You can see the video at the Inside Business...

You can see the video at the Inside Business website:

http://www.abc.net.au/insidebusiness/

Here's the transcript for anyone who missed it:

QR chief backs privatisation move

ALAN KOHLER, PRESENTER: The big float of 2010 will be Queensland Rail - a 150 year old state government enterprise, and the nation's largest rail business.

Premier Anna Bligh has decided to flog the company to raise cash.

Its chief executive is Lance Hockridge, who spent a lifetime with BHP steel in Newcastle and then port Kembla, before winding up in BlueScope steel after it was spun off from BHP.

Soon he'll be the CEO of a listed company, something he's looking forward to quite keenly, so he's selling the privatisation of QR pretty hard, against the opposition of competitors, customers and unions.

So I discussed what they're afraid of with Lance Hockridge this week.

Well Lance Hockridge, the talk is that we are heading for an IPO, a float of QR on November 1st, does that sound right?

LANCE HOCKRIDGE, CEO, QUEENSLAND RAIL: Last quarter of this year for what's going to be a really exciting next stage of development for a company which, as you know, is about 145 years old.

So this is a major step forward, it's a huge opportunity in the sense of the scale of the business.

This company last year for example moved 250 million tonnes of the nation's exports.

ALAN KOHLER: And what profit did it make last year?

LANCE HOCKRIDGE: A little over $280 million last year.

ALAN KOHLER: And it is going to be sold vertically integrated isn't it? Tracks and rolling stock all at once?

LANCE HOCKRIDGE: The Queensland coal network is going to be sold with the company, yes, so it will be vertically integrated in that part of the business.

ALAN KOHLER: And vertically integrated monopolies like that are on the nose at the moment, the Federal Government is passing a law to separate Telstra for that very reason, so why is QR different to Telstra?

LANCE HOCKRIDGE: Because this is the right model. We've looked around the world at models...

ALAN KOHLER: Telstra says that too, if I may say...

LANCE HOCKRIDGE: But the comparison between Telstra and ourselves is chalk and cheese.

You are talking about a big, big company with literally millions of small customers versus a company like ours with a handful or two handfuls of big customers, of customers of the kind of BHP and Rio Tinto.

We've looked around the world at every railroad, around the world, what is the right model for this kind of business? The exemplars are the resource companies themselves, all of whom operate integrated railroads like ours will be.

And the north American railroads, the so-called class one railroads, all of which are publicly listed, they are all vertically integrated, they are all very successful railroads.

ALAN KOHLER: Your customers are worried about it - not only your competitor Asciano, who also wants to move, is moving coal on those tracks, is worried about it, but the customers are worried about it too.

I mean, the only people who like the idea is the Queensland Government because it's going to get the most money.

LANCE HOCKRIDGE: Well I think it's a little exaggerated to say that. I think the only people who are voicing any kind of opposition to this are people who have vested interest in keeping things as they are.

And interestingly, those customers when they operate their own railroads, they operate on this structural model.

ALAN KOHLER: But they're their own customers. I mean, when they do their own railroads it's not as if they've got customers like you have.

LANCE HOCKRIDGE: As much as Ive asked 'well what's the alternative', I don't hear an alternative.

All I hear is a criticism of what's being suggested. The difference here is between ownership and access, to the extent that this is about competition. We favour competition.

Competition is demonstrably working at the moment. It's the right structure, it's the right time, this will be the right outcome for the customers and for the employees, for all of the stakeholders of this business.

ALAN KOHLER: The return from your tracks is regulated?

LANCE HOCKRIDGE: Yes.

ALAN KOHLER: What return do you make from the rolling stock, the above track part of your business, return on investment?

LANCE HOCKRIDGE: We don't disclose at the moment the different parts of the business. Last financial year, the most recently published numbers, QR Limited made a return of 7.7 per cent.

So you can derive from that that we are not exactly making huge amounts of money out of these businesses.

ALAN KOHLER: Well the returns from your rolling stock must be then in the single digits. Would that be a fair comment?

LANCE HOCKRIDGE: Well Im not going to answer because we haven't disclosed and obviously Im under certain constraints at the moment about what I can and can't say given where we are.

But we are in the infrastructure business and that's the sort of return, with the commensurate amount of risk, that we believe that we ought to be looking for as a publicly listed company.

ALAN KOHLER: On returns, I mean I would have thought as a public company, particularly on the unregulated part of your business, you're going to be looking for in excess of 10 per cent - 12 per cent returns to pay the capital on the business. Surely that's right?

LANCE HOCKRIDGE: Well precisely what we look for is something that we will talk about at the appropriate time.

But if we go back to the model that I described a little while ago of the best of the businesses in this space, the north American class one railroads, they typically - to the extent that there is such a thing - earn a return of the kind that you are talking about, around that 12 per cent.

ALAN KOHLER: So, this is the thing. I mean, I would have thought that you've got a fiduciary duty, as the managing director of a public company, to maximise the returns on the parts of the business that you can at the expense of competitors, which is why the integrated model is so problematic in a way.

It's not as if you've got a national interest in order to maximise competition. Basically your interest is to maximise the returns on that part of the business. Even if it's to Pacific National's detriment.

LANCE HOCKRIDGE: The real interest is to make sure that that critical infrastructure is built, it's built in a timely way, and it's built in an efficient way.

And that, at the end of the day, is what's most in the interests of the customers. The proportion of their total cost which is represented by freight is far swamped by the ability to be able to get the marginal tonne through the system.

Yes, we absolutely expect a fair return out of this business. At the end of the day, though, we are all in the same business.

We are all advantaged by getting the most number of tonnes through the system.

ALAN KOHLER: Just another issue between going public to private that a lot of people would be interested in I think is, a slightly personal one, do you get a pay rise when it becomes a private company?

LANCE HOCKRIDGE: I'm actually looking forward to find that out myself Alan.

ALAN KOHLER: You don't know?

LANCE HOCKRIDGE: I don't know at this stage, no.

ALAN KOHLER: I presume it give you also the opportunity, and your staff, to participate in equity issues or option type incentive schemes, would that be correct?

LANCE HOCKRIDGE: I think the single most important thing with respect to staff matters is that the Government announced in December was that every employee of QR National would be a shareholder, every employee will be given, at the time of float, $1000 worth of QR national shares, every employee will have the opportunity immediately to top that up by a further $4000 worth of shares.

I think this is absolutely the right thing to do, I think that it will materially help us.

In terms of the engagement around what we're trying to achieve in the company, we've got a lot to do, we've got a lot of growth to get on top of.

And I already have a sense of excitement around the company at actually having a stake, an ownership stake in QR National.

ALAN KOHLER: Thanks for joining us Lance Hockridge

LANCE HOCKRIDGE: You're welcome Alan.