southern In our work annual report 03-04 annual report Business, Environments, Communities. we value partnership with our customers, engagement continuous corporate social responsibility, the community, improvement and informed action. rura Sustainable water southern rural o1

Contents

REPORT FROM THE CHAIRPERSON 02 HIGHLIGHTS AND CHALLENGES 04 ABOUT US 05 SRW – WHAT WE DO OUR BOARD 06 OUR ORGANISATION STRUCTURE 07 OUR ECONOMIC PERFORMANCE 08 SERVICE DELIVERY SERVICE IMPROVEMENT WORKS FINANCIAL PERFORMANCE ASSET MANAGEMENT OBLIGATIONS OUR ENVIRONMENTAL PERFORMANCE 14 ENVIRONMENT MANAGEMENT RESOURCE MANAGEMENT LAND MANAGEMENT OUR SOCIAL PERFORMANCE 18 PARTNERSHIPS WITH CUSTOMERS AND STAKEHOLDERS PARTNERSHIPS IN OUR COMMUNITIES ACCOUNTABILITY OUR PEOPLE GENERAL INFORMATION 24 FINANCIAL REVIEW OF OPERATIONS AND FINANCIAL CONDITIONS BULK ENTITLEMENTS WATER TRANSFER TABLES 29 OUR FINANCIAL REPORT 36 COMPLIANCE CHECKLIST 52 water

Southern Rural Water (SRW) is the trading name of the Gippsland and Southern Rural Water Authority. We are a statutory rural water authority, established under the provisions of the Water Act 1989. Our responsible minister is the Hon John Thwaites MP, Minister for Water. We have four principal businesses - Eastern Irrigation, Western Irrigation, Licensing and Headworks. We also manage the recreational facilities at Blue Rock, Cowwarr, Glenmaggie, Melton, Merrimu and Pykes Creek reservoirs. We are the appointed Resource Manager for a range of surface water catchments, mostly in Gippsland, and provide administrative support to the Victorian Drillers’ Licensing Board. This Annual Report has been prepared for the financial year 1 July 2003 to 30 June 2004. report from the Chairperson

The past twelve months have been extremely challenging for us and our customers as the drought continued.

Water was scarce and there was a significant As the seasonal outlook deteriorated, SRW increase in demand from our already stressed investigated options to ameliorate the impact – rivers, streams and aquifers. This was most including building a connection to pronounced in the Werribee basin – where Melbourne’s urban system to bring in potable meagre urban supplies were augmented from water. With this estimated to cost over the Melbourne system and the seasonal $1,000/ML, some Werribee customers allocation for irrigators dropped to an approached Government for additional unprecedented 40%. The demand for support. After a concentrated period of groundwater in Werribee South soared, and discussion and negotiation, a package of the level of the aquifer dropped sharply. With measures addressing grower, water industry concerns that seawater would intrude into the and Government objectives emerged – and in aquifer, a ban on groundwater pumping was January 2004 the Werribee Irrigation District introduced in November. Managing the Recycled Water Scheme was born. groundwater ban in Werribee has been After a challenging implementation period of challenging and time-consuming for staff, less than a year for the project partners – customers and the wider community in SRW, Melbourne Water, Department of Werribee South – but after a concerted Sustainability & Environment, Department of compliance effort by SRW, including the Primary Industries, Department of Health fitting of meters to irrigation bores, we are Services, the Environment Protection building support for sustainable management Authority and customers - we look forward to of this important resource. this important water recycling venture for Victoria commencing before the end of 2004. o3

These have been exceptional circumstances Already, we have some key projects In closing, I would like to thank my fellow and I believe that the financial, environmental underway. In the Macalister Irrigation District, Board members and staff at Southern Rural and social impact of this drought will continue the Total Channel Control project will fully Water for their continued support in achieving to affect our business and the livelihood of our automate a major part of the Main Northern the objectives of our Corporate Plan, for customers for some time. Channel system. This will enable us to recover demonstrating their commitment to our water to improve both the health of the corporate values at all times and for staying Our other major theme for 2003/2004 has been Macalister River and customer service. close to all our customers and stakeholders. water reform. On 1 January we entered the jurisdiction of the Essential Services In the Werribee basin, the Recycled Water It is my privilege to take the Board into its Commission; in recent months we have been Scheme will also recover water for the fourth term, and in doing so I would like to developing our 2005/2008 Water Plan for the environment. Our recently-installed outlet at thank all those who have contributed to Commission’s first three years oversight of our the Lerderderg Weir complements this by building Southern Rural Water into an pricing. Importantly, the Water Plan allowing more variability in environmental organisation that is respected by its peers and consolidates the role of our Customer flows. Whilst the total volume of water committed to building and achieving its Triple Consultative Committees. These are pivotal to available to the environment is unchanged, Bottom Line objectives. In particular, three our operations, and we are encouraged that our this government-funded project will allow the Board members are not continuing – Cheryl new regulatory framework gives scope for their water to be used for much greater Batagol, Geoff Crick and Rob Skinner. All influence to be recognised and strengthened. environmental benefit. gave much to Southern Rural Water, and we shall miss their wisdom, experience and The Government’s recently-released White This is truly an exciting time to be involved in friendship. I thank them for their contribution, Paper, Securing Our Water Future Together water management. Whilst the issues can be and for Rob’s outstanding leadership as our comes after more than a year’s discussion and challenging, and at times confronting, we all outgoing Chairperson. consultation in the water industry and wider have an opportunity to make a difference – community. It brings a rare opportunity to and to build the sustainability of the review industry performance. The paper is businesses, communities and environments based on the desire to manage water in the that water supports. context of total catchments and it is To help us build a deeper understanding of committed to ensuring that the reforms are local issues, our Board meetings are held at well rounded and enjoy broad support. We Jan Grieg Chairperson strategic venues around southern Victoria. welcome the opportunity to be involved in its These meetings provide an opportunity to implementation and will be looking to apply meet with representatives from regional and our skills and experience as an organisation to local groups to discuss water resource maximum effect. management issues and concerns. They also enable us to deepen our relationships with our Customer Consultative Committees. By strengthening relationships with our customers we have been able to develop a clear understanding of the key issues that impact their businesses as well as their expectations of us as a water resource manager. 03-04 Southern Rural Water

Southern Rural Highlights & challenges w – The drought has continued to impact our – We extended our groundwater monitoring – By working together with project partners business and managing water resources and management activities, especially in and customers, the Macalister Irrigation over the past year has been extremely coastal areas, to minimise the risk of District has already achieved the difficult. Balancing conflicting demands seawater intrusion to aquifers and increased Government’s June 2005 target of 40% for water – for irrigation, environmental our community engagement activities. nutrient reduction, as detailed in the flows and river health – while meeting – As part of the Thomson Macalister Task Nutrient Reduction Plan. customer expectations and standards has Force, we helped identify river health – Our Licensing Business extended its been challenging. requirements and to determine flow community consultation and advertising – The lack of seasonal entitlements/sales in regimes that balance the needs of the process to ensure neighbouring landowners recent years has resulted in budget deficits environment with consumptive users. To and communities were aware of significant for both our irrigation businesses. Together monitor our compliance with water diversion licence applications. with our Customer Consultative Committees environmental flow requirements we also – We participated in discussions with and Board, we developed three-year price installed additional gauging stations. stakeholders, customers and the community paths to manage costs and establish income – The Total Channel Control project, being and contributed feedback on the forecasts based on more realistic sales targets. implemented in the Macalister Irrigation Government’s Green Paper proposals. – We sourced an emergency supply of District, will improve water delivery Now, we look forward to the challenges potable water for our Werribee Irrigation efficiency and add to environmental flows and opportunities presented by the White District customers and are negotiating to without impacting irrigators’ entitlements Paper, Securing Our Water Future supply Class A recycled water from the or security of supply. Together, the blueprint for water resource Western Treatment Plant. We are working – Structural modifications to the Lerderderg management into the future. with stakeholders to investigate alternative Weir will ensure we meet environmental – We began work on our inaugural Water supply options for customers in the flows at all times and improve river health. Plan to be submitted to the Essential Bacchus Marsh Irrigation District. – Work on the Narracan Dam wall was Services Commission. completed. This work has reduced the risk of dam failure, improved reliability of equipment and reduced operator safety issues. o5 water

About us

SRW – What we do We also manage the recreational facilities at most of these storages. Southern Rural Water is a Victorian Government Authority. Our main business We supply untreated water to: centres are located in Maffra and Werribee – farmers and growers and we employ more than 100 people, – regional urban water authorities, Gippsland including a network of field staff. Water and Western Water We are responsible for: – power generating companies in the Latrobe – managing the delivery of irrigation water Valley. to the Werribee, Bacchus Marsh and We manage infrastructure and operating assets The map above shows where our offices Macalister Irrigation Districts and worth over $425 million. In the 2003/2004 are located. maintaining the channel and pipeline financial year we invested over $4 million in infrastructure for these Districts major works on our dams and infrastructure – assessing licence applications and issuing assets and had $19.8 million in operating licences to construct new farm dams and turnover. bores, as well as managing new and existing groundwater and surface water licences – harvesting and storing water in seven major storages: - Glenmaggie, Narracan and Blue Rock are in Gippsland - Melton, Merrimu, Pykes Creek and Rosslynne are close to Melbourne.

Dargo River Wongandarra River Buchan River ARARAT Jacksons Creek Lerderderg River Wonnangatta River Snowy River Maribyrnong Wentworth River Tambo River River BALLARAT Werribee River Brodribb River Plenty River HEALESVILLE Bemm River Wannon River Pyrites Creek Macalister River Genoa River HAMILTON Nicholson River BACCHUS MARSH Yarra River Aberfeldy Cann River River MELBOURNE WARBURTON Hopkins River Dandenong Creek BAIRNSDALE Eumerella River Mitchell River Merri River Moorabool River WERRIBEE Tanjil River Glenelg River Moyne River MAFFRA Patterson River Bunyip River Thomson River Fitzroy River GEELONG Tarago River Latrobe River CAMPERDOWN KOO-WEE-RUP WARRAGUL Barwon River MOE TRARALGON MORWELL Curdies River DROMANA WARRNAMBOOL COLAC LEONGATHA Gellibrand River ROSSLYNNE DAM GLENMAGGIE DAM Tarwin RiverEast Branch Tarra River MERRIMU DAM BLUE ROCK DAM

MELTON DAM NARRACAN DAM

PYKES CREEK DAM YALLOURN WEIR MAFFRA WEIR WERRIBEE WEIR COWWARR WEIR GOODMAN'S CREEK WEIR LERDERDERG WEIR MAP NOT DRAWN TO SCALE BACCHUS MARSH WEIR DIVERSION TUNNEL

The map above shows the major rivers and streams in our region as well as our storages and weirs. 03-04 Southern Rural Water

Our Board as at December 2003. Our board Organisation

Southern Rural Water is governed by a Board In December 2003, Ms Cheryl Batagol Board Committees of eight members appointed by the Minister resigned to take up the role of Board The Board has established three Committees for Water. Our Board ensures that we fulfil Chairperson with Melbourne Water. With the to provide advice and make recommendations. our responsibilities in the best interest of expiry of the Board’s term on 30 June 2004, Mr These Committees have a formal Terms of Government, stakeholders, customers and the Rob Skinner finished his period as Chairperson. Reference, report to the Board and liaise community. Board members are appointed for After nine years of service as a member of the closely with SRW’s Chief Executive and a three-year term. SRW Board and many years of continuous senior management. involvement in the water industry through his As at 30 June 2004, our Board members were: links with farmer organisations, Mr Geoff Audit Committee. Members – Mr Geoff Crick – Mr Rob Skinner, Chairperson Crick completed his final term on our Board. (Chair), Mrs Jennifer McMillan, Ms Jan Greig, – Mrs Jennifer McMillan, Deputy Mr John Pye and Mr Trevor Tappenden (External On 1 July 2004, Ms Jan Greig was appointed Chairperson representative). All are independent members. Board Chairperson and three new members – Mr Geoff Crick were appointed to the Board – Mr Terry Burgi, This Committee and independent advisers – Ms Jan Greig Mr Alan Hawkes and Mr Michael Martin. review our annual financial statements, monitor and provide specialist advice about – Dr Martin Kent The Board meets monthly and generally these financial management and accounting – Prof John Lovering meetings are held at key regional locations. responsibilities. It oversees the internal and This provides Board members with the – Mr John Pye. external audit program as well as our risk opportunity to meet with customers and management program. stakeholders to talk about local water resource management issues and to spend time touring Remuneration and Corporate Governance local catchments and facilities. Policy Committee. Members – Mr Rob Skinner (Chair), Ms Cheryl Batagol and Mrs Jennifer McMillan. This Committee oversees the implementation of SRW’s remuneration policy, monitors executive and senior management remuneration and advises the Board about executive responsibilities. Technical and Environment Committee. Members – Professor John Lovering (Chair), Ms Cheryl Batagol, Jan Greig and Mr Geoff Crick. This Committee provides advice to the Board about SRW’s technical and environmental activities across all four businesses. It develops policies and helps to identify and prioritise the annual works programs, investment in major projects, risk management strategies, asset integrity and service standards.

T - Channel regulator in the Macalister Irrigation District. M - Spray irrigation in the Werribee Irrigation District. B - Water flowing from Glenmaggie Dam into the Macalister River. o7 board Our organisation structure

SRW board

Chief Executive Dr Martin Kent

Eastern Irrigation Business Mr. Matt Youell Western Irrigation Business Mr. Pat Caruso Headworks Business Mr. Deric Liddelow Licensing Business Mr. Graham Hawke Technical Services Business Services

Our Eastern Irrigation Business Our Headworks Business Our Eastern Irrigation Business operates the The Headworks Business harvests and stores It manages over 8,200 existing licences: Macalister Irrigation District and manages water for irrigation customers, urban water – 3,700 are for take and use of up to river diverters on the Macalister and Thomson authorities and the Latrobe Valley power 110,000 ML of water from unregulated rivers Rivers and Rainbow Creek. It has almost generators in accordance with the provisions of – 810 are for take and use of up to 1,000 customers and during 2003/2004 Bulk Entitlement Orders. Bulk Entitlement 64,000 ML from regulated rivers delivered over 170,000 ML. Our Eastern holders take around 300,000 ML of water during Irrigation Business has an annual turnover of an average year. Business turnover of around – 3,750 licences are for take and use of just over about $6 million. $3 million is supplemented by special purpose 387,000 ML from groundwater bores. funding for dam improvement works. Each year the Licensing Business also processes: Our Western Irrigation Business – up to 320 new bore construction licence Our Licensing Business applications and/or amendments to existing The Western Irrigation Business operates the licences Werribee and Bacchus Marsh Irrigation Our Licensing Business controls the take and Districts. This Business also manages the river use of water from rivers, streams and – more than 700 new groundwater licence diverters on the Werribee River. It has over groundwater aquifers across southern Victoria. applications and/or amendments to existing 400 customers and during 2003/2004 It is also responsible for licensing the licences delivered over 6,200 ML into the Werribee construction of bores and farm dams. – up to 680 new surfacewater licence Irrigation District and 1,800 ML into the applications and/or amendments to existing Bacchus Marsh District for irrigation and licences. some stock and domestic purposes. It also The Licensing Business turnover is around managed the delivery of more than 800 ML to $3.5 million. irrigators on the Werribee River. Our Western Irrigation Business has an annual turnover of Our Technical Services and Business Services about $2 million. teams – our engineers, environmental scientists, accountants, technology and human resource specialists and administrators – support these four businesses.

L - Water in an unregulated stream. R - Drilling a groundwater bore. our Economic Performance

Service delivery

Customer service targets and measures Eastern Western Headworks Licensing Irrigation Irrigation 95% of water orders delivered within one day of request, with three days notice • • All water orders delivered according to customer instructions • Applications for Farm Dam and Works on Waterways licences determined within sixty days • Applications for Bore Construction Licences determined within fourteen days • Applications for Surface and Groundwater Licences determined within sixty days • Applications for Surface and Groundwater Licence transfers determined within fourteen days • Applications for Water Right transfers determined within fourteen days • • Applications for Information Statements processed within seven days • Monthly reporting to customers on storage shares • Monthly monitoring and reporting to customers on water quality in storages • • 100% compliance with service targets and measures.

Despite the drought our businesses met many – Whilst our Headworks Business met of our service targets. environmental flow requirements (as – At the very end of the irrigation season, determined by Bulk Entitlement Orders) our Eastern Irrigation Business introduced the drought created real challenges. rosters and grouped orders from customers – Our Licensing Business introduced new to avoid running channels at low volumes. processes and procedures to help manage – With a low seasonal allocation, our the large number of applications for Western Irrigation Business reduced the groundwater and surfacewater, and the number of days it delivered water into the increase in temporary and permanent water Werribee Irrigation District and we pooled transfers. As the impact of the drought orders to maximise delivery efficiency. intensified, there was increased demand for both groundwater and surface water resources across all our region. To help manage compliance with licence conditions, we appointed additional field staff, increased our monitoring and surveillance activities and installed meters on all new diversion points. Our staff worked together with representatives from other Authorities, Councils and local organisations to implement stream flow monitoring programs. To ensure that we were meeting customer expectations, we introduced a Customer Feedback Form that was sent to all customers when the licence was issued or declined. This feedback confirms that most customers are satisfied with the information and service offered by our Bore Construction Licence administration team. o9

Service improvement works

Total Channel Control Project in the Recycled and portable water supplies in the Silt surveys at our Western storages Macalister Irrigation District Werribee Irrigation District As a result of the silt surveys conducted at all In February 2004, the Minister for Water, Due to the severe impact of the drought and four storages in the Werribee and confirmed funding of the Total Channel the lack of water in our storages, our Werribee Maribyrnong catchments, we developed new Control (TCC) project in the Macalister Irrigation District customers received only storage capacity ratings. During 2003/2004 we Irrigation District and work began in May 40% of their seasonal allocation for the undertook additional silt surveys at Rosslynne 2004. This project is part of the Government’s 2003/2004 irrigation season. To help and Merrimu reservoirs to monitor deposit Water For the Future commitments. customers with supplies over the summer rates within these storages. Apart from early months, an emergency Rescue Package was identification of outlet restriction issues, the The project aims to minimise water loss, negotiated between Government, relevant information obtained may be of assistance to introduce innovative technology and improve water authorities and customers. This package the broader issue of catchment management. river health through increased environmental included two alternative supply sources – flows. It is to be completed in two stages and short-term access to potable water from the on completion will fully automate a major part Increasing our Licensing presence Thomson Dam and a longer-term supply of of the Main Northern Channel system. Class A recycled water from Melbourne Our Licensing Business has field officers By implementing this technology and Water’s Western Treatment Plant. working from 11 locations across our region. In adopting a new way of ordering water, our – By connecting into City West Water’s new recent years we have increased our staffing customers will be able to: main trunk pipeline, we were able to access numbers but we recognise that continued, – confirm supply rates and delivery times up to 40ML/day of potable water and targeted efforts are needed in specific areas – when lodging their order supply it to customers through our especially Melbourne fringe and the Barwon region and an emphasis on unregulated surface – receive requested flows within 24 hours of irrigation distribution network. Approval catchments. We also plan to expand the role of lodging an order, depending on demand for this additional supply was announced by the Minister in December 2003 and we our Warrnambool office. This will provide – set outlets for automatic start and finish commenced delivery in January 2004. This greater visibility and promote us to other times that are convenient to them was an exceptional effort by all involved as resource management agencies and stakeholders. – receive reliable flow rates of up to the project required extensive stakeholder 20ML/day, subject to on-farm capacity engagement and complicated engineering Water trading – read meters on-line through the automated works to be completed over the Christmas system. holiday season. Over the past twelve months we have actively – By connecting into the Western Treatment encouraged all customers to trade any Water Plant’s pipeline, we will be able to offer Right or Licensed Volume that they do not irrigators the opportunity to access Class A plan to use on a temporary or permanent basis recycled water. While the final details of – and to trade this water using Watermove, the this offer are still being negotiated with online water trading exchange that operates customers, the Department of Human across Victoria. Services, Environment Protection Authority and the Department of Sustainability and Environment (DSE), this Class A recycled water will provide Water for the Future and security of supply. This recycled water will be delivered through our existing infrastructure.

L - New flume gate installed as part of TCC project. R - Installing a new pipeline in Werribee. our Economic Performance

Financial performance

Prices End of year results SRW operates on a cost-reflective basis, so During 2003/2004, we reduced our sales Cost recovery and financial viability are the prices charged generate revenue needed budgets to better match our current sales managed and monitored by employing fund to pay for: expectations, increased prices and developed based budgeting and management reporting. – recurrent operating and maintenance three-year price paths to reduce deficits in the This helps focus on the need to generate expenditure Eastern Irrigation Business and the Western sufficient funds to manage the replacement of Irrigation Business. These deficits are largely assets and to provide for investment and – future replacement of infrastructure and the result of revenue shortfall due to lack of growth within each business. To achieve this other assets employed sales. Our price paths will help us meet the we have created separate funds for asset – costs of capital improvement of annual ‘holding costs’ of these business deficits renewals and investments. infrastructure and other major works or and repayment costs over the next ten years. activities required to safeguard or develop Asset renewals are funded from an annuity the Business The price of water in the Eastern Irrigation provision included in prices, which is calculated Business increased to $37.27/ML. In the to generate sufficient funds to replace assets – corporate costs, and Western Irrigation Business, the price of water when they reach the end of their life. The – costs arising from any bulk entitlement(s) rose between 9.7% and 13.0% – to calculation is based on estimated future owned by the business. $126.50/ML for customers in the Werribee replacement costs within the renewal period and Our pricing structure, developed in Irrigation District and $115.00/ML in accounts for the time value of money. Bacchus Marsh. consultation with our Customer Consultative Investments and growth are funded from any Committees and approved by our Board, In our Headworks Business, increases in storage operating surplus, after providing for asset reflects our commitment to keeping prices as operator charges were around 7% to 14%. renewals. Investment funds represent low as possible while ensuring the long-term These increases represent the impact of accumulated surpluses/(deficits). Typically, these financial viability of our businesses. insurance premiums and increased security, as funds have been in deficit over recent years, well as some refinement in our works programs. generally as a result of seasonal conditions. In our Licensing Business we continued to The table on the following page shows the apply our five-year price path to meet our need movements in our renewals and investment for more intensive management of surface and funds for our four businesses. groundwater. In 2003/2004 we extended our The Corporate Plan for 2003/2004 established standard $150 Water Management prices that were targeted to achieve a renewals Implementation Charge to contribute to the cost based surplus of $1,081,000. A comparison of all meter readings, maintenance and water between the renewals based operating result and resource monitoring in unregulated catchments a depreciation based operating result depends on and groundwater areas. This charge was the timing of asset replacements within the applied to 21 Streamflow and Groundwater renewal cycle. If we were to adjust the Management Areas. Corporate Plan for depreciation (in place of the renewals charge) and the re-classification of non-capital major projects (funded from investment and renewals funds), we would have had a planned target accounting deficit of $2,741,000. Our actual deficit of $1,822,000 (after the $418,000 dividend payment to Government) is $919,000 better than budgeted. This improved result is derived primarily from high volumes of Bore Construction Licence applications, the receipt of some unbudgeted grant moneys and the once-off sale of surplus land in the Western Irrigation Business. This sale helped to offset the financial impacts of the drought for that Business. The Eastern Irrigation Business met its sales target for the first time in many years and with minor cost savings ended the year above budget. 11

Eastern Western Headworks Licensing Irrigation Irrigation Renewals Funds $’000’s $’000’s $’000’s $’000’s Opening balance as at 1 July 2003 4,007 1,226 2,011 281 Add Annuity Provision 1,129 450 496 148 Less Renewals Program 1,169 1,433 744 51 Add Interest Earned / (Incurred) 206 32 90 36 Closing balance as at 30 June 2004 4,173 275 1,853 414 Investment Funds Opening balance as at 1 July 2003 (2,419) (646) (247) (11) Add Recurrent Surplus / (Deficit) (25) 179 64 146 Less Investment Program 63 364 214 22 Add Interest Earned / (Incurred) (186) (37) (58) 5 Closing balance as at 30 June 2004 (2,693) (868) (455) 118 our Economic Performance

Asset management

Dam Safety Review Program Safety and Security Maintenance programs The Australian National Committee On Large To ensure the safety and security of our Each year we set priorities for funding and Dams (ANCOLD) Guidelines recommend that reservoirs and weirs, we have implemented the implementing our maintenance programs. Dam Design Safety Reviews be undertaken security assessment framework developed by During 2003/2004, this maintenance program every fifteen years to ensure that all large dams the Victorian Water Industry. We regularly for the Eastern Irrigation Business included: comply with current design standards. In 1996, complete security inspections at all major we began a formal process for completing initial structures and our emergency reporting – major and minor repairs to our distribution risk assessments and identifying priorities for protocols have been examined and tested. infrastructure, meter outlets and completing a detailed Dam Design Safety emplacements Review for all our dams. We have completed – desilting of channels and drains Safe Drinking Water these assessments for all our major dams. – services to support the installation of the As part of the requirements of the Safe During 2003/2004 we completed design reviews Total Channel Control project Drinking Water Act 2000, we are required to of Glenmaggie, Pykes Creek, Merrimu and – a meter accuracy survey and subsequent develop a Drinking Water Quality Risk Melton dams. The outcome from these reviews adjustments, re-settings and replacements Management Plan. This Plan is being is acceptance of the design standards used or the developed in conjunction with Regional Water – seepage mitigation works identification of design deficiencies or remedial Authorities and will define roles and – improvements to access points along our action to be implemented as part of our Dam responsibilities for monitoring water quality channel network Safety Program. The review confirmed that and implementing emergency response plans. Glenmaggie dam met acceptable design – extensive pruning and removal of trees standards and that Merrimu, Melton and Pykes along our channel banks. Creek, whilst being close to tolerable, presented Critical Assets Programs Generally, this work is managed and some deficiencies that should be remedied. completed by specialist contractors and SRW Further investigations were undertaken during As the failure of our major channels and pipelines would have a substantial impact on staff. However, some tasks (such as the 2003/2004. Our remedial work on strengthening painting of our infrastructures especially at the Narracan spillway gates that commenced in many of our irrigation customers, we have developed Critical Assets Programs for both road crossings to improve visibility) are 2002/2003 was completed in December 2003. undertaken by prisoners from Regional These works provided completely new means of our irrigation businesses. These programs, based on cyclic and detailed inspections and Correction Centres as part of their gate operation by hydraulic winches and rehabilitation program. improved access to gates. surveillance of our major assets, help to ensure that our key structures remain in good repair and that any exposure to potential Headworks Renewal Program failures are identified and addressed. The – At Pykes Creek dam, major works resulting Programs also include specific response plans from asset condition inspections were in the event of a major channel failure. undertaken during the year. The low-level A walkthrough inspection of the Thomson inlet tunnel was identified as a structural River siphon had confirmed that while the concern, together with concerns of limited concrete and reinforcement were structurally operational capability and remaining sound, there were leaks from a number of service life of the service gates. As storage cracks. In June 2004, our contractors began levels were at historically low levels, a new installing their Panel Lok lining system over a low-level inlet was constructed. 350 metre section of the siphon. This system Rehabilitation of the tower and tower consists of installing a plastic liner that sits access will continue into 2004/2005. flush against the surface of the concrete and – At Glenmaggie dam three spillway gates then pumping grout behind the liner to fill any were re-painted, renewing corrosion gaps and to bind the new liner to the existing protection to important infrastructure concrete surface. components. The coating used is expected to provide more than 20 years of protection to these difficult to access components. Only three further gates require refurbishment. 13

L - Rehabilitation works at Thomson River siphon. M - New inlet at Pykes Creek. R - Wandocka gauging station on the Thomson River.

Obligations

Joining the Essential Services Commission Bulk Entitlement Orders and Community obligations environmental flows On 1 January 2004, all water authorities came In accordance with current policy, SRW under the jurisdiction of the Victorian Bulk Entitlement Orders document the charges Western Water and Gippsland Water a Government’s economic regulator, the Essential operating rules that exist for all storages. As Rate of Return on the value of Headworks Services Commission (ESC). The primary role there can be more than one organisation that has assets used in storing their bulk entitlements. of the ESC is to regulate prices and service a share in these storages, all entitlement holders When first adopted, it was intended to be 4% standards. As part of our transition, we must comply with these rules, including: but for some dams it has fallen below this developed a draft Water Plan for the next three – maximum volumes that can be taken from figure. Currently it is 1.6% for the Werribee years. This Water Plan is a blueprint of our the reservoir, system or waterway system, 3.9% for the Maribyrnong system and activities – it summarises our priorities, 3% for the Upper Latrobe system. This – definition and operation of environmental programs and targets, resources and how we revenue is used to fund a range of community flow regimes will review performance. programs and government priorities but not – cost sharing arrangements and how costs our ongoing business operations. In addition, DSE is drafting a Statement of are calculated. Obligations. This will clarify many of our In 2003/2004, nearly $2 million was used to existing, specific obligations and will introduce As the storage operator, SRW: fund: new operational and reporting requirements. – allocates any inflows or losses in – our contribution to Dam Remedial Works We anticipate this to be issued in 2004/2005. accordance with the capacity shares held Program As part of our annual planning process, we – releases water in accordance with a – key community service obligations such as submitted our annual Corporate Plan to the shareholder’s request the operation of recreational facilities and Minister for Water in April 2004. This Plan was – complies with environmental flow waterway management approved and is being implemented. While we requirements. – the implementation of Streamflow and do not expect our entry to the ESC to change To better monitor compliance with Groundwater Management Plans until the the way we work with our Customer environmental flow requirements, we: relevant Plans were signed off and Consultative Committees in setting prices or implementation charges introduced, and how we work with stakeholder groups, it may – perform random checks at diversion points – our dividend payment to Government. create new challenges. along rivers to ensure that customers are complying with confirmed water orders – maintain a number of gauging stations with Managing complaints alarms that alert SRW of unusual changes To ensure that we manage customers, in water levels. These alarms provide an stakeholders and the wider community in a early detection warning to ensure professional way at all times, we have environmental flows are continuously established policies and procedures to track and achieved. Compliance with environmental monitor formal complaints. If a customer feels flows is a requirement of each Bulk that they have been treated unfairly or have Entitlement Order. been disadvantaged by a decision made by us, their complaint is subject to an internal review. During 2003/2004, we received eight formal complaints and each was resolved in-house. By comparison, in 2002/2003, we received nine complaints. An additional eight enquiries have been registered with the Energy and Water Ombudsman Victoria and where necessary these were referred to us for further investigation. All have been satisfactorily resolved. our Environmental Performance

Environment management

Our EMS, programs and external audit River health and environmental flows Monitoring of thermal impact of releases To help us identify and manage the impact of our Under various Bulk Entitlements Orders issued Cold-water pollution of downstream waterways activities on the environment we have developed by the Minister in accordance with the Water by reservoir releases is acknowledged as an an Environmental Management System (EMS). Act, we have specific responsibilities regarding issue requiring further research. In 2002/2003, This system highlights our statutory obligations environmental flows. To help us monitor as part of a statewide research initiative to build and the environmental risks that we could face as compliance, we manage a number of gauging understanding of the thermal impacts of water a result of our activities. stations along our regulated rivers and have releases, monitoring systems were installed at installed additional gauging stations where our storages and began collecting data on water During 2003/2004 we continued to implement there has been an identified need. This year, we temperature changes through the storage and at our EMS across all Businesses. This involved also participated in the Task Force groups different depths. Once we have two or three internal environmental training and the established as part of the Victorian River years of data, we plan to develop strategies to development of Environmental Management Health Strategy studies, revised arrangements manage future releases to minimise these Programs and procedures to address for the Lerderderg River and introduced new thermal impacts. significant environmental risks posed by our systems and processes for the management of activities. An external review of our EMS the Thomson and Macalister Rivers. provided recommendations for compliance Monitoring Blue Green Algae with the requirements of ISO14001. The Lerderderg River Task Force investigated Throughout 2003/2004, our Headworks the level of flow stress in the river and In April 2004, EPA Victoria confirmed that as Business continued to monitor Blue Green developed a set of management options, we were a small energy user, we were not Algae in our storages and weirs. We also took including the provision of flow ‘freshes’ to required to take any specific action to reduce part in emergency response plans for the alleviate identified deficiencies in the flow greenhouse gas emissions at our licensed Merri, Moorabool and Werribee rivers and regime without affecting existing entitlements. premises. As part of our everyday business integrated these plans into our due diligence In order to implement these recommended practice we are committed to reducing energy processes to protect public health and ensure changes to passing flow requirements, it was by turning off lights and office equipment at that risks for our customers and our business necessary to modify the Lerderderg Weir. A the end of the working day and by installing are minimised. Blue Green Algae blooms are concrete-lined steel pipe with valves and timers, where appropriate. reported according to requirements set by the meters to regulate and monitor flows was Victorian framework for Convening Agencies installed at the base of the existing structure. and Local Water Managers. Water Quality and Biodiversity This work, funded primarily by DSE cost Management Plans approximately $500,000. Once we had developed Water Quality and The Thomson/Macalister Task Force was set Biodiversity Plans for each of our seven major up to identify the environmental flows required storages, we then began to produce water to keep both rivers healthy and to achieve an quality reports for Bulk Entitlement holders acceptable balance between the needs of all each quarter. consumptive water users, including urban supply, irrigation and environment flows. This In 2003/2004, we continued the development group reported its recommendations to the of our Biodiversity register. We compiled and Minister in March 2004. updated sites of biological significance and ecological vegetation class map layers to compare with our property register. To complement this we have started to develop a map layer all properties owned by us. 15

L - Environmental flow works at Lerderderg Weir. M - Meeting with the Minister for Water at Cowwarr Weir to discuss river health. environmentR - Temporary Blue Green Algae public warning signs.

Drain monitoring and management As part of our water resource management – installed two new monitoring stations, activities within the Eastern and Western bringing the total to 27 stations Irrigation Businesses, we monitor and manage – continued our ongoing erosion control and discharges from drains. fencing works In the Macalister Irrigation District we – provided field staff with regular participate in the Nutrient Reduction Plan by performance reports. reducing nutrient discharges from drains and As at 30 June 2004, the total phosphorus load managing the drains to reduce flows. During from the MID was calculated to be 2003/2004 we: approximately 43 tonnes – within the 40% – improved management of outfalls so that reduction target and 12 months earlier than the limited volumes reached the drains target date set by Government. – installed more channel-to-drain outfall In the Werribee Irrigation District we monitoring equipment continued a similar monitoring program. Data – assisted the EPA with their dairy effluent collected this year indicates that although there audit and investigations are high concentrations of nutrients in the – finalised extra drain diversion agreements, drains, the actual flow from the drains was including the recognition of existing negligible. This means only a very small unlicensed diverters nutrient load passes from the Werribee – identified drain end storage sites and Irrigation District into Port Phillip Bay. facilitated the transfer of more than 50 drain segments to farmers for development as on-farm reuse storages

100

90

MID NUTRIENT DISCHARGE PERFORMANCE

80

70

60 Baseline (94-96) 2005 Target 2000/2001 50 2001/2002 2002/2003 2003/2004 40 PHOSPHORUS LOAD (TONNES)

30

20

10

0 First Quarter Second Quarter Third Quarter Year End

The graph shows the annual phosphorous load being discharged from the MID since 2000. BALLAN HEATHS our Environmental EIT DUNNINGS

TARN PRINCES Performance SNEYDES RAILWAY

HOPPER

POINT COOK

PRINCES S AVIATION PRINCES

GERS Port Phillip Bay

DIG

Legend

CANS Deutgam WSPA

Werribee River DUN Emerging threat Immediate threat

1012340.5 Resource Kilometres management

Water Management Plans Groundwater Monitoring A local, community-based Water Management Water Management Plans provide us with – Deutgam. Groundwater levels in the Plan underpins water resource management in reliable usage and system information and Deutgam WSPA plunged dramatically in Victoria’s groundwater management areas and have been effective in implementing metering September/October 2003 and this prompted unregulated catchments. We collaborate with the and monitoring programs across our region. the ban on groundwater extraction, DSE and Catchment Management Authorities in An annual report is developed for each including stock and domestic use. determining priorities for these plans and provide approved surface water and groundwater As the aquifer is located on the coast, administrative support for their committees. management plan. These reports, produced by decreasing groundwater levels increased the local committees, provide a summary of risk of seawater intrusion to the aquifer. The In accordance with the Act, the process starts activities and data collected to ensure potential consequence was increased salinity with our application to the Minister for the compliance with the plan’s recommendations. and damage to the aquifer, rendering the declaration of Water Supply Protection Areas water unusable for irrigation or domestic use. (WSPAs) when water usage approaches its sustainable limit or Permissible Annual Water allocations and caps At the time of the ban, we commenced weekly groundwater level and fortnightly Volume. Licence allocations are then capped In June 2004, DSE and its key stakeholders salinity testing. While levels have partially and the Minister appoints a committee to finalised the Sustainable Diversions Limit recovered, they still lie well below undertake the development of Water (SDL) project. This project developed a historical levels. Sampling has shown some Management Plans. scientific methodology for assessing flow elevated readings of salinity but the aquifer requirements for streams before there was an Community-based plans that pre-date this remains relatively stable at this time. current process exist for the Upper Latrobe, unacceptable risk to the environment and Given its complexities and the need to Gellibrand and Merri catchments. A draft plan provided a volumetric estimate of surface manage the aquifer proactively, a for the Avon catchment has been prepared and water being used or committed within 1,600 hydrogeological model has also been plans for the Barwon and Tarra WSPAs are discrete catchments. developed to test groundwater extraction scheduled to commence in 2005. Catchments As a result of this project, estimates for the scenarios against aquifer response. This being considered in this WSPA program post- diversion potential during winter (July to information, together with our resource 2005 include the Upper Maribyrnong, October inclusive) for unregulated rivers and management strategy, will better inform our Moorabool, Mitchell and Hopkins catchments. streams have been developed and decisions. Our resource management strategy WSPAs have been established in 13 areas where precautionary upper limits set. New diversion is based on compliance management, the there is already substantial groundwater licences are only permitted during the installation of meters on all bores and development. The Minister approved winterfill period and if allowed for under a continued groundwater and salinity management plans for Nullawarre and Yangery catchment SDL. monitoring. This strategy will ensure that and although he has not approved earlier plans Permissible Annual Volumes have been both the interests of the groundwater users for Deutgam and Sale, the preparation of new determined for 37 Groundwater Management and the health of the aquifer are protected. plans for these areas has Ministerial support. Areas within our region to set limits on – Sale. In October 2003 it was identified that Draft management plans have been completed allocation of groundwater licences. Of these, 22 declining groundwater levels in the Boisdale for Wy Yung, Warrion and Denison and these are already fully allocated. Formation aquifer could lead to saline are awaiting determination by the Minister. intrusion from the Gippsland Lakes into the Areas that have management plans in All licence applications to take and use water Sale WSPA. Consequently, we imposed a development include Bungaree, Condah, are subject to a range of assessments that restriction on transfers within the area most Koo Wee Rup, Wandin Yallock and Yarram. ensure the environment is protected via affected – Clydebank. This action substantially Implementation committees have been licence conditions and that they are consistent reduced groundwater usage and alleviated the appointed for Nullawarre, Yangery, Denison and with State policy, Regional Catchment stress on the aquifer. This restriction remains Wy Yung. As the Glenelg WSPA was recently Strategies and endorsed plans. in place but is subject to review. declared, this water management planning Where groundwater or surface water – Warrion. In accordance with the draft process will commence in the near future. applications in southern Victoria are refused Water Management Plan and appropriate (in accordance with Ministerial Guidelines), technical advice, a network of groundwater developments may still occur, provided water bores was identified to monitor salinity can be traded within the aquifer or river basin. levels. This network includes nine existing bores and five new bores that were installed in March 2004. All bores in the network will be monitored twice a year. 17

L - Deutgam Seawater Intrusion Threat, October 2003. M - Typical groundwater bore for domestic stock use. R - Centre pivot for irrigation using groundwater.

Land management

Erosion Weeds Pests As well as managing water resources, we are After DSE commissioned an engagement In the Macalister Irrigation District, the also responsible for managing the marginal process to identify opportunities for European carp presents a real threat to the lands around our reservoirs and the lands on partnerships and collaboration between key environment and our distribution infrastructure which our channels are built. stakeholders in weed management across as their feeding activity creates high turbidity Victoria, the Eastern Irrigation Business levels, undermines channel banks and causes During 2003/2004, we concluded work within became partners in the Victorian Weed erosion. To help control numbers we have the Merrimu catchment, including the Management Strategy. This new approach installed barriers at our Headwater sites and development of settlement basins across deeply explores our key stakeholders’ understanding implemented an ongoing carp-trapping program. eroded gullies that discharge to the lake. Over of State Government policy for weed the coming twelve months we will work with management and their roles in the Grow West to develop a number of indigenous implementation of statewide weed species tree planting sites at Merrimu Reservoir. management plan. By joining the alliance we have adopted a more consistent approach to weed management, in that we now have: – a better understanding of current weed policies and priorities to improve our investment return and our roles and responsibilities in relation to policy, funding, education, eradication and enforcement – the potential to use statewide mapping facilities – the opportunity to work in a partnership of developing a “culture” of weed management and can offer a greater range of technical advice and share scientific research. In the Western Irrigation Business, we continued our attempts to control artichoke thistle on Drain No 1 where this noxious weed had been well established prior to intensive chemical control. With the assistance of local Council and neighbouring property owners we have been able to partially eradicate this weed. Other New carp barrier being installed at Maffra Weir. problem weeds (including wild aniseed) in both the Werribee and Bacchus Marsh Irrigation Districts have being controlled with up to four applications of non-residual herbicide. our Social Performance

Partnerships with customers and stakeholders s Our Customer Consultative Committees Southern Catchments Forum Stakeholder Survey SRW has two Customer Consultative In 2002 we began gauging support for a In mid-2003 we commissioned independent Committees that work in partnership with the Southern Catchment Forum which would research into stakeholder perceptions of our Board and management to ensure that a strong bring together key natural resource managers business activities and performance. We customer perspective is brought to our from southern Victoria to increase the focus wanted to capture stakeholder perceptions planning activities and the way we implement on the management of coastal catchments. about gaps in performance, areas for water resource management decisions, With the support of our stakeholders we improvement and any ongoing issues and programs and services. They also monitor our convened the Forum in 2002/2003 and concerns. The research confirmed that there business performance. The Macalister continue to encourage its development. had been a demonstrated commitment to Committee works with our Eastern Irrigation building relationships and improving business Business and the Werribee and Bacchus Marsh performance. It also informed us of our Bacchus Marsh Stakeholder Group Committee works with our Western Irrigation stakeholder needs and priorities and created a Business. During 2003/2004 both Committees This Stakeholder Group was established to basis for future partnerships and action. met with the Board on several occasions, in examine opportunities to improve water security addition to their customary meetings and in the Bacchus Marsh Irrigation District. It is discussions with management. currently considering a proposal by DSE for a water resources plan for the west of Melbourne. Our Customer Consultative Committees are This plan would then be an input to the Central made up of local customer and business Region Sustainable Water Strategy. representatives and are responsible for: – providing a customer’s perspective on key business issues Securing Our Water Future – developing a better understanding of In April 2003, the Minister for Water released business issues facing customers, the document Valuing Victoria’s Water and in identifying current and future expectations August, the Green Paper Securing Our Water as well as key links into the community Future was released. This document reminded – collaborating with SRW staff to develop and the people of Victoria that water is essential to monitor a business plan that identifies the success of our economy, the health of our prices, investment priorities and environment and the well-being of our society. service/performance measures and standards It also foreshadowed a White Paper to map – improving relationships with SRW out the Government’s vision for water over customers through communication, the next 50 years. problem solving and dispute resolution. As a Government Authority responsible for the Our Licensing Business Forum provides a management, supply and delivery of water, we licence holder’s perspective on our Licensing shared this commitment and actively engaged Business activities and decisions. However, as in community consultation and discussions that this Business is regulatory-based, the Forum’s led to the development of the Green Paper. We role is more of a sounding board for issues as advocated a suite of proposals for sustainable diverse as prices, compliance with the Water water catchments and systems across Victoria, Act, proposed changes to the assessment of institutional arrangements that strengthen licence applications and the implementation of regional ownership and leadership of water sustainable diversion limits. In some smaller and catchment management, and the need to systems, we have also established Local Area develop a knowledgeable community. A key Committees to provide advice on local proposal was the development of sustainable management issues – such as water plans on a regional basis. rostering/restrictions, metering/monitoring and We welcomed the release of the White Paper the application of general licensing policy. Securing Our Water Future Together and its comprehensive approach to using water wisely. We share its optimism for a ‘once in a generation’ opportunity for water reform – to ensure that Victoria can continue to have healthy water resources to support growing communities and a thriving economy. 19

L - Members of our Macalister Committee as at 1 July 2004. M - Members of our Werribee and Bacchus Marsh Committee as at 30 June 2004. socialR - Members of the Grow West project team, sponsors and landowners.

Partnerships in our communities

As an organisation we demonstrate our Councils and planning permits Grow West commitment to our communities by being During the year, we had extensive Grow West is a community driven landscape involved in a number of projects, by consultation with the Mornington Peninsula change project based at Bacchus Marsh. It aims participating in committees and action groups, Shire Council and the Hume City Council in to revegetate and improve degraded land in the and by leading regional activities. relation to water resource management, upper areas of the Werribee River catchment, in planning issues, farm dam legislation and our particular the Rowsley Valley and Pentland Moorabool Water Quality Policy works on waterway application assessment Hills areas. This catchment contains some of processes. As a result of these meetings and Victoria’s worst land degradation problems. To ensure the long-term sustainability of high on-site inspections, these Councils have a quality of water for drinking, irrigation and the As a sponsor of Grow West, we encourage local better awareness of the role SRW has in their environment from the catchments in the landholders to seek information about ways to Shire and how we manage our responsibilities. Moorabool Shire, representatives from SRW, improve land productivity and to access expert Central Highlands, Barwon Water and Western As storage operator, we play an important role advice on farm forestry, biodiversity, salinity Water worked together to establish the in protecting water quality in our reservoirs. and erosion management, weed and animal pest Moorabool Water Quality Policy. This sets Under the Planning and Environment Act we control within the catchment. guidelines for the management of potable are a Referral Authority and responsible for water resources in catchments that are under reviewing planning permit applications that increasing pressure from urban and agricultural may lead to inappropriate development within development. Once the draft policy had been a catchment. In 2003 we objected to a planning prepared, an extensive consultation process permit being issued that would have allowed a with a wide range of stakeholders was subdivision of seventeen unsewered lots in the implemented. The policy now provides clear Melton Reservoir catchment to proceed. We guidelines for potential applicants for land use, were concerned about the impact this development standards and the information development would have on the catchment, required to support a permit application. water quality and the planning processes. The case was presented to the Victorian Civil and Administrative Tribunal and it was determined that the developer must connect the properties to the reticulated sewerage scheme. our Social Performance

Partnerships in our communities cont’d

Community forums and field days Blue Rock Classic Relay Competition Golf Day Throughout 2003/2004 we attended a number Each year we work together with the Riding Each year our Eastern Irrigation Business holds of regional forums, held meetings with for the Disabled, the Moe Rotary Club and a its Rusty Shovel Golf Day. The money raised at farmer/industry groups and attended the major number of volunteer groups to prepare Blue this charity event is donated to a local service regional field days to explain changes in water Rock storage and its surrounding lands for the organisation. This year nearly 100 customers, management practices and licensing Blue Rock Classic. This year more than 100 stakeholders and members of the local requirements. teams entered the competition. community joined our staff in raising over – At the Werribee Fruit & Vegetable Expo $2,200 for the Stratford Rural Fire Brigade. we explained the reasons for introducing Boating Safety The organiser of this event and many other the groundwater ban in the Deutgam community activities, Col Merlo, was awarded As increasing numbers of people use our WSPA and the need to introduce meters on Employee of the Year at the Maffra Rotary storages for boating and recreational purposes, all groundwater bores. Club’s Annual Dinner in July 2003. This we completed boating safety reviews at each of – At the Lardner Park Field Day we explained award was in recognition of Col’s community our sites during 2003/2004. These reviews, the changes to Farm Dam legislation, water service, corporate citizenship and care for the completed in conjunction with MarineSafety, resource management and the need to environment and community in which he resulted in new safety zones and low-level conserve water around the home. works and lives. Congratulations to Col for trigger points being established around the lakes. being a leader in developing and promoting – We also attended field days at Bairnsdale, These changes are currently being gazetted. Silvan and Hamilton. our community.

Fish stocking Lake Glenmaggie Open Day Rock climbing at Glenmaggie Each year Department of Primary Industry As a result of the increased number of In February 2004 our Eastern Headworks staff staff in conjunction with members of Victorian requests from school groups to access land held an Open Day at Lake Glenmaggie. This Recreational Fishing determine fish stocking around Lake Glenmaggie for rock climbing event provided the public with an opportunity to rates along inland waters. Subsequently a and hiking, we worked with our legal advisors hear about its history, how we manage its regular program has been set for stocking to find a way that would enable community operation and to inspect the Pacific Hydro Blue Rock Lake and Lake Glenmaggie with groups to access our land without generation installation. It was an opportunity for native Bass and Rainbow and Brown Trout. compromising business security and risk. the public to walk out onto the structure – Although dependent on breeding successes, it Consequently, this area has now become a unsupervised access to the dam wall is no longer is anticipated that both storages will popular site for outdoor activities and permitted. As this was a highly successful day eventually be stocked with good quantities of community programs. for both visitors and staff, our Open Day will be native Bass attracting sports fishers to the held annually. region and assisting local economies. Drought relief bus tours Merrimu Dam tours Water Week and school tours In May 2004, more than 100 women from the Wellington Shire participated in the Maffra & Western Headworks staff conducted a number We supported National Water Week by Districts Landcare Network’s Girls Day Out of tours for schools and community groups conducting bus tours of the Macalister bus tours. These tours, sponsored by us and throughout the year. One tour group, Deakin Irrigation District for primary school children. other regional organisations, were in University, was particularly interested in The tour included a number of key sites across recognition of the need for women to have a visiting specific rock formation sites in the the district where we explained how we day where they could meet with friends, Coimadai Valley that date back over 250 manage and distribute water and a visit to the discuss the impact of the drought on their million years. These sites are amongst the robotic dairy. As the theme was Water For families and businesses and to just have fun. oldest-known rock features recorded in Life – protect, conserve and get involved we The tours were in recognition of the important Australia and are located below the water line. visited the local wetlands and planted over role women play in our community. While it was not possible to locate these sites, 500 trees, shrubs and grasses and completed the students did identify a very significant water quality tests with Waterwatch. We also glacial rock formation that had initially been ran a second program that enabled more than discovered in the very late 1800s. 300 students to attend Vox Bandicoot’s production, The Last Shower. 21

L - Brett Shears (L) from the Stratford Rural Fire Brigade accepts our cheque from Col Merlo, SRW. M - Competitors in the Blue Rock Classic. R - Fish ready for release at Glenmaggie.

Accountability

Advertising and public process for licence Victorian Civil and Administrative Tribunal Working with culturally diverse groups applications The Victorian Civil and Administrative Changes to our Licensing processes ensure In 2003/2004 we established a new process Tribunal (VCAT) is a civil justice system that that all groundwater or surface water licence for providing greater transparency in hears disputes between people and applications in culturally sensitive areas are managing groundwater and surface water government about the supply of goods or referred to the Cultural Heritage Group and licence applications. Significant applications services. If customers dispute a decision made other Government agencies. Similarly, our are advertised and the public is invited to by us regarding a licence application, they can register of customer licences and stream make formal comment to us. This advertising have their case heard at VCAT. Generally, gauges has been made available to the Native process includes neighbouring landowners, these cases involve water resource planning, Title Tribunal so that they can accurately advisory groups and other agencies including taking into account environmental matters. assess native title claims. local Councils, DSE and DPI, CMAs, EPA, While attending at VCAT hearing is a last resort Coastal Boards, Urban Water Authorities and in our mediation process, we have attended a Cultural Heritage Groups. This change is a number of VCAT hearings over the past twelve major reform and helps to ensure that our months. Most of these cases are where we have decision-making is efficient, consistent and made a decision to protect the water resource, fair. We also introduced development clauses existing licence holders and the environment. for large volume applications that allow for the issue of licensed volume on an incremental basis upon completion of key Good Neighbour Code milestones of on-farm developments. In June 2004 we introduced our Good Neighbour Code. This Code documents our commitment to act professionally, responsibly and as a good neighbour when we enter others’ land in carrying out our work.

L - Open Day tour group on Glenmaggie wall. M - School groups climbing at Lanigan’s Rock. R - Photo of school children on Water Week tour. our Social Performance

Our people

Diversity As at 30 June 2004, there were 118 people employed at SRW – 95 males and 23 females. The following table shows comparative staffing numbers for the past three years.

Category 2003 / 2004 2002 / 2003 2001 / 2002 Female Permanent full time 18 17 12 Permanent part time 3 7 2 Temporary full time 1 0 2 Temporary part time 1 0 0 23 24 16 Male Permanent full time 92 88 86 Permanent part time 2 2 2 Temporary full time 1 0 2 Temporary part time 0 1 1 95 91 91 Total 118 115 107

New employees were sourced with the Capability assistance of Mission Employment, a To ensure continuous improvement and the – Our Management Development Program Commonwealth Government job network building of capability, we have implemented a provides staff with the opportunity to attend recruitment service provider. Job number of ongoing programs and initiatives Management Forums as well as lunchtime advertisements and position descriptions were for all our employees and we have placed information sessions presented by in-house developed for each new role and a selection copies of our policies, procedures and Chief subject specialists. These presentations panel interviewed short-listed candidates. Our Executive Instructions on an open-access cover topics such as budgeting, financial selection process measures candidates against database so that they are available to all staff controls, leadership, legal compliance and advertised job pre-requisites and a key at all times. information management. selection criteria that includes the Merit and Equity Principles established by the Office of – Our Employee Consultative Committee, Public Employment. During 2003/2004, six initiated as part of our three-year Women’s Network selection panels were established. All new Enterprise Agreement in October 2001, is starters were employed on probation for three made up of employees, union Our Women’s Network, established in 2001 to months and received a formal induction. Pay representatives and management. It actively promote the professional development of and entitlements are administered in provides a reference group for resolving women, continued its program of meetings and accordance with signed employment contracts issues, promoting effective communication training activities. These events included and certified industrial agreements. and building harmonious relations between showcasing our businesses, developing networks, SRW and its employees. An Enterprise conflict resolution, personality types and Agreement Team was established in April management styles and various guest speakers. 2004 in order to develop and negotiate a new Agreement from October 2004. – Our network of Equal Opportunity field contact officers to work within business teams to identify and manage issues and to provide peer education and support. 23

L - Our Enterprise Agreement Team with Union representatives. R - Women’s Network meeting.

Occupational Health and Safety During 2003/2004 we managed our Occupational Health and Safety responsibilities in accordance with the provisions of relevant legislation. The following table shows our performance during 2003/2004 and the previous two years.

2003 / 2004 2002 / 2003 2001 / 2002 Number of lost time injuries 2 5 4 Total lost time (hours) 60 436 123 Number of no lost time injuries (medical expenses only) 11 8 7 Number of incidents / near misses 16 23 18

– This year there were two lost time injuries Trainees and work experience compared to five in the previous year and a During the year we hosted four Youth significant decrease in total lost time hours. Employment Scheme (YES) trainees and a – SRW participated in a number of Victorian number of school based work experience Water Industry Association safety network students. The YES scheme, a state government working teams, and convened the team sponsored initiative, provides people aged 15 relating to manual handling. to 24 years with an opportunity to enter the – Each year consultants are engaged to workforce and build careers. As a result of this review and report on our compliance with program, two of the trainees were offered Uniform Building Regulations. Their employment, and the other two are continuing recommendations are fully implemented. their traineeships. This YES initiative has Our Maffra and Werribee offices comply helped us to build a diverse workforce, and with these requirements. the work experience program provides a – Our OHS Risk Audit identified the need to potential source of candidates in the future. replace the asbestos roof at Yallourn Weir. This will be completed as part of our capital works in the next financial year. General Information

General information i Directions from the Minister for Finance Freedom of Information The information in this Report has been Over the past twelve months there were five provided to comply with the requirements of Freedom of Information (FOI) requests for FRD 2 of the Directions of the Minister for documentation under Division 2 of the FOI Finance under the Financial Management Act Act 1982. All requests were processed and 1994, if they have not been met elsewhere in information released in accordance with the the Report. FOI Act. None of these FOI matters were referred by the applicant to the Civil & Administrative Tribunal. National Competition Pricing Members of the public can access our We operate on a full cost recovery basis in documents, subject to the provisions of the accordance with the National Competition Freedom of Information Act 1982, by applying Policy. Our prices are set in collaboration and in writing and paying the prescribed fee to the consultation with customers to ensure that all Freedom of Information Officer, Southern operational costs are met and provision is Rural Water, PO Box 153, Maffra, VIC 3860. made for the replacement of assets used to provide our services. We also implemented a Tax Equivalent regime from 1 July 2001. Whistleblowers Protection Act 2001 This legislation is designed to protect people Consultancies who disclose information about serious wrongdoings within the Victorian Public Sector During 2003/2004 we engaged nine consulting and provides a framework for investigating and firms at a total cost of $94,831 to provide managing all disclosures of improper conduct expert advice, facilitate decision-making, by SRW or its employees. Disclosures can be implement specific tasks and provide skills made to the SRW Protected Disclosure Co- not currently available within our ordinator, Southern Rural Water, PO Box 153, organisation. For comparison, during Maffra, VIC 3860 or direct to the Ombudsman 2002/2003, we engaged nine consultancies at Victoria, Level 22, 459 Collins Street, a cost of $165,942. No consultants were paid Melbourne, 3000. During 2003/2004 there were more than $100,000. no disclosures made to SRW or the Ombudsman and no recommendations made by Building Act 1993 the Ombudsman. A copy of our Whistleblowers Guidelines is available on request. Each year consultants are engaged to review and report on our compliance with Uniform Building Regulations. Their recommendations are fully Information Privacy Act implemented. Our Maffra and Werribee offices The Information Privacy Act was introduced in comply with these OHS requirements. 2002 and since then representatives from each of our businesses monitor activities and information to ensure that we comply with the legislation at all times. No formal privacy complaints were received during the year. 25 info Financial review of operations and financial conditions

Five-year financial summary, including renewals reconciliation 2004 2003 2002 2001 2000 $'000's $'000's $'000's $'000's $'000's Revenue Water Rights and Charges 12,291 9,947 8,812 9,724 9,313 Storage Operator Charges 5,839 6,773 4,101 3,422 3,463 Government Grants 1,159 882 957 2,683 938 Other 1,065 886 1,164 1,377 1,618 Total Revenue 20,354 18,488 15,034 17,206 15,332 Expenditure Operations and Maintenance 12,976 13,440 12,257 7,244 7,478 Depreciation 4,825 4,755 4,637 5,283 4,228 Other 3,957 3,527 3,676 4,151 3,536 Total Expenditure 21,758 21,722 20,570 16,678 15,242 Equity Net Operating Result (1,404) (3,234) (5,536) 528 90 Payment to Government (418) (418) (418) (380) (418) Change in Accounting Policy* - (16) - - - Movement in Retained Earnings (1,822) (3,668) (5,954) 148 (328) Renewals Reconciliation Add Back Depreciation 4,825 4,755 4,637 5,283 4,228 Less Renewals Charge 2,327 2,145 2,286 2,723 2,884 Renewals Based Result 1,094 (624) (3,185) 3,088 1,434 Less Additional Transfers to Renewals 421---- Less Dividend Payment to Government 418 418 418 380 418 Add Major Projects Expensed 1,328 1,568 3,352 321 - Funds Based Result 1,583 526 (251) 3,029 1,016

* See Notes to Financial Statements 1.8 and 15(b)

Value of our Community Service Obligations 2003 / 2004 2002 / 2003 2001 / 2002 Provision of concession to pensioners 2,171.27 1,208.56 1,340.90 Rebates paid to not for profit organisations under the water and sewerage rebate scheme Nil Nil Nil Utility relief grant scheme payments Nil Nil Nil General Information

Bulk entitlements

Thomson / Macalister River Werribee River The following information is provided in Temporary transfers of primary entitlements The following information is provided in accordance with Section 20.3 of the Thomson / were: accordance with Section 18.1 of the Werribee Macalister Bulk Entitlement Order. – MID to MID, 190 transfers, 5,818.8 ML Bulk Entitlement Order. At 30 June 2004, SRW’s entitlement in the – MID to Thomson River, 16 transfers, SRW transferred 144.5 ML from Pykes Creek Thomson Reservoir was 10,672 ML 741.2 ML Reservoir to Melton Reservoir. – Releases from the Thomson Reservoir to – MID to Macalister River, 14 transfers, Water taken from: supply primary entitlements, 3,231 ML 830.9 ML – Bacchus Marsh Diversion Weir was – Volume of SRW’s share of storage capacity – Thomson River to Thomson River, 2,971 ML as at the 1 July 2003 under Clause 9 was 20 transfers, 1,188.5 ML – Werribee Diversion Weir was 5,612 ML 868 ML – Thomson River to Macalister River, (Plus an additional 3,412 ML of potable – The volume of inflows attributed to SRW 0 transfers, 0 ML water = 9,024 ML) under Clauses 10.1 and 10.2 was 13,035 ML – Thomson to MID, 30 transfers, 1,558.7 ML – Maddingley Pumps was 0 ML The annual amounts of water taken by SRW – Macalister River to Macalister River, Volume of water taken from the waterway by from waterway were: 1 transfer, 48.0 ML primary entitlement holders including outfalls: – Southern Channel - 122,790 ML – Macalister River to Thomson River, – Bacchus Marsh was 2,079.6 ML – Northern Channel - 56,356 ML 2 transfers, 68.0 ML – River Diverters was 250.2 ML – Eastern Channel - 41,665 ML – Macalister River to MID, 2 transfers, 272.5 ML – Myrniong was 4.8 ML – Cowwarr Channel - 12,444 ML – Werribee was 3,949.6 ML (Plus an There are no amendments to this Bulk The volume of water held at Lake Glenmaggie additional 2,302.8 ML of potable water Entitlement Order. as at 30 June 2004 was 52,281 ML. = 6,252.4 ML) There have been no new Bulk Entitlements The annual amount of water taken by the There have been no internal spills. granted. primary entitlement holders under this Order As at 30 June 2004 capacity shares were: was 170,904 ML. There has been no program approved under sub-clause 18.2 to date. – Western Water, 1,419 ML There were no credits granted under Clause 17 – SRW, 373 ML of the Order. There has been no program approved under sub-clause 19.3 to date. – Unallocated, 452 ML There were no temporary or permanent transfers of a bulk entitlement or any other The Authority is not aware of any failure to As at 30 June 2004, share of passing flows: entitlement to SRW. comply with the provision of the bulk – Western Water, 28.2 ML entitlement. To minimise the potential for There were no alterations made to Schedules 1 – SRW, 9.4 ML breaching compliance with environmental or 2 under sub-clause 8.1 of the Order. – Unallocated, 9.4 ML flows, we have developed a Risk Management Permanent transfers of primary entitlements Strategy and action plan. SRW has not received any credits. For the were: year 2003/2004 a total of 275.5 ML was – MID to MID, 6 transfers, 107 ML returned to the system waterway via the main channel outfall. – Thomson River to Thomson River, 0 transfers, 0 ML No temporary transfers from this BE have – Thomson River to Macalister River, taken place. 0 transfers, 0 ML No transfers to SRW have taken place. – Macalister River to Macalister River, Allocations were restricted to 40% of 0 transfers, 0 ML entitlement for 2003/2004. – Macalister River to MID, 0 transfers, 0 ML 27

L - Maffra Weir on the Macalister River. M - Bacchus Marsh diversion weir on the Werribee River. R - Maribyrnong River monitoring point at Keilor.

Maribyrnong River Changes to Schedule 1 The following information is provided in – There are no alterations to Schedule 1 or 2 – There are no changes to Schedule 1 accordance with Section 19.1 of the of this Bulk Entitlement. Maribyrnong Bulk Entitlement Order. – There are no changes to Schedule 2. – There have been no Temporary Transfers – No water was released this year to supply within the system. Permanent Transfers licence entitlements. – There has been one temporary amendment – 1 Transfer, 123.4 ML, WID to WID – SRW’s share of Rosslynne Reservoir at the to this Bulk Entitlement. The requirement Temporary Transfers 30 June 2004 was 91 ML. to meet the 1 ML/day minimum flow at Sunbury has been replaced with a – 25 Transfers, 654.9 ML, from BMID to – Taking into account evaporation and requirement to maintain water quality BMID measurement discrepancies, SRW had inflows of 40.8 ML. parameters at Settlement Road and Salesian – 4 Transfers, 53.6 ML, from BMID to WID College. This temporary amendment will be – As no releases were made, no allowances – 1 Transfer, 50 ML, from BMID to Merrimu reviewed in November 2004. were needed for transfer and operating – 1 Transfer, 7 ML, from BMID to Werribee losses. – There have been no new Bulk Entitlements River granted. – SRW has had 22 ML deducted for passing – 3 Transfers, 63.7 ML, from WID to flow requirements. – SRW has submitted a resource Werribee River management plan, including an – With the continuation of the drought, the environmental management program, to the – 65 Transfers, 1,094.8 ML, from WID to water level in Rosslynne Reservoir has Minister. SRW has continued with the WID remained extremely low. This has resulted same metering program as before the Bulk in insufficient water available to provide – 2 Transfers, 25.7 ML, from Werribee River Entitlement was signed except some sites any irrigation releases during 2003/2004. to Werribee River have been upgraded with new equipment This lack of releases for irrigation resulted – 3 Transfers, 33 ML, from Werribee River and three sites have been amalgamated in ongoing issues with compliance for to BMID. with MWC sites to reduce costs. flows at Sunbury. Following consultation The annual volume supplied to: with DSE, SRW and other BE holders have – To SRW’s knowledge we have not failed to – Bacchus Marsh, 1,803.7 ML been granted a further temporary comply with any provisions of the Bulk amendment to the Maribyrnong BE passing Entitlement other than at Sunbury, as – Werribee, 3,827.5 ML (Plus 2,302.8 ML of reported. potable water = 6130.3ML) flows at Sunbury. – 13.3 ML has been taken from the waterway – Due to the extremely dry conditions, low There are no amendments to this Bulk by primary entitlement holders. water levels and the suspension of Entitlement Order. irrigation flows, SRW has continued to – There have been no Temporary or Permanent experience difficulties in meeting the There have been no new Bulk Entitlements transfers from this Bulk Entitlement. passing flow requirements at the Sunbury granted. We commenced work to enable the new – A total of 175.6 ML was transferred from site, as stipulated under the Bulk passing flow regime, as recommended by the Western Water’s Macedon system into the Entitlement Order. SRW has discussed Stressed Rivers Report on the Lerderderg River. Maribyrnong system less 8% for estimated these concerns with DSE and has been No new plans have been implemented. losses. granted a temporary amendment. These new arrangements will continue to protect SRW has with its best endeavours provided the environment and provide some water for passing flow requirements as detailed in savings during this drought period. the Bulk Entitlement Order. SRW experienced no difficulties in complying with the passing flow requirements. General Information

Latrobe River Yallourn Energy The following information is provided in – Although there were no amendments to The following information is provided in accordance with Section 16.31 of the Bulk this Bulk Entitlement, modelling will accordance with Section 12.3 of the Bulk Entitlement Order 1996. continue as this confirms natural flow Entitlement Order 1996. – At 30 June 2003, Blue Rock reservoir indicators and is used to review passing – The annual amount of water designated as contained 127,930 ML of water, 61.4% of flow requirements, particularly at Sale. taken by the Authority from the waterway capacity. Capacity is 208,188 ML. – There were no amounts supplied to any at its pumping station was 12,096 ML – At 30 June 2004, Blue Rock reservoir licence holders other than those specified – In accordance with Clause 11.4, the contained 148, 690 ML of water, 71.4% of in Schedule 1 of the Order. Authority has a network of metering capacity. Capacity is 208,188 ML. – Difficulties were experienced in relation to installed within its low quality water – At 30 June 2004, the amount of water in modified natural flow indicators at system that enables it to determine the low the Authority’s share of Blue Rock designated passing points and the end of quality water usage by both the Loy Yang reservoir was 2,436 ML or 1.1% of the year out of balance with the actual storage A and Loy Yang B power stations. This total capacity. volume. A new computer program was equipment is checked monthly for validity developed during 2003/2004 to calculate and annually for signal integrity. – The annual amount of water taken by licence BE shares on a daily basis in balance with holders from the system waterway was: – There were no temporary and no storage volume. - 110.4 ML, upstream of Yallourn Weir permanent transfers of all or part of the - 6,706 ML, downstream of Yallourn Weir. Bulk Entitlement. – The amount of annual losses debited to the – There was one entitlement or licence in Authority’s share of Blue Rock reservoir respect of the system waterway temporarily was 32 ML. or permanently transferred to the Authority. – There were no internal spills into the – There were no amendments to this Bulk Authority’s share of storage in Blue Rock. Entitlement. There has been no failure of which the Authority is aware to comply with – There were no periods of rationing for any any provisions of the Bulk Entitlement. licence holders during 2003/2004. There are no existing or anticipated – The Authority has provided for passing difficulties experienced by the Authority in flow requirements as specified in the Bulk complying with the Bulk Entitlement. Entitlement Order for the complete year. – There were thirty three temporary transfers and no permanent transfers of all or part of the Bulk Entitlement. – There was no Bulk Entitlement or licence in respect of the system waterway temporarily or permanently transferred to the Authority. 29

L - Narracan Dam on the Latrobe River. R - Yallourn Weir.

water Transfer Tables – for the year ended 30 June 2004

Table 1 Permanent Transfers of Water Rights and Extraction/Diversion Licences (Summary)

During year ended 30 June 2004 Total transfers Total transfers Total transfers Total transfers from other to other from districts/ to districts/ Net increase/ districts/areas districts/areas areas and areas and decrease Internal transfers and waterways and waterways waterways of waterways of for district/ District/area within district/area within Southern within Southern other Water other Water area or or waterway or waterway Rural Water Rural Water Authorities Authorities waterway Districts No. ML No. ML No. ML No. ML No. ML ML Macalister 6 107.00 0 0 0 0 0 Werribee 1 0.80 0 0 0 0 0 Bacchus Marsh 0 0 0 0 0 0 0 Regulated Waterways Thomson River 0 0 0 0 0 0 0 Macalister River 0 0 0 0 0 0 0 Latrobe River 0 0 0 0 0 0 0 Werribee River 0 0 0 0 0 0 0 Unregulated Areas Surfacewater 5 72.00 0 0 0 0 0 Groundwater 17 730.20 0 0 0 0 0 Total 29 910.00 0 0 0 0 0 0 0 0 0 30 water Transfer Tables – for the year ended 30 June 2004

Table 1.1 Permanent Transfers – from and to districts/areas & waterways within SRW

During year ended 30 June 2004 Bacchus Macalister Werribee Marsh Thomson Macalister Werribee Unregulated Unregulated To/From District District District River River River Surfacewater Groundwater Totals District No. ML No. ML No. ML No. ML No. ML No. ML No. ML No. ML ML Macalister 6 107.0 0 0 0 0 107.0 Werribee 1 0.8 0 0 0 0 0.8 Bacchus Marsh 0 0 0 0 0 0 0 Regulated Waterways Thomson River 0 0 0 0 0 0 0 Macalister River 0 0 0 0 0 0 0 Latrobe River 0 Werribee River 0 0 0 0 0 0 0 Unregulated Areas Surfacewater 5 72.0 72.0 Groundwater 17 730.2 730.2 Total 6 107 1 0.8 0 0 0 0 0 0 0 0 5 72 17 730.2 910

Table 1.2 Permanent Transfers – from districts/areas & waterways of other Authorities There were no transfers for 2003-2004.

Table 1.3 Permanent Transfers – to districts/areas & waterways of other Authorities There were no transfers for 2003-2004. 31

Table 2 Temporary Transfers of Water Rights, Diversion Licences and Sales Water (Summary)

During year ended 30 June 2004 Total transfers Total transfers Total transfers Total transfers Net Internal from other to other from districts/ to districts/ increase/ transfers districts/areas districts/areas areas and areas and decrease within and waterways and waterways waterways of waterways of from district/ District/area district/area within Southern within Southern other Water other area or or waterway or waterway Rural Water Rural Water Authorities Authorities waterway Districts No. ML No. ML No. ML No. ML No. ML ML Macalister 190 5818.80 36 1741.20 30 1572.10 169.10 Werribee 112 628.46 9 67.53 8 32.10 35.43 Bacchus Marsh 31 575.71 0 0 7 99.38 -99.38 Regulated Waterways Thomson River 22 1188.50 38 1997.70 50 2747.20 -749.50 Macalister River 1 48.00 14 830.90 8 250.50 580.40 Maribyrnong River 31 2564.70 0 0 0 0 0 Werribee River 2 22.70 10 89.10 4 25.15 63.95 Unregulated Areas Surfacewater 66 2157.20 0 0 0 0 0 Groundwater 83 4293.20 0 0 0 0 0 Total 538 17297.27 107 4726.43 107 4726.43 0 0 0 0 0

Table 2.1 Temporary Transfers – from and to districts/areas & waterways within SRW During year ended 30 June 2004 Bacchus Macalister Werribee Marsh Thomson Macalister Latrobe Werribee Unregulated Unregulated To/From District District District River River River River Surfacewater Groundwater Totals District No. ML No. ML No. ML No. ML No. ML No. ML No. ML No. ML No. ML ML Macalister 190 5818.80 30 1558.70 6 182.50 0 0 7560.00 Werribee 112 628.46 5 42.38 4 25.15 965.99 Bacchus Marsh 31 575.71 0 0 575.71 Regulated Waterways Thomson River 16 741.20 20 1188.50 2 68.00 1997.70 Macalister River 14 830.90 0 0 1 48.00 878.90 Latrobe River 0 0 31.00 2564.70 2564.70 Werribee River 8 32.50 2 57.00 0 0 0 0 2 22.70 112.20 Unregulated Areas Surfacewater 66 2157.20 2157.20 Groundwater 83 4293.20 4293.20 Total 220 7390.90 120 660.96 38 675.09 50 2747.20 9 298.50 31.00 2564.70 6 47.85 66 2157.20 83 4293.20 20835.60

Table 2.2 Temporary Transfers – from districts/areas & waterways of other Authorities & States There were no transfers for 2003-2004.

Table 2.3 Temporary Transfers – to districts/areas & waterways of other Authorities & States There were no transfers for 2003-2004. 32 water Transfer Tables – for the year ended 30 June 2004

Table 3 Irrigation water usage

During year ended 30 June 2004 Gross supply Total water at offtakes Users Diversions rights alloted (excl. volume outside Total from rivers, District/area to District passed district from delivered streams Total or waterway and diversion to other district from lakes and irrigation (District) licences Districts) Users in District channels district main channels usage Under Sales Total Usage under Sales water of delivered entitlements usage rights/ water in and stock domestic district & domestic & stock allowance ML ML ML ML ML ML ML ML ML Macalister 116705.4 233255.0 120263.5 29924.5 150188.0 0 150188.0 0 0 150188.0 Werribee 9448.5 9109.0 6222.4 13.2 6235.6 0 6235.6 0 0 6235.6 Bacchus Marsh 3758.8 2736.0 1803.7 0 1803.7 0 1803.7 0 0 1803.7 Gippsland Diverters 94341.8 0 0 0 0 0 0 36944.2 5546.9 42491.1 Maribyrnong System 1981.2 0 0 0 0 0 0 234.3 0 234.3 Werribee System 1553.2 0 0 0 0 0 0 220.4 0 220.4 Bunyip/Tarago System 14168.7 0 0 0 0 0 0 2486.3 489.6 2975.9 Other 0 0 0 0 0 0 0 4501.8 0 4501.8 Total 241957.6 245100.0 128289.6 29937.7 158227.3 0 158227.3 44387.0 6036.5 208650.8 33

Table 4 Private diversions from regulated waterways

During year ended 30 June 2004

Irrigation Stock & Domestic Other Total Licence Authorised Authorised Authorised Authorised Authorised Drainage Basin Volume Area Licence Volume Licence Volume Volume No. ML HA No. ML No. ML ML AVON RIVER 0 0 0 0 0 0 0 0 BEMM RIVER 0 0 0 0 0 0 0 0 BUNYIP RIVER 92 4739.8 742.4 129 320.5 32 150.2 5210.5 BUNYIP RIVER WEIRS 0 0 0 0 0 0 0 0 EAST GIPPSLAND 0 0 0 0 0 0 0 0 GLENELG RIVER 0 0 0 0 0 0 0 0 HOPKINS RIVER 0 0 0 0 0 0 0 0 LAKE COLAC 0 0 0 0 0 0 0 0 LATROBE RIVER 97 11121.8 1942.3 21 52.8 11 20048.6 31223.2 LATROBE RIVER TRIBUTARIES 0 0 0 1 4.4 0 0 4.4 MARIBYRNONG RIVER 8 222.6 38.7 7 15.4 3 6.6 244.6 MITCHELL RIVER 0 0 0 0 0 0 0 0 MITCHELL RIVER TRIBUTARIES 0 0 0 0 0 0 0 0 MOORABOOL RIVER 68 1580.1 177.2 17 39.2 6 48.9 1668.2 NICHOLSON RIVER 0 0 0 0 0 0 0 0 OTWAY SYSTEM 0 0 0 0 0 0 0 0 PORTLAND 0 0 0 0 0 0 0 0 SNOWY RIVER 0 0 0 0 0 0 0 0 SNOWY RIVER TRIBUTARIES 0 0 0 0 0 0 0 0 SOUTH GIPPSLAND 0 0 0 0 0 0 0 0 TAMBO RIVER 0 0 0 0 0 0 0 0 TAMBO RIVER LOWER 0 0 0 0 0 0 0 0 TAMBO RIVER TRIBUTARIES 0 0 0 0 0 0 0 0 THOMSON COWWARR CHANNEL 3 277 67.5 1 66 1 2.2 345.2 THOMSON MACALISTER 48 3829.2 618.7 18 42.05 6 3391.8 7263.05 THOMSON RIVER 135 16645.6 2843.5 18 41.8 10 33 16720.4 WERRIBEE RIVER 28 873.5 223.8 36 105.6 13 121.8 1100.9 WESTERN PORT BAY TRIBUTARIES 0 0 0 0 0 0 0 0 YARRA RIVER 0 0 0 0 0 0 0 0 Total 479 39289.6 6654.1 248 687.75 82 23803.1 63780.45 34 water Transfer Tables - for the year ended 30 June 2004

Table 4 (cont’d) Private diversions from unregulated waterways

During year ended 30 June 2004

Irrigation Stock & Domestic Other Total Licence Authorised Authorised Authorised Authorised Authorised Drainage Basin Volume Area Licence Volume Licence Volume Volume No. ML HA No. ML No. ML ML AVON RIVER 67 6174.4 1011.4 17 37.4 6 49.2 6261.0 BEMM RIVER 12 715 135.6 5 17.6 6 13.2 745.8 BUNYIP RIVER 292 9428.9 997.6 169 446.6 86 304.8 10180.3 BUNYIP RIVER WEIRS 1 6 2 0 0 0 0 6.0 EAST GIPPSLAND 0 0 0 0 0 1 6.6 6.6 GLENELG RIVER 16 965.2 140.2 30 72.6 10 26.5 1064.3 HOPKINS RIVER 120 9775.3 1646.4 33 79.7 17 85.8 9940.8 LAKE COLAC 17 800.5 124.6 3 6.6 5 64.4 871.5 LATROBE RIVER 21 546 42 13 41.8 8 92 679.8 LATROBE RIVER TRIBUTARIES 434 16300.32 4139.8 121 339 122 839.26 17478.6 MARIBYRNONG RIVER 58 1758.6 166.5 52 196.8 18 41.9 1997.3 MITCHELL RIVER 138 13030.3 2136.9 53 145.2 12 35.2 13210.7 MITCHELL RIVER TRIBUTARIES 50 1897.9 320.36 20 46.2 10 80.6 2024.7 MOORABOOL RIVER 57 1604.4 399 12 28.6 2 26.2 1659.2 NICHOLSON RIVER 2 42.7 7 7 15.4 1 2.2 60.3 OTWAY SYSTEM 175 7902.2 1229 109 259.6 80 1144.1 9305.9 PORTLAND 27 1160.9 227.1 17 37.4 8 25.4 1223.7 SNOWY RIVER 33 2537.8 463 11 24.2 1 4.4 2566.4 SNOWY RIVER TRIBUTARIES 18 1211.5 275.5 10 28.6 5 26.4 1266.5 SOUTH GIPPSLAND 226 10082.5 1696.7 270 796.2 240 844.55 11723.3 TAMBO RIVER 15 702.2 115.3 33 74.8 10 60.8 837.8 TAMBO RIVER LOWER 36 2769 457.4 16 53.6 3 6.6 2829.2 TAMBO RIVER TRIBUTARIES 19 259.65 74 27 81.5 11 32.5 373.7 THOMSON COWWARR CHANNEL 0 0 0 0 0 0 0 0 THOMSON MACALISTER 73 4369 733.18 15 37.4 9 58.7 4465.1 THOMSON RIVER 24 3041.4 403.1 7 15.4 2 6.6 3063.4 WERRIBEE RIVER 23 679.7 80.3 16 35.2 5 195.4 910.3 WESTERN PORT BAY TRIBUTARIES 7 1379.7 160 0 0 1 2.2 1381.9 YARRA RIVER 1 7.4 1.2 1 2.2 0 0 9.6 Total 1962 99148.47 17185.14 1067 2919.6 679 4075.51 106143.58 35

Table 5 Groundwater extractions

During year ended 30 June 2004 Irrigation Other Total Authorised Authorised Authorised Authorised Groundwater Management Areas Licences Volume Area Licences Volume Volume BUNGAREE 86 5,042.90 1519.6 6 268.50 5311.40 COLONGULAC 21 3,417.40 571.2 20 216.59 3633.99 CONDAH 36 7,408.70 1148 3 143.80 7552.50 CORINELLA 2 73.00 13 11 80.64 153.64 CUT PAW PAW 2 169.00 28 2 362.00 531.00 DENISON 65 13,339.10 2128.5 58 394.20 13733.30 DEUTGAM 156 5,091.80 1696.5 4 539.50 5631.30 FRANKSTON 22 864.20 263.4 6 247.10 1111.30 GERANGAMETE 0 0 0 1 8000.00 8000.00 GIFFARD 9 5,643.40 1030 3 52.00 5695.40 GLENELG 67 31,298.10 9 1139.20 32437.30 GLENORMISTON 11 2,292.10 366.4 25 113.70 2405.80 HEYWOOD 62 6,131.90 1282.4 34 259.20 6391.10 JAN JUC 0 0 0 1 4000.00 4000.00 KOO WEE RUP-DALMORE 1 51 995.50 898.3 13 141.60 1137.10 KOO WEE RUP-DALMORE 2A 37 791.16 378.7 7 42.00 833.16 KOO WEE RUP-DALMORE 2B 73 3,032.50 1825.7 19 117.20 3149.70 KOO WEE RUP-DALMORE 3 23 1,389.20 573 9 32.60 1421.80 KOO WEE RUP-DALMORE 4 29 1,725.10 670.3 33 221.70 1946.80 KOO WEE RUP-DALMORE 5 17 1,115.90 371.1 38 640.10 1756.00 KOO WEE RUP-DALMORE 6 14 447.60 170.8 2 118.00 565.60 KOO WEE RUP-DALMORE 7 10 1,187.30 253.4 15 1760.20 2947.50 LANCEFIELD 13 1,037.20 238.77 2 210.20 1247.40 LEONGATHA 10 946.10 212.3 21 524.90 1471.00 MERRIMU 10 411.50 135.2 3 40.00 451.50 MOE 18 2,165.60 372.35 55 404.47 2570.07 MOORABBIN 28 1,923.90 477.3 2 366.50 2290.40 NEPEAN 68 5,647.70 1347.45 7 59.00 5706.70 NEWLINGROOK 1 134.00 20 3 1814.00 1948.00 NOT IN GMA 614 48,463.22 10804.85 544 13135.73 61598.95 NULLAWARRE 104 21,490.21 3604.88 103 771.80 22262.01 ORBOST 3 1,200.00 268.37 0 0 1200.00 PAARATTE 0 0 0 4 3192.00 3192.00 PORTLAND 3 230.10 64.1 4 1415.50 1645.60 ROSEDALE 43 12,576.52 2264.32 5 189.40 12765.92 SALE 91 17,841.70 5264.04 14 3751.20 21592.90 STRATFORD 7 841.00 125 0 0 841.00 TARWIN 1 2.00 0.3 2 39.20 41.20 WA DE LOCK 1 61 11,695.91 2024.5 58 398.50 12094.41 WA DE LOCK 2 71 12,426.19 2133.8 46 270.44 12696.63 WA DE LOCK 3 5 974.71 180.3 1 160.00 1134.71 WANDIN YALLOCK 182 3,022.10 931.12 1 9.00 3031.10 WARRION 101 13,944.60 2362.3 24 216.20 14160.80 WY YUNG 1 6 450.80 95 0 0 450.80 WY YUNG 2 42 5,396.30 1098.9 0 0 5396.30 WY YUNG 3 13 1,243.30 219.4 0 0 1243.30 YANGERY 112 11,383.70 2339.8 53 3096.02 14479.72 YARRAM 61 21,174.80 3904.5 23 4481.42 25656.22 WAITING GMAASSESSMENT 2 161.00 52 4 49222.00 49383.00 Total 2463 288,240.02 55729.15 1298 102657.31 390897.33 36 our Financial Report

Statement of Financial Performance

For year ended 30 June 2004 2003-2004 2002-2003 Revenue from Ordinary Activities Notes $'000's $'000's Operating Revenue Water Rates & Charges 2 12,291 9,947 Storage Operator Charges 3 5,839 6,773 Government Grants for Services 1.3, 4 1,159 882 Other Revenue 6 136 139 External Services Contracts 291 265 Interest on Overdue Accounts 48 21 Non-Operating Revenue Interest on Investments 181 253 Proceeds from Sale of Fixed Assets 5 409 208 Total Revenue from Ordinary Activities 20,354 18,488

Expenses from Ordinary Activities Operations 6,668 5,874 Depreciation of Fixed Assets 1.5, 12 4,825 4,755 Administration 3,008 3,040 Maintenance 6,308 7,566 Written Down Value of Disposed Assets 5 185 187 Written Down Value of Transferred Assets 5 764 300 Total Expenses from Ordinary Activities 21,758 21,722

Loss Attributable to the Authority Before Income Tax (1,404) (3,234) Income Tax Expense 16 –– Loss Attributable to the Authority After Income Tax (1,404) (3,234) Decrease in retained profits on adoption of a new Standard 15(b) – (16) Amounts Recognised Directly in Equity – (16) Total Changes in Equity Other than those resulting from transactions with owners as owners (1,404) (3,250)

The accompanying notes form part of these financial statements. 37

Statement of Financial Position

As at the 30 June 2004 2003-2004 2002-2003 Notes $'000's $'000's Current Assets Cash Assets 1.12, 23 910 2,004 Receivables 8 2,851 2,813 Other Financial Assets 1.6, 9 5,000 2,000 Inventories 1.7 127 117 Other 281 293 Total Current Assets 9,169 7,227

Non-Current Assets Other Financial Assets 1.6, 9 – 1,208 Property, Plant & Equipment 1.4, 11 425,894 427,009 Total Non-Current Assets 425,894 428,217

Total Assets 435,063 435,444

Current Liabilities Payables 13 2,400 2,006 Advances for capital and other works 226 170 Provision for employee benefits 14 715 636 Total Current Liabilities 3,341 2,812

Non-Current Liabilities Provision for employee benefits 14 1,035 1,123 Total Non-Current Liabilities 1,035 1,123

Total Liabilities 4,376 3,935 Net Assets 430,687 431,509

Equity Contributed capital 15(a) 367,860 366,860 Asset revaluation reserve 15(c) 74,270 74,270 Retained profits (Accumulated losses) 15(b) (11,443) (9,621) Total Equity 430,687 431,509

The accompanying notes form part of these financial statements. 38 our Financial Report

Statement of Cash Flows

For year ended 30 June 2004 2003-2004 2002-2003 Inflow (Outflow) Inflow (Outflow) Notes $'000's $'000's

Cash Flows from Operating Activities (incl GST) Receipts from customers 19,795 18,006 Receipts from Government 1,182 905 Payments to suppliers and employees (16,800) (18,199) Interest and bill discount received 200 248

Net Cash provided by Operating Activities 24 4,378 961

Cash Flows from Investing Activities Payment for property, plant and equipment (4,823) (5,647) Proceeds from redemption of investments 1,208 – Payments for investments (3,000) (2,000) Proceeds from sale of property, plant and equipment 409 208

Net Cash provided by/(used in) Investing Activities (6,206) (7,439)

Cash Flows from Financing Activities Contributed Capital 1,000 – Dividend Payment to Government (266) (422)

Net Cash provided by/(used in) Financing Activities 734 (422) Net Decrease in Cash Held (1,094) (6,900) Cash Held at the Beginning of the Year 2,004 8,904 Cash Held at the End of the Year 23 910 2,004

The accompanying notes form part of these financial statements. 39

Notes to and forming Part of the Financial Statements

1 Statement of significant accounting policies 1.1 Establishment of the Authority Gippsland and Southern Rural Water Authority (SRW) was established on 1 July 1995, by a Ministerial Order under section 98 of the Water Act 1989, dated 30 June 1995. The Authority is a not for profit entity owned by the State Government of Victoria. 1.2 Accounting basis The Financial Statements are a general purpose financial report that has been prepared in accordance with applicable Australian Accounting Standards and other mandatory professional reporting requirements (Urgent Issues Group Consensus Views), and provisions of the Financial Management Act 1994. The Financial Statements have been prepared on an accrual basis and in accordance with historical cost convention, except for the valuation of infrastructure assets, which are recorded at current written down replacement value. The accounting policies adopted in preparing the Financial Statements are consistent with those of the previous year, except where separately disclosed. [see Note 1.8] 1.3 Government Grants Programs such as state water assessment, groundwater investigations, salinity investigations, establishment of groundwater management areas, and water resource management, are performed under agreements with the Victorian Government. The reimbursement of the cost of these services is included as "Government Grants for Services". The cost of the provision of these services is included in the "Operating Expenses". 1.4 Property, Plant & Equipment Fixed assets of the Authority are recorded in the books of account as follows; (a) Fixed assets, other than infrastructure assets, which were acquired prior to 1 July 1994, are shown at estimated written down historical cost; those acquired since 1 July 1994 are shown at cost. (b) Infrastructure assets acquired prior to 30 June 1999 were revalued during 1999/2000 and are shown at estimated current written down replacement value. Those acquired after 1 July 1999 are shown at cost. (c) In the case of assets constructed by the Authority, on-site overheads are included in the cost of the assets. (d) Individual items of plant costing less than $500 are expensed in the year of purchase. (e) As the Authority is a not-for-profit entity, it has not reviewed the carrying amount of its non-current asset in accordance with the provisions of Australian Accounting Standard AAS10 "Recoverable Amount of Non-Current Assets". (f) In accordance with the Authority's revaluation policy, a revaluation of infrastructure as at 1 July 1999 was undertaken during 1999/2000. Headworks infrastructure assets were revalued by the Snowy Mountains Engineering Corporation (Mr T Reid B Eng (Civil), Dip Civil Eng, FIEA, MAGS and Mr Colin Rudd B Eng (Civil), Grad Cert Water Eng, Grad Dip Mgmt, MIEA). Irrigation distribution infrastructure assets were revalued by SRW officers Mr Paul Byrnes B Eng (Ag) (Hons), Grad Cert Water Eng, Grad Dip GIS and Remote Sensing and Ms Lucy Hluszko B Eng (Civil & Computing). (g) A revaluation of buildings and associated land held or otherwise controlled by the Authority as at 1 July 2001 was undertaken during 2001/02 by Water Industry Business Services (Mr Luke Reddan AAPI, Certified Practising Valuer). (h) Land not associated with buildings, and therefore not subject to independent valuation, was assessed by the Authority as being recorded at "Fair Value" on the basis of the Recoverable Amount Test. (i) In accordance with the revised accounting standard AASB 1041 and Bulletin 41 issued by the Department of Treasury and Finance, the Authority has applied the transitional provisions relating to asset values. A formal plan has been developed to ensure that all land, buildings and infrastructure assets will be revalued progressively to fair value by no later than 30 June 2005. 1.5 Depreciation Depreciation, using the straight line method (except in the case of Motor Vehicles and Drains) is provided on depreciable assets and charged against revenue on the basis of allocating the cost of the assets over their estimated useful life. Irrigation drains are not depreciated, as they are considered to have indefinite lives. Major classes of assets and their values are included in note 11. Depreciation rates depend on life expectancy. Approximate equivalent rates are: Item Rate Storages 0.5-1% Channels 1-2% Drains 0% Pipelines 1-2% Buildings 2.5% Plant and equipment 10% Office furniture and equipment 5% to 33.3% Motor Vehicles 22.5% Reducing Balance 40 our Financial Report

Notes to and forming Part of the Financial Statements

1.6 Investments Authority funds are invested in accordance with Treasury and Investment powers granted to the Authority under the Borrowing and Investment Powers Act 1987. All investments with a maturity date within 12 months of balance date are classified as current assets, unless there exists a probable intention to reinvest the full amount of the investment beyond that period. All other investments are classified as non-current. 1.7 Inventories Inventories consist of materials and supplies for asset construction, system operation and general maintenance and are valued at the lower of cost or net realisable value. 1.8 Employee benefits Employee benefits consist of provisions for long service leave and annual leave. A provision for sick leave was not necessary as it is non-vesting and not likely that sick leave in future periods would exceed entitlements expected to accrue in those periods. Long service leave provision is recognised and is measured as the present value of expected future payments to be made in respect of services provided by employees up to reporting date. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using interest rates on national Government guaranteed securities with terms to maturity that match, as closely as possible, the estimated future cash flows. The current liability for long service leave represents the estimated amount of leave to be taken in the next twelve months, with the remainder of the provisions being considered as non-current. In the reporting periods prior to 30 June 2003, provisions for employees benefits payable within 12 months were measured using remuneration rates current at the reporting date. For the period ending 30 June 2003, the Authority was required by AASB 1028 ''Employee Benefits" to measure provision for employee benefits at remuneration rates expected to apply when the obligation is settled (nominal amount). The transitional arrangements of AASB 1028 on adoption at 1 July 2002 gave rise at 30 June 2003 to an adjustment to opening annual leave liabilities and a corresponding change to accumulated surplus/(deficit). The impact of this change was: Decrease Accumulated Surplus/(Deficit) $16k Increase Annual Leave Provision $16k 1.9 Insurance The Authority is covered by policies obtained through a number of underwriters for both property and legal liabilities. The Authority self insures for any amounts below policy deductible limits. No provision is made for potential claims. They are expensed as they occur. Any unsettled claims have been disclosed as contingent liabilities in the notes to the financial statements. 1.10 Operating Leases Where the Authority has a lease, but does not assume, substantially, all the risks and benefits associated with the ownership of the asset, the lease payments are expensed in the year they are incurred. Where the Authority does assume, substantially, all the risks and benefits associated with the ownership of the asset, the lease payments are capitalised. 1.11 Superannuation The Authority contributes in respect of its employees to a number of superannuation schemes administered by the Government Superannuation Office, Local Authorities Super Pty Ltd and other authorised Superannuation Funds. The amounts of these contributions are determined by each scheme's actuary in accordance with statutory requirements or in accordance with Superannuation Guarantee Legislation. The Authority's statutory contributions to these schemes are recorded as a superannuation expense. (Note 20) 1.12 Cash at Bank and on Hand Cash at bank and on hand includes petty cash on hand and SRW bank account balance at year end. 1.13 Bad and Doubtful Debt A provision is made for any doubtful debts based on a review of all receivables at balance date. Bad debts are written off in the period in which they are identified. 1.14 Revenue Revenue is brought into account when services have been provided or when a rate is levied or determined. Charges for water delivered are either charged progressively during the year or accrued at 30 June based on actual meter readings. Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets. The value of goods and services provided free of charge are recognised as revenue when the Authority gains control of them. No goods or services were provided free during 2003-2004. 41

Notes to and forming Part of the Financial Statements

Government grants for service are recognised as revenue at the earlier of the grant being received or invoiced. In accounting for the sale of fixed assets, gross proceeds from the sales of fixed assets are included as non operating revenue and written down value of the assets sold is disclosed as an expense. Details of the gains and losses on disposal of fixed assets are shown in note 5. All revenue is stated net of the amount of goods and services tax (GST). 1.15 Comparative Figures Where required by Accounting Standards comparative figures have been adjusted to conform with changes in presentation for the current financial year. 1.16 Impacts of Adopting AASB Equivalents to IASB Standards For financial reporting periods beginning on or after 1 January 2005, all Australian reporting entities are required to adopt the financial reporting requirements of the Australian equivalents to International Financial Reporting Standards (IFRSs). Senior finance staff have attended a number of seminars and commenced activities to identify the key issues and the likely impacts resulting from the adoption of the Australian equivalents to IFRSs. Standards relating to valuation of assets, accrual of government grants and accounting for financial instruments will have applicability for Southern Rural Water, but are unlikely to materially impact the financial position or performance of the Authority. To date Southern Rural Water has not identified any changes to the existing policies that would have a material impact on the Authority's financial position and future financial performance on the adoption of the requirements of the Australian equivalents to IFRSs.

2003-2004 2002-2003 $'000's $'000's 2 Water Rates & Charges Rates & Charges - Irrigation, Diversions & Groundwater 9,855 8,176 Sales - Irrigation & Diversions 1,199 787 Other Charges - Bore Construction, Application Fees, Transfers Fees & Information Statements 1,237 984 12,291 9,947

3 Storage Operator Charges Total charges 7,455 8,259 Charges to retail business (1,617) (1,486) Charges to other organisations 5,839 6,773

4 Government Grants State Government - Salinity Projects 118 171 State Government - Youth Employment Scheme 28 43 State Government - Water for Growth Initiative 247 173 State Government - Implementation of Farm Dam legislation 364 135 State Government - Stressed Rivers Scheme - Lerderderg River 86 330 State Government - Stressed Rivers Scheme - Review Flow Capacities 38 State Government - National Action Plan 10 State Government - Drought Relief Assistance Package 139 State Government - Installation of meters 99 State Government - Gippsland Lakes Rescue Package 30 30 1,159 882 5 Loss from Sale of Fixed Assets Proceeds from Sale of Fixed Assets 409 208 Written Down Value of Disposed Assets (185) (187) Loss from Sale of Fixed Assets 225 21 Written Down Value of Transferred Assets (764) (300) Written Down Value of Transferred Assets are the transfer of ownership of irrigation drains to landholders as part of SRW's nutrient reduction activities. Drains were transferred to landholders at no cost under this program. 6 Other Revenue Royalties 36 63 Other 100 76 136 139 42 our Financial Report

Notes to and forming Part of the Financial Statements

2003-2004 2002-2003 $'000's $'000's 7 Audit Fees Financial Statements Audit 24 24 24 24 8 Receivables Water consumers and other external clients. 2,881 2,843 Less Provision for Doubtful Debts (refer note1.13) (30) (30) 2,851 2,813 9 Other Financial Assets Current Interest bearing deposit 5,000 2,000 5,000 2,000 Non Current *Interest bearing deposit – 1,208 Total 5,000 3,208 * This investment was established to offset a bank guarantee to Melbourne Water Corporation, for water supplied from the Thomson Reservoir. The guarantee is exercisable only if SRW are unable to redeem the water used from future water allocations. During the 2003-2004 financial year, security for this guarantee was converted to a mortgage against future revenue, and the term deposit was redeemed (refer note 26).

10 Bad & Doubtful Debts Bad Debts Expense –– No amounts have been written off as unrecoverable during the reporting period.

11 Property, Plant & Equipment Refer notes: 1.4, 1.5 Land At Fair Value * 6,677 6,677

Infrastructure Assets At Cost 7,011 6,426 At Valuation ** 390,072 390,273 Accumulated Depreciation (16,664) (12,745) Drains *** 23,673 24,252 404,092 408,206 Buildings At Cost 240 213 At Valuation * 2,270 2,270 Accumulated Depreciation (254) (164) 2,255 2,319 Furniture, Fittings and Computer Systems At Cost 2,918 2,346 Accumulated Depreciation (2,117) (1,831) 801 515 Plant and Machinery At Cost 1,022 1,030 Accumulated Depreciation (495) (457) 527 573 Motor Vehicles At Cost 2,809 2,544 Accumulated Depreciation (1,074) (788) 1,735 1,756 Total Property, Plant & Equipment 416,087 420,046 43

Notes to and forming Part of the Financial Statements

2003-2004 2002-2003 $'000's $'000's Capital Works In Progress Infrastructure Assets 9,656 6,381 Plant, Machinery & Equipment 2 10 Computer Equipment 149 572 9,807 6,963 425,894 427,009 * A revaluation and fair value assesment of Land and Buildings was undertaken as at 1 July 2001. See notes 1.4(g) and 1.4(h) ** A revaluation of infrastructure assets was undertaken as at 1 July 1999. See note 1.4(f) *** Irrigation surface drains are not depreciated, as they are considered to have indefinite lives. 11.1 Movements in Fixed Assets Infrastructure Furniture, Fittings Plant & Motor Land Assets & Computer Systems Machinery Vehicles Buildings WIP Total Balance at Beginning 6,677 408,206 515 573 1,756 2,319 6,963 427,009 Additions 5 3 11 581 25 4,034 4,659 Disposals (764) (10) (175) (949) Transfers 580 571 37 2 (1,190) – Depreciation Expense (3,935) (288) (84) (427) (91) (4,825) Carrying Amount at the end of the Year 6,677 404,092 801 527 1,735 2,255 9,807 425,894 12 Depreciation Infrastructure Assets 3,935 3,940 Buildings 91 84 Furniture, Fittings and Computer Systems 288 223 Plant and Machinery 84 82 Motor Vehicles 428 426 4,825 4,755 13 Payables Trade Creditors & Accrued Expenses 2,190 1,850 Payroll Related Accruals 210 156 2,400 2,006 14 Provision for employee benefits Current Long Service Leave 52 42 Annual Leave 658 588 Superannuation Liability - Deferred Payment * 5 6 715 636 Non-current Long Service Leave 991 1,073 Superannuation Liability - Deferred Payment * 44 50 1,035 1,123 Total 1,750 1,759

Number of Employees at year end 122 118 *Refer note 20 - Local Auhorities Superannuation Schemes 44 our Financial Report

Notes to and forming Part of the Financial Statements

2003-2004 2002-2003 $'000's $'000's 15 Equity 15a Contributed Capital Opening Balance 366,860 366,860 * Total Channel Control Contribution 1,000 – Closing Balance 367,860 366,860 * The treatment of capital contributions is as agreed with the Department of Sustainability and Environment and in accordance with Urgent Issues Group Abstract 38 Contributions by Owners Made to Wholly-Owned Public Sector Entities. 15b Retained Profits (Accumulated Losses) Opening Balance (9,621) (5,954) Net Loss Attributable to the Authority (1,404) (3,234) Dividends Paid to Government (418) (418) Adjustments resulting from change in accounting policy – (16) Retained Profits (Accumulated Losses) at the end of the financial year (11,443) (9,621) 15c Asset Revaluation Reserve Opening Balance 74,270 74,270 Revaluation increment of Land & Buildings – – Closing Balance 74,270 74,270 The asset revaluation reserve records revaluations of non-current assets.

16 Tax Equivalence Regime On 1 July 2001, the Authority became subject to the State Tax Equivalence Regime, and on 1 July 2002 entered the National Tax Equivalence Regime. The Authority applied tax effect accounting in accordance with AAS 3, and the tax effects of adjustments are shown in the following reconciliation. Result from ordinary activities before income tax (1,404) (3,234) Prima facie income tax benefit thereon at 30% (421) (971) Tax Effect of: Permanent Difference: Dividend Payment to Government (125) (125) Sponsorships & Entertainment 1 5 (545) (1,091) Timing Differences: Depreciation (7,460) (7,415) Increase/(decrease) in employee entitlement (3) 22 Accrued Revenue 40 (2) Revenue in Advance 113 – (7,855) (8,486) less: Benefits of tax losses not brought to account in the absence of virtual certainty 7,855 8,486 Income tax expense –– The future income tax benefit of $25,509 thousand relating to carry forward income tax losses, $94 thousand relating to provisions, $113 thousand relating to revenue in advance, and the provision for deferred income tax of $22,394 thousand relating to depreciation and $46 thousand relating to accrued income, have not been brought to account because realisation of those benefits and provisions cannot be assured beyond reasonable doubt. Realisation of those benefits and provisions is contingent upon the future profitability of the entity's operations, continued compliance with the conditions of deductibility imposed by the law and the taxation law itself not changing in a manner which would adversely affect the entity in realising those benefits. 45

Notes to and forming Part of the Financial Statements

2003-2004 2002-2003 $'000's $'000's 17 Lease Commitments Non-capitalised lease rental charges 18 – Operating lease of buildings commitment as at 30 June: - not later than 1 year 24 – - later than 1 year but not later than 5 years 74 – - later than 5 years – – 98 –

18 Capital Commitments Capital expenditure contracts outstanding not later than 1 year 1,823 3,568 later than 1 year but not later than 5 years – – later than 5 years – – 1,823 3,568 This represents commitments outstanding on contracts for Capital Works. All outstanding works will be completed during 2004-2005. There is no actual liability for this amount at 30th June 2004

19 Transactions with other Victorian Government Controlled Entities During the 2003-2004 financial year transactions were undertaken with other Victorian Governement controlled entites. These transactions are summarised as follows: Intra Inter Intra Inter Assets 756 19 78 132 Liabilities 425 152 204 45 Revenues 4,209 540 2,786 1,072 Expenses 513 195 517 561 'Intra' Transactions are between entities within the Sustainability and Environment portfolio. 'Inter' Transactions are with entities outside the portfolio and controlled by the Victorian Government.

20 Superannuation Employees of the Authority contribute to a number of superannuation funds. Details are as follows: (a) State Superannuation Fund - New Scheme Employer Contribution 123 121 (Defined Benefit Scheme) Contribution Rate 9.5% - 10% 9% - 10% (b) State Superannuation Fund - Revised Scheme. Employer Contribution 88 90 (Defined Benefit Scheme) Contribution Rate 15.50% 15.50% (c) SSF - State Employees Retirement Benefits Fund. Employer Contribution 24 23 (Defined Benefit Scheme) Contribution Rate 12.50% 12.50% The Victorian Government holds the responsibility for any unfunded liability for State Superannuation Fund Schemes and is therefore responsible for reporting that liability.

(d) Local Authorities Superannuation Board (LASPLAN) Employer Contribution 133 329 (Accumulation Scheme) Contribution Rate 9.00% 9.00% (e) Local Authorities Superannuation Board (LASB) Employer Contribution 23 48 (Accumulation Scheme) Contribution Rate 9.25% 9.25% (f) Other Superannuation Schemes Employer Contribution 442 265 (Accumulation Schemes) Contribution Rate 9.00% 9.00% No loans have been provided to the Authority from any of the above schemes. There are no contributions outstanding as at 30th June 2004. – Unfunded Superannuation Liabilities Unfunded Liabilities are defined as the difference between the present value of members' accrued benefits and the net market value of a superannuation scheme's assets at the reporting date. The Authority is responsible for any unfunded liabilities arising from 1 July 1992 on defined benefits superannuation schemes which it sponsors in respect of its employees. – Local Authorities Superannuation Schemes The Authority's share of the unfunded liability as advised following the 31 December 2002 Actuarial Review was $53 thousand (plus contributions tax of $9 thousand). This amount was recognised in full as expenditure in 2002/03, and will be repaid over a ten-year period.Payments to date against this liability total $11 thousand (plus contributions tax of $2 thousand), leaving a balance of $42 thousand (plus contributions tax of $7 thousand). – State Superannuation Fund The Authority has no unfunded liability in respect of its employees who are members of schemes in this fund. This liability has been assumed by the State Government and is disclosed in its financial statements. 46 our Financial Report

Notes to and forming Part of the Financial Statements

21 Financial Instruments 21a Terms, Conditions and Accounting Policy The Authority's accounting policy including the terms and conditions of each class of financial asset, liability and equity instruments, both recognised and unrecognised as the balance date, is as follows: Recognised Statement of Financial Accounting Policies Terms and Conditions Financial Instruments Position Notes Financial Assets Cash Assets 23 Cash is stated at its nominal The Authority does not have an amount. Surplus Authority funds are overdraft facility but has access held in the bank account. to TCV funds. The Bank accounts attracted an average 4.66% interest rate for the year. Term Deposits 9 Term deposits are stated at their nominal The Authority holds the amount. Interest revenue is recognised in following term deposits the operating statement when it is earned. as at 30 June 2004: - $1M for 30 days expiring 1 July 2004 at a current interest rate of 5.40% - $2M for 62 days expiring 2 August 2004 at a current interest rate of 5.42% - $2M for 90 days expiring 30 August 2004 at a current interest rate of 5.44% Receivables 8 Receivables are stated at their nominal For rates and charges debtors amounts due less any provision for outstanding as at 30th June doubtful debts. 2004, payment is overdue. Normal terms are 30 days from date of invoice. Interest is charged on overdue accounts at 12.25% Financial Liabilities Creditors and Accruals 13 Creditors and accruals are recognised for Terms for the payment of future amounts to be paid in respect of creditors are 30 days after the goods and services received, whether or end of the month in which the not billed to the Authority. goods and services are received or services rendered or within 30 days from the receipt of invoice, whichever is the later. Advances for Capital – Advances for Capital & Other Works are Advances and security deposits & Other Works recognised for amounts received in are refunded upon successful advance for recoverable works, as well completion of works, or as security deposits held in respect of otherwise brought to account as works programs. revenue where required to undertake completion or remediation of works. 47

Notes to and forming Part of the Financial Statements

21b Interest Rate Risk The Authority's exposure to interest rate risk and the effective interest rates of financial assets and liabilities, both recognised and unrecognised at the balance date, are as follows:

Floating Interest Rate Fixed interest rate Non - Interest Total Carrying amount as Weighted Average (within one year) Bearing per the Balance Sheet effective interest rate

Recognised Financial 2003-2004 2002-2003 2003-2004 2002-2003 2003-2004 2002-2003 2003-2004 2002-2003 2003-2004 2002-2003 Instruments $'000's $'000's $'000's $'000's $'000's $'000's $'000's $'000's Financial Assets Cash Assets 910 2,004 910 2,004 4.66% 4.35% Term Deposit- Investment 5,000 3,208 5,000 3,208 5.31% 4.64% Debtors 2,881 2,843 2,881 2,843 Total Financial Assets 910 2,004 5,000 3,208 2,881 2,843 8,792 8,055 Financial Liabilities Creditors and Accruals 2,400 2,006 2,400 2,006 Advances for Capital & Other Works 226 170 226 170 Total Financial liabilities – – – – 2,626 2,176 2,626 2,176

21c Net Fair Values The value of assets and liabilities in the Statement of Financial Position equates to fair value.

21d Credit risk exposure The Authority's maximum exposure to credit risk at balance date for each class of recognised financial assets is the carrying amount of those assets as disclosed in the Statement of Financial Position.

21e Concentration of credit risk The Authority's exposure to credit risk is low, as most of the revenue transactions represent a charge on the property or are under a Bulk Entitlements Order. Credit risk is managed in the following ways: - Payment is 30 days or instalments for some customers. - Overdue payments are referred to debt collector approximately 6 weeks after becoming over due. 48 our Financial Report

Notes to and forming Part of the Financial Statements

22 Retail and Wholesale Operations 2003-2004 2002-2003 Wholesale Retail Total Wholesale Retail Operations Operations Eliminations Authority Operations Operations $'000's $'000's $'000's $'000's $'000's $'000's Storage Operator Charges 5,635 1,820 (1,617)* 5,838 8,256 3 Retail Usage Charges – 12,291 12,291 – 9,947 Other Revenue 17 2,208 2,225 457 1,322 Total Revenue 5,652 16,319 (1,617) 20,354 8,713 11,272 Operating & Maintenance Expenses 4,953 8,972 13,925 5,433 8,505 Depreciation 1,514 3,311 4,825 1,495 3,260 Administration, Finance Other Expenses 671 2,337 3,008 682 2,359 Internal Storage Operator Costs* – 1,617 (1,617)* – – 1,486 Other Bulk Supply Charges – – – – – – Total Expenses 7,139 16,236 (1,617) 21,758 7,610 15,610 Total Profit/(Loss) for the year (1,487) 83 – (1,404) 1,103 (4,338) Investments – 5,000 5,000 – 3,208 Other Assets 7,107 (2,939) 4,169 7,879 (2,652) Fixed Assets 288,892 137,002 425,894 289,989 137,020 Total Assets 295,999 139,064 435,063 297,868 137,576 Cash Flow information Cash Used in Investing Activities (581) (5,625) (6,206) (534) (6,905) Cash From Finance Activities (266) 1,000 – 734 (422) – Wholesale operations account for the harvesting and storage of water on behalf of external and internal customers who hold bulk water entitlements in that storage. * The internal Storage Operator Charges of $1617 thousand is included in the revenue of the Wholesale Business and the expense of the Retail Business above and are eliminated in the Operating Statement.

23 Reconciliation of Cash For the purposes of the statement of cash flows, cash includes cash on hand and deposits held at call with financial institutions. Cash at the end of the financial year as shown in the Statement of Cash Flows is reconciled to the related item in the Statement of Financial Position as follows: 2003-2004 2002-2003 $'000's $'000's Cash on hand and at bank 910 2,004

24 Reconciliation of Net Cash provided by Operating Activities to Profit from Ordinary Activities for the Year Profit / (loss) from Ordinary Activities (1,404) (3,234) Depreciation 4,825 4,755 Increase/(Decrease) in provision for employee benefits (9) 59 Change in operating assets and liabilities: Decrease/(Increase) in inventories (10) – Decrease / (Increase) in trade receivable (38) (687) Decrease / (Increase) other assets 12 89 Increase / (Decrease) advances for capital 56 (1) Increase/(Decrease) in trade creditors 407 (299) Loss / (Gain) on sale of fixed assets 539 279 Net Cash Provided by Operating Activities 4,378 961 49

Notes to and forming Part of the Financial Statements

25 Responsible Persons Disclosure The names of the Responsible Persons of Gippsland and Southern Rural Water Authority during 2003-2004 are: Minister for Water The Hon. John Thwaites Members of Authority Board: Mr R Skinner (Chairperson) Mrs J McMillan (Deputy Chairperson) Ms C Batagol, 30 June 2003 to 31 December 2003 Mr G Crick Ms J Greig Dr M Kent Prof J Lovering Mr J Pye The Chief Executive is Dr Martin Kent (Accountable Officer). Remuneration received, or due and receivable by Responsible Persons from the Authority, amounted to $310,236 (2002-2003 $306,736). Number of Responsible Persons from the Authority are shown below in their relevant bands: 2003-2004 2002-2003 $10,000-$19,9996 6 – $30,000-$39,999 1 1 $160,000-$169,999 – 1 $170,000-$179,999 1 – There were no retirement benefits paid in conjunction with the retirement of Responsible Persons, nor were there any transactions between the Authority and any Responsible Person other than those which occurred within the normal arms length transaction between the Authority and its customers. The number of Non-Director Executive Officers whose total remuneration exceeds $100,000 during 2003-2004 are shown below their relevant income bands: 2003-2004 2002-2003 $110,000-$119,999 2 – $150,000-$159,999 1 1 The total remuneration for the year of the above Executive Officers amounted to $373,437 (2002-2003 $154,588).

26 Contingent Liabilities Bank Guarantee The Authority has a contingent liability for water obtained from Melbourne Water Corporation from the Thomson Reservoir in accordance with an Agreement signed on 6 June 2000. The Bank Guarantee may be exercised in accordance with clause 13 of the Agreement if SRW is unable to repay water volumes owed by it as detailed in Schedule 1 of the Agreement, which provides for repayment over a nominal five year period. The total value of the Bank Guarantee is $1,207,500. SRW has established mortgage over future revenues as security against the Bank Guarantee, which remains in place until the above obligations have been met. Rebates against Commercial Potable Water Receipts Revenue for the current year includes receipts from customers for the delivery of 88ML of potable water at the commercial rate of $1305 per ML. If these customers choose to sign up for the recycled water package prior to 31 October 2004, retrospective rebates will be made against these receipts to reflect the package price of $126.50 per ML. The total value of the potential rebates is $103,708. 50 03-04 Southern Rural Water 51 52 03-04 Southern Rural Water

Compliance checklist

This Annual Report is prepared in accordance with the Financial Management Act and the Directions of the Minister for Finance. This list has been prepared to facilitate easy identification of compliance with statutory disclosure and other requirements. Clause Disclosure Page Report of Operations Charter & purpose FRD 22 Manner of establishment and relevant Minister 1 FRD 22 Objectives, functions, powers and duties 1 FRD 22 Nature and range of services provided 5, 7 Management & structure FRD 22 Organisational structure 7 Financial & other information FRD 22 Statement of workforce data and merit and equality 22-23 FRD 22 Summary of financial results for the year 25 FRD 22 Significant changes in financial position during the year 37 FRD 22 Operational and budgetary objectives and performance against objectives 8-11 FRD 22 Major changes or factors affecting performance 8-11 FRD 22 Subsequent events n/a FRD 22 Application and operation of Freedom of Information Act 1982 24 FRD 22 Statement on National Competition Policy 24 FRD 22 Application and operation of the Whistleblowers Protection Act 2001 24 FRD 22 Details of consultancies over $100,000 24 FRD 22 Details of consultancies under $100,000 24 FRD 22 Disclosure of major contracts 8, 12, 14 FRD 22 Statement of availability of other information inside back cover FRD 22 Occupational health and safety 23 FRD 22 Executive officer disclosures 49 FRD 22 Disclosure index 52 FRD 22 Reporting of office-based environmental impacts 14 FRD 22 Victorian Industry Participation Policy disclosures n/a FRD 22 Budget portfolio outcomes n/a Financial Statements Financial statements required under Part 7 of the FMA SD 4.2(c) Statement of compliance with Australian accounting standards and other authoritative pronouncements 39 SD 4.2(c) Compliance with Ministerial Directions 39 SD 4.2(d) Rounding of amounts 36-48 SD 4.2(c) Accountable officer’s declaration 50 SD 4.2(f) Model Financial Report n/a SD 4.2(b) Statement of financial performance 36 SD 4.2(b) Statement of financial position 37 SD 4.2(b) Statement of cash flows during the year 38 Other disclosures in notes to the financial statements FRD 9 Departmental disclosure of administered assets and liabilities n/a FRD 11 Disclosure of ex-gratia payments n/a FRD 13 Disclosure of parliamentary appropriations 44 FRD 21 Responsible person and executive officer disclosures 49 FRD 23 Superannuation liabilities and disclosure 45 PO Box 153 Maffra VIC 3860 Telephone 03 5139 3100 1300 139 510 water Facsimile 03 5139 3150 Email [email protected] Website www.srw.com.au southern rural water