Download Annual report - 2012/13 (accessible version)

Enhancing life and liveability
Melbourne Water Annual Report 2012-2013
Contents
Overview
Chairman’s Report
Managing Director’s Report
Service delivery: Water
Service delivery: Alternative water sources and integrated water cycle management
Service delivery: Sewerage
Service delivery Waterways
Corporate: Environmental stewardship
Corporate: Relationships
Corporate: Financial sustainability
Corporate: Organisational capability
Financial Report: Five Year financial summary
Directors Report
Financial Statements
Financial Statements
Notes to the Financial Report
Melbourne Water Corporation
Performance reporting
Performance Report
Certification of Performance Report for 2012–13
Melbourne Water’s Key Performance Indicators
Statutory information
ISSN: 1838–3718 (Print)
ISSN: 1838–3734 (Online)
© Copyright September 2013
Melbourne Water Corporation. All rights reserved. No part of this document may be
reproduced, stored in a retrieval system, photocopied or otherwise dealt with without
prior written permission of Melbourne Water Corporation.
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employees do not guarantee that the publication is without flaw of any kind or is
wholly appropriate for your particular purposes and therefore disclaims all liability for
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information in this publication.
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Melbourne Water
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Melbourne Victoria
Telephone: 131 722
Facsimile: 03 9679 7499
melbournewater.com.au
Overview
About us
Melbourne Water is owned by the Victorian Government. We manage water supply
catchments, treat and supply drinking and recycled water, remove and treat most of
Melbourne’s sewage, and manage waterways and major drainage systems in the
Port Phillip and Westernport region.
In all our business decisions we consider social, environmental and financial effects,
and short-term and long-term implications.
Our customers include metropolitan water retailers, other water authorities, land
developers and businesses that divert river water, and the 1.8 million households
that receive waterways and drainage services in the greater Melbourne region.
We deliver our services in partnership with others including government agencies,
local councils, catchment authorities, contractors and suppliers.
About this report
Melbourne Water’s Annual Report 2012–13 describes our annual progress towards
achieving our vision of Enhancing Life and Liveability in the greater Melbourne
region, and how we met our regulatory obligations from 1 July 2012 to 30 June 2013.
The Honourable Peter Walsh MLA, Minister for Water, was the Minister responsible
for Melbourne Water from 1 July 2012 to 30 June 2013.
The report reviews our performance against key performance indicators (KPIs)
detailed in our Corporate Plan and KPIs that meet Ministerial Reporting Directions.
We also report against sustainability or water industry-based indicators including The
Global Reporting Initiative (GRI): Sustainability Reporting Guidelines. The GRI
Content Index and our Independent Assurance Statement are available on our
website melbournewater.com.au
Online document
As part of Melbourne Water’s commitment to sustainability, we will print a limited
number of copies of this report, including 50 for the Victorian Parliament. An online
version will be available on the Melbourne Water website melbournewater.com.au
Accessibility
An accessible text format of this report is available on our website at
melbournewater.com.au If you want to obtain a copy of this report, or sections of it,
in a different accessible format, please contact Melbourne Water on 131 722 (in
Victoria), (03) 9679 7100 if calling from interstate or email
[email protected]
Our strategic guide
Melbourne Water’s vision of Enhancing Life and Liveability outlines a commitment to
do our part to improve the quality of life within the greater Melbourne region. The
document guides and informs our decisions towards achieving this vision. Melbourne
Water’s Strategic Direction is available on our website melbournewater.com.au
Chairman’s Report
When our new direction and vision were established in March 2012 the Board was
under no illusion about the hard work and commitment required to achieve our goals,
and great strides have been made over the past year.
Since joining the Melbourne Water Board in September I have been thrilled
with the progress the organisation has made in the first full year of working to
our Strategic Direction and vision, Enhancing Life and Liveability.
When our new direction and vision were established in March 2012 the Board was
under no illusion about the hard work and commitment required to achieve our goals,
and great strides have been made over the past year.
In particular, two organisation-wide initiatives emerged in the last year: Commercial
Transformation and Service Delivery, aimed at changing the way we do business,
building the capacity of our people and improving the level of service and products
for our customers. Our customers are demanding greater choice and value for
money in the delivery of our products and services in an environment under pressure
from population growth, urbanisation, ageing infrastructure and climate variability.
This environment has driven the emergence of integrated water cycle management,
with growing demand for greater diversity of products and services. Being more
commercially focused and re-thinking our existing service offerings is critical to
meeting these challenges. Of course, we are one part of a broader industry and two
major Victorian Government announcements in 2012–13 have provided the ideal
regulatory framework for us to continue working toward our vision.
The draft strategy, Melbourne’s Water Future, outlines greater use of rainwater,
stormwater and wastewater to conserve drinking water for human use, reduce
pollution flowing into our waterways and help maintain green open spaces. What we
do is consistent with these goals and I look forward to the final strategy at the end of
2013 following wide consultation on the draft with the community.
A Cleaner Yarra River and Port Phillip action plan helps align our river health and
stormwater programs with the great work being done by other agencies, local
councils and the community to help protect our most iconic natural assets.
With regard to our financial performance in 2012–13, total cash returns to our
shareholder were $94.7 million ($289.3 million in 2011–12). Net loss after tax was
$30.1 million (compared with a $274.9 million profit in 2011–12). The loss for 2012–
13 is primarily a result of the return to customers of revenue that was collected in
2011–12 to make forecast obligatory payments relating to the Victorian Desalination
Plant. These payments were not required due to delays in the plant’s commissioning.
In December 2012 we completed a $418 million upgrade of the Eastern Treatment
Plant in Melbourne’s outer south-east to treat wastewater to a much higher standard.
The upgrade has dramatically strengthened the protection of the marine environment
at Boags Rocks in Gunnamatta, where the majority of the water is currently
discharged. A significant additional benefit is the higher quality of recycled water
produced. We have been working with others to increase reuse of this resource,
particularly South East Water, which has started construction of a recycled water
pipeline to commercial and residential development north of the Eastern Treatment
Plant.
We also drew closer to completing the $75 million Frankston Drainage Improvement
Project – the single biggest project we have undertaken to improve flood protection.
The project is scheduled for completion by the end of 2013 and will better protect
businesses and homes from flooding in severe wet weather.
We are now entering a new regulatory period with a lower capital spend,
representing a shift from large-scale infrastructure investment to asset maintenance
and renewal, and an unwavering commitment to delivering high quality services on
behalf of the community.
In accordance with the Financial Management Act 1994, I am pleased to attest that
Melbourne Water Corporation’s Annual Report is compliant with all statutory
reporting requirements.
Paul Clark
Chairman
Managing Director’s Report
It was a year of transition, not only in the scale of what we do, but how we do it.
Working closely with the Office of Living Victoria, we are transforming the way our
water cycle is managed and how services are provided across the whole water
cycle.
Transition was a key theme of 2012–13, the culmination of an era of significant
infrastructure investment and the beginning of a consolidation phase.
The past year was the last of the 2008 to 2013 regulatory pricing and investment
period – in which time we delivered $3.7 billion of water, sewerage and drainage
infrastructure. We now shift investment to a focus on asset maintenance and
renewal.
It was a year of transition, not only in the scale of what we do, but how we do it.
Working closely with the Office of Living Victoria, we are transforming the way our
water cycle is managed and how services are provided across the whole water
cycle. This transformation involves a shift from predominately centralised catchmentto-building water and wastewater systems to an approach that integrates
management of water supply, sewerage, drainage and natural water systems such
as waterways and bays.
The recently established Commercial Transformation and Service Delivery programs
will provide our people with the tools and processes to ensure we are continually
improving our understanding of our customers’ needs and our ability to meet their
needs.
The capability of our people in these areas can only be achieved in a workplace
where safety and wellbeing are paramount. On that note, one of the year’s
achievements I’m most proud of was receiving certification of our newly-adopted
Australian and New Zealand Safety Standard (AS/NZS 4801), which focuses on
continuous improvement and commitment, not simply compliance. For an
organisation as diverse and complex as Melbourne Water, AS/NZS 4801 was an
ambitious target, so I’m highly appreciative of the efforts of many people across the
business who worked hard to achieve certification.
It was a particularly busy and successful year in our Waterways area, and we were
all pleased when a survey of 1,420 Melburnians found 77% of respondents were
satisfied with waterways in the region. This is the highest community satisfaction
rating we have ever recorded since the biennial Community Perceptions of
Waterways survey was first undertaken in 1993.
The Waterways group was also busy finalising the Healthy Waterways and
Stormwater strategies, which guide how the region’s rivers, creeks and stormwater
systems will be managed over the next five years. I’d like to thank many people in
local and state government and the community who helped inform these strategies.
It’s always a pleasure to see the hard work of our people recognised by their peers
and the public, and several Melbourne Water projects received awards over the past
year.
The Eastern Treatment Plant Tertiary Upgrade received the Water/Wastewater
Project of the Year at the 2013 Global Water Summit; the Melbourne Main Sewer
Replacement received a Victorian Civil Contractors Federation Earth Award and was
awarded the 2012 Trenchless Society for Technology Project of the Year – New
Installation. The Northern Sewerage Project won an Australian Institute of Project
Management Award and our Info Program picked up a 2013 Sir Rupert Hamer
Award and a Gold Knowledge Management Excellence Award.
I look forward to working with the Board and our people as we continue to drive
improvement across the business to enhance Melbourne’s liveability.
Shaun Cox
Managing Director
Service delivery: Water
Side Caption: “Our water storages continued to rise during the first half of
2012–13, exceeding 80% full for the first time since June 1997.”
Our aim
Provide services that are valued by our customers.
We will do this by:
•
Providing high-quality, safe and reliable drinking water and fit-for-purpose
water from alternative sources
•
Providing safe sewage transfer, treatment and disposal
•
Protecting and enhancing the health and amenity of waterways and bays
•
Managing flood risk
•
Adapting our assets to address climate change and variability
•
Planning, operating and maintaining our built and natural assets efficiently by
incorporating innovative and whole-of-life system approaches
•
Providing for continuity of service by improving the way we plan for, respond
to, and recover from extreme events.
Key achievements
•
Met all water quality targets for E. coli, turbidity, aluminium and disinfection
by-products
•
Worked closely with water retailers to develop an annual Water Outlook,
which gives the community better access to water use and supply information
•
Achieved a $12 million capital saving on a new water pipeline servicing
Melbourne’s growing area of Wyndham
•
Worked with fire fighting agencies to successfully protect water catchments
from bushfires.
Disappointments
•
Failed to meet our target of less than 1% for measurable transfer losses of
total water delivered, partly due to water quality issues at the Tarago
Treatment Plant and leakage from the Tyabb Service Reservoir
•
Two water main bursts caused minor damage and disruption in Glen
Waverley and Viewbank.
Challenges
•
Working with water retailers, local councils and the development industry to
maximise use of stormwater and recycled water while balancing use from
traditional catchments and dams
•
Continuing to research and assess the impact of seasonal and long term
climate change on hydrology projections.
Our water supply system
Melbourne Water’s supply system comprises:
•
157,000 hectares of protected catchments in the Yarra Ranges
•
10 reservoirs with a total capacity of 1,812 billion litres
•
34 water treatment plants
•
1,057 kilometres of water mains
•
214 kilometres of aqueducts
•
64 service reservoirs.
Managing demand and supply
Our water storages continued to rise during the first half of 2012–13, exceeding 80%
full for the first time since June 1997. However, even though total reservoir storage
was 70.1% or 1,271 billion litres at 1 July 2012, it had only increased to 70.8% or
1,282.9 billion litres by 30 June 2013.
Rainfall across Melbourne’s catchments for 2012–13 was below the long-term
average following two wetter years with back-to-back La Niña events in 2010–11 and
2011–12. Rainfall over the major catchments in 2012–13 was between 8.6% and
14.7% below average, with the catchment weighted average being 3.1% below.
Thomson catchment highlighted the variability in monthly rainfall, receiving only 8
millimetres in January, yet 220 millimetres in June.
Reflecting below average rainfall, 2012–13 stream flow of 478 billion litres into the
major harvesting reservoirs was 3.1% below the long-term average. The year started
well with above average stream flow for the first three months, although the last nine
months of 2012–13 were below average.
The total system storage volume of 70.8% at 30 June 2013 is the highest for this
time of year in 16 years. It represents a significant recovery from June 2009 when
storage levels fell to their minimum of 25.6% during the 1997 to 2009 Millennium
Drought.
Figure 1: Melbourne Water water supply system
Transcribers Note: Map has been omitted
Figure 2: Monthly average streamflow at Melbourne’s major harvesting reservoirs
Transcribers Note: Graph has been omitted
Figure 3: Monthly average rainfall at Melbourne’s major harvesting reservoirs
Transcribers Note: Graph has been omitted
Figure 4: Melbourne’s water storage
Transcribers Note: Graph has been omitted
Figure 5: Annual stream flow at Melbourne’s major harvesting reservoirs (Upper
Yarra, Thomson, Maroondah, O’Shannassy Reservoirs)
Transcribers Note: Graph has been omitted
Desalination plant on standby
The Victorian Desalination Plant was commissioned in 2012. The AquaSure
consortium undertook performance testing from September to December 2012, with
desalinated water meeting all required drinking water standards. The final
commissioning test involved running the plant at maximum capacity for 30
consecutive days.
During commissioning, a total of 24.9 gigalitres of desalinated water was transferred
to Cardinia Reservoir. However, as the Victorian Government placed a zero gigalitre
order for 2012–13, the plant ceased production on completion of testing. A further
zero gigalitre order was placed for 2013–14.
In the lead up to the first supply of desalinated water, Melbourne Water worked
closely with AquaSure, the Department of Environment and Primary Industries1 and
impacted water retailers to develop protocols for coordinated operation of systems
and infrastructure. This included innovative hydrodynamic modelling of Cardinia
Reservoir to predict the mix of the desalinated water in the reservoir and the
potential impacts on water quality.
While the desalination system will operate on an as-needs basis, further work will be
undertaken with the operator to refine and integrate operating arrangements.
New pipeline to service growth in Wyndham
Construction of a water pipeline to service Wyndham, one of the fastest growing
municipal areas in Australia, will cost $12 million less than originally forecast due to
savings identified as part of a joint integrated water cycle management approach
with City West Water.
Water demand from the City West Water zones of Cowies Hill and West Werribee is
forecast to increase significantly over the next 25 years, requiring construction of a
new main to service growth.
Stage 2 of the St Albans to Werribee Pipeline project will now cost $12 million less
following an analysis of the benefits of integrated water cycle management and the
impacts of changing growth rates and peak demands.
The diameter of the new pipeline will be reduced by installing a ‘third-pipe’ carrying
recycled water to households for non-drinking purposes, resulting in significant
reductions in peak potable water demand.
Working collaboratively to maintain supply
Following ground movement in October 2012 from the construction of a new
hospital, City West Water had to isolate its Elizabeth Street transfer mains, which
provide water to Melbourne’s CBD.
To ensure a continued water supply to the CBD, Melbourne Water worked with City
West Water on contingency measures including:
•
Ensuring all connections of alternative supply mains were open and
operational
•
Daily surveillance along pipelines supplying the CBD to ensure no impact
from third party works such as unknown excavation
•
Cancelling programmed works associated with supply to the CBD
•
Melbourne Water’s Water Control Centre undertaking daily checks of the
controlling pressures at key locations to ensure adequate supply
•
Reconfiguring water supply zones to meet increasing summer demands.
Water main bursts
On 29 October 2012, a water main burst in Knights Drive, Glen Waverley, due to a
faulty valve. The damaged section was shut down within an hour and isolated to
ensure no impact to water supply in the local area. Melbourne Water worked to
assist the owners of the one property that was damaged.
It is estimated that about two million litres of water, equating to 0.2% of Melbourne’s
daily water use, flowed into the stormwater system.
On 20 December 2012, a water main burst in Martins Lane, Viewbank. To avoid
leaving Melbourne’s CBD and northern and western suburbs without water, crews
first redirected water from other parts of the system before the damaged section
could be shut down.
The burst main, caused by a faulty valve on the Silvan-Preston main, resulted in
some land erosion damage to several properties and Melbourne Water worked with
emergency services to assist residents.
1Formerly
two separate departments known as the Department of Sustainability and
Environment and the Department of Primary Industries.
Water consumption and quality
Stage 1 water restrictions were lifted and Permanent Water Use Rules were
implemented in Melbourne from 1 December 2012.
Even though water restrictions were lifted, Melburnians continued to conserve water
in 2012–13, with an average daily consumption of 1,106 million litres per day. This is
above the 1,004 million litres average daily consumption in the last five years, but
significantly lower than the 1,320 million litres per day in the 1990s.
While consumption increased compared to 998 million litres per day in 2011–12, this
may be attributable to higher temperatures and drier conditions in the 2012–13
summer compared to cooler and wetter conditions in 2011–12. It could also be due
to the replacement of Stage 1 water restrictions with Permanent Water Use Rules
from 1 December 2012. Melbourne recorded nine consecutive days of above 32°C in
March 2013. This was the city’s longest spell of 30°C or above days in any month
since records began in 1855.
Residential daily per capita water consumption for Melbourne in 2012–13 was 161
litres compared to 149 litres in 2011–12.
Melbourne Water met water quality targets for E. coli, turbidity, aluminium and
disinfection by-products in 2012–13. We work closely with water retailers to
consistently meet stringent requirements in the distribution of safe, high quality
water.
Melbourne’s water supply system is managed according to Hazard Analysis and
Critical Control Point principles. Audits and accreditation are used to ensure quality
management from collection, treatment and distribution to customers.
Retail water consumption
Melbourne Water supplied 404,260 million litres of drinking water to water retailers in
2012–13. This compares with 365,559 million litres in 2011–12, and 351,761 million
litres in 2010–11.
This year’s consumption of 404,260 million litres is similar to levels last seen without
water restrictions in the 1980s (refer to Figure 7 Financial Year Consumption graph),
even though Melbourne’s population has grown by 60%.
Figure 6: Average daily water use for Melbourne
Transcribers Note: Graph has been omitted
Figure 7: Financial year consumption
Transcribers Note: Graph has been omitted
Figure 8: 2012–13 Retail water consumption
Transcribers Note: Graph has been omitted
Water Security Committee and Water Outlook
Melbourne Water and the water retailers prepared an annual Water Outlook for
Melbourne which was published on 1 December 2012.
The Water Outlook indicates the overall level of water supply system security based
on the storage volume at 30 November each year in relation to three zones: high,
medium and low. These zones are used to determine appropriate water
management measures. Melbourne’s storage volume was in the high zone as at 30
November 2012.
The Water Outlook outlines a range of demand management and supply
augmentation actions for the period, including alternative supply projects and water
efficiency programs.
Environmental sustainability
Melbourne Water continues to work with water retailers, local councils and the
development industry to maximise use of water sources such as stormwater and
recycled water while balancing use from traditional catchments and dams.
Sustainable water use
During 2012–13, Melbourne Water worked with the Victorian Government on
developing strategies that plan for Melbourne’s water cycle. We took the opportunity
to make a submission to the Victorian Government’s new Metropolitan Planning
Strategy, which provides an ideal opportunity to promote a new way of managing
and planning for the water cycle.
We also worked with the Office of Living Victoria to develop a new approach to urban
water planning. This approach will be incorporated into the Victorian Government’s
Melbourne’s Water Future strategy and is founded on an understanding of the entire
water cycle and its drivers: geography, topography, location of community assets,
hydrology, economics, climate and demography.
It is expected both the Metropolitan Planning Strategy and Melbourne’s Water Future
will be finalised in 2013–14.
Water Supply Demand Strategy
During 2012–13, Melbourne Water supported the development of Melbourne’s Water
Future. This strategy adopts a whole-of-watercycle approach to the linked challenges
of securing a safe and plentiful water supply, managing stormwater runoff and
wastewater discharge, reducing urban flooding, keeping parks and gardens green,
and improving the health of waterways. The previous Water Supply Demand
Strategy was reviewed as a key input to Melbourne’s Water Future.
Sustainable water strategies
Sustainable water strategies are intended to secure water supplies for consumption
and environmental purposes over a 50-year period. The Central Region Sustainable
Water Strategy 2006 sets out a series of actions to 2055 to deliver sustainable water
use and management objectives. The objectives of this strategy are addressed
through Melbourne’s Water Future. For more information on Melbourne Water’s role
in balancing consumption and environmental needs, refer to the Alternative water
sources and integrated water cycle management chapter and the Waterways
chapter.
Limiting system losses and repairing leaks
Melbourne Water annually reviews the rate of leakage and water loss from its water
supply system in line with Bulk Water Supply Agreements with water retailers, water
conservation targets, our corporate strategic goals and the Essential Service
Commission’s requirements.
The scope of this review includes leaks from pipelines, valves and fittings,
aqueducts, tank cleaning, and operational water usage for cleaning and other
purposes. A number of other losses are not included, such as reservoir evaporation,
dam see page and environmental flows.
Melbourne Water did not meet its KPI target of less than 1% of transfer losses in
total water delivered during 2012–13 (recording 1.14%). This was due to water
quality issues at the Tarago Treatment Plant, requiring large volumes of water to fix,
and leakage from the Tyabb Service Reservoir, among other factors.
A renewal project is already programmed for Tyabb in Water Plan 3 (2013–14 to
2017–18) so it is not economically feasible to repair the leak beforehand. However,
Melbourne Water has made significant water savings through operational changes to
the Winneke to Preston Water Main to reduce cleaning requirements.
Melbourne Water continues to reduce and better account for water loss in the trunk
water network through a variety of means such as: aqueduct lining and improved
flow measuring technologies; a dedicated in-house pipe repair crew; cathodic
protection of tanks and pipelines; flow meter validation/salt trials; and other best
practice asset management activities.
Adapting to a variable climate
Climate variability has the potential to impact on water, sewerage, drainage and
waterway systems managed by Melbourne Water. Climate variability can have a
significant impact on hydrology projections, so Melbourne Water continues to work
with climate researchers, industry partners and customers to understand the risks
and implications of a variable climate on our business, and to provide climate
resilience.
During 2012–13 we supported the completion of two Australian Research Council
Linkage Projects led by the University of Melbourne which will inform water
resources planning decisions. One project put recent climate variations into a longerterm context by providing reconstructions of historical annual rainfall, stream flow,
temperature and pressure variations data for south-eastern Australia. The second
project analysed recent climate patterns and assessed the range of uncertainty in
projected annual rainfall and river flows under climate change.
Melbourne Water also supported the Water Services Association of Australia’s
‘AdaptWater’ project. Through this project a tool was developed that assists in the
quantification of climate risks to assets and enables comparison of potential
adaptation options.
Working groups have been established within Melbourne Water and with water
retailers to set direction and review climate change adaptation activities. In 2012–13,
we reviewed our climate information needs and adaptation activities, and we
commenced an external review of the Climate Change Risk Register.
Protecting our catchments from bushfire
Although Melbourne Water is not a statutory fire fighting authority, we have a
legislated responsibility to limit the occurrence and spread of fire from our land to
neighbouring properties. Melbourne Water is also involved in fire prevention and
suppression to protect vulnerable built and natural assets as well as water supply
catchments.
In the lead-up to the 2012–13 summer, preparations were made for what was
forecast to be an average bushfire season. Preparations included maintaining more
than 2,400 kilometres of roads and fire trails, ensuring Melbourne Water’s 100 fire
fighters were physically fit and well trained, and ensuring all equipment was checked
and ready for use.
The Thomson catchment came under serious threat on its western flank with the
Aberfeldy fire, and this was followed by a series of lightning strikes across the Upper
Yarra and Thomson catchments resulting in a fire within the Thomson catchment
itself. Melbourne Water fire fighters were heavily involved in defending the
catchment.
During the year, strong relationships were forged with the Country Fire Authority
(CFA), Department of Environment and Primary Industries (DEPI), Parks Victoria
(PV), the State Control Centre and the Fire Services Commissioner. This enabled
Melbourne Water to quickly alert all parties to the serious threat posed to the water
supply catchments by the Thomson fires. The Fire Services Commissioner realised
the serious risk and responded proactively.
In the autumn post-fire season, a planned burning program was undertaken to
minimise the bushfire risk in the water supply catchments, with Melbourne Water
assisting DEPI and PV to achieve annual targets. Two successful planned burns
were conducted on Melbourne Water land at Silvan and Sugarloaf reservoirs with the
CFA.
Office water use
Melbourne Water did not meet its office water use target in 2012–13. Consumption
was 3,594 litres per full-time employee (FTE) per year compared to a target of 3,177
litres per FTE.
This was mainly due to commissioning issues with our new head office, resulting in
more potable water use instead of rainwater and stormwater. This included
commissioning issues with water tanks and excessive use of water for cooling the
building’s sewage pumps. These issues have now been resolved and we have a
new building management system (software application) that alerts us when more
water is being used than expected.
In terms of office space, corporate water use equates to 183.3 litres per square
metre. This data is collected for the 990 La Trobe Street, Docklands, head office.
Service delivery: Alternative water sources and
integrated water cycle management
Side Caption: “Melbourne Water continues to work with its customers to help
deliver the Victorian Government’s vision of a smart, integrated and resilient
water system for a liveable, sustainable and productive Melbourne.”
Our aim
Contribute to a more sustainable, prosperous, liveable and healthy community
by planning and delivering water supply, waterways and sewage services
holistically.
We will do this by:
•
Collaborating with customers and stakeholders to promote new and diverse
water resources
•
Integrating water planning and urban development planning
•
Finding ways to obtain multiple benefits from our natural and built assets
•
Managing the water supply system to meet urban, environmental and
agricultural needs
•
Undertaking long-term planning with stakeholders to meet the needs of a
growing population and address the forecast impacts of climate change and
variability.
Key achievements
•
Collaborated with the Office of Living Victoria, water retailers and local
councils on regional integrated water strategies to guide investment in water
projects across Melbourne
•
Provided input into the new Metropolitan Planning Strategy and identified
integrated water servicing options for Melbourne’s growth areas
•
Developed a strategy with local councils, water retailers and community
groups to maximise liveability through land management
•
Achieved an Australian-first planning amendment for Little Stringybark Creek,
which requires developers that expand impervious surface areas by more
than 10 square metres to treat runoff before it enters the stormwater system.
Disappointments
•
Recycled water usage remains lower in wet years and higher in dry years.
Although Melbourne Water’s capacity to supply recycled water is unaffected
by weather and seasons, greater expansion into industrial and residential
supply would create more reliable demand.
Challenges
•
Integrating all sources of water to diversify supply, improve climate resilience
and promote fit-for-purpose use to preserve drinking water supplies,
particularly in times of higher rainfall
•
Developing a framework to share the costs and benefits of integrated water
cycle management projects across organisations
•
Keeping pace with the speed of urban growth and supporting development of
integrated water cycle management plans in growth areas
•
Encouraging expanded use of recycled water beyond irrigation during dry
periods. 16 Melbourne Water Annual Report 2012–13
Using alternative water sources to benefit Melbourne
Melbourne Water continues to work with its customers to help deliver the Victorian
Government’s vision of a smart, integrated and resilient water system for a liveable,
sustainable and productive Melbourne.
We are collaborating with customers and stakeholders to deliver the best value we
can from the whole water cycle. This means we are driven by the perspectives of our
customers and stakeholders and have been making tangible progress through onground projects.
A key lesson we have learned is the need to be flexible and outcome focused. This
has seen us use different service approaches for different localities to match local
drivers and ensure affordable water cycle management.
Drinking water makes up less than one-third of Melbourne’s total water demand. The
Department of Health requires drinking water to be used for indoor taps and
showers.
Treated alternative water sources can be used for toilet flushing, laundry use,
domestic gardens, parks and gardens, some environmental purposes, industry and
peri-urban agriculture. Taking this approach enables Melbourne to preserve drinking
water for specific uses.
There are multiple benefits to managing the water cycle in a more integrated way,
such as:
•
Community – healthy open spaces and sports fields, a reduced urban heat
island effect and improving the resilience of the water supply system to
climate change and variability
•
Economic – opportunities for growth, especially in industry and agriculture
•
Environment – increasing the amount of water available for environmental
flows and reducing the impact of discharges such as stormwater and treated
wastewater.
Melbourne Water is working with local councils and water retailers to deliver
stormwater harvesting projects for residential and open space uses.
We are also working with City West Water, Southern Rural Water, South East Water
and the Water Infrastructure Group to provide customers with recycled water from
our wastewater treatment plants and encourage expanded use of recycled water
beyond irrigation during dry periods (e.g. for residential dual-pipe schemes).
Regional strategies to guide investment in water projects
During 2012–13 Melbourne Water collaborated with the Office of Living Victoria and
our customers to develop regional integrated water cycle strategies to guide
investment in water projects across Melbourne to 2050.
The strategies are being developed to outline a program of staged works that
contribute to the vision of a ‘productive, liveable and sustainable’ region by 2050.
North
The preliminary Integrated Water Cycle Management Plan, completed by Yarra
Valley Water and Melbourne Water with the Office of Living Victoria, has been
released for consultation. The plan investigates sustainable ways to provide water
supply and sanitation services to new homes and businesses in Melbourne’s
northern growth corridor through integrated water cycle management.
Melbourne Water is also working with Yarra Valley Water on promoting integrated
water cycle management in infill development through the Coburg stormwater
harvesting project. The Coburg Principal Activity Centre Harvesting and Reuse
project will examine how to select a large redevelopment site for viable stormwater
harvesting and reuse in inner Melbourne.
South East
After the development of an Integrated Water Cycle Management Strategy in 2012
with South East Water and Southern Rural Water, attention has shifted to on-ground
delivery of integrated water cycle management approaches in urban growth area
planning.
In 2012–13, Melbourne Water worked with South East Water, the Growth Areas
Authority and local councils to develop integrated water servicing strategies for the
Botanic Ridge and Casey-Clyde growth areas. These strategies consider the role of
recycled water and stormwater harvesting to reduce potable water use and sewage
discharges, and reuse urban stormwater.
Investigations at the Botanic Ridge site deemed stormwater harvesting unfeasible for
domestic use when the full range of costs and benefits were considered. Options
analysis of the Casey area identified opportunities for extensive use of alternative
water sources, which will be progressed in 2013–14.
West
An investigation by Melbourne Water, City West Water, Southern Rural Water,
Western Water and the Office of Living Victoria found a regional Integrated Water
Cycle Management Plan in Melbourne’s west could deliver substantial value.
The five organisations took the first steps towards developing a regional plan, which
included work on integrated water cycle management with the Growth Areas
Authority and investigation of the contribution water authority owned or influenced
land makes to recreational opportunities in the region. Work in 2012–13 also
included investigating ways to share recycled water treatment capacity at the
Western Treatment Plant.
This work will form the basis of the Integrated Water Cycle Management Plan, which
will require work with local councils and other key stakeholders in 2014 to progress
priority opportunities.
Melbourne Water and City West Water are also working collaboratively to deliver
integrated water cycle management in Melbourne’s western growth areas.
A Melbourne Water employee has been seconded to work with City West Water to
facilitate integration of water management services to benefit the community and the
environment. The secondment is recognised by both organisations as an excellent
example of Melbourne Water’s commitment to strong working relationships with its
customers.
Inner Melbourne
To inform the Metropolitan Planning Strategy, Melbourne Water has worked with the
Office of Living Victoria, the Department of Transport, Planning and Local
Infrastructure2 and the water retail businesses to undertake a water cycle study of
inner Melbourne.
The Victorian Government has previously identified a number of precincts for urban
renewal within inner Melbourne. The broad-scale development of these precincts will
be accompanied by redevelopment of existing activity centres, with growth
anticipated to reshape an area far beyond the Hoddle Grid traditionally recognised
as the Melbourne CBD.
Water companies have undertaken hydraulic modelling of the water and sewerage
networks to estimate the cost of managing the water cycle constraints associated
with further development of inner Melbourne. These investigations have identified
the types and locations of works needed to ensure water cycle services are
provided. The investigations have been used in conjunction with economic modelling
undertaken by the Office of Living Victoria. The same work has also been used to
show the total community cost of managing the water cycle through business as
usual approaches.
The inner Melbourne submission for the Metropolitan Planning Strategy advocates
for an integrated water cycle management approach across the urban planning
process to limit increased demand for drinking water, reduce wastewater flows and
retain a higher proportion of stormwater flows either onsite or in the landscape.
Such an approach is expected to:
•
Substantially reduce expenditure on augmentation of transfer/distribution
mains and balancing storages
•
Reduce expenditure on augmentation of trunk and reticulation sewers
•
Reduce both total and peak stormwater flows into local drainage networks
with an associated reduction in flooding (where flooding is not caused by
external catchments or tidal influences)
•
Help preserve and enhance the amenity of inner Melbourne by providing local
councils with an expected lower cost water supply for irrigating parks and
street trees
•
Improve inner Melbourne waterways by reducing peak stormwater flows and
associated pollutants
•
Facilitate the improvement and creation of green corridors alongside healthy
waterways to provide key linkages for the community. The next step is to
expand the current working group to include local councils and deliver an
Integrated Water Cycle Management Plan for inner Melbourne by September
2014.
Defining liveability
To support regional planning, Melbourne Water initiated a project in 2012–13 to
better understand the concept of ‘liveability’ and what it means within our business
and the water industry.
Consultation included discussions with water industry stakeholders and other
agencies, focus groups and interviews with local councils, community and social
planners.
Several key themes emerged including affordability, open space, diversity, growth
areas, built and natural environments and business activities. By understanding how
our activities and actions contribute to liveability, we can develop ways to
demonstrate this contribution and help drive improvements.
Melbourne Water has also developed a strategy to maximise liveability through land
management.
There is a significant opportunity to improve liveability for the community through
land management, as research shows that land is at the heart of our customers’
perceptions of liveability. Access to open space, recreational opportunities and
providing a connection to the natural environment are very important. Evidence
suggests people are more likely to participate in exercise if they have greater access
to open space, thereby reducing the strain on health services.
Melbourne Water is well-positioned to provide more public open space opportunities
by re-examining our land management practices.
2Formerly
two separate departments known as the Department of Transport and the
Department of Planning and Community Development.
Stormwater harvesting
Melbourne Water is responsible for the licensing of surface water from some
catchments and from its own works, which includes the requirement to licence
stormwater.
There are currently 32 active stormwater licences issued by Melbourne Water,
mainly to councils and sports clubs, totalling 1,455 million litres. Melbourne Water is
actively working with local councils and water retailers to identify and implement
stormwater harvesting projects.
Best Practice Environmental Management Review
A review of the Best Practice Environmental Management (BPEM) Guidelines for
Urban Stormwater is progressing following the release of the Ministerial Advisory
Council’s roadmap for water reform, the Living Melbourne, Living Victoria
Implementation Plan and the Victorian Government’s Yarra and Bay Action Plan.
A joint project between Melbourne Water, EPA Victoria, the Office of Living Victoria
and the Department of Environment and Primary Industries3, the review is required
to meet aspirations for integrated water cycle management. The project provides an
opportunity to review the scope, form and specifics of the objectives of the
guidelines, based on the latest research and industry experience.
Changing the BPEM standards involves a two-phased approach. The first is a
technical review of the BPEM standards. Melbourne Water has commissioned a
large portion of the research that underpins the review. The second phase is to
determine recommended changes to the existing BPEM.
Review of stormwater planning clause
Clause 56.07-4 of the Victorian Planning Provisions is an important clause for
managing stormwater as part of urban development.
In response to growing concern among our internal and external customers about
the application of this clause, Melbourne Water led a review in partnership with the
Office of Living Victoria, the Department of Environment and Primary Industries, and
the Department of Transport, Planning and Local Infrastructure.
The objective of the review was to determine the barriers and enablers to the clause,
with input from Melbourne Water, local councils, developers and industry
organisations. Recommendations were provided to partner agencies on steps that
could be taken to achieve better stormwater management outcomes in the planning
provisions.
Little Stringybark Creek trials new Environmental Significance
Overlay
The Little Stringybark Creek Environmental Significance Overlay is an Australian-first
planning amendment that requires developers in the catchment to treat water runoff
before it enters the stormwater system.
The overlay requires developers who increase impervious surface area by more than
10 square metres to treat runoff onsite through rainwater tanks, rain gardens or
passive drainage, rather than flows entering the stormwater system. The overlay is
designed as a two-year pilot to determine if this type of planning control is effective in
reducing stormwater flows and improving urban waterway health.
Managed aquifer recharge
Managed aquifer recharge involves refilling aquifers for later recovery and use, or
environmental benefit. Water deposits are made in times of surplus – commonly
during winter – and extraction occurs during peak demand in summer when
traditional supplies struggle to meet demand.
Multi-year balancing is also possible for long-term storage. Typically, managed
aquifer recharge involves the capture and use of treated stormwater or recycled
water to recharge an aquifer.
Melbourne Water is continuing to support City West Water’s West Werribee Aquifer
Storage and Recovery project. This project aims to use managed aquifer recharge to
store excess salt-reduced recycled water from a salt reduction plant at the Western
Treatment Plant. The project could balance short-term seasonal demands as well as
secure supply for coming decades. Detailed design of the site is underway, with
construction expected to start in early 2014.
Trials are also being planned for three additional aquifer storage and recovery sites
on Melbourne Water land at Ravenhall, Greek Hill and Ballan Road.
3Formerly
two separate departments known as the Department of Sustainability and
Environment and the Department of Primary Industries.
Figure 9: Melbourne Water’s recycling schemes
Transcribers Note: Map has been omitted
Managing water quality and reliability of supply
Work is now complete on the Eastern Treatment Plant Tertiary Upgrade project,
which has increased the quality of recycled water to Class A standard.
This higher quality water can now be used for a broader range of non-drinking
applications such as toilet flushing, watering sports grounds and irrigating
vegetables. Operational handover to Melbourne Water occurred in April 2013 and
Class A supply contracts with recycled water customers will start from July 2013.
Melbourne Water is continuing to work closely with South East Water to progress
further recycled water opportunities from Eastern Treatment Plant.
In 2012–13 we continued to work with water retailers and other key stakeholders to
reduce salt discharges to sewerage, and we are reviewing our Salinity Reduction
Strategy to provide more fit-for-purpose recycled water for customers. Consultation
with key stakeholders indicated that a risk assessment for the Eastern Treatment
Plant and Western Treatment Plant catchments was needed. The results highlighted
specific risk factors for the Western Treatment Plant catchment, which are now the
subject of further investigation.
The process will determine the effectiveness of previous salt reduction mechanisms
such as cleaner production, pricing and trade waste variations as well as other
options such as treatment and on-site management. Once the investigation is
complete, a triple bottom line analysis will determine the most cost-effective method
for salinity management and a draft management plan for Western Treatment Plant
will be released in late 2013.
Water recycling west of Melbourne
Western Treatment Plant supplied 11,080 million litres of recycled water to
customers in 2012–13 (23,168 million litres last year). This comprised 8,438 of
recycled water used onsite (23,007 million litres last year) by the agricultural
business MPH Agriculture, mostly Class C water for pasture irrigation and salinity
management, and 2,642 million litres of Class A recycled water supplied to Southern
Rural Water and City West Water for offsite customers (161 million litres last year).
This year saw an encouraging increase in demand for Class A recycled water from
both City West Water and Southern Rural Water. 20 Melbourne Water Annual
Report 2012–13
Supply to Southern Rural Water
Melbourne Water supplied 2,376 million litres of Class A recycled water to Southern
Rural Water (9 million litres last year). A total of 67 million litres was supplied to
customers in the Werribee Tourist Precinct.
This year 2,309 million litres of Class A recycled water was supplied to the Werribee
Irrigation District (0 million litres last year). This was due to a drier 2012–13 irrigation
period and Southern Rural Water’s new contracts with Werribee Irrigation District
farmers, which will see river water diluted with recycled water. This new arrangement
ensures farmers have access to irrigation water even during harsh droughts and
reduces dependency on river water.
Supply to City West Water
Melbourne Water supplied 267 million litres of Class A recycled water to City West
Water (152 million litres last year) for the West Werribee Dual Supply, Werribee
Employment Precinct, MacKillop College and standpipes for water carters.
This year, City West Water’s West Werribee Dual Supply scheme came online. This
scheme supplies housing developments in Werribee’s west with recycled water for
toilet flushing, garden watering, streetscape and open space irrigation. During this
year 2 million litres was supplied to City West Water for this scheme.
In the Werribee Employment Precinct, recycled water is used by City West Water’s
commercial customers for wash-down, industrial processes at Melbourne Water’s
Hoppers Crossing Pump Station and open space irrigation. During the year, 154
million litres was supplied to City West Water for this precinct (98 million litres last
year).
City West Water was supplied with 30 million litres of recycled water for MacKillop
College (22 million litres last year). Water carters were supplied with 80 million litres
of recycled water from City West Water standpipes at the Western Treatment Plant
(32 million litres last year) for a range of applications.
This year saw a perceived decrease in the use of Class C recycled water for onsite
agricultural use (8,438 million litres) when compared to last year’s usage (23,007
million litres). The perceived variance is due to a difference in how the recycled
water volumes are calculated. In 2011–12, volume determination depended heavily
on mass balance calculations. This year, upgrade works have seen the installation of
flow meters throughout the recycled water delivery channels and volumes can be
more accurately assessed. It is estimated that Class C recycled water flows to MPH
Agriculture are actually within 10% of previous year volumes.
In addition, 16,416 million litres were provided for conservation purposes in the
Ramsar-listed wetlands (16,500 million litres last year). Including the conservation
flow, 16% of Melbourne Water’s treated wastewater from both the Western
Treatment Plant and the Eastern Treatment Plant was recycled.
Water recycling east of Melbourne
Historically, the Eastern Treatment Plant at Bangholme has produced Class C
recycled water. With the completion of the Tertiary Treatment Upgrade, the plant
now produces Class A quality water. Melbourne Water is working closely with water
retailers to transition into the supply of Class A water commercially.
This year 21,352 million litres of recycled water (18,139 million litres in 2011–12) was
supplied from the Eastern Treatment Plant, including 14,379 million litres onsite
(14,331 million litres last year).
Supply to Water Infrastructure Group
Melbourne Water supplied 5,767 million litres of Class C recycled water (3,089
million litres last year) to the Water Infrastructure Group. This was supplied for
treatment to Class A recycled water for use in the Eastern Irrigation Scheme.
The Eastern Irrigation Scheme operates under the brand TopAq, a wholly owned
subsidiary of the Water Infrastructure Group. TopAq distributes recycled water to
more than 80 customers for horticulture, open space irrigation and industrial
processes.
TopAq also supplies South East Water with recycled water for dual pipe schemes in
residential developments where the water is used for toilet flushing, garden watering,
streetscape and open space irrigation.
Supply to South East Water
Melbourne Water supplied 1,206 million litres of Class C recycled water to South
East Water via the South Eastern Outfall pipeline (719 million litres last year).
The pipeline transports recycled water from the Eastern Treatment Plant and smaller
South East Water treatment plants to Boags Rocks on the Mornington Peninsula.
South East Water customers along the pipeline use this recycled water for
agricultural and horticultural activities, root crop irrigation, flower growing, drip
irrigation of vineyards, and for watering golf courses and sports grounds. There are
50 customers using recycled water from the South Eastern Outfall, the same number
as last year.
Recycled Water Volumes
Actual 2011–2012
Actual 2012–2013
Forecast 2012–13
ML
%*
ML
%*
ML
%*
23,007
7.2%
8,438
2.8%
30,000
9.9%
Werribee Irrigation
District
0 0.0%
2,309
1.0%
10,650
3.4%
Werribee Tourism
Precinct
9 0.0%
67
0.0%
200
0.1%
Western
Treatment Plant
Onsite recycling
(Supply to MPH)
Supply to
Southern Rural
Water
Actual 2011–2012
Actual 2012–2013
Forecast 2012–13
ML
%*
ML
%*
ML
%*
West Werribee
Dual Pipe Project
0 0.0%
2 0.0%
80
0.0%
Werribee
Employment
Precinct
98
0.0%
154
0.1%
360
0.1%
MacKillop College
22
0.0%
30
0.0%
50
0.0%
Water
32
tankers/standpipes
0.0%
80
0.0%
200
0.1%
Western
Treatment Plant
Total
23,168
7.2%
11,080
3.9%
41,540
13.6%
14,331
4.5%
14,379
4.7%
13,800
4.5%
3,089
1.0%
5,767
1.9%
5,000
1.6%
Supply to City
West Water
Eastern
Treatment Plant
Onsite recycling
Supply to Water
Infrastructure
Group
Eastern Irrigation
Scheme
Supply to South
East Water
Actual 2011–2012
Actual 2012–2013
Forecast 2012–13
ML
%*
ML
%*
ML
%*
South Eastern
Outfall
719
0.2%
1,206
0.4%
1,600
0.5%
Eastern
Treatment Plant
Total
18,139
5.7%
21,352
7.0%
20,400
6.6%
Total recycled
41,307
12.9 %
32,432
10.9%
61,940
20.2%
Treated
wastewater
available for
recycling
320,356
304,506
Conservation
flows at Western
Treatment Plant
16,500
16,416
Total incl.
conservation
flow
57,807
48,848
* Refers to percentage of treated wastewater produced at Melbourne Water’s
treatment plants. ML = million litres
Service delivery: Sewerage
Side quote: “The Eastern Treatment Plant Tertiary Upgrade received an
industry award at the Global Water Summit in Seville, Spain, where it was
named 2012 Water/Wastewater Project of the Year.”
Key achievements
•
Awarded the Water/Wastewater Project of the Year for the Eastern Treatment
Plant Tertiary Upgrade at the 2013 Global Water Summit
•
Received national and state awards for the Melbourne Main Sewer
Replacement project
•
Trialled the use of biosolids as fertiliser to improve soil structure and boost the
yield of crops such as wheat and corn.
Disappointments
•
Failed our odour complaints target, with 14 complaints against a target of 10
•
Delayed completion of new aeration tanks at Eastern Treatment Plant until
December 2013 due to substantial defects requiring rectification.
Challenges
•
Rehabilitating the Eastern Drop Structure on Hobsons Bay Main Sewer in a
‘live’ sewer environment to facilitate the construction of an air treatment facility
•
Reviewing our Corrosion and Odour Management Program to manage issues
such as the impacts of reduced sewer flows on odourcausing compounds
•
Positioning Melbourne Water to take advantage of new markets for resources
produced from sewage and biosolids.
Figure 10 Melbourne Water’s sewerage system
Transcribers Note: Map has been omitted
Our sewerage system
Melbourne Water’s sewerage system consists of:
•
400 kilometres of sewers
•
Eight sewage pumping stations
•
The Eastern Treatment Plant at Bangholme and the Western Treatment Plant
at Werribee
•
Nine air treatment facilities.
Melbourne Water treated a total of 305,901 million litres of sewage at Eastern
Treatment Plant and Western Treatment Plant in 2012–13. This was similar to 2011–
12 flows (320,067 million).
About 43% of this sewage was treated at Eastern Treatment Plant and 57% was
treated at Western Treatment Plant.
Eastern Treatment Plant
Melbourne Water’s $418 million upgrade of the Eastern Treatment Plant was
completed on time and within budget. Delivered by the Eastern Tertiary Alliance (a
partnership between Baulderstone, United Group Infrastructure, Black & Veatch,
KBR and Melbourne Water), the project was handed over to Melbourne Water in
April 2013 following commissioning and successful performance trials in late 2012.
The upgrade has introduced an advanced tertiary stage of sewage treatment at
Eastern Treatment Plant, improving the quality of water it produces and making it
one of the most sophisticated large-scale treatment facilities in the world. The aim of
the project was to benefit the marine environment by significantly improving the
Eastern Treatment Plant’s discharge quality. Combined with an innovative treatment
approach, the upgrade also provides a new source of high quality recycled water for
fire-fighting, flushing toilets, washing machines, watering gardens and lawns, and
washing cars.
The upgrade received an industry award at the Global Water Summit in Seville,
Spain, where it was named 2012 Water/Wastewater Project of the Year. It was
recognised for its groundbreaking trials and innovative processes, which use a
combination of ozone treatment, filters, and UV and chlorine disinfection.
Rising to the challenge
In 2012, a joint on the South Eastern Outfall rising main began to leak, just
downstream of the Eastern Treatment Plant Outfall Pump Station. The South
Eastern Outfall rising main is used to pump treated and disinfected effluent 10
kilometres uphill from the Eastern Treatment Plant to Frankston, where it flows into
the much larger South Eastern Outfall and is then gravity-fed to the Ocean Outfall at
Boags Rocks near Gunnamatta.
The same main also supplies recycled water to South East Water customers directly
or via the TopAq tertiary plant. A number of solutions for fixing the leak were
investigated; however, the only viable option was to cut and remove the leaking joint
and replace the faulty valve. This involved the complete shutdown and drainage of
the rising main while still maintaining normal treatment plant operations and storing
the treated effluent onsite. The shutdown was well planned with recycled water
customers, South East Water and TopAq, and took 48 hours of non-stop work to
complete.
Aeration tank works now on track
A contract was awarded to construct four additional aeration tanks in early 2007 to
support the conversion of existing aeration tanks to an ammonia reduction process,
and provide for ongoing population-based load growth to the Eastern Treatment
Plant.
However, a number of defects relating to the construction of the concrete aeration
tanks became apparent, causing significant delays and increased costs.
Identifying the potential causes of the defects and developing appropriate solutions
has been complex. It has also required a high level of cooperation between
Melbourne Water, the project manager, designer and constructor.
The current completion date for the construction phase of the project is December
2013 with all parties working constructively towards this goal.
Western Treatment Plant
Covers renewal project progressing well
Works to replace and double the size of the existing covers on treatment lagoons at
the Western Treatment Plant are progressing well.
Four times the size of the MCG, the new covers will help reduce odour and capture
more biogas to generate renewable energy. About 70% of the upgrade has been
completed, with the remaining segments expected to be completed in early 2014.
In 2012, the project was also chosen as a finalist in the WorkSafe Victoria Awards for
improvements to work methods that have significantly reduced the high risk of
manual handling injuries (see Organisational capability chapter).
Supporting biodiversity and improving the marine environment
An innovative approach to risk assessment has been developed for the Western
Treatment Plant to manage the dual challenges of receiving water quality and
biodiversity objectives.
Intensive scientific studies were undertaken in 2012 to develop a more rigorous
understanding of the interactions between treated effluent discharges and receiving
waters, and an Environmental Risk Assessment found the risk to Port Phillip Bay
was low. Studies also showed that nutrients in the effluent provided an important
benefit to the receiving waters, increasing the productivity of aquatic animals living in
the bay’s mudflats and supporting internationally significant populations of migratory
shorebirds. These shorebirds are one of many important values that contribute to the
listing of Western Treatment Plant as a wetland of international importance under the
Ramsar Convention.
The studies also revealed an opportunity to maintain the bay’s biodiversity while
improving water quality. It was shown that adjusting the distribution of treated
effluent, so it is delivered more directly to foreshore areas, will deliver the most
benefit to the bay. Meeting these biodiversity requirements more efficiently will also
require less water and increase the amount of recycled water that can be reused.
Projects to implement these improvements are now planned for 2014–15, and will
make a significant contribution to Melbourne Water’s vision of Enhancing Life and
Liveability through an integrated water cycle management approach.
Program of works to increase capacity at the Western Treatment
Plant
With sewage loads to the Western Treatment Plant growing in recent years, a threestage program of works has been developed to cater for increased demand.
Scheduled to take place between 2014 and 2021, the works will efficiently match
capacity with customer demand. The works are planned to balance environmental
performance with customer service levels, as well as minimising financial impacts on
our customers.
The first stage of works at the Western Treatment Plant will optimise existing
lagoons through low-cost changes to enable major expenditure on new assets to be
deferred. The work will include flow distribution modifications within the treatment
process. This will provide targeted nutrient delivery to the Lake Borrie lagoon to
support internationally significant waterfowl populations.
The second stage of works will include construction of a new activated sludge plant
to deliver additional treatment capacity in the medium term, and enhance the
reliability of Class A recycled water supply. The new sludge plant will enable stage
three refurbishment of older assets between 2019 and 2021.
Transfer system
During 2012–13, considerable planning has taken place for future upgrades to the
sewerage transfer system. These upgrades will commence during Water Plan 3
(2013–14 to 2017–18). Funding for these projects will be determined by the
Essential Services Commission (ESC).
Progress on North Yarra Main Sewer replacement
Melbourne Water is replacing the century old North Yarra Main Sewer and the Kew
North Branch Sewer, located in Alphington and Kew North.
The relevant section of the North Yarra Main Sewer runs within the Latrobe Golf
Course and Coate Park in Alphington, adjacent to the Yarra River. The relevant
section of the Kew North Branch lies between a point south of the Eastern Freeway,
near Princess Street, and a connection point on the North Yarra Main Sewer.
The project will reduce the risk of a potential sewer failure as the asset approaches
the end of its useful life and will provide increased capacity, enabling the sewer to
keep up with demand and reducing the potential for spills.
Since 2010, Melbourne Water has worked closely with the City of Yarra, Parks
Victoria and Latrobe Golf Course through an initial options assessment process, a
series of design workshops and more detailed design options. The proposed works
will involve a combination of tunnelling and trenching. Substantial progress has been
made on the planning phases of the project, with works expected to start in late 2013
and scheduled to take about three years to complete.
Ringwood Sewer/Dandenong Creek Strategy
Preliminary work has started to gain a better understanding of the biodiversity and
threatened species habitat of the Dandenong Creek as part of implementing the
Ringwood Sewer/ Dandenong Creek Strategy. Future work will include determining
the range of pollutants in the creek and possible options for prevention. Establishing
a clear focus on the natural amenity for receiving waters and habitats will also be
important. The approach is innovative in that it allows for the deferral of a $100
million sewer upgrade while achieving improved environmental outcomes. The
strategy will be implemented during Water Plan 3 (2013–14 to 2017–18), with initial
works due to be completed in mid-2014.
Melbourne Main Sewer Replacement project complete
The Melbourne Main Sewer Replacement project, one of the most complex sewer
tunnelling projects undertaken in Australia, was completed on 7 July 2012.
The project replaced a 2.3 kilometre section of the 110 year-old Melbourne Main
Sewer which will triple sewerage capacity and cater for inner growth for the next
century. An additional 1.9 kilometres of smaller branch and reticulation sewers were
also constructed to connect existing sewers to the new sewer tunnel.
A major component of the project was building a 140 metre pipeline under the Yarra
River that took specialist divers and engineers two years to build.
The project was recognised by the following industry awards:
•
Winner of the 2012 Australian Society for Trenchless Technology Project of
the Year – New Installation • Winner of the 2012 Victoria Civil Contractors
Federation Earth Awards (Category 5) projects greater than $75 million.
Melbourne Water delivered the works with John Holland, GHD and Aurecon.
Managing corrosion and odour
Melbourne Water received 14 odour complaints related to the sewerage transfer
system this year. This was the same as in 2011–12, but more than our target of no
more than 10.
Most of the odour complaints related to manhole covers being dislodged or damaged
by traffic as well as normal discharge of sewer gases from vent stacks or ventilation
associated with works undertaken in sewer network.
A key component of our Corrosion and Odour Management Program is the
development of sewer management plans at a catchment scale with water retailers.
Other program activities include analysing factors contributing to the generation and
release of gases, identifying hotspots, and determining the most effective ways to
manage corrosion risk and odour over the next 20 years.
Works to address sewer corrosion and odour from the Eastern Drop Structure (EDS)
manhole on the Hobsons Bay Main Sewer continued this year, with the completion of
below-ground rehabilitation works and the commencement of a $23 million air
treatment facility. The EDS allows sewage from Melbourne’s city fringe and bayside
areas to drop down and flow beneath the Yarra River. It handles about 175 million
litres of sewage a day and is the main crossing point for sewage on the way to the
Western Treatment Plant.
Melbourne Water is also contributing to the Sewer Corrosion & Odour Research
(SCORe) Project, established to help the Australian water industry achieve costeffective and efficient corrosion and odour management in sewers. The tools
generated by the SCORe Project cover four key areas:
•
Liquid phase controls
•
Gas phase controls
•
Corrosion control, prediction and coating performance
•
Odour and corrosion control through integrated management of assets.
Managing biosolids
Melbourne Water is trialling the application of biosolids as fertiliser to improve soil
structure and boost crop yields on land currently leased to MPH Agriculture at the
Western Treatment Plant.
The biosolids, most of which come from the Western Treatment Plant, have been
stockpiled for just over three years and are being used on wheat crops in winter and
corn crops in summer. A small amount of biosolids stockpiled at the Eastern
Treatment Plant for about four years are also being used. All of the biosolids have
been tested for metals, organochlorides and pathogens and meet relevant EPA
Victoria guidelines.
The trial will reuse more than 1,500 dry tonnes of biosolids spread over 100 hectares
of agricultural land. The method chosen for spreading the biosolids allows for direct
comparison of seven different application rates/field treatment options, including a
control.
Preliminary results will be known after the winter crop has been harvested and full
results will be available after April 2014, when the summer crop is harvested and
field testing is complete. It is expected that biosolids reuse will have a beneficial
impact on grain yield, protein content and soil structure.
Sewer mining
Melbourne Water updated its Strategic Sewerage Assessment Tool this financial
year to reflect current treatment system performance.
The updated modelling tool is now capable of analysing the system-wide effects of
sewer mining and localised sewage treatment, including energy consumption,
greenhouse gas emissions, nutrient and water flows.
Together with the Hydraulic and Sewage Quality Model, the Strategic Sewerage
Assessment Tool will be used to support the development of integrated water cycle
strategies in Melbourne.
Side Caption: “The Melbourne Main Sewer Replacement project, one of the
most complex sewer tunnelling projects undertaken in Australia, was
completed on 7 July 2012.”
Service delivery Waterways
Side quote: “Melbourne Water works with many organisations, groups and
individuals to look after our waterways, and the plants and animals that
depend on a healthy river environment.”
Key achievements
•
Completed Flood Management Plans with all 38 local councils in our region
•
Removed 1,021 kilometres of weeds and planted 259 kilometres of native
vegetation along waterways
•
Developed a new Waterways and Drainage Strategy, approved by our Board
in September 2012, which sets 39 performance targets that will be
independently assessed each year for the next five years
•
Finalised our Healthy Waterways Strategy, which identifies priority areas and
management actions to improve waterway health from 2013–14 to 2017–18
•
Finalised our Stormwater Strategy, which focuses on the integrated
management of stormwater to achieve multiple community outcomes from
2013–14 to 2017–18
•
Completed a successful pilot program to limit pollutants from rural land
entering waterways
•
Built a new fishway at Dights Falls, Abbotsford on the Yarra River to improve
passage for migratory fish to breed.
Disappointments
•
Several heavy rainfall events caused flooding in the Koo Wee Rup and
Longwarry Flood Protection District.
Challenges
•
Integrating flood management with broader stormwater quality/quantity
management and overall integrated water cycle management
•
Managing expectations about water quality during and after heavy rainfall
events
•
Meeting the growing needs of urban development in a way that considers
waterways, regional drainage and floodplain management
•
Developing a measure of the social value of waterways and a deeper
understanding of how our management practices can improve amenity. 30
Melbourne Water Annual Report 2012–13
Figure 11: Melbourne Water’s waterways and drainage systems map
Transcribers Note: Map has been omitted
Our waterways and drainage system
Melbourne Water oversees river health in the Port Phillip and Westernport region. In
this role, we manage:
•
8,400 kilometres of rivers and creeks
•
1,484 kilometres of drains
•
435 constructed waterway treatment systems and wetlands
•
308 monitoring stations on waterways and drains
•
160 urban lakes.
Improving river health
Melbourne Water works with many organisations, groups and individuals to look after
our waterways, and the plants and animals that depend on a healthy river
environment. These organisations include local councils, landowners, community
groups, developers, farmers, government agencies and research institutions.
Melbourne Water removed and managed weeds across 1,021 kilometres and
revegetated 259 kilometres of land along waterways. These works help improve river
health and protect riverbanks from erosion.
Our River Health Incentives Program provides funds and support for landowners and
managers to improve the health of land adjoining waterways. We provided 966
grants this year valued at $4.49 million (compared to 964 grants valued at $4.19
million in 2011–12).
Under our Stream Frontage Management Program, we provided $2.44 million to
support 700 projects on private property (compared to $2.56 million to support 725
projects in 2011–12) and we provided $773,254 to support 44 Rural Land Program
projects. We also provided funding for 133 Community Grant waterway management
projects totalling $617,255 (125 grants totalling $590,000 in 2011–12) and supported
public land managers through 89 Corridors of Green projects totalling $659,158 (114
grants totalling $969,000 in 2011–12).
New Waterways and Drainage Strategy
In September 2012 the Melbourne Water Board approved a draft Waterways and
Drainage Strategy to challenge the business to perform at the highest standard and
make us more accountable to our customers, stakeholders and the community.
The strategy was a specific requirement of Melbourne Water’s Statement of
Obligations and formed the basis of the Waterways and Drainage component of our
Water Plan 3 (2013–14 to 2017–18) submission to the Essential Services
Commission (ESC).
The Waterways and Drainage Strategy sets robust key performance indicators,
presented as 39 targets (and associated performance measures) against which
progress is independently assessed each year.
The Waterways Advisory Committee, which consisted of representatives from the
land development industry, community groups, local councils, the Department of
Environment and Primary Industries4, EPA Victoria, Parks Victoria, the Port Phillip
and Westernport Catchment Management Authority and the University of Melbourne,
helped develop the strategy and contributed to its strategic direction and targets. A
major challenge was bringing together the diverse views of the committee members
to develop and finalise the strategy.
Healthy Waterways Strategy adopted
Melbourne Water finalised our Healthy Waterways Strategy, which outlines how we
will work in partnership with the community, our customers and stakeholders to
manage rivers, estuaries and wetlands in the Port Phillip and Westernport region.
The new strategy will be used as a guide to protect the environmental health of our
waterways and the amenity they provide. Activities guided by the strategy include
vegetation management, environmental flows, habitat enhancement and working
with communities to achieve healthy waterways. The strategy identifies priority areas
and management actions from 2013–18.
Melbourne Water consulted extensively with interested landowners, community
groups, government agencies and local councils to ensure broad customer and
stakeholder support. The consultation process (which was run in conjunction with the
Stormwater Strategy) included 22 workshops and more than 11,000 people visited
our website and forum page to provide comment.
Defining the social value of waterways
Although the social value of waterways has long been recognised, Melbourne Water
completed research in 2012–13 to refine our understanding of ‘social value’ in
relation to amenity.
While developing our Healthy Waterways Strategy, we undertook additional analysis
so we could include amenity as a key waterway value alongside fish, frogs, birds,
platypus, macroinvertebrates and vegetation.
Previous research has shown that people feel waterways are places of value where
they can undertake passive and active recreation. However, developing our
understanding of how waterway management can influence this kind of amenity for
the better is a challenge.
Although we have a good understanding of the factors that influence amenity, such
as vegetation and sensory access to the waterway, further research is needed to
determine how much and what quality of vegetation enhances amenity.
By managing the amenity of waterways, Melbourne Water hopes to provide a setting
that supports a range of other community values such as liveability and recreation.
Dights Falls fishway working well
A new fishway at Dights Falls in Abbotsford on the Yarra River was officially
launched by the Honourable Peter Walsh MLA, Minister for Water, on 14 December
2012.
The Dights Falls fishway and weir replacement project was one of the most
significant river health projects in Water Plan 2 (2008–09 to 2012–13). It involved
replacing the old weir and improving passage for migratory fish through the
installation of a vertical slot fishway.
The heritage-listed Dights Falls Weir, built in 1895, had reached the end of its life
and needed to be replaced.
The new weir continues to play an important role controlling water levels in the Yarra
– pooling water for approximately 17 kilometres upstream and protecting important
social, economic and environmental values of the river.
The Yarra River supports 17 species of native fish – 11 of which need to make
movements up and downstream to breed. The new fishway directly benefits the
Yarra and its upstream tributaries by boosting native migratory fish numbers and
species diversity. Preliminary studies show it is working well and allowing many
species to migrate past the weir.
Works were done with extensive consultation and carried out under a Cultural
Heritage Management Plan approved by Heritage Victoria. The project was delivered
by the Waterways Alliance – a partnership between Fulton Hogan, Ecodynamics,
SMEC and Melbourne Water.
4Formerly
two separate departments known as the Department of Sustainability and
Environment and the Department of Primary Industries.
Works at Mullum Mullum Creek improve habitat for platypus
Melbourne Water planted 16,000 native trees and removed 3.5 kilometres of weeds
along a stretch of Mullum Mullum Creek between Deep Creek Road in Mitcham and
Park Road in Donvale.
A key aim of the project is to improve platypus habitat. Eight platypuses were found
in the creek during surveys in November 2012 – the highest count since Melbourne
Water started surveys in 1995. It is hoped that improved conditions will continue to
support breeding and expand the platypus habitat into other areas of the creek.
Baby boom for Melbourne’s platypus
Our Urban Platypus Program’s autumn survey found the percentage of juvenile
platypuses sighted in Melbourne is the highest in at least five years. Melbourne
Water conducts platypus surveys twice a year to determine the status of platypus
populations across greater Melbourne and the threats platypuses face in urban
areas.
To help ecologists gain a better understanding of the platypus population and aid
conservation, platypusspot.org was launched in conjunction with cesar (a research
organisation that runs Melbourne Water’s Urban Platypus Program) to encourage
people to share their platypus sightings online.
Water quality
Living Rivers is a Melbourne Water program that operates in partnership with 38
local councils to identify needs and deliver sustainable stormwater management
outcomes. Over the past 12 months, Living Rivers has provided $4.5 million in
project support to local councils for projects aimed at building capacity for
sustainable stormwater management.
Key projects include:
•
The development of water sensitive urban design maintenance guidelines and
life cycle costing of water sensitive urban design assets (all councils)
•
Tattersons Park wetland (City of Greater Dandenong)
•
Dobsons Creek stormwater disconnection retrofit (City of Knox and South
East Water).
Stormwater Strategy completed
Melbourne Water recently finalised our new Stormwater Strategy 2013–18 to help
manage stormwater and protect and improve the health of waterways and bays.
The strategy sets out a high level strategic direction for managing stormwater in rural
and urban areas to deliver multiple community outcomes, including alternative water
supply, public safety, healthy waterways and bays, and wellbeing and liveability.
The consultation process was run in conjunction with the Healthy Waterways
Strategy.
Successful trial reduces waterway pollution from rural land
A trial to reduce pollutants from rural land entering waterways has been a huge
success.
More than 100 landholders were recruited in three catchments to take action to
reduce pollutant loads to waterways during the pilot of the Rural Land Program.
Modelling for the activities funded in the pilot (e.g. stock exclusion fencing,
revegetation, paddock re-alignment, etc.) has estimated an annual reduction of
21,925 kg/year nitrogen, 8198 kg/ year phosphorus and 2321 tonnes/year sediment
from entering into Port Phillip Bay and Western Port.
The Rural Land Program is set to become a core program of Water Plan 3 (2013–14
to 2017–18), and will be delivered as part of the broader Stormwater Strategy
implementation program and the River Health Incentives Program. The trial was
funded by the Department of Environment and Primary Industries5, and will be
funded by Melbourne Water in the future.
Alternative delivery methods are also being tested including a partnership with
Mornington Peninsula Shire Council to develop and deliver a customised version of
the program in two rural catchments on the peninsula, and better integration with the
Tarago Sustainable Farms Program through the Neerim South Landcare Group.
5Formerly
two separate departments known as the Department of Sustainability and
Environment and the Department of Primary Industries.
Environmental flows
In 2012–13, Melbourne Water delivered 14 separate environmental flows in the
Werribee, Tarago and Yarra rivers, delivering about 17,000 mega litres of water to
improve river health and meet our ecological objectives.
The Werribee system received seven environmental flows using water from the
environmental entitlement, and additional water secured through a temporary trade.
This allowed us to provide flows from the Werribee Diversion Weir for the first time,
providing benefits for water quality, fish and platypus around Werribee. Community
feedback has been positive, and monitoring has revealed unexpected benefits such
as support for the frog population of Coimadai Creek.
The first ever environmental flow in the Tarago River took place in November 2012,
targeting the migration of Australian Grayling, a threatened native fish species. Since
the success of the first release, two additional releases have taken place.
Four environmental releases occurred in the Yarra River in 2012–13, including the
largest to date. Designed to mimic an autumn high flow, this release was intended to
promote the spawning of Australian Grayling. For the first time ever, water was
simultaneously released from four separate delivery points to achieve the required
flow magnitude. Recent monitoring indicates these environmental flows have helped
improve water quality by flushing stagnant water from the river bed to maintain fish
and macroinvertebrate.
Waterway diversions
Melbourne Water manages about 1,900 licenced waterway diverters that extract
licensed water from the Yarra River, Maribyrnong River, Stony Creek, Kororoit
Creek, Laverton Creek and Skeleton Creek catchments. Water is mainly used for
agricultural, industrial, commercial, domestic and stock purposes.
Dry change presents challenges for water users
After two years of wetter conditions, the dry 2012–13 irrigation season caught some
water diversion licence holders off guard, presenting challenges for Melbourne
Water.
The Yarra Valley experienced a long, dry summer with little autumn rain and above
average temperatures. For example, rainfall at Coldstream between October 2012
and April 2013 was 257.4 millimetres, 146.3 millimetres below the long-term average
(Bureau of Meteorology, 2013).
Site inspections by Melbourne Water across summer and autumn uncovered a
significant number of diverters who were approaching or had reached their water
entitlement. Thankfully most users were able to be directed to additional water
through trade on the temporary water market.
However, several diverters still exceeded their allocation. This resulted in warning
letters being issued to some growers and a small number of cases are still being
considered for legal action. Action is considered necessary by Melbourne Water
when the breach is significant and places access for the environment and other
water users at risk.
The dry conditions also resulted in a higher number of water trades on the water
market with a 20% increase in trade applications on last year. Other tasks included:
•
Implementation of the Stream Flow Management Plans for the Woori Yallock
Creek and the Little Yarra and Don River catchments, introducing revised flow
triggers for bans/ restrictions and new water trading rules in these catchments
•
Closer monitoring of users along the Yarra River during environmental flow
releases to ensure preservation of the releases for their intended purpose.
Stormwater licensing
Melbourne Water continued to work with local councils and water retailers around
new stormwater harvesting schemes. As of June 2012 we have issued 30
stormwater licences for a total of 1,291 million litres. This represents an increase of
571 million litres over last year’s figures. New schemes included:
•
DeWinton Park, Rosanna
•
Chelsworth Park, Ivanhoe
•
Kalparrin Lake, Greensborough
•
Elsternwick Park, Elsternwick.
Councils including City of Hobsons Bay, City of Boroondara and City of Moonee
Valley have schemes currently being assessed. Ongoing demand for stormwater is
expected to continue as it remains a key element in integrated water cycle
management strategies. In the face of ongoing demand we are continuing to assess
the potential impacts of harvesting on receiving urban waterways and adapting policy
and harvesting rules.
Service standards
Melbourne Water has met the service standards set out in our Customer Charter for
Diversion Services. The number of applications received in total was up from last
year but we have maintained performance with 96.9% of all applications determined
within the specified time limits.
Flood management
Floods are a natural and inevitable event, and we can’t always control them.
Therefore, we must learn how to live with them while minimising risks to public health
and safety, property and infrastructure.
Flooding deeply affects individuals, households, and the community long after flood
waters have subsided. The tangible damages, clean-up costs and loss of earnings
have a direct financial impact on those flooded and on the community. The intangible
damages, such as emotional suffering, loss of irreplaceable memorabilia and
perceived loss of security, can’t be measured in monetary terms.
In determining flood risk, Melbourne Water considers economic impacts, flood
hazard and the social impacts of flooding. Our long-term aim is to minimise all
currently known intolerable flooding risks to public health and safety, property and
infrastructure.
Although our focus for structural works is on extreme flood risk properties, we are
also working with councils and the Victoria State Emergency Service on nonstructural measures such as flood management plans, flood emergency plans,
education and awareness programs and flood overlay updates in council planning
schemes. A key activity of the strategy was to complete 38 local flood management
plans, which we successfully achieved in 2012–13. Even though these non-structural
activities do not reduce the size of a flood, they do promote better understanding of
flood risk and provide guidance on what people can do to lessen the impact of
flooding.
Work continuing on Koo Wee Rup and Longwarry flood protection
The Koo Wee Rup and Longwarry Flood Protection District is a unique area within
Melbourne Water’s operating region. A former swamp, the area was drained for
farming in the mid-late 1800s and drains were cut through the land to manage
flooding that remains common in the area.
Melbourne Water is responsible for maintaining these drains and charges a special
rate to fund the increased level of service across the district.
Following concerns regarding flooding in early 2012, Melbourne Water fast-tracked
works to improve drainage across the Koo Wee Rup and Longwarry area. We
adopted a staged approach, tackling areas that did not require extensive ecological
assessments first.
One of the projects completed was an upgrade of the Bunyip Main Drain in Vervale,
which raised the drain’s levee and rebuilt its 4 kilometre southern bank. The
upgrades allow the new drain to withstand a one-in-15 year flood, whereas
previously it could only cope with a one-in-7 year event.
Nearly 100 kilometres of works are now complete, which has helped prepare the
district for future high rainfall. We will now focus on a series of more complex works
in 2013–14.
Frankston Drainage Improvement project reduces flood risk
Now in the final stage, the Frankston Drainage Improvement project has greatly
reduced flood risk to central Frankston.
Central Frankston contains important regional infrastructure that is subject to
flooding in a one-in-100 year storm event, including Bayside North Shopping Centre,
the law courts, police station and Chisholm Institute of TAFE. Monash University’s
Peninsula Campus is also affected by flooding.
A total of 1,427 properties were prone to flood in a one-in-100 year storm event
including 1,104 residential properties and 323 industrial and commercial properties.
This flooding posed a significant economic and social risk to Frankston and the
broader community.
To reduce this risk, the Pipelines Alliance (a partnership between Melbourne Water,
Fulton Hogan, Jaydo and GHD) completed major drainage works. The works took
place in three stages:
•
Stage 1 – a 1.5 kilometre drain as built between Monash University’s
Peninsula Campus and Kananook Creek
•
Stage 2 – drainage infrastructure was upgraded within Frankston’s Central
Activity District
•
Stage 3 – construction of a drain upstream of Monash University along Bloom
Street, Roberts Street, Heatherhill Road and Manly Avenue.
Flood risk reduced in Maribyrnong
Melbourne Water has reduced the flood risk in the Maribyrnong River catchment by
introducing a full range of non-structural flood risk reduction measures.
In a one-in-100 year storm event, 478 properties in the area are flood prone. Key
measures to reduce risk have included planning scheme overlays, flood
management and flood emergency plans, a flood warning system and a Flood
Safe/Storm Safe program.
Under the latest improvements, each flood-affected property owner now has details
of the flood implications for their property linked to river gauge levels. Forecasted
flood level information is conveyed to the community as flood warnings by the media,
providing time for residents to prepare for any future flooding event.
Guiding urban growth
In 2012–13, Melbourne Water continued its focus on working with the Growth Areas
Authority, the Office of Living Victoria, local councils, water retailers and the land
development industry to provide appropriate infrastructure for Melbourne’s urban
growth in a way that onsiders waterways, regional drainage and flood management.
Melbourne Water received approximately $39 million in developer contributions
(excluding contributed assets) in 2012–13, which was less compared to previous
years ($57 million in 2011–12). These contributions are paid to Melbourne Water to
fund infrastructure and water quality projects.
Despite less developer contributions, it has still been a big year for capital
expenditure in developer works, with about $82 million spent on projects across
greater Melbourne (compared to $76 million in 2011–12).
Melbourne Water prepares drainage master plans known as Development Services
Schemes which include a catchment drainage strategy with a pricing arrangement to
support land development. A scheme is prepared to plan the required infrastructure
to ensure new urban development meets appropriate standards of flood protection,
stormwater management and waterway health. The current model enables the
infrastructure to be fully funded by financial contributions from developers or
landowners, with all developable properties contributing on the basis of land area
and land zoning.
Corporate: Environmental stewardship
Side quote: “Melbourne Water is committed to protecting, conserving and
improving natural assets and using natural resources sustainably.”
Our aim
Protect the natural environment and ensure resource availability for future
generations.
We will do this by:
•
Meeting environmental obligations and minimising environmental impacts
•
Conserving biodiversity
•
Responding to climate change and variability through mitigation measures
•
Using natural resources efficiently
•
Minimising waste through recycling and reusing initiatives
•
Preserving and promoting cultural heritage
•
Encouraging our suppliers and partners to apply sustainable business
practices.
Key achievements
•
Developed a new Energy Productivity Plan which identifies a potential 5%
reduction in energy use and operational cost savings
•
Invested significantly in biodiversity conservation at the Western Treatment
Plant including pest animal and weed control.
Disappointments
•
Did not meet our office water use target in 2012–13, with consumption of
3,594 litres per full-time equivalent employee (FTE) per year, compared to a
target of 3,177 litres per FTE per year.
Challenges
•
Maximising value from the sale of Renewable Energy Certificates and the
purchase of offsets to meet our 2018 greenhouse target
•
Minimising waste volumes and converting waste to valuable resources
•
Respecting Aboriginal heritage as we deliver on-the-ground projects •
Protecting and improving biodiversity on land and waterways managed by
Melbourne Water. 40 Melbourne Water Annual Report 2012–13
Environmental stewardship
Our environmental commitment
Melbourne Water is committed to protecting, conserving and improving natural
assets and using natural resources sustainably. Our Environment Policy specifies
actions and outcomes to achieve maximum net environmental benefits to society
and to promote sustainable resource management and use.
We have an Environmental Management System certified to the international
standard ISO 14001, which establishes management requirements to protect the
environment, prevent pollution and improve environmental performance.
We also use our Community, Environment and Public Health Assessment checklist
and triple bottom line guidelines to help assess and plan for potential environmental
impacts from our activities, while balancing community benefits and meeting
efficiency requirements for public spending.
Energy and greenhouse gas management
To minimise the potential impacts of climate change on our business and on the
people of Victoria, Melbourne Water has introduced a number of mitigation
strategies.
As a business we are committed to actively managing our own contribution to
greenhouse gas emissions by establishing a target to reduce net greenhouse gas
emissions to zero by 2018.
We completed a comprehensive Greenhouse and Renewable Energy Strategy in
2008–09 to identify how to meet our targets most efficiently. Most of the actions in
this strategy have now been achieved and a new Energy Productivity Plan is in
place. This plan discusses issues raised by the Carbon Pricing Scheme, the
purchase of emission permits and offsets, and methods to further reduce
greenhouse gas emissions. The plan also identifies a potential 5% reduction in
energy use and operational cost savings.
Our performance
Melbourne Water uses significant amounts of energy to deliver water and sewerage
services to its customers and the community. We are among the top 15 electricity
users in Victoria and the top 150 in Australia.
In 2012–13, we used 1.457 million gigajoules of energy (compared to 1.390 million
gigajoules in 2011–12) and emitted total net greenhouse gas emissions including:
•
Water treatment and pumping 49,697 tonnes of carbon dioxide equivalent
•
Wastewater treatment and pumping 322,837 tonnes of carbon dioxide
equivalent
•
Transport 3,493 tonnes of carbon dioxide equivalent
•
Other energy use (including offices) 7,535 tonnes of carbon dioxide equivalent
•
Offsets purchased 5,765 tonnes of carbon dioxide equivalent Melbourne
Water spent $24 million this year on energy compared with $22.9 million in
2011–12.
Figure 12: Energy by source 2012/2013 in gigajoules
Transcribers Note: Figure 12 has been transcribed into a list below.
49% Grid Electricity: 714469gj
12% On-site Generation WTP: 181163gj
25% Trigeneration at ETP: 369341gj
0% Hydro on-site at Winneke: 0gj
3% Vehicle Fuels: 38374gj
5% Stationary Fuels: 69466gj
6% Natural gas: 84110gj
Figure 13: Energy by use 2012/2013 in gigajoules
Transcribers Note: Figure 13 has been transcribed into a list below.
82% Water 1,195,797gj
10% Sewage 152,364gj
4% Vehicles 63,246gj
1% Offices 9,095gj
3% Other incl. stationary fuels 38,374gj
Greenhouse gas emissions reduction
Melbourne Water’s target is to reduce net greenhouse gas emissions to zero by
2018. In 2012–13, the progressive target is a reduction of 45% compared to the
calculated 2000–01 emissions of 725,225 tonnes of carbon dioxide equivalent.
Our preliminary estimation of 2012–13 emissions is 382,867 tonnes of carbon
dioxide equivalent and corresponds to a 47% reduction compared to 2000–01. Final
emission data is calculated in October and is not expected to materially differ.
Melbourne Water emitted 431,679 tonnes of carbon dioxide equivalent in 2009–10,
468,094 tonnes in 2010–11 and 418,807 tonnes in 2011–12.
National Greenhouse and Energy Reporting System
We report to the Federal Clean Energy Regulator under the National Greenhouse
and Energy Reporting System (NGERS). During 2012–13, direct discussions with
the Clean Energy Regulator assisted in clarifying greenhouse emission accounting
methodologies to more accurately represent emissions from our sewage treatment
plants.
Studies commenced into measuring nitrous oxide emissions and measuring the
capture of methane from the wastewater treatment plants. Melbourne Water is
working with the University of Queensland and the CSIRO respectively on these
studies. The overall aims of these studies are to improve the accuracy of current
fugitive emissions calculation methodologies which will inform the business on ways
to minimise or eliminate fugitive emissions.
Carbon pricing mechanism
Melbourne Water is a liable entity under the Carbon Pricing Mechanism (CPM) for
some wastewater treatment activities. During the year, Melbourne Water was
required to estimate and pay for its Interim Emissions Number (an estimate of 75%
of Melbourne Water’s liable emissions for the year), of 140,000 tonnes of carbon
dioxide equivalent. Final greenhouse gas emissions for 2012–13 will finalised under
the CPM in February 2014.
Carbon emission history
Melbourne Water historic greenhouse gas emissions have been (tCO2e):
Water
treatment
and
pumping
2008–09
2009–10
2010–11
2011–12
2012–13
74,893
108,991
124,462
62,437
49,697
303,395
324,201
341,878
322,141
Wastewater 316,215
treatment
2008–09
2009–10
2010–11
2011–12
2012–13
Waste
disposal
-
-
-
-
-
All other
energy use
(non-fleet)
9,528
15,741
15,977
10,999
7,535
Vehicle
fleet
3,710
3,552
3,454
3,493
3,493
Offsets
purchased
13,952
78,677
79,546
62,893
-
N.B. NGER determination used to calcuate emissions from wasterwater treatment
plus current energy and fuel data.
Figure 14: Melbourne Water water supply system with mini hydroelectric power
stations
Transcribers Note: Map has been omitted.
Securing onsite energy sources
Melbourne Water operates biogasfuelled generation facilities at its Eastern and
Western Treatment Plants.
During 2012–13, the Eastern Treatment Plant power station generated 148,583
gigajoules of electricity, 30.5% of its need. The Western Treatment Plant power
station (owned and operated by AGL) generated 181,163 gigajoules of electricity,
65.3% of its need, including 1,951 gigajoules exported to the grid. The Western
Treatment Plant’s production for the year was reduced due to limited biogas supplies
during the replacement of the 55 East Lagoon cover.
We generated and used 610,726 gigajoules of onsite generated energy in 2012–13
(633,916 gigajoules in 2011–12). The amount of onsite generated energy we used
and generated as a proportion of total energy was 37.8%.
In October 2012, the refurbishment of the Thomson Dam hydro-electricity plant was
completed. Since recommissioning, the plant has generated 37,766 gigajoules of
electricity in 2012–13.
After commissioning six mini hydro-electricity plants at our reservoirs, Melbourne
Water has identified five suitable sites for additional mini-hydros. These projects are
awaiting construction.
Energy efficiency studies
In 2012–13, Melbourne Water submitted its fifth public report, completing its first fiveyear cycle under the Federal Government’s Energy Efficiency Opportunities (EEO)
program, which requires large energy-using businesses to conduct energy efficiency
studies and identify energy saving opportunities.
As part of the second cycle, Melbourne Water completed its second Assessment
Plan which was approved by the Department of Resources, Energy and Tourism.
The Assessment Plan details Melbourne Water sites that are required to undergo an
energy audit over the next five years, including major sites such as sewage and
water treatment plants, and pump stations.
This year’s report examined efficiency improvements at the Eastern Treatment Plant,
the Western Treatment Plant and the Winneke Treatment Plant. Completed in
December 2012, the report found the potential cost savings associated with
improvements at the three plants was $1.4 million per year. EEO projects with total
savings of $690,000 have been implemented to date.
Twenty-five opportunities were included in the report, including:
•
Upgrading fixed speed pumps to variable output
•
Refurbishing pumps
•
Optimising operational control settings and algorithms
•
Implementing new control codes
•
Removing redundant energy consuming assets
•
Upgrading office lighting.
At the end of 2012–13, more than 96% of Melbourne Water’s electricity use had
been audited.
Energy data management system
Melbourne Water has appointed a vendor for implementing the new Energy Data
Management System (EDMS). The EDMS will replace an ageing energy data
management system that has been in use since 2000 and reached the end of its
useful life. The EDMS will provide expanded data management and reporting
capabilities as well as storage of site-related data.
Environment resource efficiency plans
EPA Victoria concluded the Environment Resource Efficiency Plans (EREP) program
early in 2012–13, which meant Melbourne Water did not have to provide an annual
report on EREPs for this financial year. Ongoing management of water, energy and
waste will continue without the formal requirement to report against an EREP for the
Eastern Treatment Plant, the Western Treatment Plant and the Winneke Treatment
Plant.
Corporate Licence
Melbourne Water’s Corporate Licence was amended in May 2013 after EPA Victoria
introduced Amalgamated Licences. These have removed the Sustainability
Commitment section of the Corporate Licence and adopted common language for all
licence clauses. Parameters for the Eastern Treatment Plant have been amended to
account for the upgraded treatment process. Melbourne Water will report against the
parameters in the superseded Corporate Licence as this applied for the majority of
2012–13.
Sustainability in our workplace
Leading the way in sustainability
Melbourne Water was a finalist in the 2012 Banksia Environmental Awards for
integrating sustainable practices into our operational activities and reducing our
environmental footprint. We were shortlisted in the category of ‘Leading in
Sustainability – Setting the Standard for Large Organisations’, recognising our
coordinated approach to making sustainability ‘business-as-usual’.
Melbourne Water was also awarded gold Waste Wise certification in November 2012
for two years by the Metropolitan Waste Management Group. This certification
recognises ongoing improvement in sustainable practices such as waste
minimisation and office-based resource efficiency. In 2012–13, 73% of office waste
was either composted or recycled.
Office water use
Melbourne Water did not meet its office water use target in 2012–13. Consumption
was 3,594 litres per full-time employment (FTE) per year compared to a target of
3,177 litres per FTE.
This was mainly due to commissioning issues with our new head office, resulting in
more potable water use instead of rainwater and stormwater. This included
commissioning issues with water tanks and excessive use of water for cooling the
building’s sewage pumps. These issues have now been resolved and we have a
new building management system (software application) that alerts us when more
water is being used than expected.
New waste to resources plan
During 2012–13, Melbourne Water drafted a Waste to Resources Plan and
commissioned the development of a comprehensive waste database. This plan will
result in Melbourne Water looking outside its business to other waste managers in
an effort to find cost-effective and environmentally sound solutions and markets for
reusing its waste products.
Conserving biodiversity
Melbourne Water is a significant landholder and waterways manager within the Port
Phillip and Westernport region. We develop and implement strategies that support
biodiversity, in compliance with Victorian and Commonwealth biodiversity
obligations.
Consistent approach to protect biodiversity
Melbourne Water’s Biodiversity Strategy ensures a consistent approach to managing
biodiversity across the organisation and sets priority actions for improvement.
During 2012–13, Melbourne Water also started development of an Environmental
Stewardship Strategy. This strategy will help protect the natural environment and
ensure resource availability for future generations.
Managing important conservation sites
Melbourne Water manages major portions of two Ramsar-listed wetlands of
international importance – the Port Phillip (Western Shoreline) and Bellarine
Peninsula Ramsar site at the Western Treatment Plant, and the Edithvale- Seaford
Wetlands Ramsar site.
Three of our reservoirs are designated ‘biosites’: Sugarloaf, Cardinia and Yan Yean.
A further 34 Melbourne Water properties are listed as ‘sites of biodiversity
significance’. All of these sites support biological communities or populations of at
least regional significance as well as rare or threatened species of animals or plants.
The Ramsar-listed Western Treatment Plant is possibly the most important refuge for
waterfowl in Victoria. It supports migratory shorebird populations and a significant
population of the nationally-endangered Growling Grass Frog. Its native grasslands
support the endangered Spiny Rice-flower and its coastal salt marsh areas support
Orange-bellied Parrots. Significant investment in biodiversity conservation at
Western Treatment Plant has included pest animal and weed control, environmental
watering of wetlands and ecological burn-offs of grassland.
The Ramsar-listed Edithvale-Seaford Wetlands are part of the larger Carrum
Wetlands Important Bird Area. This area includes the Eastern Treatment Plant and
several adjacent wetlands, which are important habitats for waterbird and wetland
vegetation communities and also for a community of bats and Eastern Grey
Kangaroos. Major hydrological reset works are planned to improve water
management at Eastern Treatment Plant to ensure appropriate habitat is maintained
for a variety of waterbirds.
Melbourne Water continues to update management plans for sites of biodiversity
significance. During 2012–13, we reviewed our Sites of Biodiversity Significance
Strategy, which establishes targets in our Healthy Waterways Strategy. This will
build greater understanding of the importance of these sites and drive priority onground works. A strategy for the protection and enhancement of biodiversity values
across the Hallam Valley floodplain was also prepared and is now the basis of triple
bottom line planning for this area for which significant Commonwealth funding is
being sought through the Biodiversity Fund.
The effectiveness of our biodiversity management program is assessed through fiveyearly monitoring of key fauna and flora, regular reviews of site management plans,
and waterbird monitoring at relevant sites.
Figure 15: Melbourne Water biodiversity
Transcribers Note: Map has been omitted
Cultural heritage
Melbourne Water continues to look for mutually beneficial heritage outcomes beyond
compliance, by working in partnership with key stakeholders.
While there are still some challenges in terms of integrating legislative requirements
into planning processes, opportunities have opened up for key stakeholder input.
Our corporate goal of protecting and promoting cultural heritage is detailed in our
Strategic Direction and further embedded in our Cultural Heritage Strategy, which
integrates Aboriginal and post-contact cultural heritage into our core business.
By integrating cultural heritage into our Environmental Stewardship Strategy, we
acknowledge cultural heritage as one of many intrinsic values in the environment.
Our Cultural Heritage Risk Matrix recognises that cultural heritage plays a key role in
water resource planning and delivery. Our commitment to cultural heritage
management is demonstrated by participation in the following activities:
•
National Aborigines and Islanders Day Observance Committee (NAIDOC)
week
•
Government Agency Heritage Asset Managers Forum
•
Cultural heritage tours
•
Wurundjeri country plan
•
Kulin Nation Koorong project – bark canoe making
•
Cultural awareness training
•
Community interpretive theatre – big pond play.
Improving sanitation and drainage in Dili
In January 2013, a joint venture between Melbourne Water and Yarra Valley Water
developed a Sanitation and Drainage Master plan for the city of Dili in Timor Leste.
The Government of the Democratic Republic of Timor Leste funded development of
the master plan as well as construction of two sanitation pilot projects. Melbourne
Water and Yarra Valley Water provided in-kind support to manage the overall
project.
The pilot projects provided two community sanitation facilities for disadvantaged
communities in the Maskarinas and Bidau Santana districts of Dili. These
communities previously had very limited access to toilet facilities. One community
had a single, shared toilet in very poor condition, while the other had no proper toilet
facilities at all. The new facilities have well-functioning and clean toilets, as well as
personal washrooms and a laundry, and will greatly improve the quality of life in
these communities.
The master plan recommends a staged approach to providing sanitation services
and improved drainage and flood protection for Dili over the next 25 years. The
project has also provided recommendations for institutional arrangements to support
implementation of the master plan.
Corporate: Relationships
Side Caption: “Melbourne Water has continued to implement its Customer
Strategy to adopt a more commercial, whole-of business approach to
managing relationships with customers and stakeholders.”
Our aim
To be valued by our customers and stakeholders, and a business of choice for
our partners. We will do this by:
•
Strengthening relationships with customers, stakeholders and suppliers
•
Developing a deeper understanding of our customers’ needs
•
Seeking and respecting customer and stakeholder views in our decisionmaking
•
Collaborating widely to find better solutions through knowledge sharing and
genuine partnership.
Key achievements
•
Received our highest ever community satisfaction rating with regard to the
management of waterways – 77% in a June 2012 community study
•
Developed a portable Water Smart City model that improves the delivery of
our key education messages on the whole urban water cycle
•
Received several awards for our new Edithvale-Seaford Wetland Education
Centre, recognising its sustainable implementation and unique design
•
Developed a Relationship Agreement with City West Water as part of the
implementation of our new Customer Strategy
•
Formed a Customer Experience Team to lead and build customer focus
across the organisation.
Disappointments
•
Underestimated the impact of the Frankston Drainage Improvement project on
a group of 17 local traders.
Challenges
•
Communicating the value of our services to customers, who are entitled to
know how funds collected through the Waterways and Drainage Charge are
spent
•
Working with retailers to implement changes to the Waterways and Drainage
Charge.
Building strong relationships
Melbourne Water’s success in achieving its vision of Enhancing Life and Liveability
depends on building strong partnerships and relationships with customers and
stakeholders. We are committed to listening to their needs, being responsive and
pooling our knowledge and expertise to create better solutions.
Customer Strategy leads to new relationship agreement
Melbourne Water has continued to implement its Customer Strategy to adopt a more
commercial, whole-of-business approach to managing relationships with customers
and stakeholders.
One of our key achievements for the year has been a new relationship agreement
with City West Water. This agreement includes guiding principles for the relationship
and identifies priority joint initiatives over the next 12 months.
Review of Patterson Lakes responsibilities underway
Traditionally, Melbourne Water has managed Patterson Lakes waterways and flood
protection structures using funds collected through a special precept rate.
The precept rate helps us provide services such as flood protection and
maintenance to residents in the Tidal Waterways and Quiet Lakes areas. When
Patterson Lakes was developed, it was agreed we would manage the waterways
within these areas.
However, over the past 12 months, Melbourne Water and area residents have been
participating in an Independent Review of management arrangements for Patterson
Lakes. The review was initiated to consider the rates we charge Patterson Lakes
residents and make recommendations about future management and maintenance
arrangements, and how they should be funded. This was in direct response to
community requests to clarify who is responsible for the care of local lakes and
waterways.
More consultation will occur throughout 2013–14 to identify how the waterways can
be managed into the future to enhance local amenity and clarify responsibilities and
obligations.
Package of measures negotiated with Heatherhill traders
After initially underestimating the impact of the Frankston Drainage Improvement
project on a group of 17 local traders, Melbourne Water engaged an independent
facilitator to negotiate a traffic management plan and package of mitigation
measures to minimise the project’s impact on the traders.
The works were part of the final stage of the project and involved building new
stormwater drains through residential streets and past the businesses, known locally
as the Heatherhill traders.
Before agreeing to the package, the traders had lobbied to change the location of
works or halt the project. Although the project benefitted central Frankston, the
traders felt it had considerable impacts on them at a time when the economic climate
and other major projects were already damaging their bottom line.
Works and road closures will now have less impact on the traders, and new traffic
measures will ensure businesses remain open and accessible during construction.
Communicating value to our customers
A key challenge for Melbourne Water is communicating the value of its services to
customers, who are entitled to know how we spend funds collected through the
Waterways and Drainage Charge.
This is a considerable challenge given the scope of our services, which range from
major capital projects such as the $75 million Frankston Drainage Improvement
project, to new wetlands constructed to benefit the environment, and other services
such as grass cutting or weed removal along waterways.
While communicating value is critical, doing so in a resource-strained environment
requires innovative ways to get our messages out into the community. Recently we
improved our efforts to communicate the value of our maintenance and low risk
capital program by informing local members of parliament and installing better
signage to explain the value of these activities.
We have also increased our presence on social media such as Twitter and
Facebook to inform a new audience about our role and the value of our services.
Explaining the new Waterways and Drainage Charge
Effective from 1 July 2012, the residential Waterways and Drainage Charge is now
billed as a ‘flat rate’ for each occupancy, spreading the cost more equitably across
property owners in Melbourne. Every dwelling on each property title is now billed a
flat rate.
Previously, the residential Waterways and Drainage Charge was calculated
according to property values, and subject to a minimum charge. The actual charge
was calculated based on 1990 property values and a ‘rate in the dollar’ figure.
The new method for calculating the charge has been approved by the Essential
Services Commission (ESC) and is in line with flat rate charges paid by retail water
customers outside metropolitan Melbourne. It is also similar to the way other utility
companies charge for their products and services.
In the last 12 months Melbourne Water developed a detailed Communications and
Engagement Plan in consultation with water retailers. This involved writing to every
multiple dwelling owner/ customer in the South East Water and Yarra Valley Water
regions (City West Water not yet complete) to explain the new billing system. The
letter included:
•
what we had discovered
•
a fact sheet explaining impacts
•
relevant contact information, and
•
a mechanism for managing financial impacts.
Improved customer focus
In response to customer feedback, our Customer and Community Group was
restructured over the last 12 months.
Reflecting our Strategic Direction, a Customer Experience Team has now been
formed to be a central, first point of contact for customer enquiries and to act as a
centre of excellence, leading and building customer focus across the organisation.
In addition, the Customer and Community Group’s new regional delivery model
focuses on developing closer connections and a deeper understanding of the needs
and expectations of our customers and stakeholders.
Community engagement
Highest ever satisfaction rating for waterways
Melbourne Water received its highest ever community satisfaction rating of 77% for
waterways in the greater Melbourne area in 2012.
The Community Perceptions of Waterways study was conducted from May to June
2012 and surveyed more than 3,800 Melburnians who had visited their local
waterway in the previous 12 months.
The biennial study has reviewed community attitudes and perceptions to waterway
maintenance, amenity and health since 1993, as well as stormwater and flooding.
In response to the question: How satisfied or dissatisfied are you with the rivers and
creeks in the greater Melbourne area overall?’ 77% of respondents answered
‘satisfied’, an increase of 7% on our KPI of 70%.
Sponsorship for pioneering energy project
Melbourne Water has joined forces with Poo Power, a pioneering Melbourne based
project that aims to turn dog poo into a renewable energy source.
The man behind Poo Power, Duncan Chew, has designed an anaerobic methane
digester that uses biogas from dog waste to light up a local dog park in the City of
Yarra.
The benefits are two-fold, with the digester educating park users on local biogas
production and similar work at the Western Treatment Plant, and expected
improvements to waterway health. The project will include a 12-month education tour
of community events prior to installation, followed by interpretative signage at the
park.
Sculpture raises awareness about willows and river health
Over the course of three weeks, artist Patrick Dougherty wove more than five tonnes
of willows into a spectacular sculpture at Federation Square to raise awareness of
the harmful effects of willows on river health.
Melbourne Water provided some of the willows for the artwork, which were removed,
from vegetation work, to reinforce its role as Melbourne’s waterways manager and
educate the community about maintaining healthy rivers.
Expanding our online presence
Melbourne Water is using its online presence to improve stakeholder engagement
and customer service. Our new website, launched in August 2013, has been
restructured based on extensive user-testing to help people access relevant and
helpful information fast.
An increased focus on social media is also attracting new users to our Facebook
page, and helping us collaborate with community partners. We generated greater
awareness about urban water management through Facebook and the launch of a
short film competition in June.
We also trialled a local Twitter page in Melbourne’s south-east to better inform local
community members, media and stakeholders about ongoing water management
issues. The successful program will be extended to our other regions late 2013.
Community education
New model for delivering community education
Melbourne Water has developed a portable Water Smart City model to improve
community education about the urban water cycle.
The new model takes participants through the stages of urban development, from
the catchment to city streets. The model includes Lego building pieces, which people
pour water over, so they can see and discuss the impacts of stormwater on the
landscape. The final step is to adapt the city by replacing pavement, adding green
roofs and installing water tanks to make the city ‘water smart’.
School education programs expanded
Melbourne Water’s school education programs were expanded in 2012–13 to include
river health excursions, which complement ongoing treatment plant tours and new
activities at the Edithvale-Seaford Wetland Education Centre.
Designed for primary and secondary students, the excursions cover topics such as
water as a resource and waterways biodiversity to help young people understand
water use issues and make positive change. Melbourne Water’s role in protecting,
managing, treating and supplying water to greater Melbourne is also showcased.
All activities support the Department of Education and Early Childhood
Development’s new AusVELS curriculum in the areas of science and geography as
well as the water and biodiversity modules in Sustainability Victoria’s ResourceSmart
AuSSI Vic framework.
Edithvale-Seaford Wetland Education Centre continues to win
awards
Since its completion in October 2011, the Edithvale-Seaford Wetland Education
Centre has won several awards for its unique design and sustainable
implementation.
Recent awards have included the 2012 Premier’s Design Award, a 2012 Victorian
Architecture Award for new Public Architecture, and a 2012 Master Builders
Association of Victoria Excellence in Construction Award for Best Sustainable
Energy Project.
Home to more than 7,000 birds, the centre’s latest feature is an interactive display,
allowing students and visitors to zoom into the wetlands through a high-resolution
camera, offering a detailed view of the birdlife. Other new displays allow visitors to
hear the sounds of the wetlands – birds, bats and frogs – or compare historical and
current maps of the site.
The centre is now open to the public every Sunday, giving people more opportunity
to visit this internationally significant site.
Raingardens Program builds momentum
Stage two of the 10,000 Raingardens Program was undertaken throughout 2012–13.
The program promotes a new, responsible way of gardening to help people create
their own sustainable garden and do their bit to protect our rivers and creeks.
Believed to be the first program of its type in Australia, the Raingardens Program
started in 2008 and originally focused on working with local councils and schools to
create raingardens in public spaces.
In 2012, the program went public with a marketing campaign aimed at creating
greater public awareness, and turning that awareness into action and registrations of
built raingardens. We have now reached our target of 10,000 registrations.
Energy and Water Ombudsman
The Energy and Water Ombudsman (Victoria) investigates and resolves disputes
between Victorian consumers and their energy, gas and water service providers.
Melbourne Water is one of 19 Victorian water businesses that are members of the
scheme.
This year we responded to 25 investigated cases, 37 less than the previous year.
Enquiries covered issues such as vegetation management, water licensing, drainage
charges, project impacts, development works, security of property, flooding-related
issues and property damage.
We are working to resolve two of these cases which remain open – both relating to
flooding issues.
Side quote: “Melbourne Water has developed a portable Water Smart City
model to improve community education about the urban water cycle.”
Corporate: Financial sustainability
Side quote: “Melbourne Water’s operating environment continues to provide
significant challenges to the business.”
Our aim
Maintain financial viability and increase business value. We will do this by:
•
Maintaining sound financial governance
•
Operating efficiently and managing commercial risk effectively
•
Investing prudently and efficiently
•
Continuously improving business productivity
•
Earning a commercial return on investments.
Key achievements
•
Developed a Financial Sustainability Strategy to strengthen our commercial
focus
•
Established a Commercial Transformation Program to drive value for
customers and deliver services more efficiently
•
Delivered $331.1 million of capital works in 2012–13, the final year of the $3.7
billion Water Plan 2 (2008–09 to 2012–13) capital program
•
Achieved above our financial performance targets for Return on Equity,
Interest Cover, and Gearing ratios as a result of lower than expected net loss
for 2012–13 (explained further under Financial performance)
•
Signed a 20-year lease agreement for the use of agricultural land at the
Western Treatment Plant, enabling greater sustainable and productive use of
the land and providing an improved commercial return for Melbourne Water.
Disappointments
•
Recorded a loss of $30.1 million, mainly due to the full return to customers of
revenue collected in advance in 2011–12 to make forecast obligatory
payments relating to the Victorian Desalination Plant.
Challenges
•
Managing significant impacts on our financial performance due to delays in
commissioning the Victorian Desalination Plant
•
Managing impacts on our financial viability due to lower than proposed price
increases
•
Determining how best to pass on desalination costs from 2016–17 onwards to
minimise the impact on customers while still maintaining financial viability
•
Ensuring financial sustainability within our current operating environment.
Ongoing operational challenges
Melbourne Water’s operating environment continues to provide significant
challenges to the business. These include responding to the financial impacts of the
Victorian Desalination Plant, higher input costs across a spectrum of activities,
service delivery, meeting customer expectations in relation to affordability, and
effectively planning for an increasing population.
The key financial challenge of 2012–13 related to delays in commissioning the
Victorian Desalination Plant, contributing to a loss of $30.1 million (compared to a
profit of $269.9 million in 2011–12).
Revenue had been collected in 2011–12 to make forecast obligatory payments
relating to the Victorian Desalination Plant. These payments were not required at
that time due to delays in the plant’s commissioning, resulting in revenue from
customers being higher than costs.
Our draft plan for the next pricing period (2013–14 to 2017–18) outlined the intention
to return this revenue to customers over the five year pricing period, but we returned
the funds earlier, in 2012–13, in response to strong community feedback. This was
achieved by freezing 2012–13 prices at 2011–12 levels and paying a rebate for the
net amount not repaid through the price freeze.
As a result, $310.8 million was returned to water consumers in 2012–13 and this
contributed to a financial loss for Melbourne Water.
The final pricing determination for 2013–14 to 2017–18 was made by our economic
regulator, the Essential Services Commission (ESC), in June 2013. Lower than
proposed prices were announced which will challenge Melbourne Water’s future
financial viability.
For Melbourne Water specifically, the ESC also only approved prices for wholesale
water and sewerage for the next three years (2013–14 to 2015–16). The ESC’s
decision to only approve these prices for three years instead of five years was
influenced by its considerations around paying desalination costs.
While being satisfied that capitalisation will become increasingly sustainable from
2016–17, the ESC was not able to form a view with sufficient confidence about the
amount which could be capitalised without impacting on Melbourne Water’s financial
viability.
To determine how best to pass on desalination costs from 2016–17, we will be
working with the ESC, focusing on minimising the impact to customers while still
maintaining financial viability for Melbourne Water.
Financial performance
While Melbourne Water made a loss of $30.1 million in 2012–13, it was significantly
less than the $144.1 million loss we had planned for. The loss for 2012–13 is
primarily a result of the return to customers of revenue that was collected in advance
in 2011–12 to make forecast obligatory payments relating to the Victorian
Desalination Plant.
Total revenue for 2012–13 was $1,270.8 million ($1,240.2 million in 2011–12). While
the water and sewerage prices were frozen at 2011–12 levels, increases to revenue
arose primarily through increased demand for water and an improvement in the
market value of our defined superannuation benefit fund.
Total expenditure was $1,315.9 million ($867.4 million in 2011–12). The key driver
for the increase compared to 2011–12 was the inclusion of $436 million of expenses
(operating, financing and amortisation) paid to the State in relation to the
desalination plant following its commissioning in November 2012. Other business as
usual expenditures for 2012–13 remained materially consistent with 2011–12.
Total assets increased to $14,478.1 million at 30 June 2013 from $10,034.1 million
at 30 June 2012. This increase is mainly due to the recognition of $4.4 billion of
finance lease assets for the desalination plant (following commissioning in November
2012) combined with the investment of $331.1 million ($547.1 million in 2011–12) in
capital works.
Total liabilities increased to $10,116.7 million at 30 June 2013 from $5,495.1 million
at 30 June 2012. This increase is mainly due to the recognition of $4.4 billion finance
lease liabilities associated with the desalination plant finance lease arrangement.
During 2012–13, Melbourne Water made cash payments to the Victorian
Government of $94.7 million (compared with $289.3 million in 2011–12 and a target
of $183.2 million). This consisted of income tax equivalent payments of $53.9 million,
a financial accommodation levy of $37.1 million and local council rate equivalents of
$3.7 million. There was no dividend paid in 2012–13. The target of $183.2 million
was not achieved as a result of the Department of Treasury and Finance deferring
payment of 2011–12 dividends declared of $94.5 million to July 2013.
We also incurred expenditure to the Victorian Government of $20.6 million in land tax
($19.4 million in 2011–12) and $4.7 million in payroll tax ($4.1 million in 2011–12).
Due to the loss in 2012–13 our return on equity was (0.7)% compared with 5.9% in
2011–12 and our planned target of ≥(3.4)%. The result was better than planned as a
result of the lower than planned loss (as explained above).
Our gearing ratio of 66.0% (45.8% in 2011–12) and our interest cover (cash) ratio of
1.5 times (3.7 times in 2011–12) worsened primarily due to recognition of the
desalination finance lease and associated additional expenses. These results were
better than our planned target ranges of ≤ 66.1% and ≥ 1.3 times (respectively) due
to the improved operational financial performance compared to plan.
Figure 16: Revenue ($M)
Transcribers Note: Graph has been omitted
Figure 17: Expenditure ($M)
Transcribers Note: Graph has been omitted
Figure 18: 2012/13 Desalination Plant Expenses Breakdown $M
Transcribers Note: Graph has been omitted
Figure 19: Capital Expenditure ($M)
Transcribers Note: Graph has been omitted
Financial Sustainability Strategy
Melbourne Water’s vision of Enhancing Life and Liveability is underpinned by
providing efficient, affordable and valued services to all customers and stakeholders.
However, changes to our operating environment can affect our ability to achieve this.
Global economic volatility, introduction of the Victorian Desalination Plant and
affordability pressures are among several drivers that have required Melbourne
Water to improve its financial performance.
In 2012–13, Melbourne Water prepared a Financial Sustainability Strategy which
outlines the objectives, operating activities, governance structure and key
performance indicators necessary to achieve financial sustainability as set out in
Melbourne Water’s Strategic Direction, and to bring a commercial focus to all its
activities.
The Financial Sustainability Strategy was approved by the Board in August 2012 and
is being implemented under seven focus areas including financial risk management
and business efficiency. Measures include:
•
A review of financial risk management policy and guidelines resulting in
significant future financing costs being avoided during the next Corporate Plan
period
•
Implementation of productivity and efficiency activities via an organisationalwide review
•
Establishment of a dedicated Investment Steering Committee to enhance
financial management practices across the organisation through disciplined
and informed decision-making processes for capital investments
•
Redesigning our investment prioritisation model and increasing the rigour on
investment criteria for all business cases
•
A change management plan that focuses on collaboration and empowerment
to think differently.
Transformational change
Established commercial transformation program
One of the key components of our Financial Sustainability Strategy is the
Commercial Transformation Program.
The aim of the program is to enhance Melbourne Water’s commercial performance
and ensure key elements of the Financial Sustainability Strategy are delivered
efficiently and effectively. The initiative will be self–funded and deliver a fully costed,
target–driven program to:
•
Drive value for customers by knowing what customers want and delivering
these services efficiently
•
Commercially position Melbourne Water to improve its financial performance
and provide sustainable, long–term returns to government
•
Build organisational capacity to deliver transformational initiatives. Elements
of the Commercial Transformation Program include a review of expenditures,
asset and land utilisation, identification of new revenue opportunities and
procurement benefits.
Efficiency through collaboration
Capital works achievements
During Water Plan 2 (2008–09 to 2012–13), Melbourne Water faced the challenge of
drought and an unprecedented capital program, which required a unique delivery
model to complete a remarkable range of projects.
This year, $331.1 million of capital works were delivered through teams working on
projects such as the Eastern Treatment Plant Tertiary Upgrade and the Melbourne
Main Sewer Replacement. As part of Water Plan 2, we successfully delivered $3.7
billion of water, sewerage and drainage infrastructure.
Our new strategy for capital delivery
Customer affordability is at the forefront of our new Water Plan 3 (2013–14 to 2017–
18).
The new Capital Delivery Strategy is framed by our Services Strategy, which
contains the following recommendations:
•
Deliver smaller, lower risk projects through maintenance contracts
•
Develop an individual fit-for-purpose delivery strategy for major standalone
projects
•
Bundle the majority of remaining projects into programs based on activity type
•
Projects delivered by Melbourne Water project managers must use either
‘design then construct’ or ‘design and construct’ methodologies.
The current operating environment will see Melbourne Water deliver fewer large
projects, with a focus on more efficient and affordable services for customers and the
wider community. We are shifting our focus away from large infrastructure projects to
renewing ageing infrastructure and maintaining an expanded asset base.
New contracts to manage assets more efficiently
New contracts were awarded in 2012–13 to drive efficiencies in asset management
across Melbourne Water.
Contractor, Wood Group PSN, has started delivering our mechanical, electrical and
civil maintenance program as well as low-risk capital works for water supply and
sewerage systems. Another contract was awarded to Fulton Hogan/Ecodynamics to
maintain our waterways and drainage assets.
The benefits of these new contract arrangements include incentives to drive
efficiency and productivity. Our service providers will also have the opportunity to
look for continual improvement opportunities across our asset business, particularly
in relation to work identification and programming, for the benefit of our customers.
Leasing agricultural land at the Western Treatment Plant
Melbourne Water has signed a 20-year lease agreement to enable MPH Agriculture
to convert some land at the Western Treatment Plant for sustainable, productive
uses.
Attached to the lease is a supply agreement for 25 gigalitres of Class C recycled
water per annum for agricultural production.
The lease agreement is the product of a 2006 strategy to maintain the functionality of
the Western Treatment Plant for the community while also preserving existing
important environmental values, restoring degraded land and achieving a
sustainable commercial return for Melbourne Water.
The strategy recommended a structured change of existing agricultural operations to
implement a diverse range of agricultural enterprises, with the management of
agricultural land outsourced to private enterprise.
Corporate governance and risk management
Ethics and values
Melbourne Water’s directors and employees are committed to operating ethically and
in the best interests of customers, the Victorian Government, employees, suppliers
and other stakeholders. The Board has adopted a Director’s Code of Conduct.
All directors, managers and employees are expected to perform their duties with
integrity and honesty. This expectation extends to dealing with our people,
customers, suppliers and the community. Melbourne Water employees and
managers must comply with Melbourne Water’s Code of Conduct.
Policies and procedures exist for directors and employees in relation to the
identification of actual and potential conflicts of interest. These documents are
regularly updated. The Corporate Secretary maintains a Register of Director’s
Interests and a register of gifts and invitations accepted by directors or employees.
As part of maintaining a safe and healthy working environment, the Board has
approved behavioural and workplace policies for specific purposes, such as
occupational health and safety and discrimination. These policies are distributed and
widely publicised to our employees.
Our governance procedures
Melbourne Water’s policy is to adopt appropriate corporate governance practices
and regularly review them to ensure we are up-to-date with best practice.
As part of these improvements, all Board members now receive papers in electronic
form. Board and committee paper formats have been reviewed and updated.
Improved Board training and development processes have also been implemented.
In addition, a structured approach to Board development (both at a Board and
individual Board member level) has been adopted.
Powers and accountability
Melbourne Water operates under the Water Act 1989.
Melbourne Water has two current by-laws, Water Supply Protection No 1 (2006) and
Waterways, Land and Works Protection and Management (2009).
The Minister for Water has delegated powers of management under the Water Act
relating to licensed private water diversions from waterways to Melbourne Water,
effective as of 1 July 1999. The Water Act and by-laws can be purchased from the
Information Victoria bookshop, 356 Collins Street, Melbourne or phone 1300 366
356.
The Honourable Peter Walsh MLA, Minister for Water, was the Minister responsible
for Melbourne Water from 1 July 2012 to 30 June 2013. Melbourne Water works with
officers of the Department of Environment and Primary Industries6 and the
Department of Treasury and Finance. Statutory and other reports are provided,
covering Melbourne Water’s performance against the objectives and performance
indicators, in the Corporate Plan.
Primary responsibilities
Melbourne Water’s Board has adopted a charter that defines its role and
responsibilities within the legislative framework provided by the Water Act and other
applicable legislation including the Public Administration Act 2004. The Board makes
plans to achieve specific objectives, including:
•
Long-term, sustainable, outcomes based on a triple bottom line approach
•
Approval of corporate plans together with key performance indicators linked to
objectives
•
Approval of annual financial statements and monitoring of performance
against objectives and risks
•
Monitoring of safety, health and environmental standards and management
systems.
•
The Board has ratified a Corporate Governance Policy. Key features of its
activities include:
•
Hold 11 Board meetings a year, undertake site visits and participate in
monthly business strategy workshops with Melbourne Water’s Leadership
Team. Special Board and committee meetings are convened as required to
meet the needs of the business
•
Monthly updates on Board activities are made available to all employees and
the community
•
Periodic strategy discussions are held with relevant stakeholder groups
•
A structured induction program exists for new Board and committee members
•
Development opportunities are made available for Board members on an
ongoing basis
•
Conflicts of interest are declared and a director does not participate in
decisions where such a conflict exists
•
Directors have the right to seek independent professional advice, at
Melbourne Water’s expense, in connection with their duties and
responsibilities
•
Declarations of pecuniary interest by directors are made annually, with
procedures for updating that information between declarations
•
There is an annual review of Board performance.
Committees
The Board has four sub-committees, each comprising at least three non-executive
directors, who meet periodically to focus on finance and sustainability, people and
safety, integrated water management, and service delivery. The Managing Director
and responsible General Managers attend meetings of committees by invitation. The
Board approves the charters of each committee.
Financial Sustainability Committee
This committee assists the Board in fulfilling its responsibilities relating to risk
management, financial management and operational control practices, and
compliance with relevant laws and regulations.
At 30 June 2013, the committee comprised Dana Hlavacek (Chairman), Richard
McKinnon, Janice van Reyk and Paul Clark. A report about the activities of the
committee in fulfilling its charter is prepared annually.
People and Safety Committee
This committee assists the Board in fulfilling its responsibilities relating to human
resources issues, remuneration, and workplace health and safety. For details of
directors’ and executives’ remuneration, refer to the Financial Statements.
At 30 June 2013, the committee comprised Peter Vines (Chairman), Dana Hlavacek
and Paul Clark. A report about the activities of the committee in fulfilling its charter is
prepared annually.
Integrated Water Management Committee
This committee assists the Board in fulfilling its responsibilities relating to integrated
water cycle management. At 30 June 2013, the committee comprised Janice van
Reyk (Chairman), Garry Smith and Warren Hodgson. A report about the activities of
the committee in fulfilling its charter is prepared annually.
6Formerly
two separate departments known as the Department of Sustainability and
Environment and the Department of Primary Industries.
Service Delivery Committee
This committee assists the Board in fulfilling its governance responsibilities relating
to the planning and delivery of capital projects and services.
At 30 June 2013, the committee comprised Warren Hodgson (Chairman), Peter
Vines, Richard McKinnon and Garry Smith. A report about the activities of the
committee in fulfilling its charter is prepared annually.
Risk management
Melbourne Water adopts a balanced approach to risk management that considers its
commercial, social and environmental responsibilities with regard to short-term and
long-term goals.
Risk management is used to ensure Melbourne Water understands its business risks
and manages them consistently. Effective and efficient management of risk is central
to the achievement of our vision.
Melbourne Water adopts a ‘whole of business’ approach by considering risks on a
group, team and project basis. Trends and commonalities are also identified across
these areas. To effectively manage risks across the organisation, risk assessments
are conducted on a regular basis to identify the:
•
Likelihood or probability of a risk occurring
•
Consequence of a risk occurring
•
Effectiveness of mitigating strategies in place to manage risks. The capital
prioritisation process uses risk assessment as a key tool for determining the
need for, and relative timing of, investments. Operational risks are managed
daily by the organisation and through specialised management systems.
Strategic risk
To assist in the strategic management of risks at an organisational level, Melbourne
Water has identified key strategic risks and assessed each risk based on the current
risk level.
Melbourne Water actively manages strategic risk with a strong focus on continuous
improvement. Melbourne Water’s risks will continue to be managed through a Risk
Management Framework, comprising major elements such as:
•
Certified management systems
•
Appropriately skilled people and sound operational procedures
•
A robust capital works program
•
Sound technological applications such as our Supervisory Control and Data
Acquisition (SCADA), Asset Management and GIS systems
•
Close working relationships with the water industry, government departments,
local councils, customers, developers and the community. Melbourne Water
has identified the following key strategic risks:
•
Health, safety and security of people, property and environment •
Environmental damage to Melbourne’s waterways/bays
•
Financial and governance framework
•
Recycled water (quantity and quality)
•
Engaging, understanding and working with key stakeholders and the
community
•
Water supply
•
Water quality
•
Asset lifecycle
•
Capital delivery
•
Impact of flood on the community
•
2018 greenhouse target
•
Recruiting, developing and retaining our employees
•
Delivering obligations in Water Plan 3 (2013–14 to 2017–18)
•
Biosolids and by-products (quantity and quality).
Insurance and incident management framework
To help mitigate the commercial, social and environmental impact of risk events,
Melbourne Water has several control measures in place including an emergency and
incident management framework and a comprehensive insurance portfolio.
As part of this framework, Melbourne Water has developed emergency management
and contingency plans, which are regularly tested and reviewed.
In addition to local emergency management arrangements, Melbourne Water assists
in the development of industry response plans and protocols. We work with water
retailers and government departments/agencies that assign roles and responsibilities
in the event of large-scale incidents. These plans are also tested and reviewed with
water retailers.
Audits and risk reviews
Melbourne Water continually reassesses its risk profile through external reviews by
subject matter specialists and a comprehensive risk-based internal audit program.
In addition to these reviews, Melbourne Water undertakes quarterly selfassessments on the current management of risks and the identification of new or
emerging risks and opportunities. The results of these reviews are presented to the
Board via its Financial Sustainability Committee, which oversees Melbourne Water’s
risk management processes.
Attestation on Compliance with the Australian/New Zealand Risk
Management Standard
I, Paul Clark, certify that:
Melbourne Water Corporation has risk management processes in place consistent
with the Australian/New Zealand Risk Management Standard (AS/NZS ISO
31000:2009).
An internal control system is in place that enables the executive to understand,
manage and satisfactorily control risk exposures.
The Financial Sustainability Committee verifies this assurance.
The risk profile of Melbourne Water Corporation has been critically reviewed within
the last 12 months.
Paul Clark
Chairman
Melbourne Water Corporation
Statements of Obligations
Two Statements of Obligations, issued by the Minister for Water pursuant to Section
4I of the Water Industry Act 1994, are applicable to Melbourne Water:
1) The Statement of Obligations applicable from September 2012 formalises
Melbourne Water’s obligations in relation to the performance of functions and
exercise of powers including the areas of:
•
the Water Plan
•
governance
•
customer and community engagement
•
risk management
•
planning
•
water services
•
compliance.
2) The Statement of Obligations applicable from 1 July 2009:
(a) Imposes obligations on Melbourne Water in relation to our water supply
function established under section 171B of the Water Act 1989, and the
exercise of our powers.
(b) Clarifies Melbourne Water’s role as manager of the Melbourne headworks
system in relation to the obligations of the water retailers as holders of certain
water entitlements.
On 26 March 2012, the Minister for Water issued an amendment to this Statement of
Obligations, the purpose of which was to set out the new rules for the future use of
the North- South Pipeline.
Melbourne Water’s Board monitors compliance with these Statements of Obligations
and reports any significant non-compliance to the Minister.
Board of Directors
The Minister for Water, in consultation with the Treasurer, appoints the directors of
Melbourne Water for terms of up to four years and the Victorian Government sets
their remuneration. Directors are eligible for reappointment for subsequent terms.
In making new appointments to the Board, the Victorian Government ensures the
Board has the necessary combination of skills and experience. The Managing
Director is appointed by the Board, subject to the approval of the Minister in
consultation with the Treasurer, for a term of up to five years.
Annual reviews are conducted of the performance of the Board as a whole and of
individual members. Pursuant to a Statement of Obligations issued by the Minister,
the outcomes of these performance reviews are reported to the Treasurer and the
Minister. The Board of Directors currently comprises a non-executive Chairman, six
non-executive directors and the Managing Director.
Figure 20: Organisation Structure
Transcribers Note: Figure 20 has been transcribed into a list below.
Managing Director
Shaun Cox
General Manager, Operations and Maintenance
Tony Antoniou
General Manager, Waterways
David Ryan
General Manager, Strategic Planning
Ben Furmage
General Manager, Customer and Community
Anne Randall
General Manager, Business Services
Malcolm Haynes
General Manager, People and Safety
Linda Heron
General Manager, Capital Delivery
David Morse
General Manager, Asset Planning
Paul Pretto
General Manager, Commercial Transformation*
Cameron FitzGerald
General Manager, Service Delivery*
Chris Chesterfield
Corporate Financial sustainability
*Commercial Transformation and Service Delivery were created in March 2013 to
enable Melbourne Water to focus appropriate attention on the commercial and
service aspects of our business, to better manage our work and to challenge
ourselves to achieve even greater results for our organisation, our customers and
our stakeholders. There was no overall increase in our head count to support these
changes.
Paul Clark
Chairman
Paul Clark was appointed to the Board on 1 October 2012. Mr Clark is a corporate
adviser specialising in debt, performance improvement and strategy, and has been
on a number of unlisted company Boards and executive committees. Mr Clark has
previously held senior executive roles with Ernst Young, HBOS Australia, BankWest,
National Australia Bank and Bank of New Zealand.
Shaun Cox
Managing Director
Shaun Cox commenced as Managing Director of Melbourne Water on 8 March 2011.
Shaun is currently a Board member (and former Chair) of the Smart Water Fund and
the Water Services Association of Australia. He holds a degree in civil engineering, a
Masters of Engineering and Technology Management and is an Adjunct Professor at
the University of Queensland. Before joining Melbourne Water, Mr Cox held the
positions of Managing Director at South East Water and Chief Executive Officer at
Gold Coast Water.
Dana Hlavacek
Director
Dana Hlavacek was appointed to the Board on 1 October 2011. Ms Hlavacek is a
finance executive with considerable experience with Rio Tinto Treasury and, before
that, KPMG. She is a Trustee of the Victorian Arts Centre Trust, a Governor of the
Arts Centre Melbourne Foundation and is also on the Board of RSPCA Victoria. Ms
Hlavacek is a member of the Salvation Army Corporate and Philanthropic Committee
and of the Brotherhood of St Laurence’s Audit Committee.
Garry Smith
Director
Garry Smith was appointed to the Board on 1 October 2012. Mr Smith is a director of
DG Consulting, provides advice on water and natural resource management policy
and strategy, and has previously held senior management roles in the rural water
industry. He is an Advisory Board member for the National Centre for Groundwater
Research and Training and Chair of Trustees for the Sampson Leadership Trust. Mr
Smith is also Chair of Goulburn Valley Community Fund and is a former Director of
eWater Pty Ltd.
Peter Vines
Deputy Chairman Peter Vines was appointed to the Board in October 2005. Mr Vines
has held chief executive and executive management positions in the energy and
infrastructure sector, including directorships in various utility companies in Australia
and internationally. Mr Vines holds qualifications in civil engineering, economics and
management. He is a member of the Australian Institute of Company Directors and a
member of the Institution of Engineers Australia.
Warren Hodgson
Director
Warren Hodgson was appointed to the Board on 1 July 2008. Mr Hodgson was
previously Secretary, Department of Innovation, Industry and Regional Development,
and before that, Under Secretary, Department of Treasury and Finance. Mr Hodgson
has a background in the manufacturing industry, qualifications in science and
engineering, and is a graduate of the Australian Institute of Company Directors.
Janice van Reyk
Director
Janice van Reyk was appointed to the Board in October 2012. Ms van Reyk is a
Non-Executive Director of the Port of Melbourne, Citywide and the Northern Territory
Environment Protection Authority, and an Independent Member of the Salvation
Army Audit Committee and of Sustainability Victoria’s Audit Finance and Risk
Committee. Ms van Reyk previously served two terms as a Non-Executive Director
of Gippsland Water and was Chair of its Safety, Health and Environment Committee.
She has broad-based business skills gained as a senior executive in ASX100
industrial companies as well as a consultant advising on major projects and public
policy. Ms van Reyk is a Leadership Victoria Fellow.
Richard McKinnon
Director
Richard McKinnon was appointed to the Board on 1 October 2012. Mr McKinnon has
had a 40 year career in the finance industry including senior executive roles in
investment banking and commercial banking. He spent 19 years with National
Australia Bank (NAB) where he was Chief Financial Officer, a member of the Group
Executive Committee and a Director of a number of NAB subsidiary companies.
Since retiring from NAB, Mr McKinnon has been in private practice as a financial
consultant and has held Board positions with Carey Baptist Grammar School Ltd and
Responsible Gaming Networks Pty Ltd.
Corporate: Organisational capability
Side quote: “Melbourne Water continues to attract and retain a diverse,
motivated and skilled workforce, bringing talent into the organisation through
a variety of measures.”
Our aim
Strengthen the capability of the organisation to deliver better customer and
community outcomes.
We will do this by:
•
Continuing to build a collaborative culture
•
Supporting our people to take responsibility for health and safety
•
Developing a high-performing organisation that values innovation, customer
service and commercial and technical expertise
•
Promoting diversity and flexibility to attract and retain a motivated and skilled
workforce
•
Fostering a learning organisation that collaborates in research, embraces
emerging thinking and adapts to new technology
•
Using innovative technological solutions to improve the effectiveness and
efficiency of business processes.
Key achievements
•
Achieved Australian and New Zealand safety standard 4801 certification of
our safety management system in June 2013
•
Received an Australian Water Association Safety Excellence Award for our
work as part of the Water Resource Alliance
•
Reached the finals of the 2012 WorkSafe Victoria Awards for the Western
Treatment Plant Covers Renewal Project
•
Team Leader of Water Supply Operations at Silvan, Nick Stuart, was awarded
the Australian Water Association’s Victorian Operator of the Year
•
Rolled out a change management approach and toolkit to support project
outcomes
•
Our work to build a constructive culture was recognised with a Culture
Transformation Sustainability Award at the 2012 Human Synergistics
conference in Melbourne.
Disappointments
•
Recorded 16 employee and contractor lost time injuries (LTIs), failing to meet
our zero harm target.
Challenges
•
Continuing to build a constructive culture by focusing on strategies to develop
high performing teams
•
Continuing to build leadership capability and develop the talent of our people.
64 Melbourne Water Annual Report 2012–13
Safe and healthy workplace
Melbourne Water is committed to achieving a zero harm workplace where the safety
of people is paramount.
In 2012–13, we failed to achieve our goal of zero lost time injuries (LTIs) for
employees and contractors, with 16 LTIs, although this was less than 20 LTIs last
financial year. The number of days lost due to LTIs is 1607.
As part of an internal review of safety performance we developed a Safety
Improvement Plan to identify areas of concern, quantify objectives and targets to
improve performance, and nominate resources responsible for achieving these
targets.
Achieved Australian and New Zealand safety standard 4801
Melbourne Water achieved Australian and New Zealand safety standard (AS/NZS)
4801 certification of our safety management system in June 2013. This standard
recognises that we systematically identify and address occupational health and
safety issues with a focus on continuous improvement. The certification enhances
the commitment in our Strategic Direction to achieving zero harm in the workplace.
Alliance wins national safety award
The Water Resource Alliance received an Australian Water Association Safety
Excellence Award for its innovative approach to communicating safety information to
staff.
The introduction of Quick Response (QR) code technology enables workers to scan
a QR code at a construction site and offers a mobile way of communicating high risk
procedures to frontline workers.
The Water Resource Alliance’s QR code approach has taken safety policies and
procedures from a hard copy format to an engaging visual demonstration.
The Water Resources Alliance is a partnership between Baulderstone, Sinclair Mertz
Knight, United Group, Infrastructure, MWH Australia, Beca and Melbourne Water to
deliver works to improve and expand the water storage system and water distribution
network.
Australian Water Association Operator of the Year 2012
Nick Stuart, Team Leader of Water Supply Operations at Silvan, won the Australian
Water Association’s Victorian Operator of the Year 2012.
The award recognises the outstanding efforts of an operator working in Victoria who
has direct responsibility for operational decisions at community water, sewer or
recycled water systems/ networks and/or water, wastewater or recycled water
treatment plants or industrial water or wastewater plants.
Lagoon covers project recognised for safety
Melbourne Water has been chosen as a finalist in the WorkSafe Victoria Awards for
work method improvements that have significantly reduced the high risk of manual
handling injuries.
The Western Treatment Plant Covers Renewal Project involves replacing and
doubling the size of lagoon covers. Four times the size of the MCG, the new covers
will help reduce odour and capture more biogas to generate renewable energy (see
Sewerage chapter).
In the early stages of the project, deployment of the new membrane (7 metres wide x
105 metres long x 2 millimetres thick) involved unrolling it on the embankment,
cutting it to length and using up to 12 people to drag the heavy membrane into
position across the existing cover, over water.
To reduce the associated health and safety risks, Melbourne Water developed a
Membrane Deployment Device, which acts like a dispenser for 1.5 tonne rolls of
membrane. The new device enables the membrane to be seamlessly rolled out onto
the cover and significantly reduces the need for workers to drag the sheet into place
as it rolls.
New People and Safety Strategy
Melbourne Water’s People and Safety Strategy was developed to increase capability
and enhance services and programs across the business.
The strategy was developed following extensive consultation with our people and
external research and benchmarking. It supports our Strategic Direction and was
approved by the Board in May 2013. There are four focus areas within the strategy:
•
Promoting Life and Liveability – creating a workplace free from injury and
illness, and Enhancing Life and Liveability for everyone, every day
•
Building Capability – to deliver a better way of doing business
•
Achieving a High Performance Culture – together we will challenge all our
teams to achieve a high performance culture
•
Transforming Our Customers Experience – together we will transform our
customers experience to deliver customer focused outcomes.
7 Only
Melbourne Water employee lost time injuries were included in this figure. Days
lost due to lost time injuries is not available for contractors.
Creating a high performance culture
Melbourne Water’s work to build and maintain a constructive culture was recognised
with a Culture Transformation Sustainability Award at the 2012 Human Synergistics
conference in Melbourne.
The award demonstrates Melbourne Water’s real commitment to constructive
behaviour from all levels of the organisation and is well deserved recognition for
everyone who has worked to transform and maintain our culture over the last five
years.
The next phase of Melbourne Water’s culture program was also developed during
2012–13, with a focus on building high performance in line with the People and
Safety Strategy.
A leader capability framework was completed to guide leadership development
including the integration of wellbeing, safety, change, resilience, customer
engagement and commercial acumen capabilities. This will be supported by formal
learning programs, coaching to enable learning from others, and learning on the job
through project placements or job rotations.
Innovation
To help provide efficient services in a complex environment, Melbourne Water
introduced a program of initiatives to boost innovation in late 2010.
This included an innovation toolkit with resources for creative thinking and team
problem-solving, and an online software tool – the Idea Pool – to allow people to
share their ideas across the business.
In 2012–13, targeted resources and training were provided to Melbourne Water
teams and a new Innovation Strategy is due for completion in August 2013.
Highlights from the program include:
•
Our online Idea Pool was enhanced with a new feature, called the ‘Help
Tank’, where users can post business problems and seek solutions in the
form of a challenge for other employees.
•
A Help Tank microsite for the Water Services Association of Australia
technology assessment group was commissioned to capture suggestions
about how Melbourne Water can use industry-developed technology. The
system streamlines management of these ideas to ensure efficient voting and
feedback on new technologies. Voting and review runs quarterly where
innovators select the top five ideas.
•
Practical innovation training workshops were conducted with over 200 people.
The training introduced participants to a range of practical tools and
techniques to tackle current service delivery problems and find new ways of
doing things.
•
An innovation needs and capability analysis was undertaken with the findings
presented to the Leadership Team in August 2012. Leadership capability
statements for innovation have now been incorporated in the organisation’s
capability framework.
•
Innovation was actively championed and supported across Melbourne Water
by the Innovation Advisory Group and our Innovation Champions. Building on
past efforts, the new Innovation Strategy identifies opportunities to enhance
our innovation culture, provide innovation tools and build capability to deliver
outcomes that transform the business.
Our workforce
Melbourne Water continues to attract and retain a diverse, motivated and skilled
workforce, bringing talent into the organisation through a variety of measures.
These initiatives include engaging graduates, trainees and vacation students, and
facilitating a range of development opportunities such as job rotations and
secondments between internal teams and external organisations.
Our measures encourage people to understand and engage with the organisation,
develop their full potential and support the delivery of organisational outcomes.
By the numbers
At 30 June 2013:
•
Our total workforce was 865 (832 full-time equivalent) compared with 834 at
30 June 2012.
•
The average age of Melbourne Water employees was 42.5 years (42 at 30
June 2012).
•
The proportion of women in our workforce was 34.1% (32.9% at 30 June
2012). During 2012–13:
•
The average age of new starters was 37 years (33 in 2011–12).
•
235 roles were filled, 77% by internal candidates (162 roles filled in 2011–12,
with 43.2% internal candidates).
•
Total voluntary and managed turnover was 7.86% (9.79% in 2011–12).
Workforce distribution
Melbourne Water workforce distribution
2012–13
2011–12
2010–11
2009–10
M
F
M
F
M
F
M
F
38
15
42
10
48
9
42
8
Technical/professional 373
226
361
216
352
214
348
206
Operational
147
3
142
1
148
2
148
3
Administration
12
51
14
48
15
53
18
55
Total
570
295
559
275
563
278
556
272
Total male and female
865
Executives
834
841
828
Developing leadership potential
Over the last 12 months we developed a capability framework comprising leader
competencies, business skills and functional competences. This work has been
undertaken on the basis that all of our people are leaders, not just those in people
management roles.
Other leadership development measures included:
•
Introducing the Hogan interpretive tool for our Board and Leadership Team,
direct reports and in some recruitment processes. The tool is supported by a
robust development planning process and a new talent management system.
•
Providing support for collective leadership development through leadership
forums. The forum series has focused on safety leadership as well as
customer focus, financial sustainability and innovation.
Toolkit for managing change
Two organisation-wide initiatives emerged in the last year: Commercial
Transformation and Service Delivery, aimed at changing the way we do business,
building the capacity of our people and improving the level of service and products
for our customers.
A change management approach and toolkit were developed to support our people
in making these changes.
Melbourne Water established and trained a group of ‘change coaches’ who will
ensure we continue to be adaptable and resilient to an everchanging environment.
An ongoing measure of the amount of change taking place within Melbourne Water
has also been established as part of the project.
Information technology
Information management program receives multiple awards
Melbourne Water’s new information management program received two awards in
2012–13 for its contribution to improving business efficiency.
The program won the Medium Government Agency category of the 2013 Sir Rupert
Hamer Awards. Presented by Public Record Office Victoria, the award recognises
programs that ensure a high level of compliance with government records
management policies, regulation and standards.
This award followed national recognition at the actKM Gold Knowledge Management
Excellence Awards which recognises significant achievements in organisational
capability, performance or sustainability through the application of knowledge based
projects or activities.
The judging panel praised Melbourne Water’s information management program for
its “excellence in elegant design and development of an information management
culture strongly supported by senior management and enabled through the use of
technology”.
Data centre goes green
Melbourne Water’s new data centre has won the Victorian iAward for Sustainability
and Green IT.
The award recognises the innovative approach Melbourne Water has taken to limit
the environmental impact of its data centre by:
•
Installing ‘free air’ cooling that uses outside air to regulate the inside
temperature
•
Recycling water from the air cooling systems
•
Using sustainable building materials and waste recycling
•
End-to-end virtualisation technologies.
These innovations are key factors in reducing power consumption by 40% compared
to the previous data facility. The facility also delivers twice the data storage and real
time synchronisation of production and disaster recovery storage.
New technology helps Operations and Maintenance team
Melbourne Water’s Operations and Maintenance team is changing the way it works,
with mobile tablets now being rolled out to provide real time access to business
systems, workflow management and data capture in the field.
The changes give our people access to information in the field to aid decisionmaking, reducing the effort needed to collect and process data, and allowing
information to be sent in real time to improve performance and risk management.
This leaves more time to focus on optimising system operations and improving
customer service. The initiative is likely to provide ongoing savings in time,
equipment and fuel costs as mobile computing takes off across the business.
Upgrading our asset management system
Melbourne Water is replacing its ageing asset management system and streamlining
its core asset management processes. This improvement will be applied across the
whole asset lifecycle for the entire business.
Our aim is to introduce common processes throughout the business, increase the
currency and accuracy of asset data, and improve knowledge about asset
performance to enable more informed decisions.
Research and technology
To ensure Melbourne Water continues to provide high quality services, research and
development initiatives are undertaken to improve efficiency through scientific
excellence, innovation and the adoption of new technology. Key initiatives in 2012–
13 included:
•
Understanding the Western Port Environment: a summary of current
knowledge and priorities for future research was publicly released in March
2012. Since then, the majority of high priority research projects have
commenced and some preliminary results were presented at a stakeholder
seminar held in March 2013.
•
The final year of a mangrove planting project took place along the northeastern shores of Western Port to reduce severe coastal erosion. More than
10,000 seedlings were planted and a range of innovative techniques were
trialled to provide protection from wind-driven waves that are thought to be
contributing to seedling mortality.
•
Investigation continued into the presence and nature of the protozoan parasite
Cryptosporidium in native and feral animals in protected water supply
catchments. Results support Melbourne Water’s unfiltered water status.
•
Melbourne Water took up a position on the Research Advisory Council of the
National Centre for Excellence for Recycled Water and is working on a major
project to set national validation guidelines for recycled water.
•
We continued to work with the Victorian Centre for Aquatic Pollution
Identification and Management on a major research program to develop a
better understanding of the impact of toxicants such as pesticides on aquatic
ecosystems in waterways.
•
Melbourne Water was successful in eight of its 13 Australian Research
Council grant applications. The eight projects represent $3.4 million in funding
over four years and demonstrate a strong collaborative approach to research.
Side Caption: “Melbourne Water’s work to build and maintain a constructive
culture was recognised with a Culture Transformation Sustainability Award at
the 2012 Human Synergistics conference in Melbourne.”
Financial Report: Five Year financial summary
Summary of Financial Results
Statement of
Profit or Loss
For the year
ended 30 June
– Extract
2013 $M
2012 $M
2011 $M
2010 $M
2009 $M
Revenue and
other income
1,270.8
1,240.2
997.3
858.4
732.2
Operating and
other expenses
450.7
375.7
328.0
326.6
330.6
Depreciation and
amortisation
expenses
315.9
242.6
231.9
122.0
105.8
Finance
expenses
549.3
249.2
223.3
171.3
122.0
Net result from
operations
before tax
(45.1)
372.7
214.1
238.5
173.8
Tax
15.0
benefit/(expense)
(102.8)
(56.2)
(52.1)
(45.8)
(Loss)/Profit for
the period after
tax
269.9
157.8
186.4
128.0
(30.1)
Statement
of
Financial
Position
For the
year ended
30 June –
Extract
2013 $M
2012 $M
2011 $M
2010 $M
2009 $M
Current
assets
259.8
97.6
109.6
71.4
108.7
Non-current
assets
14,218.3
9,936.5
9,644.8
8,876.9
5,312.4
Statement
of
Financial
Position
For the
year ended
30 June –
Extract
2013 $M
2012 $M
2011 $M
2010 $M
2009 $M
Total
assets
14,478.1
10,034.1
9,754.5
8,948.3
5,421.1
Current
liabilities
770.7
1,142.6
1,365.5
1,096.5
862.3
Non-current
liabilities
9,346.0
4,352.5
4,014.2
3,833.4
2,557.0
Total
liabilities
10,116.7
5,495.1
5,379.7
4,929.9
3,419.3
Net assets
4,361.4
4,539.0
4,374.8
4,018.4
2,001.8
Total
equity
4,361.4
4,539.0
4,374.8
4,018.4
2,001.8
Statement
of Cash
Flows: For
the year
ended 30
June –
Extract
2013 $M
2012 $M
2011 $M
2010 $M
2009 $M
Net cash
inflows from
operating
activities
219.3
520.0
266.6
302.9
278.8
Statement
of Cash
Flows: For
the year
ended 30
June –
Extract
2013 $M
2012 $M
2011 $M
2010 $M
2009 $M
Net cash
(361.2)
outflow from
investing
activities
(620.2)
(785.8)
(936.2)
(935.4)
Net cash
inflow from
financing
activities
98.6
520.9
633.3
656.4
286.9
Performance indicators included in Melbourne Water’s Corporate
Plan
Performance 2013
indicator
2012
2011
2010
2009
Return on
(0.7%)
Equity % (Net
Profit After
Tax/Total
Equity)
5.9%
3.6%
4.6%
6.1%
Internal
Financing
Ratio %
56.4%
64.5%
29.5%
23.4%
22.0%
Gearing
Ratio %
(Total
Debt/(Total
Debt +
Equity))
66.0%
45.8%
45.3%
43.3%
54.1%
Performance 2013
indicator
2012
2011
2010
2009
Cash Returns 94.7M
to
Government
$M
289.3M
173.1M
175.9M
92.3M
Performance indicators mandated by the Minister for Water through
Ministerial Reporting Direction 01
Performance 2013
indicator
2012
2011
2010
2009
Return on
Assets %
6.3%
4.7%
5.7%
6.0%
Return on
(0.7%)
Equity % (Net
Profit After
Tax/Average
Total Equity)
6.1%
3.8%
6.2%
6.4%
Gearing
Ratio %
(Total
Debt/Total
Assets)
58.5%
38.2%
37.1%
34.3%
43.5%
Interest
Cover
(Earnings
Before
Interest and
Tax) Times
0.9
2.5
2.0
2.4
2.4
4.1%
Performance indicator mandated by the Minister for Water and
included in Melbourne Water’s Corporate Plan
Performance 2013
2012
2011
2010
2009
indicator
Interest
Cover (Cash)
Times
1.5
3.7
2.8
3.4
3.3
Explanatory Notes:
Refer to the Annual Performance Reporting chapter for definitions of financial
performance indicators and reporting of all 2012/13 performance indicators (financial
and non-financial) against targets with supporting explanations for any significant
variations.
Directors Report
Directors
The Directors of Melbourne Water (‘the Corporation’) in office, during the financial
year were:
Paul Clark^ (Chairman)
Shaun Cox (Managing Director)
Peter Vines (Deputy Chairman)
Warren Hodgson
Dana Hlavacek
Janice van Reyk^
Richard McKinnon^
Garry Smith^
Eleanor Underwood^^
Terry Larkins^^
Maria Wilton^^
^Appointed to the Board on 1 October 2012
^^Appointment to the Board expired on 30 September 2012
Particulars of the Directors’ qualifications, experience and special responsibilities are
set out under Board of Directors.
Directors’ meetings
During the financial period, the Corporation held 12 meetings of Directors.
Attendance at meetings of the Board and its Committees were:
Board
Financial
Sustainabili
ty
Committee
(formerly
Audit and
Corporate
Risk
Committee)
People and
Safety
Committee
Integrated
Water
Managemen
t Committee
(formerly
Environmen
t and Public
Health
Committee)
Service
Delivery
Committee
(formerly
Capital
Planning
and
Delivery
Committee)
Atten Maxi
ded
mum
Possi
ble
Atten Maxi
ded
mum
Possi
ble
Atten Maxi
ded
mum
Possi
ble
Atten Maxi
ded
mum
Possi
ble
Atten Maxi
ded
mum
Possi
ble
Paul
Clark^
8
8
3
4
3
3
-
-
-
-
Shaun
Cox
12
12
5
6
4
4
2
2
3
3
Peter
Vines
11
12
2
2
3
3
-
-
3
3
Warren
Hodgso
n
11
12
2
2
-
-
1
1
2
3
Dana
12
Hlavace
k
12
6
6
4
4
-
-
-
-
Board
Financial
Sustainabili
ty
Committee
(formerly
Audit and
Corporate
Risk
Committee)
People and
Safety
Committee
Integrated
Water
Managemen
t Committee
(formerly
Environmen
t and Public
Health
Committee)
Service
Delivery
Committee
(formerly
Capital
Planning
and
Delivery
Committee)
Atten Maxi
ded
mum
Possi
ble
Atten Maxi
ded
mum
Possi
ble
Atten Maxi
ded
mum
Possi
ble
Atten Maxi
ded
mum
Possi
ble
Atten Maxi
ded
mum
Possi
ble
Janice
van
Reyk^
8
8
2
3
-
-
2
1
1
Richard
McKinn
on^
8
8
4
4
-
-
2
2
Garry
Smith^
8
8
-
-
-
-
1
2
2
2
Eleanor
Underw
ood^^
2
4
-
2
1
1
-
-
-
-
Terry
Larkins
^^
3
4
-
-
1
1
-
-
-
-
Maria
Wilton^
^
4
4
2
2
1
1
-
-
-
-
2
Director benefits
No Director has received, or become entitled to receive, a benefit (other than a
benefit included in Notes 25a and 25b to the Financial Statements) because of a
contract that the Director, a firm of which the Director is a member, or an entity in
which the Director has a substantial financial interest, has made (during the period
ended 30 June 2013 or at any other time) with:
(a) the Corporation; or
(b) an entity that the Corporation controlled, or a body corporate that was related
to the Corporation, when the contract was made or when the Director
received, or became entitled to receive, the benefit.
Directors and Officers liability insurance
During the financial year, the Corporation paid insurance premiums in respect of
Directors’ and Officers’ Liability insurance. The policy does not specify a premium for
individual directors and officers.
The insurance policy provides cover for directors and officers of the Corporation
against loss arising from claims made against them during the period of insurance by
reason of any wrongful act committed or alleged to have been committed by them in
their capacity as directors or officers of the Corporation and reported to the insurers
during the policy period, or if exercised, an extended reporting period.
The terms of the insurance policy prohibit the disclosure of the nature of the liabilities
insured and the amount of the premium.
Interest in contracts
No contracts involving Directors’ interests were entered into since the end of the
previous financial year, or existed at the end of the 2012/13 financial year, other than
the transactions detailed in Notes 25a and 25b to the Financial Statements.
Principal activities
The Corporation is owned by the State of Victoria. The Corporation manages and
maintains Melbourne’s water supply catchments, removes and treats most of
Melbourne’s sewage, and manages rivers, creeks and major waterways and
drainage systems in the Melbourne region. The Corporation also provides water and
sewerage services to Melbourne’s three metropolitan retail water businesses: City
West Water, South East Water and Yarra Valley Water.
Operating results and dividend
The Corporation’s loss, after providing for income tax was $30.1 million (2011/12:
profit of $269.9 million). There has been no dividend payment made or determined in
relation to the 2012/13 financial year and any dividend for the 2012/13 financial year
will be determined by the Treasurer of Victoria after consultation with the
Corporation’s Board of Directors and the Minister for Water.
The Treasurer of Victoria has determined a dividend of $94.5 million to be paid in
relation to the 2011/12 financial year. The determination was made in June 2013 for
payment in July 2013. Consequently a payable for $94.5 million has been recorded
at 30 June 2013.
Review of operations
The Directors’ review of the Corporation’s operations during the financial period
ended 30 June 2013 is set out in the Chairman and Managing Director’s report.
State of affairs
During the financial year, the Victorian Desalination Plant was commissioned and
integrated into the Corporation’s operations. The desalination plant has been built
through a Public Private Partnership managed by the Department of Environment
and Primary Industries (DEPI) and the desalination plant assets will transfer from the
department to the Corporation at the end of the project contract term presently
planned for 2039. There were no other significant changes in the state of affairs of
the Corporation during the financial period ended 30 June 2013.
Environmental regulation
The Corporation is subject to significant environmental regulation in respect of
managing its sewage treatment plants, maintaining environmental flow requirements
and managing the Ramsar wetlands. Additional information on these topics is
included in the Corporation’s 2012/13 Annual Report.
Sewage treatment plants
EPA Victoria (EPAV) issued an amalgamated licence for the discharge parameters
for the Eastern and Western Treatment Plants (ETP and WTP) on 30 May 2013.
Included in the amalgamated licence is a change to the licence parameters for ETP
which relates to the upgrade of the plant that was effectively completed in December
2012. The parameters included in the previous corporate licence will be used to
measure compliance for 2012/13 as there was only one month in 2012/13 that was
covered by the new amalgamated licence. Discharge parameters were complied with
during the financial year but both plants recorded attributable odour complaints, a
breach of a clause in the corporate licence.
Ramsar sites at WTP and Edithvale Seaford Wetlands
Melbourne Water has two sites that are listed under the Ramsar International
Convention and these are managed within the parameters of the Convention’s “wise
use” test, which aims to protect wetlands with internationally significant
environmental values.
During the financial year, extensive work on biodiversity conservation and
management of habitat areas at WTP continued in line with the 2010 Ramsar Site
Management Plan, the 2008 Land Use Strategy, and the 2008 approved
Environment Protection and Biodiversity Conservation (EPBC) Strategic Compliance
Plan. Significant on-ground investment continued to be made in water level
management, pest plant and animal control, monitoring of key
populations/communities and through research projects to support an adaptive
management approach. Annual compliance reports are submitted to the Federal
Department of Sustainability, Environment, Water, Population and Communities
presenting the results of studies and monitoring of key populations/ communities. In
addition, 2012/13 saw an independent five year audit of our compliance with the
terms of the conditional approval for the 2002 Environment Improvement Project
which noted that there were no significant adverse outcomes.
Actions in the ‘Edithvale-Seaford Wetlands Ramsar Site Management Plan’ were
implemented as required. These included significant investigations and planning to
improve hydrological control at the wetlands as required. An EPBC referral was
prepared and approved for these works. Other management activities included
monthly bird surveys, trial weed control, and establishing a research project with the
University of Melbourne to monitor vegetation responses to hydrological
management.
Environmental flow requirement – bulk entitlements
The Corporation manages bulk entitlements to water from the Thomson,
Maribyrnong and Yarra Rivers. During the financial year, the requirements were met
for all rivers with environmental flow entitlements.
Memorandum of Understanding (MOU) – Ringwood South sewer
upgrade
Melbourne Water and the EPAV have signed a MOU on adopting an alternative
approach to achieving compliance with the sewage containment policy. Instead of
upgrading the sewer to contain sewage in up to 1–5 year rainfall events, over the
next 5 years, Melbourne Water will implement a program of works including pollution
identification and control, amenity enhancement around Dandenong Creek and
habitat improvements.
Environmental incidents
During the 2012/13 financial year, there were no significant environmental incidents
related to Melbourne Water’s activities.
Implementation of the Victorian Industry Participation Policy (VIPP)
In accordance with the VIPP Act 2003, the following VIPP contracts commenced or
were completed during the 2012/13 financial year:
Contracts commenced to which the VIPP applied:
The Corporation commenced 7 metropolitan contracts totalling $504.9 million in
value to which the VIPP applied.
The commitments by contractors under the VIPP included:
•
An overall level of local content of 95.5% of the total value of the contracts
•
460 full time equivalent jobs
•
60 full time equivalent apprenticeships and traineeships
•
A number of benefits to the Victorian economy in terms of skills and
technology transfers were provided by contractors including:
– On the job training in the use of Global Positioning System equipment
for contractors;
– Commitments made to offer the Corporation’s employees the
opportunity to develop engineering designing and planning skills;
– Commitments made for ongoing training, skills development and
research and development across all sampling, analysis and laboratory
services for the Corporation’s employees and contractors;
– Commitments made for contractors to undertake training in civil
construction, conservation and habitat management or horticulture
relating to the Maintenance and Low Risk Capital Waterways and
Drainage contract;
– Commitments made for contractors to undertake training in behavioural
safety, team effectiveness, team management and health and safety;
– Customised training programs developed for the Corporation’s
employees in the use of the Asset Management Information System;
and
– Commitments made for training and skills development in the operation
of Supervisory Control and Data Acquisition software for the
Corporation’s employees.
Contracts completed to which the VIPP applied:
The Corporation completed twelve contracts totalling $518.8 million in value to which
the VIPP applied. The total number and value of these relate to 7 metropolitan and 1
regional contracts.
The outcomes reported by contractors under the VIPP included:
•
An overall level of local content of 97.0% of the total value of the contracts
•
427 full time equivalent jobs
•
2 full time equivalent apprenticeships and traineeships
•
All committed skills and technology transfers were achieved for these
contracts. These skills included:
– Drainage works and wetland construction skills for contractors;
– Training in pipe boring and trenchless technology for the Corporation’s
employees;
– Training and up skilling in high voltage works and testing for
contractors;
– Training and development of skills in technologies utilised in the tertiary
upgrade project for the Corporation’s employees;
– Training undertaken in new technology relating to virus testing,
protozoa and pathogen testing and other emerging technologies for the
Corporation’s employees;
– Training in the operation of a tracked submersible dredge for the
contractors; and
– Training provided in confined space, entry traffic management, spotter
course and manual handling.
Paul Clark Chairman
Shaun Cox Managing Director
Financial Statements
Statement of Profit or Loss and Other Comprehensive Income
For the year ended 30 June 2013
Notes
2013 $000
2012 $000
Revenue
3(a)
1,236,043
1,231,609
Other Income
3(b)
34,762
8,611
1,270,805
1,240,220
Revenue
Total revenue
Expenses
Depreciation and
amortisation
expenses
4(a)
(315,901)
(242,582)
Operational
expenses
4(b)
(192,272)
(109,138)
Employee benefits
expenses
4(c)
(86,936)
(103,462)
Repairs and
maintenance
expenses
4(d)
(71,088)
(69,328)
Administrative
expenses
4(e)
(36,309)
(36,884)
Finance expenses
4(f)
(549,334)
(249,152)
Other expenses
4(g)
(64,045)
(56,911)
(1,315,885)
(867,457)
Total expenses
Notes
Net result from
operations before
tax
Tax
benefit/(expense)
5 (a,b)
(Loss)/Profit for
the period after
tax
2013 $000
2012 $000
(45,080)
372,763
15,001
(102,844)
(30,079)
269,919
Other
comprehensive
(expense)/income
net of tax
Items that will not
be reclassified to
profit or loss
Revaluation
decrease on
infrastructure
assets
17
(53,065)
-
Reversal of
deferred tax
liabilities
recognised on
revaluation of land
17
-
13,507
(53,065)
13,507
Items that may be
reclassified to
profit or loss
Notes
2013 $000
2012 $000
17
12
14
12
14
Other
comprehensive
(loss)/income for
the period net of
tax
(53,053)
13,521
Total
comprehensive
(loss)/income for
the period after
tax
(83,132)
283,440
Net value gain on
cash flow hedges
The above Statement of Profit or Loss and Other Comprehensive Income should be
read in conjunction with the accompanying notes under Financial Statements (Notes
to the Financial Report)
Statement of Financial Position
As at 30 June 2013
Assets
Notes
2013 $000
2012 $000
Cash and cash
equivalents
6
145,179
228
Trade and other
receivables
7(a)
100,974
78,228
Other current
assets
8
9,137
7,939
Current assets
Assets
Notes
K
Non-current assets
classified as held
for sale
9
Total current
assets
2013 $000
2012 $000
255,290
86,395
4,513
11,242
259,803
97,637
Non-current
assets
Property, plant and
equipment
10(a)
14,206,461
9,920,689
Intangible assets
10(b)
11,410
15,803
Defined benefit
superannuation
plan asset
15(b), 23(d)
504
-
Total non-current
assets
14,218,375
9,936,492
Total assets
14,478,178
10,034,129
Liabilities
Current liabilities
Trade and other
payables
11(a)
382,769
264,309
Interest bearing
liabilities
12(a)
355,395
789,335
Assets
Notes
2013 $000
2012 $000
Provisions
13(a)
3,179
16,961
Current tax liability
5(c)
2,107
45,617
Employee benefits
15(a)
27,246
26,406
770,696
1,142,628
Total current
liabilities
Non-current
liabilities
Trade and other
payables
11(b)
1,663
1,701
Interest bearing
liabilities
12(b)
8,109,893
3,045,753
Provisions
13(b)
1,476
1,082
14 1,224,452
1,272,575
8,554
31,371
Total non-current
liabilities
9,346,038
4,352,482
Total liabilities
10,116,734
5,495,110
Net assets
4,361,444
4,539,019
559,173
559,116
Net deferred tax
liabilities
Employee benefits
15(c)
Equity
Contributed equity
16
Assets
Notes
2013 $000
2012 $000
Reserves
17
2,243,759
2,303,724
Retained profits
18
1,558,512
1,676,179
4,361,444
4,539,019
Total equity
The above Statement of Financial Position should be read in conjunction with the
accompanying notes under Financial Statements (Notes to the Financial Report)
Statement of Changes in Equity
For the year ended 30 June 2013
Notes
Contributed Reserves
Equity
Retained
Profits
Total $000
559,116
2,303,724
1,676,179
4,539,019
Loss for the
period after tax
-
-
(30,079)
(30,079)
Other
comprehensive
loss net of tax
-
(59,965)
6,912
(53,053)
Total
comprehensive
loss for the
period after tax
-
(59,965)
(23,167)
(83,132)
Balance at 1
July 2012
Comprehensive
loss for the
period
Notes
Contributed Reserves
Equity
Retained
Profits
Total $000
Dividends
payable
22
-
-
(94,500)
(94,500)
Net increase in
contributed
equity
16
57
-
-
57
57
-
(94,500)
(94,443)
559,173
2,243,759
1,558,512
4,361,444
559,952
2,292,504
1,522,359
4,374,815
Profit for the
period after tax
-
-
269,919
269,919
Other
comprehensive
income for the
period net of tax
-
11,220
2,301
13,521
Transactions
with equity
holders in their
capacity as
equity holders
Total
transactions
with owners
Balance at 30
June 2013
Balance at 1
July 2011
16, 17, 18
Comprehensive
income for the
period
Notes
Total
comprehensive
income for the
period after tax
Contributed Reserves
Equity
Retained
Profits
Total $000
-
11,220
272,220
283,440
Transactions
with equity
holders in their
capacity as
equity holders
Dividends paid
22
-
-
(118,400)
(118,400)
Net decrease in
contributed
equity
16
(836)
-
-
(836)
(836)
-
(118,400)
(119,236)
2,303,724
1,676,179
4,539,019
Total
transactions
with owners
Balance at 30
June 2012
16, 17, 18 559,116
The above Statement of Changes in Equity should be read in conjunction with the
accompanying notes under Financial Statements (Notes to the Financial Report)
Statement of Cash Flows
For the year ended 30 June 2013
Notes
2013 $000
2012 $000
Notes
2013 $000
2012 $000
Receipts from
customers
(inclusive of goods
and service tax)
1,256,017
1,211,642
Payments to
suppliers and
employees
(inclusive of goods
and service tax)
(478,190)
(418,702)
Income tax paid
(53,889)
(133,308)
Interest received
234
112
Interest and other
costs of finance
paid
(548,789)
(244,722)
Other receipts
43,924
104,987
219,307
520,009
(388,961)
(627,580)
Cash flows from
operating
activities
Net cash inflow
from operating
activities
28
Cash flows from
investing
activities
Payments for
property, plant and
equipment
Notes
2013 $000
2012 $000
Proceeds from
sales of property,
plant and
equipment
27,751
7,331
Net cash outflow
from investing
activities
(361,210)
(620,249)
Cash flows from
financing
activities
Proceeds from
borrowings
1(q),
2 902,850
2,186,207
Repayment of
borrowings
1(q),
2 (591,375)
(1,968,983)
Repayments for
outstanding finance
lease liability
(810)
(205)
Repayments for
desalination plant
finance lease
liability
(23,811)
-
-
(118,400)
286,854
98,619
Dividends paid
Net cash inflow
from financing
activities
22
Notes
2013 $000
Net
increase/(decrease)
in cash and cash
equivalents
2012 $000
144,951
(1,621)
Cash and cash
equivalents at the
beginning of the
financial year
Cash and cash
equivalents at the
end of the
financial year
6
228
1,849
145,179
228
The above Statement of Cash Flows should be read in conjunction with the
accompanying notes under Financial Statements (Notes to the Financial Report)
Financial Statements
Notes to the Financial Report
1. Summary of significant accounting policies
(a) (i) General
These Financial Statements of Melbourne Water Corporation (‘the Corporation’ or
‘Melbourne Water’) represent the audited general purpose financial report that
consists of a Statement of Profit or Loss and Other Comprehensive Income,
Statement of Financial Position, Statement of Changes in Equity, Statement of Cash
Flows and Notes accompanying these statements. This general purpose financial
report complies with Australian equivalents to International Financial Reporting
Standards (AIFRS), other authoritative pronouncements of the Australian Accounting
Standards Board, including Australian interpretations, the requirements of the
Financial Management Act 1994 and applicable Ministerial Directions. These
Financial Statements have been prepared on accrual and going concern bases.
(ii) Accounting policies
Unless otherwise stated, all accounting policies applied are consistent with those of
the prior year. Where appropriate, comparative figures have been amended to
accord with current presentation and disclosure made of material changes.
(iii) Classification between current and non-current
In the determination of whether an asset or liability is current or non-current,
consideration has been given to the time when each asset or liability is expected to
be realised or paid. The asset or liability has been classified as current if it is
expected to be turned over within the next twelve months, being the Corporation’s
operational cycle – see Note 1(p) for a variation in relation to employee benefits, and
Note 1(q) for a variation in relation to borrowings.
(iv) Rounding
Unless otherwise stated, amounts in the report have been rounded to the nearest
thousand dollars.
(v) Historical cost convention
These Financial Statements have been prepared under the historical cost
convention, as modified by the revaluation of certain classes of property, plant and
equipment and financial instruments.
(vi) Accounting estimates
The preparation of financial statements in conformity with AIFRS requires the use of
certain accounting estimates. It also requires management to exercise its judgement
in the process of applying the Corporation’s accounting policies. Areas involving a
high degree of estimates and assumptions, which can materially impact the financial
statements relate to the assumptions used to determine the Corporation’s estimate
of the defined benefit superannuation asset/liability, fair value of infrastructure
assets, employee and other provisions, commitments for the Victorian Desalination
Plant, useful lives of plant, property and equipment and recognition of deferred tax
balances. These assumptions and their related carrying amounts are discussed in
Notes 1(d,e,f,p,r,u), 5, 10, 13, 14, 15, 20(g) and 23.
(vii) Financial statement presentation
The Corporation has adopted the revised AASB 101 which became effective on 1
July 2012. The revised standard includes a change to the name of the Statement of
Comprehensive Income to ‘Statement of Profit or Loss and Other Comprehensive
Income’. It requires that entities group items presented in other comprehensive
income on the basis of whether they are subsequently reclassifiable to profit or loss
(reclassification adjustments) or not. The change does not remove the option to
present profit or loss and other comprehensive income in two statements, nor
change the option to present items of other comprehensive income either before tax
or net of tax. The Corporation has elected to present items of other comprehensive
income net of tax.
Revenue
(b) (i) Bulk water and sewerage services
The Corporation collects bulk water and sewerage services revenue for providing
storage operator services and bulk water and sewerage services to retail
metropolitan and regional water businesses. Bulk water and sewerage services
revenues consist of a variable metered component (based on volumes of usage) and
a fixed fee (for service availability). The metered usage component of the revenue is
recognised when the service has been used with settlement from date of invoice.
The fixed fee service availability components of the revenues are recognised on a
monthly basis with settlement at 14 days. Bulk water and sewerage services
revenues are collected from the various water businesses.
The Essential Services Commission (ESC) regulates the prices and service
standards for the provision of storage operator services and bulk water and
sewerage services. The ESC’s general regulatory powers are set out in:
•
the Essential Services Commission Act 2001;
•
Part 1A of the Water Industry Act 1994; and
•
a Water Industry Regulatory Order made under section 4D of the Water
Industry Act 1994.
1. Summary of significant accounting policies
(ii) Waterways charges
Waterways charges are recognised in the year for which the rate is levied. Charges
are levied either quarterly or annually. Waterways charges are collected by various
retail water businesses on behalf of the Corporation. A lien is held over each
property to ensure that any outstanding amounts are recovered upon sale of the
property.
The ESC regulates the prices and service standards for the provision of waterways.
(iii) Developer charges and contributions and contributed assets
Developer charges and contributions are recognised when received. Developer
contributed assets consist of assets received free of charge or for nominal
consideration and are recognised as revenue at fair value on completion of works
and their acceptance by the Corporation.
(iv) Interest receivable
Interest receivable is recognised as revenue when earned and is accrued in
accordance with the terms and conditions of the underlying financial instrument or
other contract.
(v) Net gain from disposal of property, plant and equipment
Property sales in relation to the Corporation’s arrangements with Places Victoria are
recognised upon settlement due to the nature of the arrangement between Places
Victoria and the Corporation. Other property sales are recognised on signing of an
unconditional contract of sale. Property sales are recognised in the Statement of
Profit or Loss and Other Comprehensive Income on a net basis of sale proceeds
less costs.
(vi) Government grants and contributions
Grants from the Victorian Government are recognised at their fair value where there
is a reasonable assurance that the grant will be received and the Corporation will
comply with all required conditions.
Government grants relating to costs are included as deferred income in liabilities and
are recognised in the Statement of Profit or Loss and Other Comprehensive Income
over the period necessary to match them with the costs that they are intended to
compensate.
Government grants relating to the purchase or construction of property, plant and
equipment are deducted in arriving at the carrying amount of the asset.
Expenses
(c) Finance costs
Finance costs are recognised as expenses in the period in which they are incurred.
All qualifying assets (being assets that necessarily take a substantial period of time
to get ready for their intended use or sale) are measured at fair value. Therefore, any
finance costs directly attributable to the acquisition, construction or production of
these qualifying assets are not required to be capitalised and will continue to be
expensed in the period in which they are incurred.
Finance costs include interest on short-term and long-term borrowings, finance lease
charges and the Victorian Government’s financial accommodation levy.
(d) Taxation
The Corporation is subject to the National Tax Equivalent Regime (NTER), which is
administered by the Australian Taxation Office (ATO). The difference between the
NTER and the Commonwealth legislation is that the tax liability is paid to the State
Government rather than the Commonwealth Government.
The income tax expense or benefit for the period is the tax payable on the current
period’s taxable income based on the national corporate income tax rate of 30%,
adjusted by changes in deferred tax assets and liabilities attributable to temporary
differences between the tax bases of assets and liabilities and their carrying amounts
in the financial statements, and to unused tax losses.
Deferred tax assets and liabilities are recognised for temporary differences at the tax
rate expected to apply when the assets are recovered or liabilities settled, based on
those tax rates which are enacted or substantially enacted. The relevant tax rates
are applied to the cumulative amounts of deductible and taxable temporary
differences when they arise in a transaction, that at the time of the transaction did
not affect either accounting profit or taxable profit or loss. Deferred tax assets are
recognised for deductible temporary differences and unused tax losses only if it is
probable that future taxable amounts will be available to utilise those temporary
differences and losses. Current and deferred tax is recognised in profit or loss,
except to the extent that it relates to items recognised in other comprehensive
income or directly in equity. In this case, the tax is also recognised in other
comprehensive income or directly in equity respectively.
1. Summary of significant accounting policies (continued)
Assets
(e) Property, plant and equipment
(i) Recognition and measurement of assets
Property, plant and equipment represent non-current physical assets comprising
land, buildings, water, sewerage and drainage infrastructure, plant and equipment
assets used by the Corporation in its operations. Items with a cost or value in excess
of $500 (capitalisation threshold) and a useful life of more than one year are
recognised as assets with the exception of lifecycle costs for the Victorian
Desalination Plant which are expensed.
All items with a cost or value less than $500 are expensed. Cost includes such
expenditure that is directly attributable to the acquisition of the asset. Cost may also
include transfers from equity of any gains/losses on qualifying cash flow hedges
relating to foreign currency purchases of non-current physical assets.
Subsequent costs are included in the asset’s carrying amount or recognised as a
separate asset, as appropriate, only when it is probable that future economic
benefits associated with the item will flow to the Corporation and the cost of the item
can be measured reliably.
All other subsequent costs are charged to the Statement of Profit or Loss and Other
Comprehensive Income during the financial period in which they are incurred.
(ii) Repairs and maintenance
Routine maintenance, repair costs and minor renewal costs are expensed as
incurred. Where the repair relates to the replacement of a component of an asset
and the cost exceeds the capitalisation threshold, the cost is capitalised and
depreciated over the remaining life of the asset.
(iii) Valuation of non-current physical assets
All non-current physical assets are recognised initially at cost and subsequently
revalued at fair value less accumulated depreciation and impairment in accordance
with the requirements of Financial Reporting Direction (FRD) 103D Non-Current
Physical Assets.
Revaluations are conducted either independently (as required under FRD103D) or
using management expertise and classified as a managerial revaluation. The
Corporation also considers more frequent revaluations such as during price
determination years. Any accumulated depreciation at the date of revaluation is
eliminated against the gross carrying amount of the asset and the net amount is
restated to the revalued amount of the asset.
The fair value of land and buildings is determined as the amount for which an asset
could be exchanged between knowledgeable, willing parties, in an arm’s length
transaction. Crown land is measured with regard to the property’s highest and best
use after due consideration is made for any legal or constructive restrictions imposed
on the asset. The last independent valuation of the Corporation’s land and buildings
was performed by the Valuer General Victoria (VGV) in 2010/11 to determine the fair
value of the land and buildings, in accordance with FRD 103D as explained in note
10(a)(i).
The fair value of infrastructure assets is determined annually using the ‘income
approach’ (based on discounted cash flows), as explained further at Note 10 (a)(ii).
The fair value of the remaining plant and equipment (consisting of plant and
equipment, fleet vehicles and works in progress) is determined based on cost less
any accumulated depreciation and any accumulated impairment losses. This is
deemed the most appropriate basis to approximate fair value given:
– there is no evidence that a reliable market based fair value or other
relevant fair value indicators for these assets exists; and/or
– these assets are acquired and disposed of frequently, typically have
short depreciable lives, and these assets are relatively low in value
(with the exception of works in progress) compared to land and
buildings and infrastructure assets.
(iv) Impairment
All assets are assessed for indicators of impairment on an annual basis. Such assets
are tested to ascertain whether the carrying amount exceeds their recoverable
amounts.
Impairment losses are recognised immediately in the Statement of Profit or Loss and
Other Comprehensive income, except that, to the extent that a credit balance exists
in the revaluation reserve in respect of the same assets, they are debited to the
revaluation reserve. Refer to Notes 10(a)(iii) and 10(b) for the results of the 2012/13
annual impairment test.
(v) Revaluations
Revaluation increments are credited directly to equity in the revaluation reserve,
except that, to the extent that an increment reverses a revaluation decrement in
respect of the same asset previously recognised as an expense in determining the
net result, the increment is recognised as revenue in determining the net result.
Revaluation decrements are recognised immediately as expenses in the net result,
except that, to the extent that a credit balance exists in the revaluation reserve in
respect of the same class of asset, they are debited to the revaluation reserve.
(vi) Non-current assets held for sale
Non-current assets that are classified as held for sale are stated at the lower of their
carrying amount and fair value less costs to sell, as their carrying amount will be
recovered principally through a sale transaction, rather than through continuing use.
The Corporation considers that the sale of these assets are highly probable and the
assets are available for immediate sale in their present condition. These assets are
not depreciated or amortised while classified as held for sale and are disclosed
separately in the Statement of Financial Position.
(f) Depreciation and amortisation of non-current assets
Where assets have separate identifiable components that have distinct useful lives
and/or residual values, a separate depreciation rate is determined for each
component.
Depreciation on other assets is calculated using the straight line method to allocate
their cost or revalued amounts, net of their residual values, over their estimated
useful lives, commencing from the time the asset is held ready for use. The assets’
residual values and useful lives are reviewed annually, and adjusted if appropriate,
at the end of each reporting period. Land is not depreciated. Major depreciation and
amortisation periods used are listed below and are consistent with the prior year:
Buildings 10 to 100 years
Plant and equipment 3 to 50 years
Infrastructure assets 3 to 200 years
Fleet vehicles 3 to 12 years
Intangible assets 3 to 5 years
(g) Cash and cash equivalents
For the purposes of the Statement of Cash Flows, cash and cash equivalents include
cash on hand, deposits held at call with financial institutions, other short-term and
highly liquid investments with original maturities of three months or less, that are
readily convertible to known amounts of cash and which are subject to an
insignificant risk of change in value. Bank overdrafts (if applicable) are shown within
interest bearing liabilities on the Statement of Financial Position.
(h) Receivables
All receivables are recognised at the amounts receivable less any allowance for
doubtful debts. Receivables are reviewed on an ongoing basis to identify any
receivables which cannot be collected. Debts which cannot be collected are writtenoff when identified. A provision for doubtful debts is established when there is
objective evidence that the Corporation is highly unlikely to collect all amounts due
according to the original terms of receivables. The amount of the provision is the
difference between the asset’s carrying amount and the present value of estimated
future cash flows, discounted at the effective interest rate. The amount of the
provision is recognised in the Statement of Profit or Loss and Other Comprehensive
Income.
(i) Other current assets
Other non-financial assets include prepayments which represent payments in
advance of receipt of goods or services or that part of expenditure made in one
accounting period covering a term extending beyond that accounting period.
(j) Inventories
Stores and materials are used in the construction of new works and for the repair
and maintenance of existing assets. All stores are valued at the lower of cost and net
realisable value.
(k) Smart Water Fund
The Smart Water Fund was established by the Victorian Government and is
managed by the Corporation and the three retail water businesses for the purpose of
providing grant funding to support the development of sustainable water use
projects. Each water business has a 25 per cent interest in the Fund.
Contributions made to the Smart Water Fund are initially recognised as prepayments
in the Corporation’s Statement of Financial Position. Expenses are subsequently
recognised by the Corporation when incurred by the Fund.
1. Summary of significant accounting policies (continued)
(l) Intangible assets and research & development costs
(i) Intangible assets
Intangible assets (primarily consisting of information technology software and
renewable energy certificates) represent identifiable non-monetary assets without
physical substance. Intangible assets are measured at cost less accumulated
amortisation and impairment. Costs incurred subsequent to initial acquisition are
capitalised when it is expected that additional future economic benefits will flow to
the Corporation.
Amortisation is allocated to intangible assets with estimated finite useful lives on a
systematic basis over the asset’s estimated useful life. Amortisation begins when the
asset is available for use, that is, when it is in the location and condition necessary
for it to be capable of operating in the manner intended by management. The
amortisation period and the amortisation method for an intangible asset with an
estimated finite useful life are reviewed at least at the end of each annual reporting
period. In addition, an assessment is made at each reporting period to determine
whether there are indicators that the intangible asset concerned is impaired. If so,
the assets concerned are tested as to whether their carrying value exceeds their
recoverable amount.
Refer to Note 10(a)(iii) for the results of the 2012/13 annual impairment test.
(ii) Research & development costs
Expenditure on research activities is recognised as an expense in the period in
which it is incurred. An internally generated intangible asset arising from a
development project is recognised when it is probable that the project will be
completed and generate future economic benefits and its costs can be measured
reliably.
Where no internally generated intangible asset can be recognised, development
expenditure is recognised as an expense in the period it is incurred.
(m) Goods and Services Tax
Revenues, expenses and assets are recognised net of goods and services tax
(GST), unless GST incurred is not recoverable from the ATO. In these
circumstances, the GST is recognised as part of the cost of acquisition of the asset
or as part of the expense.
Receivables and payables (including commitments) are stated inclusive of GST. The
net amount of GST recoverable from, or payable to, the ATO is included as a current
asset or liability in the Statement of Financial Position. Cash flows arising from
operating activities are disclosed in the Statement of Cash flows on a gross basis i.e.
inclusive of GST.
The GST component of cash flows arising from investing and financing activities
which is recoverable from, or payable to, the ATO are presented as operating cash
flows.
Liabilities
(n) Leased assets
(i) Finance leases
Leases of property, plant and equipment, where the Corporation substantially bears
all the risks and rewards incidental to ownership, are classified as finance leases.
Finance leases are capitalised at the lease’s inception at the lower of the fair value of
the leased property and the present value of the minimum lease payments. The
corresponding rental obligations, net of finance charges, are included in the
Statement of Financial Position. Each lease payment is allocated between the
liability and finance charges so as to achieve a constant rate on the finance balance
outstanding. The interest element of the finance cost is charged to the Statement of
Profit of Loss and Other Comprehensive Income over the lease period so as to
produce a constant periodic rate of interest on the remaining balance of the liability
for each period. The property, plant and equipment acquired under finance leases is
amortised on a straight line basis over the estimated useful life of the asset.
(ii) Operating leases – expenses
Leases in which a significant portion of the risks and rewards incidental to ownership
are retained by the lessor are classified as operating leases. Payments made under
operating leases, net of any incentives received from the lessor, are charged to the
Statement of Profit or Loss and Other Comprehensive Income on a straight-line
basis over the period of the lease, in the periods in which they are incurred, as this
represents the pattern of benefits derived from the leased assets.
(iii) Lease incentives
In the event that lease incentives are received upon entering into operating leases,
such incentives are recognised as a liability. The aggregate benefits of incentives are
recognised as a reduction of rental expense on a basis which reflects the time
pattern in which economic benefits from the leased asset are consumed.
1. Summary of significant accounting policies (continued)
(o) Payables
(i) Trade payables
Payables are recognised when the Corporation becomes obliged to make future
payments resulting from the purchase of goods and services.
(ii) Accruals
These amounts represent liabilities for goods and services provided to the
Corporation prior to the end of the financial year, which are unpaid. The amounts are
unsecured and are usually paid within 30 days of recognition or in accordance with
contract terms.
(iii) Interest payable
Interest is recognised as an expense in the reporting period in which it is payable
and accrued in accordance with the terms and conditions of the underlying financial
instruments or other contract.
(p) Employee benefits
(i) Salaries and annual leave
Liabilities for salaries, including non-monetary benefits expected to be settled within
12 months of the reporting period, are recognised in employee benefit liabilities in
respect of employees’ services up to the end of the reporting period and are
measured at the amounts expected to be paid when the liabilities are settled, at their
nominal values. Employee benefits which are not expected to be settled within 12
months are measured as the present value of the estimated future cash outflows to
be made by the Corporation, in respect of services rendered by employees up to the
end of the reporting period. Regardless of the expected timing of settlements,
provisions made in respect of employee benefits are classified as a current liability,
unless there is an unconditional right to defer the settlement of the liability for at least
12 months after the reporting period, in which case it would be classified as a noncurrent liability.
(ii) Sick leave
Sick leave payments are made in accordance with relevant awards, determinations
and Corporation policy. No provision is made in the financial statements for unused
sick leave entitlements as these are non-vesting benefits.
(iii) Long service leave
The liability for long service leave is recognised in the provision for employee
benefits and is measured as the present value of expected future payments to be
made in respect of services provided by employees up to the end of the reporting
period. Consideration is given to expected future salary levels, experience of
employee departures and periods of service. Expected future cash payments are
discounted using market yields attached to the Reserve Bank of Australia’s 10 year
rate for semi-annual coupon bonds at the end of the reporting period with terms to
maturity that closely match the estimated future cash outflows. Provisions made for
unconditional long service leave (where the employee has a present entitlement to
the benefit) are classified as a current liability. The non-current liability represents
long service leave entitlements accrued for employees with less than seven years of
continuous service. Amounts expected to be paid within 12 months are measured at
nominal value, and amounts expected to be paid beyond 12 months are measured at
present value.
(iv) Superannuation
Defined contribution plans
Contributions to defined contribution superannuation plans are expensed when
incurred.
Defined benefit superannuation plan
A liability or asset in respect of the Corporation’s equip defined benefit
superannuation plan is recognised in the Statement of Financial Position and is
measured as the difference between the present value of employees’ accrued
benefits at the end of the reporting period and the net market value of the
superannuation plan’s assets at that date. The present value of benefits is based on
expected future payments which arise from membership of the plans at the end of
the reporting period. Consideration is given to expected future salary levels,
experience of employee departures and periods of service. Expected future
payments are discounted using market yields of the 9 year Commonwealth
Government bonds that match the estimated future cash flows.
The amount brought to account in the Statement of Profit or Loss and Other
Comprehensive Income in respect of superannuation represents the contributions
made to the equip defined benefit superannuation fund, adjusted by the movement in
the defined benefit superannuation plan liability or asset which is determined
annually by independent actuarial assessment.
(v) Termination benefits
Liabilities for termination benefits are recognised when the Corporation is
demonstrably committed to terminating employment of current employees, according
to a detailed formal plan without possibility of withdrawal. The liabilities for
termination benefits are recognised as payables in the provision for employee
benefits.
Liabilities for termination benefits expected to be settled within 12 months are
measured at the amounts expected to be paid when they are settled. Amounts
expected to be settled more than 12 months from the end of the reporting period are
measured as the estimated cash outflows, discounted using market yields at the
reporting date on the 10 year bond rate.
(vi) Employee benefit on-costs
Employee benefit on-costs, including payroll tax and workers compensation are
recognised and included in employee benefit liabilities and costs when the employee
benefits to which they relate are recognised as liabilities.
(vii) Performance payments
Performance payments for the Corporation’s employees are based on achievement
of agreed performance targets and are based on a percentage of the annual salary
package provided under their contracts of employment in accordance with the
Corporations performance bonus policy. A liability is recognised and is measured as
the aggregate of the amounts accrued under the term of the contracts at the end of
the reporting period.
(viii) Work Cover
The Corporation is registered as a self-insurer for workers compensation and is
liable to the workers or workers’ dependants to pay compensation under the
Accident Compensation Act 1985. An independent actuarial assessment has been
obtained for outstanding claims incurred and not settled, and for claims incurred but
not reported as at 30 June 2013 which are recognised as a liability. Other claims
incurred and settled during the period are charged to the Statement of Profit or Loss
and Other Comprehensive Income.
In accordance with Section 146(5)(a) of the Accident Compensation Act 1985, the
Corporation must provide a bank guarantee to the Victorian Work Cover Authority as
part of its Work Cover self insurance commitments. Refer to note 15(c)(i) for details
of the independent actuarial assessment and bank guarantee.
(ix) Workers compensation
The Corporation continues to be liable for workers compensation claims incurred
prior to the introduction of Work Care (now Work Cover) in 1985. An independent
actuarial assessment is obtained for all outstanding workers compensation claims as
at 30 June 2013, which are recognised as a liability.
Refer to note 15(c)(ii) for details of the independent actuarial assessment.
(q) Interest Bearing Liabilities
Interest bearing liabilities consist of borrowings and finance lease liabilities. All
borrowings are required to be transacted through the Treasury Corporation of
Victoria whose liabilities are guaranteed by the Victorian Government.
The Corporation’s borrowings are comprised of floating rate note (FRN) loans, fixed
interest loans and an overnight loan (11 am account) facility. FRN loans are fixed
term loans with a margin that is reset to a variable interest rate every ninety or one
hundred and eighty days. Generally, these notes are issued with maturity terms
between three and nine years. Fixed interest loans are interest only loans with the
full face value repaid at maturity or refinanced for a new term. Most have maturity
terms set between 1 and 11 years (2011/12: 1 and 12 years). The overnight loan
facility interest rates are floating rates that fluctuate with the cash rate.
Borrowings are initially recognised at fair value, net of transaction costs incurred.
Borrowings are subsequently measured at amortised cost using the effective interest
method, with interest expense recognised on an effective yield basis.
Where the Corporation has an unconditional right to defer settlement of the liability
for at least 12 months after the balance date, borrowings are classified as noncurrent liabilities. Otherwise, borrowings are classified as current liabilities. See Note
2 for further details on financing arrangements and risk management. Refer to Note
1(n)(i) for further details on finance lease liabilities.
(r) Provisions, Contingent Assets and Contingent Liabilities
Provisions are recognised when the Corporation has a present legal or constructive
obligation as a result of past events, it is probable that an outflow of resources will be
required to settle the obligation and the amount has been reliably estimated.
Provisions are not recognised for future operating losses.
The amount recognised as a provision is the best estimate of the consideration
required to settle the present obligation at the end of the reporting period, taking into
account the risks and uncertainties surrounding the obligation. Where a provision is
measured using the cash flows estimated to settle the present obligation, its carrying
amount is the present value of those cash flows.
When some or all of the economic benefits required to settle a provision are
expected to be recovered from a third party, the receivable is recognised as an asset
if it is virtually certain that recovery will be received and the amount of the receivable
can be measured reliably.
Provisions for Gainshare on Capital Projects and Remediation Works are included
within the cost of the non-current physical assets to which they are directly
attributable to in accordance with criteria in note 1(e).
Contingent assets and contingent liabilities are not recognised in the Statement of
Financial Position but are disclosed by way of a note, and if quantifiable, are
measured at nominal value.
Other Significant Accounting Policies
(s) Foreign currency translation
(i) Functional and presentation currency
The functional and presentation currency of the Corporation is the Australian dollar.
(ii) Transactions
All foreign currency transactions during the reporting period are brought to account
using the exchange rate in effect at the date of the transaction.
(t) Cash flow hedges
In order to hedge the effect of foreign exchange rate movements on the fair values of
assets purchased, the Corporation occasionally enters into forward foreign exchange
contracts. These hedges are classified as cash flow hedges with the associated
gains or losses recognised directly in equity. As the hedged firm commitment results
in the recognition of an asset, the associated gains/losses that had previously been
recognised in equity are included in the initial measurement of the acquisition cost.
These are accounted for at settlement date. The gain or loss relating to the
ineffective portion is recognised immediately in the Statement of Profit or Loss and
Other Comprehensive Income.
At any point in time, any cumulative gain or loss on the cash flow hedge is retained
in equity until the forecast transaction occurs.
If a hedged transaction is no longer expected to occur, the net cumulative gain or
loss recognised in equity is transferred to the Statement of Profit or Loss and Other
Comprehensive Income.
(u) Commitments
Commitments (capital and other) are disclosed at their nominal value and inclusive
of the GST payable. In addition, where it is considered appropriate and provides
additional relevant information to users, the net present values of significant
individual projects are stated.
In accordance with the Water Interface Agreement and Supplementary Water
Interface Agreement between Melbourne Water and the State, commitments in
respect of the Victorian Desalination Plant project are recorded as per information
provided by the Department of Environment and Primary Industries.
(v) Contributed equity
Additions and disposals to net assets are designated as contributed equity when
approved by the Minister for Finance and have met the requirements of FRD 119
Contributions By Owners. Other transfers that are in the nature of contributions or
distributions have also been designated as contributed equity.
(w) Dividend policy
The Corporation is required to pay a dividend in accordance with a determination of
the Treasurer of Victoria based on a prescribed methodology. An obligation to pay a
dividend only arises after a formal determination is made by the Treasurer following
consultation with the Corporation’s Board of Directors and the Minister for Water.
(x) New Accounting Standards and Interpretations
Certain new accounting standards and interpretations relevant to the Corporation
have been published that are not mandatory for the 30 June 2013 reporting period.
The Corporation has not adopted and does not intend to adopt these standards
early. The Corporation’s assessment of the impact of these new standards and
interpretations is set out below:
(i) AASB 9 ‘Financial Instruments (December 2009)’, AASB 2009-11 and AASB
2010-7 ‘Amendments to Australian Accounting Standards arising from AASB 9’
The revised version of AASB 9 incorporates revised requirements for the
classification and measurement of financial liabilities, and carrying over of the
existing derecognition requirements from AASB 139 ‘Financial Instruments:
Recognition and Measurement’. This Standard supersedes AASB 9 (December
2009) and is effective for annual reporting periods commencing on or after 1 January
2013. The revised financial liability provisions maintain the existing amortised cost
measurement basis for most liabilities. New requirements apply where an entity
chooses to measure a liability at fair value through profit or loss. In these cases, the
portion of the change in fair value related to changes in the entity’s own credit risk is
presented in other comprehensive income rather than within profit or loss. The
Corporation does not expect this to have a material impact as all financial liabilities
are currently measured at amortised cost.
(ii) AASB 13 ‘Fair Value Measurement’ and related AASB 2011-8 and AASB 2012-1
‘Amendments to Australian Accounting Standards arising from AASB 13’
This is a new accounting standard applicable for annual reporting periods
commencing on or after 1 January 2013. It replaces the guidance on fair value
measurement in existing AASB accounting literature with a single standard. The
AASB defines fair value, provides guidance on how to determine fair value and
requires disclosures about fair value measurements. However, AASB 13 does not
change the requirements regarding which items should be measured or disclosed at
fair value. The Corporation is currently assessing the impact and does not expect
any material changes given that it is already applying the fair value requirements in
existing AASB accounting standards which are not expected to change.
(iii) AASB 1053 ‘Application of Different Tiers of Australian Accounting Standards’,
AASB 2010-2 and AASB 2011-2 ‘Amendments to Australian Accounting Standards
arising from Reduced Disclosure Requirements’
AASB 1053 and AASB 2010-2 arise from the new Reduced Disclosure Regime
requirements. They are applicable to annual reporting periods commencing on or
after 1 July 2013. AASB 1053 establishes a differential financial reporting framework
consisting of two tiers of reporting requirements for preparing general purpose
financial statements. AASB 2010-2 makes amendments to many Australian
Accounting Standards, including interpretations, to introduce reduced disclosure
requirements to the pronouncements for application by certain types of entities.
While the Corporation is currently assessing the impacts, it does not expect any
material changes as it is expected that Tier 1 will be mandated to apply.
(iv) AASB 119 ‘Employee Benefits (2011)’, AASB 2011-10 ‘Amendments to
Australian Accounting Standards arising from AASB 119 (2011)’ and AASB 2011-11
‘Amendments to AASB 119 (September 2011) arising from Reduced Disclosure
Requirements’
The revised version of AASB 119 ‘Employee Benefits’ with revised requirements for
pensions and other post-employment benefits, termination benefits and other
changes is applicable for annual reporting periods commencing on or after 1 January
2013. The key amendments include eliminating the ‘corridor approach’ permitted by
the existing AASB 119, introducing enhanced disclosures about defined benefit
plans and modifying accounting for termination benefits, including distinguishing
benefits provided in exchange for service and benefits provided in exchange for the
termination of employment and affect the recognition and measurement of
termination benefits. Furthermore, the interest cost and expected return on plan
assets used in the previous version of AASB 119 are replaced with a ‘net interest’
amount, which is calculated by applying the discount rate to the net defined benefit
liability or asset. The amendments to AASB 119 require retrospective application.
The Corporation is currently assessing the impacts of this change.
2. Financial risk management objectives and policies
(a) Principal financial instruments
The Corporation’s principal financial instruments comprise of (as per Note 19):
(i) Cash assets;
(ii) Trade debtors and other receivables;
(iii) Creditors, accrual and interest payable;
(iv) Lease liabilities;
(v) Other payables; and
(vi) Borrowings.
(b) Financial risk management objectives
The objectives of the Corporation’s Financial Risk Management Policy and
Guidelines are to:
(i) Manage the daily and long term liquidity needs of the Corporation;
(ii) Optimise cash resources, in such a way as to minimise net financing costs
and maximise the repayment of debt within acceptable levels of risk;
(iii) Ensure that all financial and treasury management operational exposures are
fully identified, quantified, planned, approved and managed; and
(iv) Safeguard the organisation’s financial resources by maintaining appropriate
internal control over the corporate treasury functions.
These objectives are consistent with the Corporate Risk Management Policy and
Framework of the Corporation, the Corporation’s Commercial Management Policy,
the Treasury Management Guidelines issued by DTF and the Victorian Public Sector
Debt Management Objectives.
(c) Financial risk management strategy
The Corporation manages financial risk by maintenance of approved debt portfolio
structure and strategic targets as required by its Financial Risk Management Policy
and Guidelines. This includes:
(i) Portfolio composition (i.e. fixed, floating, indexed exposure): During the financial
year, the Corporation’s debt portfolio was managed within the bands of:
Floating interest rate borrowings 10–40%
Fixed interest rate borrowings 60–90%
(ii) Physical maturity profile:
Debt maturity of fixed and floating interest rate borrowings (excluding 11am account)
is not to exceed 20% of the total debt portfolio in any year.
(iii) Interest rate risk profile:
Fixed and floating interest rate borrowings maturing or to be re-priced within one
year are not to exceed 40% of the total debt portfolio.
Forward rate agreements are used occasionally where it is perceived that a lower
interest rate can be achieved. The purchase of forward agreements is limited in
terms of volume and time, and is subject to a maximum term of 18 months forward.
(d) Financing arrangements
The capacity to borrow funds and manage the associated risks is subject to the
provisions of the Borrowing and Investment Powers Act (1987). In accordance with
this Act, the Treasurer of Victoria issues annual approval, permitting new borrowings
and the refinancing of all loan maturities for that year. All funding is sourced from the
Treasury Corporation of Victoria (TCV).
The Corporation’s total approved maximum borrowing for 2012/13 of $4,249.5 million
(2011/12: $4,166.3 million) was not exceeded at any stage throughout the financial
year.
(e) Capital Management
The Corporation manages its finances in order to maintain a satisfactory gearing
ratio, to provide adequate returns, maintain its current credit rating and to ensure that
it can fund its operations as a going concern.
The Corporation is currently reviewing the strategy adopted to manage its finances
through the implementation of a Financial Sustainability Strategy.
The only externally imposed capital requirements of the Corporation are that:
– financial accommodation does not exceed the approval limits set by the
Treasurer of Victoria pursuant to the Borrowing and Investment Powers
Act 1987; and
– the Corporation, with the exception of a trading account with overdraft
facilities, is required to borrow exclusively with TCV.
The Corporation’s gearing ratio (debt/(debt+equity)) at 30 June 2013 was 66.0%
(2011/12: 45.8%). The increase compared to 2011/12 is mainly attributed to
additional borrowings as a result of the commencement of the Victorian Desalination
Plant finance lease and capital expenditure on projects.
Gearing is one of a number of benchmarks that are considered by the Board when
considering the capital structure and is approved via the Corporate Plan.
(f) Market risk
Market risk is the risk that changes in market prices will affect the fair value of/or
future cash flows of the financial instruments. Market risk is comprised of the
Corporation’s foreign exchange risk, price risk and interest rate risk. The
Corporation’s exposure to market risk is primarily through interest rate risk and the
exposure to price risk is primarily through commodity and energy price risks. There is
insignificant exposure to foreign exchange risks.
Objectives, policies and processes used to manage these risks are disclosed below.
2. Financial risk management objectives and policies (continued)
(f) Market risk (continued)
(i) Foreign exchange risk
Foreign exchange risk arises when future commercial transactions and recognised
assets and liabilities are denominated in a currency that is not the entity’s functional
currency.
It is the Corporation’s policy to hedge the effect of foreign currency exchange rate
movements on the fair values of any transactions in excess of AUD$1 million. The
Corporation’s policy requires all hedging to be undertaken through TCV in the form
of forward foreign exchange contracts. At 30 June 2013, the Corporation did not
have any material forward exchange contracts.
(ii) Price risk
Price risk is the risk that the Corporation will suffer financial loss due to adverse
movements in the price of commodity inputs and/or outputs related to its business
operations. No significant exposure exists within the Corporation’s present operating
framework. Lower level exposures exist and supply and service contracts are
executed as part of the normal course of business to mitigate this risk where
possible.
(iii) Interest rate risk
Interest rate risk is the risk that the organisation will suffer a financial loss due to
adverse movements in interest rates. Exposures arise predominately from liabilities
bearing variable interest rates as the Corporation intends to hold fixed rate liabilities
to maturity. The mix of floating and fixed rate debt is managed strategically within a
range of Board approved parameters, in order to minimise exposure to fluctuations in
variable rates and to minimise the long-term net cost of funding.
(g) Credit risk
Credit risk is the risk of financial loss to the Corporation as a result of a customer or
counterparty to a financial instrument failing to meet its contractual obligations in full
and on the due date. The Corporation’s exposure to credit risk is influenced by the
individual characteristics of each customer.
All receivables are recognised at the amounts receivable less any allowance for
doubtful debts. Receivables are reviewed on an ongoing basis to identify amounts
which cannot be collected. Debts which cannot be collected are written-off. A
provision for doubtful debts is established when there is objective evidence that the
Corporation will not be able to collect all amounts due according to the original terms
of receivables.
The amount of the provision is the difference between the asset’s carrying amount
and the present value of estimated future cash flows, discounted at the effective
interest rate. The amount of the provision is recognised in the Statement of Profit or
Loss and Other Comprehensive Income.
As Trade Debtors are made up predominantly by the metropolitan retail water
businesses, the Corporation’s exposure to credit risk has been assessed to be
minimal. These debtors are invoiced in two parts. The first part is a usage charge
that is invoiced weekly and paid within seven days. The second part is an availability
charge that is invoiced monthly and paid within 14 days.
The major exposure to credit risk arises from Other Receivables, which have been
recognised net of any provision for doubtful debts. The receivable balance consists
of a large number of residential and business customers which are spread across a
diverse range of industries. Receivable balances are monitored on an on-going basis
to ensure that exposure to bad debts is not significant. The Corporation has in place
a policy and procedure for the collection of overdue receivables.
All financial risk management instruments are transacted with TCV, whose liabilities
are guaranteed by the Victorian Government. The Corporation potentially has a
concentration of credit risk with the TCV as the central borrowing authority of
Victoria. This risk is considered minimal.
(h) Liquidity risk
The Corporation manages liquidity risk by maintaining and conducting efficient
banking practices and account structures, sound cash management practices and
regular monitoring of the maturity profile of assets and liabilities, together with
anticipated cash flows.
The Corporation obtains annual approval from the Treasurer for new borrowings,
borrowings to refinance maturing and non-maturing loans and temporary purpose
borrowing facilities. In addition, the Corporation has an overdraft facility of $1 million
with the Westpac Banking Corporation, of which nil was drawn down at 30 June
2013 (2011/12: Nil).
The objective of the Corporation’s financial risk management policies is the optimal
utilisation of cash with all surplus funds repaid in borrowings. This results in a
working capital deficiency of $510.9 million (2011/12: $1,045.0 million) at the end of
the reporting period. The deficiency occurs at a point in time only due to timing of
revenue receipts and does not reflect the permanent situation of the Corporation.
This deficiency is funded by the financing arrangement with TCV and there is no
reason to indicate that the Corporation cannot pay its debts as and when they fall
due.
At 30 June 2013, the Corporation held significant amount of cash as the Corporation
had accessed $200 million of long term Floating Rate Notes (FRNs) to lock in
Financial Accommodation Levy (FAL) at 1.1% on 28 June 2013 effectively repaying
its entire 11AM overnight borrowings and carrying a cash deposit of $145.2 million at
30 June 2013.
The Corporation’s financial liability maturities have been disclosed in Note 19.
3. Revenue
(a)
Notes
2013 $000
2012 $000
Bulk water services
547,619
512,277
Bulk sewerage
services
400,169
406,911
Desalination Plant
rebate*
(14,777)
-
Waterways
charges
220,199
213,845
Total sales
revenue
1,153,210
1,133,033
38,736
56,806
Revenue
Sales revenue
Other revenue
Developer charges
and contributions
Notes
2013 $000
2012 $000
Developer
contributed assets
27,114
30,262
Interest revenue
266
112
Biological assets
305 4,941
Licence fees
2,679
2,556
Bad and doubtful
debt expenses
recovered
-
15
Fees and charges
and other revenue
13,733
3,884
Total other
revenue
82,833
98,576
Total revenue
1,236,043
1,231,609
Notes
2013 $000
2012 $000
23(e)
18,732
-
Net gain on
disposal of
property, plant and
equipment
13,267
4,968
Government
grants**
2,763
3,643
(b) Other income
Defined benefit
superannuation
plan income
Total other
income
34,762
8,611
Total revenue
1,270,805
1,240,220
* Desalination plant rebate
The desalination plant rebate relates to payments made to the retail water
businesses in relation to the early recovery of desalination plant costs in 2011/12.
This is the return required in addition to the price freeze.
** Government grants
Government grants of $2.8 million (2011/12: $3.6 million) were recognised as other
income by the Corporation during 2012/13 for various projects.
All conditions attached to Government grants have been satisfied prior to their
recognition in the Statement of Profit or Loss and Other Comprehensive Income.
The recognition of Government grants with unfulfilled conditions have been
recognised as deferred income (included in advances within trade and other
payables) in the Statement of Financial Position. Any grants relating to assets that
meet the conditions attached are recorded against the asset.
4. Expenses
(a) Depreciation and amortisation expenses
Notes
2013 $000
2012 $000
Buildings
10(c)
947 1,
497
Leasehold
improvements
10(c)
-
293
Plant and
equipment
10(c)
14,076
9,161
Infrastructure
10(c)
241,388
221,216
Depreciation
Notes
2013 $000
2012 $000
10(c)
1,535
1,079
257,946
233,246
assets
Fleet vehicles
Total depreciation
Amortisation
Desalination plant
infrastructure
assets under
finance lease
10(c)
48,023
-
Other infrastructure
assets under
finance leases
10(c)
3,488
2,158
Intangible assets
10(c)
6,444
7,178
Total amortisation
57,955
9,336
Total depreciation
and amortisation
expenses
315,901
242,582
2013 $000
2012 $000
Desalination plant
operating
expenses
86,043
-
Materials,
chemicals and
laboratory
expenses
12,419
12,276
(b) Operational expenses
Notes
Notes
2013 $000
2012 $000
Energy expenses
(including
renewable energy)
24,004
22,903
Agricultural
expenses
204
3,832
Insurance
expenses
5,685
6,030
Transport
expenses
4,699
4,916
Grants and
contributions
expenses
9,822
10,911
External
professional
services expenses
12,458
10,169
Contract works
29,352
29,210
Other expenses
7,586
8,891
Total operational
expenses
192,272
109,138
2013 $000
2012 $000
Salary expenses
64,424
60,115
Post employment
benefits
5,074
6,136
(c) Employee benefits expenses
Notes
Notes
2013 $000
2012 $000
7,864
12,728
-
16,925
Other employee
expenses
9,574
7,558
Total employee
benefits expenses
86,936
103,462
2013 $000
2012 $000
Repairs and
maintenance
67,226
65,949
Information
technology
maintenance
3,862
3,379
Total repairs and
maintenance
expenses
71,088
69,328
2013 $000
2012 $000
10,156
10,852
Annual, long
service and shift
leave expenses
Defined benefit
superannuation
fund expense
23(e)
(d) Repairs and maintenance expenses
Notes
(e) Administrative expenses
Notes
Waterways
charges billings
and collection
Notes
2013 $000
2012 $000
Information
technology and
telecommunication
expenses
14,164
13,117
Legal expenses
2,887
1,859
Education and
training expenses
2,129
2,811
Advertising
expenses
394
267
Other expenses
6,579
7,978
Total
administrative
expenses
36,309
36,884
2013 $000
2012 $000
Interest expense
208,621
214,134
Desalination plant
finance lease
interest
302,512
-
Financial
accommodation
levy
38,201
35,018
Total finance
expenses
549,334
249,152
(f) Finance expenses
Notes
(g) Other expenses
Notes
2013 $000
2012 $000
Government rates
and taxes
(including carbon
price, land tax, FBT
and other)
31,221
26,519
Rental and lease
expenses
6,830
3,183
Bad and doubtful
debt expenses
43
-
Assets written
off/written down*
15,132
25,000
6,570
-
Other expenses
4,249
2,209
Total other
expenses
64,045
56,911
Total expenses
1,315,885
867,457
Impairment
expense
10(c)
* Asset write-offs primarily relate to Drainage Developer Scheme works within a
catchment size of less than 60 hectares that are transferred to Councils for ongoing
maintenance.
5. Income tax
(a) Components of tax benefit/expense
Notes
Current tax
2013 $000
2012 $000
9,110
147,808
Notes
2013 $000
2012 $000
Deferred tax
relating to
temporary
differences
(28,778)
42,458)
Adjustments for
current tax of prior
periods
4,667
(2,506)
Total tax
(benefit)/expense
(15,001)
102,844
(b) Numerical reconciliation of income tax to prima facie tax payable
Notes
2013 $000
2012 $000
(Loss)/profit before
income tax
(45,080)
372,763
Tax at the
Australian tax rate
of 30% (2011/12:
30%)
(13,524)
111,829
Tax effect of
amounts which are
not
deductible/(taxable)
in calculating
taxable income:
Adjustment in
respect of income
tax of previous year
4,667
(2,506)
Non assessable
and non deductible
for income tax
purposes
(2,398)
(1,964)
Notes
2013 $000
2012 $000
Assessable
income/(deductible
expenses) not
booked
(3,128)
48
Research and
development tax
incentive
(618)
(4,563)
Income tax as
reported in the
Statement of
Profit or Loss and
Other
Comprehensive
Income
(15,001)
102,844
2013 $000
2012 $000
Current tax
payable
(2,107)
(45,617)
Total income tax
payable
(2,107)
(45,617)
(c) Income tax payable
Notes
(d) Income tax recognised in other comprehensive income
Notes
2013 $000
2012 $000
Notes
2013 $000
2012 $000
Deferred tax
17
arising on items
recognised in other
comprehensive
income: Decrement
in deferred tax on
infrastructure
assets revalued
(22,742)
-
Reversal of
deferred tax
liabilities on
revaluation of land
17
-
(13,507)
Net value gain on
cash flow hedges
17
5
6
(22,737)
(13,501)
2013 $000
2012 $000
Cash on hand
20
18
Cash at bank
145,153
160
Cash advances
6
50
145,179
228
Total income tax
recognised in
other
comprehensive
income
6. Cash and cash equivalents
Notes
Total cash and
cash equivalents
19
7. Trade and other receivables
(a) Trade and other receivables
Notes
2013 $000
2012 $000
19
53,114
44,462
Other receivables
31,923
19,268
Net GST
receivable from the
Australian Tax
Office
9,947
8,664
Sugarloaf pipeline
security deposit
6,049
5,866
Less: provision for
impaired other
receivables
(59)
(32)
Total other
receivables
47,860
33,766
Total trade and
other receivables
100,974
78,228
Trade debtors
Other receivables
(b) Ageing Analysis of Receivables
All receivables are recognised at the amounts receivable less any allowance for
impaired receivables. Receivables are reviewed on an ongoing basis to identify
debts that cannot be collected. Debts which cannot be collected are written-off.
Current
Past due but not impaired
0–30
days
31–60
days
61–90
days
91
Impaired Total
days +
Notes
$000
$000
$000
$000
$000
$000
Trade
debtors
7(a)
36,961
12,561
3,553
39
-
53,114
Other
receivables
7(a)
35,379
132
5,160
7,248
(59)
47,860
72,340
12,693
8,713
7,287
(59)
100,974
30 June
2013
Receivables
Total
Receivables
Current
Past Due but not Impaired
0–30
days
31–60
days
61–90
days
91
days+
Impaired Total
Notes
$000
$000
$000
$000
$000
Trade
debtors
7(a)
41,980
2,449
10
23
Other
receivables
7(a)
26,483
477
19
6,819
(32)
33,766
68,463
2,926
29
6,842
(32)
78,228
30 June
2012
$000
Receivables
Total
Receivables
44,462
8. Other current assets
Notes
2013 $000
2012 $000
Prepayments
2,630
2,057
Stores
6,507
5,882
Total other
current assets
9,137
7,939
9. Non-current assets classified as held for sale
Notes
2013 $000
2012 $000
Property, plant and
equipment – held
for sale*
4,513
11,242
Total assets
classified as held
for sale
4,513
11,242
* The Corporation currently holds 65 lots of land for sale mainly as part of the
Riverwalk (Western Treatment Plant) development.
These lots were being marketed for private sale by Places Victoria during the
2012/13 financial year.
At 30 June 2013, these lots were still on the market and an active program is
underway to locate buyers.
The 36 lots of surplus land recorded as held for sale at 30 June 2012 were mainly
part of the Riverwalk development and 22 were sold in the 2012/13 financial year
and are no longer recorded within held for sale assets. The remaining lots are still on
the market and an active program is underway to locate buyers at 30 June 2013.
10. Property, plant and equipment and intangible assets
(a) Classes of property, plant and equipment
Notes
2013 $000
2012 $000
133,973
133,867
133,973
133,867
1,033,794
1,023,058
1,033,794
1,023,058
Buildings at fair
value
21,102
22,890
Less: accumulated
depreciation
(2,912)
(2,023)
18,190
20,867
Plant and
equipment at fair
value
89,956
83,303
Less: accumulated
depreciation
(73,100)
(63,118)
Crown land
Crown land at fair
value
Total Crown land
(i)
Freehold land
Freehold land at
fair value
Total freehold
land
(i)
Buildings
Total buildings
(i)
Plant and
equipment
Notes
2013 $000
2012 $000
16,856
20,185
Fleet vehicles at
fair value
11,286
7,373
Less: accumulated
depreciation
(3,435)
(1,900)
Total fleet
vehicles
7,851
5,473
7,859,478
7,644,065
Total plant and
equipment
Fleet vehicles
Infrastructure
assets
Infrastructure
assets at fair value
Less: accumulated
depreciation
Sub total
infrastructure
assets
(215,173)
7,859,478
Infrastructure
assets under
finance lease
Desalination plant
20(g)*
assets under
finance lease at fair
value
4,662,793
7,428,892
Notes
2013 $000
Less: desalination
plant assets
accumulated
amortisation
(48,023)
Other infrastructure
assets under
finance lease at fair
value
11,303
Less: other
infrastructure
assets
accumulated
amortisation and
impairment
2012 $000
39,490
(2,158)
Sub total finance
lease
4,626,073
37,332
12,485,551
7,466,224
Capital works in
progress
510,246
1,251,015
Total property,
plant and
equipment
14,206,461
9,920,689
Total
infrastructure
assets
(ii)
* Total desalination plant assets under finance lease at fair value are higher than the
finance lease liability recorded at 20(g) as the liability reflects the net of principal
repayments and other capital payments already made to 30 June 2013.
10. Property, plant and equipment and intangible assets
(continued)
(a) Classes of property, plant and equipment (continued)
(i) Valuations of land and buildings
A valuation of the Corporation’s land and buildings was performed internally by
management in 2012/13 to determine the fair value of the land and buildings using
Valuer General Victoria (VGV) postcode and building/land use indices.
This valuation indicated that the fair value of land and buildings has not materially
changed from the last independent valuation of the Corporations’ land and buildings
which was performed by the VGV in 2010/11.
If land and buildings were measured at historical cost, the carrying amounts would
be as follows:
2013 $000
2012 $000
Land
784,705
768,770
Buildings
25,749
25,195
Total
810,454
793,965
(ii) Valuations of infrastructure assets
The fair value of infrastructure assets has been determined independently by
Deloitte Touche Tohmatsu at 30 June 2013, using the ‘income approach’
(discounted cash flow) method. The discounted cash flow method estimates fair
market value by discounting reliable estimates of future cash flows to their present
values. The significant assumptions used in determining fair value at 30 June 2013
are summarised below:
– Nominal after tax discount rate in the range of 6.0% to 6.5% (2011/12:
6.0% to 6.5%)
– Long term inflation of 2.5%
– 10 year valuation model life (based on two Water Plan periods, one
known and one estimated)
The 2012/13 valuation resulted in a decrement of $71.1 million compared to the
managerial valuation in 2011/12.
If infrastructure assets were measured at historical cost, the carrying amount would
be as follows:
2013 $000
2012 $000
Infrastructure assets –
Owned
5,443,445
4,871,778
Infrastructure assets –
Under finance lease
4,627,994
20,910
Total
10,071,439
4,892,688
(iii) Impairment
Property, plant and equipment is assessed for indicators of impairment on an annual
basis. At 30 June 2013, the Eastern Irrigation Scheme Interim Treatment Plant was
identified as impaired. The total impairment expense identified for the Eastern
Irrigation Scheme Treatment Plant was $5.9M.
(b) Intangible assets*
2013 $000
2012 $000
Intangible assets at cost
47,742
46,122
Less: accumulated
amortisation and
impairment
(36,332)
(30,319)
Total intangible assets
11,410
15,803
* Intangibles assets consist primarily of information technology software and
renewable energy certificates.
Impairment
Intangible assets are assessed for indicators of impairment on an annual basis. At
30 June 2013, Renewable Energy Certificates were identified as impaired. The total
impairment expense identified for the Renewable Energy Certificates was $0.7M. 96
Melbourne Water Annual Report 2012–13
10. Property, plant and equipment and intangible assets (continued)
(c) (i) Reconciliation of movement in property, plant and equipment and intangible assets for 2012/13
2012/13
Crow
n
land
at fair
value
$000
Freeho
ld land
at fair
value
$000
Carrying
amount at
1July
2012
133,8
67
Additions
158
Disposals
and writeoffs
(52)
Leasehold
improvem
ents at fair
value $000
Plant
and
equipm
ent at
fair
value
$000
Fleet
vehicl
es at
fair
value
$000
Infrastruct
ure assets
at fair
value
$000
Infrastruct
ure assets
under
finance
lease at
fair value
$000
Capital
works
in
progres
s $000
1,023,0 20,867
58
-
20,185
5,473
7,428,892
37,332
1,251,01 9,920,68
5
9
15,803
18,880
415
-
11,699
4,297
744,922
4,662,793
-
5,443,16
4
3,257
(2,204)
-
(141)
(384)
(15,070)
-
-
(32,724)
-
(14,873
)
Buildin
gs at
fair
value
$000
Total
$000
Intangi
ble
assets
at cost
$000
2012/13
Crow
n
land
at fair
value
$000
Freeho
ld land
at fair
value
$000
Buildin
gs at
fair
value
$000
Leasehold
improvem
ents at fair
value $000
Depreciati
on and
amortisati
on
-
-
(947)
-
Transfers
between
classes
-
-
59
Assets
classified
as held
for sale
-
6,729
-
Plant
and
equipm
ent at
fair
value
$000
Fleet
vehicl
es at
fair
value
$000
Infrastruct
ure assets
at fair
value
$000
Infrastruct
ure assets
under
finance
lease at
fair value
$000
Capital
works
in
progres
s $000
Total
$000
Intangi
ble
assets
at cost
$000
(241,388)
(51,511)
-
(309,457 (6,444)
)
(14,076)
(1,535
)
-
(811)
-
13,196
(11,885)
-
559
(559)
-
-
-
-
-
-
6,729
-
2012/13
Crow
n
land
at fair
value
$000
Freeho
ld land
at fair
value
$000
Buildin
gs at
fair
value
$000
Leasehold
improvem
ents at fair
value $000
Plant
and
equipm
ent at
fair
value
$000
Fleet
vehicl
es at
fair
value
$000
Infrastruct
ure assets
at fair
value
$000
Infrastruct
ure assets
under
finance
lease at
fair value
$000
Capital
works
in
progres
s $000
Total
$000
Intangi
ble
assets
at cost
$000
Revaluati
on
decremen
ts
-
-
-
-
-
-
(71,074)
(4,733)
-
(75,807)
-
Impairme
nt losses
-
-
-
-
-
-
-
(5,923)
-
(5,923)
(647)
Capital
expenditu
re
-
-
-
-
-
-
-
-
331,121
331,121
-
Capitalisa
tion of
works in
progress
-
-
-
-
-
-
-
-
(1,071,8
90)
(1,071,8
90)
-
2012/13
Crow
n
land
at fair
value
$000
Freeho
ld land
at fair
value
$000
Buildin
gs at
fair
value
$000
Carrying
amount
at 30
June
2013
133,9
73
1,033,7 18,190
94
Leasehold
improvem
ents at fair
value $000
Plant
and
equipm
ent at
fair
value
$000
Fleet
vehicl
es at
fair
value
$000
Infrastruct
ure assets
at fair
value
$000
Infrastruct
ure assets
under
finance
lease at
fair value
$000
Capital
works
in
progres
s $000
Total
$000
Intangi
ble
assets
at cost
$000
-
16,856
7,851
7,859,478
4,626,073
510,246
14,206,4 11,410
61
(ii) Reconciliation of movement in property, plant and equipment and intangible assets for 2011/12
2011/12
Crown
land
at fair
value
$000
Freehol
d land
at fair
value
$000
Buildin
gs at
fair
value
$000
Leasehold
improveme
nts at fair
value $000
Plant
and
equipme
nt at fair
value
$000
Fleet
vehicles
at fair
value
$000
Infrastruct
ure assets
at fair
value
$000
Infrastruct
ure assets
under
finance
lease at
fair value
$000
Capital
works
in
progres
s $000
Total
$000
Intangib
le
assets
at cost
$000
2011/12
Crown
land
at fair
value
$000
Freehol
d land
at fair
value
$000
Buildin
gs at
fair
value
$000
Leasehold
improveme
nts at fair
value $000
Plant
and
equipme
nt at fair
value
$000
Fleet
vehicles
at fair
value
$000
Infrastruct
ure assets
at fair
value
$000
Infrastruct
ure assets
under
finance
lease at
fair value
$000
Capital
works
in
progres
s $000
Total
$000
Intangib
le
assets
at cost
$000
Carrying
amount at
1 July
2011
133,7
74
1,007,9
21
19,552
293
17,338
3,949
6,700,6
57
39,490
1,702,921
9,625,8
95
13,056
Additions
-
26,620
2,813
-
12,175
2,603
973,917
-
-
1,018,1
28
9,642
Disposals
and writeoffs
-
(3,085)
(1)
-
(167)
-
(22,428)
-
(425)
(26,106
)
(1,755)
Depreciati
on and
amortisatio
n
-
-
(1,497)
(293)
(9,161)
(1,079)
(221,216)
(2,158)
-
(235,40
4)
(7,178)
2011/12
Crown
land
at fair
value
$000
Freehol
d land
at fair
value
$000
Buildin
gs at
fair
value
$000
Leasehold
improveme
nts at fair
value $000
Plant
and
equipme
nt at fair
value
$000
Fleet
vehicles
at fair
value
$000
Infrastruct
ure assets
at fair
value
$000
Infrastruct
ure assets
under
finance
lease at
fair value
$000
Capital
works
in
progres
s $000
Total
$000
Intangib
le
assets
at cost
$000
Transfers
between
classes
93
(93)
-
-
-
-
(2,038)
-
-
(2,038)
2,038
Assets
classified
as held for
sale
-
(8,305)
-
-
-
-
-
-
-
(8,305)
-
Revaluatio
n
increments
-
-
-
-
-
-
-
-
-
-
-
Capital
expenditur
e
-
-
-
-
-
-
-
-
547,110 547,110
-
2011/12
Crown
land
at fair
value
$000
Freehol
d land
at fair
value
$000
Buildin
gs at
fair
value
$000
Leasehold
improveme
nts at fair
value $000
Plant
and
equipme
nt at fair
value
$000
Fleet
vehicles
at fair
value
$000
Infrastruct
ure assets
at fair
value
$000
Infrastruct
ure assets
under
finance
lease at
fair value
$000
Capital
works
in
progres
s $000
Capitalisati
on of
works in
progress
-
-
-
-
-
-
-
-
(998,59
1)
Carrying
amount at
30 June
2012
133,8
67
1,023,0
58
20,867
-
20,185
5,473
7,428,892
37,332
1,251,0
15
Total
$000
Intangib
le
assets
at cost
$000
(998,59
1)
9,920,6
89
15,803
11. Trade and other payables
(a) Current
Notes
2013 $000
2012 $000
Creditors
52,567
42,144
Interest payable
63,472
62,928
Accruals – Other
186,612
33,719
Accruals – Capital
68,728
112,309
Other payables
11,390
13,209
Total trade and
other payables –
current
382,769
264,309
2013 $000
2012 $000
Other payables
1,663
1,701
Total trade and
other payables –
non current
1,663
1,701
Total trade and
other payables 1
9 384,432
266,010
(b) Non-current
Notes
12. Interest bearing liabilities
(a) Current
Desalination plant
and other lease
liabilities
Notes
2013 $000
2012 $000
20 (d),(g)
60,395
535
295,000
788,800
19
355,395
789,335
Notes
2013 $000
2012 $000
20 (d),(g)
4,264,893
5,753
3,845,000
3,040,000
8,109,893
3,045,753
8,465,288
3,835,088
Borrowings*
Total interest
bearing liabilities
– current
(b) Non-current
Desalination plant
and other lease
liabilities
Borrowings*
Total interest
bearing liabilities
– non-current
Total interest
bearing
liabilities**
19
* Current and non-current borrowings comprise both fixed and floating interest rate
notes depending on the dates of maturity.
** Interest bearing liabilities are unsecured (note – The Victorian Government does
provide a guarantee to TCV over its liabilities as detailed in note 2(g)).
13. Provisions (excluding employee benefits)
(a) Current
2013 $000
2012 $000
Insurance claims
2,234
1,783
Remediation works
655
-
Gainshare on capital
projects
-
13,363
Other provisions
290
1,815
Total provisions –
current
3,179
16,961
2013 $000
2012 $000
Insurance claims
1,476
1,082
Total provisions – non
current
1,476
1,082
Total provisions
4,655
18,043
(b) Non-current
(c) Movements in provisions
Carrying
amount at 1
July 2012
Insurance
Claims
Remediation Gainshare
Works
on Capital
Projects
Other
Provisions
Total
$000
$000
$000
$000
$000
2,865
-
13,363
1,815
18,043
Insurance
Claims
Remediation Gainshare
Works
on Capital
Projects
Other
Provisions
Total
Additional
provisions
recognised
1,247
655
19,588
175
21,665
Amounts
utilised
during the
year (402)
(402)
-
(18,363)
(1,700)
(20,465)
Amounts
transferred
to accruals
-
-
(14,588)
-
(14,588)
Carrying
amount at
30 June
2013
3,710
655
-
290
4,655
Insurance
Claims
Remediation Gainshare
Works
on Capital
Projects
Other
Provisions
Total
$000
$000
$000
$000
$000
Carrying
amount at 1
July 2011
613
514
68,618
2,553
72,298
Additional
provisions
recognised
2,744
396
14,289
395
17,824
Insurance
Claims
Remediation Gainshare
Works
on Capital
Projects
Other
Provisions
Total
Amounts
utilised
during the
year
(492)
(910)
(69,544)
(1,133)
(72,079)
Carrying
amount at
30 June
2012
2,865
-
13,363
1,815
18,043
(i) Insurance Claims
The amount represents a provision for public liability, motor vehicle and property
claims. The amount classified as current is expected to be settled within 12 months.
The amount classified as non-current is expected to be settled later than 12 months.
The provision amounts are based on an independent assessment of claim costs.
(ii) Remediation Works
The amount represents remediation works at the Riverwalk Estate at Werribee.
(iii) Gainshare on Capital Projects
The amount represents a provision for ‘gainshare’ on capital projects.
(iv) Other Provisions
The amount represents other provisions that satisfy the recognition requirements of
AASB 137 Provisions, Contingent Liabilities and Contingent Assets. The amount is
based on legal advice and is expected to be settled within 12 months.
14. Net deferred tax liabilities – non-current
The balance comprises temporary differences attributable to:
Notes
2013 $000
2012 $000
Notes
2013 $000
2012 $000
Property, plant and
equipment
414,600
440,467
Employee
entitlements
(8,578)
(8,421)
Developer
contributions
9,674
12,022
Finance lease
(1,726)
2,325
Defined benefit
obligation
151
(6,596)
Provisions
(1,512)
(1,703)
Revenue in
advance
(1,139)
(1,414)
Other
(1,936)
(1,761)
Total recognised
in Profit or Loss
409,534
434,919
Amounts
recognised in
Profit or Loss
Amounts recognised in Other Comprehensive Income
Notes
Gain on revaluation
of land and
buildings
2013 $000
2012 $000
15,366
15,366
Net gain on
revaluation of
infrastructure
assets
799,552
822,295
Net value loss on
cash flow hedges
-
(5)
Total recognised
in Other
Comprehensive
Income
814,918
837,656
Net deferred tax
liability
1,224,452
1,272,575
2013 $000
2012 $000
Opening balance at
1 July 2013
1,272,575
1,326,930
Credited to Profit or
Loss
(28,778)
(42,459)
(22,737)
(13,501)
Adjustment in
respect of deferred
tax of prior period
3,392
1,605
Closing balance
at 30 June 2013
1,224,452
1,272,575
Movements
Notes
Debited to Other
Comprehensive
Income
5(d)
Notes
2013 $000
2012 $000
Net Deferred tax
liabilities to be
recovered after
more than 12
months
1,233,105
1,280,841
Net Deferred tax
liabilities to be
recovered within 12
months
(8,653)
(8,266)
Total non-current
liabilities –
Deferred tax
liabilities
1,224,452
1,272,575
2013 $000
2012 $000
Accrued salaries
667
611
Employee benefits
expected to be
settled within 12
months after the
end of the period
measured at
nominal value
6,946
6,778
Long service leave
representing more
than 7 years of
continuous service
measured at
present value
18,526
17,975
15. Employee benefits
(a) Current liabilities
Notes
Notes
2013 $000
2012 $000
Other employee
benefits
1,107
1,042
Total employee
benefits liability –
current
27,246
26,406
Notes
2013 $000
2012 $000
23(d)
504
-
504
-
2013 $000
2012 $000
Other employee
benefits
5,300
6,003
Long service leave
representing less
than 7 years of
continuous service
measured at
present value
3,254
3,380
-
21,988
(b) Current assets
Defined benefit
superannuation
asset
Total employee
benefits asset –
current
(c) Non-current liabilities
Notes
Defined benefit
superannuation
liability
23(d)
Notes
2013 $000
2012 $000
Total employee
benefits liability –
non current
8,554
31,371
Net employee
benefits liability
35,296
57,777
The aggregate employee benefit liability includes amounts for annual leave, shift
leave, long-service leave, salaries,
Work Cover, superannuation and termination benefits.
(i) Work Cover
Based upon an independent actuarial assessment, a provision of $5.8 million
(2011/12: $5.2 million) has been made for outstanding claims incurred and not
settled, and for claims incurred but not reported at 30 June 2013.
The value of the bank guarantee to the Victorian Work Cover Authority (as part of the
Corporation’s Work Cover self insurance commitments) at 30 June 2013 is $8.9
million (2011/12: $8.9 million).
(ii) Workers Compensation
Based on an independent actuarial assessment, a provision of $0.6 million ($1.0
million in 2011/12) has been made for all outstanding workers compensation claims
at 30 June 2013.
16. Contributed equity
Notes
Opening balance
Capital
transactions with
the State in its
capacity as owner
arising from:
2013 $000
2012 $000
559,116
559,952
Notes
2013 $000
2012 $000
Adjustments
relating to the
transfers of Crown
assets (to)/from the
Government
57
(836)
Total contributed
equity at the end
of the year
559,173
559,116
2013 $000
2012 $000
384,374
373,168
17. Reserves
Asset revaluation reserve
Notes
Land
Opening balance
Revaluation
reserves
transferred to
retained profits on
derecognition of
asset
18
(6,912)
(2,301)
Decrement in
deferred tax on
asset revaluation
14
-
13,507
377,462
384,374
2013 $000
2012 $000
Closing balance
Buildings
Notes
Notes
2013 $000
2012 $000
Opening balance
677
677
Closing balance
677
677
1,918,685
1,918,685
(75,807)
-
Decrement in
deferred tax on
asset revaluation
22,742
-
Closing balance
1,865,620
1,918,685
Closing balance
(total asset
revaluation
reserve)
2,243,759
2,303,736
Infrastructure
assets
Opening balance
Revaluation
decrease on
infrastructure
assets
10(c)
Summary of movements in asset revaluation reserve
Notes
2013 $000
2012 $000
Opening balance
2,303,736
2,292,530
Revaluation
decrement on noncurrent physical
assets
(75,807)
-
Notes
2013 $000
2012 $000
Revaluation
reserves
transferred to
retained profits on
derecognition of
asset
(6,912)
(2,301)
Decrement in
deferred tax on
asset revaluation
22,742
13,507
Closing balance
(total asset
revaluation
reserve)
2,243,759
2,303,736
The asset revaluation reserve is used to record asset revaluation increments and
decrements in the value of non-current physical assets.
Cash flow hedge reserve
Notes
2013 $000
2012 $000
Opening balance
(12)
(26)
Gain taken to
equity
7
9
Decrement in
deferred tax on
cash flow hedges
5
5
Closing balance
-
(12)
Notes
2013 $000
2012 $000
2,243,759
2,303,724
2013 $000
2012 $000
Retained profits at
the beginning of
the year
1,676,179
1,522,359
Net (loss)/profit for
the period after tax
(30,079)
269,919
Transfer from asset 17
revaluation reserve
6,912
2,301
Dividends
payable/paid
(94,500)
(118,400)
1,558,512
1,676,179
The cash flow
hedge reserve
represents the gain
or loss on
conversion to
Australian dollars
of the cash flow
hedge.
Total reserves at
the end of the
year
18. Retained profits
Notes
22
Retained profits
at the end of the
year
19. Financial Instruments
Financial instruments are shown exclusive of GST
(a) Categorisation of financial instruments
Derivative
Contractual Contractual Total
financial
financial
financial
carrying
instruments assets –
liabilities at Amount
loans and
amortised
receivables cost
30 June
2013
Notes
$000
$000
$000
$000
Cash
6
-
145,179
-
145,179
Trade
debtors
7
-
53,114
-
53,114
Other
receivables
7
-
37,913
-
37,913
Total
financial
assets
-
236,206
-
236,206
Financial
assets
Financial liabilities
Notes
Derivative
financial
instruments
Contractua
l financial
assets –
loans and
receivables
Contractual
financial
liabilities at
amortised
cost
Total
carrying
Amount
Trade and
other
payables
11
-
-
(384,432)
(384,432)
Desalination
plant lease
liabilities
12
-
-
(4,319,537)
(4,319,537)
Notes
Derivative
financial
instruments
Contractua
l financial
assets –
loans and
receivables
Contractual
financial
liabilities at
amortised
cost
Total
carrying
Amount
12
-
-
(5,751)
(5,751)
11am
overnight
loans
12
-
-
-
-
Floating
rate notes
12
-
-
(440,000)
(440,000)
Fixed
interest
12
-
-
(3,700,000)
(3,700,000)
Total
financial
liabilities
-
-
(8,849,720)
(8,849,720)
Other lease
liabilities
Borrowings
Financial instruments are shown exclusive of GST
(a) Categorisation of financial instruments (continued)
Derivative
Contractual Contractual Total
financial
financial
financial
carrying
instruments assets –
liabilities at Amount
loans and
amortised
receivables cost
30 June
2012
Financial
assets
Notes
$000
$000
$000
$000
Derivative
Contractual Contractual Total
financial
financial
financial
carrying
instruments assets –
liabilities at Amount
loans and
amortised
receivables cost
30 June
2012
Notes
$000
$000
$000
$000
Cash
6
-
228
-
228
Trade
debtors
7
-
44,462
-
44,462
Other
receivables
7
-
25,102
-
25,102
Total
financial
assets
-
-
69,792
-
69,792
11
-
-
(266,010)
-
-
-
-
-
(6,288)
Financial
liabilities
Trade and
other
payables
Desalination
plant lease
liabilities
Lease
liabilities
Borrowings
12
(266,010)
(6,288)
Derivative
Contractual Contractual Total
financial
financial
financial
carrying
instruments assets –
liabilities at Amount
loans and
amortised
receivables cost
30 June
2012
Notes
$000
$000
$000
$000
11am
overnight
loans
12
-
-
(568,800)
(568,800)
Floating
rate notes
12
-
-
(80,000)
(80,000)
Fixed
interest
12
-
-
(3,180,000)
(3,180,000)
Total
financial
liabilities
-
-
(4,101,098)
(4,101,098)
(b) Net holding gain/(loss) on financial instruments by category
Net
Total
Fee
Impairment Total
holding
interest
income/
loss
gain/(loss) income/
(expense)
(expense)
30 June
2013
Notes
$000
$000
$000
103
-
$000
$000
Financial
assets
Financial
assets
-
103
Net
Total
Fee
Impairment Total
holding
interest
income/
loss
gain/(loss) income/
(expense)
(expense)
30 June
2013
Notes
$000
$000
$000
$000
Derivative
financial
instruments
-
-
-
-
-
Total
financial
assets
-
103
-
(549,334)
-
$000
103
Financial
liabilities
Financial
liabilities at
amortised
cost
4(f)
Total
financial
liabilities
-
-
(549,334)
(549,334)
-
(549,334)
Financial instruments are shown exclusive of GST
(b) Net holding gain/(loss) on financial instruments by category (continued)
Net
Total
Fee
Impairment Total
holding
interest
income/
loss
gain/(loss) income/
(expense)
(expense)
30 June
2012
Notes
$000
$000
$000
$000
$000
Net
Total
Fee
Impairment Total
holding
interest
income/
loss
gain/(loss) income/
(expense)
(expense)
30 June
2012
Notes
$000
$000
$000
$000
$000
45 -
-
45
Financial
assets
Financial
assets
-
Derivative
financial
instruments
9
-
-
9
Total
financial
assets
9
-45
-
54
-
(249,152)
-
(249,152)
-
Financial
liabilities
Financial
liabilities at
amortised
cost
4(f)
Total
financial
liabilities
-
(c) Interest rate exposure
Interest rate exposure
-
(249,152)
(249,152)
Weighted Floating
average
interest
interest
rate
30 June
2013
Fixed
interest
Non
interest
bearing
Total
carrying
Amount
Notes %
$000
$000
$000
$000
Cash
6
2.70
145,179
-
-
145,179
Trade
debtors
7
-
-
-
53,114
53,114
Other
receivables
7
2.70
6,049
-
31,864
37,913
-
151,228
84,978
236,206
-
-
(384,432)
(384,432)
Financial
assets
Total
financial
assets
Financial
liabilities
Trade and
other
payables
11
-
Desalination 12
plant lease
liabilities*
11. 29
(4,319,537)
(4,319,537)
Other lease
liabilities
11.03
(5,751)
(5,751)
Borrowings
Interest rate exposure
Weighted Floating
average
interest
interest
rate
Fixed
interest
Non
interest
bearing
Total
carrying
Amount
11am
overnight
loans
12
2.95
-
-
-
-
Floating
rate notes
12
2.92
(440,000)
-
-
(440,000)
Fixed
interest
12
5.44
-
(3,700,000)
-
(3,700,000)
(440,000)
(8,025,288) (384,432)
Total
financial
liabilities
(8,849,720)
* The weighted average interest rate for lease liabilities is the interest rate implicit in
the lease.
Financial instruments are shown exclusive of GST
(c) Interest rate exposure (continued)
30 June
2012
Weighted
average
interest
rate
Floating
interest
Fixed
interest
Non
interest
bearing
Total
carrying
Amount
Notes
%
$000
$000
$000
$000
6
4.28
228
-
-
228
Financial
assets
Cash
Weighted
average
interest
rate
Floating
interest
Non
interest
bearing
Total
carrying
Amount
44,462
44,462
19,236
25,102
6,094
63,698
69,792
-
-
(266,010) (266,010)
Desalination plant lease
liabilities*
-
-
-
Lease
liabilities
12
11.03
-
(6,288)
-
(6,288)
11am
overnight
loans
12
3.67
(568,800)
-
-
(568,800)
Floating
rate notes
12
3.36
(80,000)
-
-
(80,000)
Trade
debtors
7
-
-
Other
receivables
7
3.45
5,866
Total
financial
assets
Fixed
interest
-
Financial
liabilities
Trade and
other
payables
11
Borrowings
Fixed
interest
12
Weighted
average
interest
rate
Floating
interest
Fixed
interest
Non
interest
bearing
Total
carrying
Amount
5.86
-
(3,180,000)
-
(3,180,000)
Total
financial
liabilities
(648,800) (3,186,288) (266,010) (4,101,098)
Financial instruments are shown exclusive of GST
(d) Fair value
The carrying amounts and net fair values of financial assets and liabilities at
balance date are:
Book value
$000
Net fair value*
$000
Book value
$000
Net fair value*
$000
Cash
145,179
145,179
228
228
Trade debtors
53,114
53,114
44,462
44,462
Other
receivables
37,913
37,913
25,102
25,102
236,206
69,792
69,792
(384,432)
(266,010)
(266,010)
Financial
assets
Total financial 236,206
assets
Financial
liabilities
Trade and
other payables
(384,432)
Book value
$000
Net fair value*
$000
Book value
$000
Net fair value*
$000
Desalination
plant finance
lease liability
(4,319,537)
(4,319,537)
-
-
Other lease
liabilities
(5,751)
(5,751)
(6,288)
(6,288)
11am
overnight loans
-
-
(568,800)
(568,672)
Floating rate
notes
(440,000)
(440,005)
(80,000)
(80,016)
Fixed interest
(3,700,000)
(4,025,339)
(3,180,000)
(3,576,151)
Total financial (8,849,720)
liabilities
(9,175,064)
(4,101,098)
(4,497,137)
Financial
assets
Borrowings
*Net book values are capital amounts. The differences between book values and net
fair values relate principally to interest rate movements.
Net fair values of financial instruments are determined as follows:
Cash, deposit investments, short-term borrowings, cash equivalents and noninterest-bearing financial assets and liabilities (trade debtors and trade creditors) are
valued at cost. Interest bearing liabilities are estimated based on the present value of
expected future cash flows discounted at current market interest rates quoted for
securities issued by TCV or interest rates implicit in the lease for finance leases.
Derivative financial instruments are measured at fair value.
The fair value of the desalination plant finance lease liability has been determined by
the Department of Environment and Primary Industries (DEPI) in accordance with
the requirements of the relevant accounting standards.
Financial instruments are shown exclusive of GST
(e) Maturity analysis of financial liabilities
The following table discloses the contractual maturity analysis for the Corporation’s
financial liabilities. The amounts disclosed in the table are the contractual
undiscounted cash flows.
30 June
2013
Total
carrying
Amount
$000
Total
contractual
cash flows
$000
1 year or
less $000
1 to 5 years
$000
Over 5
years $000
Noninterest
bearing
(384,432)
(384,432)
(382,769)
(1,663)
-
Variable
rate
(440,000)
(559,440)
(41,168)
-
(518,272)
Fixed rate
(8,025,288) (18,512,476) (336,086)
(3,879,913) (14,296,477)
Total
financial
liabilities
(8,849,720) (19,456,348) (760,023)
(3,881,576)
(14,814,749)
30 June
2012
Total
carrying
Amount
$000
Financial
liabilities
Total
contractual
cash flows
$000
1 year or
less $000
1 to 5 years
$000
Over 5
years $000
(266,010)
(264,309)
(1,701)
-
Financial
liabilities
Non-interest (266,010)
bearing
30 June
2012
Total
carrying
Amount
$000
Total
contractual
cash flows
$000
1 year or
less $000
1 to 5 years
$000
Over 5
years $000
Variable
rate
(648,800)
(676,640)
(630,990)
(45,650)
-
Fixed rate
(3,186,288)
(4,408,713)
(191,145)
(1,394,148)
(2,823,420)
Total
financial
liabilities
(4,101,098)
(5,351,363)
(1,086,444)
(1,441,499)
(2,823,420)
Financial
liabilities
(f) Interest rate risk sensitivity analysis
Exposures arise predominately from liabilities bearing variable interest rates as the
Corporation intends to hold fixed rate liabilities to maturity. At 30 June 2013, if
interest rates had changed by +/- 50 basis points from the year end rates with all
other variables held constant, the net loss after tax and the impact on equity would
have changed by the amounts shown below.
Profit or Loss
Equity
-50 basis
points
+50 basis
points
-50 basis
points
+50 basis
points
30 June 2013
$M
$M
$M
$M
Cash
-
-
-
-
Interest
Bearing
Liabilities
(2.8)
2.8
(2.8)
2.8
Profit or Loss
Equity
-50 basis
points
+50 basis
points
-50 basis
points
+50 basis
points
(2.8)
2.8
(2.8)
2.8
Cash
-
-
-
-
Interest
Bearing
Liabilities
(3.6)
3.6
(3.6)
3.6
Total
(3.6)
3.6
(3.6)
3.6
Total
30 June 2012
Financial instruments are shown exclusive of GST
(a) Capital commitments
Total capital expenditure contracted for the construction of water, sewerage and
waterways and drainage infrastructure at 30 June 2013 but not provided for in the
accounts:
Property, plant and
equipment payable:
2013 $000
2012 $000
Within one year
58,378
107,575
Later than one year but
not later than five years
363
7,097
Total capital
commitments
58,741
114,672
(b) Operating lease commitments
(i) Melbourne Water as lessee
The Corporation leases buildings and motor vehicles under non-cancellable
operating leases.
The building lease agreements have varying terms, escalation clauses and renewal
rights. On renewal, the terms of the leases are renegotiated. Commitments for
minimum lease payments in relation to non-cancellable operating leases are payable
as follows:
2013 $000
2012 $000
Within one year
8,305
7,594
Later than one year but
not later than five years
35,171
32,909
Later than five years
100,458
107,962
Total operating lease
commitment
143,934
148,465
There are no lease incentives on non-cancellable operating leases included in trade
creditors at 30 June 2013 (2011/12: Nil).
(ii) Melbourne Water as lessor
Operating leases relate to land owned by the Corporation. All operating lease
contracts contain market review clauses.
The lessee does not have an option to purchase the land at the expiry of the lease
period.
Commitments for minimum lease payments in relation to non-cancellable operating
leases are receivable as follows:
2013 $000
2012 $000
Within one year
1,284
1,309
Later than one year but
not later than five years
2,013
2,158
Later than five years
435
274
Total operating lease
commitment
3,732
3,741
(c) Smart Water Fund
The Corporation has a commitment to the Victorian Government’s Smart Water
Fund. The Smart Water Fund was established by the Victorian Government and is
managed by the Corporation and the three retail water businesses for the purpose of
providing grant funding to support the development of sustainable water use
projects.
2013 $000
2012 $000
Within one year
1,000
1,000
Later than one year but
not later than five years
2,000
4,000
Later than five years
-
-
Total operating lease
commitment
3,000
5,000
20. Commitments
Commitments are shown inclusive of GST except for finance lease liabilities.
(d) Finance lease commitments (excluding Victorian Desalination Project)
The Corporation has a finance lease agreement with TopAq Pty Ltd. The agreement
involves the development of a water recycling project that uses effluent sourced from
the Corporation’s Eastern Treatment Plant and treats this effluent to produce and
supply Class A Water to customers in the project area.
Commitments in relation to finance lease are payable as follows:
Within one year
2013 $000
2012 $000
5,960
1,203
2013 $000
2012 $000
Later than one year but
not later than five years
-
4,810
Later than five years
-
3,406
Minimum lease payments
5,960
9,419
Less: Future finance
charges
(209)
(3,131)
Total finance lease
liability
5,751
6,288
Representing finance lease liability:
Current (refer to note 12a)
5,751
535
Non-current (refer to note
12b)
-
5,753
Total finance lease
liability
5,751
6,288
(e) Other operating commitments
Total operating expenditure (excluding leases) contracted for at balance date but not
provided for in the accounts is payable as follows:
2013 $000
2012 $000
Not later than one year
15,097
13,965
Later than one year but
not later than five years
18,461
18,645
Later than five years
11,649
20,289
Total other operating
commitments
45,207
52,899
(f) Build, Own and Operate (BOO) commitments
The Corporation has allocated a parcel of land at the Western Treatment Plant
(WTP) for the operation of a 9.2 Gigawatt biogas electricity generation plant,
managed under a BOO contract with AGL. The Corporation delivers biogas
extracted from the treatment process to AGL, who in turn provides this generated
electricity exclusively to Melbourne Water.
In 2010, the contract moved into Stage 3 which enables the export of excess
electricity to the national electricity grid. This aligned with a separate grid import
electricity contract allowing for the import and export of electricity at agreed contract
rates across our remaining sites. Both of these contracts are currently in effect.
Based on contracted projections of biogas supply and returned electricity generation,
the minimum obligation (excluding the effect inflation) over the term of the whole
arrangement is $49.5M. The arrangement commenced on 25 February 2000 and
expires on 31 December 2020. This calculation has been based on both historical
site data and contracted volumes of peak and off peak electricity throughput.
Future minimum
obligations
2013 $000
2012 $000
Not later than one year
4,047
3,586
Later than 1 year but not
later than 5 years
16,188
14,340
Later than 5 years
10,117
12,547
Total value of future
minimum obligations
30,352
30,473
Commitments are shown inclusive of GST except for finance lease liabilities.
(g) Victorian Desalination Plant Finance Lease and Other Commitments
On 30 July 2009, the State of Victoria (‘the State’) through the Department of
Environment and Primary Industries (DEPI) entered into a 30 year Project Deed with
the AquaSure consortium to build and operate the desalination plant in Wonthaggi
under a Public Private Partnership (PPP) arrangement, with a connection to the
Melbourne Water System. Construction of the desalination plant began in September
2009. The project operation term commenced from the date of commercial
acceptance which occurred on 17 November 2012, triggering the recognition of the
finance lease payable.
The Minister for Water issued a Statement of Obligations (SoO) to Melbourne Water
Corporation under section 4I of the Water Industry Act 1994 on 26 June 2009. The
SoO requires Melbourne Water Corporation to pay all monies payable by the State
under the Project Deed with AquaSure.
Melbourne Water also entered into a Victorian Desalination Project ‘Water Interface
Agreement’ (WIA) and a Supplementary Water Interface Agreement with the State to
record the terms of the interface and financial arrangements between the Project and
Melbourne Water.
Under the arrangement, Melbourne Water Corporation has an obligation to make
Project Deed Payments to the DEPI, who are managing the contract with AquaSure
on behalf of the State government. The portions of the Project Deed Payments that
relate to the right to use the project assets are accounted for as a finance lease as
disclosed in the table at (i) below. In addition, the Project Deed Payments also
include other commitments for operating, maintenance and lifecycle costs as
disclosed in the table at (ii) below.
The desalination plant assets will transfer from DEPI to the Corporation at the end of
the project contract term presently planned for 2039.
As per information provided by DEPI, the Corporation has recognised the following
finance lease liability, and an asset of equal value:
(i) Victorian Desalination Plant Finance Lease Liability:
Minimum future lease
payments
Present value of minimum
future lease payments
2013 $000
2012 $000
2013 $000
2012 $000
Not later than
1 year
539,190
-
54,642
-
Later than one
year but not
later than five
years
2,087,670
-
213,633
-
Minimum future lease
payments
Present value of minimum
future lease payments
2013 $000
2012 $000
2013 $000
2012 $000
Later than five
years
10,723,730
-
4,051,260
-
Minimum
future lease
payments
13,350,590
-
4,319,535
-
Less: Future
finance
charges
(9,031,055)
-
-
-
Total finance
lease liability
4,319,535
-
4,319,535
-
Current (refer
to note 12a)
54,642
-
Non-current
(refer to note
12b)
4,264,893
-
Total finance
lease liability
4,319,535
-
Representing
finance lease
liability:
Commitments are shown inclusive of GST except for finance lease liabilities.
(g) Victorian Desalination Plant Finance Lease and Other Commitments
(continued)
(ii) Victorian Desalination Plant Other Commitments Payable:
Based on information provided by DEPI, the disclosures for other commitments
payable at 30 June 2012 have been restated to include amounts relating to
Renewable Energy Certificates (RECs) and the connection services charges. The
commitment has also been adjusted to exclude the high voltage alternating
transmission line asset transactions as those commitments were not a commitment
for Melbourne Water. The adjustments have increased the commitment reported in
the comparative year by $1,070.3 million in nominal terms.
The Project Deed requires the payment of an annual connection services charge and
the purchase of a minimum number of RECs to offset the electricity used by the
plant. The number of RECs that are consumed will vary based on the volume of
water produced by the plant. If there are any surplus RECs at the end of the project
term, the Project Deed requires AquaSure to transfer them to the State, or sell them
at arms length commercial terms on behalf of the State with all proceeds paid to the
state. DEPI will transfer any surplus RECs or proceeds from sales thereof to
Melbourne Water at the end of the project contract term.
The other commitments payable are disclosed based on information provided by
DEPI.
2013 $000
2012 $000
Within one year
115,361
45,807
Later than one year but
not later than five years
497,987
401,454
Later than five years
4,390,942
3,885,117
Total other
commitments (inclusive
of GST):
5,004,290
4,332,378
Less: GST recoverable
from the Australian
Taxation Office
(454,935)
(393,858)
Total other
commitments(exclusive
of GST)
4,549,355
3,938,520
(iii) Victorian Desalination Plant Finance Lease Project Commitment:
At 30 June 2012, the Victorian Desalination Plant project operation term had not yet
commenced and therefore the finance lease liability was not yet recognised. Refer to
Note 20(g)(i) for the finance lease liability disclosures at 30 June 2013 following
commencement of the project operation term on 17 November 2012. Refer below for
the minimum future lease payments commitments disclosed at 30 June 2012, based
on information provided by DEPI.
Nominal values Present values
2013 $000
2012 $000
2013 $000
2012 $000
Not later than 1
year
-
321,042
-
306,561
Later than one
year but not later
than five years
-
2,260,735
-
1,679,657
Later than five
years
-
11,941,205
-
2,537,437
Minimum future
lease payments
-
14,522,982
-
4,523,655
Less: GST
recoverable from
the Australian
Taxation Office
-
(1,320,271)
-
(411,241)
Total minimum
lease payments
-
13,202,711
-
4,112,414
Minimum future
lease
payments:
Finance lease
payable from
commencement
date
Notes: At 30 June 2012, the present value of the minimum future lease payments
was discounted to the date of expected commercial acceptance using the interest
rate implicit in the lease.
Commitments are shown inclusive of GST except for finance lease liabilities.
(h) Food Bowl Modernisation Commitment
Stage 1 of the Victorian Government’s Northern Victoria Irrigation Renewal Project
(NVIRP) had planned total expenditure of $1.004 billion.
The previous Victorian Government mandated that the Corporation will contribute
$330 million (including GST) towards the total investment in the project, and there is
an agreement for the three metropolitan retail water businesses to make direct
payments to the Corporation to finance this contribution.
At 30 June 2013, $330 million (including GST) has been invoiced by DEPI to the
Corporation, and accordingly the
Corporation has invoiced $330 million to the retail water businesses. The amounts
invoiced have been paid to DEPI and reimbursed by the retail water businesses. The
associated income and expense flows have been offset in the Statement of
Comprehensive Income and the Statement of Financial Position to reflect the
substance of the transaction being that the Corporation is merely a “pass through”
agent. There are no commitments outstanding at 30 June 2013.
2013 $000
2012 $000
Not later than one year
-
33,000
Total commitment
-
33,000
21. Contingent assets and liabilities
Notes
(a) Contingent
assets
2013 $000
2012 $000
Notes
2013 $000
2012 $000
Legal claims
arising out of
various matters
connected with the
Corporation’s
business dealings.
30,602
35,119
Total contingent
assets
30,602
35,119
2013 $000
2012 $000
Details and
estimates of
maximum amounts
of contingent
assets for which no
provision is
included in the
accounts, are as
follows:
(b) Contingent liabilities
Notes
Details and
estimates of
maximum amounts
of contingent
liabilities for which
no provision is
included in the
accounts, are as
follows:
Notes
Legal claims
arising out of
various matters
connected with the
Corporation’s
business dealings.
2013 $000
2012 $000
12,938
4,074
Possible gainshare payable by the
Corporation on
capital projects (not
yet able to be
measured with
sufficient reliability
as a provision)
Total contingent
liabilities
3,718
12,938
7,792
2013 $000
2012 $000
Dividend payable
(relating to
previous financial
year)
94,500
-
Dividend paid
(relating to
previous financial
year)
-
118,400
94,500
118,400
22. Dividends
Notes
Total dividends
18
The Corporation’s loss, after providing for income tax was $30.1 million (2011/12:
profit of $269.9 million). There has been no dividend payment made or determined in
relation to the 2012/13 financial year and any dividend for the 2012/13 financial year
will be determined by the Treasurer of Victoria after consultation with the
Corporation’s Board of Directors and the Minister for Water.
The Treasurer of Victoria has determined a dividend of $94.5 million to be paid in
relation to the 2011/12 financial year.
The determination was made in June 2013 for payment in July 2013. Consequently,
a payable for $94.5 million has been recorded at 30 June 2013.
23. Defined benefit superannuation
Defined benefit superannuation
The equip superannuation fund (‘the fund’) provides lump sum benefits based on
length of service and final superannuable salary for employees engaged up until 31
December 1993. Employees contribute at rates between 0 to 7.5 per cent of their
superannuation salary. The Corporation contributes to the fund based on the
Corporation’s commitments under the Employee Participation Agreement and
Contribution Policy with the Trustee of the Fund.
Notes
2013 $000
2012 $000
Employer
contributions to
defined
contribution funds
5,074
6,136
Employer
contributions to the
defined benefit
superannuation
fund
3,760
1,913
Total employer
contributions
8,834
8,049
(a) Employer
contributions
(b) Reconciliation of the Present Value of the Defined Benefit Superannuation
Obligation
Notes
2013 $000
2012 $000
Balance at the
beginning of the
year
114,953
104,807
Current service
cost
2,493
2,651
Interest cost
2,898
4,441
Contributions by
Plan participants
1,157
1,185
Actuarial
(gains)/losses
(9,076)
9,485
Benefits paid
(6,971)
(7,130)
Taxes and
premiums paid
(734)
(486)
Present value of
the defined
benefit obligation
at the end of the
year
104,720
114,953
(c) Reconciliation of the Fair Value of Plan Assets
Notes
2013 $000
2012 $000
Balance at the
beginning of the
year
92,965
97,831
Expected return on
Plan assets
6,310
6,578
Notes
2013 $000
2012 $000
Actuarial
gains/(losses)
8,737
(6,926)
Employer
contributions
3,760
1,913
Contributions by
Plan participants
1,157
1,185
Benefits paid
(6,971)
(7,130)
Taxes and
premiums paid
(734)
(486)
Fair value of Plan
assets at the end
of the year
105,224
92,965
(d) Reconciliation of the Assets and Liabilities Recognised in the Statement of
Financial Position
Notes
2013 $000
2012 $000
Present value of
the defined benefit
obligation
104,720
114,953
Fair value of Plan
assets
(105,224)
(92,965)
(504)
21,988
Net defined
benefit
superannuation
(asset)/liability*
15(b)
* The Corporation has recognised an asset in the Statement of Financial Position in
respect of its defined benefit superannuation arrangements at 30 June 2013
(2011/12: liability). If the defined benefit superannuation fund is in surplus, the
Corporation may reduce the required contribution rate, depending on the advice of
the Plan’s actuary. If a deficit exists in the Fund, the Corporation may be required to
increase contribution rate, depending on the advice of the Plan’s actuary consistent
with the Plan’s deed.
2013 $000
2012 $000
Service cost
2,493
2,651
Interest cost
2,898
4,441
Expected return on Plan
assets
(6,310)
(6,578)
Actuarial (gain)/loss
recognised in year
(17,813)
16,411
Total defined benefit
superannuation
(income)/expense (Note
3 & 4)
(18,732)
16,925
(e) (Income)/Expense
Recognised in the
Statement of Profit or
Loss and Other
Comprehensive Income
(f) Categories of Plan assets
The percentage invested in each asset class at the Statement of Financial Position
date was:
Australian Equity
2013 $000
2012 $000
29%
35%
2013 $000
2012 $000
International Equity
30%
27%
Fixed Income
12%
11%
Property
9%
10%
Alternatives/Other
15%
10%
Cash
5%
7%
Total
100%
100%
(g) Fair Value of Plan Assets
The fair value of Plan assets includes no amounts relating to:
a) any of the Corporation’s own financial instruments; and
b) any property occupied by, or other assets used by, the Corporation.
(h) Expected Rate of Return on Plan Assets
The expected return on Plan assets assumption is determined by weighting the
expected long-term return for each asset class by the target allocation of assets to
each asset class and allowing for the correlations of the investment returns between
asset classes. The returns used for each asset class are net of investment tax and
investment fees. An allowance for administration expenses has also been deducted
from the expected return.
2013 $000
2012 $000
(i) Actual return on Plan
assets
15,047
(348)
(j) Principal Actuarial
Assumptions at the
Balance Sheet Date
%pa
%pa
(j) Principal Actuarial
Assumptions at the
Balance Sheet Date
%pa
%pa
2013 $000
2012 $000
Discount rate (active
members)
3.0%
2.7%
Discount rate (pensioners)
3.3%
3.0%
Expected return on Plan
assets (active members)
7.0%
7.0%
Expected return on Plan
assets (pensioners)
7.5%
7.5%
Expected salary increase
rate
3.25%
4.0%
Expected pension
increase rate
3.0%
3.0%
2013 $000
2012 $000
2011 $000
2010 $000
Present value of
defined benefit
obligation
104,720
114,953
104,807
100,174
Less: fair value
of Plan assets
(105,224)
(92,965)
(97,831)
(90,221)
(k) Historical
Information
2013 $000
2012 $000
2011 $000
2010 $000
(Surplus)/deficit (504)
in Plan
21,988
6,976
9,953
Experience
adjustments
(gain)/loss –
Plan assets
(8,737)
6,926
(1,771)
(2,144)
Experience
adjustments
(gain)/loss –
Plan liabilities
(230)
1,296
(159)
(1,337)
(l) Expected Contributions
Employer contributions for defined benefit superannuation plan members during the
financial year ending 30 June 2014 are expected to be $1.5 million.
(m) Defined contribution superannuation
Employees engaged from 1 January 1994 are entitled to benefits under
accumulation funds. The majority of these employees are covered by Vision Super
Pty Ltd. Employees have the opportunity to make personal contributions to this fund
(or other funds) at a self-nominated rate or amount. The minimum employer
contribution to the fund, pursuant to the Superannuation Guarantee Charge was 9.0
per cent in 2012/13 (2011/12: 9.0 per cent).
24. Related party transactions
(a) Entities with significant influence – Department of Environment and
Primary Industries and Department of Treasury and Finance
The Department of Environment and Primary Industries (DEPI), formerly called the
Department of Sustainability and Environment (DSE) leads and directs the
Corporation in the implementation of the framework for achieving the Victorian
Government’s responsibilities for sustainability of the natural and built environment.
DEPI monitors the Corporation’s compliance with the Water Act 1989, Water
Interface Agreement and the Supplementary Agreement to the Water Interface
Agreement. The Department of Treasury and Finance (DTF) monitors the
Corporation’s compliance with the Financial Management Act 1994. DTF is
responsible for protecting the shareholder’s interest in respect of corporate business
plans and capital project approvals above $50 million (2011/12: $50 million). DTF
also collects income taxes, the financial accommodation levy and dividend payments
from the Corporation.
(b) Related parties with significant transactions
The following entities have the same controlling entities as the Corporation, and
therefore are considered to be related parties of the Corporation:
City West Water, South East Water, Yarra Valley Water, Western Water,
Gippsland Water, Southern Rural Water and Barwon Water
City West Water, South East Water, Yarra Valley Water, Western Water, Gippsland
Water, Barwon Water and Southern Rural Water are Government owned water
corporations with agreements with the Corporation that include bulk water and
sewerage, bulk recycled water supply and biosolids storage arrangements. These
agreements operated on normal terms and conditions during the reporting period.
Treasury Corporation of Victoria
TCV provides financial accommodation (loans to the Corporation), executes financial
arrangements (derivatives) and provides/arranges the provision of financial services
to the Corporation. Any investments above $2 million are also required to be
invested with TCV.
Places Victoria
Places Victoria is the Victorian Government’s sustainable urban development
agency. The Corporation is involved with Places Victoria in commercial
arrangements associated with the development of land at the Dandenong Treatment
Plant (Meridian and Logis developments), surplus land at Werribee Treatment Plant
(Riverwalk development)and drainage developer works.
(c) Other related parties
The following entities have the same significant influencing entities as the
Corporation, and therefore are considered to be related parties of the Corporation.
– Sustainability Victoria
– Environment Protection Agency (EPA) Victoria
– Parks Victoria
– Port of Melbourne Corporation
– Vic Roads
Notes
2013 $000
2012 $000
DEPI
1,920
2,299
DTF
5,544
-
City West Water
299,647
288,221
South East Water
436,448
421,231
Yarra Valley Water
444,807
428,075
Western Water
13,624
9,287
Southern Rural
Water
384
40
Gippsland Water
32
24
Barwon Water
166
-
165
2,761
527,631
24,319
(d) Transactions
with related
parties
Receipts from
related parties
Places Victoria
11,155 17,864
Other related
parties
Payments to
related parties
DEPI
Notes
2013 $000
2012 $000
DTF
5,442
172,416
City West Water
9,169
3,758
South East Water
7,175
4,742
Yarra Valley Water
7,971
5,770
Western Water
4,485
147
Southern Rural
Water
47
-
Barwon Water
2
-
TCV
207,409
208,981
Places Victoria
29,006
15,107
Other related
parties
1,000
2,906
22
-
118,400
16
57
(836)
Dividend paid
DTF
Equity
contributions
(transfer of crown
land)
DEPI
(f) Outstanding balances arising from sales/purchases of goods and services
The following balances are outstanding at the reporting date in relation to
transactions with related parties:
Notes
2013 $000
2012 $000
DEPI
311
-
City West Water
11,515
9,940
South East Water
14,104
13,366
Yarra Valley Water
25,002
21,157
Western Water
1,616
307
Southern Rural
Water
9
4
TCV
7,098
5,866
Places Victoria
11
-
Other Related
parties
497
-
DEPI
54,380
64,058
DTF
105,737
8,898
City West Water
189
142
South East Water
341
58
Yarra Valley Water
313
509
Current
receivables
Current payables
Notes
2013 $000
2012 $000
11(a), 12(a)
358,472
851,728
Places Victoria
1,779
635
Other Related
parties
7
-
4,259,739
-
3,845,000
3,040,000
TCV
Non current
payables
DEPI
12(b)
TCV
(g) Terms and conditions
Transactions relating to dividends are subject to final determination by the Treasurer
after consultation with the Corporation’s Board of Directors and the Minister for
Water.
Transactions relating to equity contributions are determined by the Minister for Water
in consultation with the Corporation.
Transactions relating to trading activities of the Corporation including sale of bulk
water, sale of sewerage services and collection of drainage rates are based on
normal commercial terms and conditions.
Outstanding balances are unsecured and are receivable/payable in cash under
normal trading terms.
(h) Guarantees
There are no guarantees given or received for the current and non-current payables,
current receivables and borrowings.
25. Responsible persons disclosures
(a) Responsible persons
The names of persons who were responsible persons at any time during the financial
year were:
The Hon. Peter Walsh MLA, Minister for Water (1 July 2012 to 30 June 2013)
Board Members
Chairman
Paul Clark
1 October 2012 to 30 June
2013
Chairman
Eleanor Underwood
1 July 2012 to 30
September 2012
Deputy Chairman
Peter Vines
1 July 2012 to 30 June
2013
Managing Director
Shaun Cox
1 July 2012 to 30 June
2013
Director
Dana Hlavacek
1 July 2012 to 30 June
2013
Director
Warren Hodgson
1 July 2012 to 30 June
2013
Director
Janice van Reyk
1 October 2012 to 30 June
2013
Director
Richard McKinnon
1 October 2012 to 30 June
2013
Director
Garry Smith
1 October 2012 to 30 June
2013
Director
Maria Wilton
1 July 2012 to 30
September 2012
Director
Terry Larkins
1 July 2012 to 30
September 2012
Remuneration of responsible persons
Remuneration paid to the Minister is reported in the Annual Report of the
Department of Premier and Cabinet.
Other relevant interests are declared in the Register of Members’ Interests which
each Member of Parliament completes.
The number of responsible persons whose remuneration from the Corporation was
within the specified bands were as follows:
Income Band ($)
2013 Number
2012 Number
10,000–19,999
2
2
20,000–29,999
1
-
30,000–39,999
3
1
40,000–49,999
3
4
60,000–69,999
1
-
70,000–79,999
-
-
90,000–99,999
-
1
420,000–429,999
-
1
470,000–479,999
1
-
Total numbers
11
9
$000
$000
845
778
Total amount
(b) Related party transactions
There were no amounts paid by the Corporation in connection with the retirement of
responsible persons of the Corporation during the 2012/13 financial year.
There were no loans in existence by the Corporation to responsible persons or
related parties during the 2012/13 financial year.
Related party transactions involving Board Members are as follows:
2013 $000
2012 $000
1,000
-
Total revenue received
from Western Water was:
13,624
9,287
Total payments made to
Western Water were:
4,485
147
(i) Janice van Reyk –
Director: Janice van Reyk
is a Director of the Port of
Melbourne Corporation. All
dealings with this agency
were on normal terms and
conditions during the
reporting period.
Total payments made to
Port of Melbourne
Corporation were:
(ii) Terry Larkins –
Former Director (term
expired on 30 September
2012) Terry Larkins, is the
Chairman of Western
Water. He is also a
Director and Melbourne
Water’s representative at
the Victorian Water
Industry Association (Vic
Water). All dealings with
these agencies were on
normal terms and
conditions during the
reporting period.
All other transactions with related party entities were made on normal terms and
conditions during the financial year.
26. Remuneration of executives
The numbers of executive officers (including those that have the authority and
responsibility for planning, directing and controlling the activities of the Corporation,
directly or indirectly, during the financial year), other than responsible persons (as
defined in FRD 21B Responsible Person and Executive Officer Disclosures in the
Financial Report) whose remuneration (total and base) falls within the specified
bands above $100,000 are as follows:
(Total remuneration is inclusive of bonus payments, long-service leave payments,
redundancy payments and retirement benefits paid and payable. Base remuneration
excludes these components).
Total Remuneration Base Remuneration
Income Band
($)
2013 Number
2012 Number
2013 Number
2012 Number
100,000–
109,999
-
-
-
-
110,000–
119,999
-
-
-
-
120,000–
129,999
-
-
-
-
130,000–
139,999
-
-
-
1
140,000–
149,999
1
1
3
4
150,000–
159,999
1
-
7
8
160,000–
169,999
4
5
12
10
Income Band
($)
2013 Number
2012 Number
2013 Number
2012 Number
170,000–
179,999
5
7
9
4
180,000–
189,999
10
7
190,000–
199,999
13
5
3
1
200,000–
209,999
5
3
3
3
210,000–
219,999
5
3
-
-
220,000–
229,999
2
1
-
-
230,000–
239,999
2
3
3
2
240,000–
249,999
1
-
1
-
250,000–
259,999
-
-
1
4
260,000–
269,999
2
2
2
-
270,000–
279,999
1
-
-
-
280,000–
289,999
-
3
-
-
Income Band
($)
2013 Number
2012 Number
2013 Number
2012 Number
290,000–
299,999
3
1
-
-
300,000–
309,999
-
-
-
-
310,000–
319,999
-
-
-
1
320,000–
329,999
-
-
1
-
330,000–
339,999
-
-
-
-
340,000–
349,999
-
-
-
-
350,000–
359,999
-
1
-
-
360,000–
369,999
1
-
-
-
Total
numbers
52
45
52
45
Total
annualised
employee
equivalent
(AEE)*
51.8
43.8
51.8
43.8
$000
$000
$000
$000
10,801
9,259
9,601
8,227
Total amount
* Annualised employee equivalent is based on working 38 ordinary hours per week
over the reporting period.
There are no other personnel with significant management responsibilities.
27. Key management personnel compensation
Key management personnel (as defined in AASB 124 Related Party Disclosures)
includes the Managing Director and executives officers who have the authority and
responsibility for planning, directing and controlling the activities of the Corporation,
directly or indirectly, during the financial year.
2013 $000
2012 $000
Short-term employment
benefits
2,974
2,694
Post-employment benefits
-
-
Other long-term benefits*
663
568
Termination benefits
-
-
Share-based payments
-
-
Total amount
3,637
3,262
Total numbers
9
9
* Other long-term benefits represents long service leave.
28. Reconciliation of net cash provided from operating activities to
net profit/(loss)
Loss/(profit) for the
period after tax 1
Notes
2013 $000
2012 $000
8
(30,079)
269,919
Notes
2013 $000
2012 $000
Depreciation and
amortisation
4(a)
315,901
242,582
Net gain on sale of noncurrent assets
3(b)
(13,267)
(4,968)
Assets written off/written
down
4(g)
15,132
25,000
Impairment
4(g)
6,570
-
Developer contributed
assets
3(a)
(27,114)
(30,262)
(Increase)/Decrease in
trade and other
receivables
(22,773)
23,425
(Increase)/Decrease in
other assets
(1,198)
1,159
27
(15)
82,092
2,643
Plus/(less) non cash
items:
Changes in operating
assets and liabilities
(net of investing
items):
Increase/(Decrease) in
provision for impaired
receivables
Increase in trade and
other payables
7(a)
Notes
2013 $000
2012 $000
(18,866)
5,978
(43,510)
10,385
(Decrease)/Increase in
defined benefit
superannuation fund
(18,228)
15,012
Decrease in deferred tax
liabilities
14 (25,380)
(40,849)
Net cash provided by
operating activities
219,307
520,009
(Decrease)/Increase in
provisions
(Decrease)/Increase in
current tax liability
5(c)
29. Remuneration of auditors
During the reporting period, the following fees were paid or payable for services
provided by the Victorian Auditor General’s Office:
2013 $000
2012 $000
Audit of financial report
155
151
Drainage and Waterways
review
40
39
Total amount
paid/payable
195
190
30. Events occurring after balance sheet date
No matters or circumstances have arisen since the end of the reporting period which
significantly affected or may significantly affect the operations of the Corporation, the
results of those operations, or the state of affairs of the Corporation in future financial
years.
Melbourne Water Corporation
Statement by Directors and Chief Finance Officer
We certify the attached Financial Statements for the Melbourne Water Corporation
(‘the Corporation’) have been prepared in accordance with Standing Direction 4.2 of
the Financial Management Act 1994, applicable Australian Accounting Standards,
Interpretations and other mandatory professional reporting requirements.
We further state that, in our opinion, the information set out in the Statement of Profit
or Loss and Other Comprehensive Income, Statement of Financial Position,
Statement of Changes in Equity, Statement of Cash Flows and Notes to and forming
part of the Financial Statements, presents fairly the financial transactions during the
year ended 30 June 2013 and the financial position of the Corporation as at 30 June
2013.
We are not aware of any circumstance which would render any particulars included
in the Financial Statements to be misleading or inaccurate.
Dated at Melbourne on this 6th day of September 2013. The Financial Statements
were authorised for issue by the Directors on the 6th day of September 2013.
On behalf of the Board:
Paul Clark
Chairman
Shaun Cox
Managing Director
Malcolm Haynes
Chief Finance Officer
VAGO
Victorian Auditor-General's Office
Level 24, 35 Collins Street
Melbourne VIC 3000
Telephone 61 3 8601 7000
Facsimile 61 3 8601 7010
Email [email protected],gov.au
Website www.audit.vio.gov.au
INDEPENDENT AUDITOR'S REPORT
To the Board Members, Melbourne Water Corporation
The Financial Report
The accompanying financial report for the year ended 30 June 2013 of the
Melbourne Water Corporation which comprises a statement of profit and loss and
other comprehensive income, statement of financial position, statement of changes
in equity, statement of cash flows, notes comprising a summary of significant
accounting policies and other explanatory information, and the statement by
directors and chief finance officer has been audited.
The Board Members' Responsibility for the Financial Report
The Board Members of the Melbourne Water Corporation are responsible for the
preparation and fair presentation of the financial report in accordance with Australian
Accounting Standards, and the financial reporting requirements of the Financial
Management Act 1994, and for such internal control as the Board Members
determine is necessary to enable the preparation and fair presentation of the
financial report that is free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
As required by the Audit Act 1994, my responsibility is to express an opinion on the
financial report based on the audit, which has been conducted in accordance with
Australian Auditing Standards. Those standards require compliance with relevant
ethical requirements relating to audit engagements and that the audit be planned
and performed to obtain reasonable assurance about whether the financial report is
free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts
and disclosures in the financial report. The audit procedures selected depend on
judgement, including the assessment of the risks of material misstatement of the
financial report, whether due to fraud or error. In making those risk assessments,
consideration is given to the internal control relevant to the entity's preparation and
fair presentation of the financial report in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on
the effectiveness of the entity's internal control. An audit also includes evaluating the
appropriateness of the accounting policies used and the reasonableness of
accounting estimates made by the Board Members, as well as evaluating the overall
presentation of the financial report.
I believe that the audit evidence I have obtained is sufficient and appropriate to
provide a basis for my audit opinion.
Independence
The Auditor-General's independence is established by the Constitution Ad 1975. The
Auditor-General is not subject to direction by any person about the way in which his
powers and responsibilities are to be exercised. In conducting the audit, the AuditorGeneral, his staff and delegates complied with all applicable independence
requirements of the Australian accounting profession.
Opinion
In my opinion, the financial report presents fairly, in all material respects, the
financial position of the Melbourne Water Corporation as at 30 June 2013 and of its
financial performance and its cash flows for the year then ended in accordance with
applicable Australian Accounting Standards, and the financial reporting requirements
of the Financial Management Act 1994.
Matters Relating to the Electronic Publication of the Audited Financial Report
This auditor's report relates to the financial report of the Melbourne Water
Corporation for the year ended 30 June 2013 included both in the Melbourne Water
Corporation's annual report and on the website. The Board Members of the
Melbourne Water Corporation are responsible for the integrity of the Melbourne
Water Corporation's website. I have not been engaged to report on the integrity of
the Melbourne Water Corporation's website. The auditor's report refers only to the
subject matter described above. It does not provide an opinion on any other
information which may have been hyperlinked to/from this report. If users of the
financial report are concerned with the inherent risks arising from publication on a
website, they are advised to refer to the hard copy of the audited financial report to
confirm the information contained in the website version of the financial report.
MELBOURNE
10 September 2013
John Doyle Auditor-General
Performance reporting
Performance Report
Financial Performance Indicators
MRD 01
Referenc
e
Performanc 2011-2012
e Indicator
2012-2013
[1]
Performanc Targe Resul Targe Resul Varianc
e Indicator t
t
t
t
e%
Targe Note
t Met s
F1
Internal
22.9
Financing
%
Ratio – (Net
operating
cash flow –
dividends) /
capital
expenditure)
%
64.5
%
9.2%
56.4
%
513.0%
Y
F2
Gearing
Ratio –
(Total debt
(including
finance
leases) /
total assets)
%
59.5
%
38.2
%
58.9
%
58.5
%
-0.7%
Y
F3
Interest
Cover –
EBIT
(Earnings
before net
interest and
tax expense
/ net interest
expense) –
times
≥1.0
2.5
≥0.6
0.9
50.0%
Y
[2]
[2]
MRD 01
Referenc
e
Performanc 2011-2012
e Indicator
2012-2013
[1]
Performanc Targe Resul Targe Resul Varianc
e Indicator t
t
t
t
e%
F4
Interest
Cover –
Cash (Cash
flow from
operations
before net
interest and
tax
payments /
net interest
payments) –
times
≥1.5
3.7
≥1.3
1.5
15.4%
Y
[2],[3]
F5
Return on
Assets
(Earnings
before net
interest and
tax /
average
total assets)
%
4.2%
6.3%
2.9%
4.1%
41.4%
Y
[2]
F6
Return on
equity –
(Net profit
after tax /
average
total equity)
%
0.5%
6.1%
-3.3%
-0.7%
-78.8%
Y
[2]
Service And Environmental And Other Performance Indicators
Targe Note
t Met s
MRD 01
Reference
Performanc
e Indicator
[1]
S1
2011-2012
2012-2013
Targe
t
Targe
t
Resu
lt
Resu
lt
Varian
ce %
Targ
et
Met
Note
s
Y
[3]
Water
Quality
Complianc
e with
BWSA
water
quality
requiremen
ts:
S1.1
Microbiologi
cal
standards –
E.coli %
100% 100% 100%
100% 0%
S1.2
Aesthetics –
turbidity %
≥91.5
%
98.0
%
E1
Reliability
of
Sewerage
Collection
Services
EPA Victoria
SEPP
System
failure
100% ≥91.5
%
7.1%
[3],[4
]
MRD 01
Reference
Performanc
e Indicator
[1]
2011-2012
2012-2013
Targe
t
Resu
lt
Targe
t
Resu
lt
Varian
ce %
Targ
et
Met
Note
s
0
1
0
0
0.0%
Y
[3]
0
0
0
0
0.0%
Y
[3]
980
≤1000
990
-1.0%
Y
[3]
0
0
0
0.0%
Y
[3]
E1.1
System
failure –
zero spills
due to
sewerage
system
failure
E2
Sewerage
Treatment
and
Disposal –
WTP
E2.1
Offensive
odours
beyond the
boundary
(number)
E2.2
Raw sewage ≤1000
TDS (mg/L)
E3
Sewerage
Treatment
and
Disposal –
ETP
E3.1
Offensive
odours
beyond the
boundary
0
MRD 01
Reference
Performanc
e Indicator
[1]
2011-2012
2012-2013
Targe
t
Resu
lt
Targe
t
Resu
lt
Varian
ce %
Targ
et
Met
Note
s
≤5.0
2.79
≤5.0
0.80
-84.0%
Y
[3],[4
]
0
0
100%
100% 0.0%
Y
[3]
100% 100%
100% 0.0%
Y
[3]
E3.2
Ammonia
limit (mg/L)
E4
Waterways
– Drainage
and Flood
Protection
E4.1
Currently
known
intolerable
flood risks
reduced by
10% by
2013
E4.2
Achieve
100%
Water Plan
implementati
on targets
assigned to
Melbourne
Water from
the Regional
River Health
Strategy and
Addendum
(%)
E5.1
Recycled
Water
MRD 01
Reference
Performanc
e Indicator
[1]
E5.1
Capacity to
supply
recycled
water of
specified
reliability
and quality
from ETP
and WTP to
enable retail
water
businesses
to meet their
targets for
potable
water
substitution
(volume –
ML)
2011-2012
2012-2013
Targe
t
Resu
lt
Targe
t
830
1,404 964
Resu
lt
Varian
ce %
Targ
et
Met
Note
s
964
0.0%
Y
[3]
Notes – to Performance Report:
[1] Performance indicators as mandated in Ministerial Reporting Direction 01 –
Performance Reporting (MRD 01) have been marked with their MRD 01 reference
numbers.
[2] While the targets have been achieved for these financial performance indicators,
the variance between the results achieved and targets set for these financial
performance indicators are above the % thresholds mandated under MRD 01
defining significant variances requiring explanatory notes. The key factor for the
improvement compared to target across all of these financial performance indicators
is due to the better than plan financial performance for 2012/13. While Melbourne
Water has made a loss in 2012–13, it was significantly less than the $144.1 million
loss we had planned for, with the improvement a result of higher revenues
(increased water sales and improvement in the market value of our defined
superannuation benefit fund) and lower expenditures compared to Plan (primarily
finance charges and operating expenses), while still ensuring that the over recovered
desalination revenue from 2011–12 was fully returned to customers.
[3] These performance indicators are mandated and measured consistently by both
MRD 01 and by the Melbourne Water Board of Directors. Therefore the results have
not been repeated within the ‘Melbourne Water’s Key Performance Indicators’
section of the Performance Reporting chapter.
[4] The % variance between the results achieved and target set for this performance
indicator is above the % threshold mandated under MRD 01 defining significant
variances requiring explanatory notes. Given that the target was set at a range of
“less than or equal to” rather than a specific number, and results achieved were well
within the less than, greater than or equal to range, this is not deemed as a
significant variance by Melbourne Water.
Target Met = Target has been assessed as met when actual result is greater
than or equal to the target set or the performance indicator.
Certification of Performance Report for 2012–13
We certify that the accompanying Performance Report of Melbourne Water in
respect of the 2012–13 financial year is presented fairly in accordance with the
Financial Management Act 1994.
The statement includes the relevant performance indicators as determined by the
responsible Minister, the actual results achieved for the financial year against
predetermined performance targets and these indicators, and an explanation of any
significant variance between the actual results and performance targets.
As at the date of signing, we are not aware of any circumstances which would render
any particulars in the Performance Report to be misleading or inaccurate.
Dated this 6th day of September 2013
Paul Clark
Chairman
Shaun Cox
Managing Director
Malcolm Haynes
Chief Finance Officer
Level 24, 35 Collins Street Melbourne VIC 3000
Telephone 61 3 8601 7000 Facsimile 61 3 8601 7010 Email
commenfeftaudit.vlo.gov.au Website www.audit.vlc.gov.au
VAGO
Victorian Auditor-General's Office
INDEPENDENT AUDITOR'S REPORT
To the Board Members, Melbourne Water Corporation
The Performance Report
The accompanying performance report for the year ended 30 June 2013 of the
Melbourne Water Corporation comprises the performance indicators, the related
notes and the certification has been audited.
The Board Members' Responsibility for the Performance Report
The Board Members of the Melbourne Water Corporation are responsible for the
preparation and fair presentation of the performance report in accordance with the
Financial Management Act 1994 and for such internal control as the Board Members
determine is necessary to enable the preparation and fair presentation of the
performance report that is free from material misstatement, whether due to fraud or
error.
Auditor's Responsibility
As required by the Audit Act 1994, my responsibility is to express an opinion on the
performance report based on the audit, which has been conducted in accordance
with Australian Auditing Standards, Those standards require compliance with
relevant ethical requirements relating to audit engagements and that the audit be
planned and performed to obtain reasonable assurance about whether the
performance report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts
and disclosures in the performance report. The audit procedures selected depend on
judgement, including the assessment of the risks of material misstatement of the
performance report, whether due to fraud or error. In making those risk
assessments, consideration is given to the internal control relevant to the entity's
preparation and fair presentation of the performance report in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity's internal control. An audit
also includes evaluating the overall presentation of the performance report.
I believe that the audit evidence I have obtained is sufficient and appropriate to
provide a basis for my audit opinion.
Independent Auditor's Report (continued)
Independence
The Auditor-General's independence is established by the Constitution Act 1975.
The Auditor-General is not subject to direction by any person about the way In which
his powers and responsibilities are to be exercised. In conducting the audit, the
Auditor-General, his staff and delegates complied with all applicable independence
requirements of the Australian accounting profession.
Opinion
In my opinion, the performance report of the Melbourne Water Corporation in respect
of the 30 June 2013 financial year presents fairly, in all material respects, and in
accordance with the Financial Management Act 1994.
Matters Relating to the Electronic Publication of the Audited Performance Report
This auditor's report relates to the performance report of the Melbourne Water
Corporation for the year ended 30 June 2013 included both in the Melbourne Water
Corporation's annual report and on the website. The Board Members of the
Melbourne Water Corporation are responsible for the integrity of the Melbourne
Water Corporation's website. I have not been engaged to report on the integrity of
the Melbourne Water Corporation's website. The auditor's report refers only to the
subject matter described above. It does not provide an opinion on any other
information which may have been hyperlinked to/from this report. If users of the
performance report are concerned with the inherent risks arising from publication on
a website, they are advised to refer to the hard copy of the audited performance
report to confirm the information contained in the website version of the performance
report.
MELBOURNE
10 September 2013
John Doyle Auditor-General
Melbourne Water’s Key Performance Indicators
Financial Performance Indicators
Performance
Indicator
2011–2012
2012–13
Financial
Target
Sustainability
Result
Target
Result
Target
Met
Meet
regulated
Water Plan
operating
expenditure
$M
368.8
325.4
565.0
428.3
Y
Cash Returns
to
Government
$M
158.3
289.3
183.2
94.7
N
Gearing % –
(Debt/Debt +
Equity)
66.9%
45.8%
66.1%
66.0%
Y
Return on
equity % –
(NPAT/Total
Equity)
0.5%
5.9%
-3.4%
-0.7%
Y
Efficient and
effective
delivery of the
capital
program; On
time
80.0%
55.9%
80.0%
54.5%
N
[2]
On budget
95.0%
82.4%
95.0%
88.8%
N
[3]
Performance
Indicator
2011–2012
2012–13
Notes
[1]
Water
Target
Result
Target
Result
Target
Met
Operate
100%
water supply
system within
environmental
requirements
–%
compliance
100%
100%
100%
Y
Maintain
system losses
as a % of
water
supplied to
retail water
businesses %
<1.0%
1.27%
<1.0%
1.14%
N
>99.6%
99.9%
>99.6%
99.9%
Y
Notes
Production
and Storage
Water
Transfer
Compliance
with retail
water
businesses’
pressure
requirements
as set out in
BWSAs %
Water
Quality
[4]
Performance
Indicator
2011–2012
2012–13
Water
Target
Result
Target
Result
Target
Met
Disinfection
by-products
%
100%
100%
100%
100%
Y
Aesthetics –
Aluminium %
100%
100%
100%
100%
Y
Notes
Compliance
with BWSA
water quality
requirements:
Performance
Indicator
2011–2012
2012–13
Sewerage
Target
Result
Target
Result
Target
Met
Notes
100%
100%
100%
100%
Y
[5]
ETP
EPA Licence
Compliance
Compliance
with EPA
Victoria
discharge
licence
requirements
%
Performance
Indicator
2011–2012
2012–13
Sewerage
Target
Result
Target
Result
Target
Met
Litter at beach
[that results in
a licence
breach]
0
0
0
0
Y
100%
100%
100%
100%
Y
0
0
0
0
Y
WTP
EPA Licence
Compliance
Compliance
with EPA
Victoria
discharge
licence
requirements
%
Sewerage
Transfer
System
EPA SEPP
compliance for
sewerage
system spills
Zero spills due
to storm
events of a
severity of up
to 1-in-5 years
Notes
Performance
Indicator
2011–2012
2012–13
Sewerage
Target
Result
Target
Result
Target
Met
Notes
Complaints
relating to
transfer
system odour
<10
14
<10
14
N
[6]
35,000m3
0
45,000m3
131m3
N
[7]
0
0
1,512
Y
Biosolids
Management
Maximise
sustainable
reuse of
biosolids:
ETP- biosolids
reuse of
90,000 cubic
metres for
construction fill
by 2013
WTP- biosolids 0
reuse
Performance
Indicator
2011–2012
Waterways
Target
2012–13
Result
Target
Result
Target
Met
Notes
Performance
Indicator
2011–2012
2012–13
Waterways
Target
Result
Target
Result
Target
Met
Achieve
Waterways
and Drainage
Operating
Charter
performance
targets
100%
97.5%
100%
100%
Y
100%
100%
100%
Y
109
106
109
Y
Drainage & Flood Protection
All new
development
complies with
flood
protection
standards
100%
Stormwater Quality
Contribute to
reducing the
waterway
nitrogen load
to Port Phillip
Bay through
targeted
stormwater
action (tonnes)
104
Waterways Condition
Notes
Performance
Indicator
2011–2012
2012–13
Waterways
Target
Result
Target
Result
Target
Met
100%
100%
100%
100%
Y
100%
100%
100%
Y
Achieve Water
Plan
implementation
targets set out
in the
Waterways
Water Quality
Strategy and
Regional River
Health
Strategy for
water quality
programs and
works
Land Development
Development
services
schemes
prepared,
implemented
and reviewed
according to
the
development
planning
program
100%
Notes
Performance
Indicator
2011–2012
Waterways
Target
Statutory and
100%
agreed
industry
response times
will be
achieved for all
development
referrals
2012–13
Result
Target
Result
Target
Met
100%
100%
100%
Y
Streamflow Diversions
Diversions to be managed:
In accordance
with rules
specified in
streamflow
management
plans, local
management
rules or
drought
responses
plans
100%
100%
100%
100%
Y
To meet the
service
requirements
in Melbourne
Water’s
Customer
Charter
[Diversion
Services]
100%
100%
100%
100%
Y
Notes
Performance 2011–2012
Indicator
Recycled
Water
2012–13
Target
Result
Target
Result
Target
Met
ETP
100%
92%
100%
100%
Y
WTP
100%
92%
100%
100%
Y
Notes
Compliance
with retail
BRWAs
requirements
for reliability
and water
quality;
Performance
Indicator
2011–2012
Environmental Target
Stewardship
Sustainability
2012–13
Result
Target
Result
Target
Met
Notes
Performance
Indicator
2011–2012
2012–13
Environmental Target
Stewardship
Result
Target
Result
Target
Met
Achieve
sustainability
performance
score within
20% of the
best score by
global water
utilities and
Australian
utilities, using
the Dow Jones
Sustainability
World Indices
(DJSI) –
measured
every two
years
N/A
N/A
within
20% of
best
score
Achieved
Y
Renewable
energy used or
exported as %
of total energy
used
>60.0%
60.0%
61.0%
0.0%
N
% reduction on
2000/01
greenhouse
gas emissions
>42.0%
50.2%
45.0%
47.7%
Y
Notes
Greenhouse
Renewable
energy and
greenhouse
[8]
Performance
Indicator
2011–2012
Environmental Target
Stewardship
2012–13
Result
Target
Result
Target
Met
Notes
[9]
Office Based Resource Efficiency
% reduction on
2006/07 office
water
consumption
per FTE
3.50%
9.9%
60.00%
55.0%
N
% reduction on
2006/07 office
paper use per
FTE
14.0%
27.7%
16.0%
23.0%
Y
% reduction on
2006/07 office
waste to landfill
per FTE
14.0%
33.1%
20.0%
40.0%
Y
% reduction on
2006/07 office
energy use per
FTE
4.5%
24.4%
30.0%
49.0%
Y
For the 9 DEPI
designated
sites of high
biodiversity
significance
[BioSites], the
number of
BioSites that
have:
[10]
Performance
Indicator
2011–2012
2012–13
Environmental Target
Stewardship
Result
Target
Result
Target
Met
Had
management
plans
developed
[cumulative]
9
9
9
9
Y
Had
management
plans
implemented
[cumulative]
8
8
9
9
Y
Performance
Indicator
2011–2012
Notes
2012–13
Relationships Target
Result
Target
Result
Target
Met
Notes
Complaints
referred to
EWOV
responded to
within EWOV
established
time
97.3%
100%
96.0%
N
[11]
100%
Performance
Indicator
2011–2012
2012–13
Relationships Target
Result
Target
Result
Target
Met
Notes
Maintain at
least 70%
total
community
satisfaction
with
Waterways
(measured
every two
years)
70.0%
77%
N/A
N/A
N/A
[12]
Effectiveness
of community
committee
and
community
consultation
processes
85.0%
86.0%
N/A
N/A
N/A
[13]
Effectiveness
of community
education
programs
85.0%
97.7%
90.0%
98.0%
Y
[14]
Target
Met
Notes
Performance
Indicator
2011–2012
Organisational Target
Capability
2012–13
Result
Target
Result
Number of lost
time injuries:
Melbourne
Water people
and contractors
[injuries]
0
20
0
Increase in
constructive
behaviours
(measured
every two
years)
Achieved
Achieved N/A
16
N
N/A
N/A
[15]
Notes – to Melbourne Water Key Performance Indicators:
[1] The annual target was not achieved mainly due to deferral of payment of the
2011/12 dividend of $94.5M to July 2013, following determination made by the
Treasurer of Victoria in June 2013.
[2] The target was not achieved due to optimistic forecasting of project duration. For
Water Plan 3, Capital Delivery is investigating how it can prepare risk-adjusted
schedules that recognise the inherent time risks of the project. The Water Plan 3
capital delivery strategy also includes back-to-back contractor KPIs to improve ontime delivery accountability.
[3] The target was not achieved due to a small number of projects realising greater
risk costs than budgeted. The next capital delivery strategy includes back-to-back
contractor KPIs to improve on-budget delivery accountability.
[4] Melbourne Water’s total water loss reported for 2012/13 is 1.14% of the water
supplied to the retail water companies. The water loss volumes reported this year
decreased slightly when compared to last year’s figure of 1.27% primarily owing to
reduced cleaning following a bow wave of increased post drought cleaning in
2011/12. The reduction in cleaning losses was offset to some extent by an increase
in operational losses due to impacts of algal growth in one treatment facility and the
need to maintain high quality drinking water. Melbourne Water remains proactive and
committed to further improvements in the management of system loss where the
benefit outweighs the cost.
Results to be audited by Cardno in September. Results to be published first week of
October.
[5] There were four odour complaints confirmed at ETP, but no action was
undertaken by EPA Victoria.
[6] Melbourne Water received 14 odour complaints related to the sewerage transfer
system this year. The complaints were due to a range of reasons, mainly discharge
of sewer gases from vent stacks in accordance with the vents intended function of
removing sewer gases to prevent corrosion with the balance arising from manhole
covers being dislodged or damaged by traffic.
A key component of our Corrosion and Odour Management Program is the
development of Sewer Management Plans with the retail water businesses at a
catchment scale to analyse the factors contributing to the generation and release of
gases, identifying hotspots and determine the most effective options to manage the
risk of corrosion and odour over the next 20 years.
Melbourne Water is also contributing to the (SCORe) Project, which will be rolled out
progressively in 2014. This project is established to provide knowledge and
technology to support the Australian Water Industry to achieve cost-effective and
efficient corrosion and odour management in sewers. The tools generated by the
SCORe Project will cover four key areas:
– Liquid phase controls
– Gas phase controls
– Corrosion control, prediction and coating performance
– Odour and corrosion control through integrated management of asset
[7] A total of 131m3 of biosolids was reused from Eastern Treatment Plant in 2012–
13. Melbourne Water is seeking to engage a third party to promote and expand the
use of biosolids in fill projects, and is contracting for reuse of biosolids on farmland
as a soil amendment and fertilizer. It is expected that this will result in no further
stockpiling of ETP biosolids by 2017–18 or earlier.
[8] Melbourne Water decided not to achieve its Renewable Energy Target,
recognising that due to factors such as increasing water costs and the introduction of
a carbon price, some concessions were needed to balance our impact on the
environment and Melburnians’ water bills. Melbourne Water remains fully committed
to reaching our target of zero net emissions by 2018. This commitment is shown
through our use of onsite energy sources. This year we used a total of
1,255,748MWh of electricity in 2012-13, of which 369,348MWh was generated onsite
from Melbourne Water’s renewable biogas generation plant at ETP. In addition to
this, another 28,673MWh of renewable hydro-electricity was generated and exported
back to the grid from Melbourne Water’s seven hydro generation facilities.
[9] This KPI is based on the office water use at our 990 La Trobe Street office only.
The main reason for this target not being achieved
is commissioning issues with the water tanks and water used to cool the building’s
sewage pumps at our new head office. These issues have now been resolved and
we have a new building management system (software application) that will alert us
when more water is being used than expected. [10] Melbourne Waters office energy
KPI is based on our electricity use at 990 La Trobe Street only. The large decrease
in our energy use per FTE is mainly due to moving to our new head office as well as
our data centre moving from our head office.
[11] In December 2012, 1 out of 4 cases was not responded to within EWOV time
frames. EWOV cases are now managed and tracked. This allows actions to be
assigned to relevant stakeholders and allow greater visibility of progress and
performance against EWOV reporting requirements. Since December 2012, 8
EWOV complaints have been responded to in the required timeframe.
[12] Survey is undertaken every two years, last surveyed in 2011–12.
[13] Stakeholders in these committees strongly indicated that they did not want to be
surveyed again this year. The committees meet four times a year and an annual
survey was viewed as excessive by members. Stakeholders indicated their feedback
and results would be similar to previous years when the KPI has been met.
[14] This figure is approximate.
[15] The annual target was not achieved due to 16 lost time injuries to employees
and contractors. We are committed to improving our health & safety performance by
continuing the focus on a Zero Harm culture. Such improvement is reflected in our
recent achievement of attaining AS4801:Occupational Health and Safety
Management System certification in June 2013.
Target Met = Target has been assessed as met when actual result is greater
than or equal to the target set or the performance indicator.
Statutory information
Disclosure Index
Melbourne Water’s Annual Report 2012–13 is prepared in accordance with all
relevant Victorian legislation and pronouncements.
This index has been prepared to facilitate identification of Melbourne Water’s
compliance with statutory disclosure requirements.
Legislation Requirement
Page
Reference
FRD 22D
Manner of establishment
and the relevant Minister
1,58–61
FRD 22D
Objectives, functions,
powers and duties
1,57–61
FRD 22D
Nature and range of
services provided
1
Organisational structure
60
FRD 10
Disclosure index
140–141
FRD 22D
Statement of workforce
data
62–67
FRD 22D
Summary of the financial
results for the year
52–57
FRD 22D
Five year summary of
financial results
69–70
FRD 22D
Significant changes in
financial position during
the year
51–57
Report of Operations
Charter and purpose
Management and
structure
FRD 22B
Financial and other
information
Legislation Requirement
Page
Reference
FRD 22D SD 4.2(k)
Operational and budgetary 1–67, 128–139
objectives and
performance against
objectives
FRD 22D
Occupational health and
safety policy
64–67, 138–139
FRD 22D
Major changes or factors
affecting performance
1–67, 128–139
FRD 22D
Subsequent events
123
FRD 22D
Application and operation
of the Freedom of
Information Act 1982
143–145
FRD 22D
Compliance with building
and maintenance
provisions of Building Act
1993
150
FRD 22D
Statement of National
Competition Policy
143
FRD 22D
Application and operation
of the Whistleblowers
Protections Act 2001
151–152
FRD 22D
Details of consultancies
over $10,000
142–143
FRD 22D
Details of consultancies
under $10,000
142
FRD 22D
Statement of availability of
other information
150
Legislation Requirement
Page
Reference
FRD 22D
Environmental
performance
1–67, 128–139
FRD 25
Victorian Industry
Participation Policy
disclosures
73
FRD 27B
Presentation and
Reporting of Performance
information
128–139
FRD 29
Workforce data
disclosures in the report of
operations – public service
employees
65–66
FRD 30A
Standard requirements for
the design and print of
annual reports
Entire report
SD 4.5.5
Risk management
compliance attestation
60
SD 4.2(g)
General information
requirements
1–67
SD 4.2(j)
Sign-off requirements
2–3
MRD 01
Performance reporting
128–139
MRD 02
Reporting on water
consumption and drought
response
8–13
Ministerial reporting
directions
Legislation Requirement
Page
Reference
MRD 03
Environmental and social
sustainability reporting
1–67, 128–139
MRD 04
Disclosure of information
on bulk entitlements,
transfers of water
entitlements, allocations
and licenses, irrigation
water usage and licence
requirements
145–150
SD 4.2(b)
Statement of Profit or Loss
and Other Comprehensive
Income
74
SD 4.2(b)
Statement of Financial
Position
75
SD 4.2(b)
Statement of Changes In
Equity
76
SD 4.2(b)
Statement of Cash Flows
77
SD 4.2(b)
Notes to the financial
statements
78–123
Financial Report
Financial statements
required under Part 7 of
the Financial
Management Act 1994
Other requirements
under Standing
Directions 4.2
Legislation Requirement
Page
Reference
SD 4.2(c)
Compliance with
Australian accounting
standards and other
authoritative
pronouncements
78
SD 4.2(c)
Compliance with
Ministerial Directions
78
SD 4.2(c)
Accountable officer's
declaration
124
SD 4.2(d)
Rounding of amounts
78
FRD 03A
Accounting for dividends
85, 112
FRD 07A
Early Adoption of
Authoritative Accounting
Pronouncements
86
FRD 11
Disclosure of ex-gratia
payments
N/A
FRD 17A
Long service leave wage
83, 100
inflation and discount rates
FRD 19
Private provision of public
infrastructure
(BOO/BOOT)
Other disclosures as
required by FRDs in
notes to the financial
statements
109
Legislation Requirement
Page
Reference
FRD 21B
Responsible person and
executive officer
disclosures
119–121
FRD 103D
Non-current physical
assets
80, 94–96
FRD 105A
Borrowing costs
79, 91
FRD 104
Foreign currency
85, 87, 88
FRD 106
Impairment of assets
80, 95
FRD 108A
Classification of entities as
For-Profit
78
FRD 109
Intangible assets
82, 95
FRD 110
Cash flow statements
77, 81
FRD 112C
Defined benefit
superannuation
obligations
83, 113–115
FRD 114A
Financial Instruments –
General Government
Entities and Public NonFinancial Corporations
78–88, 102–107
FRD 119
Contributions by owners
85, 101
FRD 120G
Accounting and reporting
pronouncements
applicable to the 2012–13
reporting period
86
Legislation Requirement
Page
Reference
FRD 121
Infrastructure assets
80–81, 94–96
Key Legislation
Water Act 1989
Freedom of Information
Act 1982
Building Act 1993
Whistleblowers
Protections Act 2001
Victorian Industry
Participation Policy Act
2003
Financial Management Act
1994
Consultants
During 2012–13, Melbourne Water engaged 16 consultants at less than $10,000
each to undertake operational and capital works projects at a total cost of $96,211
(exclusive of GST).
In addition, Melbourne Water engaged 29 consultants (see table below) at over
$10,000 to undertake the following projects (expenditure excludes GST):
Consultant
Project
Total fee
approved
Expenditure
12/13
Future
expenditure
ACCSR
CSR strategy
23,755
23,755
-
Consultant
Project
AECOM
Total fee
approved
Expenditure
12/13
Future
expenditure
Australia Wet
27,634
Algae Biogas to
Biomass –
Evaluation
27,634
-
AECOM
Australia
Biosolids –
Waste to
Resource
Market
Assessment
88,696
88,696
-
ATMECO Pty
Ltd
Methane
Emissions
Analysis
13,574
13,574
-
ATURA Pty
Ltd
Land
85,697
application of
Biosolids – Risk
Assessment
85,697
-
Blueshpere
environmental
Review of the
GW monitoring
program for
WTP
35,000
30,950
4,050
Changeworks
Change
management
for new
contract
34,375
23,750
10,625
CPG
Australia Wet
14,702
Algae Biogas to
Biomass –
Evaluation
14,702
-
Consultant
Project
Total fee
approved
Expenditure
12/13
Future
expenditure
D J O'brien
and
Associates
Operations
and
Maintenance
Strategy
20,000
18,000
2,000
Deloitte
Biosolids –
Waste to
Resource
Market
Assessment
15,465
15,465
-
15,703
15,703
-
Environmental WTP Soil
Earth Sciences Contamination
Strategy
Frost &
Sullivan
Biosolids –
Waste to
Resource
Market
Assessment
32,500
32,500
-
GHD Pty Ltd
Winneke Major
Hazard Facility
Re-licensing
engineering
consultancy
246,700
34,210
-
GHD Pty Ltd
Silvan QRA
and Chlorine
Consequence
Modelling
51,746
29,005
22,741
GHD Pty Ltd
Methane
Emissions
Analysis
15,230
15,230
-
Consultant
Project
GHD Pty Ltd
Total fee
approved
Expenditure
12/13
Future
expenditure
Use of
25,342
Recycled Water
for
agricultural/land
application
purposes –
Bunyip Food
Belt
25,342
-
GHD Pty Ltd
Biosolids –
Sample
Analysis
11,136
11,136
-
Halcrow
Pacific
Determination
32,033
of Best Practice
Monitoring and
Operating of
Pumping
Stations
32,033
-
HRL
Technology
Methane
Emissions
Analysis
23,250
23,250
-
Ivana Gillard
Consulting for
Business
Services
Leadership
Team
Workshop /
Consulting for
ISC Workshop
15,750
15,750
-
KPMG
Financial
Sustainability
Strategy
223,165
223,165
-
Consultant
Project
Total fee
approved
Expenditure
12/13
Future
expenditure
KPMG
Greenhouse
and Energy
Strategy
95,000
95,000
-
Monash
University
Greenhouse
Mitigation Plan
10,250
10,250
-
Net Balance
Management
Group P/L
Sustainability
Assurance
Review
25,500
25,500
-
Parsons
Brinckerhoff
Wet Algae
Biogas to
Biomass –
Evaluation
60,000
60,000
-
Plant
Performance
Wet Algae
Biogas to
Biomass –
Evaluation
46,670
46,670
-
Press play
Industry tour
finding report
13,920
13,920
-
Protiviti
Risk
Management –
review
consequence
tables
18,700
18,700
-
PWC
Authorisation
levy policy
28,656
28,656
-
Seed Advisory
Greenhouse
and Energy
Strategy
16,875
16,875
-
Consultant
Project
Total fee
approved
Expenditure
12/13
Future
expenditure
Sinclair Knight
Metz
Environmental
Stewardship
20,000
20,000
-
SMEC
Australia Pty
Ltd
Embankment
30,524
Stability Review
– Clay Rich
Biosolid Fill
30,524
-
49,800
49,800
-
SPIIRE
Australia Wet
26,198
Algae Biogas to
Biomass –
Evaluation
26,198
-
The
Humphreys
Group
Extravision
project
26,250
26,250
-
$1,519,795
$1,267,888
$39,416
SP-BIC Pty Ltd Central
Operations
process review,
Sewerage
operations
review, Civil
Maintenance
review
TOTAL >
$10,000
National Competition Policy
Melbourne Water submitted its 2009 Water Plan for water, sewerage and recycled
water services to the Essential Services Commission in November 2008 to enable
the Essential Services Commission to make a price determination for the four-year
period commencing 2009–10.
The 2009 Water Plan set out proposed performance relative to the expenditures and
outcomes included in the Essential Services Commission’s first determination as well
as proposed outcomes, expenditures and prices for the second price determination
period.
In December 2007, Melbourne Water submitted its 2008 Water Plan for waterways
and drainage services, which enabled the Essential Services Commission to make a
price determination for these services commencing in 2008–09 for a five-year period.
These processes are consistent with the pricing and institutional reform objectives of
the National Competition Policy.
Melbourne Water is corporatised and therefore has an independent Board, with
independent and objective performance monitoring. We face equivalent tax
treatment, borrowing requirements and regulations as a private business. As outlined
above, we also operate in an environment where the Essential Services Commission
determines cost-based pricing. In this regard, our processes are consistent with the
requirements of the Victorian Competitive Neutrality Policy.
Freedom of Information
Melbourne Water is subject to the Freedom of Information Act 1982 and is
committed to releasing documents in our possession unless exempt. We also
welcome enquiries about the broad range of documents we provide outside the
Freedom of Information Act.
The designated persons for the purpose of the Freedom of Information Act 1982 are:
Principal Officer:
Mr P Clark
Chairman, Melbourne Water Board
Authorised Officer:
Mr M Keough
FOI and Privacy Advisor and Government Liaison, Melbourne Water
The Office of the FOI Commissioner was established this year. Decisions made after
1 December 2012 are subject to review by the FOI Commissioner rather than
internal review.
Requests for information
This year we received 20 requests for access to documents under the Freedom of
Information Act 1982 and finalised five requests from the previous year. Three
requests from the previous year were not proceeded with.
Decisions on requests
Requests related to:
Reviews of decisions
Access in full 1
Environment and planning
5
Internal reviews 2
Access in part 17
Flooding 5
Reviews by FOI
Commissioner 1
Access refused 4
Litigation 2
Documents not located 3
Property 4
Complaints
Applicant did not proceed
3
Water supply 10
Complaints to FOI
Commissioner 0
Not finalised 0
Withdrawn 0
Complaints to VCAT 0
Other 2
Reviews and complaints
In 2012–13:
•
Internal reviews were requested of two decisions. One decision was
confirmed and one was varied resulting in more documents being released.
•
One review was sought of the FOI Commissioner, who affirmed Melbourne
Water’s decision.
•
No notifications of VCAT hearings were received.
Year/Number of requests
2005–06 14
2006–07 20
2007–08 20
2008–09 35
2009–10 43
2010–11 32
2011–12 25
Grounds for refusing release of documents included: documents affecting personal
privacy, legal proceedings, State security or commercial undertakings, and internal
working documents the disclosure of which would not be in the public interest.
Access to documents
People wanting access to Melbourne Water documents under the Freedom of
Information Act 1982 should write to:
Freedom of Information Officer
Melbourne Water
PO Box 4342
Melbourne Victoria 3001.
Each application must clearly identify the documents sought and be accompanied by
the required application fee ($25.70 from 1 July 2013).
General enquiries concerning Freedom of Information can be made by telephoning
the Freedom of Information Officer on (03) 9679 6821 between 9am and 5pm,
Monday to Friday or via email to: [email protected]
Information required under Part II of the Freedom of Information Act is available on
our website, melbournewater.com.au under About us, Legislation and policies.
The statement includes information about Melbourne Water functions, decisionmaking, consultation arrangements and publications. It also outlines how to make a
Freedom of Information request and how to request information outside the scope of
the Act.
Categories of documents
We use a computerised records management system to manage our
correspondence and documents. We use online computer systems to manage our
financial, human resource and other operational activities and plans relating to water
supply, waterways, drainage and sewerage responsibilities. Historical archives of our
activities are available through the Public Records Office Victoria. More information
is in our Part II Information Statement on our website.
Pricing
Melbourne Water’s 2012–13 water and sewerage prices remained at 2011–12
prices. This price freeze occurred in order to return funds to customers that were
recovered early for the Victorian Desalination Plant. In addition, Melbourne Water’s
reform of the residential waterways and drainage charges culminated in 1 July 2012
when all residential customers moved to a flat charge.
This resulted in customers facing differing price changes for the year, although the
maximum price increase was 5.5% in real terms.
Bulk Entitlements
The three metropolitan Retail Water Corporations hold Bulk Entitlements to the water
resources of the Yarra River, Thomson River, Tarago River and Bunyip River, Silver
Creek and Wallaby Creek (Goulburn River Basin) and to the Victorian Desalination
Project. The entitlements have been established as a collective ‘pool’. On 2 July
2012, the Minister for Water gazetted new Bulk Entitlements for the Retail Water
Corporations in the River Murray and Goulburn System of up to 75,000 megalitres
annually, as a result of the Water Retail Corporation’s investment in the GoulburnMurray Water Connections Project.
Prior to this (26 March 2013), the Minister for Water amended the retail corporations
Statement of Obligations (System Management) to provide clarity on when the retail
corporations may draw on this water for Melbourne’s consumptive use. This
included; the need for Melbourne’s total system storage levels to be less than 30%
as at 30 November that year and that allocations have been made against highreliability water shares in the Goulburn System for the current irrigation season, and
water is available in the critical water reserve. The Statement of Obligations (System
Management) amendment also allows for up to 300 megalitres to be used annually
to maintain the North-South Pipeline in good working order and kept ready for firefighting purposes.
Table 1 – Compliance with all Bulk Entitlements held by the three Melbourne retail water corporations (retailers)
Melbourne
Retail Water
Corporations
reporting
obligation
Combined Yarra
Yarra
River3
River,
Silver and
Wallaby
Creeks,
Thomson
River
Silver
Thomson Tarago
and
River8
and
Wallaby
Bunyip
5
Creeks
Rivers11
Victorian
Goulburn River
Desalination System18 Murray23
19
24
Project14
The volume
of water
taken by the
Retail Water
Corporations
in 2012–13
Clause
15.1 (a)
325,855
ML
Clause
15.1 (a)
299,636
ML
Clause
13.1 (a)
1,071
ML
Clause
15.1 (a)
25,148
ML
Clause
14.1 (a)
4,612 ML
(Tarago)
2,190 ML
(Bunyip)
Clause 11.1
(a) 0 ML15 16
Compliance
with the long
term average
Bulk
Entitlement
diversion limit
Clause
15.1 (b)
411,571
ML1
Clause
15.1 (b)
297,382
ML4
Clause
13.1 (b)
13,487
ML6
Clause
15.1 (b)
109,694
ML9
Clause
Clause 11.1
14.1 (f)
(e) 0 ML
7,545 ML
(Tarago)12
2,192 ML
(Bunyip)13
Clause
14.1 (b)
18 ML20
0 ML
N/A
N/A
Melbourne
Retail Water
Corporations
reporting
obligation
Combined Yarra
Yarra
River3
River,
Silver and
Wallaby
Creeks,
Thomson
River
Silver
Thomson Tarago
and
River8
and
Wallaby
Bunyip
5
Creeks
Rivers11
Victorian
Goulburn River
Desalination System18 Murray23
19
24
Project14
The total
annual
consumption
in 2012–13
404,260
ML
N/A
N/A
The Retail
Water
Corporations
share of flows
in 2012–13
N/A
Clause Clause
15.1 (a) 13.1 (a)
312,311 N/A
ML
N/A
N/A
N/A
N/A
N/A
Clause
15.1 (a)
140,799
ML
Clause
14.1 (a)
26,924 ML
Clause 11.1
(a) N/A
Clause
14.1 (c)
18,099
ML
Clause
11.1 (a)
8,943
ML
Melbourne
Retail Water
Corporations
reporting
obligation
Combined Yarra
Yarra
River3
River,
Silver and
Wallaby
Creeks,
Thomson
River
The Retail
Water
Corporations
share of
storage
volume at
30/06/13
N/A
Silver
Thomson Tarago
and
River8
and
Wallaby
Bunyip
5
Creeks
Rivers11
Clause N/A
15.1 (a)
428,906
ML
Clause
15.1 (a)
754,560
ML
Clause
14.1 (a)
29,547 ML
Victorian
Goulburn River
Desalination System18 Murray23
19
24
Project14
N/A
27,104
ML21
13,315
ML25
Table 1 – Compliance with all Bulk Entitlements held by the three Melbourne retail water corporations (retailers)
(continued)
Melbourne
Retail Water
Corporations
reporting
obligation
Combined
Yarra River,
Silver and
Wallaby
Creeks,
Thomson
River
Yarra
River3
Volume
supplied to
Primary
Entitlement
Holders
Melbourne
Clause
‘pool’2
15.1
10,433 ML
(a) N/A
(Western
Water) 0 ML
(Barwon
Water) 0 ML
(Westernport
Water) 0 ML
(South
Gippsland
Water)
Silver
and
Wallaby
Creeks5
Thomson Tarago
River8
and
Bunyip
Rivers11
N/A
N/A
Victorian
Goulburn River
Desalination System18 Murray23
19
24
Project14
Clause
Clause 11.1
14.1 (a)
(a)17 N/A
346 ML
(Gippsland
Water) 0
ML
(Southern
Rural
Water)
N/A
N/A
Melbourne
Retail Water
Corporations
reporting
obligation
Combined
Yarra River,
Silver and
Wallaby
Creeks,
Thomson
River
Any
N/A
assignment of
water
allocation or
temporary/
permanent
transfers of
the Bulk
Entitlement
Yarra
River3
Silver
and
Wallaby
Creeks5
Thomson Tarago
River8
and
Bunyip
Rivers11
Clause
15.1
(c) Nil
Clause
Clause
13.1 (c)
14.1 (b)
NilClause Nil
15.1 (c)
Nil
Clause
11.1 (b)
Nil
Victorian
Goulburn River
Desalination System18 Murray23
19
24
Project14
Clause 14.1
(d)22 25,892 ML
Clause 14.1
(e) Nil
Clause
11.1
(b)26
+4,372
ML
Clause
11.1 (c)
Nil
Melbourne
Retail Water
Corporations
reporting
obligation
Combined
Yarra River,
Silver and
Wallaby
Creeks,
Thomson
River
Yarra
River3
Silver
and
Wallaby
Creeks5
Thomson Tarago
River8
and
Bunyip
Rivers11
Victorian
Goulburn River
Desalination System18 Murray23
19
24
Project14
Any
temporary or
permanent
transfer of the
Bulk
Entitlement
which may
alter the flow
in the
waterway
N/A
Clause
15.1
(d) Nil
Clause
13.1 (d)
Nil
Clause
15.1 (d)
Nil
Clause
14.1 (a)
Nil
N/A
N/A
N/A
Any
amendment
to the Bulk
Entitlement
N/A
Clause
15.1
(e) Nil
Clause
13.1 (e)
Nil
Clause
15.1 (e)
Nil10
Clause
14.1 (d)
Nil
Clause 11.1
(c) Nil
Clause
14.1 (f)
Nil
Clause
11.1 (d)
Nil
Melbourne
Retail Water
Corporations
reporting
obligation
Combined
Yarra River,
Silver and
Wallaby
Creeks,
Thomson
River
Yarra
River3
Silver
and
Wallaby
Creeks5
Thomson Tarago
River8
and
Bunyip
Rivers11
Victorian
Goulburn River
Desalination System18 Murray23
19
24
Project14
Any new Bulk
Entitlement
granted to the
Retail Water
Corporations
N/A
Clause
15.1 (f)
Nil
Clause
13.1 (f)
Yes7
Clause
15.1 (f)
Nil
Clause
14.1 (e)
Nil
Clause 11.1
(d) Nil
Yes19
Yes24
Any failures
to comply
with any
provision of
the Bulk
Entitlement
N/A
Clause
15.1
(g) Nil
Clause
13.1 (g)
Nil
Clause
15.1 (g)
Nil
Clause
14.1 (g)
Nil
Clause 11.1
(f) Nil
Clause
14.1 (g)
Nil
Clause
11.1 (e)
Nil
Melbourne
Retail Water
Corporations
reporting
obligation
Combined
Yarra River,
Silver and
Wallaby
Creeks,
Thomson
River
Yarra
River3
Silver
and
Wallaby
Creeks5
Thomson Tarago
River8
and
Bunyip
Rivers11
Victorian
Goulburn River
Desalination System18 Murray23
19
24
Project14
Any difficulty
experienced
in complying
with the Bulk
Entitlement
and if so, any
remedial
action taken
or proposed
N/A
Clause
15.1
(h) Nil
Clause
13.1 (h)
Nil
Clause
15.1 (h)
Nil
Clause 11.1
(g) Nil
Clause
14.1 (h)
Nil
Clause
14.1 (h)
Nil
Clause
11.1 (f)
Nil
Notes for compliance with Bulk Entitlements
Combined Yarra River, Silver and Wallaby Creeks, Thomson River
1. Compliance with the long-term average diversion limit of 555,000 megalitres is
assessed using a 15-year rolling average annual diversion.
2. The supply of water to Primary Entitlement Holders is obligated under the
Victorian Desalination Project Bulk Entitlements via water sources from the
Melbourne ‘pool’ of all Melbourne’s Bulk Entitlement sources.
Yarra River
3. The Retail Water Corporations hold the following Bulk Entitlements on the Yarra
River
•
Bulk Entitlement (Yarra River – Melbourne Water for City West Water Limited)
Conversion Order 2006 – BEE049364
•
Bulk Entitlement (Yarra River – Melbourne Water for South East Water
Limited) Conversion Order 2006 – BEE049363
•
Bulk Entitlement (Yarra River – Melbourne Water for Yarra Valley Water
Limited) Conversion Order 2006 – BEE049362
4. Compliance with the long-term average diversion limit of 400,000 megalitres is
assessed using a 15-year rolling average annual diversion.
Silver and Wallaby Creeks
5. The Retail Water Corporations hold the following Bulk Entitlements on the Silver
and Wallaby Creeks
•
Bulk Entitlement (Silver & Wallaby Creeks – Melbourne Water for City West
Water Limited) Conversion Order 2006 – BEE049475
•
Bulk Entitlement (Silver & Wallaby Creeks – Melbourne Water for South East
Water Limited) Conversion Order 2006 – BEE049474
•
Bulk Entitlement (Silver & Wallaby Creeks – Melbourne Water for Yarra Valley
Water Limited) Conversion Order 2006 – BEE049473
6. Compliance with the 3-year total diversion limit of 66,000 megalitres is assessed
using a 3-year rolling total diversion.
7. The Retail Water Corporation’s received new Bulk Entitlements on 2 July 2013 in
the Goulburn System as a result of the investments made in the G-MW Connection’s
Project.
Thomson River
8. The Retail Water Corporations hold the following Bulk Entitlements on the
Thomson River
•
Transfer of Bulk Entitlement (Thomson River – Melbourne Water Corporation)
Conversion Order 2001 to City West Water Limited 2006 – BEE049361
•
Transfer of Bulk Entitlement (Thomson River – Melbourne Water Corporation)
Conversion Order 2001 to South East Water Limited 2006 – BEE049360
•
Transfer of Bulk Entitlement (Thomson River – Melbourne Water Corporation)
Conversion Order 2001 to Yarra Valley Water Limited 2006 – BEE049359
9. Compliance with the long-term average diversion limit of 171,800 megalitres is
assessed using a 15-year rolling average annual diversion.
10. On 12 May 2013, the Minister for Water amended the Bulk Entitlement (Thomson
River – Environment) Order 2005, to provide changes to passing flow obligations.
These changes were noted by the Retail Water Corporations and Melbourne Water.
Tarago and Bunyip Rivers
11. The Retail Water Corporations hold the following Bulk Entitlements on the
Tarago and Bunyip Rivers
•
Bulk Entitlement (Tarago and Bunyip Rivers – Melbourne Water for City West
Water Limited) Conversion Order 2009 – BEE049358
•
Bulk Entitlement (Tarago and Bunyip Rivers – Melbourne Water for South
East Water Limited) Conversion Order 2009 – BEE049357
•
Bulk Entitlement (Tarago and Bunyip Rivers – Melbourne Water for Yarra
Valley Water Limited) Conversion Order 2009 – BEE049356
12. Compliance with the Tarago River long-term average diversion limit of 24,950
megalitres is assessed using a 5-year rolling average annual diversion.
13. Compliance with the Bunyip River long-term average diversion limit of 5,560
megalitres is assessed using a 5-year rolling average annual diversion.
Victorian Desalination Project
14. The Retail Water Corporations hold the following Bulk Entitlements to the
Victorian Desalination Project
•
Bulk Entitlement (Desalinated Water – City West Water Limited) Order 2010 –
BEE050814
•
Bulk Entitlement (Desalinated Water – South East Water Limited) Order 2010
– BEE050815
•
Bulk Entitlement (Desalinated Water – Yarra Valley Water Limited) Order
2010 – BEE050816
15. On 1 April 2012, the Minister for Water made a zero desalinated water order for
the 2012–13 year.
16. 24,850 megalitres was transferred to Cardinia Reservoir for commissioning of the
Victorian Desalination Plant, this is not considered to be water taken under the Bulk
Entitlement.
17. As the Primary Entitlement Holders are supplied from the Melbourne ‘pool’, this
is reported under note two of the combined Yarra River, Silver and Wallaby Creeks
and Thomson River.
Goulburn System
18. The Retail Water Corporations hold the following Bulk Entitlements to the
Goulburn System
•
Bulk Entitlement (Goulburn System – City West Water) Order 2012 –
BEE049478
•
Bulk Entitlement (Goulburn System – South East Water) Order 2012 –
BEE049477
•
Bulk Entitlement (Goulburn System – Yarra Valley Water) Order 2012 –
BEE049476
19. The Retail Corporations were granted Bulk Entitlement’s to the Goulburn System
on 2 July 2012.
20. 18 megalitres of water was used to maintain the operational capacity of the
North-South Pipeline and keep the pipeline charged for fire-fighting purposes, as
allowed under clause 9.1 (c) of the Retail Water Corporation’s Statements of
Obligations (System Management).
21. The Retail Water Corporations had 16,682 megalitres deducted from their 30
June 2012 volumes as a result of carry over rules and spillable water account spill
losses during 2012–13.
22. The Retail Water Corporations have in place water management strategies to
manage water allocation holdings in in the River Murray and Goulburn System to
maximise the value of the resources held to their customers and minimise risk of
spilling water allocation. These strategies include the transfer of allocations between
Bulk Entitlement Allocation Bank Accounts and trading allocations.
River Murray
23. The Retail Water Corporations hold the following Bulk Entitlements to the River
Murray
•
Bulk Entitlement (River Murray – City West Water) Order 2012 – BEE049481
•
Bulk Entitlement (River Murray – South East Water) Order 2012 –
BEE049480
•
Bulk Entitlement (River Murray – Yarra Valley Water) Order 2012 – BEE
049479
24. The Retail Water Corporations were granted Bulk Entitlement’s to the River
Murray on 2 July 2012.
25. The Retail Water Corporations had 0 megalitres deducted from their 30 June
2012 volumes as a result of carry over rules and spillable water account spill losses
during 2012–13.
26. The Retail Water Corporations have in place water management strategies to
manage water allocations holdings in the River Murray and Goulburn System to
maximise the value of the resources held to their customers and minimise risk of
spilling water allocation. These strategies include the transfer of allocations between
Bulk Entitlement Allocation Bank Accounts and trading allocations.
Melbourne Water’s Bulk Entitlement
Melbourne Water holds a Bulk Entitlement to the water resources of the Maribyrnong
Basin to supply irrigators diverting water from Jacksons Creek, downstream of
Rosslynne Reservoir, and the Maribyrnong River between its confluence with
Jacksons Creek and Shepherd Bridge.
Table 2 – Compliance with the Maribyrnong River Bulk Entitlement held by
Melbourne Water
Melbourne Water reporting obligation
Maribyrnong River
The volume of water taken by Melbourne
Water to supply licence holders in 2012–
13
Clause 19.1 (b) 106 ML
Melbourne Water reporting obligation
Maribyrnong River
Compliance with the 5-year rolling
average annual Bulk Entitlement
diversion limit of 1,056 megalitres
141 ML
Melbourne Water’s share of flow into the
Rosslynne Reservoir in 2012–13
Clause 19.1 (a,iii) 648 ML
Melbourne Water’s share of storage
volume in the Rosslynne Reservoir at
30/06/13
Clause 19.1 (a,ii) 2,116 ML
Transfer and operating losses within the
system
Clause 19.1 (a,iv) 0 ML
Releases made from the Rosslynne
Reservoir to supply licence holders in
2012–13
Clause 19.1 (a,i) 0 ML
Releases from Melbourne Water’s share
of flow to meet minimum flows
Clause 19.1 (a,v) 55 ML
Any temporary or permanent transfers of
the Bulk Entitlement
Clause 19.1 (c) nil
Any temporary or permanent transfer of
the Bulk Entitlement which may alter the
flow in the waterway
Clause 19.1 (d) nil
Alteration to volume of water under
licences issued by Melbourne Water
Clause 19.1 (e) nil
Alteration to security of supply of
entitlements under licences
Clause 19.1 (e) nil
Transfer of licences (number, amount
and places)
Clause 19.1 (f) Yes1
Melbourne Water reporting obligation
Maribyrnong River
Any amendment to the Bulk Entitlement
Clause 19.1 (g) nil
Any new Bulk Entitlement granted to
Melbourne Water
Clause 19.1 (h) nil
Implementation of metering program
Clause 19.1 (i) Yes
Any failures to comply with any provision
of the Bulk Entitlement
Clause 19.1 (j) nil
Any difficulty experienced in complying
with the Bulk Entitlement and if so, any
remedial action taken or proposed
Clause 19.1 (k) nil
1 Two
transfers of licences were made: 1) Subdivide licence with 24 ML in Keilor; 2)
Subdivide licence with 19 ML in Keilor.
Environmental Entitlements
Table 3 – Compliance with the Environmental Entitlements held by the
Victorian Environmental Water Holder
Yarra River
Thomson
River
Silver and
Wallaby
Creeks
Tarago and
Bunyip Rivers
Environment’s
share of
storage
volume at
30/06/13
34,965 ML
0 ML1
N/A
1,808 ML
Compliance
with
environmental
flows
Yes
Yes
Yes
Yes
1 Releases
from the Thomson Environmental Water Account in 2012/13 exceeded
the environment’s actual share of storage by 187 ML. The over release was
reconciled on 1 July 2013 with the new annual allocation.
Compliance with Building Act 1993
Melbourne Water’s major premises are compliant with the Building Act 1993.
Melbourne Water has a program to refurbish its remote sites to ensure compliance
with the Building Code of Australia 2009.
All sites that the Property Team is accountable for are Essential Safety Measures
compliant with follow-up audits undertaken as required. Defects are rectified as part
of ongoing maintenance requirements.
Melbourne Water’s leased corporate office at 990 La Trobe Street, Docklands is
compliant with the Building Code of Australia 2009, and Essential Safety Measures
are in place and compliant.
Privacy legislation
Melbourne Water is subject to the Information Privacy Act 2000 and the Health
Records Act 2001 and is committed to protecting the privacy of personal and health
information it collects and handles. Melbourne Water collects and handles personal
and health information only to carry out its functions and activities.
Melbourne Water is committed to openness and transparency and welcomes any
queries about its approach to privacy. We endeavour to resolve any privacy
complaints quickly and effectively.
People wanting to make a privacy complaint, or seek a copy of Melbourne Water’s
Privacy Policy, should write to:
Privacy Advisor
Melbourne Water
PO Box 4342
Melbourne Victoria 3001.
Information available on request
Further information is available on request about:
•
Pecuniary interests of relevant officers
•
Details of shares held by a senior officer as nominee or held beneficially in a
statutory authority or subsidiary
•
Details of changes in prices, fees, charges, rates and levies charged if
relevant
•
Details of Melbourne Water publications
•
Committees chaired by Melbourne Water
•
Major external reviews carried out on Melbourne Water
•
Research and development activities
•
Overseas visits
•
Major promotional, public relations and marketing activities
•
Melbourne Water’s Code of Conduct
•
Assessments and measures to improve the occupational health and safety of
employees
•
Statement of industrial relations
•
Details of time lost through industrial accidents and disputes
•
Major sponsorships.
Phone 131 722 (within Victoria) or (03) 9679 7100 (within the rest of Australia) or
visit melbournewater.com.au
Protected Disclosure Act 2012
The Whistleblowers Protection Act 2001 was repealed and replaced with the
Protected Disclosure Act 2012 on 10 February 2013.
As the change of legislation occurred midway through the 2012–13 financial year,
this disclosure complies with the requirements of the Protected Disclosure Act 2012
and section 104 of the Whistleblowers Protection Act 2001, for each of the relevant
time periods.
Compliance with the Protected Disclosure Act 2012
The Protected Disclosure Act 2012 was part of a package of integrity reforms
introduced by the Victorian Coalition Government, which also established the
Independent Broad-Based Anti-Corruption Commission (IBAC).
The Protected Disclosure Act 2012 enables people to make disclosures about
improper conduct within the public sector without fear of reprisal. It aims to ensure
openness and accountability by encouraging people to make disclosures and
protecting them when they do.
What is a ‘protected disclosure’?
A protected disclosure is a complaint of corrupt or improper conduct by a public
officer or a public body.
Melbourne Water is a “public body” for the purposes of the Protected Disclosure Act
2012.
What is ‘improper or corrupt conduct’?
Improper or corrupt conduct involves substantial:
•
Mismanagement of public resources, or
•
Risk to public health or safety or the environment, or
•
Corruption.
The conduct must be criminal in nature or a matter for which an officer could be
dismissed.
How do I make a ‘protected disclosure’?
You can make a protected disclosure about Melbourne Water or its board members,
officers or employees by contacting IBAC using the contact details provided below.
Please note that Melbourne Water is not able to receive protected disclosures.
How can I access Melbourne Water’s procedures for the protection
of persons from detrimental action?
Melbourne Water has established procedures for the protection of persons from
detrimental action in reprisal for making a protected disclosure about Melbourne
Water or its employees. You can access our procedures on our website at
melbournewater.com.au (> About us > Who we are > Legislation and policies).
Contacts
Independent Broad-Based Anti-Corruption Commission Victoria
Address: Level 1, North Tower, 459 Collins Street, Melbourne Victoria 3001
Mail: IBAC, GPO Box 24234, Melbourne Victoria 3000
Internet: www.ibac.vic.gov.au
Phone: 1300 735 135
Email: See the IBAC website for the secure email disclosure process, which also
provides for anonymous disclosures.
152 Melbourne Water Annual Report 2012–13
Disclosures under the Whistleblowers Protection Act 2001 (up to 9
February 2013)
The archived procedures established under the Whistleblowers Protection Act 2001
are available upon request.
The disclosures detailed in the table below relate to the period commencing on 1
July 2012 and ending on 9 February 2013.
The number and types of 2012–13 number
disclosures made to
Melbourne Water during
the year (1 July 2012 to 9
February 2013):
2011–12 number
Public interest disclosures
Protected disclosures
0
0
The number of disclosures
referred during the year by
Melbourne Water to the
Ombudsman for
determination as to
whether they are public
interest disclosures
0
0
The number and types of
disclosed matters referred
to Melbourne Water by the
Ombudsman for
investigation
0
0
The number and types of
disclosures referred by
Melbourne Water to the
Ombudsman for
investigation
0
0
The number and types of 2012–13 number
disclosures made to
Melbourne Water during
the year (1 July 2012 to 9
February 2013):
2011–12 number
The number and types of
investigations taken over
from Melbourne Water by
the Ombudsman
0
0
The number of requests
made by a whistleblower
to the Ombudsman to take
over an investigation by
Melbourne Water
0
0
The number and types of
disclosed matters that
Melbourne Water has
declined to investigate
0
0
The number and types of
0
disclosed matters that
were substantiated upon
investigation and the
action taken on completion
of the investigation
0
Any recommendations
made by the Ombudsman
that relate to Melbourne
Water: Recommendation
regarding file security and
management
0
0