1. Value Sharing in Queensland 21 March 2016

2. Page 2 Copyright © 2016 Ernst & Young Australia. All Rights Reserved. Liability limited by a scheme approved under Professional Standards Legislation Part II – Evaluation of value sharing mechanisms

3. Page 3 Copyright © 2016 Ernst & Young Australia. All Rights Reserved. Liability limited by a scheme approved under Professional Standards Legislation EY’s evaluation of value sharing mechanisms ► Evaluation criteria: ► Mechanisms were rated as follows: ► : very likely to meet the criterion ► : moderately likely to meet the criterion ► : less likely to meet the criterion 1.Public interest, equity and stakeholder acceptance 2.Deliverability, efficiency, cash flow robustness and risk

4. Page 4 Copyright © 2016 Ernst & Young Australia. All Rights Reserved. Liability limited by a scheme approved under Professional Standards Legislation Value sharing with landowners, occupiers and developers Beneficiary CategoryFunding Mechanism (1) Public interest, equity and stakeholder acceptance (2) Deliverability, efficiency, cash flow robustness and risk Landowners, occupiers and developers Local residential rates levy State land levy Developer charges and contributions Property rights & commercial development

5. Page 5 Copyright © 2016 Ernst & Young Australia. All Rights Reserved. Liability limited by a scheme approved under Professional Standards Legislation Value sharing with users and operators Beneficiary CategoryFunding Mechanism (1) Public interest, equity and stakeholder acceptance (2) Deliverability, efficiency, cash flow robustness and risk Users and operators User charges Registration and fuel charges levy Operator dividends

6. Page 6 Copyright © 2016 Ernst & Young Australia. All Rights Reserved. Liability limited by a scheme approved under Professional Standards Legislation Value sharing with businesses and employees Beneficiary CategoryFunding Mechanism (1) Public interest, equity and stakeholder acceptance (2) Deliverability, efficiency, cash flow robustness and risk Businesses and employees Local business rates levy Payroll tax levy

7. Page 7 Copyright © 2016 Ernst & Young Australia. All Rights Reserved. Liability limited by a scheme approved under Professional Standards Legislation Value sharing with businesses and employees Beneficiary CategoryFunding Mechanism (1) Public interest, equity and stakeholder acceptance (2) Deliverability, efficiency, cash flow robustness and risk Governments Local government tax uplift State tax uplift Federal tax uplift

8. Page 8 Copyright © 2016 Ernst & Young Australia. All Rights Reserved. Liability limited by a scheme approved under Professional Standards Legislation Part III – Identifying opportunities and constraints in the Queensland context

9. Page 9 Copyright © 2016 Ernst & Young Australia. All Rights Reserved. Liability limited by a scheme approved under Professional Standards Legislation Implementing value sharing in Queensland How would this be achieved in practice? What are the current policy avenues available? Value sharing in Queensland is not new ►Gold Coast Rapid Transit ►Lend Lease RNA Showground re-development ►Holland Park Suburban Centre Improvement Project ►Caxton St Improvement Project Charge The challenge is to integrate it into planning delivery and operations for all new projects Statewide

10. Page 10 Copyright © 2016 Ernst & Young Australia. All Rights Reserved. Liability limited by a scheme approved under Professional Standards Legislation Implementing value sharing in Queensland ► Any policy framework must still be designed having regard to: ► Robust review of available mechanisms ► Project type ► Collection mechanism ► Revenue timing/certainty/risk ► Risk allocation ► Legislative changes ► Can you share in value created outside pre-construction, project delivery and operations phases?

11. Page 11 Copyright © 2016 Ernst & Young Australia. All Rights Reserved. Liability limited by a scheme approved under Professional Standards Legislation Implementing value sharing in Queensland Potential approach to staging value sharing during project development StageDescription 1. Opportunities for value creation ► What is the scope of the project? ► Who will benefit from the project? ► What is the nature of the benefit? ► Can the benefit be quantified? 2. Identification of potential value sharing mechanisms ► What mechanisms can be reasonably employed to share the value identified? ► ‘First pass’ evaluation based on public interest, equity, implementation considerations and potential contribution to project funding 3. Quantification of value sharing mechanisms ► Data gathering ► Assumptions and variables development ► Financial modelling 4. Development of value sharing package ► How much revenue could be generated? ► How accessible is the potential revenue? ► How direct is the link to the beneficiary? ► Development of a bankable and deliverable package ► Are there any distortionary impacts/unintended consequences 5. Execution plan ► Governance ► Procurement ► Finance ► Agreements and other legal enables ► Technical enablers ► Supporting investment ► Communication and engagement

12. Page 12 Copyright © 2016 Ernst & Young Australia. All Rights Reserved. Liability limited by a scheme approved under Professional Standards Legislation Governance and capability Policy needs governance and delivery capability. Consider: ► Policy ownership ► Whether policy is optional/mandatory ► Responsibility for raising finance ► Responsibility for revenue allocation

13. Page 13 Copyright © 2016 Ernst & Young Australia. All Rights Reserved. Liability limited by a scheme approved under Professional Standards Legislation Challenges in the Queensland environment Fundamental shifts are required ► Key challenges: ► Collection and distribution ► Complexity of governance ► Effective conversion of revenues into project finance ► Federal/State/Local government interfaces

14. Ernst & Young Assurance | Tax | Transactions | Advisory About Ernst & Young EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com. The information in this document and in any oral presentations made by EY is confidential to EY and should not be disclosed, used, or duplicated in whole or in part for any purpose other than the evaluation by ARUP and DTMR of EY for the purposes of this proposal. © 2016 Ernst & Young, Australia. All Rights Reserved. Liability limited by a scheme approved under Professional Standards Legislation.