Australian Financial Review
17th February 2006

Queensland Rail

In approving the purchase by Queensland Rail (QR) of rail networks in Western and South Australia, Premier Peter Beattie indicated his belief in competition (February 15).

Indeed, with QR required by the Queensland Competition Authority to allow access to its rail network and thus face freight competition from Pacific National, Mr Beattie was spurred to ask - "What's wrong with competition between the public sector and the private sector?"

However, questions do arise regarding level playing fields.

As QR is a corporation, albeit 100 per cent government owned, are its major investment decisions subject to approval by the Queensland Government or determined by the Board?

If QR is adopting a policy of competition, will it now adopt policies that produce a return on assets more comparable to that in the private sector or will it continue to "achieve" the return of recent years about equivalent to the long term bond rate?

And,in the spirit of fair competition, will the Queensland Government take steps to reduce the subsidies of nearly $800 million a year which it provides QR for, inter alia, low volume freight services?

Finally, while Beattie rejected any idea of selling QR, there is also a question as to whether his state might not better realise its assets of $8.6 billion and use them for improving social infrastructure.