Queensland Rail is a very big monopoly business owned by the state
government. Revenue out of Australia will soon top $3 billion and this
week’s $446 million purchase of ARG’s WA bulk commodity rail business
will lift total assets above $9 billion.

Splashing taxpayer funds on assets thousands of kilometres away from
Queensland is not exactly the type of core service Sunshine State
residents would be expecting from the Beattie Labor Government. Indeed, NSW Premier
Morris Iemma cited Snowy’s construction of a new power station in
Victoria as one of the reasons for dumping the controlling 58% stake
owned by the NSW government.

It was interesting to read in The AFR today that Queensland Rail
CEO Bob Scheuber is a real old school train enthusiast who remains a
member of Rail, Tram and Bus Union and followed his father into the
business more than 30 years ago.

So who is in charge of the big picture strategy at QR? A quick look at the board
suggests an interesting combination of transport types, accountants,
councillors and unionists, which is nothing like the board of, say,
Patrick Corp or Toll Holdings. The six longest serving QR directors
have averaged about five years and mostly joined in a major board clean
out after the Beattie Government was elected in 1999. They are:

Bronwyn Morris (Chairman): accountant turned professional director
Paul Bell: Emerald Shire councillor for 20 years, including nine as mayor
Warren McLachlan: mayor of Monto Shire and former chairman of Cattlemen’s Union
Richard Joel: former long-time CEO of Brisbane Council’s Office of Economic Development
Dawson Petie: former general secretary ACTU Queensland and general manager QIC
Cathie Wood: runs training company and has transport industry experience

However, the commercial strength of the board was strengthened in July last year with these three appointments:

Susan Rix: partner at accountant BDO Kendells and experienced on several government boards

Robert Holloway:
IT veteran and former Queensland state director for Optus
John West: 30-year veteran of transport industry

They replaced:

Ted Brown: former Dean of Engineering at University of Queensland
Clare Endicott: plaintiff lawyer
David Stevenson: director

That said, what remains is still an unusual combination with the one
common theme being that all nine directors are Queenslanders at a time
when the business is attempting to go national. Buying interstate
assets is clearly tolerated but getting out-of-towners to help guide
the strategy is not. The board clearly has strong Labor Party
connections but not excessively so given the size and complexity of the
business.

One other interesting Labor connection in this week’s $1.3 billion sale
of ARG is that QR’s buying partner, Babcock & Brown, has close ties
to the Queensland Government. Beattie’s former Treasurer David Hamill
is now chairman of Babcock & Brown Infrastruture, the business that
was founded when the investment bank paid almost $600 million to the
Queensland government for the Dalrymple Bay coal terminal in Mackay.

Why the Beattie Government is selling coal ports in Queensland and
buying trains to carry bulk commodities in WA is a little hard to
fathom, but this is something you can do when your balance is about $20
billion stronger than any other state.

Peter Fray

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