The crew of VH-NSD received an amended clearance on the flight from Townsville to Mackay, which required tracking over Proserpine. They experienced difficulties receiving the Proserpine VOR (VHF OMNI Range), in that the aircraft indications on both receivers were not indicating a steady reading. The pilots averaged the indications, but when they transferred to the Mackay VOR, they found that their aircraft was on the 300 degree radial and not the 311 degree radial as cleared by air traffic control. The aircraft was then cleared to continue inbound on the 300 degree radial. Another aircraft was outbound on the 285 degree radial at the time and a breakdown in separation had occurred. The aircraft were estimated to have come within 8nm (15km) of each other.
The crew of VH-NSD did not report their inability to navigate accurately using the Proserpine VOR. This would have allowed air traffic control to use another means of separation other than confining the aircraft to radials. Mackay Air Traffic Control reported that the Proserpine VOR has not been reported as unserviceable by any other aircraft prior to or after this occurrence.