding, financing, procurement and delivery models for key infrastructure projects and service delivery outcomes with the greatest potential for public private partnerships.

Revenue management

Wemanage$13billionofQueensland’s revenue base by delivering and administering simple, efficient and equitable revenue managementservicesforStatetaxes,royalty revenue, grant schemes and revenues from fines and penalties.

Trade and investment

We help Queensland companies developmarkets,improvetheirexportcapability and promote trade and investment opportunities.

Changes in TreasuryFollowing a comprehensive review of its operations, the Treasurer announced that as of 1 October 2013, Trade and Investment Queensland would become a statutory body. This will better enable TIQ to promote ‘brand Queensland’ to the world. As a business partner, we will support TIQ’s transition to a stand-alone statutory body. Read more about Trade and Investment Queensland from page 31.


Our organisationOur structure (featured below as at 30 June 2013) comprises specialist divisions that together provide economic, financial and commercial advice to Government to enhance Queensland’s financial position and economic performance.

State Parliament Treasurer and Minister for Trade

Under Treasurer

FiscalFiscal policy and budget management

Economic and Structural Policy Statistical and economic research; Government-owned

corporations governance; microeconomic reform; intergovernmental relations

Projects QueenslandSignificant infrastructure projects

Office of State RevenueState taxes, other revenue and grants

Trade and Investment Queensland Trade and investment development

Corporate ServicesCorporate support and business development services

Statutory bodies – Motor Accident Insurance Commission

Divisions

Stakeholders

Queensland Government agencies

Other levels of government and jurisdictions

Business and not-for-profit

Community

6

Queensland’s future prosperity - meeting the Government’s objectives for the communityQueensland Treasury and Trade plays a direct role in the State’s future prosperity and in improving quality of life for all Queenslanders.

We contribute to the Government’s objectives for the community … … by …

Grow a four pillar economy • Managingafiscalstrategyunderpinnedbythe Government’s four fiscal principles:

− To stabilise and significantly reduce debt

− To achieve and maintain a general Government sector fiscal balance in 2014-15

−Tomaintainacompetitivetaxenvironmentfor business

− To target full funding of long-term liabilities in accordance with actuarial advice.

• ProvidingtimelyandaccurateadvicetotheGovernment on key financial aggregates to aid decision making

• ShapingQueenslandandnationalpoliciestosupport a business friendly environment, economic sustainability and globally competitiveexports

Lower the cost of living for families by cutting waste

• Implementinglegislativechangestosupportlower cost-of-living initiatives, such as those relating to household electricity costs and concessional duty for homebuyers

Deliver better infrastructure and planning

• Continuingstructuralandinfrastructurereforms to raise the productivity of the Queensland economy and raise living standards

• Drivingcooperativefundingmodelstoensureinfrastructure is built where it is needed, on time and within budget

Revitalise front-line services for families

• Makingrecommendationsonresourcestoberedirected to front-line services

• EnsuringGovernmentresourcesachievevaluefor money, are directed to services that improve quality of life and are delivered efficiently and equitably

Restore accountability in government

• Providingtransparentfinancialandcommercial advice to Government to achieve bettervalueformoneyfortaxpayers.

• MakingakeycontributiontotheCommissionof Audit, commissioned by the State Government to conduct an independent audit of Queensland’s finances.

• Continuingourleadershiproleinfinancialmanagement for Government agencies.

… through our offices and their services:

Fiscal Fiscal and economic policy and advice

Economic and Structural Policy Statistical and economic research; Government-owned corporations governance; regulatory, microeconomic and competition reform; intergovernmental fiscal relations.

Projects Queensland Significant infrastructure projects

Office of State Revenue Statetaxes,otherrevenueandgrants

Trade and Investment Queensland Trade and investment development

Read more about the Government’s objectives for the community at www.thepremier.qld.gov.au/plans-and-progress/plans/6-months-july-dec-12.aspx


Fiscal

The year in review

Page 12

Strategy Highlights The year ahead

Develop and monitor the State Budget to support key State reforms through the application of rigorous financial and economic policy advice and to regain the State’s AAA credit rating.

Developed a revised fiscal strategy, which focussed on reducing debt, achieving a fiscal balance, stabilising then maintaining a competitivetaxenvironmentforbusinessandtargeting fully funding long term liabilities.

Developed the 2012-13 and 2013-14 State Budgets.

Published the 2011-12 Report on State Finances and the 2012-13 Mid-Year Fiscal and Economic Review.

Develop the 2014-15 State Budget.

Develop the 2012-13 Report on State Finances and the 2013-14 Mid-Year Fiscal and Economic Review.

Assist Government in implementing recommendations from the independent Commission of Audit.

Strengthen relations between Government and industry

Developed and implemented the Queensland Treasury and Trade Business Liaison Program.

Use insights gained from the Business Liaison Program to inform future strategy and policy development.

2012-13 2011-12

State contribution $22.841 M $30.42M

Other income $1.21M $4.952 M

Full-time equivalent employees 124 173

1 Decrease mainly relates to internal departmental restructure in 2012-13, funding for Voluntary Separation Program payments made in 2011-12 and funding for advertising costs in 2011-12 associated with previous Government’s Queensland Building Boost Grant program.

2 Includes one-off reimbursement of costs incurred by Commercial Transactions Team.

Financial summary

8


Provide economic and statistical information services and products that contribute rigorous evidence in support of Government programs.

Released Population Reports on the Bowen, Galilee and Surat Basins.

With the Department of State Development, Infrastructure and Planning, deliver a Resource Communities Data Portal to streamline access to data and reduce costs to project proponents in undertaking a Social Impact Assessment.

Updated the Government’s population projections for Queensland to 2061 and for smaller areas of geography to 2036.

Update the demand maps for the Queensland Schools Planning Commission with the new Queensland Government Population Projections.

Establish an Office of Best Practice Regulation to cut red tape and regulation by 20 per cent.

Provide leadership on regulatory reform to achieve red tape reduction [reduce the regulatory burden].

Established OBPR in July 2012, and worked with OBPR to publish the Report Card on Red Tape Reduction March 2012 – March 2013.

Continue leadership of red tape reduction, including implementing the Government’s Framework for Measuring and Reducing the Burden of Regulation.

Led Queensland’s commitments to the COAG-driven National Partnership Agreement to Deliver a Seamless National Economy, and attracted $17.2millioninAustralianGovernmentrewardpayments for reforms completed in 2011-12.

Continue work on Seamless National Economy reforms including the national occupational licensing component of the National Partnership Agreement, and attract reward payments for reforms achieved.

Continue work on commitments under the national competition and regulatory reform agenda.

Provide research, advice and direction to support the Government’s objectives in economic, regulatory and sectoral reform and governance.

Maintained rigorous governance for Government-owned corporations, including the annual negotiation of Statements of Corporate Intent, and specific requirements for the statutory authorities , QR and Seqwater.

Completed the amalgamation of the three bulk water entities (Seqwater, Linkwater and the South East Queensland Water Grid Manager) and contributed to electricity sector reform to support a more efficient industry and reduce long term pressure on prices.

Monitor the performance of the GOCs and undertake assessments of GOCs’ capital investment plans and major contracts proposed by the GOCs.

2012-13 2011-12

State contribution $27.261 M $34.44M

Other income $5.072 M $7.36M


1 Decrease mainly relates to internal departmental restructure in 2012-13, agency savings, and reduction in funding for 2011 national Census of Population and Housing project.

2 Decrease primarily due to decreased survey activity during period of workforce reform and organisational restructure.

Financial summary

The year in review

Economic

Page 16

Analysis: Rate of red tape reduction activity increased across Government in 2012-13. Both the number of initiatives completed and the overall number of initiatives in progress or completed increased over the year. At June 2013, around 400 different initiatives were either completed or underway. These will have flow-on benefits to business and the community throughout 2013-14 and beyond.

450

400

350

300

250

200

150

100

50

0

Jun-12 Sep-12 Dec-12 Mar-13 Jun-13

Completed In progress

Red tape reduction initiatives in Queensland



Page 21


Focus on time-effective infrastructure delivery for major capital projects.

Developer selected to build 1 William Street office tower.

Early works activities for 1 William Street, including pilingandexcavationwork,commencedinFebruary 2013.

Prepare a brief that documents the State’s requirements for an integrated office fitout for 1 William Street.

Strengthen relations between Government and industry to encourage private investment in Queensland infrastructure.

Prepared successful business case for 10 schools to be delivered by public private partnership.

Undertook a multi-phased competitive tender process with the market for the proposed Government Wireless Network (GWN).

Undertook a bidding process with two committed proponents for the New Generation Rollingstock (NGR) project, which will replace an ageing train fleet.

Commenced a business case to assess the developmentopportunitiesfortheexistingRoyalChildren’s Hospital (RCH) site in Herston, Brisbane.

Manage the procurement phase of the Queensland Schools Project, including selecting a proponent and finalising contractual arrangements.

Finalise contractual arrangements with a private service provider for provision of the GWN.

Finalise contractual arrangements with a private service provider for the NGR project.

Complete the business case on the development of the RCH site for the Queensland Government’s consideration.

Enhance the infrastructure assessment and procurement processes within government.

Provided advice in projects that will facilitate development of new infrastructure for the resource sector,includingtheAbbotPointExpansionandWoleebee Creek water pipeline.

Provided advice for projects aimed at improving Government service delivery outcomes, including social housing and asset redevelopment options.

Continue to support agencies and GOCs in providing commercial advice for new infrastructure and service delivery programs.

Continue to consider unsolicited commercial proposals when received by Government.

2012-13 2011-12

State contribution $10.37M $–M

Other income $10.66M $–M

Full-time equivalent employees 19 –

Projects Queensland commenced operation 1 July 2012.

Financial summary

10

Revenue management

Page 26

2012-13 2011-12

State contribution $103.73M $81.51M

Other income $3.66M $2.87M


2012-13 included full year impact of machinery-of-Government transfer of State Penalties Enforcement Registry.

Financial summary

Analysis: The decrease in royalties reflects falling global commodity prices. Payrolltaxcontinuestogrowstrongly.

Duties Payroll tax Land tax Other tax (includes gambling and gaming tax)

First home owner grant Queensland building boost Royalties

0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

2009-10 2010-11 2011-12 2012-13

$ B

illio

ns

Total revenue administered by Office of State Revenue 2009-10 to 2012-13

The year in review


Position the Office of State Revenue as a leading e-business agency with excellentclientsupportandfirm and fair enforcement.

Introduced an e-business facility for State Penalties Enforcement Registry one-off payments, instalment plans and balance enquiries.

Extende-businesscapabilitytoothertaxpayers.

Used the newly acquired SAP HANA platform to improve data modelling and data matching capabilities in our compliance program. As a result, anadditional$20millioninpayrolltaxrevenuehasbeen assessed.

Provide responsive and ongoing legislation and revenue policy advice services to the State Government.

Implementedthe$15,000GreatStartGrantforfirsthomebuyers buying or building a brand new home.

Supported the grant with an online and television advertising campaign, and participated in major industry events such as the HIA Home Show.

Continue promoting the Great Start Grant.

Managed$12.1billioninrevenueandgrants. Manageaforecast$13.2billioninrevenue and grants.

Reviewed the business practices of the State Penalties Enforcement Registry, and trialled the use of mercantile agents to recover debt.

Continue the use of mercantile agents, and increase our use of data matching to increase non-compliance.

Further develop the Revenue Management System (RMS) to support innovative business practices.

Finalised the royalties module of the Revenue Management System, allowing online lodgement and payment for royalties clients.



Page 31


Assist Queensland companies to increase their global competitivenessandexpandmarkets.

Delivered over 300 trade missions, significant inbound buyers’ missions and international tradeshows.

Continue to coordinate ministerial missions, commencing with the Treasurer’s trade and investment mission to South Korea, China, including Hong Kong, Indonesia and Singapore in late July.

Appoint a dedicated trade and investment representative for PNG.

Coordinated five ministerially led trade and investment missions to China, Japan, USA, and India.

Opened a Trade and Investment Office in Beijing. Open a new TIQ office in Jakarta, appoint an Association of South East Asian Nations Trade Commissioner, also based in Jakarta.

Hostedthe2012PremierofQueensland’sExportAwardstorecogniseandpromoteexportandglobalexpansionopportunities.

Host the 2013 awards program.

Facilitated the Premier’s delegation to Papua New Guinea for a Memorandum of Understanding on Business and Government Cooperation.

Work closely with all stakeholders to promote better access to overseas markets and encourage overseas investment in Queensland.

Established Business and Skilled Migration Queensland to take responsibility for the State-sponsored migration program.

Continue implementing business and skilled migration initiatives, and act as Queensland’s representative on the Australian Government’s Ministerial Council for Skilled Migration.

Represented Queensland on national bodies including the Senior Officials Trade and Investment Group, National Trade Development Working Group, and the National Investment Advisory Board.

CollaboratedwiththeExportFinanceandInsurance Corporation and the Department of Foreign Affairs and Trade on national trade matters, trade agreement negotiations and consultations on the Australia in the Asian Century White Paper.

Continue to represent and advocate Queensland’s trade and investment interests on national bodies.

2012-13 2011-122

State contribution $26.38M $5.68M

Other income $1.69M $0.15M


2012-13 includes full year impact of machinery-of-Government transfer of Trade and Investment Queensland.

Financial summary

12

Fiscal

Our services

Our fundamental role is to provide whole-of-Government policies, strategies and advice to promote value-for-money service delivery, and manage the State’s finances.

Our clientsTreasury and Trade’s Fiscal Division advises and supports the Premier, the Treasurer and Minister for Trade, and the Assistant Minister for Finance, Administration and Regulatory Reform on fiscal and economic policy.

For all Government agencies, other levels of Government and statutory bodies, we provide advice and support on:

• fiscalandeconomicpolicy

• policyandadviceonfinancialmanagement

• accounting,budgetarymatters,legislation and project evaluation.

Our structure*


Alex BeaversDeputy Under Treasurer

Dennis MolloyAssistant Under Treasurer, Fiscal and Macroeconomics

Lynne BullochDirector, Education

Drew EllemAssistant Under Treasurer, Education Group

Wayne CannonState Actuary

Director, Health

Walter IvessaAssistant Under Treasurer, Health Group

Director, Fiscal and Financial Management Leigh Pickering

Janelle Thurlby

John O’ConnellAssistant Under Treasurer, Transport and Main Roads Group

Director, Transport and Main Roads Trevor Dann

Geoff WaiteFiscal Discipline and Reform

* as at 30 June 2013


Service standards

Not

es

2012-13 published

annual target

2012-13 actual

Achievement of Government’s four fiscal principles− to stabilise then significantly reduce debt− to achieve and maintain a general

Government sector fiscal balance by 2014-15− tomaintainacompetitivetaxenvironment

for business− to target full funding of long term liabilities

in accordance with actuarial advice

1

Partially met

On track

Met

Met

Partially met

Not met

Met

Met

Other measures

Quarterly reports on financial position completedwithinsixweeksofquarterend

4 4

Compliance with the Uniform Presentation Framework requirements and relevant Australian Accounting Standards for whole of government financial reporting

100% 100%

Achievement of key milestones in the Budget process

100% 100%

Achievement of key milestones in the Report on State Finances process

100% 100%

Data provision to the Commonwealth Grants Commission and Australian Bureau of Statistics within agreed timeframes

100% 100%

Total cost of portfolio resource allocation advice

2 $20.4million Discontinued

Variances

1 In the 2013-14 Budget the Government implemented savings and revenue measures that offset expendituredecisionssincetheMid-YearFiscalandEconomicReview,andiscontinuingtodeliversavings outlined in the 2012-13 Budget. Nevertheless, the scale of natural disasters and revenue write-downshasresultedinamodestfiscaldeficitof$244million(or0.5%ofGeneralGovernmentrevenue) projected for 2014-15. Despite this, achievement of a 2014-15 fiscal balance remains within reach and the Government will continue to pursue its policy objective.

2 Discontinued and no longer reported as a result of an organisational restructure in 2012.

Performance highlights

Service report - Fiscal

Key issues in our environmentImplementation of the Commission of Audit (COA) recommendations is likely to impact significantly on the fiscal service. The Government accepted most of the COA recommendations in the COA’s final report, which is fundamentally about ways in which the quality and quantity of frontline services can be improved.

The scale of recent natural disasters and the associated rebuilding task, combined with ongoing weakness in revenues, has created further challenges for the Government in improving the sustainability of the State’s finances.

VisionTo ensure growth in Queensland’s long term fiscal and economic performance.

Analysis: Measuresinthe2012-13StateBudgethadasignificantimpactonexpenditure.Totaloperatingexpensesin2012-13willbejust1.1%above2011-12levels,thelowestgrowthsince1998-99.

Average rate of growth over the decade to 2011-12

8.9%

Average rate of growth from 2012-13 onwards

2.6%

15%

12%

9%

6%

3%

0%

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

2012-13

2013-14

2014-15

2015-16

2016-17

Focus on fiscal repairGrowth in general Government sector expenses

14


Regain the State’s AAA credit rating.

Goal

StrategyDeliver the Queensland State Budget with a strong focus on fiscal repair and consolidation, and support key State reforms through the application of rigorous financial and economic policy advice.

Focus on fiscal repair

On attaining office, the Government established an independent Commission of Audit (COA) into the State’s finances, to begin Queensland’s journey back to financial sustainability.

In 2012, the COA found an ‘urgent need for fiscal repair’. In response, the Government released a revised fiscal strategy, which focussed on:

• stabilisingthenreducingdebt

• achievingafiscalbalanceby2014-15

• maintainingacompetitivetaxenvironment for business

• targetingfullyfundinglongtermliabilities.

Inthiscontextwedevelopedthe 2012-13 State Budget, delivered in September 2012 to allow time for a comprehensive budgetary response to the COA’s initial findings.

That Budget began the task of fiscal repair. It included measures worth $7.766billionover2012-13to2015-16, largely achieved by Governmentexitingactivitiesnotintheir domain, reducing waste and inefficiency, some specific revenue measures, and an estimated 14,000 reduction in full-time equivalent public sector positions.

These measures had a significant impactonexpenditure.Operatingexpensesin2012-13areestimatedtobe$2billionlowerthanbudgeted,andtotaloperatingexpensesin2012-13 will be only 1.1 per cent above 2011-12 levels. This is the lowestgrowthsince1998-99.

During the year, we continued monitoring and reporting on the State’s position by publishing the 2011-12 Report on State Finances and the 2012-13 Mid-Year Fiscal and Economic Review.

In a return to traditional timeframes, the 2013-14 State Budget was developed during the year and handed down by Treasurer Tim Nicholls in June 2013. Read more on page 15.

In the year ahead we will coordinate the preparation and delivery of the 2014-15 State Budget, as well as the 2012-13 Report on State Finances and the 2013-14 Mid-Year Fiscal and Economic Review.

Treasury and Trade views fiscal repair as being a constant for the department. To return the State’s finances to their former strength will require ongoing policy and financial management vigilance and, ultimately, strategies to facilitate larger-scale debt reduction.

Implementing key Commission of Audit reforms

In March 2013, the independent Commission of Audit delivered its Final Report to the Government. Treasury and Trade coordinated the Government’s response which culminated in the release of A Plan – Better Services for Queenslanders in April.

Our work will continue throughout 2013-14 as the COA recommendations move into the implementation phase. Some recommendations relate directly to our portfolio, others may demand targeted advice to agencies or adjustments to whole-of-Government policy settings.

Tracking the impact of natural disasters

From January to March 2013, ex-TropicalCycloneOswaldandsubsequent flooding brought destruction to 57 Queensland local government areas, many of whom were still recovering from natural disasters of 2010-12. These incidents had a major impact on the social and economic life of this State.

Our analysts assessed the impact of Oswald on the economy, estimating thatthisextremeweathereventdetracted around ¼ per cent from Gross State Product in 2012-13. While it is difficult to calculate a precise fiscal impact, the repair and recovery costsfromthisdisasterareexpectedtobe$2.5billion.Thisaddstothesignificant cost from other natural disasters over recent years. This data, and associated policy and funding responses, were factored into the preparation of the 2013-14 State Budget.

StrategyEstablish the Fiscal Discipline and Reform Unit and improve financial performance.

During the year we established a Fiscal Discipline and Reform Unit and tasked it with undertaking reform projects aimed at improving the quality and timeliness of information on Queensland’s fiscal position and emerging issues.



StrategyStrengthen relations between Government and industry

Direct engagement with businessTreasury and Trade has much to gain from increasing it’s engagement with key stakeholders.

During the year, we initiated the QTT Business Liaison Program, in which our people established direct dialogue with key business and industry leaders, including those in the ‘four pillar’ sectors of tourism, construction, resources and agriculture. The resulting relationships will prove invaluable in implementing the Government’s economic strategy and cutting red tape.

The program will continue throughout the coming year, and insights gained will feed into our future strategy and policy development.

Growth, rebuilding, resilience – State Budget 2013-14We continued the Government’s pursuit of fiscal repair in developing the 2013-14 State Budget, handed down by the Treasurer on 4 June 2013.

The theme of this Budget was growing the economy, rebuilding Queensland and making communities more resilient for the future.

As a result of fiscal repair efforts initiated by the Government, there has been a significant improvement in borrowing projections. Borrowings were revisedtobeapproximately$6.2billionlessin2014-15andaround $8.7billionlessin2015-16thanthoseprojectionsoutlinedintheindependent Commission of Audit Interim Report. As an important first step in regaining Queensland’s AAA credit rating, non-financial public sector grossborrowingsareexpectedtostabiliseataround$81billionfrom 2015-16 onwards.

Read more about State Budget 2013-14 at www.budget.qld.gov.au

2011-12 2012-13 2013-14 2014-15 2015-16 2016-17

2013-14 Budget

2012-13 MYFER

Commission of Audit Interim Report

10%

9%

8%

7%

6%

1.8% of total revenue

Analysis: The reduction in borrowing requirements over the forward estimates, together with lower interest rates, have resulted in a substantially lower projected interest to revenue ratio over the forward estimates.

Source: Queensland Treasury and Trade, and Commission of Audit interim report.

Comparison of projected non-financial public sector interest expense to revenue ratio

16

Our Economic and Structural Policy Division advances the performance of the Queensland economy by providing statistical, economic and demographic research and advice across Government, managing the State’s interest in the Government-owned corporations (GOC) sector, achieving best-practice regulation and reduces red tape, advising on microeconomic and competition reform, and managing intergovernmental fiscal relations.

Our clientsOur principal clients are:

• theTreasurerandMinisterforTrade

• theAssistantMinisterforFinance,Administration and Regulatory Reform

• shareholdingMinisters.

We provide strategic direction for the Government’s regulatory reform agenda and on the governance of Government-owned corporations. Our involvement includes:

• liaisingwiththeOfficeofBestPractice Regulation, and leadership of the Government’s red tape reduction agenda

• undertakingreforminitiativesinthebulk water and energy sectors

• leadingQueensland’sparticipationin intergovernmental regulatory reforms such as the Council of Australian Governments (COAG) Seamless National Economy agenda and Business Advisory Forum

• monitoringthefinancialandnon-financial performance and analysing major proposals of Government-owned corporations.

For other Government agencies and entities, we provide advice on cost-of-living issues. We are the primary source of statistical and demographic research services, and we provide ‘public good’ services, primarily statistics and other information, to Queensland communities.

Our structure*


Gary WardDeputy Under Treasurer

Pauline ElliottAssistant Under Treasurer

Director, Strategic Advisory Director, Regulatory Reform Katrina Martin

Director, Microeconomics and Structural Reform Tania Homan

Insurance Commissioner Neil Singleton

Government Statistician Antony Skinner

Gary WardAssistant Under Treasurer

Director, Strategic Advisory Intergovernmental Relations Frank Ravalli, Laurie Ehrenberg

Service report - Economic

VisionToensurewehaveamoreflexible,innovative and competitive Queensland economy. This will be achieved by providing a high quality economic and policy advice and advancing the Government’s reform agenda.

MissionTo provide strategic and policy advice in intergovernmental relations, regulatory reform, economic and structural reform, statistics and analysis, insurance and Government-owned corporations, to support economic growth as well as improved planning and policy development.


Economic


Key issues in our environmentAustralian Government level

The current nature of federal financial relations is such that states and territories require substantial financial transfers from the Australian Government to enable them to meet their service delivery responsibilities. In recent years the Australian Government has increasingly sought to control and monitor the use to which the transferred funds are put. This situation has led to a significant degree of Commonwealth intrusion into areas of policy and service delivery that are the responsibility of state and territory governments, with accompanying duplication and overlap of activity, conflicting priorities, lack of clear accountability, and increasing pressure on states’ own-source revenue capacity.

Following the introduction of a carbon price, the market for energy generation continues to be difficult: oversupply; uncertainty over future demand; and the market power of vertically integrated retailers make for challenging operating conditions for the GOC generators.

Service standards

Not

es

2012-13 published

annual target

2012-13 actual

Cost of monitoring and governance per GOC 1 $0.19million $0.23million

Stakeholder and client satisfaction with outputs (rated satisfied or very satisfied)

95% 99%

Other measures

Percentage of GOC Statements of Corporate Intent (SCI) available for completion by 30 June

92% 92%

Percentage of quarterly performance monitoring reportscompletedwithinsixweeks

100% 100%

Responses to requests for information 2 3,910 3,048

Formal products and services delivered to Fiscal 3 60 24

Formal products and services delivered to other clients

4 272 464

Delivery of outputs within timeframes agreed with clients(excludesinternetservices)

95% 99%

Variances

1 Increase primarily due to cost of redundancies related to fiscal repair measures announced in 2012-13 Budget. At the time of that Budget, funding for cost of redundancies was held centrally.

2 Decrease due to fewer than anticipated requests for information during period of organisational restructure and workforce reform in our client agencies.

3 Decrease due to fewer than anticipated requests for formal products and services from Fiscal Division during organisational restructure and workforce reform.

4 Increase due to higher demand for formal products and services due to clients delaying requests until release of Census data.



18


Goal

To be a strong and influential State, that delivers effective and efficient services for Queenslanders.

StrategyProvide economic and statistical information services and products that contribute rigorous evidence in support of Government programs.

Knowing where services and infrastructure are needed

The Bowen, Galilee and Surat Basins are the hubs of Queensland’s coal industry. These mainstays of the Queensland economy are major employers and income earners for our State.

During 2012-13, demand for data on these centres continued, particularly as these communities have high proportions of non-resident (fly in/fly out, or FIFO) workforces. Our updated population reports on the Bowen, Galilee and Surat Basins help Government decision makers and communities alike understand the number of FIFO workers in these centres, and their accommodation patterns helps communities and Government decision-makers plan for their services and infrastructure needs.

In the year ahead, we will collaborate with the Department of State Development, Infrastructure and Planning to deliver the Resource Communities Data Portal, which will streamline access to data and reduce costs for project proponents when they undertake a Social Impact Assessment.

Projections drill down to greater detail

The smaller the geographical area studied, the greater the usability of its population data. In 2012-13, we continued updating the Government’s population and dwelling projections forthenexttwodecades,usingnewsmall area geography standards. By tracking population changes at this more detailed level, Government and non-government agencies will be able to more accurately predict future service and infrastructure needs.

These new population projections will be released in the coming year, when they will be used to update demand maps for the Queensland Schools Planning Commission. The Commission will use these maps to help Government identify those schools most in need of infrastructure funding and support.

Official surveys track Queenslanders’ needs, cost of living

The role of the Government Statistician in undertaking official surveys is vital in assuring the Government of the validity of the data it uses, and in maintaining community confidence in how it is collected.

Each year, Queensland’s Government Statistician undertakes numerous official surveys under the authority of the Statistical Returns Act 1896, to meet a range of information needs. Our focus in this space during 2012-13 was the study, training and employment destinations of young people after leaving school, community preparedness for natural disasters and bio-security.

In the coming year, we will again conduct surveys to build the Index of Retail Prices in Queensland Regional Centres. This survey, conducted every few years, measures the relative price differences of a basket of goods and services used by Queenslanders. It allows the Government to compare the cost of living between Brisbane and selectedregionalcentres.TheIndexofRetail Prices will be published on the Government Statistician’s website – www.oesr.qld.gov.au

StrategyEstablish an Office of Best Practice Regulation to cut red tape and regulation by 20 per cent, and provide leadership to achieve best practice regulation and reduce red tape.

Reducing the burden of regulation

Reducing red tape and pursuing best-practice regulation is vital if business and Government are to ‘free up’ capacity to achieve economic success and better service delivery.

During the year, Treasury and Trade led the Government’s red tape reduction program to good effect. Agencies have implemented or are currently implementing over 360 different red tape reduction reforms.

In July 2012, we met our commitment to establish the independent Office of Best Practice Regulation (OBPR) in the Queensland Competition Authority. Since then, OBPR has taken leadership of assessing agencies’ Regulatory Impact Statements (RISs), and strengthened the system’s accountability.


OBPR has also formalised the need to issue Decision RISs (in which OBPR makes recommendations to the regulation’s decision maker). In the year ahead, we will work with OBPR on a comprehensive review of the RIS system. Read more about Regulatory Impact Statements at www.qca.org.au/OBPR/

Having released its Report on Measuring and Reducing the Burden of Regulation in 2012-13, in the year ahead OBPR will release its first annual report on the Government’s progress toward the 20 per cent reduction in red tape.

In the year ahead, we will maintain momentum on red tape reduction by implementing the Government’s Framework for Measuring and Reducing the Burden of Regulation. This will include agency reduction targets and a regulatory reform agenda for local government, with priority reviews as recommended by OBPR.

We will also continue to advise agencies and our Ministers on the strategic direction of the reform program as a whole as well as on individual reforms.

Participating in national regulatory reform

The Council of Australian Governments (COAG) is a key stakeholder in jurisdictions’ efforts to design and implement best-practice regulation, through its National Partnership Agreement to Deliver a Seamless National Economy and the new national competition and regulatory reform agenda developed with the COAG Business Advisory Forum.

In 2012-13, Treasury and Trade continued to lead Queensland’s commitments to national regulatory reform including reforms progressed through the Business Advisory Forum.

Key elements of the Forum’s charter – in which we will play a key role – are to lift regulatory performance and reduce the reporting burden on businesses.

During the year, Queensland received $17.2millioninrewardpaymentsfromthe Australian Government for reforms completed in 2011-12.

In the year ahead, we will continue our work on national occupational licensing, which is a major reform under the National Partnership Agreement, and to implement regulatory reforms under the Government’s commitment to the new national competition and regulatory reform agenda.

Streamlining the functions of government

During the year, we worked to close the Queensland Future Growth Fund (QFGF) from 1 July 2013, originally established to fund infrastructure and initiatives benefiting Queensland’s economy. As most of the funding allocations had been completed, it was found there was no need to maintain and account for them in a separate entity such as the Fund.

We also worked to abolish the Community Investment Fund, also from 1 July 2013, and also to streamline administrative and financial processes.

As part of the Government’s commitment to regulatory reform, we began repealing or partially repealing a number of pieces of legislation which we identified as either redundant or able to be simplified:

• FutureGrowthFundAct2006

• AnzacSquareDevelopmentProjectAct 1982

• CommonwealthandStateStatisticalAgreement Act 1958

• CommonwealthSavingsBankofAustralia Agreement Act 1966

• EnergyAssets(RestructuringandDisposal) Act 2006

• GovernmentInscribedStockAct1920

• GovernmentLoanAct1986

• GovernmentLoansRedemptionandConversion Act 1923

• GovernmentStockAct1912

StrategyProvide research, advice and direction to support the Government’sobjectivesineconomic, regulatory and sectoral reform and governance

A close watch on essential services

Queensland’s energy, water, rail and ports Government-owned corporations (GOCs) and statutory bodies provide essential services for communities and business. Our task is to balance the Government’s financial interest in these enterprises with the need for reliable, efficient and secure services.

During 2012-13, GOCs and Queensland Railprovidedfor$1.39billionindividendsandtaxequivalents,contributing to essential services for communities.In2013-14,weexpecttoachievedividendsandcurrenttaxequivalents from the GOCs and QueenslandRailof$1.68billion.

Our ability to optimise returns is aided by a structured, efficient governance program, which includes annual negotiation between GOC boards and their shareholding Ministers of the GOCs’ Statements of Corporate Intent, before the start of each financial year. The performance of the GOCs against the targets in these documents is assessed throughout the year via monthly ratio analyses, benchmarking and quarterly assessment of performance against targets. This detailed process for all GOCs continued during 2012-13, as well as specific governance arrangements for the Queensland Rail and Seqwater statutory bodies.

In 2013-14, we will develop strategic requirements for GOCs, Queensland Rail and Seqwater ahead of their business planning periods. With these organisations, we will set and monitor meaningful financial and non-financial targets.


20

Reducing red tape – how do we measure up?Regulation – at its best, it protects people from harm and unfair business practices; unfettered, it stifles job creation, innovation and productivity.

The good news is that the Government is moving towards the ‘best’ end of the scale with decisive steps to cut red tape.

Released in May 2013, the Report Card on Red Tape Reduction March 2012 – March 2013 outlines real, measurable reductions in the red tape hurdles faced by business, Government and consumers. Some of the highlights are:

• forcompanies,theprovisionsthatimposecriminalliabilityondirectorshavebeenslashedfrom3,800toaround 280

• approvalprocessesforenvironmentallyrelevantactivitieshavebeenstreamlined,savingonaverage$20,000inapplicationcosts,150pagesofpaperworkand68daysprocessingtime

• forhomerenovations,therangeofworkaplumberordrainercandowithoutlocalgovernmentpermitsormandatoryhasbeenexpanded,savingtradespeopleandtheirclientsupto$25millionannuallyinfeesforkitchenand bathroom work.

Key reforms planned for the year ahead are:

• areviewofQueensland’spropertylegislation

• areductioninreportingobligationsforthebusinessandnot-for-profitsectors

• collaborationwithlocalgovernmentbodiestoreduceredtapeinlocalgovernmentregulation.

Read the Government’s Red Tape Report Card at www.treasury.qld.gov.au


Our program for 2012-13 also included detailed assessments of GOCs, Queensland Rail and Seqwater’s capital programs and asset holdings, toensurethesebodiesmaximisetheircapital utilisation and have appropriate capital structures. This program of work will be continued in the year ahead, along with a schedule of assessments of capital investment plans and major contracts proposed by the GOCs.

The amalgamation of Queensland’s three bulk water entities (Seqwater, Linkwater and the South East Queensland Water Grid Manager) took effect from 1 January 2013. In an additional drive to support a more efficient industry and reduce long term pressure on prices, we also contributed to the Government’s electricity sector reform agenda.


Service report - Commercial services/Projects Queensland

Projects Queensland investigates and evaluates funding, financing, procurement and delivery models for key infrastructure projects and service delivery outcomes with the greatest potential for public private partnerships. The division manages significant infrastructure projects, on behalf of the Queensland Government, through business case development and procurement processes. Projects Queensland also fulfils an advisory role to specific Queensland Government agencies and Government owned corporations undertaking infrastructure projects.

Our clientsProjects Queensland provides services to the Queensland Government and specific departments and agencies across the Queensland public sector, including Government-owned corporations. We also engage directly with the private sector and maintain a commercial focus on potential public private partnerships.

Our structure*


Executive Director Dave Stewart

Assistant Government Statistician (Surveys) Project Director Liam Gordon

Project Director Graeme Garrett

Project Director Mary-Anne Curtis

Project Director Roger Black



VisionAflexiblystructured,nimbleandwell-governed unit responsible for delivering value-for-money infrastructure outcomes for the State.

MissionTo achieve greater value for money from the Government’s infrastructure program andservicedelivery,tofacilitatecooperativefundingmodelsandtomaximiseprivate investment in infrastructure.

22


Service standards

Not

es

2012-13 published

annual target

2012-13 actual

Percentage of key project milestones met 1 New measure New measure

Variances

1 As noted in the 2013-14 Service Delivery Statements (Budget Paper No. 5), this service standard will apply from 1 July 2013.


Key issues in our environmentThe Queensland Government is delivering critical infrastructure and services for the community while, at the same time, addressing its fiscal reform agenda. In a tight fiscal environment, the Government has adopted a comprehensive approach to ensuring the community receives maximumbenefitfromtheGovernment’s investments. This approach involves rigorous evaluation of the value-for-money of proposed capital investments, contestability of services, and innovative and efficient funding solutions.

To meet these objectives, in 2012-13 the Government established Projects Queensland within Treasury and Trade to enhance infrastructure delivery capability, achieve greater value for money and foster investment partnerships through cooperative funding models. The PQ team is a highly qualified team of of project management, commercial analysis, contract negotiation and stakeholder engagement specialists.

Projects Queensland’s key projectsKey projects that Projects Queensland (PQ) was involved in during 2012-13 were:

1 William StreetDevelopment of 43 level office tower in Brisbane CBD

PQ’s role: Procurement and then oversight of development

Status as at 30 June 2013: Under construction

Government Wireless NetworkEnhanced digital radio voice and narrowband data communications for Queensland’s public safety agencies

PQ’s role: Procurement

Status as at 30 June 2013: Request for binding bids

New Generation RollingstockDesign, build, maintenance and financing of new train fleet

PQ’s role: Procurement


Queensland Schools10 new schools in growth areas in South East Queensland

PQ’s role: Development of business case and then procurement


Royal Children’s Hospital SiteOptions for health-related uses and other development opportunitiesfor4.8hectaresite

PQ’s role: Preparation of business case

Status as at 30 June 2013: Business case development

Toowoomba Second Range CrossingProposed bypass route to the north of Toowoomba

PQ’s role: Revision of business case

Status as at 30 June 2013: Business case with Australian Government for funding consideration

The Queensland Government’s actions on economic infrastructure reform and contestability of services, together with the national red tape regulatory reform, will impact on the activities carried out by Projects Queensland.



StrategyFocus on time-effective infrastructuredeliveryformajorcapitalprojects

Focussing on time-effective infrastructure delivery

Projects Queensland has demonstrated its priority of time-effective infrastructure delivery through its procurement and project management of the 1 William Street tower development. In July 2012, we were assigned to procure the 1 William Street development, the catalyst for the rejuvenation of the Government Precinct in the Brisbane CBD.

We engaged with the market through anExpressionofInterestinvitationinAugust2012.Lessthansixmonthsafter being assigned the project, we concluded the transaction with a significant superannuation fund and long term asset owner. The procurement process was rigorous and managed within budget constraints.

This outcome was achieved through:

• workingcloselywithaprobityteamthat understood the necessity for a fast paced process with proponents

• workingcloselywithexecutivemanagement to refine direction and deliverables

• sourcingspecialistpersonnel,bothwithin and outside Government, to bolsterexpertisewhenrequired

• facilitatingtargetedworkshopstoensure all proponents completely understoodtheprojectexpectations

• simplifyingbriefingandapprovalprocesses enabling rapid decisions to be made.

In 2013, the contractor for the development commenced site establishment activities for the 1 William Street tower.

Early works activities, including piling andexcavationwork,commencedinFebruary 2013.

In the year ahead, Projects Queensland will prepare a brief that documents the State’s requirements for an integrated office fitout. The early availability of this brief will mean the fitout can be delivered concurrently with the base building, thus saving time, minimising possible reworks to services, and providing a higher standard of finish.

StrategyStrengthen relations between Government and industry to encourage private investment in Queensland infrastructure

Encouraging private investment in infrastructureOur key role is to engage with the privatesectortoexploreopportunitiesfor investment in public infrastructure and service delivery. Our team prepares preliminary evaluations for key projects with the greatest potential as public private partnerships (PPPs). We prepare business cases for all projects approved as potential PPPs, as well as manage tender processes and oversee contract negotiations for all projects approved to proceed as PPPs.

Government Wireless Network

The proposed Government Wireless Network (GWN) is a key project where the Queensland Government’s objective is to enter into contractual arrangements with a private sector provider who will design, build, finance and operate the GWN under a managed service arrangement with the State.

Foster value-for-money investment partnerships to deliver public infrastructure and services on time and to budget.

Goal

The proposed GWN is intended to deliver enhanced digital radio voice and narrowband data communications for Queensland’s public safety agencies, with:

• improvedcommunicationssafety

• interoperabilitybetweenpublicsafety agencies

• addedfunctionalityandfoundationto support effective front-line public safety services.

An early priority for the project is to deliver the communications needs for the G20 Leaders’ Summit in 2014. Over time, other Queensland Government agencies, local governments and public safety providers will potentially use the GWN’s services as it is progressively deployed throughout the State.

The Government has been undertaking a multi-phased competitive tender process with the market for the proposed GWN. The Request for Binding Bid Process commenced in February 2013. In the year ahead, we will finalise contractual arrangements with private service providers for provision of the network.

New Generation Rollingstock

Projects Queensland has a key role in ensuring the New Generation Rollingstock project is delivered through a partnership approach with the private sector for the design, build, ongoing maintenance and financing of a new train fleet for Queensland. This project will replace an ageing train fleet and deliver new passenger trains to cater for the increase in passenger services as South East Queensland continues to grow.

The project is in the final bidding phase with two committed proponents. We expecttofinalisecontractualarrangements with private service providers in late 2013 with the new trains commencing services approximatelytwoyearsaftercontractaward.

24


Queensland Schools

On behalf of the Department of Education, Training and Employment, we are managing the procurement phase for the development of 10 schools located in rapidly developing areas in South East Queensland. This project involves seeking a private sector provider to finance, construct and maintain the package of new schools (eight Prep-6 primary and two 7-12 secondary schools).

This public private partnership will enable the Government to look beyond traditional methods of financing and building school infrastructure. The procurement phase will be finalised in December 2013.

Future projects for private sector consideration

Projects Queensland is working on a number of future projects, with the goal to deliver infrastructure outcomes for the State through private finance and investment.

During 2012-13, we prepared business cases for high priority Government projects such as the Toowoomba Second Range Crossing and the Queensland Schools project. We also commenced work on the business case for the Royal Children’s Hospital Site project. The business cases, which aim to determine the value of the projects and their suitability for delivery as public-private partnerships, are rigorously evaluated to ensure consistency between projects on how the Government collaboratively works with the private sector.

See the Projects Queensland website www.treasury.qld.gov.au/projects-queensland for more information about projects with potential for public-private partnerships.

StrategyEnhance the infrastructure assessment and procurement processes within government.

The scope of our responsibilities is to ensure a consistent approach to the assessment of the State’s infrastructure projects, resulting in the selection of appropriate procurement and financing options, and better targeting of projects as potential public-private partnerships.

Our Commercial Advisory Team provides commercial advice to Queensland Government agencies and Government owned corporations (GOCs) regarding project assessment, risk allocation and contractual negotiations for new capital investments or service delivery programs. This team collaboratively works with agencies and GOCs to identify and assess the potential for private sector investment, minimise thecostandriskexposuretotheStateGovernment, and deliver the over-arching goal of completing infrastructure projects on time and on budget.

During 2012-13, the Commercial Advisory Team provided advice on a range of projects that has facilitated the development of new infrastructure for the resource sector, including the AbbotPointExpansionandWoleebeeCreek water pipeline.

The team also provided advice for projects aimed at improving Government service delivery outcomes, including social housing and asset redevelopment options. In the year ahead, the team will continue to support agencies and GOCs in providing commercial advice for new infrastructure and service delivery programs, while also considering unsolicited commercial proposals when received by Government.



Rejuvenating the Queensland Government PrecinctProjects Queensland has successfully taken a lead role in the procurement and project management of the 1 William Street development in the Brisbane CBD.

The development of the 43 level office tower will act as a catalyst for the rejuvenation of the Queensland Government Precinct, while revitalising the lower William Street section of Brisbane city with landmark architecture and a well-planned urban environment. The development will include retail and garden areas with integrated connections to the Brisbane River, Botanic Gardens, heritage places and Parliament House.

It will be the home of the Queensland public service with the Government planning to occupy 60,000 square metres of the office space. The remaining space will offer contemporary and vibrant accommodation for the private sector to lease.

The 1 William Street tower is planned for completion by December 2016. The developer of the new office tower has advised Government that the construction phase will create more than 1,000 jobs per year in the Queensland construction industry.

26

The Office of State Revenue (OSR) manages a revenue base of $13 billion for Queensland by delivering and administering simple, efficient and equitable revenue management services for State taxes, royalty revenue, grant schemes and revenues from fines and penalties.

Our clientsWehelptaxpayersandgrantrecipients, their agents and professional advisors, fines and penalties debtors, victims of crime and prosecuting authorities meet their obligations and receive their entitlements.

For the Queensland Government, we provide legislative and policy advice, revenue forecasting and trend analysis.

Our structure*

Helen Gluer Under Treasurer

David Smith Commissioner

Deputy Commissioner

Director, Business Revenue

Director, Collections

Tony Kulpa

Helen Wootton

Liz Wells

Registrar, State Penalties Enforcement Registry Natalie Barber

Martin SchwedeDeputy Commissioner

Allan MasonDeputy Commissioner

Director, Policy and Legislation Melinda Kross

Director, Royalty Simon McKee

Director, Strategic Policy Projects Melissa Daly

Director, Land Revenue Liam Cooke

Director, Complex Investigations and Enforcement Natalie Wakefield

Director, Review and Intelligence Richard Jolly

Director, Business Development and Grants Management David Elson

Director, GST and Performance Giles Wilmer

Service report - Revenue management

Revenue management



Key issues in our environmentMovements in global commodity prices have been significantly impacting the royalties component of Queensland’s revenue base since coal pricespeakedin2008-09.In2012-13,Queenslandexperiencedareductionofapproximately$650millioninroyalty revenue.

Similarly, global economic uncertainty and the resultant ‘belt tightening’ has made its presence felt in less revenue frompropertytransactions,landtax,and fines and penalties. This will require OSR, now incorporating the State Penalties Enforcement Registry, tocontinuetoprovideflexiblepaymentoptions for clients while maintaining firm and fair enforcement.

The number of clients requiring assistance from OSR is increasing, as is the volume of payments and debt requiring follow-up. OSR will manage increasing workloads with efficiency measures, innovation through technology, targeted communication and education with clients and stakeholders.

VisionExcellence

MissionWe manage revenue, through our committed, professional people to:

• linktheGovernmentandthecommunity

• supporttheGovernment’ssocialand fiscal responsibilities

• helpmembersofthecommunitymeet their obligations and receive their entitlements.

Service standards

Not

es

2012-13 published

annual target

2012-13 actual

Client satisfaction with services provided 1 70% 72%

Totalrevenuedollarsadministeredperdollarexpended– accrual

1 $196 $190

Average overdue debt as a percentage of total revenue collected

1 1.5% 1.6%

SPER clearance rate (finalisations/ lodgements) 2 76% 99%

SPER percentage of debt pool under compliance 3 55% 60%

Other measures

Amount of revenue, grants and subsidies administered 1 $12.4B $11.8B

Number of First Home Owner Grant (FHOG) applications paid

12,000 12,757

FHOG applications processed within service standards 95% 100%

Percentage of investigations performed within standards 1 90% 89%

Percentage of lodgements and payments received electronically

1, 4 70% 83%

Variances

1 ThesemeasuresexcludeStatePenaltiesEnforcementRegistry(SPER)astheyweredevelopedpriortothe machinery of Government transfer of SPER into the revenue management service.

2 Increase due to SPER business reform initiatives and targeted debt write-off program this financial yearundernewapprovedguidelines,with427,810debtstotalling$102.8Mwritten-off.Thisispartially offset by record lodgements due to large volume of Electoral Commission Queensland fines lodged from November 2012, a new Offender Levy from August 2012, and suspension of enforcement activities in February and March 2013 in response to natural disasters.

3 Increase primarily due to SPER business reform initiatives including mercantile agent trial and a new website with on-line e-business facility.

4 Increase due to increased focus on electronic payments which has reduced proportion of non-electronic transactions.


Other duties 1%

Queensland Building Boost grant 1%

Payroll tax 37%

Land tax 8%

Gambling taxes 9%

Transfer duty 16%

Vehicle registration duty 4%

General insurance duty 5%

Royalties 18%

First Home Owner Grant 1%

Office of State Revenue administered revenue 2012-13


Analysis: Payrolltaxandroyaltycollectionsrepresentover50%ofrevenueadministeredbyOSRfollowedbytransferduty16%,gamblingtax9%andlandtax8%.

28


Goal

Regain the State’s AAA credit rating.

StrategyPosition the Office of State Revenue as a leading e-business agency with excellent client support and firm and fair enforcement.

On board with e-business

As revenue managers, e-business is critical in allowing us to collect revenue and pay entitlements efficiently and effectively. It began when we introduced our revenue management system (RMS), and each yearweexplorehowwemightbringmore transactions online.

2012-13wasnoexception.Oureffortswill bear fruit in the coming year, as payments from solicitors’ trust accounts, additional self-assessment transactions and property transfer transactions move online.

Through our collaboration in National e-Conveyancing Development Ltd, we willimplementPropertyExchangeAustralia (PEXA). PEXA is an online system that removes most of the manual processes and paperwork associated with property transfers. It allows parties involved in the exchangeofproperty–landregistries,financial institutions and legal and other practitioners – to transact together online.

Greater use of technology to increase compliance was similarly successful during the year. The 2012-13 State Budget included a commitment of $31.5millionoverthreeyearsforenhanced revenue compliance activities. This allowed us to acquire the SAP HANA platform, which expandedourdatamodellinganddatamatching capabilities. This investment hassofarassessedanadditional$20millioninpayrolltax,revenuewhichisnow available to improve front-line services. Read more about HANA on page 30.

Capturing revenue from unpaid fines

When the State Penalties Enforcement Registry (SPER) joined us in 2012, we undertook to improve the recovery of unpaid fines and penalties by examiningourbusinesspractices.Weintroduced an e-business facility for SPER one-off payments, instalment plans and balance enquiries.

A key strategy was to trial the use of mercantile agents to help reduce the debt pool. Since November 2012, four agents have worked with SPER to actively manage around 57,000 debtor files. The result of the trial will determine future strategies for addressing the debt pool.

Engagement with debtors is a significant part of SPER’s work, whether by working directly with vulnerable and disadvantaged groups, or by simply making our communication clearer and our processes easier to follow. During the year we redesigned the SPER website to improve usability and increase transparency of compliance and enforcement.

StrategyProvide responsive and ongoing legislation and revenue policy advice services to the State Government.

Responding to the Government’s policy and service-delivery objectives

In2012-13,wemanaged$12.1billionin revenue and grants which will ultimately fund the services of Government. In the coming year, our revenue and grants portfolio is forecasttoincreaseto$13.2billion.

Each year, we are called upon to advise on and implement measures from the State Budget that require a revenue or grant response. In 2012-13, our main focus in this space was the Great Start Grant (originally called the First Home OwnerConstructionGrant),a$15,000grant for first homebuyers buying or building a new home. We supported this initiative with an online and television advertising campaign, as well as participating in major industry events such as the HIA Home Show. Our promotion of the Great Start Grant isexpectedtocontinueduring2013-14.

Also arising out of the State Budget was the reinstatement of the transfer duty concession for people buying their principal place of residence, which can save homebuyers up to $7,175.

In the coming year, we will implement the following initiatives from the 2013-14 State Budget:

• deferralofthepayrolltaxthresholdincreaseto$1.1millionuntil1July2015, noting that Queensland maintains a highly competitive payrolltaxregime

• increasingtheratesofdutyapplicable to insurance premiums for general insurance products to nine per cent from 1 August 2013. This will assist in meeting Queensland’s contribution to implementation of the National Disability Insurance Scheme (DisabilityCare).

We will also continue to provide responsive advice to Government in such areas as:

• continuingtheexpandedinvestigation program to ensure compliance with Queensland’s revenue law

• expandinge-businessopportunitiesfor OSR’s clients

• improvingcommunicationbetweenOSR and its clients.


StrategyAchieve red tape reductions.

Reducing the burden for businessReducing red tape and regulation among our client base frees up business to focus on growing the economy.

During the year, as part of a suite of State Budget measures, we increased thepayrolltaxexemptionthresholdfrom$1millionto$1.1million,meaning more businesses will not have the costs and red tape associated withpayingpayrolltax.

Weintroducedmoreexemptionsfromtransfer duty in the resource sector. Thetransferofexplorationpermitsunder ‘farm-in’ arrangements, in which the owner or lessee of mineral rights assigns an interest in those rights to a secondpartyforexplorationordevelopment, would ordinarily have attracted duty. Making these transactionsexemptfromtransferdutywillsavetheindustryapproximately$5millionperannum.

StrategyFurther develop the Revenue ManagementSystem(RMS)tosupport innovative business practices.

Better management of grants across GovernmentIn2012-13,some$204millioningrants was paid to individuals, businesses and not-for-profit groups. Emanating from different agencies, these grants are paid from different systems with varying degrees of functionality, making monitoring and reporting at a whole-of-Government level cumbersome.

During the year, we continued to streamline Government grants administration through RMS’s QGrants module. QGrants has full grants management capability to centralise payment and processing of grants across Queensland Government agencies, with the added benefit of reduced administration costs.

Individuals and groups are now able to apply for a greater range of grants online.

The Department of Education, Training and Employment’s (DETE) Office of Early Childhood Education and Care uses QGrants for their Long Day Care Grants. The Department of National Parks, Recreation, Sport and Racing’s Get Started grants, which help young people get involved in sport, are also managed through QGrants.

In2013-14,QGrantswillexpanditsreach to DETE’s Kindergarten Provider Program and Early Years Services Grants and Community Benefit Fund grants from the Office of Liquor and Gaming Regulation.

A line of sight on royalty revenue

Royalties from mining and petroleum werewortharound$2.114billiontothe Queensland economy in 2012-13. With global commodity prices falling, efficient administration and a rigorous ‘line of sight’ on the State’s royalty revenue base is critical.

During the year, we completed bringing royalties into RMS. Mining and petroleum royalty clients can now use OSRconnect to lodge returns and pay their royalty liabilities.

For royalty clients, OSRconnect will prepopulate return data, provide in-built help, calculate royalty liabilities, and allow them to view their paymenthistory.Approximately 95 per cent of quarterly royalty clients now use OSRconnect for royalty return lodgement, a trend mirrored in the other revenue-collection modules of RMS.

Royalties will remain on our radar in the coming year. We have commenced a review and rewrite of the royalty provision of Queensland’s Mineral Resources Regulation 2003. Under the StatutoryInstrumentsAct1992, the regulationwillexpireon1September2013.

However, the regulation’s provisions relating to royalties remain necessary to prescribe the rates and methods of calculating royalties, the way royalties are assessed and payable, and the basis for collecting and enforcing liabilities. Modifying the regulation will ensure it continues to support the operation of the Mineral Resources Act in delivering these provisions.


30


Moretaxpayerspayingtheirfairshare,thankstoHANAThe use of in-memory databases has increased in recent times, due to their faster and more predictable performance. This is critical when the datasets one is working with are large and complexanddifficulttoprocesswithtraditionaldataprocessingapplications.

This challenge led us in 2012-13 to acquire the SAP platform HANA to undertake data modelling to identify companieswhowerenotmeetingtheirpayrolltaxobligations.

WithHANA,wemodelledexternaldatasets,includingfromtheAustralianTaxationOfficeandWorkcover,withourowninternalpayrolltaxassessmentdatatoidentifycases of non-compliance. We then referred these cases to our in-house investigators.

However, our compliance program does not rely on investigative and punitive tools alone. Through our client engagement program, we discovered that a small number of accounting and business advisory firms were havingtograpplewithpayrolltaxcomplianceforthefirst time.

We then began working with those firms to get them on board before non-compliance became an issue.

This combination of investment in technology and direct client engagement has been highly successful for us, withanadditional$20millioninrevenuebeingassessed.

HANA is now a ‘business as usual’ part of our strategy to ensure everyone pays their fair share.


Trade and Investment Queensland helps Queensland businesses develop global markets and improve export capability, and promotes trade and investment opportunities.

Our clientsFor Queensland industry, we deliver exportandinvestmentattractionservices, including trade missions, inbound delegations, networking events and forums, to assist Queenslandindustryexpandandfindnew markets, attract investment and become more internationally competitive.

With the Australian Department of Immigration and Citizenship (DIAC), we support skilled and business migration applications in close collaboration with DIAC.

With Queensland’s Department of Agriculture, Fisheries and Forestry, we provide value chain assistance to agricultural industries, including horticulture and seafood, to develop internationally competitive supply chains.

WithAustrade,theExportFinanceandInsurance Corporation and the Department of Foreign Affairs and Trade (DFAT), we promote access to overseas markets and decision makers for Queensland companies. We work with DFAT to represent Queensland industry’s interests in international trade negotiations.

Our structure*


Rob WhiddonManaging Director, Trade and Investment Queensland

Acting Director, International Business Solutions

Devinka Wanigesekera

Director, Overseas Market Development - Asia Nussara Smith

Director, Overseas Market Development - Americas Europe Middle East and Emerging Markets

Stephen Biggs

Acting Director, Regional Trade and Investment

Kathleen Collingwood

Service report - Trade and investment



32

Key issues in our environmentEconomic growth in Queensland’s majortradingpartnersisexpectedtostrengthen from 2.75 per cent in 2013 to 3.25 per cent per annum from 2014 onwards, with non-Japan Asia continuing to be the main driver of growth. The US economy is also improving.

The Australian dollar has remained well above parity with the US dollar for mostof2012-13andisexpectedtoease over the remainder of the forecast period to 2017, as global monetary and economic conditions improve.

Growth in non-liquefied natural gas business investment is forecast to gradually strengthen from 2014-15 onwards, as global conditions are assumed to improve and the Australian dollar is projected to depreciate.

Recent progress on Australia’s negotiations on free trade agreements with China, Japan, India, Republic of Korea and the Trans Pacific Partnership suggestgreaterexportopportunitiesfor Queensland companies in these markets.

Queensland and Australia are looking tonon-miningsectorstofilltheexportvoid caused by a downturn in mining. However, multi-lateral trade negotiations to open up global markets have historically been protracted and may not be successful in the short to medium timeframe.

Service standards

Not

es

2012-13 published

annual target

2012-13 actual

Number of targeted and qualified leads for Queensland businesses generated through Trade and Investment Queensland’s overseas trade missions and other trade andexportdevelopmentactivities

1 400 310

Other measures

The number of structured programs/activities helping businesses build their capacity, improve their performance and/or access opportunities

2 400 435

The number of business participants in structured development activities

2 8,000 9,919

Significant one-on-one business consultations undertaken

3 2,000 1,560

Number of businesses involved in Trade and Investment Queensland’s facilitated alliances, partnerships, industry networks, supply chains, clusters etc.

4 250 323

Numberofbusinessesassistedtoexportorexpandmarket share

3 2,800 1,958

Variances

1 Decrease primarily due to soft global demand, strong Australian dollar and reprioritisation of activities to seek qualified leads and focus efforts on converting leads to international business contracts.

2 Increase reflects reprioritisation of Trade and Investment Queensland activities, including greater number of inbound investment missions.

3 Decrease primarily due to soft global demand and strong Australian dollar which resulted in reduced demandfromQueenslandcompaniesforexportassistance.

4 Increase reflects reprioritisation of Trade and Investment Queensland activities, including more targeted efforts towards, and greater business participation in, events that contribute to this measure.



Changes ahead for Trade and Investment QueenslandIn 2012, the Government committed to a comprehensive review of Trade and Investment Queensland. The review, by Geoffrey Thomas and John Mickel, made a number of recommendations to allow TIQ a better focus on its core role of assisting businesses and attracting investment.

In the coming year, we will implement the review’s endorsed recommendations, chief of which is to establish TIQ as a statutory body from 1 October 2013. We will be resourced to have a greater capacity to identify in-market trade opportunities and have greater flexibilitytooperateinaglobalbusinessenvironment.

As a statutory body, we will be led by our own board and will adopt a ‘Brand Queensland’ approach to whole-of-Government international activities. We will also open a new TIQ office in Jakarta and appoint an Association of South East Asian Nations (ASEAN) Trade Commissioner, also based in Jakarta.

We will have the lead role in the promotion and attraction of foreign investment and will be the State’s lead agency for the promotion of Queensland’s international education and training sector, the State’s fourthlargestexportearner.



Goal

Unleash and facilitate private sector growth potential.

StrategyAssist Queensland companies to increase their global competitiveness and expand markets

Taking Brand Queensland to the world

Our business is in physically taking Brand Queensland to the world, and keeping Queensland products and services top of mind with overseas buyers and investors.

In 2012-13, we delivered over 300 trade and investment initiatives such as trade missions, significant inbound buyers missions from China, Indonesia, Chile, Thailand and India and international tradeshows in Dubai and Hong Kong which helped build the international profile of Queensland productsandservices.Anextensiverange of goods and services were promoted by these events, including food and agriculture, mining services and education and training.

It is vital that our major trading partners see that Queensland businesses’exportambitionshavethe backing of the highest levels of Government. In 2012-13, we coordinated five ministerially led trade and investment missions to the key markets of China, Japan, USA, and India. In China, the Honourable Jann Stuckey MP, Minister for Tourism, Major Events, Small Business and the Commonwealth Games, and the Treasurer and Minister for Trade jointly announced China Eastern Airlines’ new direct route from Shanghai to Cairns. On a major mission to India, the Premier was accompanied by 74 representatives from Queensland companies.

Queensland now has a Trade and Investment Queensland office in Beijing, in recognition of this region’s importance as a major trading partner.

Trade and Investment Commissioner Zijian Zhang and his team will work with Queensland companies, especially companies seeking to work in Chinese and Mongolian mining regions.

Recognition for export excellence

We again offered the annual Premier ofQueensland’sExportAwards,nowin its 24th year. This program’s value extendsbeyondtherecognitionfactor– it is an important conduit for Queensland products and services to global markets. The winner of the Small to Medium Manufacturer category was PWR Performance Products, producers of cooling solutions (such as radiators) for motor racing applications. Ormeau-based PWR then went on to win the AustralianExporteroftheYearAward,Australia’shighestexportinghonour.Read more about the awards at www.export.qld.gov.au/awards

International cooperation

Our relationship with Papua New Guinea is unique, in that it provides opportunities for trade and investment as well as development assistance with public services.

In 2012-13, we facilitated the Premier’s journey to Papua New Guinea, with a delegation of Queenslandexportcompanies,tosigna Memorandum of Understanding on Business and Government Cooperation. This agreement commits both jurisdictions to develop trade and investment opportunities in a range of industries including agriculture, resources, construction, infrastructure and education. Arising out of the agreement, the Queensland-Papua New Guinea GovernmentExchangewillbuildcollaboration between our two countries.

Apoliceexchangeprogramisunderway, and our Government will help with the construction of a hospital in Daru (off the south coast of PNG).

We will continue our relationship with Papua New Guinea by appointing a dedicated trade and investment representative in Port Moresby, to build government and private sector relationships and increase project collaboration.

StrategyWork closely with all stakeholders to promote better access to overseas markets and encourage overseas investment in Queensland.

Migrants enrich the economy

Last year, Queensland’s State-sponsored migration program brought 225 skilled and business migrants into our State to enrich the economy withinvestment,skillsandexpertise.

During the year, in response to a review of Queensland’s activities in this area, we established Business and Skilled Migration Queensland. This new team has taken responsibility for the State-sponsored migration program.

In the coming year, our processes are being streamlined and our nomination times are now competitive against other states. Queensland will be promoted as a destination of choice to potential business migrants overseas, with seminars and workshops in Asia to promote business migration and investment in Queensland. We will also take on the role of Queensland’s representative on the Australian Government’s Ministerial Council for Skilled Migration.

34

Connecting with the right people

Doing business – anywhere, in any field – depends on relationships: building them, maintaining them, capitalising on them. Our role is to bring businesses, buyers and decision makers together. In 2012-13, we helped some 2,000 firms and over 8,000businessparticipantswithexportadvice,in-marketsupportandparticipation at trade missions and events.

Our Food and Agribusness Unit is a key link in the chain of putting Queensland business in touch with the right people. During the year, they facilitated business matching activities for 26 inbound delegations, many of which were from China. This unit facilitated important supply chain linkages for Queensland’s avocado and mango industries with businesses inAsiaresultinginincreasedexports.On the investment front, the unit hosted an investment forum which was attended by over 160 representatives from business, state and local governments.

As a direct result of the team’s energy in business matching, a large Chinese company ordered over 70 containers of meat from a number of Queensland processors, and negotiations are underway for further supply contracts and potential investment. These are just some of many instances where our networking efforts have the potential to translate into ‘signed and sealed’ orders.

In the year ahead, areas of focus for ourexportandinvestmentattractionactivities will include mining equipment, technology and services, construction and infrastructure, international aid and development business, education, and food and agribusiness.

Getting Queensland a place at the table

Throughout 2012-13, we represented Queensland on national bodies responsible for Australia’s trade and investment global agenda, including:

• SeniorOfficialsTradeandInvestment Group

• NationalTradeDevelopmentWorking Group

• InvestmentAdvisoryBoard.

WecollaboratedwiththeExportFinance and Insurance Corporation and DFAT on national trade matters, including Queensland’s involvement in bi- and multilateral trade agreement negotiations and consultations on the Australia in the Asian Century White Paper, a ‘roadmap’ for Australia to become a more prosperous and resilient participant in this region.

In 2013-14, we will continue to represent Queensland on these national bodies to ensure that Queensland’s interests are advanced.

Attracting investment from major trading partnersWith tourism and construction mainstays of the Government’s ‘four pillar economy’ strategy, it makes sense to bring our major trading partners along on the journey.

In April 2013, we staged our first investment attraction mission to China, to promote investment opportunities in Queensland’s tourism infrastructure and construction sectors. Led by The Honourable Ian Walker, Minister for Science, Information Technology, Innovation and the Arts, the mission included 44 delegates from 26 companies and was a collaborative venture with the Sunshine Coast, Logan and Cairns local government authorities.

Potential outcomes to date include:

• TheFoshanAssociationfortheDevelopmentPromotion of Small and Middle Size Enterprises reciprocated with an investment delegation to the Sunshine Coast in May 2013.

• TheChinaRealEstateChamberofCommerceisbringing an investor delegation to Queensland in October 2013 to inspect investment opportunities, especially those promoted during this mission.

• ThePresidentofChinaAustraliaEntrepreneurAssociation Incorporated will lead a delegation to QueenslandinAugust2013toexploreinvestmentopportunities in the tourism infrastructure and property development sectors.



Our people

Building a capable and skilled workforceQueensland Treasury and Trade’s Workforce Strategy provides a framework for ensuring we have an engaged workforce that is capable of delivering our business requirements now and into the future.

The strategy is a direct response to our divisions’ current and emerging business requirements and concentrates on four key elements relevant to an effective workforce:

• talentmanagement

• availability,retentionandreward

• capability

• organisationalstructure,culture,technology and innovation.

In April 2013, two projects aligned to the capability and talent management elements were launched: Critical Capability, and Executive Capability andLeadershipDevelopment. These projects are providing a framework for our divisions to map, manage and maximisecriticalcapabilityandtoplananddelivergrowthinexecutiveand leadership capability. The projects are being implemented in 2013-14 via the business partner relationship between divisions and Human Resources Branch.

In 2012-13 we recruited 13 employees requiring placement from other government departments. This process has enabled our organisation to benefit from, and build on, the transferableskillsofexistingpublicservice employees.

2012-13 saw the continuation of GRADStart, our graduate recruitment and development program. We welcomed18graduatesintoour2013program. Read more about GRADStart onpage38.

Managing performance

Our performance management frameworkclarifiesexpectationsinhow an employee’s own learning aspirations can align with achieving our business goals. Opportunities for improvement or professional development are identified through performance discussions and are regularly reviewed.

2012-13 saw the framework move online, allowing for greater staff accessibility and awareness, improved consistency in the timing and content of performance conversations, and better monitoring of implementation processes.

Our induction program assists new employees in their role transition within the department. It focusses on helping starters and their managers establish work responsibilities, expectationsandgoals,andprovidesclarity and direction from day one. Our online induction program covers:

• anoverviewofourorganisation

• codeofconductandotheremployeerelations training

• payandconditions,entitlements,learning and development

• workplacehealthandsafety

• howwemanageinformationandresources

• ICTsystems.

We are committed to recognising and rewarding employees who achieve above and beyond the requirements of their day-to-day roles.

Staff are eligible for divisional, department-wide and Queensland public sector-wide awards.

Staff with 25 and 40 years of service are also recognised for their contribution to Queensland Treasury and Trade and the Queensland public service. Additionally, we recognise the contribution that staff volunteers make to Queensland, such as our Community Recovery volunteers in the January 2013 floods.

Building capability

Our Workforce Strategy has a strong focus on building capability with the aim of ensuring the ability to retain and develop our internal talent. This enables us to target skills needed for critical roles. These business-critical roles are identified in collaboration with divisions, with targeted capabilityandexecutiveleadershipdevelopment actions to be implemented over 2013-14. Alongside these targeted actions, we will be aligning our leadership development offerings with the Public Service Commission’s frameworks and processes.

Our employees benefit from access to quality programs such as those offered by the Australia and New Zealand School of Government (ANZSOG) and the Queensland Public Service Commission. In 2012-13, eight of our people participated in the Public Sector Management Program, a nationally accredited Graduate Certificate level program with a strong focus on business acumen, accountability and leadership.

We continued to invest in our people through our Study and Research Assistance Scheme (SARAS) to undertake formal study or research withfinancialassistanceandflexibleleave arrangements.

Our people

36

During 2012-13, SARAS arrangements supported 41 staff in disciplines including accounting, law, business management and economics.

We recognise the pivotal role played by managers and supervisors in leading teams to achieve business outcomes. A series of learning events has been well received by managers across our organisation because of their focus on practical aspects of managing staff, including through peer learning. The emphasis on managing performance has been particularly valued by our managers and is already showing results through early intervention to improve performance.

Changes ahead in our workplace• Wewillcontinuetomaintain

and engage our workforce while delivering key reform programs developed by the Public Service Commission.

• Wewillfocusourattentiononimplementing the Workforce Strategy to ensure we have an engaged workforce that delivers and shapes the business of Treasury and Trade now and into the future.

• Wewillidentifyworkforcestrategies that are critical to supporting the key reforms of the public sector while providing a coherent approach to workforce priorities and key workforce-related risks identified by our business. In doing so, we will support our people to deliver the highest standardsofexcellencetorespond to changing business priorities.

2010-11

2011-12

Administration(Trainee to AO3)

Officers (AO4-AO6) Technical (PO2-PO6 and TO1-TO6)

Middle management(AO7-AO8)

Senior management(SO-CEO)

Num

ber o

f Sta

ff

Male Female

0

50

100

150

200

250

300

2012-13

2010-11

2011-12

2012-13

2010-11

2011-12

2012-13

2010-11

2011-12

2012-13

2010-11

2011-12

2012-13

Total staff by gender and classification

Our workforce at a glance The Queensland Treasury and Trade workforce decreased in size during 2012–13 due to the implementation of the whole of Government workforce reforms.

At the end of the year, our workforce comprised:

• 1,103people1

• 1,058.77full-timeequivalentstaff 2

• 140part-timeandcasualstaff

• adecreaseintherepresentationof women to 54.49 per cent

1. Represents 6.2 per cent decrease on same time 2011-12, attributed to whole-of-Government workforce reforms. Headcount includes staff in Motor Accident Insurance Commission (MAIC) and Nominal Defendant.

2. Represents employees active and paid in the final pay period of 2012-13 financial year. Full-time equivalent includes staff in Motor Accident Insurance Commission (MAIC) and Nominal Defendant.

NumberPercentage

of workforce

Men 502 45.51%

Women 601 54.49%

Aboriginal and Torres Strait Islanders 14 1.27%

People from non-English speaking backgrounds 169 15.32%

People with disability 67 6.07%

Women in middle and upper management (AO7–AO8levels)

1191 10.79%

Womeninseniorofficerandseniorexecutiveservice (SO–CEO levels)

402 3.63%

Permanent separation rate 15.6%

Permanent retention rate 85.6%

Average annual earnings by men $87,963.84

Average annual earnings by women $72,777.55

Data relates to the final pay period 2012-131.Represents49.58%ofband2. Represents 41.23% of band

Our people


Leading a collaborative approach

Queensland Treasury and Trade’s Human Resources Branch has been active in identifying opportunities for collaboration with its counterparts in the Department of Premier and Cabinet and other departments in 2012-13. This activity has included convening opportunities for skill and information sharing, collectively reviewing and contributing to good practice in workforce management and working together to leverage our strengths.

Consultation in our workplaces

We have a joint consultative committee of employee representatives and management, which supports the commitments given in the State Government Departments Certified Agreement 2009.Thiscommitteemeetseverysixweeks to discuss strategic policy matters and industrial issues that impact on our organisation, such as:

• organisationalchangeandrestructuring

• workloadmanagement

• training

• balancingworkandfamily

• climatechangeandworkplacesustainability

• workforcedata.

During 2012-13, we worked with the Together Union of Employees on agreed consultative processes for our organisation.

Redundancies and other separationsA program of voluntary redundancies was implemented during 2012-13. During this period, 74 employees received redundancy packages at a costof$5.099million(includesonevoluntary redundancy funded by the Motor Accident Insurance Commission). Employees who did not accept an offer of a redundancy were offered case management for a set period of time, where reasonable attempts were made to find alternative employment placements. At the conclusion of this period, and where it was deemed that continued attempts of ongoing placement were no longer appropriate, employees yet to be placed were terminated and paid a retrenchment package. During the period, two employees received retrenchment packages at a total cost of$94,000.

Promoting a healthy and safe workplaceEncouraging our people to lead active and healthy lifestyles benefits everyone. Our corporate health program had a strong focus on programs that educated our people on health risk factors such as diabetes, cardiovascular diseases and obesity. These were facilitated in partnership with our corporate health partners, BUPA and Medibank.

We also promote healthy lifestyle choices such as healthy catering guidelines, showering/ changeroom facilities to encourage increased physical activity to/from work and during break periods, and the new Get Healthy Information and Coaching Service. We continued our free annual flu vaccinations which resulted in a participation rate of above 40 per cent.

In an effort to build positive mental health, we focussed on early intervention programs to address poor performance associated with mental ill health. We facilitated a range of positive mental health workshops for staff and our employee assistance provider was available for staff and immediate family members for short-term counselling and support. Managers had access to a manager support hotline for help with the everyday challenges they face.

The Government acknowledged that many employees who have been impacted by organisational change may require additional assistance. On this basis, the Government approved an enhanced employee assistance program to assist surplus employees with employment pathways, skills and career advice to support them to compete in the broader job market.

The program was managed by the Public Service Commission in close collaboration with public service agenciesandexternalproviders.Thereferral process was managed by internal case managers and funding used on a case-by-case basis.

Our people

Statutory workers’ compensation claims per injury year

2012-13 2011-12 2010-11 2009-10

Statutory claims accepted 14 9 14 8

Claims received 14 14 17 10

Common law 0 0 0 0

Ofthe14claimsacceptedthisfinancialyear,11claimsresultedfromjourneyincidentsandsixclaimsdidnotresultinanylosttime.

38

Our people

Spreading the word through consultationIn 2012-13, our health and safety networks continued to communicate to staff about health and safety, and opportunities to support a healthy workforce with a particular focus on a preventative ergonomics program.

Our safety advisors continued to assist senior officers meet their workplace health and safety due diligence requirements.

Rehabilitation and returning to workWorkplace rehabilitation is about helping our injured or ill workers back to safe and suitable work as early as possible. It is also about finding the best ways for our workers to keep their valuable work skills with the aim to return to the job they had before their injury or another suitable job. Our return-to-work programs assist in maintaining our commitment to continual worker support and best practice programs.

Helping our people balance work and family life

We help our employees balance their work and family commitments with a rangeofflexibleworkarrangementsand policies, including part-time work arrangements and telecommuting/ working from home. Our strong focus on work-life balance makes good business sense by reducing absenteeism, staff turnover, and knowledge and skills loss.

GRADStartOur GRADStart program has landed a spot in the top 100 employers in a survey by the Australian Association of Graduate Employers Ltd.

Graduates rated their employers on aspects including quality of work, training and development, compensation and benefits, work/life balance and career development.

GRADStart is recognised as a key recruitment strategy for our organisation and has a rich history of employing high performing staff across a majority of business areas.

DeputyUnderTreasurerAlexBeaversistestamenttothis.Alexjoinedasagraduatein1993andhasheldsenior roles in Treasury and Trade and the Department of the Premier and Cabinet prior to his appointment as Deputy Under Treasurer in 2009.

In2013,wewelcomed18graduatestoworkinvariousroles in Fiscal, Economic and Structural Policy, Corporate Services and the Office of State Revenue.

There was an impressive pool of 700 diverse applicants whowererequiredtoparticipateinanexhaustiveandhighly competitive selection process.

Danelle Roylance, a 2012 graduate, gives the program a ‘glowing’ recommendation.

“Ifoundthattheprogramwasexcellent,”shesaid.

“The development opportunities were continuous throughout the year.

“The highlight for me was being rotated through different areas. It was a fantastic opportunity to experiencedifferentbusinessareasandtomeetnewpeople.”

We strive to maintain a high quality program and review the program on a regular basis to identify improved selection processes, professional development and career structure for graduates.


Managing our organisation

Planning and resourcingCorporate governance in Treasury and Trade starts with the Government’s objectives for the community:

• Growafourpillareconomy,withattendant goals for jobs, returning the State’s budget to surplus and regaining Queensland’s AAA credit rating.

• Lowerthecostofliving,byprovidingbudgetary, financial and commercial responses to front-line service needs.

• Investinbetterinfrastructureandbetter planning, through funding models that deliver infrastructure where and when it is needed, and within budget.

• Revitalisefront-lineservicesbyensuring government resources achieve value for money.

• RestoreaccountabilityinGovernment through our role in providing transparent financial and commercial advice to Government.

Fiscal strategyOur foundation for achieving the Government’s objectives is the Charter of Fiscal Responsibility, which outlines the Government’s fiscal principles and on which the Treasurer reports to Parliament:

• Stabilisethensignificantlyreducedebt.

• Achieveandmaintainageneralgovernment sector fiscal balance by 2014-15.

• Maintainacompetitivetaxenvironment for business.

• Targetfullfundingoflongtermliabilities such as superannuation in accordance with actuarial advice.

Read more about the Charter of Fiscal Responsibility and the Government’s fiscal strategy at www.treasury.qld.gov.au

Each year’s State Budget, mid-year review and end-of-year outcomes report outlines the Government’s achievements against this fiscal strategy. This then sets the direction for our strategic plan, which commits us to specific objectives in the fiscal, economic, revenue, service delivery, federal reform and capability arenas. Each of our service areas is responsible for particular strategies relating to their line of business.

Corporate planningFrom our strategic plan, each Treasury and Trade division develops its own plan for the years ahead. They set business and capability priorities and allocate the resources and infrastructure they need to meet objectives.

Linking our strategic and business planning framework to the State Budget, each year a Service Delivery Statement details our budget, performance and future objectives.

Read about the most recent State Budget at www.budget.qld.gov.au


Accountability through sound corporate governanceOur corporate governance practices have equipped us to play our part in the Government’s objectives for Queenslanders with transparency, accountability and a sound ethical framework. Our systems, processes and management structures allow us to make decisions, manage resources and review our performance in a manner that meets the high standards set by Government.

Government’s objectives for the community

Strategic Plan

Office strategic plansEach Treasury and Trade

division develops its own strategic plan to address its services.

Whole-of-department plans

A number of whole-of-department plans support

business activities.

Operational/business plans

Individual performance plans

Performancereporting

40

Performance and accountabilityFor Queensland

Along with all other agencies, we base our decisions on planning, resource management and performance on the Government’s objectives and the Queensland Government’s financial management framework.

We continue to take a lead role in strengthening financial accountability in Government by working directly with agencies to meet their obligations under the Financial Accountability Act.

For our organisation

Our performance is monitored externallythroughtheParliamentaryEstimates Committee process, generally held after each year’s State Budget.

We are accountable to the Treasurer and Minister for Trade who reports on our performance against our Service Delivery Statement through the Estimates Committee. We also prepare quarterly performance reports for the Government.

Internally, our performance is monitored closely by our Board of Management, and monthly finance reports are provided to the Under Treasurer.

The Board of Management and the Broader Management Group are supported by a number of committees, each providing leadership, direction and advice for a particular aspect of Treasury and Trade’s performance:

• ResourceGovernanceCommittee

− management of Treasury and Trade’s own budget

− monitoring the use of our financial, human, technology, communication and information resources

− approving submissions on Corporate Services’ initiatives.

• InformationSteeringCommittee

− Treasury and Trade’s information management and information technology investments, activities and resources

− application of Government information standards

− alignment of our program of work with our ICT resources strategic plan.

• AuditandRiskManagement Committee

− risk management strategy

− identification and treatment of high-level risk

− integrity and cost effectiveness of internal controls

− advice to the Under Treasurer on responsibilities under the Financial Accountability Act, the Financial and Performance Management Standard 2009, and other legislation and prescribed requirements.

• WorkforceCapabilityPerformanceCommittee

− Treasury and Trade’s Workforce Strategy, and specific workforce management priorities

− risks and barriers to workforce priorities.

We monitor our performance in line with the Government’s Performance Management Framework. This framework establishes how performance data should be used to identify and address risks and opportunities for agencies, Government and the community.

Leading Treasury and TradeIn 2012, Treasury and Trade repositioned its structure to be able to more effectively respond to the priorities of Government. Our services now more closely reflect our contributions to those priorities: implementing sound fiscal discipline, leading the development of economic and structural policy, securing Queensland’s revenue base, positioning Queensland through trade and investment programs, and enhancing the delivery of infrastructure.

Accountable to the Treasurer, Treasury’schiefexecutive,UnderTreasurer Helen Gluer, is supported by a Board of Management, comprising the heads of each of our divisions. In turn, the Broader Management Group is accountable for specific operational programs within those service areas.



Our executive team (as at 30 June 2013)

Treasury and Trade’s Board of Management

Helen Gluer Under TreasurerExecutiveleadershipandstrategicdirection of Treasury

AlexBeavers Deputy Under Treasurer Fiscal

Gary WardDeputy Under Treasurer and Government Statistician

Economic and Structural Policy

Dave Stewart ExecutiveDirector Projects Queensland

David Smith CommissionerOffice of State Revenue (incorporating the State Penalties Enforcement Registry)

Chris Turnbull ExecutiveDirector Corporate Services

Rob Whiddon Managing Director Trade and Investment Queensland


Our leadership group (as at 30 June 2013)

Treasury and Trade’s Broader Management Group

Board of Management, plus:

Mary-Anne Wilson Director, Office of the Under Treasurer, and Cabinet Legislation Liaison

Fiscal Division

Dennis Molloy Assistant Under Treasurer, Fiscal and Macroeconomics

Walter Ivessa Assistant Under Treasurer, Health Group

Drew Ellem Assistant Under Treasurer, Education Group

John O’Connell Assistant Under Treasurer, Transport and Main Roads Group

Wayne Cannon State Actuary

Economic and Structural Policy Division

Pauline Elliott Assistant Under Treasurer, Commercial Monitoring

Neil Singleton Insurance Commissioner

Tania Homan Director, Microeconomics and Structural Reform

Antony Skinner Director, Government Statistician

Office of State Revenue

Tony Kulpa, Allan Mason, Martin Schwede

Deputy Commissioners, Office of State Revenue

Corporate Services Division

Duncan Anson Director, Finance

Keith Millman Commercial Counsel

Mark Rogers Director, Workforce Management

Karen Hampson Director, Information and Communication

42

Our ethical environmentWe value, actively support and promote an ethical work environment across Queensland Treasury and Trade. We do this so our people understand their responsibilities, carry them out with respect and integrity, and deliver effective and efficient services to our clients.

The Code of Conduct for the Queensland Public Service is the key document which guides ethical standards of behaviour across Treasury and Trade. The code is aspirational and clarifies for the public whatweexpectofourselves,ourcolleagues and our organisation.

The code is based on the public sector ethics principles outlined in the Public Sector Ethics Act 1994:

• integrityandimpartiality

• promotingthepublicgood

• commitmenttothesystemofgovernment

• accountabilityandtransparency.

We synchronise our values with these principles and the code. In particular, we value:

• communicationwhichisopenandhonest

• takingresponsibility

• performanceanddelivery.

Several of the objectives in our Strategic Plan 2012-16, including effective and efficient services for Queensland, directly support these principles.Allstaffareexpectedtoconsider and discuss these principles as part of our achievement and development planning process.

In 2012-13, we continued to implement our tailored bi-annual online training program which supports the code and ethical behaviour. Apart from providing a detailed overview of the code, this training also covers:

• fraudawarenessandcontrol

• ethicaldecisionmaking

• officialmisconduct–whatitisandhow it can be reported

• publicinterestdisclosures.

We have also invested significant time and resources in implementing an online fraud awareness training program in 2012-13. Virtually all of our staff–99.8percent–completedthisprogram.

In addition, we ensure that all administrative procedures and management practices of the agency have proper regard to the ethics principles and values, as well as the approved code. This includes recent work and improvement to our:

• fraudandcorruptioncontrolpolicy

• policyandpracticesforemployeecomplaints

• policyandpracticesfortheapprovalof leave, including special leave.

External scrutinyExternalauditsandreviewsaidtransparency in government and help us improve our performance and that of other agencies. These aims are critical if we are to meet the Government’s and communities’ expectationsofaccountabilityandvalue-for-money service delivery.

Auditor-General Report to ParliamentNo. 5 for 2012-13 – tabled 27 November 2012

Results of audit: State public sector entities for 2011-12

Recommendations

Although there were no recommendations specific to Treasury and Trade, it was recommended that all State public sector entities review their procurement practices for contract rollovers to ensure there is appropriate contract succession planning and that value for money is being maintained.

Our response

To address this issue, we have established a contract register, and a review of potential rollovers and their impact is planned once the contract management requirements are fully loaded into the contract management system. Data analytics over contract rollovers is included in our three-year internal audit plan.

Auditor-General Report to ParliamentNo. 7 for 2012-13 – tabled 5 March 2013

Results of audits: Queensland state government financial statements 2011-12

Recommendations

That Queensland Treasury and Trade:

• workwithotherstatestoagreeonaconsistent approach to value and disclose land under roads

• developacomprehensivesuiteoffinancial sustainability indicators for use over the longer term. The indicators should include measures for operating performance, capital expenditureandfinancing,andshould measure performance over time against set targets.

Our response

• QueenslandcomplieswithAASB1051 in recognising land under roads (LUR). The value of these assets is determined by the Valuer-General. We agree that LUR is valued differently across jurisdictions. However, we do not consider this an issue that can be resolved by our organisation or state treasuries; we regard it as a matter for valuers in each jurisdiction.

Until the matter is resolved, we will continue to comply with the relevant accounting standard and will adopt the value provided by the Valuer-General, as we do with all other non-financial assets. We also note that key users of financial statements, such as ratings agencies, have not indicated any particular concerns.

• Thekeyforgovernmentsistochoose a small number of appropriate measures to drive decision making and for public reporting purposes. The Queensland Government has chosen four key measures for this purpose and publishes these in its Budget, Mid-Year Fiscal and Economic Review and end-of-year reports. The Government measures were informed by the considerable work undertaken by the Commission of Audit on the strategies required to improve the State’s finances.



The Queensland Government also publishes a full suite of financial statements three times each year to allow interested parties such as ratings agencies to measure financial sustainability based on their own preferred set of measures.


Online service delivery

Recommendations

Although there were no recommendations specific to Treasury and Trade, there were a number of generic recommendations across all agencies:

• Thateachdepartmentdevelopsandimplements a channel strategy consistent with the Government’s strategy for online service delivery.

• Thatalldepartmentsdocumentthesecurity design of their online services and use this to identify and mitigate security risks.

• ThatalldepartmentsandtheBrisbane City Council:

− identify cost-effective technologysolutionstoexpandtheir online channel and use authentication services for complexonlineservices.

− collect and use data on cost and demandtooptimisethemixofchannels used for services.

Our response

In keeping with the Government’s One Stop Shop initiative, the Office of State Revenue is continuing to optimise the use of e-business by expandingonlineservices.OSRhasalready made significant progress towards lowering costs through e-business: over 90 per cent of State taxationlodgementsarecompletedonline by clients and more than 80percentofrevenueisreceivedelectronically. More cost-effective methods of outbound communication, such as webinars and SMS, have also been trialled and will be incorporated into standard business practices to maximisecostsavings.

OSR has published security design documentation on our intranet. This documentation provides critical information such as the network logical model, network traffic flow, and the use of AUSKEY for authentication of businesses.


Fraud risk management

Recommendations

Although there were no recommendations specific to Treasury and Trade, there were a number of generic recommendations across all agencies:

• Allpublicsectoragenciesshouldassess their fraud control program against the better practice principles in the Auditor-General’s report and, as required, implement a plan to address deficiencies identified by this self-assessment.

• Wherethefollowingarenotinplace,agencies should:

− conduct and regularly update their fraud risk assessments

− implement routine data analytics over areas identified as inherently susceptible to fraud

− use their fraud data to inform ongoing development of fraud control programs.

Our response

We have jointly assessed our current fraud control environment and have identified some opportunities for closer alignment with better practice principles. We have started addressing the gap through an internal audit review which produced a clear action plan to address gaps and areas of risk. Our new fraud control plan will be released later in 2013. Data analytics were performed in 2012-13 and further data analytic reviews are included in our three-year internal audit plan.

Audit and risk managementIn 2012, Treasury and Trade merged its audit and risk management committees.

Our Audit and Risk Management Committee provides an advisory service to our accountable officer – Under Treasurer Helen Gluer – to assist in the effective discharge of responsibilities prescribed in the Financial Accountability Act 2009, the Financial and Performance Management Standard 2009, and other relevant legislation and prescribed requirements.

Audit and Risk Management Committee charter

The Treasury and Trade Audit and Risk Management Committee charter was developed with reference to the Audit CommitteeGuidelines:ImprovingAccountability and Performance. The charter was revised during the financial year to better incorporate risk management, integrity and misconduct and the requirements for a quorum. Under the charter, the committee’s key responsibilities are (but are not limited to):

• consideringauditandaudit-relatedfindings

• assessingandenhancingourcorporate governance processes including our systems of internal control and the internal audit function.

• evaluatingandfacilitatingthepractical discharge of the internal audit function, particularly in planning, monitoring and reporting.

• overseeingandappraisingourfinancial and operational reporting processes through the internal audit function

• reviewingriskmanagementandmitigation strategies

• reviewingtheeffectivenessofourrisk management framework and process for identifying, monitoring and managing significant business risks, including fraud.


44

Role

The role of the Committee is to provide independent assurance and assistance to the Under Treasurer on:

• ouragency’srisk,controlandcompliance frameworks

• ourprescribedexternalaccountability responsibilities

• ourintegrityframework.

The Committee does not replace or replicate established management responsibilities and delegations, the responsibilitiesofotherexecutivemanagement groups within Queensland Treasury and Trade or the reporting lines and responsibilities of eitherinternalauditorexternalauditfunctions.

The Committee provides prompt and constructive reports on its findings directly to the Under Treasurer, particularly when issues are identified that could present a material risk or threat to our organisation.

2012-13 members

The committee has five members from across our organisation, plus an independent member from outside Treasury and Trade:

• AlexBeavers,DeputyUnderTreasurer (chair)

• HelenGluer,UnderTreasurer

• GaryWard,DeputyUnderTreasurer

• NeilSingleton,InsuranceCommissioner

• MartinSchwede,DeputyCommissioner, Office of State Revenue

• DonLicastro,QueenslandTreasuryCorporation.

The Chief Finance Officer and the ExecutiveDirector,CorporateServiceshave standing invitations to committee meetings.

2012-13 program

In 2012-13, the committee met four times to consider matters including:

• the2011-12financialstatementsforTreasury and Trade, Queensland Future Growth Corporation, Motor Accident Insurance Commission and Nominal Defendant

• theinternalauditplanfor2012-13

• the2011-12ReportonStateFinances

• QueenslandAuditOffice’sreportstoParliament as they related to Treasury

• issuesraisedbytheQueenslandAudit Office including recommendations resulting from performance audits

• establishmentofanewriskmanagement framework within Treasury and Trade

• issuesraisedbyInternalAuditreports

• activitiesofotherrelatedcommittees in Treasury and Trade.

Internal audit

In 2012-13 we appointed PwC Australia to deliver our internal audit and risk management services. As the appointment was made part way through the financial year, the initial tasks for our new internal audit team were to develop and deliver an interim audit plan and to revise charters and protocols.

Internal Audit supports the Audit and Risk Management Committee by regularly evaluating Treasury and Trade’s financial and operational systems, reporting processes and activities. The function provides an independent and objective assurance service and operates in accordance with our Internal Audit Charter which has incorporated key internal audit and ethical standards. Our function is also independent of the Queensland Audit Office (QAO), although it liaises with QAO regularly.

The Internal Audit plan delivered during the financial year saw a suite of reviews completed which covered key risk areas across the department, drawing upon input from specialists as needed.

A three year Internal Audit plan (to commence July 2013) was approved by the Audit and Risk Management Committee. The plan was developed through consideration of our key organisational objectives and areas of risk.

Risk management

All staff in Treasury and Trade are responsible for managing risk, and risk management is integrated into all of our business activities and systems.

Tofurtherimproveexistingprocesses,over the course of 2012-13 we reviewedourexistingriskmanagementframeworks, policy and operations, and consulted with a broad range of agency stakeholders on how our risk management activities might remain relevant to the changing operational needs of our organisation.

Over the course of 2013-14, we will implement the updated policies, frameworks and training arising out of the review. These and other outcomes of the review will drive a continued proactive approach to understanding our ever-changing operating environment, and to derive value for our strategic and service delivery objectives.

Managing our information resourcesOur records allow us to make quality decisions and recommendations for the Government on behalf of the community. These valuable assets are our corporate memory, documenting our actions, decisions and communication while providing the foundation of government accountability.

Throughout the year, we responsibly managed our records through sound information management and recordkeeping practices that comply with the Public Records Act 2002, InformationStandard40:recordkeepingandInformationStandard 31: retention and disposal of public records. Our people efficiently identified, captured, digitised, retained and, where necessary, disposed of records as an integral part of their daily work activities.



In 2012-13, we maintained our commitmenttoexcellenceinrecordkeeping by:

• upgradingourexistingrecordkeeping system to ensure continued interoperability with business applications

• preparingtodevelopandimplementan enterprise content management system

• buildingstaffawarenessaboutgoodrecord management practices through training programs and information sessions

• continuingtotransferpermanentrecords to Queensland State Archives

• monitoringandreportingontheuseof recordkeeping systems and procedures

• supportingtheGovernment’sOpenData initiative by releasing 14datasetscomprising189individual data files, such as State Budget papers and Government Statistician datasets. These datasets are available through the Government’s Open Data website – qld.gov.au/data

Also available through qld.gov.au/data areour2012-13expenditureonoverseas travel and consultancies, plus our progress under the Queensland Multicultural Action Plan.


46

Financial summary

Financial summary

This summary provides an overview of our financial performance for 2012-13. Queensland Treasury and Trade’s financial statements fall into two categories:

•administered, which report on the funds Queensland Treasury and Trade administers on behalf of the Queensland Government in its role as the State’s financial manager

•controlled,whichdisclosetherevenue,expenses,assetsandliabilitiesusedtoconduct Queensland Treasury and Trade business.

2012-13 Statement of Assurance

As required by the Financial Accountability Act 2009, our Chief Financial Officer provided a statement to our accountable officer, the Under Treasurer, assuring her of the efficiency, effectiveness and economy of our financial operations and governance. This statement indicated no deficiencies or breakdowns in internal controls which would impact adversely on our financial statements or governance for the year.

Analysis and evaluation In 2012–13, Queensland Treasury andTradeadministered$24.96billionofrevenueand$7.91billionofexpensesonbehalfoftheState.Thisexcludesadministereditemrevenue which is appropriation revenue received from the Consolidated Fund to meet administeredexpenses.

The largest single source of administered revenue was Commonwealthgrants$12.72billion,followedbyStatetaxes,fees,finesandleviesof$9.75billion.

The main component of Commonwealth revenues was Queensland’s share of the goods andservicestax(GST).OtherCommonwealth revenue includes funding for National Partnership Payments and Natural Disaster Relief and Recovery funding arrangements.

Queensland Treasury and Trade administered a number of grants on behalf of the State in 2012–13 including the Great Start Grant, First Home Owner Grant, the Queensland Building Boost Grant and grants to the Queensland Reconstruction Authority.

Queensland Treasury and Trade’s controlled revenues consist principally of Parliamentary appropriations. In 2012–13, revenue allocated to services was $192.69million(comparedwith$154.75millionin2011–12).Theincrease was predominately due to the full year impact of the machinery-of-Government transfers of Trade and Investment Queensland (TIQ) and the State Penalties Enforcement Registry (SPER) into the department.

Queensland Treasury and Trade ensures it has appropriate and relevant policies, processes, systems and controls to ensure it operates within its budget, achieves value for money and minimises its costs and risks in relation to its liabilities. All divisions of Queensland Treasury and Trade provide regular assurance as to the operation of internal controls and fraud detection processes.


Administered

Administered

Queensland Government Insurance FundThe Queensland Government Insurance Fund (QGIF) is an administrative arrangement in Queensland Treasury and Trade. The fund operates as a self-insurance arrangement into which Government agencies pay premiums to meet the cost of claims and insure against future potential liabilities. QGIF aims to improve the management of insurable risks through identifying, providing for, and funding the Queensland Government’s insurable liabilities.

Claims are paid out of Queensland Treasury and Trade’s Administered accounts, while the actuarial assessed provision for future claims is held at the whole-of-Government level.

The liability balance at 30 June 2013 is$884.2million,comparedto$926.4millionat30June2012.Investments to sufficiently cover the Government’s outstanding claims liabilities are held by the Queensland Investment Corporation within its long term assets. The fund reinsurance program has been in place since 1 November 2011 and thereforetheexpensesforthe2012-13 financial year represent a full years premium.

QGIF claims liabilities and associated investment balances are reported in the annual Report on State Finances of the Queensland Government.

The financial summary table below provides a snapshot at 30 June 2013 of the Queensland Government Insurance Fund, with a comparison to the same results at 30 June 2012.

Royalties, State taxes, fees, fines and levies 2012-13 Total administered expenses by category 2012-13

Payroll tax $4.32B

Duties $3.08B

Royalties $2.11B

Gaming taxes and other taxes $0.99B

Land tax $0.99B

Fees, fines and levies $0.37B

Superannuation benefit payments $3.23B

Borrowing costs $1.71B

Annual Leave Central Scheme $1.49B

Grants and contributions $0.24B

Long service leave reimbursements $0.51B

Benefit payments $0.21B

All other expenses $0.35B

Supplies and services $0.17B

The Government implemented election commitments regarding key revenues including the increase of the payroll taxthresholdfrom$1millionto$1.1million,andreinstatement of the transfer duty concession for principal place of residence from 1 July 2012.

Superannuationbenefitpaymentsof$3.23B,Borrowingcostsof$1.71BandAnnualLeaveCentralSchemecostsof$1.49Bwerethelargestcomponentsofthe$7.907BofexpensestheDepartmentadministeredonbehalfoftheState.

Queensland Government Insurance Fund financial summary

30 June 2013 $M

30 June 2012 $M

Assets under investment 1,122.8 983.0

Provision for future liabilities 884.2 926.4

Premiums collected 162.6 131.8

Claims paid 116.0 96.3

Fundoperatingexpenses 4.7 4.6

Reinsuranceexpense 28.6 17.5

48

Queensland Treasury and Trade administered revenue

2011-12 2012-13

Commonwealth funding as a percentage of total revenues 51% 39%

State funding as a percentage of total revenues 17% 24%

Fundingfromexternalsourcesasapercentageoftotalrevenues 33% 32%

Queensland Treasury and Trade Administered Summary Statement of Comprehensive Income

for the year ended 30 June 2013

Treasury Department

Actual 2011-12

$’000

Treasury Department

Actual 2012-13

$’000

Income from continuing operations

Commonwealth grants 19,587,340 12,719,795

Taxes,fees,finesandlevies 9,358,225 9,752,672

Royalties, property income and other territorial revenue

2,977,567 2,361,505

Interest 37,665 45,308

Administered item revenue 6,381,259 7,762,507

Other revenue 132,463 51,097

Gains

Gains/(losses) on financial instruments at fair value

- 24,383

Gains/(losses) on concessional loan premium

10,104 1,373

Total income from continuing operations 38,484,623 32,718,640

Expenses from continuing operationsEmployeeexpenses 5,021 1,934

Supplies and services 157,551 169,478

Impairment losses 16,592 143,517

Grants and contributions 388,716 242,547

Benefit payments 238,370 205,255

Interest 47,822 32,646

Superannuation benefit payments 2,123,762 3,233,361

Long service leave reimbursements

398,658 512,341

Annual Leave Central Scheme 1,427,525 1,487,083

Borrowing costs 1,433,477 1,709,516

Concessional loan discount 16,087 2,331

Other 132,164 166,895

Total expenses from continuing operations 6,385,745 7,906,904

Operating result for the year before transfers to Government 32,098,878 24,811,736

Transfer of administered comprehensive income to Government

32,098,878 24,818,520

Total administered comprehensive income

- (6,784)

The decrease is due to the timing of funding provided by the Commonwalth for various National Partnership Payments and Special Purpose Payments.

The decrease is due to a reduction in mining royalties collected by Office of State Revenue.

The increase is due to changes in cash management pooling arrangements and accounting treatment for National Disaster Relief and Recovery Arrangement (NDRRA) concessional loans, partially offset by a reduction in interest collected from trust funds under Property Agent and Motor Dealers Act.

The decrease is due to revenue on-passed from Queensland Reconstruction Authority (QRA) to Queensland Rural Adjustment Authority and the receipt and transfer of Unclaimed Monies Fund balances.

The increase is predominately due to a forward starting swapcontracttohedgetheinterestrateexposureriskassociated with the Sunshine Coast University Hospital project.

The decrease is due to contributions towards the Parliamentary Contributory Superannuation Fund.

Increases relate to impairment of SPER receivables and bad debts written off.

Thedecreaseisduetoone-offex-gratiapaymentsinrelation to State owned electicity generators, restructure of port and water authorities and Grants to QRA for NDRRA loans.

The decrease reflects fewer First Home Owner/Great Start Grants, which has a longer ‘tail’ due to conditions imposed.

The decrease is due to reduction in the cash interest rate and the balance of the Working Capital Fund.

The increase is due to additional payments made to QSuper Limited as a result of redundancies associated with the workforce renewal process.

The increase relates to the impact of the workforce renewal process.

Increase is due to provision of Government services and the State’s Capital Program funding requirements.

The increase is due to a higher number of QGIF claims paymentsandreinsuranceexpenses.


Controlled

Controlled

Employee expenses $113.34M

Supplies and services $79.26M

Grants and contributions $0.02M

Depreciation and amortisation $11.60M

Other $7.52M

Total expenses by category 2012-13

Fiscal Economic andStructural Policy

Commercial Services/Projects

Queensland

Revenue Management

Trade and InvestmentQueensland

2012-13 2011-12

0

20

40

60

80

100

120

$ m

illio

ns

Total expenses by service

Queensland Treasury and Trade controlled key financial performance indicators

2011-12 Actual 2012-13 Actual

Netcostofservicesfundedbyappropriation($M) $153.95 $190.91

State funding as % of total revenues 92% 90%

Fixedassetsemployed($'000) $40,983 $32,823

Netassets($'000M) $61,168 $55,486

In 2012-13 the full year impact of the Trade and Investment Queensland and SPER machinery of Government changes and commencement of Commercial Servcies/Projects Queensland is reflected.

50

Queensland Treasury and Trade Controlled Summary Statement of Comprehensive Incomefor the year ended 30 June 2013

Treasury Department

Actual 2011-12

$’000

Treasury Department

Actual 2012-13

$’000

Income from continuing operations RevenueDepartmental services revenue 154,754 192,687

User charges 12,770 18,803

Grants and other contributions 236 610

Other revenue 937 1,403

Gains

Gain on sale of property, plant and equipment 7 9

Total income from continuing operations

168,704 213,512

Expenses from continuing operationsEmployeeexpenses 103,936 113,336

Supplies and services 46,235 79,263

Grants and contributions 99 19

Depreciation and amortisation 10,693 11,595

Otherexpenses 6,937 7,524

Total expenses from continuing operations

167,900 211,737

Operating result from continuing operations

804 1,775

Operating result for the year 804 1,775

Total comprehensive income 804 1,775

The increase is predominately due to the full year impact of Machinery of Government (MoG) transfers of Trade and Investment Queensland (TIQ) and State Penalties Enforcement Registry (SPER).

The increase is comprised of revenue recouped for work completed in Projects Queensland (PQ) partially offset by a reduction in Government Statistician survey revenue and completion of Commercial Transaction Team activities.

The increase is due to the full year impact of performance paymentsforTradestartcontractsandexportawardsfromAustrade Australia.

The increase is due to subleasing arrangements for overseas office accommodation.

The increase is due to the full year impact of TIQ and SPER MoG transfers, partially offset by the impact of the voluntary redundancies program.

The increase is due to costs associated with projects managed by PQ, the full year effect of MoG transfer of SPER mainly associated with the costs attributed to the call centre and the TIQ MoG mainly associated with office accommodation, travel, contractors and IT support.

The decrease is due to reduced project volume and contributions to organisations by TIQ.

The increase is due to the full year impact of amortisation on the SPER system.

The increase is due to increased bank charges associated with the SPER function and full year impact of the TIQ and SPER MoG transfers.

Queensland Treasury and Trade Controlled Statement of Financial Positionas at 30 June 2013

Treasury Department

Actual 2011-12

$’000

Treasury Department

Actual 2012-13

$’000

Assets

Cash 20,483 25,627

Receivables 8,052 7,527

Property, plant and equipment 8,990 5,982

Intangibles 31,993 26,841

Financial assets 4,601 6,833

Other 8,876 6,577

Total assets 82,995 79,387

Liabilities

Payables 17,534 19,372

Accrued employee benefits 3,107 3,135

Other 1,186 1,394

Total liabilities 21,827 23,901

Net assets 61,168 55,486

Total equity 61,168 55,486

The increase is due to the movement in receivables, payables and unearned revenue balances, the 2012-13 operatingsurplusandlowercapitalexpenditure.

The decrease is primarily due to depreciation on general plant and equipment.

The decrease is due to amortisation of business software systems, partially offset by the acquisition of additional software licences.

The increase is due to escrow hurdle requirements satisfied andissuanceof1,487,501sharesinNationale-Conveyancing Development Limited (NECDL).

The decrease relates to no escrow asset requirement on shares held in NECDL.

The increase relates to amounts payable as at 30 June 2013 with respect to projects.

The increase is attributed to project funding received in advance, partially offset by a one-off contribution received in advance in 2011-12.

Equity decreased due to equity withdrawals where depreciation funding is provided via appropriation funding, partiallyoffsetbyequityinjectionforcapitalexpenditure.


Financial statements


Quensland Treasury and TradeForeword .......................................................................................................................................................................... 52

Statement of Comprehensive Income ............................................................................................................................... 53

Statement of Financial Position ....................................................................................................................................... 54

Statement of Changes in Equity ....................................................................................................................................... 55

Statement of Cash Flows ................................................................................................................................................. 56

Statement of Comprehensive Income by Major Departmental Services. ........................................................................... 57

Statement of Assets and Liabilities by Major Departmental Services. .............................................................................. 58

Administered Statement of Comprehensive Income ........................................................................................................ 59

Administered Statement of Financial Position ................................................................................................................. 60

Administered Statement of Changes in Equity ................................................................................................................. 61

Administered Statement of Cash Flows ........................................................................................................................... 62

Administered Statement of Comprehensive Income by Major Departmental Services ...................................................... 63

Administered Statement of Assets and Liabilities by Major Departmental Services ......................................................... 64

Notes To and Forming Part of the Financial Statements ................................................................................................... 66

Management Certificate ................................................................................................................................................. 130

Independent Auditor’s Report ....................................................................................................................................... 131

52

ForewordQueensland Treasury and Trade’s Financial Statements are general purpose financial statements prepared in accordance with prescribed requirements including Australian Accounting Standards and the FinancialReportingRequirements issued by the Treasurer.

The Financial Statements comprise the following components:

• StatementsofComprehensiveIncome

• StatementsofFinancialPosition

• StatementsofChangesinEquity

• StatementsofCashFlows

• StatementsofComprehensiveIncomebyMajorDepartmentalServices

• StatementsofAssetsandLiabilitiesbyMajorDepartmentalServices

• NotesToandFormingPartoftheFinancialStatements.

Within the above components, the Financial Statements have been aggregated into the following disclosures (refer Notes 2(b) and 2(c) for full details of this aggregation):

1. Controlled

(a) Queensland Treasury and Trade (as an entity in its own right and to which the remainder of this annual report refers) – column headed ‘Parent Entity’

(b) Consolidated (Queensland Treasury and Trade and its controlled entity Queensland Treasury Holdings Pty Ltd (QTH) and its subsidiaries) - column headed ‘Consolidated Entity’.

2. Administered on behalf of the whole of Government - shaded statement and notes

In addition, the department administers transactions and balances in a trust or fiduciary capacity. These are identified in Note78.

Queensland Treasury and Trade and QTH are controlled by the State of Queensland which is the ultimate parent entity.

The head office and principal place of business of Queensland Treasury and Trade is:

ExecutiveBuilding 100 George Street BRISBANE QLD 4000


Financial statementsQueensland Treasury and Trade and controlled entity

Statement of Comprehensive Incomefor the year ended 30 June 2013

3 Financial Statements – Queensland Treasury and Trade

2013 2012 2013 2012Notes $'000 $'000 $'000 $'000

Departmental service revenue 4 192,687 154,754 192,687 154,754User charges 5 18,803 12,770 18,803 12,770Grants and other contributions 6 849 236 610 236Interest revenue 7 27,183 27,269 .. ..Other revenue 1,479 985 1,403 937Amortisation of unearned revenue 8 304 299 .. ..Dividends received 9 53,748 61,090 .. ..

Gain on sale of property, plant and equipment

9 7 9 7

Fair value gain/(loss) on shares 10 300,467 (11,586) .. ..

Gain on acquisition of subsidiary 11 .. 3,009 .. ..

595,529 248,833 213,512 168,704

Employee expenses 12 113,336 103,936 113,336 103,936Supplies and services 13 82,732 46,349 79,263 46,235Depreciation and amortisation 14 11,595 10,693 11,595 10,693Grants and contributions 15 19 99 19 99Borrowing costs 16 87,272 136,608 .. ..Management fees 17 1,175 2,027 .. ..Brokerage and settlement fees 7,839 .. .. ..Operating leases 18 340 335 .. ..Impairment expense 19 40,655 9 10 9Other expenses 20 8,342 7,526 7,514 6,928

353,305 307,582 211,737 167,900

Income tax expense 21 70,558 (41,192) .. ..

171,666 (17,557) 1,775 804

171,666 (17,557) 1,775 804

Total comprehensive income 171,666 (17,557) 1,775 804



Gains

Operating result for the year

Operating result from continuing operations

The accompanying notes form part of these statements.

Expenses from continuing operations

Parent EntityConsolidated Entity


Queensland Treasury and Trade and controlled entity

Statement of Comprehensive Income

Revenue


54


Statement of Financial Positionas at 30 June 2013


2013 2012 2013 2012Notes $'000 $'000 $'000 $'000

Cash and cash equivalents 22 72,083 64,865 25,627 20,483Receivables 23 7,710 8,061 7,527 8,052Lease receivables 24 9,954 19,438 .. ..Other 25 6,890 8,958 6,326 8,304

Other financial assets 26 787,195 2,802,979 .. ..

883,832 2,904,301 39,480 36,839

Other financial assets 26 6,833 4,601 6,833 4,601

Lease receivables 24 157,520 167,474 .. ..Loans and receivables 27 164,065 191,853 .. ..Intangible assets 28 26,841 31,993 26,841 31,993Property, plant and equipment 29 5,982 8,990 5,982 8,990Deferred tax asset 30 58,013 61,983 .. ..Other 25 251 572 251 572

419,505 467,466 39,907 46,156

1,303,337 3,371,767 79,387 82,995

Payables 31 19,823 17,850 19,372 17,534Accrued employee benefits 32 3,135 3,107 3,135 3,107Unearned revenue 33 1,719 1,487 1,394 1,186Tax liabilities 35 183,535 6 .. ..Interest bearing liabilities 37 9,954 19,438 .. ..

218,166 41,888 23,901 21,827

Unearned revenue 33 3,685 4,002 .. ..

Deferred tax liabilities 34 91,575 208,539 .. ..Interest bearing liabilities 37 299,394 2,591,030 .. ..

394,654 2,803,571 .. ..

612,820 2,845,459 23,901 21,827

690,517 526,308 55,486 61,168

Accumulated surplus 580,022 408,356 39,404 37,629Contributed equity 110,495 117,952 16,082 23,539

690,517 526,308 55,486 61,168

Net assets

Non-current assets

Total assets

Total liabilities

Consolidated Entity

Current assets

Parent Entity


Total non-current liabilities

Current liabilities

Total current liabilities

Total non-current assets

Equity

Total equity


Statement of Financial Position

Non-current liabilities

Total current assets

as at 30 June 2013



Statement of Changes in Equityfor the year ended 30 June 2013


2013 2012 2013 2012Notes $'000 $'000 $'000 $'000

Balance 1 July 408,356 503,912 37,629 36,825Operating result from continuing operations 171,666 (17,557) 1,775 804Dividend paid 36 .. (77,999) .. ..Prior year adjustments .. .. .. ..Balance 30 June 580,022 408,356 39,404 37,629

Balance 1 July 117,952 119,065 23,539 24,652Transactions with owners as owners:

Appropriated equity injections 4 1,078 1,843 1,078 1,843Appropriated equity withdrawals 4 (8,535) (8,564) (8,535) (8,564)Net assets transferred - machinery of Government (MoG) State Penalties Enforcement Registry from the Department of Justice and Attorney-General

3 .. 3,652 .. 3,652

Net assets transferred - MoG Trade and Investment Queensland from the Department of Employment, Economic Development and Innovation

3 .. 1,956 .. 1,956

Balance 30 June 110,495 117,952 16,082 23,539

690,517 526,308 55,486 61,168


Accumulated surplus


Statement of Changes in Equity


Contributed equity

Total equity

Consolidated Entity Parent Entity

56


Statement of Cash Flowsfor the year ended 30 June 2013


2013 2012 2013 2012 Notes $'000 $'000 $'000 $'000

Output receipts 192,553 152,155 192,553 152,155User charges 17,655 35,562 17,573 35,503Grants and other contributions 861 236 610 236Income tax equivalents .. 1,422 .. ..

GST input tax credits from Australian Taxation Office (ATO)

8,098 6,733 7,727 6,666

Interest received 11,206 11,702 .. ..Other 1,412 935 1,407 935

Employee expenses (113,239) (100,812) (113,239) (100,812)Supplies and services (92,334) (73,735) (79,446) (54,985)Grants and contributions (19) (99) (19) (99)

(88,375) (136,608) .. ..

(1,656) (9,656) (1,654) (9,656)Income tax equivalents (23) .. .. ..Other (8,627) (7,066) (8,627) (7,066)

38 (72,488) (119,231) 16,885 22,877

Sales of property, plant and equipment 13 7 13 7Lease payments received 1,022 960 .. ..Proceeds from investments 2,319,370 3,102 .. ..Novation payments received 18,416 19,705 .. ..

Acquisition of subsidiary net of cash acquired .. 244 .. ..

Payments for property, plant and equipment (361) (1,471) (361) (1,471)Acquisition of investments .. (5,249) .. (5,249)Payments for intangibles (3,927) (111) (3,927) (111)

2,334,533 17,187 (4,275) (6,824)

Equity injections 1,069 1,843 1,069 1,843Borrowings 79,764 127,002 .. ..Dividend received 53,748 61,090 .. ..

Repayment of borrowings (2,380,873) (84,255) .. ..Dividend paid .. (77,999) .. ..Equity withdrawals (8,535) (8,564) (8,535) (8,564)

(2,254,827) 19,117 (7,466) (6,721)

7,218 (82,927) 5,144 9,332

64,865 146,752 20,483 10,111

.. 1,040 .. 1,040

22 72,083 64,865 25,627 20,483

Parent Entity

Cash flows from investing activities

Outflows:

Net cash provided by/(used in) investing activities

Cash flows from financing activities

Inflows:

Outflows:

Net cash provided by/(used in) operating activities

Inflows:

Cash transfers due to MoG change

Cash and cash equivalents at end of financial year


Inflows:

Outflows:

Net cash provided by/(used in) financing activities

Net increase/(decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of financial year


Statement of Cash Flows


Cash flows from operating activities

GST remitted to ATO

Borrowing costs

Consolidated Entity



Statement of Comprehensive Income by Major Departmental Servicesfor the year ended 30 June 2013

7 F

inan

cial

Sta

tem

ents

– Q

ueen

slan

d Tr

easu

ry a

nd T

rade

Que

ensl

and

Trea

sury

and

Tra

de a

nd c

ontr

olle

d en

tity

2013

2012

***

2013

2012

***

2013

2012

***

2013

2012

***

2013

2012

***

2013

2012

***

2013

2012

***

2013

2012

***

$'0

00$

'000

$'0

00$

'000

$'0

00$

'000

$'0

00$

'000

$'0

00$

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$'0

00$

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$'0

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$'0

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Dep

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l ser

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22,8

4430

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27,2

6034

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65..

103,

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81,5

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2,70

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rant

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109

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637

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....

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)23

311

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....

25,8

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587

1,64

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583

....

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** 2

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and

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incl

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nsur

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58


Statement of Assets and Liabilities by Major Departmental Servicesas at 30 June 2013

8 F

inan

cial

Sta

tem

ents

– Q

ueen

slan

d Tr

easu

ry a

nd T

rade

2013

2012

***

2013

2012

***

2013

2012

***

2013

2012

***

2013

2012

***

2013

2012

***

2013

2012

***

$'00

0$'

000

$'00

0 $

'000

$'00

0$'

000

$'00

0 $

'000

$'00

0 $

'000

$'00

0$'

000

$'00

0$'

000

Cash

and

cas

h eq

uiva

lent

s7,

682

6,75

6(7

85)

(1,5

67)

1,72

1..

(4,2

09)

(5,1

25)

7,13

15,

724

14,0

8714

,695

25,6

2720

,483

Rece

ivab

les

100

1,07

478

51,

530

909

..1,

278

997

384

428

4,07

14,

023

7,52

78,

052

Oth

er47

133

1,16

376

82,

095

..1,

247

5,32

542

176

71,

353

1,31

16,

326

8,30

4

7,82

97,

963

1,16

373

14,

725

..(1

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)1,

197

7,93

66,

919

19,5

1120

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39,4

8036

,839

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er fi

nanc

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s..

....

....

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1..

....

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4,60

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ible

ass

ets

2653

242

323

....

26,3

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....

267

468

26,8

4131

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Prop

erty

, pla

nt a

nd e

quip

men

t12

121

215

414

423

..18

588

438

436

25,

115

7,38

85,

982

8,99

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ther

....

....

....

....

251

572

....

251

572

147

265

396

467

23..

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635

934

5,38

27,

856

39,9

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7,97

68,

228

1,55

91,

198

4,74

8..

31,6

4037

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8,57

17,

853

24,8

9327

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79,3

8782

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Paya

bles

515

954

505

690

3,49

6..

6,52

55,

757

4,44

75,

016

3,88

45,

117

19,3

7217

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Accr

ued

empl

oyee

ben

efits

415

863

416

299

37..

1,00

790

290

668

435

435

93,

135

3,10

7U

near

ned

reve

nue

....

365

480

1,55

8..

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94(1

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1,39

41,

186

930

1,81

71,

286

1,46

95,

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..7,

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7,20

26,

382

5,79

42,

680

5,54

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21,8

27

930

1,81

71,

286

1,46

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..7,

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26,

382

5,79

42,

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5,54

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21,8

27

7,04

66,

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273

(271

)(3

43)

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30,6

292,

189

2,05

922

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22,3

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61,1

68

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Que

ensl

and

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sury

and

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nder

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truc

ture

and

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seve

ral M

ajor

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s ha

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es h

ave

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re.

Que

ensl

and

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sury

and

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olle

d en

tity

Stat

emen

t of A

sset

s an

d Li

abili

ties

by M

ajor

Dep

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enta

l Ser

vice

s

as a

t 30

June

201

3

Fisc

al*

Econ

omic

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mm

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al S

ervi

ces

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ts Q

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emen

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ueen

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d Tr

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ry a

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Trad

e

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l cur

rent

liab

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s

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rent

ass

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eral

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Curr

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iabi

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s

Net

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Non

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-cur

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Tota

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ets


Financial statementsQueensland Treasury and Trade

Administered Statement of Comprehensive Incomefor the year ended 30 June 2013


2013 2012Notes $'000 $'000

Commonwealth grants 47 12,719,795 19,587,340 Taxes, fees, fines and levies 48 9,752,672 9,358,225Royalties, property income and other territorial revenue 49 2,361,505 2,977,567Interest revenue 50 45,308 37,665Administered item revenue 52 7,762,507 6,381,259Other revenue 53 51,097 132,463

Gains

Gains/(losses) on financial instruments at fair value 24,383 ..Gains/(losses) on concessional loan premium 51 1,373 10,104

32,718,640 38,484,623

Employee expenses 54 1,934 5,021Supplies and services 55 169,478 157,551Impairment losses 56 143,517 16,592Grants and contributions 57 242,547 388,716Benefit payments 58 205,255 238,370Interest expense 59 32,646 47,822Superannuation benefit payments 3,233,361 2,123,762Long service leave reimbursements 512,341 398,658Annual Leave Central Scheme claims paid 1,487,083 1,427,525Borrowing costs 60 1,709,516 1,433,477Concessional loan discount 61 2,331 16,087Other expenses 62 166,895 132,164

7,906,904 6,385,745

24,811,736 32,098,878

.. ..

24,811,736 32,098,878

Transfers of administered comprehensive income to Government 24,818,520 32,098,878

63 (6,784) ..Total administered comprehensive income

Expenses from continuing operations


Operating result from continuing operations before transfers to Government


Operating result from discontinued operations

Operating result for the year before transfers to Government


Revenue



Administered Statement of Comprehensive Income


Income and expenses administered on behalf of the whole of Government

60


Administered Statement of Financial Positionas at 30 June 2013


2013 2012Notes $'000 $'000

Cash and cash equivalents 64 917,758 1,117,920Receivables 65 1,122,140 757,099Accrued taxes, fees and fines 334,730 314,232Other 66 465,498 460,349Other financial assets 67 24,383 ..

2,864,509 2,649,600

Receivables 65 140,691 135,950

140,691 135,950

3,005,200 2,785,550

Payables 68 571,190 570,741Transfer to Government payable 2,113,247 1,333,724Interest-bearing liabilities 69 32,676 8,761Other 70 91,026 23,287

2,808,139 1,936,513

Interest-bearing liabilities 69 34,979,960 26,517,649

34,979,960 26,517,649

37,788,099 28,454,162

(34,782,899) (25,668,612)

Accumulated surplus 5,795 12,579Contributed equity 2 (ad) (34,788,694) (25,681,191)

(34,782,899) (25,668,612)


Total non-current liabilities

Administered net assets

Equity

Current liabilities

Total administered assets

Total current assets

Total administered equity

Non-current liabilities

Total current liabilities

Total administered liabilities

Total non-current assets

Assets and liabilities administered on behalf of the whole of Government

Non-current assets


Administered Statement of Financial Position

as at 30 June 2013

Current assets



Administered Statement of Changes in Equityfor the year ended 30 June 2013


2013 2012Notes $'000 $'000

12,579 12,579

(6,784) ..

5,795 12,579

(25,681,191) (17,859,921)Equity injections 52 .. 119,430Equity withdrawals 52 (1,228,225) (201,030)

600,798 200,860Non-appropriated equity withdrawals (8,480,076) (7,940,530)

(34,788,694) (25,681,191)

(34,782,899) (25,668,612)


Total administered equity

Equity administered on behalf of the whole of Government

Balance 1 July

Total administered comprehensive income

Balance 30 June

Balance 1 July


Administered Statement of Changes in Equity

Contributed equity

Balance 30 June

Accumulated surplus

Non-appropriated equity injections


62


Administered Statement of Cash Flowsfor the year ended 30 June 2013


2013 2012Notes $'000 $'000

Administered item receipts 7,308,411 6,494,397Grants and other contributions 12,730,872 19,634,891Taxes, fees, fines and levies 9,872,162 9,275,491Royalties, property income and other territorial revenue 2,337,938 3,419,778Interest 35,619 34,063GST input tax credits from ATO 4,710 4,913Other 66,769 72,288

Transfers to Government (24,049,020) (32,795,693)Grants and contributions (409,661) (506,017)Interest paid to departments (36,382) (52,144)Borrowing costs (1,726,910) (1,443,275)Supplies and services (207,477) (90,776)GST remitted to ATO (15,132) (13,192)Superannuation benefit payments (3,233,361) (2,123,762)Long service leave reimbursements (464,650) (393,025)Annual leave reimbursements (1,490,323) (1,392,040)Other (284,450) (184,238)

71 439,115 (58,342)

Loans and advances 15,251 15,384

Loans and advances made (16,351) (81,054)

(1,100) (65,670)

Equity injections 598,949 303,578Borrowings 8,350,000 7,047,967

Borrowing redemptions (185,412) (958,762)Equity withdrawals (9,401,714) (8,159,965)

(638,177) (1,767,182)

(200,162) (1,891,194)

1,117,920 3,009,114

64 917,758 1,117,920Administered cash and cash equivalents at end of financial year


Outflows:

Administered cash and cash equivalents at beginning of financial year

Net cash provided by/(used in) financing activities


Inflows:

Net cash provided by/(used in) operating activities

Outflows:

Cash flows from financing activities

Inflows:

Outflows:

Net cash provided by/(used in) investing activities

Inflows:

Cash flows administered on behalf of the whole of Government

Cash flows from investing activities


Administered Statement of Cash Flows


Cash flows from operating activities




Administered Statement of Comprehensive Income by Major Departmental Servicesfor the year ended 30 June 2013

13

Fina

ncia

l Sta

tem

ents

– Q

ueen

slan

d Tr

easu

ry a

nd T

rade

Que

ensl

and

Trea

sury

and

Tra

de

Adm

inis

tere

d S

tate

men

t of C

ompr

ehen

sive

Inco

me

by M

ajor

Dep

artm

enta

l Ser

vice

s

for t

he y

ear e

nded

30

June

201

3

2013

2012

2013

2012

2013

2012

2013

2012

$'0

00$

'000

$'0

00$

'000

$'0

00$

'000

$'0

00$

'000

Inco

me

from

con

tinu

ing

oper

atio

ns

Rev

enue

Com

mon

wea

lth g

rant

s12

,719

,795

19,5

87,3

40..

....

..12

,719

,795

19,5

87,3

40Ta

xes,

fees

, fin

es a

nd le

vies

....

9,73

7,71

79,

342,

146

14,9

5516

,079

9,75

2,67

29,

358,

225

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163,

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132,

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64


Administered Statement of Assets and Liabilities by Major Departmental Servicesas at 30 June 2013

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ies



Notes To and Forming Part of the Financial Statements 2012-13

Contents

Notes to the Financial Statements Page

1. Objectives of the department . . . . . . . . . . . . . . . . . . . .66

2. Summary of significant accounting policies . . . . . . . .66

3. Departmental services . . . . . . . . . . . . . . . . . . . . . . . . .77

Controlled note numbers

4. Reconciliation of payments from Consolidated Fund to service revenue recognised in the Statement of Comprehensive Income . . . . . . . . . . . . . .80

Reconciliation of payments from Consolidated Fund to appropriated equity adjustments recognised in contributed equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . .80

5. User charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .80

6. Grants and other contributions . . . . . . . . . . . . . . . . . . .81

7. Interest revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .81

8. Amortisationofunearnedrevenue . . . . . . . . . . . . . . . .81

9. Dividends received . . . . . . . . . . . . . . . . . . . . . . . . . . . . .81

10. Fair value gain/(loss) on shares. . . . . . . . . . . . . . . . . . .82

11. Gain on acquisition of subsidiary . . . . . . . . . . . . . . . . .82

12.Employeeexpenses . . . . . . . . . . . . . . . . . . . . . . . . . . . .82

13. Supplies and services. . . . . . . . . . . . . . . . . . . . . . . . . . .87

14. Depreciation and amortisation . . . . . . . . . . . . . . . . . . .87

15. Grants and contributions . . . . . . . . . . . . . . . . . . . . . . . .87

16. Borrowing costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .87

17. Management fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .87

18.Operatingleases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .87

19. Impairmentexpense . . . . . . . . . . . . . . . . . . . . . . . . . . . .87

20.Otherexpenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .88

21.Incometaxexpense . . . . . . . . . . . . . . . . . . . . . . . . . . . .88

22. Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . .88

23. Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .89

24. Lease receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .89

25. Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .91

26. Other financial assets. . . . . . . . . . . . . . . . . . . . . . . . . . .91

27. Loans and receivables . . . . . . . . . . . . . . . . . . . . . . . . . .92

28.Intangibleassets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .92

29. Property, plant and equipment . . . . . . . . . . . . . . . . . . .94

30.Deferredtaxasset. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .96

31. Payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .96

32. Accrued employee benefits . . . . . . . . . . . . . . . . . . . . . .96

33. Unearned revenue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .96

34.Deferredtaxliabilities . . . . . . . . . . . . . . . . . . . . . . . . . .97

35.Currenttaxliabilities . . . . . . . . . . . . . . . . . . . . . . . . . . .97

36. Dividend paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .97

37. Interest bearing liabilities . . . . . . . . . . . . . . . . . . . . . . .97

38.Reconciliationofoperatingsurplustonetcash from operating activities . . . . . . . . . . . . . . . . . . . . . . . .98

39. Non-cash financing and investing activities. . . . . . . . .98

40.Commitmentsforexpenditure . . . . . . . . . . . . . . . . . . . .99

41. Contingencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100

42. Controlled entities . . . . . . . . . . . . . . . . . . . . . . . . . . . 100

43. Investments in entities which are not controlled entities or associated companies . . . . . . .101

44. Events occurring after balance date . . . . . . . . . . . . . .101

45. Other arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . .101

46. Financial instruments . . . . . . . . . . . . . . . . . . . . . . . . . .102

Administered note numbers Page

47. Commonwealth grants . . . . . . . . . . . . . . . . . . . . . . . . 108

48.Taxes,fees,finesandlevies . . . . . . . . . . . . . . . . . . . 108

49. Royalties, property income and other territorial revenue . . . . . . . . . . . . . . . . . . . . . . . 109

50. Interest revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109

51. Concession loan premium . . . . . . . . . . . . . . . . . . . . . 109

52. Administered item revenue . . . . . . . . . . . . . . . . . . . . 109

53. Other revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .110

54.Employeeexpenses . . . . . . . . . . . . . . . . . . . . . . . . . . .110

55. Supplies and services. . . . . . . . . . . . . . . . . . . . . . . . . .110

56. Impairment losses . . . . . . . . . . . . . . . . . . . . . . . . . . . .110

57. Grants and contributions . . . . . . . . . . . . . . . . . . . . . . .111

58.Benefitpayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . .111

59. Interestexpense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .111

60. Borrowing costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .111

61. Concessional loan discount . . . . . . . . . . . . . . . . . . . . .112

62.Otherexpenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .112

63. Total administered comprehensive income . . . . . . . .112

64. Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .112

65. Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .113

66. Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . .114

67. Other financial assets. . . . . . . . . . . . . . . . . . . . . . . . . .114

68.Payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .114

69. Interest-bearing liabilities . . . . . . . . . . . . . . . . . . . . . .115

70. Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .116

71. Reconciliation of administered comprehensive income to net cash from operating activities . . . . . . . . . . . . .116

72. Non-cash financing and investing activities. . . . . . . .117

73.Commitmentsforexpenditure . . . . . . . . . . . . . . . . . . .117

74. Contingencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .117

75. Events occurring after balance date . . . . . . . . . . . . . .117

76. Financial instruments . . . . . . . . . . . . . . . . . . . . . . . . . .118

77. Adjustment to comparitives – administered . . . . . . .126

Trust Balances note numbers

78.Trusttransactionsandbalances . . . . . . . . . . . . . . . . .127

79. Transfer payments . . . . . . . . . . . . . . . . . . . . . . . . . . . 129

80.Agencytransactions . . . . . . . . . . . . . . . . . . . . . . . . . . 129

66



Queensland Treasury and Trade Notes To and Forming Part of the Financial Statements 2012-13


1 Objectives of the department

Queensland Treasury and Trade provides economic and financial policy advice to the Queensland Government to enhance our State’s financial position and economic performance. The department also takes a lead role in assisting the Government to be accountable and transparent in delivering services to the community. The department is predominantly funded by parliamentary appropriations. Its structure consists of six divisions, allowing for a streamlined approach to dealing with policy and service delivery issues. The department is structured to help the Government meet its fiscal objectives as required in the Charter of Fiscal Responsibility. Queensland Treasury and Trade is focussed on restoring Queensland’s position of financial strength through managing a fiscal strategy underpinned by the Government’s four principles. The four principles are: to stabilise then significantly reduce debt to achieve and maintain a General Government sector fiscal balance by 2014-15 to maintain a competitive tax environment for business to target full funding of long term liabilities in accordance with actuarial advice.

2 Summary of significant accounting policies

The significant policies, which have been adopted in the preparation of these financial statements, are as follows:

(a) Statement of compliance

Queensland Treasury and Trade has prepared these financial statements in compliance with section 42 of the Financial and Performance Management Standard 2009.

These financial statements are general purpose financial statements, prepared in accordance with Australian Accounting Standards and Interpretations. In addition, the financial statements comply with the Treasurer’s Minimum Reporting Requirements for the year ended 30 June 2013 and other authoritative pronouncements. With respect to compliance with Australian Accounting Standards and Interpretations, the department has applied those requirements applicable to not-for-profit entities, as the department is a not-for-profit entity. Except where stated, the financial statements have been prepared in accordance with the historical cost convention. The accrual basis of accounting has been adopted for both controlled transactions and balances, and those administered by the department on a whole of Government basis.

(b) The reporting entity and principles of consolidation

The consolidated financial statements include the value of all revenues, expenses, assets, liabilities and equity of the department and the entities that it controls. Details of the department’s controlled entities are disclosed in note 42. The department as an economic entity consists of the parent entity together with QTH and Queensland Trade and Investment Office Pty Ltd as controlled entities. In order to provide enhanced disclosure, the department has adopted the principles outlined in Australian Accounting Standard AASB 127 Consolidated and Separate Financial Statements. This approach is considered appropriate as it reflects the relationship between the department’s core business activities and those of its controlled entities. In the process of reporting the department as a single economic entity, all transactions with the entity controlled by the department have been eliminated (where material). Where control of an entity is obtained during the financial year, its results are included in the consolidated Statement of Comprehensive Income from the date on which control commences. Where control of an entity ceases during a financial year, its results are included for that part of the year in which control existed.

(c) Administered transactions and balances

Those revenues, expenses, assets and liabilities under the discretionary control of the department are classified as controlled transactions or balances.






2 Summary of significant accounting policies (continued) The department administers, but does not control, certain resources on behalf of the Government such as the collection of State taxes, royalties and levies. In doing so, it has responsibility and is accountable for administering related transactions and items, but does not have the discretion to deploy the resources for the achievement of the department’s objectives. Transactions and balances relating to administered resources are not recognised as controlled revenues, expenses, assets or liabilities, but are disclosed separately as administered transactions and balances in the shaded administered statements and associated notes.

(d) Trust transactions and balances

The department administers certain transactions and balances in a trust or fiduciary capacity such as the Treasurer of Queensland Accounts. As the department performs only a custodial role in respect of these transactions and balances, they are not recognised in the financial statements, but are disclosed in note 78. While these transactions and balances are in the care of the department, they are subject to the department’s normal system of internal control and external audit by the Auditor-General.

(e) Departmental service revenue/administered item revenue

Appropriations provided under the Annual Appropriation Act are recognised as revenue when received or when approved as an accrual at year end.

Amounts appropriated to the department for transfer to other entities in accordance with legislation or other requirements are not controlled by the department and such amounts are reported as administered item revenue.

(f) User charges, taxes, fees, fines and levies

User charges and fees controlled by the department are recognised as revenues when the revenue has been earned and can be measured reliably with a sufficient degree of certainty. This involves either invoicing for related goods/services and/or the recognition of accrued revenue. User charges and fees are controlled by the department where they can be deployed for the achievement of departmental objectives. Taxes, fees, fines and levies collected but not controlled by the department are reported as administered revenue and are disclosed in note 48. Administered revenue also includes royalties, interest and penalties. Administered revenue is recognised when one or more of the following events is satisfied: the underlying transaction or event which gives rise to the right to collect the revenue occurs and can be measured reliably the assessment is raised by the self assessor (a person who lodges transactions online) the assessment is issued as a result of Commissioner assessed transactions or following compliance activities such as

reviews and audits

(g) Grants and other contributions Grants, donations, gifts and other contributions that are non-reciprocal in nature are recognised as revenue in the year in which the department obtains control over them (control is generally obtained at the time of receipt). Where grants are received that are reciprocal in nature, revenue is progressively recognised as it is earned, according to the terms of the funding agreements. Contributed assets are recognised at their fair value. The accounting treatment for contributions of services is explained in Note 2(z).

(h) Special payments Special payments include ex-gratia expenditure and other expenditure that the department is not contractually or legally obligated to make to other parties. In compliance with the Financial and Performance Management Standard 2009, the department maintains a register setting out details of all special payments. Special payments are predominantly reported in note 57.

(i) Foreign currency transactions The department and its controlled entities’ financial statements are presented in Australian dollars, which is its functional and presentation currency. Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities held in foreign currencies at balance date are retranslated into the functional currency in the Statement of Financial Position at the closing rate. Translation differences are taken to the Statement of Comprehensive Income in the financial year in which they arise.

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2 Summary of significant accounting policies (continued)

(j) Cash and cash equivalents

For the purposes of the Statement of Financial Position and the Statement of Cash Flows, cash assets include all cash and cheques receipted but not banked at 30 June as well as deposits at call with financial institutions. Cash assets include investments with short periods to maturity that are readily convertible to cash on hand at the department’s option and that are subject to a low risk of changes in value.

(k) Receivables

Trade debtors are recognised at the amounts due at the time of sale or service delivery i.e. the agreed purchase/contract price. Settlement of trade debtors is generally required within 30 days. The collectability of receivables is assessed periodically with provision made for impairment. All known bad debts were written-off as at 30 June. Increases in the provision for impairment are based on loss events as disclosed in note 46 and note 76. A financial asset is impaired if objective evidence indicates a loss event has occurred after the initial recognition, and that the loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably.

Other debtors arise from transactions outside the usual operating activities of the department and are recognised at their assessed amounts. Loans and receivables are included in current assets, except for those with maturities greater than 12 months after the reporting period which are classified as non-current assets.

(l) Non-current assets classified as held for sale

Non-current assets held for sale consist of those assets which management has determined are available for immediate sale in their present condition, and their sale is highly probable within the next twelve months. These assets are measured at the lower of the assets’ carrying amounts and their fair values less costs to sell. Such assets are no longer amortised or depreciated upon being classified as held for sale.

(m) Acquisition of assets

Actual cost is used for the initial recording of all non-current physical and intangible acquisitions of assets controlled by the department. Cost is determined as the value given as consideration plus costs incidental to the acquisition, including all costs incurred in getting the assets ready for use, including architects’ fees and engineering design fees where applicable. However, any training costs are expensed as incurred. Where assets are received free of charge from another Queensland Government entity (whether as a result of a machinery of Government change or other involuntary transfer), the acquisition cost is recognised as the gross carrying amount in the books of the transferor immediately prior to the transfer together with any accumulated depreciation. Assets acquired at no cost or for nominal consideration, other than from an involuntary transfer from another Queensland Government entity, are recognised at their fair value at date of acquisition in accordance with AASB 116 Property, Plant and Equipment.

(n) Property, plant and equipment

Items of property, plant and equipment with a cost or other value equal to or in excess of the following thresholds are recognised for financial reporting purposes in the year of acquisition: Plant and equipment $5,000 Items with a lesser value are expensed in the year of acquisition. Items or components which form an integral part of an asset are recognised as a single asset (functional asset). The recognition threshold is applied to the aggregate cost of each functional asset. When the use of a property changes from owner-occupied to investment property, the property is remeasured to fair value and reclassified as investment property. Plant and equipment is measured at cost in accordance with the Non-Current Asset Policies for the Queensland Public Sector.







(o) Revaluations of non-current physical assets

Non-current physical assets measured at fair value are revalued on an annual basis by appraisals undertaken by an independent professional valuer or internal expert, or by the use of appropriate and relevant indices. Revaluations based on independent professional valuer or internal expert appraisals are undertaken at least once every five years. However, if a class of asset experiences significant and volatile changes in fair value (i.e. where indicators suggest that the value of the class of asset may have changed by 20% or more from one reporting period to the next), it is subject to such revaluations in the reporting period, where practicable, regardless of the timing of previous such method of revaluation. Any revaluation increment arising on the revaluation of an asset is credited to the asset revaluation surplus of the appropriate class, except to the extent it reverses a revaluation decrement for the class previously recognised as an expense. A decrease in the carrying amount on revaluation is charged as an expense, to the extent it exceeds the balance, if any, in the revaluation surplus relating to that asset class. On revaluation, accumulated depreciation is restated proportionately with the change in the carrying amount of the asset and any change in the estimate of remaining useful life. Materiality concepts under AASB 1031 Materiality are considered in determining whether the difference between the carrying amount and the fair value of an asset is material.

(p) Intangibles

Intangible assets with a cost or other value equal to or greater than $100,000 are recognised in the financial statements. Items with a lesser value are expensed. The department’s intangible assets include internally generated software, purchased software and software development in progress. It has been determined that there is no active market for any of the department’s intangible assets. As such, these are recognised and carried at cost less accumulated amortisation and accumulated impairment losses.

No intangible assets have been classified as held for sale or form part of a disposal group held for sale. Purchased software is amortised on a straight-line basis over its estimated useful life to the department of three to eleven years, with zero residual value. Costs associated with the development of computer software have been capitalised to the extent that future economic benefits are more rather than less likely to eventuate and are amortised on a straight line basis over the period of the expected benefit to the department, which varies from three to fourteen years with zero residual value. Software licences are expensed due to the changing nature of software except where the amounts are of significant value and the department expects to receive benefits over three or more years. In this instance, the software is capitalised as an intangible asset and amortised over the period in which the related benefits are expected to be realised with zero residual value. Expenditure on research activities relating to internally generated intangible assets is recognised as an expense in the period in which it is incurred.

(q) Amortisation and depreciation of intangibles, property, plant and equipment

All intangible assets of the department have finite useful lives and are amortised on a straight line basis.

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Property, plant and equipment assets are depreciated on a straight-line basis so as to allocate the net cost of each asset, less its estimated residual value, progressively over its estimated useful life to the department. Estimates of remaining useful lives are made on a regular basis for all assets, with annual reassessments for major items. Assets under construction (work-in-progress) are not depreciated/amortised until they reach service delivery capacity. Service delivery capacity relates to when construction is complete and the asset is first put to use or is installed ready for use in accordance with its intended application. These assets are then reclassified to the relevant classes within property, plant and equipment or intangibles.

The cost (or other value) of leasehold improvements is depreciated over the estimated useful lives of the improvements or the unexpired period of the lease, whichever is shorter. Where assets have separately identifiable components that are subject to replacement, these components are assigned useful lives distinct from the asset to which they relate and are depreciated accordingly. Any expenditure that increases the originally assessed capacity or service potential of an asset is capitalised and the new depreciable amount is depreciated over the remaining useful life of the asset to the department. For each class of depreciable asset, the following depreciation/amortisation rates were used:

Class Depreciation/amortisation rates Plant and equipment

– IT and communications – Furniture and office amenities – Office equipment – Leasehold improvements – Motor Vehicles

Intangibles – Internally generated software – Purchased software/licences

16.6% - 33.3% 10% 14.3% - 33.3% 8.3% - 20% 20% 7.14% - 33.3% 9.09% - 33.3%

Separately identified components of assets are measured on the same basis as the assets to which they relate.

(r) Impairment of non-current assets All non-current physical and intangible assets are assessed for indicators of impairment on an annual basis for each class of asset. If an indicator of possible impairment exists, for example, redundant legislation leading to system obsolescence, the department determines the asset’s recoverable amount. Any amount by which the asset’s carrying amount exceeds the recoverable amount is recorded as an impairment loss. The asset’s recoverable amount is determined as the higher of the asset’s fair value less costs to sell and depreciated replacement cost. An impairment loss is recognised immediately in the Statement of Comprehensive Income. Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of the impairment loss is recognised as income.

(s) Leases

A distinction is made in the financial statements between finance leases that effectively transfer from the lessor to the lessee substantially all risks and benefits incidental to ownership, and operating leases, under which the lessor retains substantially all risks and benefits. The department has entered into a number of operating leases whereby the lessor effectively retains substantially the entire risks and benefits incidental to ownership. Non-cancellable operating lease commitments are disclosed under note 40. Operating lease payments are representative of the pattern of benefits derived from the leased assets and accordingly are expensed in the periods in which they are incurred.







(t) Other financial assets

The department classifies its investments based on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition. Financial assets at fair value through profit or loss are financial assets either held for trading or for which fair value is more representative of the nature of the assets. Unrealised gains and losses are brought to account in the Statement of Comprehensive Income. Investments in unlisted equity instruments that do not have a quoted market price in an active market are measured at cost. Derivative financial instruments Administered derivatives are recognised in the Statement of Financial Position at fair value and are classified as trading except where they are designated as part of an effective hedge relationship and classified as hedging derivatives. The carrying value of a derivative is remeasured at fair value throughout the life of the contract. Derivatives are carried as assets when fair value is positive and as liabilities when the fair value is negative. The method of recognising the gains and losses arising from derivatives entered into by the department depends on whether a derivative is designated as a hedging instrument. Where a derivative is designated as a hedging instrument, hedge accounting is applied. Where hedge accounting is not applied, changes in the fair value of a derivative instrument arising from re-measurements throughout the life of the contract are recognised in the Statement of Comprehensive Income as part of income from continuing operations. The department does not hold any derivatives designated as a hedging instrument. All changes in the fair value of derivatives are recognised as Gains/(losses) on financial instruments at fair value.

(u) Payables

Trade creditors are recognised upon receipt of goods and services at the contracted amount to be paid for the goods and services received. Amounts owing are generally settled on 30 day terms.

(v) Financial instruments

Recognition Financial assets and financial liabilities are recognised in the Statements of Financial Position when the department becomes party to the contractual provisions of the financial instrument. Classification Financial instruments are classified and measured as follows: Cash and cash equivalents – held at fair value through profit and loss Receivables – held at amortised cost Other financial assets:

o shares held in listed companies at fair value through profit or loss o shares held in unlisted companies at cost o derivative financial instrument at fair value through profit or loss

Loans and advances - held at amortised cost Payables – held at amortised cost Borrowings – held at amortised cost. Borrowings are initially recognised at fair value, plus any transaction costs directly attributable to the borrowings, and subsequently held at amortised cost using the effective interest method. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of a financial instrument (or, when appropriate, a shorter period) to the net carrying amount of that instrument. Any borrowing costs are added to the carrying amount of the borrowing to the extent they are not settled in the period in which they arise. Borrowings are classified as non-current liabilities to the extent that the department expects to defer settlement until at least 12 months after reporting date. All other disclosures relating to the measurement basis and financial risk management of financial instruments held by the department are included in notes 46 and 76.

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2 Summary of significant accounting policies (continued) (w) Employee benefits

Employer superannuation contributions, annual leave levies and long service leave levies are regarded as employee benefits. Payroll tax and workers’ compensation insurance are a consequence of employing employees, but are not counted in an employee’s total remuneration package. They are not employee benefits and are recognised separately as employee related expenses.

Wages, salaries and sick leave Wages and salaries due but unpaid at reporting date are recognised in the Statement of Financial Position at the current salary rates. For unpaid entitlements expected to be paid within 12 months, the liabilities are recognised at their undiscounted values. For those entitlements not expected to be paid within 12 months, the liabilities are classified as non-current liabilities and recognised at their present value, calculated using yields on Fixed Rate Commonwealth Government bonds of similar maturity after projecting the remuneration rates expected to apply at the time of likely settlement.

History indicates that on average, sick leave taken each reporting period is less than the entitlement accrued. This is expected to continue in future periods. Accordingly, it is unlikely that existing accumulated entitlements will be used by employees and no liability for unused sick leave entitlements is recognised.

As sick leave is non-vesting, an expense is recognised for this leave as it is taken. Annual leave

The Queensland Government’s Annual Leave Central Scheme (ALCS) became operational on 30 June 2008 for departments, commercialised business units and shared service providers. Under this scheme, a levy is made on the department to cover the cost of employees' annual leave (including leave loading and on-costs). The levies are expensed in the period in which they are payable. Amounts paid to employees for annual leave are claimed from the scheme quarterly in arrears. No provision for annual leave has been recognised in the department's financial statements as the liability is held on a whole of Government basis and reported in those financial statements pursuant to AASB 1049 Whole of Government and General Government Sector Financial Reporting.

Long service leave Under the Queensland Government’s long service leave scheme, a levy is made on the department to cover the cost of employees' long service leave. Levies are expensed in the period in which they are paid or payable. Amounts paid to employees for long service leave are claimed from the scheme quarterly in arrears. Therefore, no provision for long service leave is recognised in the department’s financial statements, the liability being held on a whole of Government basis and reported in those financial statements prepared pursuant to AASB 1049 Whole of Government and General Government Sector Financial Reporting. Superannuation Employer superannuation contributions are paid to QSuper, the superannuation scheme for Queensland Government employees, at rates determined by the Treasurer on the advice of the State Actuary. Contributions are expensed in the period in which they are paid or payable. The department’s obligation is limited to its contribution to QSuper. The QSuper scheme has defined benefit and defined contribution categories. The liability for defined benefits is held on a whole of Government basis and reported in those financial statements pursuant to AASB 1049 Whole of Government and General Government Sector Financial Reporting. Key management personnel and remuneration Key management personnel and remuneration disclosures are made in accordance with section 5 of the Financial Reporting Requirements for Queensland Government Agencies issued by Queensland Treasury and Trade (the Fiscal & Macroeconomics Branch). Refer to note 12 (a) and (b) for the disclosures on key management personnel and remuneration.







(x) Borrowing costs

Borrowing costs are recognised as expenses in the period in which they are incurred. Borrowing costs include:

interest on short-term and long-term borrowings administration charges. No borrowing costs are capitalised into qualifying assets.

(y) Taxation

Queensland Treasury and Trade is a State body as defined under the Income Tax Assessment Act 1936 and is exempt from Commonwealth taxation with the exception of fringe benefits tax (FBT) and goods and services tax (GST). As such, FBT and GST credits receivable from/payable to the Australian Taxation Office (ATO) are recognised and accrued. From 1 July 2010, following the asset sales under the Renewing Queensland Plan, the QTH controlled entity has expanded its activities resulting in it being registered under the National Tax Equivalents Regime (NTER). Under the NTER, payments are made to the State Treasurer equivalent to the amount of Commonwealth income tax. In calculating the income tax equivalent expense, tax effect accounting principles are adopted. Deferred income tax liabilities are recognised for all taxable temporary differences arising from prepayments of expenditure. Deferred tax assets are recognised where it is probable that future taxable income will be available against which the temporary differences can be utilised. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they are levied by the same tax authority of the same taxable entity.

The QTH controlled entity falls under the Taxation of Financial Arrangements (TOFA) legislation. It applies the default realisation and accrual methods allowed under TOFA.

(z) Services received free of charge or for nominal value Contributions of services are recognised only if the services would have been purchased if they had not been donated and their fair value can be measured reliably. Where this is the case, an equal amount is recognised as revenue and as an expense. Examples of such services provided include archival services provided by Queensland State Archives.

(aa) Allocation of revenues and expenses from ordinary activities of corporate services

The department allocates revenues and expenses attributable to corporate services to its controlled services in the Statement of Comprehensive Income by major departmental services based on the average usage patterns of the services’ key drivers of costs.

(ab) Insurance The department’s non-current physical assets and other risks are insured through the Queensland Government Insurance Fund with premiums paid on a risk assessment basis. In addition, the department pays premiums to WorkCover Queensland in respect of its obligations for employee compensation.

(ac) Rounding and comparatives

Amounts included in the financial statements are in Australian dollars and have been rounded to the nearest $1,000 or, where that amount is $500 or less, to zero unless disclosure of the full amount is specifically required. Comparative information has been restated where necessary to be consistent with disclosures in the current reporting period. Shares held in Aurizon Ltd (formerly QR National Ltd) have been reclassified to current assets in the Statement of Financial Position following the expiry of the escrow period in 2012.

(ad) Contributed equity

The negative contributed equity position reported in the department’s Administered Statement of Financial Position primarily represents whole of Government borrowings on-forwarded to the Consolidated Fund to inject into other departments to satisfy their capital requirements.

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2 Summary of significant accounting policies (continued) Non-reciprocal transfers of assets and liabilities between wholly-owned Queensland state public sector entities as a result of machinery of Government changes are adjusted to ‘Contributed equity’ in accordance with Interpretation 1038 Contributions by Owners Made to Wholly-Owned Public Sector Entities. Appropriations for equity adjustments are similarly designated.

(ae) Issuance of financial statements

The financial statements are authorised for issue by the Under Treasurer and Chief Financial Officer at the date of signing the Management Certificate.

(af) Accounting estimates and judgements

The preparation of financial statements necessarily requires the determination and use of certain critical accounting estimates, assumptions, and management judgements that have the potential to cause a material adjustment to the carrying amounts of assets and liabilities within the next financial year. Such estimates, judgements and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in future periods as relevant. Estimates and assumptions that have a potential significant effect are outlined in notes 41(Contingencies), 74 (Contingencies), 46 (Financial instruments), 76 (Financial instruments) and 27 (Loans and receivables). The Australian government passed its Clean Energy Act in November 2011 which resulted in the introduction of a price on carbon emissions made by Australian businesses from 1 July 2012. The flexible market-based price phase of the carbon pricing mechanism will commence on 1 July 2015. It will be preceded by a three-year period during which the price of permits will be fixed at $23 per tonne or carbon dioxide equivalent in year one, $24.15 in year two and $25.40 in year three. Section 4.3.4 of Queensland Treasury and Trade’s report on 'Carbon Price Impacts for Queensland' dated August 2011 indicates that, for non-residential construction activities, costs may increase by between 0.7 per cent and 0.8 percent over the period 2012-13 to 2015-16. On this basis and on other information available, the introduction of the carbon pricing mechanism is not expected to have a significant impact on Queensland Treasury and Trade’s critical accounting estimates, assumptions and management judgements.

(ag) New and revised accounting policies and standards

The department did not voluntarily change any of its accounting policies during 2012-13. Australian accounting standard changes applicable for the first time for 2012-13 have had minimal effect on the department’s financial statements, as explained below. AASB 2011-9 Amendments to Australian Accounting Standards – Presentation of Items of Other Comprehensive Income [AASB 1, 5, 7, 101, 112, 120, 121, 132, 133, 134, 1039 & 1049] became effective from reporting periods beginning on or after 1 July 2012. The only impact for Queensland Treasury and Trade is that, in the Statement of Comprehensive Income, items within the 'Other Comprehensive Income' section are now presented in different subsections, according to whether or not they are subsequently classifiable to the operating result. Whether subsequent reclassification is possible depends on the requirements or criteria in the accounting standard/interpretation that relates to the item concerned. The department is not permitted to early adopt a new or amended accounting standard ahead of the specified commencement date unless approval is obtained from Queensland Treasury and Trade (Fiscal & Macroeconomics Branch). Consequently, the department has not applied any Australian Accounting Standards and Interpretations that have been issued but are not yet effective. The department applies standards and interpretations in accordance with their respective commencement dates. At the date of authorisation of the financial report, the expected impacts of new or amended Australian Accounting Standards with future commencement dates are as set out below. AASB 13 Fair Value Measurement applies from reporting periods beginning on or after 1 January 2013. AASB 13 sets out a new definition of “fair value”, as well as new principles to be applied when determining the fair value of assets and liabilities. The new requirements will apply to all of the department’s assets and liabilities (excluding leases) that are measured and/or disclosed at fair value or another measurement based on fair value. The potential impacts of AASB 13 relate to the fair value measurement methodologies used, and financial statement disclosures made in respect of, such assets and liabilities.






2 Summary of significant accounting policies (continued) The department has commenced reviewing its fair value methodologies for items measured at fair value to determine whether those methodologies comply with AASB 13. To the extent that the methodologies don't comply, changes will be necessary. While the department is yet to complete this review, no significant changes are anticipated, based on the fair value methodologies presently used. AASB 13 will require an increased amount of information to be disclosed in relation to fair value measurements for both assets and liabilities. To the extent that any fair value measurement for an asset or liability uses data that is not "observable" outside the department, the amount of information to be disclosed will be relatively greater. A revised version of AASB 119 Employee Benefits applies from reporting periods beginning on or after 1 January 2013. The revised AASB 119 is generally to be applied retrospectively. Given Queensland Treasury and Trade’s circumstances, the only implications for the department are that the revised standard clarifies the concept of 'termination benefits', and the recognition criteria for liabilities for termination benefits will be different. If termination benefits meet the timeframe criterion for 'short-term employee benefits', they will be measured according to the AASB 119 requirements for 'short-term employee benefits'. Otherwise, termination benefits will need to be measured according to the AASB 119 requirements for 'other long-term employee benefits'. Under the revised standard, the recognition and measurement of employer obligations for 'other long-term employee benefits' will need to be accounted for according to most of the requirements for defined benefit plans. The revised AASB 119 includes changed criteria for accounting for employee benefits as 'short-term employee benefits'. However, as Queensland Treasury and Trade is a member of the Queensland Government central schemes for annual leave and long service leave, this change in criteria has no impact on the department’s financial statements as the employer liability is held by the central scheme. The revised AASB 119 also includes changed requirements for the measurement of employer liabilities/assets arising from defined benefit plans, and the measurement and presentation of changes in such liabilities/assets. Queensland Treasury and Trade makes employer superannuation contributions only to the QSuper defined benefit plan, and the corresponding QSuper employer benefit obligation is held by the State. Therefore, those changes to AASB 119 will have no impact on the department. AASB 1053 Application of Tiers of Australian Accounting Standards applies as from reporting periods beginning on or after 1 July 2013. AASB 1053 establishes a differential reporting framework for those entities that prepare general purpose financial statements, consisting of two Tiers of reporting requirements – Australian Accounting Standards (commonly referred to as 'Tier 1'), and Australian Accounting Standards – Reduced Disclosure Requirements (commonly referred to as 'Tier 2'). Tier 1 requirements comprise the full range of AASB recognition, measurement, presentation and disclosure requirements that are currently applicable to reporting entities in Australia. The only difference between the Tier 1 and Tier 2 requirements is that Tier 2 requires fewer disclosures than Tier 1. Details of which disclosures in standards and interpretations are not required under Tier 2 reporting are set out in amending standards AASB 2010-2, AASB 2011-2, AASB 2011-6, AASB 2011-11, AASB 2012-1, AASB 2012-7 and AASB 2012-11 (which also apply from reporting periods beginning on or after 1 July 2013). However, Queensland Treasury and Trade's Financial Reporting Requirements effectively do not allow application of AASB 2011-6 in respect of controlled entities, associates or interests in jointly controlled entities. Queensland Treasury and Trade’s Fiscal & Macroeconomics Branch policy is to require adoption of Tier 1 reporting by all Queensland Government departments (including Queensland Treasury and Trade) and statutory bodies that are consolidated into the whole of Government financial statements. Therefore, the release of AASB 1053 and associated amending standards will have no impact on the Queensland Treasury and Trade. The following new and revised standards apply as from reporting periods beginning on or after 1 January 2014 – • AASB 10 Consolidated Financial Statements • AASB 11 Joint Arrangements • AASB 12 Disclosure of Interests in Other Entities • AASB 127 (revised) Separate Financial Statements • AASB 128 (revised) Investments in Associates and Joint Ventures, and • AASB 2011 -7 Amendments to Australian Accounting Standards arising from the Consolidation and Joint Arrangements Standards [AASB 1, 2, 3, 5, 7, 9, 2009-11, 101, 107, 112, 118, 121, 124, 132, 133, 136, 138, 139, 1023 & 1038 and Interpretations 5, 9, 16 & 17]. The AASB is planning to amend AASB 10. Such amendments are expected to clarify how the IASB’s principles about control of entities should be applied by not-for-profit entities in an Australian context. Hence, Queensland Treasury and Trade is not yet in a position to reliably determine the future implications of these new and revised standards for the department's financial statements.

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2 Summary of significant accounting policies (continued) AASB 10 redefines and clarifies the concept of control of another entity, and is the basis for determining which entities should be consolidated into an entity’s financial statements. Therefore, once the AASB finalises its not for profit amendments to AASB 10, Queensland Treasury and Trade will need to reassess the nature of its relationships with other entities, including entities that aren’t currently consolidated. AASB 11 deals with the concept of joint control and sets out new principles for determining the type of joint arrangement that exists, which in turn dictates the accounting treatment. The new categories of joint arrangements under AASB 11 are more aligned to the actual rights and obligations of the parties to the arrangement. Subject to any not-for-profit amendments to be made to AASB 11, Queensland Treasury and Trade will assess the nature of any arrangements with other entities to determine whether a joint arrangement exists in terms of AASB 11. If a joint arrangement does exist, Queensland Treasury and Trade will follow the relevant accounting treatment specified in either AASB 11 or the revised AASB 128, depending on the nature of the joint arrangement. AASB 12 Disclosure of Interests in Other Entities requires qualitative and quantitative disclosures on an entity’s interest in, and judgements applied to subsidiaries, joint arrangements, associates and unconsolidated structured entities. This standard will expand on disclosures currently included in these statements. AASB 1055 Budgetary Reporting applies from reporting periods beginning on or after 1 July 2014. From that date, based on what is currently published in the Queensland Government's Budgetary Service Delivery Statements, Queensland Treasury and Trade will include in these financial statements the original budgeted statements for the Statement of Comprehensive Income, Statement of Financial Position, Statement of Changes in Equity, and Statement of Cash Flows. These budgeted statements will be presented consistently with the corresponding (actuals) financial statements, and will be accompanied by explanations of major variances between the actual amounts and the corresponding budgeted financial statement. In addition, based on what is currently published in the Queensland Government's Service Delivery Statements, the department will include in these financial statements the original budgeted information for major classes of administered income and expenses, and major classes of administered assets and liabilities. This budgeted information will need to be presented consistently with the corresponding (actuals) administered information, and will be accompanied by explanations of major variances between the actual amounts and the corresponding budgeted financial information.

AASB 9 Financial Instruments (December 2010) and AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2010) [AASB 1, 3, 4, 5, 7, 101, 102, 108, 112, 118, 120, 121, 127, 128, 131, 132, 136, 137, 139, 1023 & 1038 and Interpretations 2, 5, 10, 12, 19 & 127] become effective from reporting periods beginning on or after 1 January 2015. The main impacts of these standards on the department are that they will change the requirements for the classification, measurement and disclosures associated with financial assets. Under the new requirements, financial assets will be more simply classified according to whether they are measured at amortised cost or fair value. Pursuant to AASB 9, financial assets can only be measured at amortised cost if two conditions are met. One of these conditions is that the asset must be held within a business model whose objective is to hold assets in order to collect contractual cash flows. The other condition is that the contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. The department has commenced reviewing the measurement of its financial assets against the new AASB 9 classification and measurement requirements. However, as the classification of financial assets at the date of initial application of AASB 9 will depend on the facts and circumstances existing at that date, the department's conclusions will not be confirmed until closer to that time. At this stage, and assuming no change in the types of transactions the department enters into, it is not expected that any of the department's financial assets will meet the criteria in AASB 9 to be measured at amortised cost. Therefore, as from the 2015-16 financial statements, all of the department's financial assets are expected to be required to be measured at fair value, and classified accordingly (instead of the measurement classifications presently used in notes 2(v), 46 and 76). The same classification will be used for net gains/losses recognised in the Statement of Comprehensive Income in respect of those financial assets. In the case of the department's current receivables, as they are short-term in nature, the carrying amount is expected to be a reasonable approximation of fair value. For financial liabilities, AASB 9 has largely adopted the recognition and measurement criteria currently contained in AASB 139. The impact of this standard is not expected to have a material impact on the financial statements. The most significant impact of the new measurement requirements on Queensland Treasury and Trade is that “Loans and Advances” in the administered accounts will need to be measured at fair value. Queensland Treasury and Trade is not yet able to reliably estimate what the fair value of this asset will be at the date of initial application of AASB 9. The difference between the carrying amount of this asset and its initial fair value will be recognised as an adjustment to the balance of Accumulated Surplus on initial application of AASB 9. AASB 9 allows an entity to make an irrevocable election at the date of initial recognition to present in 'other comprehensive income' subsequent changes in the fair value of such an asset. Queensland Treasury and Trade (Fiscal & Macroeconomics Branch) is currently considering mandating this accounting treatment when AASB 9 becomes effective.






2 Summary of significant accounting policies (continued) Queensland Treasury and Trade will not need to restate comparative figures for financial instruments on adopting AASB 9 as from 2015-16. However, changed disclosure requirements will apply from that time. A number of one-off disclosures will be required in the 2015-16 financial statements to explain the impact of adopting AASB 9. Assuming no change in the types of financial instruments that Queensland Treasury and Trade enters into, the most significant ongoing disclosure impacts are expected to relate to loans and advances in the administered accounts measured at fair value through other comprehensive income. All other Australian accounting standards and interpretations with future commencement dates are either not applicable to Queensland Treasury and Trade’s activities, or have no material impact on the department.

3 Departmental services

The identity and purpose of each major service undertaken by the department during the year is summarised below.

Fiscal The Fiscal service area provides policies, strategies and advice at a whole of Government level to promote value-for-money service delivery, manage the State’s finances in accordance with the Charter of Fiscal Responsibility, and advance the performance of the Queensland economy to support growth and employment. Key activities undertaken by this service area include: developing and monitoring the State Budget promoting Queensland’s position in negotiations with the Australian Government and other states and territories providing financial advice to foster State-wide infrastructure development on behalf of the Government delivering financial advice and reports that enable decision making. Economic The Economic service area undertakes a range of key activities, including: providing the function of the Government Statistician and being the primary source of statistical, economic and demographic

research services across Government managing the State’s interest in the Government-owned corporations sector to deliver market like returns while maintaining

service delivery and governance commitments to Queenslanders achieving best-practice regulation and reducing red tape providing advice about, and oversight of, microeconomic and competition reform managing and coordinating intergovernmental fiscal relations issues, including national financial agreements, matters

pertaining to the distribution of the GST, and national tax reform regulating and improving Queensland’s compulsory third party insurance scheme and managing the Motor Accident Insurance

and Nominal Defendant funds. Commercial services / Projects Queensland The Commercial service area optimises the State’s investment in and provision of infrastructure to communities by investigating and evaluating funding, procurement and delivery models, and maximising private investment in Queensland’s infrastructure. Revenue management The Revenue management service area administers a revenue base of around $13 billion by delivering and administering simple, efficient and equitable revenue management services for State taxes and royalty revenue. Additional responsibilities include undertaking revenue compliance, grant schemes and debt recovery activities for the State. This service area achieves its revenue responsibilities by: positioning itself as a leading e-business agency with high level client support with firm and fair enforcement providing responsive ongoing legislation and revenue policy advice to the State Government further progressing the development and implementation of the Revenue Management System to support innovative business

practices. Trade and investment The Trade and investment service area delivers a suite of client services to help Queensland companies develop markets, improve their export capability and promote trade and investment opportunities. This area has a strong focus on developing and expanding export opportunities in international education and training, food and agribusiness, mining equipment, technologies and services, and construction and infrastructure. This service area also assists investment attraction in agribusiness, resources, industrial biotechnology, infrastructure and tourism development.

78





3 Departmental services (continued)

Major activities of the department 2012-13 Major activities – transfer of Skilled and Business Migration Queensland from the Department of Education, Training and Employment (DETE) to Queensland Treasury and Trade. This transfer occurred as a consequence of an interdepartmental transfer with effect from 1 April 2013. No assets and liabilities were transferred from DETE to Queensland Treasury and Trade. Controlled appropriation revenue of $184,000 for 2012-13 was transferred to Queensland Treasury and Trade. Major activities of the department 2011-12

Major activities – transfer of Mining Royalties from the former Department of Employment, Economic Development and Innovation (DEEDI) to Queensland Treasury and Trade. This transfer occurred as a consequence of a machinery of Government change with effect from 1 July 2011. The following administered assets and liabilities of Mining Royalties were transferred from DEEDI to Queensland Treasury and Trade:

$’000 Assets Receivables 768,600 768,600 Liabilities Transfer to Government payable 768,600 768,600 Net assets ..

Controlled appropriation revenue of $395,000 for 2011-12 was transferred to Queensland Treasury and Trade. Major activities – transfer of Trade and Investment Queensland from the former Department of Employment, Economic Development and Innovation (DEEDI) to Queensland Treasury. This transfer occurred as a consequence of a machinery of Government change with effect from 1 May 2012. The following controlled assets and liabilities of Trade and Investment Queensland were transferred from DEEDI to Queensland Treasury and Trade:

$’000 Assets Cash 1,680 Receivables 71 Other assets - current 140 Property plant and equipment 343 Other assets - non-current 573 2,807 Liabilities Payables 233 Accrued employee benefits 512 Other 106 851 Net assets 1,956

The increase in net assets of $1.956 million has been accounted for as an increase in the contributed equity as disclosed in the Statement of Changes in Equity. Appropriation revenue of $7.844 million for 2011-12 was also transferred to Queensland Treasury and Trade.






3 Departmental services (continued) Major activities – transfer of State Penalties Enforcement Registry (SPER) from the Department of Justice and Attorney-General (JAG) to Queensland Treasury and Trade. This transfer occurred as a consequence of a machinery of Government change with effect from 1 June 2012. The following controlled assets and liabilities of SPER were transferred from JAG to Queensland Treasury and Trade:

$’000 Assets Cash 2,024 Receivables 64 Prepayments 14 Property plant and

equipment/intangibles 3,652

5,754 Liabilities Trade creditors 1,771 Payables 51 Accrued employee benefits 280 2,102 Net assets 3,652

The increase in net assets of $3.652 million has been accounted for as an increase in the contributed equity as disclosed in the Statement of Changes in Equity. Appropriation revenue of $2.076 million for 2011-12 was also transferred to Queensland Treasury and Trade. Major activities – transfer of State Penalties Enforcement Registry (SPER) from the Department of Justice and Attorney-General (JAG) to Queensland Treasury and Trade. This transfer occurred as a consequence of a machinery of Government change with effect from 1 June 2012. The following administered assets and liabilities of SPER were transferred from JAG to Queensland Treasury and Trade:

$’000 Assets Cash 3,176 Receivables 319,789 322,965 Liabilities Transfer to Government Payable 322,965 322,965 Net assets ..

No administered appropriation revenue for 2011-12 was transferred to Queensland Treasury and Trade.

80





2013 2012 2013 2012

$'000 $'000 $'000 $'0004 Reconciliation of payments from Consolidated Fund to service revenue

recognised in the Statement of Comprehensive Income

Budgeted departmental service appropriation 218,393 156,325 218,393 156,325Transfer (to)/from other departments .. 9,152 .. 9,152Transfer (to)/from other heading (25,840) (13,322) (25,840) (13,322)Total Departmental service receipts 192,553 152,155 192,553 152,155

Plus closing balance of Department service appropriation receivable 134 .. 134 ..Plus opening balance of Departmental service appropriation payable .. 2,599 .. 2,599Departmental service revenue recognised in Statement of Comprehensive Income

192,687 154,754 192,687 154,754

Reconciliation of payments from Consolidated Fund to appropriated equity adjustments recognised in contributed equity

Budgeted equity adjustment appropriation (7,457) (3,853) (7,457) (3,853)Transfer (to)/from other heading .. (2,868) .. (2,868)Total equity adjustment receipts (7,457) (6,721) (7,457) (6,721)

Appropriated equity adjustment recognised in contributed equity (7,457) (6,721) (7,457) (6,721)

5 User charges

Sale of goods .. 87 .. 87Sale of services 18,803 12,683 18,803 12,683

18,803 12,770 18,803 12,770







2013 2012 2013 2012

$'000 $'000 $'000 $'000

6 Grants and other contributions

Resources received below fair value 260 263 260 263Grant revenue * 239 .. .. ..Other 350 (27) 350 (27)

849 236 610 236

7 Interest revenue

Interest - Bank .. 592 .. ..Interest - QTC 2,595 1,488 .. ..Interest - QIC Growth Fund 120 794 .. ..Interest - lease receivables * 8,611 9,606 .. ..Interest - loans and receivables ** 15,857 14,789 .. ..

27,183 27,269 .. ..

* Relates to interest recognised on Lease receivables by Dalrymple Bay Coal Terminal Holdings (DBCTH) Pty Ltd (refer note 24).


** Relates to interest recognised on financial assets acquired from Brisbane Port Holdings Pty Ltd (BPH) following the sale of the Port of Brisbane (refer note 27).

* During the year the QTH controlled entity received an amount of $0.251 million (excl. GST) under a transitional arrangement between City North Infrastructure Pty Ltd (CNI), QTH and the State of Queensland. The QTH controlled entity is taking over project management responsibilities on behalf of the State for the Airport Link, Northern Busway (Windsor to Kedron) and Airport Roundabout Upgrade projects, which were previously undertaken by CNI. The details of the arrangement are being formalised under a Project Management Agreement which is currently being finalised, with the State agreeing to provide funding to allow the QTH controlled entity to meet these responsibilities. Project Management expenses recognised totalled $0.239 million. In July 2013, a further $5.281 million (excl. GST) was transferred from CNI to the QTH controlled entity to support these operations.

8 Amortisation of unearned revenue

Amortisation of unearned revenue 304 299 .. ..

304 299 .. ..

Amortisation of the upfront payment on the leasing arrangements for Dalrymple Bay Coal Terminal, entered into between DBCTH and the original lessee. The upfront payment was deferred and is amortised in accordance with the related lease payments.

9 Dividends received

Unfranked dividends 37,790 61,090 .. ..Partially franked dividends 15,958 .. .. ..

53,748 61,090 .. ..

Dividends received relate to interim and final dividends on AZJ shares. As part of the off-market share buy back in November 2012, a dividend of $2.76 per share was received as a component of the proceeds on sale (288,184,438 shares) which is included in Note 10.

82





2013 2012 2013 2012

$'000 $'000 $'000 $'000


10 Fair value gain/(loss) on shares

Gain/(loss) - QIC Growth Fund 399 (790) .. ..Gain on Shares - unrealised * 143,814 16,430 .. ..Loss on shares - realised ** (642,011) .. .. ..Dividends - proceeds from sale *** 798,271 .. .. ..Bonus shares provided **** (6) (27,226) .. ..

300,467 (11,586) .. ..

** During the financial year 632,276,657 shares in AZJ, were sold through:

* Relates to the market movement on remaining shares held in Aurizon Holdings Ltd (AZJ) (formerly QR National Limited) recorded at fair value (recognised at the closing listed market price of $4.16 per share (2012: $3.40 per share)).

- a placement to cornerstone investors (October 2012: 144,092,219 shares at $3.47 per share) and share buy-back (November 2012:288,184,438 shares at $3.47 per share comprising a $2.76 per share dividend component and $0.71 per share capital component), and

- a sale to institutional investors (March 2013: 200,000,000 shares at $4.03 per share).

The fair value loss is mainly due to the capital component ($0.71 per share compared to the sale price of $3.47 per share) received on the share buy-back.

*** As part of the share buy-back in November 2012, a dividend of $2.76 per share was received as a component of the proceeds on sale (288,284,438 shares).

**** During the year 1,707 Loyalty Bonus Shares (2012: 8,054,986) were provided to Retail Investors in accordance with the obligations of the State under the Retail Offer document.

11 Gain on acquisition of subsidiary

Gain on acquisition of subsidiary .. 3,009 .. ..

.. 3,009 .. ..

On 1 July 2011, the QTH controlled entity obtained the remaining 50% of shares in DBCTH. The gain relates to the fair value of assets acquired at no consideration.

12 Employee expenses

Employee benefits

Salaries and wages 84,947 78,048 84,947 78,048Employer superannuation contributions 10,509 9,211 10,509 9,211Long service leave levy 1,718 1,675 1,718 1,675Parental leave expense 389 351 389 351Annual leave levy 9,111 8,527 9,111 8,527Other employee benefits 764 167 764 167

Employee related expenses *

Workers' compensation premium 298 273 298 273Payroll tax 4,789 4,706 4,789 4,706Other employee related expenses 811 978 811 978

113,336 103,936 113,336 103,936

Number of employees: 1,013 1,087 1,013 1,087

* Employment expenses not included in employees total remuneration package

The number of employees as at 30 June, including both full-time employees and part-time employees, measured on a full-time equivalent basis (reflecting Minimum Obligatory Human Resource Information (MOHRI)) is:






12 Employee expenses (continued) Key management personnel and remuneration

(a) Key Management Personnel

Under Treasurer

Managing DirectorResponsible for Trade and Investment Queensland

SES3; Governor in Council under s60(1) of the Public Service Act 1996

18-Feb-08 **

* The Assistant Under Treasurer has been relieving in this position since 16 July 2012. The position attracts remuneration at the contract classification SES4.** The Managing Director commenced with Queensland Treasury and Trade on 3 April 2012, the effective date of the machinery of Government change of Trade and Investment Queensland to Queensland Treasury and Trade.

Commissioner Responsible for the Office of State RevenueSES3; Governor in Council under s79(1) of the Public Service Act 1996

01-Mar-07

Executive Director Responsible for Corporate ServicesSES2; Governor in Council under s60(1) of the Public Service Act 1996

24-Jun-02

Deputy Under TreasurerResponsible for the division of Economic and Structural Policy

SES3; Public Service Commission Chief Executive under s115 of the Public Service Act 2008 *

22-Sep-10

Executive Director Responsible for Projects Queensland

Under a secondment arrangement from Ernst and Young from July 2012 to January 2013, subsequently renegotiated as a secondment arrangement from QTC commencing in January 2013

16-Jul-12 / 21-Jan-13

Responsible for executive leadership, strategic direction of the department and whole of Government financial management

CEO; Governor in Council under s92 of the Public Service Act 2008

26-Mar-12

Deputy Under Treasurer

Responsible for executive leadership, strategic direction of the department and whole of Government financial management and the Fiscal division

CEO5; Public Service Commission Chief Executive under s121 of the Public Service Act 2008

27-Jun-12

The following details for key management personnel include those positions that had authority and responsibility for planning, directing and controlling the activities of the department during 2012-13. Further information on these positions can be found in the body of the Annual Report under the section relating to Executive Management.

Position Responsibilities

Current Incumbents

Contract classification and appointment authority

Date appointed to position

84





12 Employee expenses (continued) (b) Remuneration

Remuneration policy for the department's key management personnel is set by the Queensland Public Service Commission as provided for under the Public Service Act 2008. The remuneration and other terms of employment for the key management personnel are specified in employment contracts. The contracts provide for the provision of performance-related cash bonuses and other benefits including motor vehicles. For the 2012-13 year, remuneration of key management personnel increased by 2.2% in accordance with Government policy, apart from the Under Treasurer’s remuneration which was fixed from the date of appointment until 30 June 2013, and the Executive Director, Projects Queensland whose remuneration was agreed under the relevant secondment arrangements. Remuneration packages for key management personnel disclosed in the table below comprises the following components: o Short term employee benefits which include:

- Base – consisting of base salary (equates to 52 weeks salary and leave loading) - Vehicle allowance (cash) and movement in annual leave - includes a car allowance (where no

vehicle or one of a lesser value is taken) and the movement in annual leave entitlements during the financial year

- Non-monetary benefits – consisting of the option of the private use component of a Government owned motor vehicle together with fringe benefits tax applicable to the benefit

o Long term employee benefits representing the movement of long service leave entitlements o Post employment benefits include superannuation contributions o Termination provisions are specified within individual contracts of employment. Contracts of

employment provide for notice periods, service and separation payments and a repayment clause. No reason needs to be given for a contract termination.

Amounts disclosed equal the amount expensed in the Statement of Comprehensive Income. Total fixed remuneration is calculated on a 'total cost' basis and includes the base and non-monetary benefits, long term employee benefits and post employment benefits.

1 July 2012 - 30 June 2013

Base

$'000

Vehicle Allowance

(cash) &

Movement in

Annual Leave

$'000

Non-Monetary

Benefits

$'000

$'000 $'000

Deputy Under Treasurer 189 9 26

$'000 $'000

62

Position

Short Term Employee BenefitsLong Term

Employee BenefitsPost Employment

BenefitsTermination Benefits Total Remuneration

.. 620 Under Treasurer 488 34 24 12

Deputy Under Treasurer 244 14 25 30

Executive Director 393 .. 3 ..

23 .. 224

155 (3) 21 5

(11) 22 183 7

19 .. 197

70 178 .. 2,270

234

Commissioner

Executive Director

5 23 ..

23 11

341

.. .. 396

.. 258

28 ..

Total Remuneration 1,835 40 147

(3) 26 Managing Director 183






12 Employee expenses (continued)

1 July 2011 - 30 June 2012

Base

$'000

Vehicle Allowance

(cash) &

Movement in

Annual Leave

$'000

Non-Monetary

Benefits

$'000

$'000 $'000

23 .. 214 Executive Director 180 (2) 25 (12)

242

7 .. 24

Executive Director 180 8 24 7 23 ..

Under Treasurer * 132

Deputy Under Treasurer 197 5 23

8

Short Term Employee BenefitsLong Term

Employee Benefits

.. 170

Associate Under Treasurer 198 1 .. 244

17

14 6

1,137

Position

10

256

Under Treasurer 359 8 5 13 46

3

706

25

Post Employment Benefits

Termination Benefits Total Remuneration

$'000 $'000

Executive Director 180 17 21 6 23 .. 247

Executive Director 152 (1) 21 5 19 .. 196

2,748

Managing Director 30 3 4 1 4

* For the financial year 2011-12 the Under Treasurer was eligible for an "at risk incentive" payment of 15% of total remuneration value, pro-rated for the period 26 March to 30 June 2012. As at the date of signing the 2011-12 Management Certificate this payment had not been assessed and finalised. This is further clarified in note 12(c).

.. 42

Total Remuneration 1,608 49 145 36 204 706

86





12 Employee expenses (continued) (c) Performance payments The remuneration package for the Under Treasurer includes a potential performance payment up to a maximum of 15% of that position’s total fixed remuneration, which equates to approximately $87,450. Eligibility for such a performance payment is conditional on the achievement of objectives that are documented in that position’s performance agreement. Eligibility to a performance payment is determined based on:

analysis by the Public Service Commission (PSC) of relevant performance data consultation with the Director-General of the Department of the Premier and Cabinet and one external

business person recommendations from the PSC Chief Executive and Chair of the PSC Board, and the Premier’s ultimate discretion regarding whether the incumbent will be paid a performance payment and,

if so, how much. As at the date of management certification of these financial statements, the eligibility to a performance payment for the Under Treasurer relating to 2012-13 financial year performance had not yet been confirmed. With respect to the process to determine eligibility, recommendations are yet to be made to the Premier by the Chair, Public Service Commission. The Premier’s ultimate decision is expected to be made during September 2013. Therefore, any performance payment approved by the Premier will be reported as an expense within 2013-14.

There were no performance bonuses expensed in the 2011-12 financial year.

The aggregate performance bonuses paid to all key management personnel are as follows:2013 2012

$ '000 $ '000

16 ..Key Management Personnel

Position Date paid Basis for payment

Under Treasurer 19-Apr-13

The performance bonus was calculated by reference to the above elements and was calculated on a pro rata basis from date of employment, 26 March 2012, to 30 June 2012. The bonus payment equated to 10%, compared to the maximum of 15% of total fixed remuneration payable.






2013 2012 2013 2012

$'000 $'000 $'000 $'000

13 Supplies and services

Consultants and contractors 30,894 15,002 30,894 15,002Supplies and consumables 5,422 3,253 5,422 3,253Repairs and maintenance 5,267 5,009 5,267 5,009Travel 947 813 947 813Accommodation 15,862 13,124 15,862 13,124SPER call centre fees 9,792 934 9,792 934Computer related charges 3,984 1,371 3,984 1,371Legal and professional fees 4,178 795 709 681Other 6,386 6,048 6,386 6,048

82,732 46,349 79,263 46,235

14 Depreciation and amortisation

Depreciation and amortisation incurred in respect of:

Property, plant and equipment 2,516 3,099 2,516 3,099Intangibles 9,079 7,594 9,079 7,594

11,595 10,693 11,595 10,693

15 Grants and contributions

Contributions 19 99 19 99

Other .. .. .. ..

19 99 19 99

16 Borrowing costs

Interest - AZJ shares 61,507 115,822 .. ..Interest - BPH receivables 17,154 11,180 .. ..Interest - DBCTH leases 8,611 9,606 .. ..

87,272 136,608 .. ..

17 Management fees

Management fee - QTC loans 1,103 1,984 .. ..Management fee - QTC Cash Fund 67 27 .. ..Management fee - QIC Growth Fund No.2 5 16 .. ..

1,175 2,027 .. ..

18 Operating leases

Rentals 340 335 .. ..

340 335 .. ..

19 Impairment expense

Impairment losses on receivables * 40,655 9 10 940,655 9 10 9

* Relates to the rights to cashflows under a revenue sharing arrangement as part of the Port of Brisbane sale which has been written down to its recoverable value. The receivable was originally recognised in 2011 at $121.249 million and has been amortised at 9% annually with $29.857 million recognised in interest revenue over the two years. Current forecasts indicate the original expectations relating primarily to price growth are unlikely to materialise and as such the carrying value has been written down to $110.462 million as at 30 June 2013.

Relates to interest paid on borrowings from QTC for the financing of the above arrangements.

The QTH controlled entity incurs fees relating to loans with QTC and investments in the QTC Cash Fund and QIC Growth Fund.

Rentals are recognised as an expense in the financial year in which they are incurred.


88





2013 2012 2013 2012

$'000 $'000 $'000 $'000

20 Other expenses

Audit fees – Auditor-General * 848 1,094 814 1,044Other audit fees 712 61 712 61Company secretariat and accounting services - QTC 388 384 .. ..Operating lease rentals 550 467 550 467Advertising and promotions 2,065 2,177 2,065 2,177Minor assets < $5,000 253 972 253 972Other 3,526 2,371 3,120 2,207

8,342 7,526 7,514 6,928

21 Income tax expense

Current Tax comprises:

Current tax on profit for the year 181,415 189 .. ..Adjustment in respect of prior year - Loyalty Bonus Shares 2,136 .. .. ..

183,551 189 .. ..

Deferred tax comprises:

Decrease/(increase) in deferred tax asset 3,970 (41,019) .. ..(Decrease)/increase in deferred tax liability (116,963) (362) .. ..

(112,993) (41,381) .. ..Income tax expense/(benefit) 70,558 (41,192) .. ..

Numerical reconciliation of income tax expense to prima facie tax payable:Profit/(loss) before income tax expense 240,449 (59,553) .. ..Less: (profit)/loss of non taxable entities (1,205) (294) .. ..

Profit/(loss) before income tax expense from taxable entities 239,244 (59,847) .. ..

Tax at the Australian tax rate of 30% 71,773 (17,954) .. ..

Adjustment in respect of prior year 2,136 162 .. ..Non-assessable dividend - BPH .. (23,400) .. ..Franking credits received - AZJ (3,351) .. .. ..Income tax expense/(benefit) 70,558 (41,192) .. ..

22 Cash and cash equivalents

Cash at bank 25,610 20,477 25,605 20,462QTC Cash Fund 46,449 44,365 .. ..Imprest accounts 24 23 22 21

72,083 64,865 25,627 20,483

* Total audit fees paid to the Queensland Audit Office relating to the QTT 2012-13 financial statements are estimated to be $850,000 (2012: $890,000), and for the QTH controlled entity audit fees are estimated to be $38,300 (2012: $53,300). There are no non-audit services included in this amount.







2013 2012 2013 2012

$'000 $'000 $'000 $'000

23 Receivables

Current

Trade debtors 2,029 2,611 1,846 2,602Less allowance for impairment (15) (9) (15) (9)

2,014 2,602 1,831 2,593

GST input tax credits receivable 913 586 913 586GST payable (345) (78) (345) (78)Net GST receivable 568 508 568 508

Interdepartmental receivable 3,180 3,330 3,180 3,330Departmental service revenue receivable 134 .. 134 ..Annual leave reimbursements 1,783 1,610 1,783 1,610Other debtors 31 11 31 11

5,128 4,951 5,128 4,951

7,710 8,061 7,527 8,052

24 Lease receivables

Current

Lease receivable 1,064 1,022 .. ..Novation receivable 8,890 18,416 .. ..

9,954 19,438 .. ..Non-current


157,520 167,474 .. ..Total


167,474 186,912 .. ..


90





2013 2012 2013 2012

$'000 $'000 $'000 $'00024 Lease receivables (continued)

Finance leases

Minimum lease payments

- Not later than one year 6,471 6,471 .. ..- Later than one year and not later than five years 25,882 25,882 .. ..- Later than five years 214,873 221,344 .. ..Minimum lease commitments receivable at balance date * 247,226 253,697 .. ..

Less: future finance charges (134,208) (139,657) .. ..Total lease receivable 113,018 114,040 .. ..

Present value of minimum lease payments

- Not later than one year 1,064 1,022 .. ..- Later than one year and not later than five years 4,802 4,578 .. ..- Later than five years 107,152 108,440 .. ..

113,018 114,040 .. ..

Novation receivable

Minimum lease payments


Minimum novation payments receivable at balance date * 63,590 85,167 .. ..

Less: future finance charges (9,134) (12,295) .. ..Total lease receivable 54,456 72,872 .. ..

Present value of minimum lease payments


54,456 72,873 .. ..

Consolidated EntityConsolidated Entity Parent Entity

* These lease commitments receivable represent payments due from the primary lessee under the Plant lease, On-shore sub-lease, Off-shore sub-sub-lease and Road sub-sub-lease. The terms of the Plant lease and On-shore sub-lease are 50 years each, with options to renew for a further 49 years, while the Off-shore sub-sub-lease and Road sub-sub-lease terms are 99 years each. There are no guaranteed residuals for any of the leases.

* The novation receivable represents payments owing to North Queensland Bulk Ports Corporation Limited from DBCT Management Pty Ltd which has been novated to DBCT Holdings Pty Ltd. The novation payments to be made are set out in the Framework Agreement, with the final payment to be made on 30 June 2020.






2013 2012 2013 2012

$'000 $'000 $'000 $'000

25 Other assets

Current

Prepayments 2,969 2,841 2,405 2,187Other accrued revenue 3,233 3,874 3,233 3,874Escrow asset .. 2,231 .. 2,231Security deposits 268 .. 268 ..Non-current assets held for sale 420 12 420 12

6,890 8,958 6,326 8,304

Non-current

Security deposits 251 572 251 572

251 572 251 572

26 Other financial assets

Current

Shares - AZJ * 787,195 2,793,127 .. ..QIC Growth fund No.2 ** .. 9,852 .. ..

787,195 2,802,979 .. ..

Non-current

Shares held in unlisted company at cost 6,833 4,601 6,833 4,601

6,833 4,601 6,833 4,601


** The QTH controlled entity, through its subsidiary DBCTH held an investment in the QIC Growth Fund No.2, a unitised trust. This investment was fully redeemed in September 2012 and the proceeds deposited in the QTC Cash Fund.

* The QTH controlled entity holds 189,229,499 (2012: 821,507,863) shares in AZJ, purchased at the institutional price of $2.55 per share. The shares are market valued based on the closing listed share price of $4.16 (2012: $3.40). During the financial year 632,276,657 shares were sold (refer note 10**), with the net proceeds from sale being applied in full repayment of the related debt with QTC (refer note 37). The QTH controlled entity's residual holding at 30 June is approximately 8.9% of shares in AZJ.

92





2013 2012 2013 2012

$'000 $'000 $'000 $'000

27 Loans and receivables

Non-current

Loans and receivables 164,065 191,853 .. ..

164,065 191,853 .. ..

28 Intangible assets

Non-current

Internally generated software

– at cost 82,153 82,252 82,153 82,252– accumulated amortisation (54,549) (46,516) (54,549) (46,516)– accumulated impairment loss (3,732) (3,936) (3,732) (3,936)

23,872 31,800 23,872 31,800

Other software/licences

– at cost 14,363 11,171 14,363 11,171– accumulated amortisation (11,503) (11,016) (11,503) (11,016)

2,860 155 2,860 155

Work in progress

– at cost 109 38 109 38

109 38 109 38Total intangibles

– net book value 26,841 31,993 26,841 31,993

As part of the sale of the Port of Brisbane by the State, the QTH controlled entity purchased the rights of BPH (formerly Port of Brisbane Corporation Limited) to receive all moneys owing (whether or not due and payable) under agreements with entities in the QPH group. Under these arrangements, the risks and benefits, including the credit risk, have been transferred to the QTH controlled entity.

The State of Queensland has provided a guarantee to the QTH controlled entity for any shortfall of moneys payable under the loan arrangements (refer note 37).


The receivables include the rights to payments under a loan arrangement entered into between BPH and QPH Hold Trust. The loan is discounted at a rate of 5.6% and includes fixed annual payments with the loan maturing on 31 December 2025. The receivables also include the rights to future licence fees from Port of Brisbane Pty Ltd. The licence fee entitles BPH the right to a percentage of trade revenue for a period of 35 years commencing from 2016 to 2050. The licence fee receivable has been estimated based on trade volume and price growth and is discounted at a rate of 9%. The licence fee has been written down at 30 June 2013 to its recoverable amount (refer note 19).




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94


Notes To and Forming Part of the Financial Statements 2012-13Queensland Treasury and Trade Notes To and Forming Part of the Financial Statements 2012-13


2013 2012 2013 2012

$'000 $'000 $'000 $'00029 Property, plant and equipment

Non-current

Plant and equipment

– at cost 28,267 35,806 28,267 35,806– accumulated depreciation (21,946) (27,022) (21,946) (27,022)– accumulated impairment loss (417) .. (417) ..

5,904 8,784 5,904 8,784

Capital works in progress

– at cost 78 206 78 206

Total property, plant and equipment

– net book value 5,982 8,990 5,982 8,990





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96





2013 2012 2013 2012

$'000 $'000 $'000 $'00030 Deferred tax asset

The balance comprises temporary differences attributable to:

Carried forward tax loss .. 20,955 .. ..Capital loss on sale - AZJ * 31,373 .. .. ..Long term receivable - BPH 3,236 .. .. ..Prior year adjustment .. (556) .. ..Tax benefit .. 18,178 .. ..Reduction in subsidiary carrying value 23,400 23,400 .. ..Accruals 4 6 .. ..

58,013 61,983 .. ..

31 Payables

Current

Trade creditors 9,479 6,138 9,385 6,063Interdepartmental payable 5,400 5,612 5,400 5,612Other 4,944 6,100 4,587 5,859

19,823 17,850 19,372 17,534

32 Accrued employee benefits

Accrued salaries and wages 170 385 170 385Annual leave levy payable 2,385 2,495 2,385 2,495Paid Parental Leave 12 3 12 3Overseas annual leave 189 .. 189 ..Overseas severance provisions 350 182 350 182Other 29 42 29 42

3,135 3,107 3,135 3,107

33 Unearned revenue

Current

Unearned revenue * 1,406 1,186 1,394 1,186Sub-lease on land ** 313 301 .. ..

1,719 1,487 1,394 1,186

Non-current

Unearned revenue .. .. .. ..Sub-lease on land ** 3,685 4,002 .. ..

3,685 4,002 .. ..

** The QTH controlled entity, through DBCTH, has deferred revenue resulting from an upfront payment on a long-term lease arrangement.


* The share price on 288,184,438 shares sold in November 2012 under an off-market share buy back was $3.47 per share made up of a dividend of $2.76 per share with a further $0.70 per share capital component (refer note 10). The structure of this sale resulted in a capital loss of $1.85 per share. This capital loss of $533.1 million was able to be offset against capital gains realised during the year of $428.6 million from sales to cornerstone and institutional investors.

* During the year, the QTH controlled entity received an amount of $0.251 million (plus GST) under a transitional arrangement between QTH, CNI and the State of Queensland (refer note 6). An amount of $0.239 million has been recognised in the year relating to the contract management expenses incurred during the period.




Queensland Treasury and Trade Notes to and forming part of the Financial Statements 2012-13


2013 2012 2013 2012

$'000 $'000 $'000 $'000

34 Deferred tax liabilities

Attributable to temporary differences

Long term receivables - BPH .. 5,217 .. ..Financial assets at fair value - AZJ 91,398 203,322 .. ..Investments in subsidiaries - DBCTH 177 .. .. ..

91,575 208,539 .. ..

35 Current tax liabilities

Current tax liabilities 183,535 6 .. ..

183,535 6 .. ..

36 Dividend paid

Total dividend paid or provided for - Type A shareholders .. 77,999 .. ..

.. 77,999 .. ..

37 Interest bearing liabilities

Current loans with QTC

Lease loan * 1,064 1,022 .. ..Novation loan ** 8,890 18,416 .. ..

9,954 19,438 .. ..

Interest bearing liabilities

Non-current loans with QTC

Lease loan * 111,954 113,018 .. ..Novation loan ** 45,566 54,456 .. ..Loan funding purchase of shares in AZJ *** .. 2,236,722 .. ..Loan funding purchase of BPH receivable **** 141,874 186,834 .. ..

299,394 2,591,030 .. ..

***The QTH controlled entity holds 189,229,499 (2012: 821,507,863) shares in AZJ, purchased at the institutional price of $2.55 per share which was initially funded by a loan from QTC. During the year, the QTH controlled entity sold 632,276,657 shares and the proceeds from the sales have been applied against the loan resulting in the debt being fully extinguished (refer note 26). **** The QTH controlled entity has purchased the rights to future cashflows from BPH, which was funded by loans from QTC (refer note 27). During the year an amount of $59.3 million was applied against the fixed rate loan which resulted in the full repayment of this loan. Under a Deed of Guarantee, dated 7 December 2010, all loan repayments with QTC are guaranteed by the State of Queensland. In the event the QTH controlled entity is unable to pay any amount pursuant to the loan when due, the State can be called upon to meet the shortfall.

The QTC loans are recorded at amortised cost being the carrying value of the balance outstanding at balance date. QTC prices the loans with reference to notional financial instruments and manages interest rate risk arising in connection with each facility. Interest and fees on the loans are charged quarterly and capitalised.

*The long-term Lease Loan from QTC, is for a period of 50 years, unless terminated earlier. Interest on the loan is fixed at 4.8% per annum, calculated on the daily balance and payable in arrears on each date rent is payable. A first ranking registered fixed and floating charge has been granted by DBCTH in favour of QTC over all the assets and undertakings of DBCTH.

**The long-term Novation Loan from QTC is for a period of 20 years, unless terminated earlier. Interest on the loan is fixed at 4.8% per annum, calculated on the daily balance and payable in arrears on each date rent is payable. A first ranking registered fixed and floating charge has been granted by DBCTH in favour of QTC over all the assets and undertakings of DBCTH.


In 2012 an amount of $77.999 million was received by the QTH controlled entity from its investment in BPH which was repatriated to the State of Queensland as a dividend.

98





2013 2012 2013 2012

$'000 $'000 $'000 $'000

38

Operating surplus/(deficit) 171,666 (17,557) 1,775 804

Impairment expense 41,062 508 417 508Gain on shares - unrealised (143,808) 10,796 .. ..Gain on shares - realised (156,260) .. .. ..Interest - loans and receivables (15,857) (14,789) .. ..Fair value of investment in subsidiary .. (3,009) .. ..Dividend received (53,748) (61,090) .. ..Tax expense/(benefit) 70,541 (41,381) .. ..Decrease in amortisation of unearned income (304) (312) .. ..Net fair value movement on investment - QIC Growth Fund (399) 790 .. ..Distribution received on investment - QIC Growth Fund (120) (794) .. ..Depreciation/amortisation expense 11,595 10,693 11,595 10,693Disposal of property, plant and equipment 21 93 21 93

Change in assets and liabilities:

(Increase)/decrease in appropriation receivable (134) .. (134) ..(Increase)/decrease in GST input tax credits receivable (327) 1,036 (327) 1,036(Increase)/decrease in interdepartmental receivable 150 (3,330) 150 (3,330)(Increase)/decrease in trade debtors 614 19,266 762 19,198(Increase)/decrease in annual leave reimbursements (173) (133) (173) (133)(Increase)/decrease in other assets 2,928 (2,478) 2,928 (2,351)(Increase)/decrease in other debtors (20) 8 (20) 8(Increase)/decrease in other financial assets (2,232) .. (2,232) ..Increase/(decrease) in interdepartmental payable (212) (1,986) (212) (1,986)(Increase)/decrease in prepayments (128) (36) (218) ..Increase/(decrease) in trade creditors 3,322 7,761 3,322 7,761Increase/(decrease) in accrued employee benefits 28 866 28 866Increase/(decrease) in GST payable 267 (8,739) 267 (8,739)Increase/(decrease) in other payables (1,192) (14,317) (1,272) 1,159Increase/(decrease) in prepaid tax .. 1,613 .. ..Increase/(decrease) in unearned revenue 232 (2,710) 208 (2,710)

Net cash from operating activities (72,488) (119,231) 16,885 22,877

Reconciliation of operating surplus to net cash from operating activities


39 Non-cash financing and investing activities

Assets and liabilities received by or transferred to the department as a result of machinery of Government changes are set out in note 3.



Notes To and Forming Part of the Financial Statements 2012-13Queensland Treasury and Trade Notes to and forming part of the Financial Statements 2012-13


2013 2012 2013 2012

$'000 $'000 $'000 $'00040 Commitments for expenditure

(a) Non-cancellable operating lease commitments

Not later than one year* 2,691 3,453 2,315 3,082Later than one year and not later than five years* 7,522 7,765 6,019 6,281Later than five years 14,382 16,499 .. 1,929Total commitments 24,595 27,717 8,334 11,292

(b) Motor vehicle operating lease commitments

Not later than one year 311 388 311 388Later than one year and not later than five years 47 145 47 145Later than five years .. .. .. ..Total commitments 358 533 358 533


Non-cancellable operating lease commitments consist of Queensland Treasury and Trade's (QTT's) accommodation operating leases in privately owned buildings. In relation to QTT's accommodation operating leases in government owned buildings, it has occupancy agreements with the Department of Housing and Public Works (DHPW). As these agreements are open ended, they do not meet the definition of an operating lease in AASB 117 Leases. The amounts payable extend over an indefinite period of time and therefore cannot be quantified in the commitments note to the financial statements.

Commitments under motor vehicle operating leases at reporting date are inclusive of anticipated GST (excluding any overseas motor vehicle leases) and are payable as follows:

Motor vehicle operating lease commitments consist of Queensland Treasury and Trade's (QTT's) motor vehicle operating leases with QFleet and Trade and Investment Queensland's overseas motor vehicle operating leases.

* Several of QTT's overseas accommodation leases in privately owned buildings have sharing and co-location arrangements with third parties who reimburse QTT for their share of the accommodation costs. At reporting date, QTT is expected to be reimbursed $0.203 million in the time band "not later than one year" and $0.165 million in the time band "later than one year and not later than five years".

QFleet leases a wide range of vehicles to Queensland Government departments and other organisations in receipt of government funding. Vehicles are usually provided on a fully maintained operating lease basis, incorporating elements such as registration, insurance and maintenance. Leasing rates are based on vehicle type, options, area, nature of operation, and time and distance projections.

Included in commitments for the QTH controlled entity are payments due for lease and sub-lease arrangements. The payments have not been discounted and exclude any future escalations for CPI increases or projected outgoings which are provided for under the terms of each lease.

Commitments under operating leases at reporting date are inclusive of anticipated GST (excluding any overseas accommodation leases) and are payable as follows:

Operating leases are entered into as a means of acquiring access to office accommodation. The leases vary, however, most contain clauses relating to annual rental reviews and renewal options but not purchase options. No operating leases contain restrictions on financing or other leasing activities.

100





2013 2012 2013 2012

$'000 $'000 $'000 $'00040 Commitments for expenditure (continued)

(c) Operating expenditure commitments

Not later than one year 15,831 12,587 15,831 12,587Later than one year and not later than five years 3,832 6,089 3,832 6,089Later than five years .. .. .. ..Total commitments 19,663 18,676 19,663 18,676


Material operating expenditure commitments inclusive of GST contracted for but not recognised in the financial statements are payable as follows:

41 Contingencies North Queensland Ports Infrastructure Development Pending the dismissal of a litigation matter before the Supreme Court, the department anticipates recouping a share of legal costs of approximately $0.2 million. Environmental obligations

The QTH controlled entity has exposure to claims made against it through its subsidiaries and associated companies in relation to any pre-existing contamination of land assets. At balance date, there have been no claims made against the QTH controlled entity. Land tax Under the Port of Brisbane Share Sales and Purchase Agreement, the State has agreed to pay to the Port lessee any portion of the Port lessee’s land tax liability in years the land tax assessment for the leased area exceeds the estimated land tax assessment. The obligations are subject to certain conditions, including the lessee pursuing any objection available to it in relation to an assessment, and are limited to assessment years up to and including 30 June 2025. 42 Controlled entities Queensland Treasury Holdings Pty Ltd (QTH) is controlled by the department and its revenues, expenses, assets, liabilities and equity have been included within these financial statements. The Under Treasurer, as Trustee for the Treasurer of Queensland, holds a 60% beneficial interest in QTH, which comprises ownership of “A” class capital. The remaining 40% interest is held by the Queensland Treasury Corporation (QTC) for and on behalf of the Under Treasurer as the corporation sole of QTC. QTH acts as a corporate vehicle through which the Queensland Government invests in assets of strategic importance to the State. The QTH controlled entity is audited by the Auditor-General of Queensland.

Name of Entity Country of

Incorporation

Shares Held No

Carrying Value

$

Equity Holding

2013 2012

Queensland Treasury Holdings Pty Ltd (QTH) Controlled Entities of QTH Queensland Lottery Corporation Pty Ltd (QLC) Australia 1 1 100% 100% Queensland Airport Holdings (Cairns) Pty Ltd Australia 2 2 100% 100% Queensland Airport Holdings (Mackay) Pty Ltd Australia 2 2 100% 100% Network Infrastructure Company Pty Ltd * Australia 2 2 100% 100% Brisbane Port Holdings Pty Ltd (BPH) Australia 2,314,152 16,414,358 100% 100% DBCT Holdings Pty Ltd Australia 2 6,017,190 100% 100% * Network Infrastructure Company Pty Ltd was registered on 15 June 2010 and has not traded. Queensland Trade and Investment Office Pty Ltd exists to support the activities of the department’s Trade and Investment Queensland overseas offices. All issued shares are held by the Shareholding Minister on behalf of the Queensland Government. The Queensland Auditor-General audits the company.





43 Investments in entities which are not controlled entities or associated companies

Name of entity Principal activities Percentage ownership Carrying amount 2013 2012 2013 2012 % % $'000 $'000 City North Infrastructure Pty Ltd*

Manages the procurement of the Airport Link and part of the Northern Busway

50%

50%

..

..

National E-Conveyanc- ing Development Limited

Develop then operate the national e-conveyancing system

7.43% 10.18% 6,833 4,601

* At balance date, the QTH controlled entity held a 50% shareholding in City North Infrastructure Pty Ltd. The remaining 50% of shares were cancelled on 1 July 2013 and resulted in QTH obtaining control from that date. QTH has not equity accounted CNI into the statements as the effect would not be material. The operations of CNI are currently being wound down with a transition of the project management responsibilities to QTH. 44 Events occurring after balance date Trade and Investment Queensland (TIQ) will become a statutory body from 1 October 2013 by virtue of the Trade and Investment Queensland Act 2013. The assets and liabilities of TIQ will be transferred from QTT to the statutory body as a consequence of this change. On 1 July 2013, the remaining 50% shares in City North Infrastructure Pty Ltd (CNI) held in trust for the State by the former Director-General of the Department of Transport and Main Roads were cancelled. This resulted in QTH obtaining 100% ownership and control of CNI. CNI is currently transferring its operations to the QTH controlled entity pending deregistration of the company. An amount of $5.809 million (including GST) was transferred from CNI to the QTH controlled entity in July 2013 to support these operations. There are no other known events occurring after the reporting date which will materially affect the department and its controlled entities’ financial outcome reported for the 2012-13 financial year. 45 Other arrangements

Network infrastructure assets During 2010, the Queensland Government transferred certain assets from Aurizon Network Pty Ltd (formerly QR Network Pty Ltd) to the QTH controlled entity which were subsequently leased back to Aurizon Network under a 99 year lease arrangement. The transfers consisted of Aurizon Network’s right, title and interest in, and obligations and liabilities pursuant to, the Central Queensland Coal Network Infrastructure. These assets were transferred at book value under the direction of the Treasurer. Immediately following this transfer, the QTH controlled entity entered into a 99 year lease in relation to these network infrastructure assets to lease the rights back to Aurizon Network. The lessee must manage, operate, repair and maintain the infrastructure and is responsible to indemnify the lessor for any loss incurred to the extent of the law. At the completion of the lease term the assets may be surrendered to the lessor at the option of the lessor for the fair market value or the lease extended for a further 99 years. Consideration for the lease is based on a notional rental of $1 per annum but only if demanded in writing. It is currently not expected that the controlled entity would call upon this payment and therefore no recognition of the lease receivable amount has been recognised. Property Leases The QTH controlled entity has interests in freehold land leased to third parties under long term lease arrangements. The rights to use the assets have been leased to third parties for 99 years with expiry dates ranging from December 2107 to November 2110. All the risks and rewards associated with the land during the lease term have been transferred to the lessee despite there being no transfer of title. Therefore all land subject to long term finance leases have been derecognised in these accounts. It is considered that accounting for land as a finance lease is consistent with the economic position of the transaction.

102




46 Financial instruments (a) Categorisation of financial instruments

The consolidated entity has the following categories of financial assets and financial liabilities:

2013 2012

$'000 $'000

Financial assets

Cash and cash equivalents 22 72,083 64,865

Receivables and loans 23/27 171,775 199,914

Lease receivables 24 167,474 186,912

Other 25

Other accrued revenue 3,233 3,874

Escrow asset .. 2,231

Security deposits 519 572

Other financial assets 26 794,028 2,807,580Total 1,209,112 3,265,948

Financial liabilities

Payables 31 19,823 17,850

Tax liabilities 35 183,535 6

Interest bearing liabilities 37 309,348 2,610,468Total 512,706 2,628,324

Category Note

(b) Financial risk management

The management of financial risk is integral to the department and its controlled entities’ overall governance framework. The department and its controlled entities’ activities expose it to a variety of financial risks; credit risk, liquidity risk, and market risk (including price, interest rate risk and currency risk). The department and its controlled entities manage its exposure to these financial risks through advice and consultation with QTC primarily in relation to its borrowing activities. Risk management parameters are reviewed regularly to reflect changes in market conditions and changes to the department and its controlled entities’ activities.

(c) Credit risk exposure Credit risk exposure refers to the situation where the department and its controlled entities may incur financial loss as a result of another party to a financial instrument failing to discharge their obligation. Credit risk (receivables) is managed pursuant to internal policies. These focus on the prompt collection of revenues due and payable to the department and follow-up of outstanding fees and charges within specified timeframes. Any write-offs require high level approval. The maximum exposure to credit risk at balance date in relation to each class of recognised financial assets is the carrying amount of those assets net of any provisions for impairment as indicated in the notes to the Statement of Financial Position. No collateral is held as security and no credit enhancements relate to financial assets held by the department. No financial assets and financial liabilities have been offset and presented net in the Statement of Financial Position. The QTH controlled entity is exposed to credit risk in relation to the receivables arrangements entered into with BPH. BPH has assigned its rights to the QTH controlled entity to receive money payable to it by the Port Manager, Port of Brisbane Pty Ltd (PBPL). An upfront payment of $50.5 million was made to BPH for the rights to payments under a loan arrangement entered into between BPH and QPH Hold Trust as part of the sale of the Brisbane Port operations. A further amount of $121.2 million was paid in return for BPH's rights to future licence fees from PBPL. In the current financial year, an amount of $3.0 million was received against the loan with the loan repayable via fixed annual payments to 2025. Repayments against the licence fee primarily commence in 2016 for a period of 35 years. In the current year an impairment expense has been recognised against the licence fee receivable relating primarily to expectations of lower price growth affecting these cashflows (refer note 19). In the event there is a shortfall in the receipt of cashflows from PBPL, there is a guarantee from the State to enable it to meet its debt obligations backing these arrangements. The QTH controlled entity is also exposed to credit risk through its investments in the QTC Cash Fund and the QTC Working Capital Facility. The QTC Cash Fund is an asset management portfolio that invests with a wide variety of high credit rated counterparties. Deposits with the QTC Cash Fund are capital guaranteed. Working Capital facility deposits have a duration of one day and all investments are required to have a minimum credit rating of “A-”, therefore the likelihood of the counterparty having capacity to meet its financial commitments is strong. The remainder of cash is held with the Commonwealth Bank of Australia under the whole of Government banking facility.





46 Financial instruments (continued) (c) Credit risk exposure (continued)

The allowance for impairment reflects the occurrence of loss events. The most readily identifiable loss event is where a debtor is overdue in paying a debt to the department and its controlled entities, according to the due date (normally terms of 30 days). Economic changes impacting debtors, and relevant industry data, also form part of the documented risk analysis. If no loss events have arisen in respect of a particular debtor or group of debtors, no allowance for impairment is made in respect of that debt/group of debtors. If the department and its controlled entities determines that an amount owing by such a debtor does become uncollectible (after an appropriate range of debt recovery actions), that amount is recognised as a Bad debt expense and written-off directly against Receivables. In other cases where a debt becomes uncollectible but the uncollectible amount exceeds the amount already allowed for impairment of that debt, the excess is recognised directly as a Bad debt expense and written off directly against Receivables. Impairment loss expense for the current year for the department and its controlled entities transactions is immaterial and therefore not disclosed in the Credit risk exposure table for 2013 below. Ageing of past due but not impaired as well as impaired financial assets are disclosed in the following tables: 2013 Financial assets past due but not impaired*

Less than 30 days

30-60 days 61-90 days More than

90 days Total

overdue $'000 $'000 $'000 $'000 $'000

Financial assets

Receivables 481 9 .. 22 512

Total 481 9 .. 22 512

*2013 Individually impaired financial assets not disclosed as considered immaterial

2012 Financial assets past due but not impaired

Less than 30 days

30-60 days 61-90 days More than

90 days Total

overdue

$'000 $'000 $'000 $'000 $'000

Financial assets

Receivables 831 23 49 136 1,039Total 831 23 49 136 1,039

Overdue

Overdue

104




46 Financial instruments (continued)

(d) Liquidity risk Liquidity risk refers to the situation where the department and its controlled entities may encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. The department and its controlled entities manage liquidity risk by ensuring that it has sufficient funds available to meet employee and supplier obligations as they fall due. This is achieved by ensuring that minimum levels of cash are held within the various bank accounts so as to match the expected duration of the various employee and supplier liabilities. The QTH controlled entity is exposed to liquidity risk through its borrowings with QTC, however this is mitigated by back to back arrangements whereby the QTH controlled entity’s debt obligations are matched by the receipt of cash flows from third parties. In addition, there is a guarantee from the State Government in the event a shortfall on the BPH loan occurs (refer notes 27 & 37). The following table sets out the liquidity risk of financial liabilities held by the department. It represents the contractual maturity of financial liabilities, calculated based on undiscounted cash flows relating to the liabilities at reporting date. The undiscounted cash flows in these tables differ from the amounts included in the Statement of Financial Position that are based on discounted cash flows.

< 1 year 1 - 5 years > 5 years

$'000 $'000 $'000 $'000 $'000


Payables 31 19,822 1 .. 19,823 19,823

Tax liabilities 35 183,535 .. .. 183,535 183,535

Interest bearing liabilities 37 17,815 62,875 417,079 497,769 309,348Total 221,172 62,876 417,079 701,127 512,706


$'000 $'000 $'000 $'000 $'000


Payables 31 17,850 .. .. 17,850 17,850

Tax liabilities 35 6 .. .. 6 6

Interest bearing liabilities 37 31,048 82,828 3,262,637 3,376,513 2,610,468Total 48,904 82,828 3,262,637 3,394,369 2,628,324

Note

2012 payable in

Note

Total Undiscounted

Cash Flow

Carrying Amount

Carrying Amount

2013 payable in

Total Undiscounted

Cash Flow






(e) Market risk Market risk is the risk that changes in market prices, such as foreign exchange, interest rates and equity prices will affect the department and its controlled entities income or value of its holdings of financial instruments. The objective is to manage and control market risk exposure within acceptable parameters, while optimising return within desired frameworks.

i) Price risk

Equity price risk arises from movements in the share price of the Aurizon Holdings Ltd shares. The investment exposure of these shares is monitored based on market data.

ii) Interest rate risk

The QTH controlled entity is exposed to interest rate risk through its investments and borrowings which are primarily held with QTC. Excess cash is held in the QTC Cash Fund which is capital guaranteed. Interest rate risk on borrowings is minimised by managing borrowings to a benchmark duration which takes into account the cashflows associated with the loans. The Board approves the interest rate risk management parameters including the target modified duration in consultation with QTC.

iii) Currency risk Foreign exchange risk arises when future transactions are denominated in non-Australian currency. Trade and Investment Queensland (TIQ) operates nationally and internationally and is exposed to foreign exchange risk arising from currency exposures to the British Pound, US Dollar, Hong Kong Dollar, Japanese Yen, Taiwan Dollar, Chinese Yuan, Chilean Peso and Saudi AR. Forward exchange contracts were entered into by TIQ commencing October 2012 with maturity June 2013 to mitigate currency volatility for the period over an estimated 80% of operating expenditures for overseas offices.

(f) Sensitivity analysis Interest rates Sensitivity to interest rate movements is shown for variable financial assets and liabilities based on the carrying amount at reporting date. The following interest rate sensitivity analysis depicts the effect that a reasonably possible change in interest rates (assumed to be 1%) would have on the operating result and equity, based on the carrying values at the end of the reporting period:

Financial instruments Profit Equity Profit Equity

$'000 $'000 $'000 $'000 $'000

Cash * 46,449 (464) (464) 464 464

Interest bearing liabilities 141,874 65 65 (57) (57)Potential impact (399) (399) 407 407

* excludes fixed rate or non-interest bearing assets


$'000 $'000 $'000 $'000 $'000

Cash* 44,365 (444) (444) 444 444

Interest bearing liabilities 133,600 60 60 (60) (60)Potential impact (384) (384) 384 384

* excludes fixed rate or non-interest bearing assets

-1%

2013 Interest rate risk

1%-1%

Carrying amount

Carrying amount


1%

106




46 Financial instruments (continued) (f) Sensitivity analysis (continued)

QTC borrowings include both floating rate and loans that are fixed in nature. The interest rate sensitivity of the floating rate loan is based on a modified duration of 7 years (2012: 6 years) and includes the effect of periodic rebalancing over the year. No interest rate sensitivity has been calculated for the fixed rate loans. In relation to the AZJ share loan carried at 30 June 2012, the loan was structured to approximate a fixed rate loan by allowing its duration to decay. There is negligible impact on interest costs from changes in interest rates structured in this manner. The QIC Growth Fund is exposed to market risk in the form of movements in interest rates and equity prices, however, as the impact of any movement is not material, the interest rate of investments held in the QIC Growth Fund at 30 June 2012 have not been included in the sensitivity analysis. Equities Sensitivity analysis for equity instruments is based on a reasonable possible change in the ASX200 share price which is estimated at +/- 10% (2012: +/- 15%).

Carrying amount


$'000 $'000 $'000 $'000 $'000

Other financial assets

Shares - AZJ 787,195 (78,720) (78,720) 78,720 78,720Potential impact (78,720) (78,720) 78,720 78,720


$'000 $'000 $'000 $'000 $'000

Other financial assets

Shares - AZJ 2,793,127 (418,969) (418,969) 418,969 418,969Potential impact (418,969) (418,969) 418,969 418,969

Carrying amount

2013 Equities

-10% 10%

2012 Equities

-15% 15%

(g) Fair value

Fair value hierarchy The recognised fair values of financial assets and liabilities are classified according to the following fair value hierarchy that reflects the significance of the inputs used in making these measurements: Level 1 - fair values that reflect unadjusted quoted prices in active markets for identical assets/liabilities Level 2 - fair values that are based on inputs that are directly or indirectly observable for the asset/liability (other than unadjusted quoted prices), and Level 3 - based on unobservable inputs or observable inputs to which significant adjustments have been applied.






46 Financial instruments (continued) (g) Fair value (continued)

Fair value

According to the above hierarchy, the fair values of each class of asset recognised at fair value are as follows:

Class

Level 1

$'000

Level 2

$'000

Level 3

$'000 Financial assets

Cash at bank 25,634 46,449 ..

Shares - AZJ 787,195 .. ..

Total 812,829 46,449 ..

Level 1 $'000

Level 2 $'000

Level 3 $'000

Financial assets

Cash at bank 20,477 44,367 ..

Shares - AZJ 2,793,127 .. ..

QIC Growth fund No.2 .. 9,852 ..

Total 2,813,604 54,219 ..

Class

$'000

787,195

859,278

64,844

Classification according to fair value hierarchy

72,083

2,793,127

2,867,823

2012 Total Consolidated Carrying Amount

9,852


2013 Total Consolidated Carrying Amount

$'000

No transfers between classification levels occurred during the financial year. The fair values of assets and liabilities have been based on the following: The fair value of trade receivables and payables is assumed to approximate the value of the original transaction, less any provision for impairment. Units in the QIC Growth Fund No.2 are based on the closing unit price as valued by the Unit Trust. Shares in AZJ are valued using the closing quoted price at reporting date. The department’s shares held in unlisted company is measured at cost (see note 2(v)) as fair value cannot be reliably measured, therefore no fair value is disclosed. The fair value of interest bearing liabilities is based on the QTC quoted market value of the debt outstanding at balance date. The fair value of interest bearing liabilities is notified by the Queensland Treasury Corporation. It is calculated using discounted cash flow analysis and the effective interest rate (refer Note 37) and is disclosed below:

Carrying Amount $'000

Fair Value

$'000

Carrying

Amount $'000

Fair Value

$'000 Financial asset

Loans and receivables 164,065 164,065 191,853 191,853Lease receivables 167,474 167,474 186,912 186,912


Interest bearing liabilities 309,348 321,179 2,610,468 2,657,710 Total 22,191 10,360 (2,231,703) (2,278,945)

2013 2012

108





2013 2012

$'000 $'00047 Commonwealth grants

Administered on behalf of the whole of Government

GST revenue grant 9,469,524 8,681,478Specific purpose - recurrent

- First Home Owner Boost 95 1,995 - Healthcare .. 2,545,760 - Schools 816,848 760,045 - Skills and workforce development 273,847 268,776 - Disability services 249,613 251,698 - Affordable housing 250,177 246,119National Partnership Payments - recurrent project 838,256 1,394,235National Partnership Payments - recurrent facilitation 10,277 49,898National Partnership Payments - recurrent reward 20,797 169,429National Partnership Payments - capital project 790,361 5,217,907

12,719,795 19,587,340

48 Taxes, fees, fines and levies


Taxes

Casino tax 82,672 86,428Gaming machine tax 586,843 572,142Gold Lotto 218,936 193,474Golden Casket 36,062 39,777Keno tax 21,840 21,988Land tax 993,245 1,020,285Payroll tax 4,319,736 4,073,690Duties 3,084,765 3,190,137Wagering tax 40,920 40,490Other taxes 845 806

9,385,864 9,239,217Fees

Proceeds from sale of gaming machine authorities 14,366 15,437Magistrates Court fees 54,374 3,294Proceeds from sale of club entitlements 478 483Other fees 3,424 3,341

72,642 22,555Fines

Penalties 248,208 22,600

248,208 22,600Levies

Community Ambulance Cover levy * 28 30,701Health Services levy 45,930 43,152

45,958 73,853

9,752,672 9,358,225

* From 1 July 2011 the Community Ambulance Cover levy (CAC) has been abolished.





2013 2012

$'000 $'00049


Mining royalties 2,113,769 2,766,012Competitive neutrality fees 242,894 206,263Credit margin 3,447 4,096Dividends .. 47Land tax equivalent receipts 1,395 1,149

2,361,505 2,977,567

50 Interest revenue


Interest from investments 14,837 4,496Interest from loans 734 1,124Effective interest adjustment on discounted loans and advances 6,544 3,884Interest from trust funds 23,193 28,161

45,308 37,665

51 Concessional loan premium


Concessional loan premium - Commonwealth borrowings* 1,373 10,104

1,373 10,104

52 Administered item revenue


Budgeted administered item appropriation and equity 5,968,938 6,227,450Transfer (to)/from other heading 25,840 16,189Unforeseen expenditure 63,445 105,294Total administered item receipts 6,058,223 6,348,933

Plus closing balance of administered item receivable 560,745 124,360Less closing balance of equity withdrawal payable 5,251 (16,712)Less opening balance of administered item receivable (106,649) (237,498)Plus opening balance of equity withdrawal payable 16,712 80,576Total administered appropriation 6,534,282 6,299,659

This is represented by:

Administered item revenue recognised in Statement of Comprehensive Income

7,762,507 6,381,259

Equity adjustment recognised in contributed equity (1,228,225) (81,600)

6,534,282 6,299,659

Royalties, property income and other territorial revenue

*represents the premium on initial recognition of Commonwealth borrowings

110





2013 2012

$'000 $'00053 Other revenue


Grant revenue from Qld Reconstruction Authority 16,351 79,513Proceeds of crime from the Public Trustee 17,102 7,262Return of CNI surplus 5,251 ..Unclaimed money from Public Trustee 3,622 ..QGIF excess recovery 3,545 4,313Miscellaneous receipts 5,226 41,375

51,097 132,463

54 Employee expenses


Superannuation 1,934 4,683FBT expense * .. (178)FBT recovery * .. 516

1,934 5,021

55 Supplies and services


GST administration expense remitted to the Commonwealth 142,540 137,342Management fees .. 674Administration fees 23,269 15,995Other 3,669 3,540

169,478 157,551

56 Impairment losses


Impairment losses on trade receivables 37,213 (12,202)Bad debts written off 106,304 28,794

143,517 16,592

* The whole of Government FBT arrangement ceased on 31 March 2011. Balances in FBT expense and recovery represent FBT amendments from prior years. Since 1 April 2011 agencies have lodged returns and paid FBT directly to the Australian Taxation Office.





2013 2012

$'000 $'00057 Grants and contributions


SEQ Water Grid Manager 27,975 25,146Community Investment Fund 135,210 148,834Ex-gratia payments* 18,589 7,262Payment for taxes, royalties and grants relief ** 42,061 122,903Natural Disaster Relief and Recovery Assistance (NDRRA) payments .. 1,127Grant to Qld Reconstruction Authority 16,351 79,513QRAA exceptional circumstances .. 162Other 2,361 3,769

242,547 388,716

58 Benefit payments


First Home Owner Payments 77,452 139,910Queensland Building Boost Grant 102,003 98,460Great Start Grant 25,800 ..

205,255 238,370

59 Interest expense


Interest paid by Treasury Offset Bank Account

on trust and bank balances 32,646 47,822

32,646 47,822

60 Borrowing costs


Interest on loans – Commonwealth Government 1,269 1,802Effective interest adjustment on discounted Commonwealth borrowings 3,764 1,624

Interest on loans – QTC 1,691,615 1,429,353Interest - other 13,158 27Market Value Realisation charge on repayment of QTC borrowings (290) 671

1,709,516 1,433,477

** ex-gratia (special) payments relate to taxes, grants and royalties to or on behalf of individuals and entities who met certain criteria, including individuals affected by the relocation of the town of Grantham and for certain transactions relating to restructures within government. Details of the individual payments are confidential under Office of State Revenue (OSR) legislation.

* ex-gratia payments of dividends and tax equivalent payments to local government.

112




2013 2012

$'000 $'00061 Concessional loan discount


Concessional loan discount - Natural Disaster Relief and Recovery Arrangements (NDRRA) loans* 2,331 16,087

2,331 16,087

62 Other expenses


119,719 100,613Reinsurance expense 28,590 17,541Other 18,586 14,010

166,895 132,164

Queensland Government Insurance Fund claims and concessions

*represents the discount on initial recognition of Natural Disaster Relief Recovery Arrangements (NDRRA) loans

63 Total administered comprehensive income

The total comprehensive income resulting from administered transactions represents the movement in the Community Investment Fund (CIF).

64 Cash


Cash at bank 917,758 1,117,920

Comprised of:

Whole of Government Treasury Offset arrangement * (12,491) 45,475Other administered bank accounts 930,249 1,072,445

917,758 1,117,920

* The whole of Government Treasury offset arrangement incorporates the Treasury Offset Bank Account which is an overdraft facility as required under section 49 (1) of the Financial Accountability Act 2009 and a Queensland Treasury Corporation (QTC) Working Capital Facility. This overdraft facility is part of an offset arrangement with other departmental bank accounts and is taken into account in determining the interest earned on the whole of Government position. Cash at bank is an aggregate of Treasury administered bank accounts including the Treasury Offset Bank Account. * In addition, Queensland Treasury and Trade has established another setoff arrangement with the CBA to maximise interest earned on surplus cash balances held by departmental bank accounts that do not fall within the whole of Government setoff arrangement. * The QTC Working Capital Facility is used for short term borrowings. The market value of the borrowings in the QTC Working Capital Facility at 30 June 2013 is represented by its book value (as notified by QTC). Interest is calculated daily based on the Reserve Bank’s official cash rate. Interest is charged at rates between 3.6% to 2.8% (2012: between 4.8% and 3.5%) along with an administration margin of 0.05% to 0.10% (2012: 0.05%).






2013 2012

$'000 $'00065 Receivables


Current

Trade debtors 886,351 913,190Less allowance for impairment (350,966) (312,343)

535,385 600,847

Loans and advances * 15,591 15,020

15,591 15,020

Non appropriated equity injection receivable .. 16,712Appropriated equity withdrawal receivable 5,251 ..Administered item revenue receivable 560,745 124,360Other debtors 5,168 160

571,164 141,232

1,122,140 757,099

Non-current

Loans and advances * 163,771 163,138

Less concessional loan discount (25,756) (29,968)

138,015 133,170

Other debtors 2,676 2,780

2,676 2,780

140,691 135,950

* Natural Disaster Relief and Recovery Arrangements (NDRRA) loans are carried at amortised cost. Repayments are received yearly in arrears. The Commonwealth Attorney-General’s Department – Emergency Management Australia determines the annual interest rate to be applied to the loans. In the 2012-13 year the interest rate was 1.69% (2012: 2.67%) which was calculated as 50% of the 10-year Treasury bond rate, averaged over the three-month period between April and June 2012.

114




2013 2012

$'000 $'00066 Other current assets


Current

Royalties - accrued revenue 314,287 318,271Other accrued revenue 141,731 132,588Prepayments 9,480 9,490

465,498 460,349

67 Other financial assets


Current

Derivative financial instrument * 24,383 ..

24,383 ..

68 Payables


Current

GST input tax credits receivable (215) (512)GST payable 10,999 10,375Net GST payable 10,784 9,863

Appropriated equity withdrawal payable .. 16,712Trade creditors 4,316 57,251Payable to central schemes 423,504 379,054Insurance premiums on-pass to State 102,819 98,463Other creditors 29,767 9,398

571,190 570,741

* The purpose of entering into the forward starting swap contract was to hedge the economic risk (at a whole of Government level) that may arise from a floating rate borrowing that Queensland Health is expected to enter into in November 2016.





2013 2012

$'000 $'00069 Interest-bearing liabilities


Current

Commonwealth borrowings # 9,513 8,761QTC Borrowings * 23,163 ..

32,676 8,761Non-current

Commonwealth borrowings # 103,161 101,622Less concessional loan premium (14,564) (16,954)QTC Borrowings * 34,891,363 26,432,981

34,979,960 26,517,649

# Interest is charged on Commonwealth Backlog Sewerage and Natural Disaster Relief and Recovery Arrangements (NDRRA) loans at a predetermined rate and recognised as an expense as it accrues. Interest is charged on the Commonwealth Backlog Sewerage loans at rates between 9.05% and 10.40%. The Commonwealth Attorney-General’s Department – Emergency Management Australia determines the annual interest rate to be applied to the NDRRA loans. In the 2012-13 year the interest rate was 1.69% (2012: 2.67%) which was calculated as 50% of the 10-year Treasury bond rate, averaged over the three-month period between April and June 2012. * Interest is charged on the whole of Government borrowing with QTC at rates of between 3.10% and 5.73% (2012: between 4.34% and 6.09%) along with an administration margin at rates between 0.05% and 0.09% (2012: between 0.05% and 0.10%) which is accrued and paid quarterly to QTC. Interest is charged on the Stadium loans with QTC at fixed rates (including administration) of between 3.89% and 6.70% which is accrued and paid quarterly to QTC.

116





2013 2012

$'000 $'00070 Other liabilities


Unearned revenue 84,398 12,923Sundry liabilities 6,628 10,364

91,026 23,287

71 Reconciliation of administered comprehensive income to net cash from operating activities


Administered comprehensive income (6,784) ..

Add/(subtract) items classified as investing/financing activities:Loans and advances .. (113)Interest expense on QTC loans 1,465 3,822Interest revenue on ancillary setoff (3,145) ..

Change in assets and liabilities:

(Increase)/decrease in GST input tax credits receivable 298 (178)(Increase)/decrease in trade and other receivables 65,462 (275,072)(Increase)/decrease in accrued royalties 3,984 (318,271)(Increase)/decrease in other assets (9,133) (88,429)(Increase)/decrease in accrued tax, fees and fines (20,498) (21,383)

(441,636) 113,138(Increase)/decrease in other financial assets (24,383) ..NDRRA Concessional Loan Premium 13,584 46,688NDRRA Concessional Loan Discount (4,211) 29,968Increase/(decrease) in trade and other payables (28,223) 72,409Increase/(decrease) in payables to central schemes 44,450 41,118Increase/(decrease) in GST payable 623 1,410Increase/(decrease) in transfers to Government payable 779,523 382,233Increase/(decrease) in other liabilities 67,739 (45,682)

Net cash provided by/(used in) operating activities 439,115 (58,342)

(Increase)/decrease in administered appropriation receivable





72 Non-cash financing and investing activities

On 30 June 2013, $306.589 million of borrowings (Suncorp Stadium loan $140.574 million, Skilled Park Stadium loan $134.738 million & Gabba Stadium loan $31.277 million) was transferred from Stadiums Queensland to Treasury administered. The transfer was deemed to be a contribution/distribution by/from the owners and was adjusted against Stadiums Queensland’s and QTT’s administered contributed equity as a non-reciprocal transfer of borrowings in accordance with AASB 1004 Contributions.

2013 2012

$'000 $'000

73 Commitments for expenditure

Not later than one year .. 161,718Later than one year and not later than five years .. 416,498Later than five years .. ..Total commitments .. 578,216

Grant expenditure commitments


Grant commitments, from the CIF, not subject to GST, committed to be provided for at reporting date, but not recognised in the financial statements, are payable as follows:

Due to the abolition of the CIF (effective 1 July 2013), there were no grant expenditure commitments at the reporting date.

74 Contingencies


Litigation in progress As at 30 June 2013 the following cases were filed in the courts:

Cases Supreme Court 10 Civil and Administrative Tribunal 10 Magistrates Court .. Total 20

These cases relate to revenue collected by the Office of State Revenue. The department’s legal advisers and management believe there is insufficient information available to determine the outcome of the abovementioned cases. Accordingly, no provision has been taken up in Queensland Treasury and Trade’s financial statements.

An estimate of the liability and/or potential revenue foregone should the outcomes of the abovementioned cases prove unfavourable for Queensland Treasury and Trade is $23.946 million. Further to the above, as at 30 June 2013, the Office of State Revenue was considering 201 objections relating to duties, payroll tax, land tax, Queensland Building Boost Grant and the First Home Owner Grant scheme. An estimate of the financial effect, the uncertainties relating to any cash outflow or possibility of any reimbursement is not disclosed because it is impracticable to do so.

75 Events occurring after balance date

The Government has approved the abolition of the CIF effective 1 July 2013 by virtue of the Liquor and Gaming (Red Tape Reduction) and Other Legislation Amendment Act 2013, Part 7 Amendment of Gaming Machine Act 1991. All revenues currently directed to CIF will now flow to the Consolidated Fund. The department is currently undertaking an assessment of the recognition criteria for taxes, fees and fines revenue, with a possible effective date from 1 July 2013.

118





76 Financial instruments (a) Categorisation of financial instruments

Queensland Treasury and Trade has the following categories of financial assets and financial liabilities:


2013 2012

$'000 $'000

Financial assets

Cash and cash equivalents 64 917,758 1,117,920

Receivables 65 1,262,831 893,049

Accrued taxes, fees and fines 334,730 314,232

Other 66

Royalties - accrued revenue 314,287 318,271

Other accrued revenue 141,731 132,588

Other financial assets 67 24,383 ..Total 2,995,720 2,776,060


Payables 68 571,190 570,741

Transfer to Government Payable 2,113,247 1,333,724

Interest bearing liabilities 69 35,012,636 26,526,410

Other liabilites

Sundry liabilities 70 6,628 10,364Total 37,703,701 28,441,239

Category Notes

(b) Financial risk management The management of financial risk is integral to Queensland Treasury and Trade’s overall governance framework. Risk exposures include credit risk, liquidity risk and market risk (including interest rate risk).

The department has adopted various strategies for the mitigation of each risk category, including active monitoring by the Fiscal and Macroeconomics Branch of borrowings by the State on behalf of the whole of Government. It is assisted in the discharge of these responsibilities through the provision of professional advice and assistance by the Queensland Treasury Corporation (borrowings and short term investments). The department’s internal financial reporting framework and oversight by the Resource Governance Committee also contribute to the effective management of financial risks.





76 Financial instruments (continued) (c) Credit risk exposure

Credit risk exposure refers to the situation where the department may incur financial loss as a result of another party to a financial instrument failing to discharge their obligation. Credit risk (receivables) is managed pursuant to internal policies of the department. These focus on the prompt collection of revenues due and payable to the department (and to the Consolidated Fund) and follow-up of outstanding fees and charges within specified timeframes. Any write-offs require high level approval. The maximum exposure to credit risk at balance date in relation to each class of recognised financial assets is the carrying amount of those assets net of any provisions for impairment as indicated in the notes to the Statement of Financial Position. No collateral is held as security and no credit enhancements relate to financial assets held by the department. In the current financial year, the department entered into a single forward starting swap contract, which is an Over-the-Counter (“OTC”) derivative financial instrument. The notional value of the underlying swap contract is $488.507 million. As part of this transaction, the department has also executed a Credit Support Annex with the counterparty of the single forward starting swap contract. Under this agreement, margins are transferred to / from QTC (the ‘counterparty’) in line with fair value changes in the value of the derivative financial instrument. No financial assets and financial liabilities have been offset and presented net in the Statement of Financial Position. The allowance for impairment reflects the occurrence of loss events. The most readily identifiable loss event is where a debtor is overdue in paying a debt to the department according to the due date. An allowance for impairment for tax collections is calculated based on the status of the debtor (solvent or insolvent) and the age of the debt. SPER debts are impaired based on historic collection analysis. If no loss events have arisen in respect of a particular debtor or group of debtors, no allowance for impairment is made in respect of that debt/group of debtors. If department determines that an amount owing by such a debtor does become uncollectible (after appropriate range of debt recovery actions), that amount is recognised as a Bad Debt expense and written-off directly against Receivables. In other cases where a debt becomes uncollectible but the uncollectible amount exceeds the amount already allowed for impairment of that debt, the excess is recognised directly as a Bad Debt expense and written off directly against Receivables. Impairment loss expense for the current year regarding the department's receivables is $37.213 million. This is an increase of $49.415 million from 2012 and is due to the following loss events: payroll tax clients in liquidation SPER debts deemed unrecoverable

120





76 Financial instruments (continued) (c) Credit risk exposure (continued)

Ageing of past due but not impaired as well as impaired financial assets are disclosed in the following tables:



Less than 30 days

30-60 days 61-90 days More than 90

days Total overdue

$'000 $'000 $'000 $'000 $'000

Financial assets

Receivables 7,055 (6,693) 5,522 379,431 385,315

Total 7,055 (6,693) 5,522 379,431 385,315



Less than 30 days


days Total overdue

$'000 $'000 $'000 $'000 $'000

Financial assets

Receivables 21,148 19,678 3,821 443,979 488,626Total 21,148 19,678 3,821 443,979 488,626

Overdue

Overdue






(c) Credit risk exposure (continued)


2013 Individually impaired financial assets

Less than 30 days


days Total overdue

$'000 $'000 $'000 $'000 $'000

Financial assets

Receivables 418 1,005 848 348,695 350,966

Allowance for impairment (418) (1,005) (848) (348,695) (350,966)Carrying Amount .. .. .. .. ..


2012 Individually impaired financial assets

Less than 30 days


days Total overdue

$'000 $'000 $'000 $'000 $'000

Financial assets

Receivables 1,612 3,424 930 306,377 312,343

Allowance for impairment (1,612) (3,424) (930) (306,377) (312,343)Carrying Amount .. .. .. .. ..

Overdue

Overdue

2013 2012

$'000 $'000

Movements in allowance for impairment

Balance at 1 July 312,343 55,122Machinery of Government transfer - SPER opening balance

.. 269,173

Amounts written off during the year (104,661) (28,794)Amounts recovered during the year (233) 250Increase/(decrease) recognised in Statement of Comprehensive Income

143,517 16,592

Balance at 30 June 350,966 312,343

122




76 Financial instruments (continued) (d) Liquidity risk

Liquidity risk refers to the situation where the department may encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset.

The department is exposed to liquidity risk in respect of its payables, Commonwealth borrowings, borrowings from Queensland Treasury Corporation for the Floating Rate and Government Debt Pools and stadium loans. The following table sets out the liquidity risk of financial liabilities held by the department. It represents the contractual maturity of financial liabilities, calculated based on undiscounted cash flows relating to the liabilities at reporting date. The undiscounted cash flows in these tables differ from the amounts included in the Statement of Financial Position that are based on discounted cash flows.



$'000 $'000 $'000


Payables 68 571,190 .. .. 571,190 571,190

Transfer to Government payable 2,113,247 .. .. 2,113,247 2,113,247

Interest bearing liabilities 69

Commonwealth borrowings 20,515 68,449 37,126 126,090 112,674

QTC borrowings 2,498,423 7,380,028 33,404,865 43,283,316 34,914,526

Other liabilities 70

Sundry liabilities 6,628 .. .. 6,628 6,628Total 5,210,003 7,448,477 33,441,991 46,100,471 37,718,265



$'000 $'000 $'000


Payables 68 570,741 .. .. 570,741 570,741

Transfer to Government payable 1,333,724 .. .. 1,333,724 1,333,724

Interest bearing liabilities 69

Commonwealth borrowings 12,265 71,985 38,840 123,090 110,383

QTC borrowings 2,152,554 5,984,643 25,935,700 34,072,897 26,432,981

Other liabilities 70

Sundry liabilities 10,364 .. .. 10,364 10,364Total 4,079,648 6,056,628 25,974,540 36,110,816 28,458,193

Total Undiscounted

Cash Flow$'000

Carrying Amount$'000

Total Undiscounted

Cash Flow$'000

Carrying Amount$'000

2013 payable in

Notes

2012 payable in

Notes

(e) Market risk

Queensland Treasury and Trade (administered) does not trade in foreign currency and is not exposed to commodity price changes. The department is exposed to interest rate risk through its borrowings and cash deposited in interest bearing accounts. The department did not undertake any hedging in relation to interest risk in the current financial year. However, during the current financial year, the department entered into a forward starting swap contract with a notional amount of $488.507 million. In 2016, another department of the Government is expected to enter into a floating rate borrowing. At the whole of Government level, this forward starting swap contract is expected to hedge economically the interest rate payments made in relation to this borrowing. The forward starting swap contract will entitle the department to receive floating interest payments on a notional amount of $488.507 million from the swap counterparty in return for payment of fixed interest payments on a notional amount of $488.507 million to the swap counterparty.






76 Financial instruments (continued) (e) Market risk (continued)

Regular reports are provided by Queensland Treasury Corporation regarding the performance of the derivative and reported to the Treasurer on a monthly basis. This forward starting swap contract was entered into by Queensland Treasury Corporation on behalf of the department. The swap counterparty is Queensland Treasury Corporation (QTC) as agent. The fair value of the forward starting swap contract has the potential for gains or losses to arise as a result of movements in market prices that affect the inputs to the valuation techniques used to measure the fair value of the forward starting swap contract.

(f) Interest rate sensitivity analysis

The following interest rate sensitivity analysis depicts the outcome to comprehensive income if interest rates were to change by +/- 1% from the year end rates applicable to the department’s financial assets and liabilities. This is mainly attributable to the department’s exposure to variable interest rates on its borrowings from QTC, the Commonwealth and cash holdings.


Profit Equity Profit Equity

$'000 $'000 $'000 $'000 $'000

Cash (12,491) 125 125 (125) (125)

Receivables

Loans and advances 107,890 (1,079) (1,079) 1,079 1,079

Other financial assets 24,383 (244) (244) 244 244

Interest Bearing Liabilities

Commonwealth borrowings 107,890 1,079 1,079 (1,079) (1,079)

QTC borrowings - FRDP 673,865 6,739 6,739 (6,739) (6,739)

QTC borrowings - GDP 33,934,072 25,329 25,329 (23,304) (23,304)Potential Impact 31,949 31,949 (29,924) (29,924)


Profit Equity Profit Equity

$'000 $'000 $'000 $'000 $'000

Cash 45,475 (455) (455) 455 455

Receivables

Loans and advances 103,977 (1,040) (1,040) 1,040 1,040

Interest Bearing Liabilities

Commonwealth borrowings 103,977 1,040 1,040 (1,040) (1,040)

QTC borrowings - FRDP 646,011 6,460 6,460 (6,460) (6,460)

QTC borrowings - GDP 25,786,969 18,980 18,980 (18,180) (18,180)Potential Impact 24,985 24,985 (24,185) (24,185)

-1%



1%Carrying amount

Financial instruments-1%

Financial instruments1%Carrying

amount

124




76 Financial instruments (continued) (g) Fair value

Fair value hierarchy The recognised fair values of financial assets and liabilities are classified according to the following fair value hierarchy that reflects the significance of the inputs used in making these measurements: Level 1 - fair values that reflect unadjusted quoted prices in active markets for identical assets/liabilities Level 2 - fair values that are based on inputs that are directly or indirectly observable for the asset/liability (other than unadjusted quoted prices), and Level 3 - fair values that are derived from data not observable in a market. According to the above hierarchy, the fair values of each class of financial instrument carried at fair value are as follows:

Class

Level 1 $'000 Level 2 $'000 Level 3 $'000

Financial assets

Cash Other administered bank accounts

930,249 .. ..930,249

Whole of Government Treasury Offset Arrangement (13,223) .. .. (13,223) QTC working capital facility .. 732 .. 732

Derivative financial instruments .. 24,383 .. 24,383

Total 917,026 25,115 .. 942,141

Class

Level 1 $'000 Level 2 $'000 Level 3 $'000

Financial assets

Cash

Other administered bank accounts

1,072,445 .. ..1,072,445

Whole of Government Treasury Offset Arrangement 44,511

.... 44,511

QTC working capital facility .. 964 .. 964

Total 1,116,956 964 .. 1,117,920

Classification according to fair value hierarchy 2012 Total Carrying Amount

2013 Total Carrying Amount

$'000

$'000


Queensland Treasury and Trade does not recognise any financial assets or financial liabilities at fair value other than for cash and cash equivalents and derivative financial instruments on its Statement of Financial Position.

The fair value of trade receivables and payables are assumed to approximate the value of the original transaction, less any provision for impairment. The fair value of the forward starting swap contract is derived from valuation techniques commonly employed in the fair valuation of such financial instruments. These valuation techniques use inputs that are directly observable from commonly available market data. The fair value of monetary financial assets and financial liabilities, other than QTC borrowings, is based on market prices where a market exists, or is determined by discounting expected future cash flows by the current interest rate for financial assets and liabilities with similar risk profiles.





76 Financial instruments (continued) (g) Fair value (continued)

The fair value of borrowings is notified by the Queensland Treasury Corporation. It is calculated using discounted cash flow analysis and the effective interest rate and is disclosed below:


Fair value

Carrying amount

Fair value Carrying amount

Fair value

$'000 $'000 $'000 $'000

Financial assets

Receivables

Loans and advances 179,362 170,091 178,158 176,025

179,362 170,091 178,158 176,025


Interest bearing liabilities

Commonwealth borrowings 112,674 107,100 110,383 110,219

QTC borrowings 34,914,526 36,651,962 26,432,981 28,671,255Total 35,027,200 36,759,062 26,543,364 28,781,474

2013 2012

126



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78 Trust transactions and balances

As the department performs only a custodial role in respect of these transactions and balances they are not recognised in the financial statements but are shown here for disclosure purposes.

Name Description Local Government General Rates Equivalent Regime

The Local Government General Rates Equivalent Regime collects general rates equivalents on port land in commercial use by government owned concerns and SEQ Bulk Water authorities. General Rates Equivalents are then forwarded to local authorities.

Services Provision Fund Microsoft provided an amount equal to 6% of total purchases made by government agencies into the Government Information Technology Committee Services Provision Fund (GITC SPF) each year. The GITC SPF is used to fund Queensland Government projects that meet certain criteria. This program has ceased and the Fund is now closed.

QR National Refund Account Queensland Treasury and Trade as the supply facilitator for the sale of QR National managed the bank accounts associated with the ‘Initial Public Offering’ (IPO). The Department held the remaining account in trust for the State of Queensland and did not have any control over the funds. Net proceeds including interest to date were recorded in the Consolidated Fund for the State of Queensland. This account is now closed and the remaining funds held in Trust were transferred to the Public Trustee during 2012-13.

ICT Innovation Fund The ICT Innovation Fund provides funding for the identification and implementation of innovative ways for the Queensland Government to do business through early engagement of ICT-enabled projects, including feasibility studies, pilot projects and proofs of concept. This program has ceased and the Fund is now closed.

The Queensland Auditor–General performed the audit of the department’s trust transactions for 2012-13. Funds listed below are held by ‘The corporation sole of the Treasurer of Queensland’ as constituted under section 53 of the Financial Accountability Act 2009 on behalf of the bodies which do not have the power to invest in their own right or who are required to lodge security or other deposits.

Fund name Audit arrangements Friendly Societies Auditor-General of Queensland Security Deposits Auditor-General of Queensland Public Sector Management Program Auditor-General of Queensland Trust Company Security Deposits Auditor-General of Queensland

128





78 Trust transactions and balances (continued)

2013 2012

$'000 $'000

Expenses and revenue administered on behalf of other entities

Administered revenues

Interest income 29 208

Tax equivalent receipts 3,954 3,398

Service Provision Fund revenue .. ..Total administered revenue 3,983 3,606

Administered expenses

Transfers to other government entities 1,713 ..Administration charges 1 1Special payments 3,980 3,392Service Provision Fund claims .. 2,778Interest expense 378 173Total administered expenses 6,072 6,344

Net surplus/(deficit) (2,089) (2,738)

Assets and liabilities administered on behalf of other entities

Administered current assets

Cash at bank

QR National .. 2Local Government General Rates Equivalents Regime (17) 9Services Provision Fund .. 1,713Treasurer of Queensland Deposits 84 1,189

Total 67 2,913

Investments

Government and other bonds 140 140Total 140 140

Total administered assets 207 3,053

Other creditors

Accrued expenses (3) (6)Other deposits held .. (2)

Total (3) (8)

Total administered liabilities (3) (8)

Net assets 204 3,045




79 Transfer payments

Payments under the Intergovernmental Agreement on Federal Financial Relations are made from the Commonwealth Treasury to the State and Territory Treasuries. These payments represent Specific Purpose Payments, National Partnership Payments and general revenue assistance.

While most of these payments are receipted and paid out to departments via appropriation funding, some payments are passed on directly to the relevant entities. These payments occur where: The payment is ultimately for a third party – for example, non-Government schools and local governments The payment is a reimbursement of expenditure incurred by the State after invoicing the Commonwealth, or The agreement with the Commonwealth requires the payment to be paid into an interest bearing account held by the final

recipient of the funding.

Amounts received from the Commonwealth for direct payments to the following entities in 2012-13 totalled $1.864 billion (2012: $1.776 billion):

Department of Education, Training and Employment (Non-government schools, $1,821.868 million) Department of Natural Resources and Mines (Caring for our country, $23.02 million) Department of Agriculture, Fisheries and Forestry (Plant disease and eradication, $17.602 million; Exotic Disease

Preparedness Program, $0.01 million) Department of Local Government, Community Recovery and Resilience (Local Government Reform Fund,

$0.208 million) Red Cross – Commonwealth Government’s donation to Queensland Floods Appeal 2013 ($1 million).

80 Agency transactions

(a) Queensland Treasury and Trade currently acts as an agent and processes grant payments on behalf of a number of

Queensland government departments. These transactions do not form part of Queensland Treasury and Trade's accounts and are instead reported by the various departments. For the 2012-13 financial year the total value of grants paid was $49.309 million (2012: $65.807 million).

(b) Queensland Treasury and Trade also acts as an agent in the collection and distribution of unpaid infringement fines and court ordered monetary amounts for various external parties including Local Government bodies, Universities and individuals.

2013 2012

$'000 $'000

Opening balance 9,953 9,303 *

Collections 37,309 2,982

Distributions to principals (35,135) (2,332)

Balance 30 June 12,127 9,953

* The functions of the State Penalties Enforcement Registry were transferred from the Department of Justice and Attorney-General to Queensland Treasury and Trade as a result of a machinery of Government change, effective date 1 June 2012.



130



CERTIFICATE OF QUEENSLAND TREASURY AND TRADE These consolidated general purpose financial statements have been prepared pursuant to section 62(1) (a) of the Financial Accountability Act 2009 (the Act), relevant sections of the Financial and Performance Management Standard 2009 and other prescribed requirements. In accordance with section 62(1) (b) of the Act we certify that in our opinion: (a) the prescribed requirements for establishing and keeping the accounts have been complied with in all material respects; and (b) the statements have been drawn up to present a true and fair view, in accordance with prescribed accounting standards, of

the transactions of Queensland Treasury and Trade for the financial year ended 30 June 2013 and of the financial position of the department at the end of that year.

D ANSON FCPA, BBus H GLUER MBA, BCom, FCPA, FAICD Chief Financial Officer Under Treasurer 29 August 2013 29 August 2013



INDEPENDENT AUDITOR’S REPORT

To the Accountable Officer of Queensland Treasury and Trade

Report on the Financial Report

I have audited the accompanying financial report of Queensland Treasury and Trade, which comprises the statements of financial position and statements of assets and liabilities by major departmental services as at 30 June 2013, the statements of comprehensive income, statements of changes in equity, statements of cash flows and statements of comprehensive income by major departmental services for the year then ended, notes comprising a summary of significant accounting policies and other explanatoryinformation,andthecertificatesgivenbytheUnderTreasurerandChiefFinancialOfficeroftheDepartmentandtheconsolidated entity comprising the Department and the entities it controlled at the year’s end or from time to time during the financial year.

Accountable Officer’s Responsibility for the Financial Report

The Accountable Officer is responsible for the preparation of the financial report that gives a true and fair view in accordance with prescribed accounting requirements identified in the Financial Accountability Act 2009 and the Financial and Performance Management Standard 2009, including compliance with Australian Accounting Standards. The Accountable Officer’s responsibility also includes such internal control as the Accountable Officer determines is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Myresponsibilityistoexpressanopiniononthefinancialreportbasedontheaudit.Theauditwasconductedinaccordancewiththe Auditor-General of Queensland Auditing Standards, which incorporate the Australian Auditing Standards. Those standards require compliance with relevant ethical requirements relating to audit engagements and that the audit is planned and performed to obtain reasonable assurance about whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of the financial report that gives a true and fair view in order to design audit procedures that are appropriateinthecircumstances,butnotforthepurposeofexpressinganopinionontheeffectivenessoftheentity’sinternalcontrol,otherthaninexpressinganopiniononcompliancewithprescribedrequirements.Anauditalsoincludesevaluatingtheappropriateness of accounting policies used and the reasonableness of accounting estimates made by the Accountable Officer, as well as evaluating the overall presentation of the financial report including any mandatory financial reporting requirements approved by the Treasurer for application in Queensland.

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 by Parliament.

The Auditor-General may conduct an audit in any way considered appropriate and is not subject to direction by any person about thewayinwhichauditpowersaretobeexercised.TheAuditor-Generalhasforthepurposesofconductinganaudit,accesstoalldocuments and property and can report to Parliament matters which in the Auditor-General’s opinion are significant.

Opinion

In accordance with s.40 of the Auditor-General Act 2009 –

(a) havereceivedalltheinformationandexplanationswhichIhaverequired;and

(b) in my opinion –

(i) the prescribed requirements in relation to the establishment and keeping of accounts have been complied with in all material respects; and

(ii) the financial report presents a true and fair view, in accordance with the prescribed accounting standards, of the transactions of the Queensland Treasury and Trade and the consolidated entity for the financial year 1 July 2012 to 30 June 2013 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 provide assurance on the integrity of the information presented electronically and does not provide an opinion on any information which may be hyperlinked to or from the financial statements. If users of the financial statements are concerned with the inherent risks arising from electronic presentation of information, they are advised to refer to the printed copy of the audited financial statements to confirm the accuracy of this electronically presented information.

Queensland Audit OfficeBrisbane

132

PublicationsQueensland Treasury and Trade produces a range of publications, guidelines, forms and other documents relating to:

• financialandeconomicpolicy

• governmentownedcorporations

• economic,statisticalanddemographic research, including economic reports such as the Queensland Economic Review

• infrastructureprojects

• exportandbusinessdevelopment

• staterevenue,includinglandtax,payrolltaxandduties

• theGreatStartGrantforfirsthomebuyers

• adviceonpayinginfringementnotices and fines.

Many of these publications are available online through www.treasury.qld.gov.au or by contacting the relevant Treasury and Trade office.

Statutory bodiesTransactions for the following statutory bodies and entities are accounted for in their own annual reports.

The Treasurer and Minister for Trade is a joint Minister for the following entities which were established under the South East Queensland Water (Restructuring)Act2007:

• QueenslandBulkWaterSupplyAuthority (trading as Seqwater): responsibility shared with the Minister for Energy and Water Supply

• QueenslandBulkWaterTransportAuthority (trading as LinkWater): responsibility shared with the Minister for Energy and Water Supply

• SEQWaterGridManager:responsibility shared with the Minister for Energy and Water Supply.

Read more

Read more about Treasury and Trade’s:

• contributiontotheGovernment’s Multicultural Action Plan

• spendingonconsultanciesandoverseas travel

online at data.qld.gov.au/

Appendices

* Abolished from 1 July 2013

Statutory body Legislative basis under which established

Motor Accident Insurance Commission MotorAccidentInsuranceAct1994

Nominal Defendant MotorAccidentInsuranceAct1994

Queensland Competition Authority QueenslandCompetitionAuthorityAct1997

Queensland Treasury Corporation Queensland Treasury Corporation Act 1988

Queensland Future Growth Corporation* Future Growth Fund Act 2006


Treasury and Trade legislation

• AboriginalLandAct1991(Part7totheextentthatitisrelevanttoroyalties)

• Agent-GeneralforQueenslandAct1975

• AirportAssets(RestructuringandDisposal)Act2008

• AlcanQueenslandPty.LimitedAgreementAct1965(totheextentthat it is relevant to royalties)

• AnzacSquareDevelopmentProjectAct1982

• AppropriationAct2009



• AppropriationAct(No.2)2008

• Appropriation(Parliament)Act2008




• Appropriation(Parliament)Act(No.2)2008

• BrisbaneMarketsAct2002

• BrisbaneTradesHallManagementAct1984

• CentralQueenslandCoalAssociatesAgreementAct1968(totheextentthat it is relevant to royalties) (Sch pt V)

• CommonwealthAluminiumCorporation Pty. Limited Agreement Act1957(totheextentthatitisrelevant to royalties)

• CommonwealthandStateStatisticalAgreementAct1958

• CommonwealthPlaces(MirrorTaxesAdministration) Act 1999

• CommonwealthSavingsBankofAustralia Agreement Act 1966

• CommunityAmbulanceCoverLevyRepeal Act 2011

• CompetitionPolicyReform(Queensland) Act 1996

• DalrympleBayCoalTerminal(Long-Term Lease) Act 2001

• DutiesAct2001

• EnergyAssets(RestructuringandDisposal) Act 2006

• FamilySecurityFriendlySociety(Distribution of Moneys) Act 1991

• FinancialAccountabilityAct2009

• FinancialAgreementAct1994

• FinancialIntermediariesAct1996

• 1996FinancialSectorReform(Queensland) Act 1999

• FirstHomeOwnerGrantAct2000

• FossickingAct1994(totheextentthat it is relevant to royalties)

• FuelSubsidyRepealAct2009

• FutureGrowthFundAct2006

• GamingMachineAct1991(ss314(1),314(3) and 322(5))

• GeothermalEnergyAct2010(totheextentthatitisrelevanttoroyalties)

• GovernmentInscribedStockAct1920

• GovernmentLoanAct1986

• GovernmentLoansRedemptionandConversion Act 1923

• GovernmentOwnedCorporationsAct1993

• GovernmentStockAct1912

• GSTandRelatedMattersAct2000

• InfrastructureInvestment(AssetRestructuring and Disposal) Act 2009

• Judges(PensionsandLongLeave)Act1957 (s17)

• LandTaxAct2010

• LiquorAct1992(ss219(2),219(3)and 220(3))

• MineralResourcesAct1989(totheextentthatitisrelevanttoroyalties)

• MotorAccidentInsuranceAct1994

• MountIsaMinesLimitedAgreementAct1985(totheextentthatitisrelevant to royalties)

• MutualRecognition(Queensland)Act1992

• OccupationalLicensingNationalLaw(Queensland) Act 2010

• OffshoreMineralsAct1998(totheextentthatitisrelevanttoroyalties)

• PayrollTaxAct1971

• PetroleumAct1923(totheextentthat it is relevant to royalties)

• PetroleumandGas(ProductionandSafety)Act2004(totheextentthatitis relevant to royalties)

• Petroleum(SubmergedLands)Act1982(totheextentthatitisrelevantto royalties)

• PublicOfficers’SuperannuationBenefitsRecoveryAct1988

• QueenslandCompetitionAuthorityAct 1997 (jointly administered with the Attorney-General and Minister for Justice)

• QueenslandInvestmentCorporationAct 1991

• QueenslandNickelAgreementAct 1970 (all financial and related matters);(totheextentthatitisrelevant to royalties)

• QueenslandTreasuryCorporationAct1988

• SouthEastQueenslandWater(Restructuring) Act 2007 (including as a responsible Minister for the purposes of Chapter 2 of the Act)

• StateFinancialInstitutionsandMetway Merger Facilitation Act 1996

• StatePenaltiesEnforcementAct1999

• StatisticalReturnsAct1896

• StatutoryAuthorities(SuperannuationArrangements) Act 1994

• StatutoryBodiesFinancialArrangementsAct1982

• Superannuation(PublicEmployeesPortability)Act1985

• Superannuation(StatePublicSector)Act 1990

• TaxationAdministrationAct2001

• ThiessPeabodyCoalPty.Ltd.AgreementAct1962(totheextentthat it is relevant to royalties)

• ThiessPeabodyMitsuiCoalPty.Ltd.AgreementsAct1965(totheextentthat it is relevant to royalties)

• TorresStraitIslanderLandAct1991(Part7totheextentthatitisrelevantto royalties)

• Trans-TasmanMutualRecognition(Queensland) Act 2003

134

Glossary

AUSkey

Software used for logging into and using business-to-government online services. A business’s AUSkey authenticates or verifies the user’s identity, and gives them access to participating online services without the need for different user IDs and passwords for each service.

COAG

Council of Australian Governments – the peak intergovernmental forum in Australia. Comprises the Prime Minister, State and Territory Premiers and Chief Ministers and the President of the Australian Local Government Association. Currently pursuing reform in economic and social participation, strengthening the national economy, sustainability and liveability, health services and Indigenous disadvantage.

Duties

AStatetaxoncertaintransactionsincluding transfer of property, vehicle registration, insurance contracts and other acquisitions.

Enterprise content management (ECM)

A system covering all aspects of how an organisation manages its information - document management, web content management, search, collaboration, records management, workflow management, capture and scanning. ECM aims to make the management of corporate information easier through unifying search, storage, security, version control, process routing, and retention.

Land tax

Statetaxonfreeholdland,assessedonthetaxablevalueofanowner’stotal land holdings.

Machinery of Government

Usually refers to changes to Government departments or agencies, often after an election. Can involve creating or abolishing departments or moving functions from one department to another.

Natonal e-Conveyancing Development Limited (NECDL)

A company formed by the Victorian, New South Wales, Queensland and Western Australian Governments to deliver a national electronic conveyancing solution to the Australian property industry. NECDL usesPEXA-PropertyExchangeAustralia – a purpose-built system for lodgements and property settlements to be performed online.

Payroll tax

Statetaxpaidifacompanypaysmorethan$1.1millionperyearintaxablewages. From 1 July 2015 the threshold willriseto$1.2millionandwillcontinuetoincreaseby$100,000eachyearuntilitreaches$1.6millionon 1 July 2019.

Project proponent

Inthecontextofmajorinfrastructure,a proponent is one who puts forward a proposition or proposal.

Queensland Competition Authority

Independent statutory authority created out of a national approach to competition policy. Provides independent, objective appraisal of issues such as significant government business activities which compete with the private sector, Government-owned monopolies and privately owned water monopolies, and accessibility of essential infrastructure. Now includes the Office of Best Practice Regulation.

SPER

State Penalties Enforcement Registry. Part of the Office of State Revenue, SPER is responsible for collecting and enforcing unpaid infringement notice fines, court ordered monetary fines and offender recovery orders issued in Queensland.

Supply/value chain

System or ‘chain’ of organisations, people, technology, activities, information and resources involved in moving a product or service from supplier to customer. Supply chain activities transform resources, materials and components into a finished product that is delivered to the end customer.


Index1 William Street 22, 23, 25

2012-13 highlights 3

2013-14 – the year ahead 3

Abbot Point 24

About us 4-6

Changes in Treasury 4

How we began 4

Meeting the Government’s objectives 6

Organisational chart 5

Who we are 4

What we do 4

Audit, including Internal Audit 43-44

Appendices 132-136

Publications 132

Statutory bodies 132

Legislation 133 BowenBasin 18

Business Liaison Program 7, 15

Business & skilled migration 11, 31, 33

GalileeBasin 18

Carbon price 17

Changes in Treasury (machinery of Government) 4

Charter of Fiscal Responsibility 39

Code of Conduct 42

Commission of Audit 2, 13, 14

Commercial services/ Projects Queensland 9, 21

Consultancies Open Data portal

Consultative committee 37

Contact us 136 Corporate governance (Managing our organisation) 39-45

Council of Australian Governments(COAG) 8,16,19

Document and records management 44-45

Dividends,GOCs 8,19

e-business 28

e-conveyancing 28

Economic&StructuralPolicydivision 8,16

Energy 17

Ethics 42

Export-advice,assistance,awards 11,31-34

Externalaudits/scrutiny 42-43

Financial Accountability Act 2009 40, 43, 46

Financial and Performance Management Standard 2009 40, 43

Financial statements 51

Financial summary 46-50

Fiscal Discipline & Reform Unit 2

Fiscal division 7, 12

Generators, energy 17

Glossary 134

GOCs 8,19

Government objectives for community 6

Government precinct, Brisbane 23,25

Government Wireless Network 2, 9, 22, 23

GreatStartGrant 10,28

How we began 4

IndexofRetailPrices 18

Infrastructure 9, 21-25

Internal Audit 43-44

International activities 31-34

Leading Treasury & Trade 40-41

Legislation 133

Letter of compliance inside front cover

Linkwater 2,3,8,20,132

Machinery of Government changes (Changes in Treasury) 4

Managing our organisation (corporate governance) 39-45

Mid Year Fiscal and Economic Review 7, 14

Mission 3

Multicultural Open Data portal

Mining(resource)communities 18

NationalPartnershipAgreements 8,19

Natural disasters 13, 14

New Generation Rollingstock 23

OfficeofBestPracticeRegulation 18-19

Office of State Revenue 10, 26-30

Organisational structure 5, 40-41

Our people 35-38

Families 38

GRADStart 38

Health,safetyandwellbeing 37-38

Performance management 35

Redundancies, other separations 37

Study and Research Assistance Scheme (SARAS) 35-36

Workforce attraction and retention 35-36

Workforce profile (at a glance) 36 Workforce strategy 35

Workplace health and safety 37-39

Ourfinancialpositionexplained (financial summary) 46-50

Overseas travel Open Data portal

Payrolltax 28,30

Performance management 35

Populationprojections 18

Professional development 35-37

Projects Queensland 9, 21

Publications 132

Public private partnerships 9, 21, 23

Public Sector Renewal 2

QGrants 29

Qld Future Growth Fund 4, 19

Qld Government Insurance Fund 47

Qld Schools project 2, 9, 22, 24

Queensland Rail 19

Recruitment 35

Regulatory reform, redtapereduction 8,16-20

Report on State Finances 14

ResourcesCommunitiesDataPortal 8,18

Revenue–GOCs 8,19

RevenueManagementSystem(RMS)10,28

Reward, recognition programs 35

Risk management 43, 44

Royal Children’s Hospital site 9, 22, 24

Royalties 10, 27, 29, 47

Study and Research Assistance Scheme 35-36

SeamlessNationalEconomy 8,16,19

Seqwater 2,8,19,20,132

SEQWaterGridManager 2,3,8,20,132

Service reports Commercial services/

Projects Queensland 21

Year in Review 9

Economic 16

Yearinreview 8

Fiscal 12

Year in review 7

Revenue management 26

Year in review 10

Trade and investment 31 Year in review 11

StateBudget 3,7,13-14,15,28-29,39

Statement of Assurance – Chief Financial Officer 46

Statements of Corporate Intent (GOCs) 19

State Penalties Enforcement Registry(SPER) 10,27,28

Statutory bodies 4, 132

Strategic plan 39

SuratBasin 18

Surveys 18

Toowoomba 2nd Range Crossing 22, 24

Trade and Investment Queensland 2, 11, 31-34

Transfer duty 27-29

Translating and interpreting Inside front cover

Under Treasurer’s report 2

Values, vision 3

Voluntary Separation Program (whole of Government) 7

Waterauthorities 2,8,16,20,132

What we do, who we are 4

Woleebee Creek pipeline 24

Workers compensation claims 37

Workforce demographics 36

Workplacehealthandsafety 37,38

Year in review/year ahead 7-11

136

Contact us

Queensland Treasury and Trade – principal place of business

ExecutiveBuilding 100 George Street GPOBox611 BRISBANE QLD 4001 Australia

Phone: +61 7 3035 1933

Office of the Under Treasurer Phone +61 7 3035 1933

Cabinet Legislation and Liaison Officer Phone +61 7 3035 1924

Legal Services Unit Phone +61730351870

Trade and Investment Queensland Exporthotline (informationonexportingyourbusiness) +61 7 3224 4035 (8.30am-4.30pmMondaytoFriday)

Address: Trade and Investment Queensland GPOBox611 BRISBANE QLD 4001 Australia

Web www.export.qld.gov.au

www.export.qld.gov.au/contact-us (internationalofficesorregionalexperts)

www.facebook.com/TradeandInvestmentQld

Fiscal division

Phone: +61 7 3035 1933

Address: Executivebuilding 100 George Street BRISBANE QLD 4000

Economic and Structural Policy Division

Phone: +61 7 3035 1933

Address: Executivebuilding 100 George Street BRISBANE QLD 4000

Projects Queensland

Phone: +61730351847

Address: GPOBox611 BRISBANE QLD 4001

E-mail: [email protected]

Web: www.treasury.qld.gov.au/projects-queensland

Motor Accident Insurance Commission

Phone: +61 7 3035 6327


Email: [email protected]

Web: www.maic.qld.gov.au

Nominal Defendant

Phone: +61 7 3035 6321



Office of State Revenue

Phone: (in Australia) 1300 300 734

Address: POBox15931 CITY EAST QLD 4002


Web: www.osr.qld.gov.au

State Penalties Enforcement Registry

Phone: (in Australia) 1300 365 635

Address: The Registrar SPER GPOBox1387 BRISBANE QLD 4001


Web: www.sper.qld.gov.au

Corporate Services

Phone: +61 7 3035 3101

Address: Level 3 33 Charlotte Street BRISBANE QLD 4000

FeedbackHelp us improve our annual report by sharing your feedback with us through the Government’s Get Involved website – www.getinvolved.qld.gov.au

Queensland Treasury Corporation

Phone: +61738424600

Address: Level 6, 123 Albert Street, BRISBANE Qld 4000 GPOBox1096, BRISBANE QLD 4001


Web: www.qtc.qld.gov.au/qtc/public

17 September 2013

The Honourable Tim Nicholls MPTreasurer and Minister for Trade GPO Box 611Brisbane Qld 4000

Dear Treasurer

I am pleased to present the Annual Report 2012-2013 and fi nancial statements for Queensland Treasury and Trade.

I certify that this Annual Report complies with:

• the prescribed requirements of the Financial Accountability Act 2009 and the Financial and Performance Management Standard 2009, and

• the detailed requirements set out in the Annual report requirements for Queensland Government agencies.

A checklist outlining the annual reporting requirements can be found at www.treasury.qld.gov.au.

Yours sincerely


© The State of Queensland (Queensland Treasury and Trade) 2013

Licence:

This annual report is licensed by the State of Queensland (Queensland Treasury and Trade) under a Creative Commons Attribution (CC BY) 3.0 Australia licence.

In essence, you are free to copy, communicate and adapt this annual report as long as you attribute the work to the State of Queensland (Queensland Treasury and Trade).

To view a copy of this licence, visit http://creativecommons.org/licenses/by/3.0/au/deed.en

Attribution:

Content from this annual report should be attributed as:The State of Queensland (Queensland Treasury and Trade) Annual Report 2012-13

ISSN 1837-2848

Translating and interpreting assistance

The Queensland Government is committed to providing accessible services to Queenslanders from culturally and linguistically diverse backgrounds.

If you have diffi culty in understanding the annual report, you can contact us on +61 7 3035 3503 between 9am-5pm, Monday to Friday (except for public holidays).

We will arrange an interpreter to effectively communicate the report to you.

Queensland Treasury and TradeAnnual Report 2012–13 www.treasury.qld.gov.au


Documents

Queensland Treasury and Trade...Brisbane Qld 4000 Dear Treasurer I am pleased to present the Annual Report 2012-2013 and ﬁ nancial statements for Queensland Treasury and Trade. I