TRANSPORT DEPRECIATION

312 Dr McFETRIDGE (Morphett) (20 November 2007). Why are buses depreciated using the diminishing value method, while trams are depreciated using the straight line method?

The Hon. P.F. CONLON (Elder—Minister for Transport, Minister for Infrastructure, Minister for Energy): I provide the following information:

I am advised that the respective depreciation methods have been adopted as they best reflect the consumption pattern of the assets service potential. In the case of buses, I am advised older buses are used in the peak period when all buses are required to meet the peak period demand. Older buses are not required during the inter-peak periods when only a portion of the fleet is required.

In the case of trams, the department owns eleven Flexity trams and TransAdelaide owns five H Class trams. The majority of trams (the eleven Flexity trams) are the same age and are expected to be used fully throughout their useful life. Consequently, I am advised the straight line method of depreciation best reflects the consumption pattern of these assets. The H Class trams are also depreciated on a straight line basis. All of the H type trams originally entered service in 1929 and have been revalued with the estimated life reviewed several times due to their age. While they are now used on weekends, public holidays and special occasions, the usage is expected to be constant over the remaining life. Consequently, the straight line basis best reflects the consumption pattern of these assets.