Notes to the Financial Statements

For the year ended 30 June 2004

Contingent liabilities
In addition to the liabilities incorporated in the financial statements, the Department has the following contingent liabilities:

Litigation in progress:

1. The Department has pending litigation that may affect the financial position to the value of $60,000 in relation to an alleged damages claim. The Department has disclaimed liability.
2. The Department has pending litigation that may affect the financial position to the value of $70,000 in relation to an alleged contractual claim by a supplier. The Department has disclaimed liability.
3. The Department has pending litigation that may affect the financial position to the value of $1,000,000 in relation to alleged losses claimed. The Department has disclaimed liability.
4. The Department has pending litigation that may affect the financial position to the value of $350,000 in relation to a common law claim. The Department has disclaimed liability.

36. Financial instruments

(a) Interest rate risk exposure

The following table details the Department's exposure to interest rate risk as at the reporting date:

	Variable interest rate $ 000	Less than 1 year $ 000	1 to 5 years $ 000	More than 5 years $ 000	Non interest bearing $ 000	Total $ 000
2004 Financial assets
Cash assests	7,281	-	-	-	7,085	14,366
Restricted cash assets	99	-	-	-	6,798	6,897
Receivables	-	-	-	-	5,450	5,450
	7,380	-	-	-	19,333	26,713
Weighted average interest rate	5.02%
Financial liabilities
Payables	-	-	-	-	6,022	6,022
WATC loans	-	2,581	7,916	1,836	-	12,333
	-	2,581	7,916	1,836	6,022	18,355
Weighted average interest rate		5.93%	6.43%	6.22%
2003
Financial assets	10,080	-	-	-	44,099	54,179
Weighted average interest rate	4.88%
Financial liabilities	-	13,610	57,765	204,056	16,565	291,996
Weighted average interest rate		6.47%	5.27%	6.03%

(b) Credit risk exposure

The credit risk of the Department's financial assets relating to receivables which have been recognised in the Statement of Financial Position is the carrying amount, net of any provision for doubtful debts.

(c) Foreign exchange risk exposure

In 2003, the Department had an exposure to changes in foreign exchange rates resulting from its bus replacement program which requires payment for bus chassis to be made in Euros.

The Department utilised forward exchange contracts and options in Euros to hedge that risk. The purpose of the Department's foreign currency hedging activities was to protect against the risk that the eventual Australian dollar outflows in respect of bus chassis purchases may be adversely affected by changes in exchange rates. The Department did not enter into hedge transactions for speculative purposes.

The forward exchange contracts were transferred to the Public Transport Authority on 1 July 2003.

Buy EUR	2004		2003
	Contracts $ 000	Options $ 000	Contracts $ 000	Options $ 000
Sell Australian Dollars
Maturity
0 - 6 months	-	-	3,606	3,405
6 - 12 months	-	-	1,065	1,111
	2004 rate	2004 rate	2003 rate	2003 rate
Average exchange rates
Maturity
0 - 6 months	-	-	0.5800	0.5500
6 - 12 months	-	-	0.5800	0.5500
The following losses were deferred at 30 June 2003 and included in the Statement of Financial Position.
			2004 $ 000	2003 $ 000
Deferred losses			-	32