prepared for growth Annual Report 2009 / 10 Year in Review
LANCEFIELD Shire of Mitchell Lancefield Reservoir
Garden Hut
Reservoir Deep
Shire of Macedon Ranges River ROMSEY Creek Campaspe WOODEND Reservoir Romsey Reservoir Shire of Hepburn MT MACEDON
MACEDON Riddells RIDDELLS CREEK Campaspe NEW GISBORNE Rosslynne Creek Reservoir
Jacksons Jacksons Creek Creek GISBORNE City of Hume
Lerderderg SUNBURY
Creek
Deep
Creek
Shire of Moorabool COIMADAI Pykes Creek TOOLERN VALE Reservoir Djerriwarrh River Reservoir Creek MYRNIONG Merrimu DIGGERS REST Reservoir BULLA
Werribee Creek Creek LONG FOREST Shire of Melton
Toolern BACCHUS MARSH Pyrites
Djerriwarrh River MELTON
ROCKBANK Melton Reservoir
Western Water City of Wyndham Service Area Shire of Golden Plains Legend
Waterway, reservoir or dam
Western Water Service Area
Municipal boundary
Water Filtration Plant
Recycled Water Plant
Prepared for Growth Contents Year in Review
Year in Review 1 Western Region Water Corporation (trading as Western Water) is one of Highlights 2 Victoria’s thirteen regional urban water Vision, Values, Pathways 3 corporations, providing water, sewerage Assets at a Glance 3 and recycled water services to more Foreword from the Managing Director and Chair 4 than 56,000 properties across an area Performance Report 6 of 3,000 square kilometres.
Governance and 12 Situated north west of metropolitan Organisational Structure Melbourne, the region is a combination
Organisational Structure 12 of rural and urban living with a large proportion of land devoted to agricultural Board Members 13 use. However, the region is becoming Board Committees 14 increasingly urbanised and residential customers comprise 93% of the Sustainability 16 customer base. Water Consumption 16 Western Water’s service area is home to Capital Works Investment 19 a fast growing population which grew by Environmental Sustainability 20 3.7% to reach 145,000 in 2009/10. The Social Sustainability 26 population is forecast to surpass 275,000 Financial Performance Report 32 by 2021.
Appendices 82 Concurrently the region is experiencing its 13th consecutive year of below average A1. Bulk Entitlements 82 rainfall. Being prepared for ongoing growth A2. OH&S Policy 85 in the face of continuing low rainfall is A3. Whistleblowers Protection Procedures 86 Western Water’s core challenge.
Disclosure Index 94 This Annual Report provides detail on the significant achievements and Global Reporting Initiative Index 95 challenges of the year since the 2008/09 Annual Report Index & Glossary 96 report was submitted and presents the corporation’s direction for the future, and complies with reporting requirements issued by the Department of Sustainability and Environment.
Western Water annual REPORT 2009/10 1 Year in Review
Western Water Highlights
Highlights Awards $35.5 million invested in building 2009 Savewater! Sustainability in infrastructure for growth including Government Award for delivery of Class A upgrades to five recycled water plants, Recycled Water to Eynesbury completion of new outfall sewer Hume City Council Business Award for mains for Melton and Gisborne and Environmental Sustainability for recycled construction of large capacity drinking water achievements and recycled water storage tanks Australian Water Association (Victorian Commissioned Biogas Cogeneration Branch) Innovation Award for the Children Facility at Melton Recycled Plant of Drought education program saving 1,800 tonnes of greenhouse Fourth consecutive Gold Award for Western gas emissions per year Water’s Annual Report at the Australasian Reporting Awards Commenced WaterTight residential program with 486 home audit and retrofits conducted to date Commenced Integrated Water Management greenfield planning to create a water neutral suburb at Toolern New Biogas Cogeneration Facility at Melton for 50-60,000 future residents The most water smart customers in the State with average residential water consumption down to 149 litres/ person/day Water recycling rate of 85%, saving 1,528 megalitres of drinking water by substitution Permanently protected the 35 hectare Pinkerton Forest by signing a Section 173 Agreement under the Planning and Environment Act 1987 with Financial Summary Melton Shire Council Net profit after tax of $4.8 million Reduced greenhouse gas emissions Developer contributions of $16 million by a further 3,505 tonnes (30% below 2004/05 baseline emissions) Capital expenditure of $35.5 million Debt level at $102.25 million
2 Prepared for growth Our Vision, Values Assets and Pathways at a Glance
Western Water’s vision reflects principles Total Properties 61,751 and practices of sustainability that are embedded throughout the corporation. - Serviced assessments (including vacant land) 56,054 This vision is based on the belief that all - Serviced assessments (vacant land) 4,487 people, as individuals and communities, Water Supply must play a part in protecting and preserving our finite water resources. Connected water customers 51,567 - Residential 47,699 Our vision maintains a strong community focus. Our values embody how we will act, - Non-residential 3,868 and define our behaviours. Our pathways Water consumption (ML) 10,592 drive strategic and corporate planning, - Residential 7,909 focussing the whole organisation on building - Non-residential 1,719 an economically, socially and environmentally - Water losses 964 sustainable future. Water mains (km) 1,741 Water filtration plants 7 Our Vision Chlorination plants 14 To be a leading service provider working with Sewer Service our community towards a sustainable future Serviced sewer customers 49,375 Our Values Connected sewer customers 45,527 Commitment Volume treated (ML) 7,989 Integrity Sewer mains (km) 1,086 Fairness Recycled Water Supply Leadership Recycled Water Plants 7 Accountability Recycled water produced (ML) 7,386 Sustainability Percentage reused 85% Inclusiveness Recycled water mains (km) 96 Our Pathways To be a valued and innovative service Sunbury Recycled Water Plant provider as judged by our customers and the wider community To drive an environmentally sustainable future To proactively manage our destiny
Western Water annual REPORT 2009/10 3 Year in Review
Foreword from the Managing Director and Chairman
The population in Western Water’s region has continued to Integrated Water Management grow in 2009/10 in a persistently rain constrained environment. Preparing for and accommodating this growth is an ongoing To further explore options for diversifying water sources, Western and exciting challenge for the corporation. By 2021, the region’s Water began work on a major Integrated Water Management population is expected to reach 275,000, an increase of 90%. (IWM) solution for the new Toolern precinct, expected to house To meet this growth, Western Water understands that future an additional 50-60,000 people by 2030. Toolern IWM will be a water supplies must be affordable to our customers, meet showcase for water sensitive design aiming to reduce household environmental needs and be resilient to climate change. drinking water consumption by more than 50%. All sources of water will be considered including recycled water, stormwater, For well over a decade, Western Water’s strategic direction rainwater and grey water. has been based upon the need to better manage the water we have. In the past year, the region consumed 10,592 megalitres Water Conservation and Efficiency of water. Most of this was sourced from Melbourne storages In March 2010, the Minister announced Sunbury and Macedon as local reservoirs remain at record low levels. To ensure there customers were among the most water efficient people in Victoria. will be sufficient water for the region in the future, Western Across the region this year, residential customers used just 149 Water is diversifying supplies and reducing our reliance on litres per capita per day, an exceptional result in response to rain - dependent sources. drought and water restrictions. This level of use is nearly half Capital Works the 1990’s average. Ongoing capital works investment prioritises infrastructure WaterTight, our home audit and retrofit program, commenced projects to ensure an integrated water supply. Much of this year’s late in 2009 and has been a great success, and the Showerhead $35.5 million investment was allocated to projects which improve Exchange Program is ongoing. The award winning primary school our ability to produce recycled water, thereby reducing demand Education Program was expanded to include pre-schools and on precious drinking water. In the coming five years, another secondary schools in 2010. $229 million will be spent on critical integrated water supply infrastructure projects. Greenhouse Gas Reduction Western Water is also striving to reduce its environmental footprint, Renewable Resources aiming to reach zero net carbon emissions by 2017/18. This Recycled water plays a leading role in diversifying the region’s year net emissions were reduced by 3,505 tonnes. Nonetheless, water supply. This year, 85% of recycled water was reused higher emissions due to the need to pump water to a growing saving an estimated 1,528 megalitres of drinking water population remain a major challenge. In June 2010, Western Water through substitution. We are on target to meeting our goal of commissioned a Biogas Cogeneration Facility at Melton Recycled recycling 100% water by 2013. Key highlights this year included Water Plant to produce electricity from methane. The new facility commissioning the Riddells Creek Recycled Water Scheme and alone will cut 1,800 tonnes of greenhouse gas emissions each again being recognised for the innovative recycled water supply year, providing the power to operate the Class A recycled water solution at Eynesbury, winning the 2009 Savewater Sustainability plant and a portion of the energy requirements for the Melton in Government Award. Western Water also continued its industry Recycled Water Plant. leading work in finding sustainable reuses for another wastewater by-product, biosolids, reducing stockpiles and using 121% of production in 2009/10.
4 Prepared for growth Managing Director, John Wilkinson, and Chairman, Terry Larkins.
Biodiversity The Year Ahead The local environment is being further enhanced through Our priority continues to be the delivery of high quality drinking biodiversity action plans at Western Water’s assets. This year, water, recycled water and sewerage services to meet the needs the International Year of Biodiversity, witnessed the planting of of the community. Ongoing population growth and climate change 8,000 indigenous trees and shrubs with several new species have necessitated the strategic development of integrated water identified and protected at our sites. In March 2010, Western management solutions to ensure future supply. These solutions will Water ensured Pinkerton Forest, 35 hectares of endangered be our focus for the coming year and into the foreseeable future. Plains Grassy Woodland at Melton Recycled Water Plant, will be permanently protected by signing a Section 173 Agreement The 2009/10 Western Water Annual Report clearly demonstrates under the Planning and Environment Act 1987 with Melton that we are prepared for and meeting the combined challenges Shire Council. of growth and ongoing drought in the region. Our commitment to sustainability and meeting the challenges of the future sees Economic Sustainability the 2009/10 Annual Report reporting to Application Level C of the Global Reporting Initiative (GRI). In accordance with the Financial Service improvements, capacity increases and development Management Act 1994, we are pleased to present Western Water’s of new infrastructure is largely funded by revenue received from Annual Report for the year ending 30 June 2010. customers. Approved by the Essential Services Commission, prices are rising by an average of 8.8% per year until 2013 at which time they will be competitive with metropolitan water retailers.
This year Western Water made an overall surplus of $5.9 million before tax which includes developer assets and cash contributions of $16 million. Capital works investment was financed from operating cashflows and additional borrowings of $33 million. The debt level is $102.25 million and in line with the Essential Terry Larkins Services Commission’s pricing principles. Chairman
People Western Water employs 145 staff and services a population of 145,000. We would like to thank all staff for their continuing dedication and professionalism. Their committed efforts have contributed to stable, high levels of customer satisfaction for many years. We would like to acknowledge our customers and John Wilkinson our community advisory network. They provide the local input that will help build a more sustainable, water smart future for Managing Director the region. Finally, we would like to thank the Board for their outstanding commitment and leadership. Together we are 18th August 2010 prepared for growth.
Western Water annual REPORT 2009/10 5 Year in Review
Western Water Performance Report
Financial Performance Indicators Performance Indicator Note 2008-09 2009-10 2009-10 Variance Result Target Result +ve/(-ve)
Long Term Profitability Earnings before net interest and tax ÷ average total assets 1 2.20% 1.21% 2.32% 92%
Owner’s Investment Net profit after tax ÷ average total equity 1 1.44% 0.10% 1.35% 1222%
Long Term Financial Viability Total debt (including finance leases) ÷ total assets 2 14.42% 17.44% 19.61% (12%)
Liquidity and Debt Servicing (Interest Cover) Earnings before net interest and tax expense ÷ net interest expense 1 2.74 times 1.1 times 2.05 times 0.95 times
Immediate Liquidity and Debt Servicing (Cash Cover) Cash flow from operations before net interest 3 3.49 times 1.77 times 2.37 times 0.6 times and tax payments ÷ net interest payments
Operating Efficiency $ $ $ $ Water supply / sewage collection Operations, maintenance and administration expenses per ML transported or treated. · water supply reticulation 179 200 203 (2%) · water supply treatment 928 1,299 1,293 0% · sewerage reticulation 171 217 202 7% · sewerage treatment 4 565 679 609 10%
6 Prepared for growth Service & Environmental Performance Indicators Performance Indicator Note 2008-09 2009-10 2009-10 Variance Result Target Result +ve/(-ve)
Water Supply Interruptions Number of customers receiving >5 unplanned interruptions in the year 0 2 0 -
Interruption Time Indicators Average duration of unplanned water supply interruptions 5 128 minutes 90 minutes 57 minutes 37%
Average duration of planned water supply interruptions 5 151 minutes 200 minutes 110 minutes 45%
Restoration of Water Supply Unplanned water supply interruptions restored within 5 hours 99% 98% 99% 1%
Reliability of Sewerage Collection Services Indicators Sewer spills from reticulation and branch sewers (priority 1 and 2) 6 124 * 162 (31%)
Sewage spilt from emergency relief structures and pumping stations 7 0% * 0.13% - (% of volume transported)
Containment of Sewer Spillages Sewer spills contained within 5 hours 100% 100% 100% -
Customer Complaints Indicators Water quality complaints per 1000 customers 8 3.92 * 2.14 45%
Water supply reliability complaints per 1000 customers 9 0.02 * 0.04 (100%)
Sewer service quality and reliability complaints per 1000 customers 0.02 * 0.02 -
Affordability complaints per 1000 customers 10 0.15 * 0.20 (33%)
Billing complaints per 1000 customers 11 0.35 * 0.16 54%
Pressure complaints per 1000 customers 12 0.02 * 0.05 (194%)
Sewage odours complaints per 1000 customers 0.02 * 0.02 -
Other complaints per 1000 customers 13 0.27 * 0.16 41%
* No target set. Variance is measured against 2008/09 result.
Western Water annual REPORT 2009/10 7 Year in Review
Western Water Performance Report (cont)
Service & Environmental Performance Indicators (cont) Performance Indicator Note 2008-09 2009-10 2009-10 Variance Result Target Result +ve/(-ve)
Reuse Indicators Effluent reuse (volume)
Bacchus Marsh 100% * 100% 0% Gisborne 14 74% * 57% (17%) Melton 100% * 100% 0% Riddells Creek 100% * 100% 0% Romsey 100% * 100% 0% Sunbury 14 66% * 55% (11%) Woodend 14 98% * 68% (30%) Total 90% 90% 85% (5%)
Biosolids reuse (dry mass)
Bacchus Marsh Gisborne 15 292% 100% 81% (19%) Melton 124% 100% 92% (8%) Riddells Creek Romsey Sunbury 15 100% 100% 82% (18%) Woodend 16 4045% - Total 121% 100% 121% 21%
Sewage Treatment Standards Number of analyses complying with licence agreements as % of samples.
Bacchus Marsh 100% 100% 94% (6%) Gisborne 100% 100% 100% 0% Melton 100% 100% 100% 0% Riddells Creek 100% 100% 97% (3%) Romsey 100% 100% 97% (3%) Sunbury 71% 100% 100% 0% Woodend 100% 100% 98% (2%)
* No target set. Variance is measured against 2008/09 result.
8 Prepared for growth Notes Western Region Water Corporation Performance Report 1. depreciation charge was down $2.5M from budget due For the year ending 30 June 2010 to asset revaluation being deferred from 1 July 2009 to 30 June 2011. Developer activity was stronger resulting In our opinion, the accompanying Performance Report of Western in developer contributions being $3.3M above budget. Region Water Corporation in respect of the 2009/10 financial year is presented fairly in accordance with the Financial Management 2. debt levels are on budget. However, with the asset Act 1994. revaluation delay, debt currently represents a higher portion of assets. The statement outlines the relevant performance indicators as 3. developer cash revenue was $1.7M above plan, with determined by the responsible Minister, the actual results achieved payments to suppliers being $2M under plan. for the financial year against predetermined performance targets and these indicators, and an explanation of any significant variance 4. Woodend desludging to be completed in 2010/11. between the actual results and performance targets. 5. Ongoing continuous improvement to reduce time of interruptions. As at the date of signing, we are not aware of any circumstances 6. Continuing climate change impacts including grey water which would render any particulars in the Performance Report to reuse and increased tree root ingress reduces sewer be misleading or inaccurate. flows causing blockages and subsequent spills. 7. One spill occurred after a 1 in 150 year storm, and another after an alarm malfunction. 8. Prior year recorded a high level of complaints following a one off incident. Terry Larkins 9. no systemic issues identified. Only two reliability complaints lodged. Director 10. due to real price increases, three more customers lodged affordability complaints. 11. Prior year billing complaints were higher due to introduction of Waterways Charge. 12. Three unrelated low pressure complaints were recorded compared to one complaint in 2008/09. John Wilkinson 13. Continued training, leading to staff satisfactorily Accountable Officer responding to customer enquiries before they escalate to complaint stage. 18th August 2010 14. A number of Recycled Water Schemes - most notably those which have limited winter storage and licences to discharge to creeks (including Sunbury, Gisborne and Woodend) experienced lower than expected irrigation demand due to high rainfall weather patterns over the summer months. 15. Biosolid production result was down on target due to wet product. 16. Woodend lagoon desludged for first time in 20 years.
Western Water annual REPORT 2009/10 9 Year in Review
Western Water Performance Report: Auditor-General’s Report
10 Prepared for growth Western Water annual REPORT 2009/10 11 Governance and Organisational Structure
Governance and Organisational Structure
As a statutory corporation, Western Water is established under the standards, while the Environment Protection Authority (EPA) Water Act 1989. For the reporting period 1 July 2009 to 30 June governs environmental standards, particularly for wastewater 2010, the relevant Minister was the Hon. Tim Holding MP, Minister discharge, recycled water and biosolids management. for Water. A skills based Board of Directors, supported and advised by Executive Management, is appointed by the Minister to set The Essential Services Commission (ESC), the Victorian Western Water’s strategic direction and business policy. Government’s economic regulator for essential utility services, also regulates Western Water prices, service standards and Western Water is responsible to the Minister for Water via market conduct. the Department of Sustainability and Environment (DSE), particularly the Water Industry Division. The Department of The Energy and Water Ombudsman (Victoria) (EWOV) receives, Treasury and Finance also has a shareholder governance role. investigates and resolves enquiries and complaints against The Department of Health sets and supervises water quality electricity and water suppliers across the state.
Organisational Structure Western Water’s Management Team is comprised of a skilled group of experienced professionals committed to achieving Board Members our corporate and strategic objectives. Terry Larkins Dorothy Bell Led by Managing Director, John Wilkinson, the Management Marcos Anastassiou Board Committees Team is accountable to the Board and consists of General Russell Anderson Audit Committee Managers in three areas: Commercial Services, Customer Lucia Cade Capital Works Committee andCommunity Relations, and Sustainability. Carol Mathew Policy Review Committee Judy Tyers Remuneration Committee
Managing Director Customer Advisory Group John Wilkinson Community Reference Groups
General Manager General Manager General Manager Commercial Services Customer & Sustainability Les McLean Community Rob Franklin Relations Peter Donlon
Human Resources Employee Relations Financial Services Customer Relations Asset Management Organisational Renewable Resources Communications Water Systems Development Regulation Information Services Capital Investments and Risk
12 Prepared for growth Board Members
Western Water’s Board is responsible for the planning and Russell Anderson October 2007 management of the policies, strategies and objectives of Western Russell has extensive experience in financial management, Water. Board members have a broad range of relevant skills, governance, risk management and internal auditing. He has held experience and expertise to meet our objectives. senior governance roles at Air New Zealand, Marsh Pty Ltd, CSIRO, PricewaterhouseCoopers and the Qantas Group. Russell Terry Larkins (PSM JP) Chairman - June 2001 has provided independent governance reporting to listed public Terry has over 30 years experience in the water industry and local companies and government authorities incorporating financial government. He was the Chief Executive of the Shire of Gisborne and strategic risk analysis. Russell is actively involved in ensuring and Secretary of the Gisborne Water Board. He is a Board Member sustainability principles are being adopted in corporate governance of Melbourne Water, Chief Executive of the Eva Tilley Memorial frameworks utilised in the public and private sectors and has a Home and a current Board Member of VicWater, Macedon Bachelor Degree in Commerce. Ranges Health Services and Macedon Ranges Further Education Centre. Terry has a Diploma in Business Studies from RMIT, is an Lucia Cade July 2005 Associate of the International Water Association (IWA) and Fellow Lucia has Bachelor Degrees in Engineering and Economics, of the Local Government Professional (LGyro). Masters Degrees in Engineering and Business Administration and holds a Diploma from the Institute of Company Directors. Lucia’s John Wilkinson (B Com, FCPA, RCA, FIWA, FAICD) previous experience includes senior roles at City West Water and Managing Director - June 2002 Melbourne Water in the areas of infrastructure planning, operations With 30 years experience in the water industry, John was and service delivery. Lucia currently consults and works within appointed Chief Executive of Western Water in June 2002. He was the private and public sector developing growth opportunities, appointed Managing Director in July 2007 when Western Water delivering major infrastructure projects and managing became a Corporation. John has a Bachelor of Commerce from stakeholders. Lucia maintains her involvement in the water Melbourne University with Majors in Economics and Accountancy. industry through her consulting work and an ongoing involvement In 1998 John received the Institute of Water Administration’s with the Australian Water Association. most prestigious award, the Barry Leach Award, acknowledging exceptional service to the Institute and the Victorian Water Industry. Carol Mathew July 2005 Victorian Rural Woman of the Year in 2002, Carol managed an Dorothy Bell June 2001 Alpaca Stud farm in Lancefield until recently. Prior to this, Carol Dorothy has a Bachelor of Arts, Masters of Education, Professional spent 17 years in local government as a Councillor and a Senior Counselling Diploma and Company Directors’ Course Diploma. Executive Officer. Carol’s experience includes eight years on the Dorothy has 30 years of experience in teaching, state consultancy, Australian Alpaca Co-operative Board, five years on the Central curriculum administration and governance. A professional Mediator Victorian Regional Enterprise Network, six years as Commissioner and Counsellor, Dorothy is a member of the Australian Institute of Local Government Best Value Victoria and six years as Chair, Rural Professional Counsellors and a graduate member of the Australian Industries Research and Development Corporation – Rare Natural Institute of Company Directors. Fibres Committee. She provides consultancy work on performance improvement to local government. Marcos Anastassiou October 2007 Marcos holds degrees in Mathematics, Social Sciences and Judy Tyers October 2007 Organisation Behaviour. He is a Member of the Australian Institute Judy brings senior public policy and management experience of Company Directors and worked in higher education as a planner from the public sector to the Board. Her experience includes and academic and consultant. He currently holds a senior planning directing inter-governmental relations and strategic planning position at RMIT. Marcos has lived in the Macedon Ranges since in the Department of Premier and Cabinet. She was General 1992 and has been active in the community. He was a Councillor Manager of the Business Council of Australia. Judy has been for the Macedon Ranges Shire from 1997 to 2000 and a Board involved in the community as Chair of Western Water’s Macedon Member of the Djerriwarrh Health Service from 2000 to 2003. Ranges Community Reference Group and she is a Trustee of the Mt Macedon Memorial Cross. Judy was a Director of the Australian Council of Businesswomen and the National Foundation of Australian Women. She is currently a sessional member of VCAT and Applied Learning Coordinator at the Australia and New Zealand School of Government at Melbourne University.
Western Water annual REPORT 2009/10 13 Governance and Organisational Structure
Board Committees
Western Water has four Board committees to assist in carrying other committee members. All Board members on the Audit out its corporate governance functions: Committee are independent, non-executive Directors. • Policy Review Committee Remuneration Committee • Remuneration Committee • Audit Committee The Remuneration Committee reviews the remuneration and • Capital Works Committee performance arrangements of executives and the terms of employment for all employees. Terry Larkins is the Chairman and Each committee operates under approved terms of reference Judy Tyers and Carol Mathew are the other committee members. and is chaired by a Board member. In addition, two Board members attend Western Water’s Customer Advisory Group Policy Review Committee meetings. Committee members are chosen for their skills, The Policy Review Committee investigate, review and develop experience and other qualities they bring to the committees. policies for best practice corporate governance. Dorothy Bell Board committees are entitled to any resources and is the Chairperson and Terry Larkins and Marcos Anastassiou information required and have direct access to Western Water are the other committee members. staff. As required, the Managing Director, members of the management team and other staff attend committee meetings. Capital Works Committee
Board members receive committee agendas and can attend all The Capital Works Committee is responsible for providing strategic meetings, subject to reviewing any conflict of interest requirements. input to Western Water’s Capital Works Plan and monitors the A verbal report by the Chair of each committee is presented at each implementation of the plan in accordance with timeframes and Board meeting and all committee minutes are tabled. budgets. Lucia Cade is the Chairperson and Dorothy Bell, Marcos Anastassiou, Russell Anderson, Terry Larkins, Carol Mathew and Audit Committee Judy Tyers are the other committee members. The Audit Committee assists the Board in fulfilling its Customer Advisory Group responsibilities by reviewing all matters relating to corporate finance, auditing functions, review of financial statements The Customer Advisory Group (CAG) enables community input and accounting policies. This committee also considers to service planning and decision making processes by providing compliance with legislation and other activities and procedures, a direct link between the Board, customers and consumer including insurance and risk management. Russell Anderson advocacy groups. Carol Mathew is the Chairperson of the is the Chairman and Terry Larkins and Lucia Cade are the CAG and Dorothy Bell is a member of the Group.
Board & Committee Meeting Attendance The Board has eleven scheduled meetings each year, with additional meetings convened as required.
Table 1: Board Meeting and Committee Attendance
Board Member Board Policy Review Capital Works Audit Committee Remuneration Committee Committee Committee
Terry Larkins (Chairman) 11 1 4 4 4 Dorothy Bell (Deputy Chairman) 10 1 4 Russell Anderson 10 4 4 Marcos Anastassiou 11 1 4 Lucia Cade 10 4 3 Carol Mathew 10 3 4 Judy Tyers 8 3 2 John Wilkinson 11 1 4 4 4
14 Prepared for growth Risk Management
Attestation
I, Terry Larkins, certify that Western Water has risk Terry Larkins management processes in place consistent with the Chairman Australian/New Zealand Risk Management Standard western water (4360:2004) and an internal control system is in place that enables the executive to understand, manage and satisfactorily control risk exposures.
Western Water’s Audit Committee verifies this assurance and that the risk profile of Western Water has been critically reviewed with the last 12 months. Russell Anderson
Chairman, Audit Committee western water
18th August 2010
Western Water annual REPORT 2009/10 15 sustainability
Sustainability Water Consumption
Western Water’s service area is now experiencing the 13th since Western Water began. This was due to strong customer consecutive year of drought. Local reservoirs continue to be at support of water restrictions and the voluntary T155 campaign. record low levels and Melbourne storages have provided the majority of the region’s drinking water for many years. At the core of Western Water’s strategic direction is the identification and implementation of integrated water management During the reporting period, 10,592 megalitres of drinking water solutions to ensure future supply. In addition, water losses were was supplied to the region. Of this, 89% was supplied by the reduced to 9.1% of total consumption in 2009/10, in line with Yarra Bulk Entitlement. Despite population growth of 3.7% this meeting the Water Plan target of 8% by 2013. year, drinking water consumption across the region in 2009/10 was down 1.2% on last year and at the lowest level recorded
Chart 1: Water Consumption and Population Trends – 16 Years LEGEND Water Population Consumption (ML) Consumption Population
16,000 160,000 14,000 140,000 12,000 120,000 10,000 100,000 8,000 80,000 6,000 60,000 4,000 40,000 2,000 20,000 0 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Year
Table 2: Water Consumption and Population Trends (FY) – 16 Years
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Consumption 12,995 10,968 13,826 14,281 12,372 12,072 13,908 13,346 14,432 11,351 11,813 12,891 11,601 10,730 10,719 10,592 Population 90,349 91,608 92,756 93,996 95,871 97,239 98,740 104,796 112,226 119,775 123,600 128,758 131,312 134,810 139,730 144,948
16 Prepared for growth Table 3: Water Consumption by District
Sunbury / Bacchus Macedon Romsey / Marsh Ranges Melton Lancefield Total
Residential water customers 6,527 21,119 17,859 2,194 47,699 Residential water consumption (ML) 1,163 3,241 3,192 313 7,909 Residential per capita consumption (litres/person/day) 161 138 161 129 149 Non-residential water customers (ML) 586 1,827 1,267 188 3,868 Non-residential water consumption (ML) 253 705 694 68 1,719 Water losses (ML) 142 395 389 38 964 Non-revenue water (ML) 160 447 440 43 1,091 Total annual consumption (ML) 1,557 4,341 4,275 419 10,592 Average annual consumption (previous 7 years) 1,632 4,961 4,245 547 11,385
* Average calculated for seven years to 30 June 2009
Bulk Entitlements Table 4: Major Reservoir Levels (% Capacity) - 5 Years Traditionally the Western Water region had a heavy reliance on 2005/06 2005/06 2007/08 2008/09 2009/10 two large water storages – Rosslynne Reservoir and Merrimu Reservoir. Water from these storages is held as a bulk entitlement Rosslynne 7.0% 4.1% 3.4% 3.0% 4.5% (BE) supplied by Southern Rural Water (SRW). Western Water Reservoir also owns 17 smaller storages, most of which are located in Merrimu 17.0% 13.0% 13.0% 9.7% 9.4% or near the Macedon Ranges. Reservoir Once again, there have been minimal inflows into the larger SRW storages over the past year and limited inflows into the smaller dams. Storage levels in the major local reservoirs remain at critically low levels with Rosslynne at 4.5% of capacity and Merrimu at 9.4%.
Rosslynne Reservoir below 5% capacity
Western Water annual REPORT 2009/10 17 sustainability
Merrimu Reservoir below 10% capacity
As a result, Western Water is significantly reliant on water supplied Major Non-Residential Water Users from the Yarra Bulk Entitlement sourced via Melbourne Water’s In 2009/10, two customers fell within Section 122ZJ of the Water supply system. During the year, this external source provided Act 1989, consuming more than 50 megalitres of water in the year. 89% of the region’s total water supply. As rapid growth continues Both customers are major manufacturing businesses and are in the region, this reliance on external sources will continue and working with Western Water to help develop plans to reduce their will need to increase. water consumption. Western Water’s Bulk Entitlement Report is contained in Appendix 1 and provides details about water taken in compliance Table 5: Major Non-Residential Customers (Usage >50ML) with the ten bulk entitlements. Volumetric Range (ML per year) No. Customers Drought Response 50-100 2 Western Water’s Drought Response Plan By-Law was invoked >100 0 during the year through the change to Stage 3 water restrictions in May 2010. The change in restrictions was promoted in local Total No. Customers 2 and metropolitan newspapers, on Western Water’s website, bills and in H2Info, the customer newsletter. Table 6: Major Customers and Participation in Water Community support for water conservation is evident in residential Conservation Programs water consumption results. In 2009/10, per capita consumption fell to 149 litres per day. Despite extreme heat waves early in Customer Name Participation in Water Conservation Program 2009, all Western Water towns either reduced or maintained their water consumption in the 2009 year compared to 2008. Sunbury ABMT Textiles WaterMAP in place. Also participating in and Macedon customers in particular were identified as among joint EPA, Western Water and consultant the lowest water consumers in Victoria. efficiency study. Saizeriya WaterMAP in place. Investigations into Recycled Water and stormwater harvesting being undertaken.
18 Prepared for growth Capital Works Investment
During the reporting period, Western Water invested $35.5M on Department and public bodies are required to apply VIPP in all capital works projects. Over $150M has been invested in capital tenders over $3M in metropolitan Melbourne and $1M in regional works in the past five years with a further $229M earmarked for Victoria. In the Western Water region, Hume City and Melton capital expenditure in the coming five years to ensure the region’s Shire Councils are considered metropolitan, while Moorabool integrated water supply. and Macedon Ranges are regional.
Table 7: Capital Works Expenditure ($M) – 5 Years Table 8: VIPP Applicable Contracts 2009/10
2005/06 2006/07 2007/08 2008/09 2009/10 New Projects:
Capital Works Merrimu & Rosslynne 10 Megalitre Water Tanks Expenditure 23.2 22.5 34.0 37.3 35.5 Design and construction of two 10 megalitre water storage tanks ($M) one at Merrimu and Rosslynne. Work started at Rosslynne in February 2010 and will begin at Merrimu in July 2010. Rosslynne is expected to be completed by January 2011 and Merrimu by 2009/10 capital works achievements include: April 2011. New jobs were not created for this project. • Commissioned $2M Surbiton Park Biogas Cogeneration Facility Surbiton Park RWP Upgrade Upgrade of existing sewage treatment process. Construction • Completed $13M Stage 1 Surbiton Park Recycled Water Plant commenced in October 2009 and is due for completion in Upgrade with $13.7M Stage 2 now underway December 2010. No new jobs were created for this project. • Completed $13.3M outfall sewer main for Melton Greater than 30 jobs were retained. • Commenced $8M construction of two 10 megalitre water Gisborne RWP (Stage 2) storage tanks at strategic locations Construction of new inlet works and sludge treatment facilities. • Commissioned $6.1M upgrade to Woodend Recycled The project value is $1.8M. Construction began in November Water Plant 2009 and will be completed in August 2010. Commissioning • Commissioned $2M 5 megalitre Class A recycled water will be carried out later this month. The equivalent of one full storage tank at Surbiton Park time job has been created. • Commenced $2.5M upgrade of Bacchus Marsh Recycled Completed Projects: Water Plant
• Continued $1.8M upgrade of Gisborne Recycled Water Plant Loch Road Tank and $2.9M outfall sewer main for Gisborne Design and construction of 3.5 megalitre water storage tank in • Commenced installation of $2.2M belt press dewatering Mt Macedon. The $1.6M tank commenced in August 2008 and unit at Sunbury Recycled Water Plant was completed in February 2010. The equivalent of three full time jobs were created. Many projects underway this year will continue into the coming year. A major new project for 2010/11 is the $4.4M construction Woodend RWP Upgrade of Romsey Borefield to augment Romsey’s drinking water supply Upgrade of existing lagoon based treatment process to with groundwater. activated sludge treatment process. Construction commenced in December 2009 and was completed in June 2010. New jobs Victorian Industry Participation Policy were not created for this project. In October 2003, Parliament passed the Victorian Industry Participation Policy (VIPP) Act 2003. This requires public bodies and departments to report on the implementation of the VIPP. Building Act 1993 The policy was developed to ensure that applicable Government Western Water complies with the building and maintenance projects use local suppliers whenever and wherever they offer provisions of the Building Act 1993. the best value for money. In 2009/10, $5.1M in contracts were directly awarded to local suppliers for capital works projects. National Competition Policy Competitive neutrality seeks to enable fair competition between government and private sector business. Western Water continues to implement and apply this principle in its business undertakings.
Western Water annual REPORT 2009/10 19 sustainability
Environmental Sustainability
Our Water Our Future Community Education and Awareness Western Water’s main communications activities revolve around In 2004 the Victorian Government put in place a long term plan water conservation messages – in particular water restrictions for water - Our Water Our Future (OWOF). The plan sets out and the T155 campaign. Awareness of communication messages 110 actions for sustainable water management aimed at every is very high amongst customers with 94% aware of water sector of the community, seeking to secure water supplies and restrictions. Residential water conservation is actively promoted sustain growth over the next 50 years. The actions aim to: through the WaterTight and Water wise programs and the Water • Repair rivers and groundwater systems by giving them legal Smart rebate scheme. During the reporting period, 376 customers water rights and conducting restoration works; registered for the WaterTight program and a further 110 registered • Price water to encourage people to use it more wisely; for a Water wise visit. • Permanently save water in our towns and cities, through Western Water recognises that educating young people on common sense water saving and recycling measures; climate change and water conservation creates a ripple effect • Secure water for farms through pioneering water allocation reaching far beyond the classroom. For that reason, significant and trading systems; and time and resources is devoted to the education program. During the reporting period, 4,074 students from 42 primary schools • Manage water allocation to find the right balance between participated in 190 Western Water school presentations. Schools economic, environmental and social values. and community groups can also access free, guided group tours Western Water’s actions under the Our Water Our Future plan of treatment plants. In the past year, 13 group tours took place. are set out in the following section. On Saturday 5 June, Western Water celebrated World Environment Water Supply Management Day with the inaugural Sammy’s Super Saturday for members of the Sammy Club, a children’s water conservation program. Over Water Supply Demand Strategy and Conservation Targets 150 participants came to Merrimu Water Filtration Plant to enjoy water conservation displays, environmental music performances, Western Water has developed an extensive water conservation native animals and plant tours. and supply management program in response to long term drought and climate change. Developed in 2007, the Water Supply Demand Industry Strategy (WSDS) is a 50 year plan devised in consultation with customers and stakeholders to develop the optimal combination Since 2007, Western Water has worked with industry across of demand measures and supply options for the region. the region to help conserve water through the WaterMAPs program. WaterMAPs customers are identified as those using A major achievement of this Strategy was the commencement over 10 megalitres of water each year. Under the program, they of the WaterTight program, a residential home audit and retrofitting must develop a water management action plan to use water program targeting households using more than 155 litres per more efficiently and report their savings each year. person per day. WaterTight evolved out of a strategic planning day attended by members of Western Water’s customer advisory Thirteen non-residential customers were registered in the network. The toilet retrofit scheme will be included in WaterTight WaterMAP program in 2009/10. Key achievements with in 2010/11. industry include:
The WSDS supports the Central Region Sustainable Water Strategy • installation of check meters on individual pools at Sunbury (CRSWS) and the Regional Action Plan (RAP) for the Western Aquatic and Leisure Centre to monitor water used in pool Water service area as well as the Government’s OWOF program. backwashing, and improve efficiency of the process The WSDS aims to reduce per capita water consumption by 25% • provision of alternative, fit for purpose water at Holcim by 2015 and 30% by 2020 against average 1990s consumption Quarry, using water captured on site for dust suppression in the region, which was 308 litres/person/day. In 2009/10 per in processes. This has resulted in Holcim falling under capita consumption was reduced to the lowest recorded for the 10ML consumption for 2009/10. region at 149 litres/person/day.
20 Prepared for growth Western Water also works closely with more than 400 trade waste • Showerhead exchange offer expanded to two showerheads customers providing advice on cleaner production techniques and per household reducing their water consumption and trade waste production. • WaterMAPS customers (>10ML/year) contacts and site visits Over the coming year, industry specific fact sheets will be • development of Toolern Integrated Water Management produced for the major trade waste sectors of food production (IWM) Strategy and motor vehicle maintenance. • Infrastructure provided to enable bulk water transfer to the Recycled water has offered a viable alternative to surface Bacchus Marsh Irrigation District water for many primary industry customers in the region. • Securing additional 7GL bulk entitlement from the Melbourne Over 90 customers are connected to the Sunbury/Melton system, and working with Melbourne Water, the metropolitan Recycled Water Scheme pipeline alone and plans are underway retailers and DSE to plan water supply growth requirements to extend the Gisborne Recycled Water Scheme for growers for the greater Melbourne pool of water resources in a new horticultural precinct in Gisborne South. • Seeking approval from Southern Rural Water to commence Local Government construction of a new groundwater bore at Romsey Western Water has developed strong working relationships with • Registered with Waterfind regarding additional water rights the four local governments in the service region – Melton Shire, for Pykes Creek Reservoir Macedon Ranges Shire, Hume City and Moorabool Shire Councils. • Continued work on bulk entitlement for the Werribee system Significant actions and achievements with local government during to provide unallocated water to both Western Water and 2009/10 include: the environment • Representation on DSE’s Drought Response and Extreme • Recycled water: the launch of the Riddells Creek Recreation Drought Response sub-committees Reserve recycled water project in partnership with Macedon Ranges Shire Council and recycled water usage for irrigation Water Conservation at many council properties including recreation reserves and public open spaces throughout the region. The region’s fast growing population, combined with long term • Water catchment protection: Working with the Macedon below average rainfall and other climate change impacts, has Ranges Shire Council to enhance guidelines to protect water meant that implementing an effective water conservation strategy catchments from residential development is not only a major challenge but is essential to maintaining the vitality of the Western Water service region. • Capital works: working with Melton Shire Council and other stakeholders to implement Integrated Water Management In 2009/10, residential usage was 149 l/p/d. This result reflects in the new Toolern residential precinct. Local councils are the successful uptake of the voluntary T155 campaign, which consulted and updated on progress as capital works are began in December 2008, and the implementation of Stage 3a planned and implemented. water restrictions in April 2007. • Water conservation: provision of detailed water consumption data for council sites provided on request and work with Table 9: Residential Water Consumption per Capita per Day – 5 Years significant council–owned, water consumers in the WaterMAP 2005/06 2006/07 2007/08 2008/09 2009/10 program including MacPherson Park in the Melton Shire and Sunbury Aquatic Centre in Hume City Council. Water • Showerhead Exchange Program: ongoing partnership with Consumption 206 194 164 159 149 local councils to provide exchange points across the region Per Capita for the showerhead program. Per Day Sustainable Water Strategies Developed in 2005 by DSE in consultation with participating Integrated Water Management water corporations including Western Water, the Central Region Integrated Water Management (IWM) is the coordinated Sustainable Water Strategy (CRSWS) is one of a suite of strategies management of water supply, sewerage, recycled water, drainage which Western Water employs to ensure a secure water supply and stormwater systems. It optimises the use of all alternative well into the future. water sources, minimises impact on the natural environment, Significant actions and achievements under the CRSWS during and ultimately, reduces consumption of treated drinking water. 2009/10 include: During 2009/10, Western Water worked with both state and • Implementation of the Active Leakage Reduction Plan local government, developers, Melbourne Water, Southern Rural (including the Pressure Management Program) Water and other stakeholders to ensure the implementation of IWM in the new housing developments at Toolern near Melton. • education program extended to include preschool and The Toolern precinct is projected to become home to 50-60,000 secondary schools people by 2030. • Participation in metropolitan Residential End Use Measurement Study (REUMS)
Western Water annual REPORT 2009/10 21 sustainability
Recycled Water Western Water continues in partnership with South East Water to research the benefits of applying biosolids to agricultural land. Western Water continues to set a benchmark for the water industry Research findings were presented at a water industry biosolids in Australia aiming to beneficially recycle 100% of all water by conference this year and were published in AWA’s Water Journal 2013. Customers are supplied with Class A, B and C recycled (June 2010). water for fit for purpose uses including external household use, toilet flushing and irrigation of public open spaces, recreation Regional Catchment Management reserves, agriculture, horticulture and golf courses as well as Strategy construction works. Western Water has undertaken a range of actions and strategies In 2009/10, Western Water’s seven recycled water plants received which support the vision and goals of the Port Phillip and Western 7,989 megalitres of wastewater, producing 7,386 megalitres Port Regional Catchment Strategy. In particular, high levels of of recycled water of which 85% was used by customers. An recycled water use have reduced the level of nutrients discharged estimated 1,528 megalitres of drinking water was saved through into waterways. substitution with recycled water this year. Land and biodiversity asset management has continued in Table 10: Recycled Water Volume and % Used – 5 Years conjunction with Melbourne Water and community groups including Deep Creek Landcare, Pinkerton Landcare and Environment Group 2005/06 2006/07 2007/08 2008/09 2009/10 and Friends of Toolern Creek.
Recycled 5,821 5,589 5,904 6,058 7,386 Water (ML) Recycled 78% 84% 86% 88% 85% Water Used (%)
In October 2009, Western Water won the 2009 Savewater Sustainability in Government Award for Eynesbury’s recycled water supply. With 2,900 homes being built in the next two decades, Eynesbury is the first Victorian town development to record a six star sustainability rating, saving about 50% Campaspe Reservoir of its drinking water through substitution with recycled water.
The Riddells Creek Recycled Water Scheme was also Protecting Water Catchments commissioned this year, providing recycled water to the Protection of water catchments was at the core of a town’s recreation and sporting clubs and conserving benchmark “red dot” decision handed down by the Victorian valuable drinking water. Civil and Administrative Tribunal (VCAT) in December 2009 Biosolids relating to land development near Woodend. Biosolids are a nutrient rich, organic material produced during Applicants had sought permits for four dwellings in the treatment of recycled water. They can be used for a range land that fell within Western Water’s Campaspe River of functions including application to land as a soil conditioner Catchment. The VCAT decision ruled against the permits, and fertiliser. Biosolids can also be combined with green waste reinforcing Victorian Government planning controls and for domestic compost or used as structural material for road setting a benchmark for future planning decisions in construction. sensitive environmental areas.
All seven recycled water plants produce biosolids, with The decision builds upon a Supreme Court appeal made 2,446 tonnes generated in 2009/10 and 121% beneficially by Western Water in 2008 to protect the Campaspe River reused. This figure includes all reducing stockpiles of biosolids catchment from potential risks of residential development. from prior years. This is the fourth consecutive year reuse of Work continues with DSE, Coliban Water, Southern Rural biosolids has exceeded production. Water, Goulburn Murray Water and Macedon Ranges Shire Council to develop new guidelines in the Macedon Ranges Table 11: Biosolids Produced (tonnes) and % Reused – 5 Years* consistent with this decision.
Year 2005/06 2006/07 2007/08 2008/09 2009/10
Total Biosolids 2,576 2,228 2,225 2,182 2,446 Produced % Reused 59.8% 142.0%* 132.6%* 121.0%* 121.0%*
* Includes quantities of stockpiled biosolids.
22 Prepared for growth Victorian Biodiversity Strategy subsequently separated the 5.5 hectare grassland from farming Western Water’s Biodiversity Asset and Action Plan was developed activity, fencing it off from stock access and commenced weed in 2004 in line with the principles of the Victorian Biodiversity control activity. Parwan Landcare Group has been contacted to Strategy. This plan was updated in 2008 to reflect changes to assist with future management of the grassland. legislation and the conservation status of flora and fauna species, The Gisborne survey identified an endangered species, the listed noxious weeds and threatened vegetation communities. Matted- flax Lily (Dianella amoena) and measures are also in In 2009/10, particular focus was placed on protecting significant place to protect this threatened species. biodiversity assets for the future. In addition, detailed flora and fauna surveys were undertaken at three sites including the recycled Victorian River Health Strategy water plants at Bacchus Marsh and Sunbury and the water filtration Western Water owns and manages several large properties plant at Gisborne. with frontage to waterways. These include 3km of Deep Creek frontage in Romsey, 5km of Werribee River frontage at Melton, Significant biodiversity actions undertaken during the year include: 2km and 1km of Jacksons Creek frontage at Sunbury and • Protection of 35ha of endangered Greybox Grassy Woodland Gisborne respectively and another 1km of stream frontage along at Pinkerton Forest, Melton RWP Five Mile Creek at Woodend. These stream frontages consist of various topographical features including river valley escarpments, • Fencing of 5.5ha of Plains Grassland at Parwan South, flood plains and riparian zones. Western Water works closely Bacchus Marsh RWP with Melbourne Water to manage the riparian zones of stream frontages. The remaining topographical features are managed • Location of two flora species and one vegetation community by Western Water. listed under the Environment Protection and Biodiversity Conservation (EPBC) Act 1999 The Victorian River Health Strategy provides a long term approach to protecting and improving river health for the state. During • nesting and breeding of White-bellied Sea Eagles at Melton RWP 2009/10, Western Water continued to work with Melbourne Water • Planting of over 8,000 indigenous trees, shrubs and and the Department of Sustainability and Environment to protect understorey species at Western Water sites and improve river health consistent with the Victorian River Health Strategy. Actions within Our Water Our Future and the Central • d evelopment of a management plan for expansion of grassy Region Sustainable Water Strategy have progressed including the woodland habitat at Melton RWP with a habitat corridor created Werribee Bulk Entitlement Review, which will see unallocated from a 10 hectare paddock previously used for the controlled water split equally between Western Water and the environment. disposal of residues from wastewater treatment In addition, plantings at Deep Creek and the Werribee River were undertaken in coordination with Melbourne Water’s Stream • Weed control along 5km Werribee River stream frontage Frontage Management program. at Melton RWP. Further, the biological assessment of Jacksons Creek and Five New Species Identified Mile Creek continued for the third consecutive year with a view to The Parwan South survey identified a threatened species known identifying the long term ecological risk of discharges into streams as Clover Glycine (Glycine latrobeana) which has EPBC listing from recycled water plants. as vulnerable. The survey area itself is made up of critically endangered Plains Grassland (EVC 132). Western Water has
Protecting Pinkerton Forest At Melton, Western Water has been preserving Pinkerton Forest in partnership with the Pinkerton Landcare and Environment Group for well over a decade. Pinkerton Forest is a 35 hectare area of Plains Grassy woodland of very high conservation significance. Greybox Grassy Woodlands and Derived Native Grasslands of South-Eastern Australia are now listed as Endangered under the EPBC Act 1999.
White-bellied Sea Eagles nested and successfully bred at Pinkerton Forest during the year, an event widely recognised as a major conservation achievement. In March 2010, Western Water ensured Pinkerton Forest will be permanently protected by signing a Section 173 Agreement under the Planning and Environment Act 1987 with Melton Shire Council.
Pinkerton Forest
Western Water annual REPORT 2009/10 23 sustainability
River Health Obligations Office Based Environmental Impacts Western Water is committed to managing the impact of all its Corporate Water Consumption activities to minimise environmental impacts on and risks to the During the reporting period, significant water savings were realised aquatic ecosystem. During 2009/10: due to the prevalent culture of water conservation in the office. • management of waterway environmental flows in the region Office staff water consumption of 3.6kL per annum is equivalent was ensured in coordination with Melbourne Water and to just 15 litres per person per day. Southern Rural Water Table 12: Office Based Water Consumption – 3 Years • the qualification of the Maribyrnong environmental flows was signed by the Minister for Water to ensure management of 2007/08 2008/09 2009/10 the small volume of water in Rosslynne Reservoir for both environmental health and emergency potable supplies Water Consumption (kL) 326.0 417.1 318.0 • all obligations were met to manage works on waterways FTE Staff 84 87 89 and prevent environmental impacts and risks to aquatic ecosystems Consumption/Staff (kL) 3.9 4.8 3.6 • capital works upgrades were undertaken at recycled water Office Space (m2) 2,097.4 2,097.4 2,097.4 plants in Woodend and Gisborne to further reduce nutrient Unit based consumption 155.4 198.8 151.8 discharges and protect waterway health (litres/m2) • extensive monitoring of groundwater bores continued at recycled water plants for early identification of any potential impact of its activities on the aquifers. Western Water’s office water consumption is calculated on water No impacts were identified. used at the Sunbury administration office and does not include water consumption from any other sites including depots or treatment plants. The Sunbury office’s water meter is shared New Biogas Cogeneration Facility at Melton with other organisations. Consequently, Western Water’s share is calculated on the proportion of staff present in the building over the year. Three years of data is available as Western Water has occupied the Sunbury office for that period.
Energy and Greenhouse Gas Emissions Western Water’s Greenhouse Gas Reduction Strategy aims to reach zero net carbon emissions by 2017/18. The strategy demonstrates a strong commitment to sustainability and awareness of the link between climate change and the impact on future water resources.
Inroads towards our target of zero net carbon emissions were made this year. In 2004/05, Western Water produced more than 30,000 tonnes of carbon emissions, equivalent to pollution from 6,925 cars. In the past year, net carbon emissions were reduced to 20,999 tonnes, 30% below 2004/05 levels and 3,505 tonnes below 2008/09.
Table 13: Net Greenhouse Gas Emissions (tonnes CO2e) – 5 Years
2005/06 2006/07 2007/08 2008/09 2009/10
Total GGE 23,192 23,958 23,484 24,504 20,999 (tonnes CO2e)
This year, Western Water commissioned its first Biogas Cogeneration Facility at the Melton Recycled Water Plant. The Cogeneration Facility will provide the complete energy needs for the Class A Recycled Water Plant at Melton and will also contribute to the energy requirements of the larger Class C plant. In addition, the second largest sewer pump station in the region was decommissioned this year, replaced by a gravity outfall sewer.
24 Prepared for growth Carbon Offsets Table 16: Direct and Indirect Emissions (tonnes CO2e) Western Water purchased 2,494 tonnes of carbon offsets Emission Type recognised under the Voluntary Carbon Standard in 2009/10. GreenPower continued to be purchased for the Sunbury Office Total Direct Emissions 4,590 and for 66 smaller pump stations, equating to 793 tonnes of carbon offsets through renewable energy purchases. - Water Treatment 6
Table 14: Carbon Offsets Purchased (tonnes CO2e) – 4 Years - Sewage Treatment 3,997 - Vehicle Fleet 587 2006/07 2007/08 2008/09 2009/10 - Recycled Water Distribution 0 100% Green Energy 0 213 522 793 - Waste Disposal 0 First Climate Voluntary 0 0 820 2,494 Total Indirect Emissions 19,696 Carbon Standard Total offsets purchased - Energy Use 19,696 0 213 1,342 3,287 (tonnes C02e) Total Emissions (tonnes CO2e) 24,286
Significant Activities Generating Greenhouse Energy Sources Gas Emissions The main energy source continues to be the Victorian electricity The treatment and supply of water as well as the treatment and grid. However, the introduction of our first Biogas Cogeneration management of sewage are the two main activities generating Facility and decommissioning the second largest pumping station greenhouse gas emissions. Due to the success of the Greenhouse will ensure our reliance on the grid is reduced in coming years. Gas Reduction Strategy, both activities have generated fewer emissions this year compared to 2008/09. Indirect emissions Table 17: Net Energy Source Breakdown (tonnes CO2e) – 4 Years account for 81% of total emissions. 2006/07 2007/08 2008/09 2009/10
Table 15: Significant Activities Generating GGE (tonnes CO2e) Vic Grid Electricity 19,905 18,342* 19,009* 16,409* – 4 Years Consumed
2006/07 2007/08 2008/09 2009/10 Methane Emissions 945 2,124 2,667 1,806^ Nitrous Oxide 2,170 2,170 2,058 2,148 Water Treatment 10,527 8,959 10,483 9,651 Emissions and Supply Soda Ash 3 3 2 5 Sewage Consumed Treatment and 10,850 12,432 13,584 12,701 Unleaded Petrol 383 293 250 243 Management Consumed Transport 662 644 462 587 Diesel Consumed 551 528 516 386 Other – Recycled 1,069 1,052 794 814 AutoGas 0 6 0 0 Water Distribution B20 Biodiesel 0 18 1 2 Other – Office 850 610 522 533 Total 23,958 23,485 24,504 20,999 Total Emissions 23,958 23,697 25,845 24,286 (tonnes CO2e) (tonnes CO2e)
* Includes carbon offsets. (For 2009/10, 3,287 tonnes CO2e carbon offsets were purchased.) ^ Methane emissions have reduced due to a change in the default value used.
Western Water annual REPORT 2009/10 25 sustainability
Social Sustainability
Water Services Sewer System Western Water maintains 1,086km of sewer mains with 38km new Water Quality sewer mains constructed in the past year. The Sewer Hot Spot In October 2009, Western Water successfully passed its second program focuses on routine cleaning of those areas at highest risk Regulatory Audit by the Department of Health for its Drinking Water of blockages and spills. Tree root penetration remains the main Risk Management Plan under the Safe Drinking Water Act 2003. cause of sewer blockages across the region. These have been The successful audit result confirms the continuous commitment made more prevalent by prolonged drought. to deliver quality and safe drinking water to customers. During the past year, there were 30.1 sewer main blockages All 19 water quality zones, including sites at reservoirs, water per 100km of sewer main (against a target of 29.0). The average filtration plants, storage tanks, pump stations and customer taps, interruption time to customers while repairs were undertaken complied with the microbiological requirement of at least 98% of for sewer blockages was 94 minutes which is on par with last the drinking water samples collected in a 12 month period to have year’s average. zero E.coli organisms per 100 millilitres. Table 19: Sewer Blockages – 5 Years Water Supply System 2005/06 2006/07 2007/08 2008/09 2009/10 Western Water maintains 1,741km of water mains with 31km new mains constructed in the past year. The extensive Sewer 281 291 298 298 326 reticulation system is maintained through regular repairs and Blockages operational actions such as valve exercising, mains flushing and condition assessment. These actions help to reduce water loss through leakage and burst pipes and assist in maintaining Sewer blockages resulted in 11 uncontained spills. These events water quality. are treated with high priority with field teams and after hours staff Ground movement is the key cause of water main breaks, are immediately available to ensure spills are contained as quickly especially in the highly reactive soil areas of the region. The as possible. All sewer spills during 2009/10 were contained within number of burst water mains this year is significantly below 5 hours. prior years in part due to our water main replacement and Two major spills occurred in the past year. One took place in pressure reduction program. Western Water recorded 11.6 bursts October 2009 in Melton West near Arnolds Creek for which per 100km of water mains (well below our target of 21.5) and Western Water was fined $5,841 by EPA Victoria. The spill was the average interruption time was 59 minutes (well below our caused by tree roots and fats blocking the sewer. In March 2010 target of 90 minutes). When water is unavailable to customers, a second major spill occurred when a pumping station spilled into alternative drinking water is provided. Toolern Creek in Melton. This spill was caused by failures in the alarm system thought to be due to major electrical storm activity in Table 18: Water Mains Bursts – 5 Years February. Western Water has undertaken a broad review of causes 2005/06 2006/07 2007/08 2008/09 2009/10 of sewer spills and is planning expansion of its blockages and spills prevention program. Water Mains 376 372 373 290 202 Bursts
26 Prepared for growth Customers Managing Complaints The complaints management procedure provides a process Customer Advisory Network for managing a complaint from receipt through to resolution. Western Water has an established customer advisory network During 2009/10, complaint numbers were significantly lower that provides ongoing advice to the Board on those issues than prior years driven by decline in water quality complaints. important to achieving its vision. The network is comprised Of all complaints received, 77% related to water quality issues, of one Customer Advisory Group (CAG) and three Community typically turbidity and colour. Much of this relates to the inability Reference Groups (CRGs) which represent the key regions of to flush mains during drought. Sunbury, Macedon Ranges and Melton/Bacchus Marsh. There are currently 29 members of the network from a broad range Table 21: Customer Complaints – 5 Years of ages and backgrounds. 2005/06 2006/07 2007/08 2008/09 2009/10 The main role of the CRGs is to consider and discuss Western Water issues affecting their region. CRGs are made up of Water Quality 232 187 204 215 120 representatives from the local community and are attended Water and 5 3 5 3 3 by management. The CAG provides a direct link between the Sewer CRGs, Western Water’s Board, customers and consumer groups. Service It comprises Board Members, CRG Chairs and representatives of key customer and advocacy groups. Billing and 17 24 25 27 20 Accounts Across the year, each CAG and CRG meet five times. Member General 45 28 15 15 11 input is sought on major projects and customer service initiatives. In July, all network members attend a strategic planning day Total 299 242 249 260 156 and input from this day forms the start of the strategic planning process for the corporation. Eight new members joined the advisory network during the year. They were recruited through The Energy and Water Ombudsman Victoria (EWOV) handled 21 local advertising and referrals from community organisations. referrals on behalf of Western Water customers in the past year, with 18 handled as enquiries requiring no further action and only Customer Service 3 referred for investigation. Customer service performance is measured weekly to ensure Customer Satisfaction that essential service functions are performed in accordance with agreed standards. Customer service efficiencies continue In May 2010, results from the annual customer survey remained at very high performance levels despite continued strong growth very high with 91% of the 600 customers interviewed satisfied in customer numbers. Results for average wait times and calls with the overall service provided by Western Water. The average answered within 30 seconds performed at their best levels rating of 8.3 out of 10 demonstrates strong and stable service in five years. delivery over many years.
Table 20: Customer Service Efficiencies – 5 Years Table 22: Overall Customer Satisfaction (out of 10) – 5 Years 2006 2007 2008 2009 2010 2005/06 2006/07 2007/08 2008/09 2009/10
Customer Average Customer 8.4 8.5 8.4 8.3 8.3 service calls 87,388 94,760 75,734 89,010 83,768 Satisfaction received
Calls answered Customer satisfaction with overall water quality remains high within 30 89% 85% 89% 93% 95% and customers continue to be very satisfied with their sewerage seconds (%) service. Western Water is well perceived as a valuable member of Average wait the community. For the small percentage of customers who were 13 16 14 11 10 time (seconds) not satisfied with Western Water, the main areas suggested for improvement related to value for money. Correspondence requiring a 747 832 1,182 1,466 1,852 response
Western Water annual REPORT 2009/10 27 sustainability
Managing Social and Economic Impacts Service Charges From 1 July 2009, water and sewer charges increased in line with Drought the five year pricing structure incorporated in the ESC approved Western Water’s service region continues to be impacted by Water Plan 2008-2013. In 2009/10, the following water and sewer record low rainfall with 2009/10 marking the 13th consecutive charges applied: year of drought. As a result, 89% of all water supplied to customers is sourced from the Yarra Bulk Entitlement. Table 23: Water and Sewer Charges Transferring water such long distances requires significant use of pumping stations resulting in higher energy use and costs. Residential Non-Residential
To help alleviate the impact of drought and its associated costs, Water Service & Usage customers are encouraged to conserve water through observation Service charge per $174.56 $174.56 of water restrictions and participating in the voluntary T155 annum program. As a result, consumption in the region is at its lowest level recorded since the corporation commenced in 1994/95, Usage/kilolitre (per 4 despite ongoing high annual population growth rates. mthly billing cycle) 0-53 kilolitres $1.1222 $1.4887 (flat fee) Water Restrictions 53-106 kilolitres $1.4887 $1.4887 (flat fee) All towns in Western Water’s service area were on Stage 3a water Greater than 106 kilolitres $2.9775 $1.4887 (flat fee) restrictions through to May 2010 when restrictions were eased to Stage 3. To be in line with metropolitan water corporations, Sewerage Tariff customers were able to apply for an exemption from restrictions under specific circumstances. A total of 388 exemptions were Service charge $443.48 $443.48 issued in 2009/10 (324 of these were rolled over from Stage 3a) with the majority regarding altered watering hours. New Customer Contributions (average lot size) Formal procedures are in place to address customers who do not Water $1,127.12 observe water restrictions. During the past year, 111 properties were visited and 39 first warning restrictions letters issued. Sewer $1,127.12 A total of 5 formal warning notices were issued and 2 restrictions Class A Recycled Water $1,127.12 of water supply occurred. No on the spot fines were issued and no formal legal action for water restrictions was undertaken Class A Recycled Water during the year. Service charge $75.47 Usage $1.1222
Some customers experience difficulty paying their account resulting in enhancement of the Hardship Policy and Collections Policy during 2009/10. As a result of the policy changes, staff have greater flexibility to provide customers with tailored individual payment solutions.
82 new hardship customers were registered this year with 116 financial assistance and bonuses given to customers from six separate schemes. Notably, 25 hardship customers ‘graduated’ from the program during the reporting period due to the greater flexibility built into the Hardship and Collections Policies.
28 Prepared for growth Community Service Obligations Names and titles of decision makers: A total of 34,618 pensioner, healthcare and veterans affairs Authorised Person Les McLean, General Manager, concessions were provided during 2009/10, totalling $2.1M. Commercial Services The annual concession cap per account is $29.10 for water Principal Officer John Wilkinson, Managing Director and $36.10 for sewer services. 594 not for profit organisations received rebates on their annual water and sewer charges, Requests for access to information held by Western Water totalling $97,663. Customers receive payment for the Hardship should be made in writing to: Relief Grant Scheme (Sewerage Connection Scheme) directly FOI Officer:Mr Les McLean, from the Department of Human Services. General Manager Commercial Services Western Water PO Box 2371 Sunbury DC, Victoria 3429 Table 24: Community Service Obligations – 2 Years Contact details 9218 5445 or 2008/09 2009/10 [email protected] No. $ No. $ From 1 July 2010 a fee of $23.90 applies to any application for documents. Additional information and how to make an Concessions: FOI request is available on Western Water’s website and at Pensioners, 11,659 1,911,552 11,539 2,151,638 www.foi.vic.gov.au. Healthcare, Veterans Affairs Availability of Other Information Not for profit rebates 597 144,066 594 97,663 Subject to the Freedom of Information Act 1982, the following Utility Relief Grant information is available on request: 88 30,791 107 44,696 Scheme • a statement that declarations of pecuniary interests have Water concession on been duly completed by all relevant officers life support machines 2 52 4 70 • details of shares held by a senior officer as nominee or held – haemodialysis beneficially in a statutory authority or subsidiary • details of all publications produced by the entity about itself, and how these can be obtained Freedom of Information Act 1982 • details of any major external reviews carried out by the entity The Victorian Freedom of Information Act gives customers the • details of major research and development activities right to access documents held by Government agencies as well undertaken by the entity as the right to request that incorrect or misleading information be amended or removed. Western Water is considered to be • details of overseas visits undertaken including a summary a Government agency under the Act. The decision to release of the objectives and outcomes of each visit information is made by an Authorised Officer. • details of major promotional, public relations & marketing activities undertaken to improve the occupational health and During 2009/10, there was one request for access to information safety of employees in accordance with the Act for which access was granted in part. • details of assessments and measures undertaken to improve Table 25: Freedom of Information Summary the occupational health and safety of employees • general statement on industrial relations and details of time Personal requests received 0 lost through industrial accidents and disputes, and Non personal requests received 1 • list of major Committees sponsored by Western Water, the Requests outstanding at 30 June 2010 0 purposes of each Committee and the extent to which the purposes have been achieved. Internal reviews 0 Internal reviews where the original decision was 0 confirmed, varied or overturned VCAT appeals lodged 0 VCAT appeals decided 0 Exemptions in requests, internal reviews and VCAT 0 appeals Total dollar of application fees collected and waived $23 Total dollar of charges collected and waived $600
Western Water annual REPORT 2009/10 29 sustainability
Human Resources Women’s Affairs Flexible employment strategies focusing on work/life balance Employment and Conduct Principles have increased the proportion of women in our workforce. As a Western Water is committed to applying merit and equity result, women make up close to half of Western Water’s workforce principles when appointing staff. Selection processes ensure as well as a third of the Customer Advisory and Community that applicants are assessed and evaluated fairly and equitably Reference Groups. on the basis of the key selection criteria and other accountabilities without discrimination. Young People Western Water’s award winning Education Program ensures Western Water’s values and employment principles are critical young people in the community understand and feel empowered to maintaining and improving performance of the workforce. to act upon water conservation messages. Western Water also Policies and practices are in place so that the corporation supports and encourages work experience for secondary and continually strives to uphold the principles of equal opportunity, tertiary students. Short term work placements broaden students’ employee diversity and work/life balance. experience and understanding of the workplace and of career Workforce Data opportunities in the water industry. During the year, a Work Placement Program was provided for four tertiary students Western Water aims to attract, retain and develop talented across the corporation including in Water Quality Systems and committed employees. At 30 June 2010, 145 people and Capital Investments. were employed in a variety of professional, technical, trade and administrative roles. This figure includes permanent, This is the fifth year Western Water has participated in the casual and temporary employees. Of these, 45% were women. Western Chances Program which provides work experience and mentoring for youth from Melbourne’s western suburbs. Table 26: Workforce Composition by Function – 2 Years This year, two Western Chances students have been awarded ongoing placements on a part time basis while they continue their 2008/09 2009/10 tertiary study. In addition, a Traineeship Program was provided Male Females Male Females for two young, local residents who completed their Certificate III in Business Studies during the reporting period. These Trainees Board Members 3 4 3 4 have now been offered full time employment in the Customer Managing Director/ 4 - 4 - Service Team. General Managers Indigenous Communities Managers 6 4 6 4 Western Water is aware of the region’s indigenous community and Operational, 64 57 70 60 its heritage. Cultural Heritage Management Plans are developed for administration and Aboriginal Affairs Victoria (AAV) for all works within 200 metres of field staff waterways (unless previously disturbed). Local indigenous groups Total 77 65 83 68 have the opportunity to assess related sites for significant cultural artefacts prior to approving capital works. Recruitment procedures also recognise the significance ofWur-cum barra, the Victorian Inclusiveness public sector’s indigenous employment strategy. Inclusiveness is a core value for Western Water and a key Whistleblowers Protection Act 2001 consideration of the Human Resources Strategy. This value is demonstrated through community representation on the Customer The Whistleblowers Protection Act 2001 recognises that improper Advisory Group and Community Reference Groups which include conduct by staff or actions that involve reprisals against those who members from across the service region who cover a range of come forward to disclose such conduct will not be tolerated. age groups, social, economic and cultural backgrounds. Further, The objectives of the Act are to: Western Water’s commitment to inclusiveness is demonstrated through support and involvement in community activities • promote a culture in which staff feel safe to make disclosures and sponsorships. • protect people who disclose information about serious wrongdoing within the public sector from recrimination Diversity or other adverse consequences Western Water strongly supports workplace diversity through • provide a framework for investigating disclosed matters its robust Equal Employment Opportunity policy. A relatively small proportion of people in the region speak a language other • ensure that investigated matters are dealt with properly. than English at home with Italian, Maltese and Greek the most Western Water’s Whistleblowers Protection procedure is available prominent. To provide quality service delivery to a culturally and in the Human Resources Manual. The procedure is available linguistically diverse community, Western Water employs translation to members of the public upon request and is included as an services for customers and works with local governments and Appendix to this report (page 86). No disclosures were reported community organisations such as the Migrant Resource Centre. in accordance with the Act during the reporting period. Western Water also provides free presentations and water filtration plant tours for community groups about the source and safety of the region’s drinking water.
30 Prepared for growth Occupational Health and Safety Table 28: Workcover Claims – 5 Years Western Water aims to provide healthy and safe workplaces 2005/06 2006/07 2007/08 2008/09 2009/10 for employees, contractors and the wider community. Key safety messages are reinforced across the business via safety New 5 9 1 3 7 alerts, the intranet and site/toolbox meetings. Particular focus standard* is given to workplace health and safety education and training. claims The Occupational Health & Safety (OH&S) Policy is included New minor 4 4 8 4 4 as Appendix 2. claims The OH&S Committee is comprised of two Management and Total 9 13 9 7 11 five employee representatives and is responsible for improving the safety of the work environment. The Committee has access * For a claim to be classified as a standard claim it must exceed a to additional management and specialist resources. threshold of around $550 of medical payments or ten days lost time. Any claim that falls below these thresholds are classified Both the OH&S Policy and a list of Committee members are as minor claims. displayed on noticeboards at each worksite and are available on the intranet. Committee meeting minutes are also available on the intranet and are communicated to all employees at Table 29: Workcover Premiums – 5 Years monthly team meetings. 2005/06 2006/07 2007/08 2008/09 2009/10 A key area of focus is workplace health and safety education and training processes, and systems that ensure the safety of Premiums 132,360 129,017 175,964 220,078 197,220 employees, customers and the community. Aligned with the Health ($) and Well Being Strategy, the OH&S Training Program has a strong focus on health as well as safety.
Significant OH&S initiatives during the year included implementing This year, Western Water recorded 11 lost time injuries, compared the Employee Health Program, partly funded by a Worksafe grant, with 5 in the prior year. These injuries accounted for 468 days lost. which included employee health checks, and commencing a major This represents a significant deterioration in days lost compared project in 2010 to reduced workplace injuries. to previous years. Two serious injuries occurred in July 2009 and contributed to almost two thirds of total days lost for the reporting Workplace Incident Management period. Because of the serious nature of the injuries, full time Incidents include injuries and other hazards (non-injury) related return to work is not yet practicable and so they continue to impact incidents. 20 workplace incidents were reported during 2009/10, on figures for lost time injuries. compared with 18 in the prior reporting period. Table 30: Total Lost Time Injury Days – 5 Years
Table 27: Workplace Incidents – 5 Years 2005/06 2006/07 2006/07 2008/09 2009/10
2005/06 2006/07 2007/08 2008/09 2009/10 Lost Time 1 24 9 5 11 Workplace 12 23 20 18 20 Injuries incidents Lost Time 44.5 177.0 204.6 27.5 468 Injury Days
A total of 11 Workcover claims were lodged during the year, compared with 7 in the prior year. A key focus going forward is a new OH&S Improvement project, with clear goals to improve performance in this critical area.
Western Water annual REPORT 2009/10 31 Financial performance report
Financial Performance Report Summary
The following summary table and graphs highlight that in 2009/10 Western Water’s revenue was strong, some $2.2 million above plan. However, revenue from charges fell slightly under budget as a result of water restrictions being maintained. Developer activity remained strong with a 13% increase in total New Customer Contributions from 2008/09. The improved net result is also attributable to depreciation being $2.5 million less than budget as a result of delay in infrastructure assets being revalued, which has a flow on of a higher depreciation charge.
Table 31: Financial Performance Summary – 5 Years
$’000 Plan Actual Actual Actual Actual Actual 2009/10 2009/10 2008/09 2007/08 2006/07 2005/06
Revenue
Service Charges 46,564 44,159 39,691 33,551 32,082 32,541 New Customer Contributions 12,639 16,017 14,204 17,538 12,381 17,175 Interest 40 33 119 132 108 300 Other 1,570 2,795 1,660 1,543 1,274 1,249 Total Revenue 60,813 63,004 55,674 52,764 45,845 51,265
Expenses
Operating Expenses 39,024 35,287 31,042 27,796 26,064 24,132 Corporate Expenses 13,728 14,444 12,684 11,372 11,603 9,373 Finance 5,900 5,706 3,847 2,177 938 206 Environment Contribution 1,615 1,615 1,615 1,300 1,300 1,300 Total Expenses 60,267 57,052 49,188 42,645 39,905 35,011
NET PROFIT BEFORE TAX 546 5,952 6,486 10,119 5,940 16,254
32 Prepared for growth Table 32: Financial Objectives and Performance
Measure Objective Performance Comment
After tax return on Achieve 4.2% return 4.7% Higher net profit due mainly to increased regulatory asset base new customer contributions, and lower depreciation charges than plan
Interest coverage Achieve 1.07 times interest cover 2.04 Whilst interest rates on new loans have reduced, lower profit has affected the interest cover
Regulatory gearing Not exceed 49.7% interest bearing 48.4% Borrowings and capital expenditure were debt against Regulatory Asset Base very close to plan
Capital expenditure Capital Expenditure budget $35.7M $35.6M Delivery of major projects on track
Revenue Achieve $300k in additional revenue $472,940 in cost and Several large cost savings initiatives maximisation/ cost sources/cost or productivity savings productivity savings were identified during the year minimisation strategy was identified
Net Profit Expenses Western Water made an overall surplus pre-tax of $5.952 million, Operating expenses were $3.2 million less than budget, with including developer asset and cash contributions of $16 million. depreciation being $2.4 million under budget as a result of delayed asset revaluation. Other operating and administration expenses Revenue were contained within overall budgets. Service and tariff charges were below the 2009/10 Corporate Plan target due mainly to lower than anticipated water usage income as a result of continuation of water restrictions and changing customer water conservation behaviours.
Melton Recycled Water Plant upgrade is ongoing.
Western Water annual REPORT 2009/10 33 Financial performance report
Shareholder Dividend Post Balance Date Events Western Water is required to pay a dividend in accordance with There are no post balance date events that materially affect a determination of the Treasurer of Victoria under the Public Western Water’s 2009/10 financial statements. Authorities (Dividend) Act 1983, based on a prescribed percentage of the previous years’ adjusted net profit. An obligation to pay a Access to Information dividend only arises after consultation with the portfolio Minister Other information as required under the Financial Management Act and the Treasurer and a formal determination is made by the 1994 and FRD22B, but not specifically referred to, is available upon Treasurer. No shareholder dividend was paid in the year 1 July request to the relevant Minister, Members of Parliament and the 2009 to 30 June 2010. public. Requests can be made to the General Manager, Commercial Major Changes or Factors Affecting Services, Western Water, PO Box 2371, Sunbury DC Vic. 3429. Performance Outlook 2010/11 Ongoing water restrictions have resulted in reduced water Western Water faces two main challenges going forward. The consumption income over the past four years. However developer first is the continued climate change impact of severely reduced cash and contributed assets remain strong. local water sources necessitating the ongoing purchase of large volumes of water from Melbourne Water. The other challenge Significant Changes in Financial is the extension of the Urban Growth Boundary. This will see Position Melbourne’s growth boundary extended and significantly impact on Western Water’s service area, creating growth rates not The regulatory pricing model Western Water operates within typically experienced by regional urban water corporations. expects the business to carry debt like any other business. The region’s population is forecast to almost double by 2021. Western Water’s capital works program is largely financed from new borrowings and during the year, new borrowings During 2010/11, Western Water’s infrastructure assets will of $33M≈was used to fund the capital program. be revalued from the cost of construction (used for assets constructed since 2001) to a value representing the current Consultancies construction costs for similar assets, less an adjustment for There were no consultancies costing in excess of $100,000 for the accumulated use. This will result in an upward adjustment to year 1 July 2009 to 30 June 2010. There were 15 consultancies of the value of assets as at 30 June 2011 and a higher subsequent less than $100,000 engaged during the year, totalling $ 356,570. depreciation charge. The higher depreciation charge will affect profits reported in the future. Disclosure of Major Contracts Western Water did not enter into any contracts greater than $10 million during the year ended 30 June 2010.
Financial Results Comparison The table and graphs below highlight that there has been a greater increase in expenses than income in 2009/10. The major contributing factor of rising expenditure was a 20% increase in overall water purchased (due to rising costs of water purchased from Melbourne Water) as well as increased financing expense due to the strong capital works program financed partly from new debt. Table 33: Comparison of Financial Results – 5 Years
2009/10 % change 2008/09 2007/08 2006/07 2005/06
Total revenue 46,987 13.3% 41,470 35,226 33,464 34,090 (excluding developer revenue)
Total expenditure 57,052 15.9% 49,188 42,645 39,905 35,011
Profit before developer income (10,065) (9.1%) (7,718) (7,419) (6,441) (921) & income tax
Developer income 16,017 12.7% 14,204 17,538 12,381 17,175
Income tax (expense)/benefit (1,122) (20.4%) (1,409) (2,968) (1,859) (4,869)
Net profit after tax 4,830 (4.9%) 5,077 7,151 4,081 11,385
34 Prepared for growth Revenue New Customer Contribution Income An overall increase in operating revenue of 13% is due to real New customer contributions remained relatively strong during price rises to pay for increased water tariffs and increased the year exceeding budget. other revenue. Revenue from water usage was slightly down on budget as residential and business customers continue to change Chart 5: New Customer Contribution Income – 5 Years behaviours in an effort to conserve water. 25
Chart 2: Revenue ($M) – 5 Years 20 60 15 50 2007/08 2005/06 40 10 2009/10 2008/09 2009/10 30 5 2006/07 2008/09
20 2007/08 2005/06 2006/07 0 10 Revenue 2009/10 0 This graph shows approximately 81% of income this year was Expenditure derived from service charges, consumption and sundry charges. The remaining 19% came from cash and assets from developers. An overall increase in operating expenditure of 16% is attributable to a combination of the high cost of bulk water purchased and Chart 6: Revenue Source Breakdown supplied to customers due to low levels of local storages (20% 15% Water increase) and financing costs (48% increase). Depreciation charge 4% 21% Water consumption 15% continues to increase (14% increase in 2009/10) as a result of 19% 0% over $150 million spent on capital works in the last five years. 34% Sewerage 1% Recycled water Chart 3: Expenditure ($M) – 5 Years 6% Contributions for works 21% 60 6% 19% Assets received from 1% developers 50 0% Investments 2009/10 40 4% Other Revenue 34% 2008/09 30 2007/08
2006/07 Expenses 2009/10
20 2005/06 The increase in costs in 2009/10 is attributable to the cost of 10 water purchased from Melbourne Water, which is now 18% of all expenditure (up from 17% in 2008/09), and financing charges now 0 being 10% of all expenditure due to increased debt level (up from Net Profit After Tax 8% in 2008/09). Net profit after tax was above plan but marginally lower than Chart 7: Expenses Breakdown
2008/09. Western Water benefited from a tax expense reduction 25% Administration and of $667k from the Federal Government Investment Allowance operating expenses 10% Scheme. However, higher financing costs and depreciation 3% Environmental 25% charges more than offset the reduction. Revenues were strong Contribution 11% with new customer contributions from growth leading to the 18% Water Purchases strong after tax result in spite of current water restriction levels 23% Depreciation 3% and customer water conservation efforts. 10% 10% Contractors & Consultants Chart 4: Net Profit After Tax – 5 Years 11% Other Expenses 18% 12 23% 10% Finance Charges 10
8 2005/06
6
4 2007/08 2008/09 2 2009/10 2006/07 0
Western Water annual REPORT 2009/10 35 Financial performance report
Understanding the Financial Report
Statement of Comprehensive Income Notes to the Financial Report The statement of comprehensive income measures Western The notes to the Financial Report provide further information Water’s performance over the year and shows if a profit or loss in relation to the rules and assumptions used to prepare the has been made in delivering products and services. The Statement balance sheet as well as additional information and detail about includes all sources of income less all expenses incurred specific items within the statements. The notes also advise the in earning that income. For the year ending 30 June 2010, reader if there have been any changes to accounting standards, Western Water made a profit after tax of $4.8 million. policy or legislation which may change the way the statements are prepared. Information in the notes is particularly useful when Balance Sheet there has been a significant change from the previous year’s comparative figure. The Balance Sheet sets out Western Water’s net accumulated financial worth at a point in time. It shows the assets Western Statutory Certificate and Auditor Water holds as well as liabilities or claims against those assets. Both assets and liabilities are expressed as current General’s Report or non- current. Current means that assets or liabilities are These attachments provide the reader with a written undertaking expected to be converted to cash within the next 12 months. in relation to the correctness and trustworthiness of the Financial Non- current assets or liabilities are long term. Equity is total Statements. In particular, the Report from the Auditor General capital and reserves plus profits that have been reinvested in provides an independent view and will advise the reader if there the business over the years. are any issues of concern. Statement of Changes in Equity The statement of changes in equity shows the changes in equity between two financial periods reflecting the increase or decrease in net assets during the year. The total overall change in equity during a financial year represents the total amount of income and expenses through the statement of comprehensive income, and items charged directly to the equity account from revaluation of assets. Cash Flow Statement The cash flow statement summarises Western Water’s cash receipts and payments for the financial year and the net cash in hand position. It differs from the statement of comprehensive income in that it:
• excludes non-cash expenses such as depreciation • excludes the accruals taken into account by the statement of comprehensive income • includes payments or receipts in relation to capital items • includes any financing activities such as movements in loans held by Western Water.
For the year ending 30 June 2010, Western Water had a net cash inflow of $9 million.
36 Prepared for growth Financial Report Contents
STATEMENT OF COMPREHENSIVE INCOME 38
BALANCE SHEET 39
STATEMENT OF CHANGES IN EQUITY 40
CASH FLOW STATEMENT 41
NOTES TO THE FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2010
Note 1 Significant Accounting Policies 42 Note 2 Financial Risk Management Objectives and Policies 52 Note 3 Statement of Comprehensive Income – Disclosures 55 Note 4 Income Tax 57 Note 5 Cash & Cash Equivalent Assets 58 Note 6 Receivables 59 Note 7 Property, Plant & Equipment 61 Note 8 Intangible Assets 64 Note 9 Deferred Tax Assets 64 Note 10 Payables 64 Note 11 Interest Bearing Liabilities 65 Note 12 Employee Benefits Provisions 67 Note 13 Deferred Tax Liabilities 68 Note 14 Contribution by Owners 68 Note 15 Reserves 69 Note 16 Accumulated Funds 69 Note 17 Financial Instruments 70 Note 18 Segment Information 72 Note 19 Commitments 73 Note 20 Contingent Liabilities and Contingent Assets 74 Note 21 Post-employment Benefit 74 Note 22 Responsible Persons Related Party Disclosures 76 Note 23 Reconciliation of Profit / (Loss) for the Period after Related IncomeT ax to Net Cash Flows from Operating Activities 78 Note 24 Dividends 78 Note 25 Events Occurring after the Balance Sheet Date 78
STATUTORY CERTIFICATION 79
AUDITOR-GENERAL’S REPORT 80
Western Water annual REPORT 2009/10 37 Financial performance report
Statement of Comprehensive Income for the reporting period ended 30 June 2010
2009/10 2008/09 Notes $’000 $’000
Revenue Service charges 1(d), 3(a) 31,267 27,924 Water Consumption 1(d), 3(a) 12,892 11,767 New Customer Contributions 1(d), 3(a) 16,017 14,204 Government Contributions 1(d), 3(a) – 140 Interest 1(d), 3(a) 33 119 Other revenue 1(d) 2,795 1,520 Total revenue 63,004 55,674
Expenses Depreciation 1(g), 3(c) 12,681 10,854 Amortisation 1(g), 3(c) 619 797 Employee benefits 1(n) 9,342 8,457 Water Purchases 10,182 8,515 Electricity 2,011 2,143 Environmental Contribution 1(q) 1,615 1,615 Repairs and maintenance expenses 1(f) 1,123 1,240 Other Operating & Administration 13,175 11,296 Finance costs 1(e) 5,706 3,847 Total expenses 56,454 48,764
6,550 6,910 Net gain(loss) on disposal of property, plant and equipment, 3(b) (598) (424) infrastructure Net result before tax 5,952 6,486 Income tax expense 4 1,122 1,409 Net result for the period 16 4,830 5,077 Other comprehensive income – – comprehensive Income for the period 4,830 5,077
The above statement of comprehensive income should be read in conjunction with the accompanying notes.
38 Prepared for growth Balance Sheet as at 30 June 2010
2009/10 2008/09 Notes $’000 $’000
ASSETS Current assets Cash and cash equivalents 1(h), 5 7,374 1,336 Receivables 1(i), 6 8,067 7,124 Prepayments 794 640 Tax receivable 4(a) – 670 Total current assets 16,235 9,770
Non-current assets Receivables 1(i), 6 246 292 Property, plant and equipment 1(f), 7 500,610 467,032 Intangible assets 1(j), 8 1,708 1,899 Deferred tax assets 9 2,530 1,325 Total non-current assets 505,094 470,548
TOTAL ASSETS 521,329 480,318
LIABILITIES Current liabilities Payables 1(k), 10 11,953 12,175 Income in advance 1(d) 1,071 1,005 Current tax payable 4(a) – – Interest bearing liabilities 11 – 3,000 Employee benefits 1(n), 12 2,593 2,284 Total current liabilities 15,617 18,464
Non-current liabilities Interest bearing liabilities 11 102,250 66,250 Deferred tax liabilities 13 41,918 39,590 Total non-current liabilities 144,168 105,840 TOTAL LIABILITIES 159,785 124,304
NET ASSETS 361,544 356,014 Equity Contributed capital 1(p), 14 159,128 158,428 Reserves 15 37,247 37,247 Accumulated surplus/(deficit) 16 165,169 160,339 TOTAL EQUITY 361,544 356,014
The above balance sheet should be read in conjunction with the accompanying notes.
Western Water annual REPORT 2009/10 39 Financial performance report
Statement of Changes in Equity for the period ended 30 June 2010
Accumulated Contributed surplus/ capital Reserves deficit Total Notes $’000 $’000 $’000 $’000 Balance at 1 July 2008 158,428 37,247 155,262 350,937 Effects of changes in accounting policy (net of tax) – – – – Restated total equity at the beginning of the financial 158,428 37,247 155,262 350,937 year Total comprehensive income for the year as 5,077 5,077 reported in the 2009 financial report Effects of changes in accounting policy (net of tax) – – – – Restated total comprehensive income for the year 5,077 5,077 Transactions with the State in its capacity as owner Contributions by owner – Balance as at 30 June 2009 158,428 37,247 160,339 356,014 Total comprehensive income for the year 4,830 4,830 Transactions with the State in its capacity as owner Contributions by owner 700 700 Balance as at 30 June 2010 159,128 37,247 165,169 361,544
The above statement of changes in equity should be read in conjunction with the accompanying notes.
40 Prepared for growth Cash Flow Statement for the reporting period ended 30 June 2010
2009/10 2008/09 Notes $’000 $’000
Cash Flows from Operating Activities Receipts Tariffs and charges 50,231 43,042 GST received from ATO 4,901 4,882 Interest 33 117 Income tax receipts 670 – 55,835 48,041 Payments Employees (9,249) (7,315) Suppliers (31,597) (27,170) Interest and other costs of finance paid (5,292) (3,463) Environmental contribution (1,615) (1,615) Income tax payments – (1,009) GST paid to the ATO (229) (157) (47,982) (40,729)
Net cash (outflow)/inflow from operating activities 23 7,853 7,312 Cash Flows from Investing Activities (Payments for property, plant & equipment) (35,988) (39,746) Proceeds from sale of non-current assets 768 609 (Payment for intangible assets) (295) (214) Net cash (outflow)/inflow from investing activities (35,515) (39,351) Cash Flows from Financing Activities Proceeds from borrowings 36,000 23,250 (Repayment of borrowings) – – Proceeds from contributed capital by State Government 700 – Net cash (outflow)/inflow from financing activities 36,700 23,250
Net increase/(decrease) in cash held 9,038 (8,789)
Cash and cash equivalents at the beginning of the financial year (1,664) 7,125 Cash and cash equivalents at end of the financial year 5(a) 7,374 (1,664)
The above cash flow statement should be read in conjunction with the accompanying notes.
Western Water annual REPORT 2009/10 41 Financial performance report
Notes to the Financial Report for the year ended 30 June 2010
Note 1 Significant Accounting Policies Historical cost convention These financial statements have been prepared under the historical (a) Basis of Accounting cost convention, as modified by the revaluation of financial assets, General certain classes of property, plant and equipment. The financial report includes separate financial statements for Western Region Water Corporation as an individual reporting Critical accounting estimates entity. This financial report is a general purpose financial report The preparation of financial statements in conformity with that consists of a Statement of Comprehensive Income, Balance AAS requires the use of certain critical accounting estimates Sheet, Statement of Changes in Equity, Cash Flow Statement that affect the application of accounting policies and the reported and notes accompanying these statements. The general amounts of assets, liabilities, income and expenses. Actual results purpose financial report has been prepared in accordance with may differ from these estimates. It also requires management Australian Accounting Standards (AAS), Interpretations and to exercise its judgement in the process of applying the entity’s other authoritative pronouncements of the Australian Accounting accounting policies. Standards Board, and the requirements of the Financial Financial statement presentation Management Act 1994 and applicable Ministerial Directions. Where applicable, those paragraphs of the AAS applicable to not-for-profit The entity has applied the revised AASB 101 Presentation of entities have been applied. Financial Statements which became effective 1 January 2009. The revised standard requires the separate presentation of a This financial report has been prepared on an accrual and going statement of comprehensive income and a statement of changes concern basis. in equity. All non-owner changes in equity must now be presented in the statement of comprehensive income. As a consequence, the Accounting policies entity had to change the presentation of its financial statements. Unless otherwise stated, all accounting policies applied are Comparative information has been re-presented so that it is in consistent with those of the prior year. Where appropriate, conformity with the revised standard. comparative figures have been amended to align with current presentation and disclosure made of material changes (b) Changes in accounting policy to comparatives. The accounting policies are consistent with those of the previous Functional and presentation currency year, unless stated otherwise. Items included in the financial report are measured using the (c) Comparative amounts currency of the primary economic environment in which Western Region Water Corporation operates (‘the functional currency’). Where necessary, figures for the previous year have been The financial statements are presented in Australian dollars, reclassified to facilitate comparison. which is Western Regional Water Corporation’s functional and presentation currency.
Classification between current and non-current In the determination of whether an asset or liability is current or non-current, consideration is given to the time when each asset or liability is expected to be realised or paid. The asset or liability is classified as current if it is expected to be realised or settled within the next twelve months, being Western Water’s operating cycle – see 1(n) for a variation in relation to employee benefits.
Rounding Unless otherwise stated, amounts in the report have been rounded to the nearest thousand dollars.
42 Prepared for growth (d) Revenue recognition (e) Borrowing costs
Water and sewerage charges Borrowing costs are recognised as an expense in the period in Tariff and service charges are recognised as revenue when levied which they are incurred. Borrowing costs include interest on bank or determined. Water usage charges by measure are recognised as overdrafts and short term and long term borrowings, amortisation revenue when the product is provided. Meter reading is undertaken of discounts or premiums relating to borrowings, amortisation of progressively during the year. An estimation, calculated by utilising ancillary costs incurred in connection with the arrangement of the bulk meter reading at the end of the reporting period, is made borrowings and finance lease charges. at the end of each accounting period in respect of meters which have not been read at balance date. (f) Recognition and measurement of assets
Trade waste charges are recognised as revenue at the end of the Property, plant and equipment represent non-current assets service delivery period. comprising land, buildings, water, sewerage and recycled water infrastructure, plant, equipment and motor vehicles, used by the Amounts received by customers in advance of accounts being water corporation in its operations. Items with a cost or value issued are recognised as a liability. in excess of $1,000 and a useful life of more than one year are recognised as an asset. All other assets acquired are expensed. New Customer Contributions/Fees paid by developers Water infrastructure assets built by developers in a new land Acquisition subdivision that on completion are provided to Western Water, The purchase method of accounting is used for all acquisitions of or fees paid by developers to connect new developments to assets, being the fair value of the assets provided as consideration Western Water’s existing water supply and sewerage systems are at the date of acquisition plus any incidental costs attributable to recognised as revenue when the contributions are received. the acquisition.
Government grants and contributions Where assets are constructed by Western Water, the cost at which Government grants and contributions are recognised as operating they are recorded includes an appropriate share of fixed and revenue on receipt or when an entitlement is established, variable overheads. whichever is the sooner, and disclosed in the Statement of Assets acquired at no cost by Western Water are recognised at fair Comprehensive Income as Government grants and contributions. value at the date of acquisition. However, grants and contributions received from the Victorian State Government which were originally appropriated by the Parliament Repairs and maintenance as additions to net assets or where the Minister for Finance and Routine maintenance, repair costs and minor renewal costs are the Minister for Water have indicated are in the nature of owners’ expensed as incurred. Where the repair relates to the replacement contributions are accounted for as Equity – Contributed Capital. of a component of an asset and the cost exceeds the capitalisation Sale of assets threshold, the cost is capitalised and depreciated. The profit or loss on sale of an asset is determined when control has passed to the buyer.
Interest Interest income is recognised as revenue using the effective interest rate method.
Lease or rental income Income from operating leases (i.e. rentals) is recognised in income on a straight line basis over the lease term.
Western Water annual REPORT 2009/10 43 Financial performance report
Notes to the Financial Report for the year ended 30 June 2010
Measurement of non-current physical assets Revaluation of non-current assets All non-current physical assets except water, sewerage and Revaluation increments are credited directly to equity in the recycled water infrastructure assets are recognised initially at revaluation reserve, except to the extent that an increment cost, and subsequently revalued at fair value less accumulated reverses a revaluation decrement in respect of that class of asset depreciation and impairment in accordance with the requirements previously recognised as an expense in determining the net result, of Financial Reporting Direction (FRD) 103D. Revaluations the increment is recognised as revenue in determining the net are conducted using independent or management expertise result. and are classified as either an independent revaluation or a managerial revaluation. Revaluation decrements are recognised immediately as an expense in the net result, except that, to the extent that a credit balance Plant, equipment and motor vehicles are measured at fair value. exists in the revaluation reserve in respect of the same class of For the plant, equipment and vehicle asset class, where the asset, they are debited to the revaluation reserve. corporation is able to demonstrate that there is no evidence that a reliable market-based fair value (or other fair value indicators) Revaluation increases and revaluation decreases relating to exist for these assets, depreciated replacement cost could individual assets within a class of property, plant and equipment represent a reasonable approximation of fair value. are offset against one another within that class but are not offset in respect of assets in different classes. Water infrastructure assets are measured at cost less any accumulated depreciation and any accumulated impairment losses. Revaluation reserves are not transferred to accumulated funds These assets comprise substructures or underlying systems held on derecognising of the relevant asset. to facilitate the harvesting, storage, treatment and transfer of water Impairment of assets to meet customer needs. They also include infrastructure assets Intangible assets with identifiable useful lives are tested annually that underlie sewage and drainage systems. as to whether their carrying values exceed their recoverable The last valuation of land was conducted as at 30 June 2008, and amount. All other assets are assessed annually for indicators the last valuation of buildings was conducted as at 30 June 2007. for impairment except for deferred tax assets.
For whole-of-government reporting at 30 June 2009 and 30 June If there is an indication of impairment, the assets concerned are 2010, water infrastructure assets are measured at fair value less tested as to whether their carrying values exceed their recoverable any accumulated depreciation and any accumulated impairment amount. Where an asset’s carrying amount exceeds its recoverable losses, in accordance with FRD 121 Infrastructure Assets amount, the difference is written off by a charge to the Statement (Water/ Rail). of Comprehensive Income except to the extent that the write down can be debited to an asset revaluation reserve amount applicable During 2009, the Minister for Finance issued two new FRDs to that class of asset. in relation to non-current physical assets that are relevant to water infrastructure assets. FRD 103D Non-current Physical The recoverable amount for most assets is measured at the higher Assets (“FRD 103D”), as revised in March 2009, requires all of depreciated replacement cost and fair value less costs to sell. non-current physical assets to be measured using the revaluation Recoverable amount for assets held primarily to generate net cash model unless the entity has received prior written approval of the inflows is measured at the higher of the present value of future Minister for Finance to measure the assets at cost. FRD 103D is cash flows expected to be obtained from the asset and fair value applicable for reporting periods commencing on or after 1 July less costs to sell. It is deemed that, in the event of the loss of an 2008, superseding FRD 103C. However, in recognition of the asset, the future economic benefits arising from the use of the initial workload and heavy demand on resources within a relatively asset will be replaced unless a specific decision to the contrary tight timeframe for implementation, transitional dispensation was has been made. available to relieve measurement at fair value at the entity reporting A reversal of an impairment loss on a revalued asset is credited level until the temporary exemption is withdrawn. This temporary directly to equity under the heading revaluation reserve. However, exemption is made under FRD 121 Infrastructure Assets (Water/ to the extent that an impairment loss on the same class of asset Rail). During the year, this temporary exemption was extended until previously recognised in the Statement of Comprehensive Income, the financial year ending 30 June 2011 at the direction of DTF. a reversal of that impairment loss is also recognised in the Statement of Comprehensive Income.
44 Prepared for growth Assets classified as held for sale Major depreciation periods used are listed below and are Assets classified as held for sale are measured at the lower of their consistent with the prior year unless otherwise stated: carrying amount and fair value less costs to sell, as their carrying Depreciation Periods amount will be recovered principally through a sale transaction, Buildings 50 Years rather than through continued use. Western Water considers that the sale is highly probable, the asset is available for immediate sale Infrastructure in its present condition and the sale is expected to be completed Water & Recycled Water: within 12 months from the date of classification. Assets are not – Storage 50-100 Years depreciated or amortised while they are classified as held for sale. – Distribution network 60 Years Assets classified as held for sale are classified as current assets. – Treatment plants 10-60 Years Sewerage: (g) Depreciation and amortisation of non-current – Storage 50-100 Years assets – Distribution network 80 Years – Treatment plants 10-60 Years All non-current physical assets that have a limited useful life are depreciated. Where assets have separate identifiable components Plant & Equipment that have distinct useful lives and/or residual values, a separate – Equipment 5-20 Years depreciation rate is determined for each component. – Machinery 10-15 Years – Furniture & computers 3-10 Years Depreciation on other assets is calculated using the straight line – Motor vehicles 2 Years method to allocate their cost or revalued amounts, net of their Intangibles 5 Years residual values, over their estimated useful lives, commencing from the time the asset is held ready for use. The assets residual Operating leases values and useful lives are reviewed, and adjusted where required, Leases in which a significant portion of the risks and rewards of at each balance sheet date. ownership are retained by the lessor are classified as operating Intangible assets with finite useful lives are amortised as an leases. Payments made under operating leases (net of any expense on a systematic basis (typically straight line), commencing incentives received from the lessor) are charged to the Statement from the time the asset is available for use. The amortisation of Comprehensive Income on a straight line basis over the periods are reviewed and adjusted if appropriate at each period of the lease, in periods in which they are incurred, as this balance date. Intangible assets with indefinite useful lives are represents the pattern of benefits derived from the leased assets. not amortised. However all intangible assets are assessed for Leasehold improvements impairment annually as outlined in Note 1(f). Leasehold improvements are recognised at cost and are amortised over the unexpired period of the lease or the estimated useful life of the improvement, whichever is the shorter. At balance date, leasehold improvements are amortised over a 10 year period.
Western Water annual REPORT 2009/10 45 Financial performance report
Notes to the Financial Report for the year ended 30 June 2010
(h) Cash and cash equivalent assets (j) Intangibles
Cash and cash equivalents include cash on hand, deposits held Intangible assets represent identifiable non monetary assets at call with financial institutions, other short term, highly liquid without physical substance. investments with original maturities of three months or less that are readily convertible to known amounts of cash and which Intangible assets are recognised at cost. Subsequently intangible are subject to an insignificant risk of changes in value, and bank assets with finite useful lives are carried at cost less accumulated overdrafts. Bank overdrafts are shown within interest bearing amortisation and accumulated impairment losses. Costs incurred liabilities on the balance sheet, but are included within cash and subsequent to initial acquisition are capitalised when it is expected cash equivalents for cash flow statement presentation purposes. that additional future economic benefits will flow to Western Water.
(i) Receivables The only intangible asset Western Water recognises is computer software purchased for normal operations. Trade receivables are recognised initially at fair value and subsequently measured at amortised cost, less an allowance for (k) Payables impaired receivables. Trade receivables are due for settlement no Payables consist predominantly of trade and sundry creditors. more than 28 days from the date of recognition for water utility These amounts represent liabilities for goods and services debtors, and no more than 30 days for other debtors. Non-current provided to Western Water prior to the end of the financial debtors are Private Schemes, payable on terms of up to 20 years. year, which are unpaid at financial year end. The amounts are Collectability of trade receivables is reviewed on an ongoing unsecured and are usually paid within 30 days of recognition. basis. Debts which are known to be uncollectable are written off. Payables are initially recognised at fair value, being the cost of the An allowance for impaired receivables is established when there goods and services, and subsequently measured at amortised cost. is objective evidence that the Corporation will not be able to collect Under construction contracts, there is generally a requirement all amounts due according to the original terms of receivables. to withhold retention funds from payments during construction, The amount of the allowance is the difference between the and a requirement to hold a security deposit, being a percentage asset’s carrying amount and the present value of estimated of the contract price, for up to 12 months after completion of future cash flows, discounted at the original effective interest construction. These funds are recognised as current liabilities. rate. The amounts credited to the allowance are recognised (See Note 10) as an expense in the Statement of Comprehensive Income. Any Waterways & Drainage Charge that has been collected in Payments received from customers in advance have been cash from customers and not paid to Melbourne Water, as well as separated out from debtors and disclosed as a liability. amounts that remain outstanding from customers, are recognised Commencing in July 2008, Western Water now bills both existing as a current liability. customers and new customers a Waterways & Drainage Charge (l) Interest bearing liabilities for all properties that fall within a designated boundary. New customers do not currently receive any other service from Western Borrowings are initially recognised at fair value, net of transaction Water. The charge is not recognised as revenue by Western Water costs incurred. Borrowings are subsequently measured at as the funds are only collected on behalf of Melbourne Water amortised cost. Any difference between the proceeds (net of and is therefore recognised as a corresponding liability. Western transaction costs) and the redemption amount is recognised in Water only remits funds once the account has been paid, and if the Statement of Comprehensive Income over the period of the the account is not paid, is not included in the mercantile agents borrowings, using the effective interest method. collection procedures. The charge is levied under the Water Act Borrowings are classified as current liabilities unless Western 1989 and therefore remains an outstanding charge on the property Water has an unconditional right to defer settlement of the liability and is collected at a future time when the property is sold. for at least 12 months after the balance sheet date.
46 Prepared for growth (m) Financial instruments (n) Employee benefits
Recognition (i) Wages and salaries, annual leave and sick leave Financial instruments are initially measured at fair value, plus Liabilities for wages and salaries, annual leave and accumulating in the case of a financial asset or financial liability not at fair sick leave expected to be settled within 12 months of the reporting value through profit and loss, transaction costs that are directly date are recognised in employee benefit liabilities in respect of attributable to the acquisition or the issue of the financial asset or employees’ services up to the reporting date, and are measured liability. Subsequent to initial recognition, the financial instruments at the amounts expected to be paid when the liabilities are settled, are measured as set out below. at their nominal values. Employee benefits which are not expected to be settled within 12 months are measured as the present value Loans and receivables of the estimated future cashflows to be made by the entity, in Loans and receivables are non-derivative financial assets with respect of services rendered by employees up to the reporting fixed or determinable payments that are not quoted in an active date. Regardless of the expected timing of settlements, liabilities in market. They are included in current assets, except for those with respect of the employee benefits are classified as a current liability, maturities greater than 12 months after the reporting date which unless there is an unconditional right to defer the settlement of are classified as non-current assets. Loans and receivables are the liability for at least 12 months after the reporting date, in which included in trade and other receivables and other receivables in the case it would be classified as a non-current liability. balance sheet. Long service leave (LSL) Impairment Current Liability – unconditional LSL (representing 7 or more years At each reporting date, Western Water assesses whether there is of continuous service) is disclosed as a current liability even where objective evidence that a financial instrument has been impaired. the Corporation does not expect to settle the liability within 12 In the case of available-for-sale equity instruments, a significant months, because it does not have the unconditional right to defer or prolonged decline in value of the instrument below its cost the settlement of the entitlement should an employee take leave is considered an indicator that the investment is impaired. If within 12 months. any such evidence exists for available-for-sale financial assets, the cumulative loss is measured as the difference between the The components of this current LSL liability are measured at: acquisition cost and the current fair value, less any impairment • Present value – component that the Corporation does not loss on that financial asset previously recognised in profit or expect to settle within 12 months; and loss is removed from equity and recognised in the income statement. Impairment losses are recognised in the Statement • nominal value – component that the Corporation expects to of Comprehensive Income. Impairment losses recognised in settle within 12 months. the Statement of Comprehensive Income on equity instruments classified as available-for-sale are not reversed through the Current Liability – conditional LSL (representing less than 7 years Statement of Comprehensive Income. of continuous service) is also disclosed as a current liability as staff have the ability to transfer accumulated Long Service Leave to other Water Corporations under Water (Long Service Leave) Regulations 2001 No. 79 should they transfer employment. Western Water’s policy is to recognise conditional Long Service Leave as a current liability based on portability and frequent staff movements. Conditional LSL is required to be measured at present value.
In calculating present value, consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.
Western Water annual REPORT 2009/10 47 Financial performance report
Notes to the Financial Report for the year ended 30 June 2010
(ii) Superannuation (q) Environmental contributions
The amount charged to the Statement of Comprehensive Income The Water Industry (Environmental Contributions) Act 2004 in respect of superannuation represents the contributions made to (the Act) was amended by the Water Industry Act 1994 to make the superannuation plan, in respect to the current services of entity provision for environmental contributions to be paid by water staff. Superannuation contributions are made to the plans based on supply corporations. The Act establishes an obligation for the relevant rules of each plan. corporations to pay into consolidated fund annual contributions Details of the last actuarial review conducted by Vision Super for for the first period from 1 October 2004 to 30 June 2008 in Defined Benefit members as at 31 December 2008 are contained accordance with the pre-established schedule of payments, at Note 21. which sets out the amounts payable by each Corporation. The contribution period has been extended to cover the period (iii) Employee benefit on-costs 1 July 2008 until 30 June 2012. Employee benefit on-costs, including payroll tax and worker’s The purpose for the environmental contribution is set out in the compensation are recognised and included in employee benefit Act, and funding may be used for the purpose of funding initiatives liabilities and costs when the employee benefits to which they that seek to promote the sustainable management of water or relate are recognised as liabilities. address adverse water related matters. (iv) Performance payments The environmental contributions are disclosed separately within Performance payments for Western Water’s Executive Officers the expenses. are based on a percentage of the annual salary package provided under their contract(s) of employment. A liability is recognised and (r) Operating results of retail services is measured as the aggregate of the amounts accrued under the The financial report includes a note reporting the three lines term of the contracts to balance date. of business of Western Water, a retail water distribution, retail (o) Provisions sewerage treatment and recycled water retailer in accordance with the Ministerial Direction under Section 51 of the Financial Provisions are recognised when the corporation, as a result of Management Act 1994. a past event, has a legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic Segment information is reported on the basis of business benefits will be required to settle the obligation. segments, as Western Water’s risks and returns are affected predominantly by differences in the products and services provided The amount recognised as a provision is the best estimate of the through those segments. consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties Segment revenues, expenses, assets and liabilities are those that surrounding the obligation. are directly attributable to a segment and the relevant portion that can be allocated to the segment on a reasonable basis. Segment (p) Contributions by owners assets include all assets used by a segment and consist primarily of operating cash, receivables, inventories, property, plant and Additions to net assets which have been designated as equipment and other intangible assets, net of related provisions. contributions by owners are recognised as contributed capital. Segment liabilities consist primarily of trade and other creditors, Other transfers that are in the nature of contributions or employee entitlements and borrowings. distributions have also been designated as contributions by owners. Transfer of net assets arising from administrative restructures are treated as distributions to or contributions by owners.
48 Prepared for growth (s) Taxation (t) Dividend policy
Western Water is subject to the National Tax Equivalent Regime Western Water is required to pay a dividend in accordance with (NTER), which is administered by the Australian Taxation Office. a determination of the Treasurer of Victoria under the Public Authorities (Dividend) Act 1983, based on a prescribed percentage The income tax expense or revenue for the period is the expected of the previous years’ adjusted net profit. tax payable or receivable on the current period’s taxable income based on the national income tax rate of 30%, adjusted by changes An obligation to pay a dividend only arises after consultation with in deferred tax assets and liabilities attributable to temporary the portfolio Minister and the Treasurer and a formal determination differences between the tax bases of assets and liabilities and their is made by the Treasurer. Western Water’s preliminary estimate for carrying amounts in the financial statements, and unused tax losses. the reporting period is $nil.
Deferred tax assets and liabilities are recognised for temporary (u) Goods and services tax differences at the tax rate expected to apply when the assets are recovered or liabilities are settled, based on those tax rates Revenues, expenses and assets are recognised net of goods and which are enacted or substantially enacted. The relevant tax rates services tax (GST), except where the amount of GST incurred are applied to the cumulative amounts of deductible and taxable is not recoverable from the Australian Taxation Office (ATO). temporary differences to measure the deferred tax asset or In these circumstances, the GST is recognised as part of the liability. No deferred tax asset or liability is recognised in relation cost of acquisition of the asset or as part of an item of expense. to these temporary differences if they arose in a transaction that Receivables and payables are stated inclusive of GST. The net at the time of the transaction did not affect either accounting profit amount of GST recoverable from, or payable to, the ATO is or taxable profit or loss. Deferred tax assets are recognised for included as a current asset or liability in the Balance Sheet. Cash deductible temporary differences and unused tax losses only if it flows arising from operating activities are disclosed in the Cash is probable that future taxable amounts will be available to utilise Flow Statement on a gross basis – i.e. inclusive of GST. The GST those temporary differences and losses. Current and deferred tax component of cashflows arising from investing and financing balances attributable to amounts recognised directly in equity are activities which is recoverable or payable to the taxation authority also recognised directly in equity respectively. is classified as operating cash flows.
Western Water annual REPORT 2009/10 49 Financial performance report
Notes to the Financial Report for the year ended 30 June 2010
(v) New accounting standards and interpretations issued that are not yet effective
Certain new accounting standards and interpretations have been published that are not mandatory for the 30 June 2010 reporting period.
As at 30 June 2010, the following standards and interpretations had been issued but were not mandatory for financial year ending 30 June 2010. Western Water has not, and does not intend to, adopt these standards early.
Applicable for annual reporting periods Impact on financial Standard/Interpretation Summary beginning or ending on statements
AASB 2009-5 Further Amendments to In May 2009, the AASB issued a number 1 January 2010 The entity does Australian Accounting Standards arising of improvements to existing Australian not expect that any from the Annual Improvements Project Accounting Standards. The entity adjustments will [AASB 5, 8, 101, 107, 117, 118, 136 & 139] will apply the revised standards from be necessary as a 1 July 2010. result of applying the revised rules.
AASB 9 Financial Instruments and AASB 9 Financial Instruments addresses 1 January 2013 The entity is yet AASB 2009-11 Amendments to the classification and measurement of to assess its full Australian Accounting Standards arising financial assets and is likely to affect impact. However, from AASB 9 the entity’s accounting for its financial initial indications are assets. The standard is not applicable that it may affect the until 1 January 2013 but is available for entity’s accounting early adoption. for its available-for- sale financial assets, since AASB 9 only permits the recognition of fair value gains and losses in other comprehensive income if they relate to equity investments that are not held for trading. Fair value gains and losses on available-for- sale debt investments, for example, will therefore have to be recognised directly in profit or loss.
50 Prepared for growth Applicable for annual reporting periods Impact on financial Standard/Interpretation Summary beginning or ending on statements
Revised AASB 124 Related Party In December 2009 the AASB issued 1 January 2011 When the amendments Disclosures and AASB 2009-12 a revised AASB 124 Related Party are applied, the entity Amendments to Australian Accounting Disclosures. It is effective for accounting and the parent will Standards periods beginning on or after 1 January need to disclose any 2011 and must be applied retrospectively. transactions between The amendment removes the its subsidiaries requirement for government-related and its associates. entities to disclose details of all However, it has yet transactions with the government and to put systems into other government-related entities and place to capture the clarifies and simplifies the definition of a necessary information. related party. It is therefore not possible to disclose the financial impact, if any, of the amendment on the related party disclosures.
AASB Interpretation 19 Extinguishing AASB Interpretation 19 clarifies the 1 July 2010 It is not expected to financial liabilities with equity accounting when an entity renegotiates have any impact on instruments and AASB 2009-13 the terms of its debt with the result that the entity’s financial Amendments to Australian Accounting the liability is extinguished by the debtor statements since it is Standards arising from Interpretation 19 issuing its own equity instruments to only retrospectively the creditor (debt for equity swap). It re applied from the quires a gain or loss to be recognised in beginning of the profit or loss which is measured as the earliest period difference between the carrying amount presented (1 July of the financial liability and the fair value 2009) and the entity of the equity instruments issued. has not entered into any debt for equity swaps since that date.
AASB 2009-14 Amendments to In December 2009, the AASB made 1 January 2011 The entity does Australian Interpretation – Prepayments an amendment to Interpretation 14 not make any such of a Minimum Funding Requirement The Limit on a Defined Benefit Asset, prepayments. The Minimum Funding Requirements and amendment is their Interaction. The amendment therefore not expected removes an unintended consequence to have any impact on of the interpretation related to voluntary the entity’s financial prepayments when there is a minimum statements. funding requirement in regard to the entity’s defined benefit scheme. It permits entities to recognise an asset for a prepayment of contributions made to cover minimum funding requirements.
Western Water annual REPORT 2009/10 51 Financial performance report
Notes to the Financial Report for the year ended 30 June 2010
Note 2 Financial Risk Management Objectives The main risks Western Water is exposed to through its financial and Policies instruments are as follows: (A) Market risk Western Water’s activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. This note presents Market risk is the risk that changes in market prices will affect information about Western Water’s exposure to each of these risks, the fair value or future cash flows of Western Water’s financial and the objectives, policies and processes for measuring instruments. Market risk comprises of foreign exchange risk, and managing risk. interest rate risk and other price risk. Western Water’s exposure to market risk is primarily though interest rate risk. There is no Western Water’s Board has overall responsibility for establishment exposure to foreign exchange risk and insignificant exposure to and oversight of Western Water’s risk management framework. other price risks. Western Water’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential Objectives, policies and processes used to manage these risks are adverse effects on the financial performance of Western Water. disclosed in the paragraphs below: Western Water uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity (i) Interest rate risk analysis in the case of interest rate, foreign exchange and other Western Water’s exposure to market interest rates relates primarily price risks, ageing analysis for credit and beta analysis in respect to Western Water’s long term borrowings and funds invested on of investment portfolios to determine market risk. the money market.
Risk management is carried out by the Manager Organisational Western Water minimises its exposure to interest rate changes on Development and Risk under policies approved by the Board. its long term borrowings by holding a mix of fixed and floating rate The finance department identifies, evaluates and hedges financial debt. Debt is sourced from Treasury Corporation Victoria and is risks in close cooperation with Western Water’s operating units. managed within a range of Board approved limits with debt levels The Board provides written principles for overall risk management, and interest rates being monitored regularly. as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative Western Water has minimal exposure to interest rate risk through financial instruments and non derivative financial instruments, its holding of cash assets and other financial assets. Western Water and investment of excess liquidity. manages its interest rate risk by maintaining a cash investment from time to time.
(ii) Foreign exchange risk Western Water has no exposure to changes in the foreign exchange rate.
(iii) Other price risk Western Water has no significant exposure to other price risk.
52 Prepared for growth The sensitivity analysis below has taken into consideration past performance, future expectations, economic forecasts and management’s knowledge and experience of the financial markets, the Corporation believes that: – a movement of 1% in interest rates is reasonable over the next 12 months.
Interest Rate Risk at 30-Jun-10 +1% -1% Carrying amount Result Equity Result Equity $’000 $’000 $’000 $’000 $’000
Financial assets Cash and Cash Equivalents 7,374 7 7 (7) (7) Receivables 8,313 Other Financial Assets Financial liabilities Payables 11,953 Interest Bearing Liabilities 102,250 (23) (23) 23 23 Other Financial Liabilities Total increase/(decrease) (16) (16) 16 16
Interest Rate Risk at 30-Jun-09 +1% -1% Carrying amount Result Equity Result Equity $’000 $’000 $’000 $’000 $’000
Financial assets Cash and Cash Equivalents 1,336 25 25 (25) (25) Receivables 7,416 Other Financial Assets Financial liabilities Payables 12,175 Interest Bearing Liabilities 69,250 (8) (8) 8 8 Other Financial Liabilities Total increase/(decrease) 17 17 (17) (17)
Sensitivity on cash balances is based on historical average cash balance during the year.
Western Water has no exposure to Foreign Currency or Other Price Risk.
Western Water annual REPORT 2009/10 53 Financial performance report
Notes to the Financial Report for the year ended 30 June 2010
(B) Credit risk (D) Fair valuation measurements
Credit risk is the risk of financial loss to Western Water as a result The fair value of financial instruments traded in active markets of a customer or counterparty to a financial instrument failing to (such as publicly traded derivatives) is based on quoted market meet its contractual obligations. Credit risk arises principally from prices at the balance sheet date. The quoted market price used for Western Water’s receivables and financial assets available for sale. financial assets held by Western Water is the current bid price.
Western Water’s exposure to credit risk is influenced by the The carrying value less impairment provision of trade receivables individual characteristics of each customer. The receivable balance and payables is a reasonable approximation of their fair values consists of a large number of residential and business customers due to the short term nature of trade receivables. The fair value which are spread across a diverse range of industries. Receivable of financial liabilities for disclosure purposes is estimated by balances are monitored on an ongoing basis to ensure that discounting the future contractual cash flows at the current exposure to bad debts is not significant. Western Water has in place market interest rate that is available to Western Water for similar a policy and procedure for the collection of overdue receivables. financial assets.
An analysis of the ageing of Western Water’s receivables at The carrying amounts and aggregate net fair values of financial reporting date has been provided in Note 6. assets and financial liabilities at balance date have been provided in Note 17. (C) Liquidity risk
Liquidity risk is the risk that Western Water will not be able to meet its financial obligations as they fall due. Western Water’s policy is to settle financial obligations within 30 days and in the event of dispute make payments within 30 days from the date of resolution.
Western Water manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities by continuously monitoring forecasts and actual cash flows and matching the maturity profiles of financial assets and financial liabilities.
During the course of the financial year, Western Water relies on the Treasury Corporation of Victoria’s ability to provide borrowings within the annual Treasurer’s approval limits. Future years Treasurer approvals are usually provided in June prior to the commencement of the subsequent financial year, based on Western Water’s Corporate Plan submission.
Western Water’s financial liability maturities have been disclosed in Note 17.
54 Prepared for growth 2009/10 2008/09 Note 3 Statement of Comprehensive Income – Disclosures $’000 $’000
Service charges Water 9,553 8,193 Sewerage 20,851 18,936 Recycled water 863 795 31,267 27,924 Water consumption 12,892 11,767 Total Service Charges 44,159 39,691 Government contributions –Operating – 140 New Customer Contributions Fees paid by developers 4,084 3,948 Assets received from developers 11,933 10,256 16,017 14,204 Interest Investments 33 119 Other revenue Information statements 319 251 Tapping and connection fees 1,081 750 Property rental 50 49 Other 1,345 470 2,795 1,520 Total revenue 63,004 55,674
(b) Net gain/(loss) on disposal of non-current assets The surplus/(deficit) from ordinary activities includes the following specific net gains and expenses. Net gain (loss) on disposal Property, plant and equipment Proceeds from sale of assets 768 609 Less Written Down Value of asset sold 1,366 1,033 (598) (424)
Western Water annual REPORT 2009/10 55 Financial performance report
Notes to the Financial Report for the year ended 30 June 2010
2009/10 2008/09 Note 3 Operating Statement – Disclosures (cont) $’000 $’000
(c) Expenses Depreciation – Buildings 376 353 – Water infrastructure 3,605 3,182 – Sewerage infrastructure 2,853 2,657 – Recycled water infrastructure 245 187 – Plant, equipment and motor vehicles 5,602 4,475 Total depreciation 12,681 10,854 Amortisation – Intangible & Leasehold Assets 619 797 619 797 Movement in Employee Benefits – Annual Leave 61 (17) – Long Service Leave 248 183 309 166 Bad & Doubtful Debts 162 99 Borrowing costs 5,706 3,847 Superannuation contributions 792 690 Operating Lease rental expense 520 495
Auditors’ remuneration – Auditor-General for audit of annual financial statements 42 41 – Internal Audit – Moore Stephens 71 92 – Deloitte – Taxation Reviews/Regulatory Audit 46 34 159 167
56 Prepared for growth 2009/10 2008/09 Note 4 Income Tax $’000 $’000 The income tax expense for the financial year differs from the amount calculated on the net result. The differences are reconciled as follows:
(a) Components of tax expense Current tax payable – – Deferred tax relating to temporary differences 2,327 2,738 Deferred tax asset (1,205) (659) Adjustments for current tax on prior periods – (469) (Over)/Under provision on prior year tax return – (201) 1,122 1,409 Current Tax Liability/(Asset) Current tax – – Instalment paid – (670) Current Liability/(Asset) – (670) Income tax expense is attributable to: Surplus from continuing operations 1,122 1,409
(b) Reconciliation of income tax to prima facie tax payable Net result before income tax expense 5,952 6,486 Tax at the Australian tax rate of 30% (2009: 30%) 1,786 1,946 Tax effect of amounts which are not deductable/(taxable) in calculating taxable income: – Adjustment in respect of income Tax of previous year – (469) – Research and development concession (9) (7) – Investment Allowance (667) (72) – Other 12 11 Income tax as reported in the Statement of Comprehensive income 1,122 1,409
Western Water annual REPORT 2009/10 57 Financial performance report
Notes to the Financial Report for the year ended 30 June 2010
2009/10 2008/09 Note 5 Cash & Cash Equivalent Assets $’000 $’000 Cash on hand 2 2 Cash at Bank 372 1,334 Deposit at call 7,000 – 7,374 1,336
(a) Reconciliation to cash at the end of year The above figures are reconciled to cash at the end of the financial year as shown in the Cash Flow Statement, as follows: Cash assets as above 7,374 1,336 At call borrowings – (3,000) Balances as per Cash Flow Statement 7,374 (1,664)
(b) Cash at bank and on hand These are non interest bearing 2 2 (c) Deposits at call The deposits are bearing floating interest rate currently 4.45%.(2009: 3.2%) 7,000 –
58 Prepared for growth 2009/10 2008/09 Note 6 Receivables $’000 $’000 Current Trade receivables 7,150 6,414 Provision for impaired receivables (49) (37) GST Receivable 966 747 Other receivables – – 8,067 7,124 Non-current Other Receivables 246 292
(a) Provision for impaired receivables As at 30 June 2010, current receivables of the Corporation with a nominal value of $49,001 (2009: $36,645) were impaired. The amount of the provision was $49,001 (2009: $36,645). The individually impaired receivables relate to provision of Recycled Water Service. The ageing of these receivables is as follows: 1 to 3 months – 6 3 to 6 months 7 – Over 6 months 42 30 49 36 Movements in the provision for impaired receivables are as follows: Balance at the beginning of the year (36) (72) Provision for impairment recognised during the year (162) (99) Receivables written off during the year as uncollectible 149 135 Balance at the end of the year (49) (36) The creation and release of the provision for impaired receivables has been included in ‘other expenses’ in the Statement of Comprehensive income. Amounts charged to the provision account are generally written off when there is no expectation of recovering additional cash.
The other amounts within receivables do not contain impaired assets and are not past due. Based on credit history, it is expected that these amounts will be received when due.
Western Water annual REPORT 2009/10 59 Financial performance report
Notes to the Financial Report for the year ended 30 June 2010
2009/10 2008/09 Note 6 Receivables (cont) $’000 $’000 (b) Past due but not impaired trade receivables
As of 30 June 2010, trade receivables of $2,260,000 (2008: $1,789,000) were past due but not impaired. These relate to a number of independent customers for whom there is no recent history of default. The ageing analysis of these receivables is as follows: 1 to 3 months 818 920 3 to 6 months 349 407 Over 6 months 1,093 461 2,260 1,789 The other amounts within receivables do not contain impaired assets and are not past due. Based on credit history, it is expected that these amounts will be received when due.
(c) Foreign exchange and interest rate risk for trade and other receivables The carrying amounts of the Corporation’s current and non-current receivables are denominated in the following currencies: Australian Dollars 8,313 7,416 8,313 7,416 Current Receivables 8,067 7,124 Non current receivables 246 292 8,313 7,416
(d) Fair value and credit risk
Due to the short-term nature of the current receivables, their carrying value is assumed to approximate their fair value.
2010 2009 Carrying Amount Fair Value Carrying Amount Fair Value Private Schemes 212 212 258 258 Bond Paid 34 34 34 34 246 246 292 292
60 Prepared for growth 2009/10 2008/09 Note 7 Property, Plant & Equipment $’000 $’000 (a) Classes of property, plant and equipment Land At fair value (as at 30 June 2008) 36,179 36,179 At cost 1 – 36,180 36,179 Buildings At fair value (as at 30 June 2007) 15,587 15,704 At cost 2,260 1,839 Less: accumulated depreciation 1,054 685 16,793 16,858 Water infrastructure At cost and deemed cost 219,078 207,309 Less: accumulated depreciation 53,838 50,359 165,240 156,950 Sewerage infrastructure At cost and deemed cost 247,421 225,886 Less: accumulated depreciation 86,888 84,158 160,533 141,728 Recycled Water infrastructure At cost and deemed cost 14,493 13,380 Less: accumulated depreciation 1,364 1,119 13,129 12,261 Equipment At fair value 137,918 130,205 Less: accumulated depreciation 61,126 56,907 76,792 73,298 Motor vehicles At fair value 2,295 2,107 Less: accumulated depreciation 568 545 1,727 1,562 Leasehold Assets At cost 1,321 1,321 Less: accumulated depreciation 385 252 936 1,069 Under construction 29,280 27,127 Total Property, Plant & Equipment 500,610 467,032
Land was valued at 30 June 2008 using the Valuer General’s indices. Buildings were valued at 30 June 2007 by an independent valuer, City Fringe Valuers. No assets of Western Region Water Corporation have been pledged as security.
Western Water annual REPORT 2009/10 61 Financial performance report
Notes to the Financial Report for the year ended 30 June 2010
Note 7 Property, Plant & Equipment (cont) (b) Movements during the reporting period 2009-2010
Opening Additions/ Capital Closing WDV Capital Transfer to WDV $’000 Transfers Disposals Expenditure DSE Revaluation Depreciation $’000
Land At fair value 36,179 1 – – – – – 36,180 Building At fair value 16,858 421 (111) 1 – – (376) 16,793 Water infrastructure At deemed cost 156,950 8,330 (97) 3,662 – – (3,605) 165,240 Sewerage infrastructure At deemed cost 141,728 13,566 (83) 8,175 – – (2,853) 160,533 Recycled Water infrastructure At deemed cost 12,261 1,054 – 59 – – (245) 13,129 Equipment At fair value 73,298 9,068 (331) 35 – – (5,278) 76,792 Motor Vehicles At fair value 1,562 1,233 (744) – – – (324) 1,727 Leasehold Assets At cost 1,069 – – – – – (133) 936 Under construction 27,127 (33,673) – 35,941 – – – 29,395 Total property, plant and equipment 467,032 – (1,366) 47,873 – – (12,814) 500,725
At 1 July 2009 Cost or fair value 661,057 Accumulated depreciation (194,025) and impairment Net carrying amount 467,032
At 30 June 2010 Cost or fair value 705,833 Accumulated depreciation (205,223) and impairment Net carrying amount 500,610
62 Prepared for growth Note 7 Property, Plant & Equipment (cont) (b) Movements during the reporting period 2008-2009
Opening Additions/ Capital Closing WDV Capital Transfer to WDV $’000 Transfers Disposals Expenditure DSE Revaluation Depreciation $’000
Land At fair value 36,318 1 (140) – – – – 36,179 Building At fair value 16,653 558 – – – – (353) 16,858 Water infrastructure At deemed cost 146,441 9,599 (298) 4,389 – – (3,181) 156,950 Sewerage infrastructure At deemed cost 136,053 2,628 (162) 5,867 – – (2,658) 141,728 Recycled Water infrastructure At deemed cost 9,079 3,369 – – – – (187) 12,261 Equipment At fair value 57,312 20,236 (71) – – – (4,179) 73,298 Motor Vehicles At fair value 1,628 592 (362) – – – (296) 1,562 Leasehold Assets At cost 1,134 62 – – – – (127) 1,069 Under construction 26,606 (37,045) – 37,566 – – – 27,127 Total property, plant and equipment 431,224 – (1,033) 47,822 – – (10,981) 467,032
At 1 July 2008 Cost or fair value 614,969 Accumulated depreciation (183,745) and impairment Net carrying amount 431,224
At 30 June 2009 Cost or fair value 661,057 Accumulated depreciation (194,025) and impairment Net carrying amount 467,032
Western Water annual REPORT 2009/10 63 Financial performance report
Notes to the Financial Report for the year ended 30 June 2010
Note 8 Intangible Assets $’000
Computer Software Year ended 30 June 2010 At 1 July 2009, net of accumulated amortisation 1,899 Additions Acquired 295 Amortisation (486) At 30 June 2010, net accumulated amortisation 1,708
Year ended 30 June 2009 At 1 July 2008, net of accumulated amortisation 2,355 Additions Acquired 214 Amortisation (670) At 30 June 2009, net accumulated amortisation 1,899
2009/10 2008/09 Note 9 Deferred Tax Assets $’000 $’000 The balance comprises temporary differences attributable to: Amounts recognised in Statement of Comprehensive income Employee benefits 775 685 Tax Losses 1,731 620 Other 24 20 Total Deferred tax assets 2,530 1,325 Movements Opening balance at 1 July 1,325 666 Credited/(debited) to the Statement of Comprehensive income 1,205 659 Closing balance at 30 June 2,530 1,325
Deferred tax asset to be recovered after more than 12 months 2,530 1,325
Note 10 Payables Current Trade creditors 4,403 5,036 Payables – GST 24 26 Contractor Deposits & Retentions 1,280 1,586 Accrued Expenses-Interest 1,372 958 Accrued Expenses-Other 4,874 4,569 11,953 12,175
64 Prepared for growth 2009/10 2008/09 Note 11 Interest Bearing Liabilities $’000 $’000
Current Secured Bank overdraft (a) – – Loans (b) – 3,000 Total current interest bearing liabilities – 3,000 Non-current Secured Loans (b) 102,250 66,250 Total non-current interest bearing liabilities 102,250 66,250 Total interest bearing liabilities 102,250 69,250 Credit standby arrangements Total facilities Bank Overdraft 500 500 Unused at balance date Bank Overdraft balance – – 500 500 Bank loan facilities Total facilities 102,250 69,250 Used at balance date 102,250 69,250 Unused at balance date – –
(a) Overdraft limit – $0.5 million secured by a Mortgage over the general revenue of Western Region Water Corporation
(b) Security for Loans is by way of Treasurer’s guarantee in favour of the Treasury Corporation of Victoria dated 22nd June 2000. Loan interest is payable every six months and loans have a maturity profile of up to 14.8 years.
All bank loans are with Treasury Corporation of Victoria under the Treasurers approval. Any unused facilities are not automatically carried over into the next financial year with a fresh approval required for each financial year. Treasurer approval was received on 25 June 2010 to re-finance $12.25M of maturing loans and new loans of $29M between 1 July 2010 and 30 June 2011.
Western Water annual REPORT 2009/10 65 Financial performance report
Notes to the Financial Report for the year ended 30 June 2010
Note 11 Interest Bearing Liabilities (cont) 2009/10 Carrying amount $’000 Fair Value $’000 On balance sheet Non traded financial liabilities Bank Overdrafts – – Bank Loans 102,250 106,711 102,250 106,711 Off Balance sheet Contingencies – – – –
On Balance sheet The fair value of current borrowings equals their carrying amount, as the impact of discounting is not significant. The fair values of non- current borrowings are based on cash flows discounted using borrowing rates varying from 4.285% to 7.25%, depending on the type of the borrowing (2009 – 3.165% to 7.25%).
The Corporation has potential financial liabilities which may arise from certain contingencies disclosed in note 20. As explained in those notes, no material losses are anticipated in respect of any of those contingencies and the fair value disclosed above is the directors’ estimate of amounts which would be payable by the Corporation as consideration for the assumption of those contingencies by another party.
Risk Exposures
The exposure of the Corporation’s borrowings to interest rate changes and the contractual repricing dates at the balance dates are as follows:
2010 2009 $’000 $’000 6 months or less 500 5,500 6-12 months 11,750 6,750 1-5 years 32,000 20,250 Over 5 years 58,000 36,750 102,250 69,250
Current borrowings – 3,000 Non current borrowings 102,250 66,250 102,250 69,250
Treasurer approval was received on 25 June 2010 to refinance all loans maturing in 2010/11. In line with 2010/11 Corporate Plan, all maturities will be refinanced.
The carrying amounts of the Corporation’s borrowings are denominated in the following currencies:
Australian dollar 102,250 69,250
For an analysis of the sensitivity of borrowings to interest rate risk and foreign exchange risk refer to note 2.
66 Prepared for growth 2009/10 2008/09 Note 12 Employee Benefits Provisions $’000 $’000
Current Annual leave and unconditional long service leave entitlements, representing 7 or more years of continous service Employee Benefits – Short term employee benefits that fall due within 12 months after the end of the period, measured at nominal value. 2,020 1,809 Other long term employee benefits that do not fall due within 12 months after the end of the period, measured at present value 202 130 Provisions related to employee benefit on-costs – Short term employee benefits that fall due within 12 months after the end of the period, measured at nominal value. 339 323 Other long term employee benefits that do not fall due within 12 months after the end of the period, measured at present value 32 22 Total Current 2,593 2,284
Movement in provisions Annual Leave Carrying amount at start of year 686 703 Leave paid out to leaving employees (25) (30) Additional provision recognised 86 13 747 686 Long Service Leave Carrying amount at start of year 1,597 1,414 Leave taken by employees (48) (99) Additional provision recognised 297 282 1,846 1,597
The number of full time equivalent employees at reporting date 130 123 The following assumptions were adopted in measuring the present value of long service leave and retirement gratuity entitlements: Weighted average increase in employee costs 4.50% 4.45% Weighted average discount rates 5.16% 3.43% Weighted average settlement period 11 Years 11 Years
The Corporation made no ex-gratia payments.
Western Water annual REPORT 2009/10 67 Financial performance report
Notes to the Financial Report for the year ended 30 June 2010
2009/10 2008/09 Note 13 Deferred Tax Liabilities $’000 $’000
The balance sheet comprises temporary differences attributable to: Amounts recognised in Statement of Comprehensive income Depreciation 32,206 30,199 Labour costs in capital works 242 297 Accrued Revenue 1,065 889 Other (629) (828) 32,884 30,557
Amounts recognised directly in equity Revaluation of property, plant & equipment 9,033 9,033 9,033 9,033 Net deferred tax liabilities 41,917 39,590 Movements Opening balance at 1 July 39,590 36,852 Charged to the Statement of Comprehensive income 2,327 2,738 Charged to equity – – Closing balance at 30 June 41,917 39,590 Deferred tax liabilities to be settled after more than 12 months 41,917 39,590
Note 14 Contribution by Owners Balance at beginning of reporting period 158,428 158,428 Capital contributions/(repayment) in the year 700 – Balance at end of reporting period 159,128 158,428
68 Prepared for growth 2009/10 2008/09 Note 15 Reserves $’000 $’000 Composition of reserves Asset revaluation surplus 37,247 37,247 37,247 37,247 Movements in reserves Asset revaluation surplus Balance 1 July 37,247 37,247 Revaluation increment/(decrement) on non-current assets – – Transfer to accumulated surplus – – Balance 30 June 37,247 37,247 The asset revaluation surplus is used to record asset revaluation increments and decrements in the value of non-current physical assets.
Note 16 Accumulated Funds Opening balance at 1 July 160,339 155,262 Net result for the period 4,830 5,077 Transfer from Reserve – – Closing balance at 30 June 165,169 160,339
Western Water annual REPORT 2009/10 69 Financial performance report
Notes to the Financial Report for the year ended 30 June 2010
Note 17 Financial Instruments Interest rate risk exposure
The following table sets out Western Water’s exposure to interest rate risk, including the contractual repricing dates and the effective weighted average interest rate by maturity periods.
Exposures arise predominantly from liabilities bearing variable interest rates as the Corporation intends to hold fixed rate liabilities to maturity
Floating Non interest 1 year Over 1 to Over 2 to Over 3 to Over 4 to Over 5 Interest rate or less 2 years 3 years 4 years 5 years years Bearing Total 2010 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 Financial Assets Cash 7,374 – – – – – – – 7,374 Trade Debtors – – – – – – – 8,067 8,067 Other receivables – – – Total financial assets 7,374 – – – – – – 8,067 15,441 Financial Liabilities Payables – – – – – – – 11,953 11,953 Other loans – 12,250 13,000 2,500 11,000 5,500 58,000 – 102,250 Lease liabilities – – – – – – – – – Total financial liabilities – 12,250 13,000 2,500 11,000 5,500 58,000 11,953 114,203 Net financial liabilities (7,374) 12,250 13,000 2,500 11,000 5,500 58,000 3,886 98,762 Weighted average interest rate 3.42% 5.38% 5.26% 6.11% 5.81% 5.91% 6.44% – 0.00%
Floating Non interest 1 year Over 1 to Over 2 to Over 3 to Over 4 to Over 5 Interest rate or less 2 years 3 years 4 years 5 years years Bearing Total 2009 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Financial Assets Cash 1,336 – – – – – – – 1,336 Trade Debtors – – – – – – – 7,124 7,124 Other receivables – – – – – – – – – Total financial assets 1,336 – – – – – – 7,124 8,460 Financial Liabilities Payables – – – – – – – 12,175 12,175 Other loans 3,000 9,250 12,250 1,500 2,500 4,000 36,750 – 69,250 Lease liabilities – – – – – – – – – Total financial liabilities 3,000 9,250 12,250 1,500 2,500 4,000 36,750 12,175 81,425 Net financial liabilities 1,664 9,250 12,250 1,500 2,500 4,000 36,750 5,051 72,965 Weighted average interest rate 3.42% 5.64% 5.38% 6.40% 6.12% 6.89% 7.82% – 0.00%
70 Prepared for growth Note 17 Financial Instruments (cont) Fair valuation
The carrying amounts and fair values of financial assets and financial liabilities at balance date are:
2010 2009 Carrying Amount Fair Value Carrying Amount Fair Value Financial Assets Cash 7,374 7,374 1,336 1,336 Other financial instrument – – – – Trade debtors 8,067 8,067 7,124 7,124 Total Financial Assets 15,441 15,441 8,460 8,460
Financial liabilities Payables 11,953 11,953 12,175 12,175 Other loans 102,250 105,758 69,250 70,532 Total Financial Liabilities 114,203 117,711 81,425 82,707
None of the classes of interest bearing liabilities are readily traded on organised markets in standardised form. The fair value of borrowings is based upon market prices, where a market exists or by discounting the expected future cash flows by the current interest rates for liabilities with similar risk profiles. Fair value is inclusive of costs which would be incurred on settlement of a liability.
Western Water annual REPORT 2009/10 71 Financial performance report
Notes to the Financial Report for the year ended 30 June 2010
Note 18 Segment Information The revenue from and results of services were:
Water Supply Sewerage Recycled Water Totals 2010 2009 2010 2009 2010 2009 2010 2009 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Revenue Sales 23,981 20,735 22,142 19,941 864 795 46,987 41,471 Developer Revenue 5,909 5,690 10,034 6,680 74 1,833 16,017 14,203 Total Revenue 29,890 26,425 32,176 26,621 938 2,628 63,004 55,674 Expenditure Depreciation/amortisation 6,472 5,537 5,943 5,693 885 422 13,300 11,652 Supplies, services & 22,257 20,937 14,606 11,311 1,183 1,441 38,046 33,689 employee costs Borrowing costs 2,853 1,923 2,853 1,924 – – 5,706 3,847 Total expenditure 31,582 28,397 23,402 18,928 2,068 1,863 57,052 49,188 Operating result by function (1,692) (1,972) 8,774 7,693 (1,130) 765 5,952 6,486 Assets Property Plant & Equipment 195,394 191,486 279,946 254,127 25,385 23,318 500,725 468,931 Unallocated assets 11,387 Total assets 195,394 191,486 279,946 254,127 25,385 23,318 500,725 480,318 Liabilities Trade & other payables 1,851 5,215 3,513 6,928 147 714 5,511 12,857 Loans 51,125 34,625 51,125 34,625 – – 102,250 69,250 Unallocated liabilities 52,024 42,197 Total liabilities 52,976 39,840 54,638 41,553 147 714 159,785 124,304 Cash flow Capital Investment Replacement/renewals 2,874 1,316 1,330 719 203 – 4,407 2,035 expansion/enhancements 4,101 4,754 26,689 25,996 924 7,175 31,714 37,925
72 Prepared for growth 2009/10 2008/09 Note 19 Commitments $’000 $’000 Operating Lease commitments At 30 June, Western Water had the following operating lease commitments. – within one year 440 463 – one to five years 1,599 1,624 – greater than five years 861 1,275 Minimum lease payment 2,900 3,362
The lease for the head office in Sunbury is for ten years, expiring May 2017, with a five year option. This lease is indexed to CPI and has five yearly market reviews. The remainder of the leases are for photocopiers for a period of 51 months expiring in February 2011.
Capital commitments
At 30 June, Western Water had the following capital Construction Contracts
Outstanding capital commitments are to be paid as follows:
Payments due: – within one year 17,566 8,556 – one to five years – – 17,566 8,556
Operating commitments
At 30 June, Western Water had the following operating Operational Contracts
Operational commitments are due for payment as follows:
– within one year 5,345 6,007 – one to five years 1,937 2,577 – greater than five years 363 – 7,645 8,584
Environment Contribution
At 30 June 2010, Western Water had outstanding contribution commitments, to be paid as follows:
– within one year 1,615 1,615 – one to five years 1,615 3,230 3,230 4,845
Operating Lease receivables
– within one year 147 145 – one to five years 627 617 Total minimum future lease receivables 774 762
Operating leases for land are mostly for ten years.
Western Water annual REPORT 2009/10 73 Financial performance report
Notes to the Financial Report for the year ended 30 June 2010
2009/10 2008/09 Note 20 Contingent Liabilities and Contingent Assets $’000 $’000
Contingent liabilities Nil – – Contingent assets Western Water enters into agreements with land developers whereby assets are transferred to Western Water at no cost. These assets are brought to account as revenue and capitalised on completion of the project. At the reporting date, land developers had commenced construction of assets that would eventually be transferred to Western Water contingent upon the release of Statements of Compliance by Western Water. This amount has been calculated as the sum of the estimate of the project costs by their percentage complete at 30 June.
Total estimated contingent assets 2,111 2,957
Note 21 Post-employment Benefit Western Water makes employer superannuation contributions in respect of most employees to the Local Authorities Superannuation Fund (the Fund). Obligations for contributions are recognised as an expense in the Statement of Comprehensive Income when they are due. The Fund has two categories of membership, each of which is funded differently.
The Fund’s accumulation category, Vision Super Saver, receives both employer and employee contributions on a progressive basis. Employer contributions are normally based on a fixed percentage of employee earnings (9% required under Superannuation Guarantee Legislation). No further liability accrues to the employer as the superannuation benefits accruing to employees are represented by their share of the net assets of the Fund.
Defined Benefit Plan The Fund’s Defined Benefit Plan is a multi-employer sponsored plan. As the Fund’s assets and liabilities are pooled and are not allocated by employer, the Actuary is unable to allocate benefit liabilities, assets and costs between employers. As provided under Paragraph 32 (b) of AASB 119, Western Water does not use defined benefit accounting for these contributions.
Western Water makes employer contributions to the defined benefit category of the Fund at rates determined by the Trustee on the advice of the Fund’s Actuary. On the basis of the results of the most recent full actuarial investigation conducted by the Fund’s actuary as at 31 December 2008, Western Water makes the following contributions:-
– 9.25% of members’ salaries (same as previous year); – the difference between resignation and retrenchment benefits paid to any retrenched employees (same as previous year);
The Fund surplus or deficit (i.e. the difference between fund assets and liabilities) is calculated differently for funding purposes (i.e. calculating required contributions) and for the calculation of accrued benefits as required in AAS25 to provide the values needed for the AASB119 disclosure in Western Water’s financial statements. AAS25 requires that the present value of the defined benefit liability to be calculated based on benefits that have accrued in respect of membership of the plan up to the measurement date, with no allowance for future benefits that may accrue. The actuarial investigation concluded that although the Net Market Value of Assets was in excess of Accrued Benefits at 31 December 2008, based on the assumptions adopted, there was a shortfall of $71M when the funding of future benefits was also considered. However, Western Water was advised that no additional contributions are required for 30 June 2010. The Actuary has commenced undertaking the next actuarial investigation to ascertain if additional contributions would be required. The Actuarial review will be as at 30 June 2010.
74 Prepared for growth Note 21 Post-employment Benefit (cont) The result of the actuarial review is expected to be finalised during October 2010. Should the review identify a funding shortfall requiring additional contributions, Western Water will be notified of any amount payable by November 2010 for payment on 1 July 2011. A further actuarial review will be under taken as at 30 June 2011. Based on the result of this further review, a detailed funding plan will be developed and implemented to achieve the target of fully funding the Fund by 31 December 2013.
Accounting Standard Disclosure The Fund’s liability for accrued benefits was determined by the Actuary at 31 December 2008 pursuant to the requirements of Australian Accounting Standard AAS25 as follows:
31-Dec-08 $’000 Net Market Value of Assets 3,630,432 Accrued Benefits (per accounting standards) 3,616,422 Difference between Assets and Accrued Benefits 14,010 Vested Benefits 3,561,588
The financial assumptions used to calculate the Accrued Benefits for the defined benefit category
Net Investment Return 8.50% p.a. Salary Inflation 4.25% p.a. Price Inflation 2.75% p.a.
The next actuarial review for the Fund is scheduled for 30 June 2010
Western Water contributes in respect of its employees to the following superannuation schemes:
2009/10 2008/09 Type of scheme Rate $’000 $’000 Vision Super Defined Benefit 9.25% 150 152 Vision Super Defined Contribution 9.00% 634 529 BT Classic Defined Contribution 9.00% 2 2 Colonial First State Defined Contribution 9.00% – 1 Equip Super Defined Contribution 9.00% – 2 MLC Masterkey Defined Contribution 9.00% 2 – P & J Tyers Super Fund Defined Contribution 9.00% 2 2 UniSuper Defined Contribution 9.00% 2 2 Total contributions to all funds 792 690
As at the reporting date, there was $33,855 payable to Vision Super.
As at the reporting date, there were no loans to or from Western Water to any of the above funds.
Western Water annual REPORT 2009/10 75 Financial performance report
Notes to the Financial Report for the year ended 30 June 2010
2009/10 2008/09 Note 22 Responsible Persons Related Party Disclosures $’000 $’000 a) Responsible Persons The names of persons who were responsible persons at anytime during the financial year were: The Hon. Timothy Holding MP, Minister for Water (1 July 2009 to 30 June 2010) T Larkins (Chairman) D Bell (Deputy Chair) L Cade C Mathew M Anastassiou R Anderson J Tyers J Wilkinson (Managing Director) Remuneration of responsible persons Remuneration paid to Ministers is reported in the Annual Report of the Department of Premier and Cabinet. Other relevant interests are declared in the Register of Members’ Interests which each member of the Parliament completes. Remuneration received, or due and receivable from Western Water in connection with the management of Western Water (includes termination payments and bonuses paid at the end of contracts). 473 448 The number of responsible persons whose remuneration from Western Water was within the specified bands are as follows: Income Band ($) No. No. 10,000 – 19,999 – 4 20,000 – 29,999 6 2 40,000 – 49,999 1 1 280,000 – 289,999 – 1 300,000 – 309,999 1 – 8 8
Retirement benefits of responsible persons $’000 $’000 The retirement benefits paid by the corporation in connection with the 35 35 retirement of responsible persons for the Corporation amounted to:
76 Prepared for growth 2009/10 2008/09 Note 22 Responsible Persons Related Party Disclosures (cont) $’000 $’000 Other related party transactions Western Water transacted business of water purchase from Melbourne Water and development and management of the Waterways Charge throughout the financial year to the value of $11,660,000 (2008/09: $9,488,410). T Larkins is a director of Melbourne Water. These transactions were undertaken in the ordinary course of business, are at arms length and carry normal commercial terms. Transactions with Melbourne Water: Purchase of Water 8,681 6,716 Remittance of Waterways Charge on behalf of customers 2,875 2,542 Receipt of Waterways Charge administration fee and cost recovery for 104 230 implementation Aggregate amounts recognised. 11,660 9,488 Amounts receivable from and payable to responsible persons or their responsible person related parties at 30 June Current-payable 406 503 Non current – – b) Executive officers’ remuneration
The number of executive officers, other than responsible persons, whose total remuneration falls within the specified bands above $100,000 are as follows:
Total Remuneration Base Remuneration 2010 2009 2010 2009 Income band ($) No. No. No. No. 140,000 – 149,999 – – 1 1 150,000 – 159,999 – 1 1 1 160,000 – 169,999 2 1 – – 190,000 – 199,999 – – – 1 200,000 – 209,999 – – 1 – 210,000 – 219,999 – 1 – – 220,000 – 229,999 1 – – – Total Amount 555 540 508 494
Total Numbers 3 3 3 3
Western Water annual REPORT 2009/10 77 Financial performance report
Notes to the Financial Report for the year ended 30 June 2010
Note 23 Reconciliation of Profit/(Loss) for the Period after Related Income Tax to Net Cash Flows from 2009/10 2008/09 Operating Activities $’000 $’000 Profit/(Loss) for the period after income tax 4,830 5,077 Add/(less) Non Cash Flows in Net Profit/(Loss) Net (profit)/loss on sale of non-current assets 598 424 Depreciation and amortisation 13,300 11,651 Developer contributions (non cash) (11,933) (10,256) Bad Debts Write Off 162 99
Change in assets and liabilities Decrease/(increase) in receivables (896) (2,144) Decrease/(increase) in prepayments (154) (180) Decrease/(increase) in other financial assets – – Decrease/(increase) in Deferred Income (44) – Decrease/(increase) in deferred tax asset (1,205) (659) Decrease/(increase) in income tax receivable 670 (670) Increase/(decrease) in trade creditors (177) 2,135 Increase/(decrease) in income in advance 66 (60) Increase/(decrease) in deferred tax liabilities 2,327 2,738 Increase/(decrease) in income tax payable – (1,009) Increase/(decrease) in provisions 309 166 Net Cash flows from Operating Activities 7,853 7,312
Note 24 Dividends The process to determine the 2010 dividend has not yet been completed at the reporting date.
The Board’s preliminary dividend estimate for this period is nil. Note 25 Events Occurring after the Balance Sheet Date No matters or circumstances have arisen since the end of the reporting period which significantly affected or may significantly affect the operations of the Corporation, the results of those operations, or the state of affairs of the Corporation in future
78 Prepared for growth Statutory Certification
We certify the attached financial statements for Western Region Water Corporation have been prepared in accordance with Standing Direction 4.2 of the Financial Management Act 1994, applicable Australian Accounting Standards, Interpretations and other mandatory professional reporting requirements.
We further state that, in our opinion, the information set out in the Statement of Comprehensive Income, Balance Sheet, Statement of Changes in Equity, Cash Flow Statement and notes to and forming part of the financial statements, presents fairly the financial transactions during the year ended 30 June 2010 and the financial position of Western Water as at 30 June 2010.
We are not aware of any circumstance which would render any particulars included in the financial statements to be misleading or inaccurate.
Terry Larkins
Chairman Western Region Water Corporation
John Wilkinson
Managing Director Western Region Water Corporation
Les McLean
Chief Finance & Accounting Officer Western Region Water Corporation
18th August 2010
Western Water annual REPORT 2009/10 79 Financial performance report
Financial Performance Report: Auditor-General’s Report
80 Prepared for growth Western Water annual REPORT 2009/10 81 APPENDIX 1 Bulk Entitlements 2009/10
Key to table abbreviations ML = Megalitres WW = Western Water component N/A = not applicable SRW = Aspect managed by Southern Rural Water MW = Aspect managed by Melbourne Water
Under Bulk Entitlement (BE) compliance requirements, Western Water is required to report on various aspects for 2009/10. That required information is included in this report on the 10 BE’s currently held by Western Water. Note that references to the relevant BE clause are stated in (italics). Reporting for: Barringo Lancefield Macedon Maribyrnong Myrniong Riddells Creek Romsey Werribee Woodend Yarra Under BE clause: 11.1 14.1 14.1 19.1 12.1 11.1 12.1 13.1 14.1 16.1 Water source(s) and storage(s) Barringo Creek and Garden Hut Creek Bawden Rd Spring, Slatey Creek, Pykes Creek and Main Creek, Bolinda Creek and Lerderderg River, Campaspe River, Yarra Catchment via Pierce Reservoir (G), Monument Creek Railway Creek, Jacksons Creek, Pykes Creek Foster and Wright Kerrie Reservoir Goodmans Creek, Falls and Smokers Melbourne Water’s (M) and Garden Hut Turitable Creek, Salty Creek, Gisborne Reservoir Reservoirs Coimadai Creek, Creeks, Barbour and supply system Reservoir Willimigongon Creek Creek and Rosslynne Lake Merrimu (M) Kavanagh Springs, and Reservoir, Reservoir Djerriwarrh Creek, Straws Lane Kitty English, Frank and Djerriwarrh Bore, Campaspe Mann, Andersons, Reservoir (DJ) Reservoir (CR) and McDonalds and Orde Reservoirs B&C Hill Reservoirs 32,516 (M) Total Capacity of storage(s) (ML) 64 46 485 25,368 22,119 77 296 366 1,773,000 983 (DJ) 8,500 (M) Annual Bulk Entitlement (ML) 320 315 645 6,100 58 300 460 802 11,250 1,486 (DJ) Western Water’s entitlement in storage at the start of the financial 52.3 4.04 282 737 58 47 154 2,379 7.3% (M) 113 11,250 year (ML) and % full for the 81% 9% (d) 58% (d) 2.9% (a, iii) 2.47% 61% 52% 242 25% (DJ) (a, ii) 31% (d) storage(s) Inflows attributable to WW taken 258 (M) (a, iii) 164 CR (e) 0.61 (e) 99.5 (e) 363 (e) 356* SRW 35 287 N/A from this BE water source(s) (ML) 250 (DJ) (a, iv)) 0 Falls & Bore Extra inflows (e.g: diversions 444 from Yarra BE 16.4 from 0 (M) 58 from Yarra BE into the storages) or local catchment 7.2 0 0 0 from Macedon 0 11.75 from Yarra BE Riddells Creek and N/A 0 (DJ) 77 from Macedon runoff storages (a, i) Yarra BE’s Volume taken from the 77 for Woodend 16.4 including 388.6 (M) (a, i) 0 32.9 2.8 31.9 (b) 272 (e) 333 9,874 (b) storage(s) (ML) supply Yarra BE water (e) 34.6 (DJ) Maximum extraction rate 0.09 from 0.59 from Garden 1.4 from Macedon 23 from Rosslynne 3.6 from 25.9 from (M) from storage or water source (ML/ 0.5 from Pykes Res 0.7 from Main Ck (b) 3.5 from CR (c) 36.7 (a) Barringo Ck (c) Hut Res (c) storages (c) Res Bolinda Ck (c) 2.6 from (DJ) day) Estimated evaporation & other SRW – See Note 3 SRW (M) See note 3 11.5 47 83 SRW 21.6 41.9 111 MW losses (e.g: seepage) (ML) (a, iv) 60.4 (DJ) SRW (M) (a, v) Environmental releases (ML) 0 0 105 68.4 SRW 0 0 0 MW 0 (DJ) Volume of environmental and All Monument Ck weir SRW (M) 154 (b) 0 SRW (a, v) SRW 70 (a) 99 (b) 0 (b) MW passing flows (ML) flows(e) 0 (DJ) Passing/environmental requirements SRW (M) Yes Yes See note 2 SRW SRW Yes Yes See note 2 MW met See note 2 (DJ) Amendments to the Bulk Entitlement No (h) No (i) No (f) Yes - see note 1 (d) No (i) No (h) No (i) No (d) No (i) No (f) Failure to comply with the BE, or compliance difficulties experienced No No No No No No No See note 4 See note 4 No or anticipated in the future Western Water’s entitlement unused 1,376 or remaining in storage at end of 48.6 9.78 380 1,080 26.2 43.6 122.5 2,220 6.8% (M) 167.8 88% of Yarra financial year (ML) and % full for the 76% 21.3% 78% 4.3% 5.4% 57% 41% 397 40% (DJ) 46% BE used storage
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Under Bulk Entitlement (BE) compliance requirements, Western Water is required to report on various aspects for 2009/10. That required information is included in this report on the 10 BE’s currently held by Western Water. Note that references to the relevant BE clause are stated in (italics). Reporting for: Barringo Lancefield Macedon Maribyrnong Myrniong Riddells Creek Romsey Werribee Woodend Yarra Under BE clause: 11.1 14.1 14.1 19.1 12.1 11.1 12.1 13.1 14.1 16.1 Water source(s) and storage(s) Barringo Creek and Garden Hut Creek Bawden Rd Spring, Slatey Creek, Pykes Creek and Main Creek, Bolinda Creek and Lerderderg River, Campaspe River, Yarra Catchment via Pierce Reservoir (G), Monument Creek Railway Creek, Jacksons Creek, Pykes Creek Foster and Wright Kerrie Reservoir Goodmans Creek, Falls and Smokers Melbourne Water’s (M) and Garden Hut Turitable Creek, Salty Creek, Gisborne Reservoir Reservoirs Coimadai Creek, Creeks, Barbour and supply system Reservoir Willimigongon Creek Creek and Rosslynne Lake Merrimu (M) Kavanagh Springs, and Reservoir, Reservoir Djerriwarrh Creek, Straws Lane Kitty English, Frank and Djerriwarrh Bore, Campaspe Mann, Andersons, Reservoir (DJ) Reservoir (CR) and McDonalds and Orde Reservoirs B&C Hill Reservoirs 32,516 (M) Total Capacity of storage(s) (ML) 64 46 485 25,368 22,119 77 296 366 1,773,000 983 (DJ) 8,500 (M) Annual Bulk Entitlement (ML) 320 315 645 6,100 58 300 460 802 11,250 1,486 (DJ) Western Water’s entitlement in storage at the start of the financial 52.3 4.04 282 737 58 47 154 2,379 7.3% (M) 113 11,250 year (ML) and % full for the 81% 9% (d) 58% (d) 2.9% (a, iii) 2.47% 61% 52% 242 25% (DJ) (a, ii) 31% (d) storage(s) Inflows attributable toWW taken 258 (M) (a, iii) 164 CR (e) 0.61 (e) 99.5 (e) 363 (e) 356* SRW 35 287 N/A from this BE water source(s) (ML) 250 (DJ) (a, iv)) 0 Falls & Bore Extra inflows (e.g: diversions 444 from Yarra BE 16.4 from 0 (M) 58 from Yarra BE into the storages) or local catchment 7.2 0 0 0 from Macedon 0 11.75 from Yarra BE Riddells Creek and N/A 0 (DJ) 77 from Macedon runoff storages (a, i) Yarra BE’s Volume taken from the 77 for Woodend 16.4 including 388.6 (M) (a, i) 0 32.9 2.8 31.9 (b) 272 (e) 333 9,874 (b) storage(s) (ML) supply Yarra BE water (e) 34.6 (DJ) Maximum extraction rate 0.09 from 0.59 from Garden 1.4 from Macedon 23 from Rosslynne 3.6 from 25.9 from (M) from storage or water source (ML/ 0.5 from Pykes Res 0.7 from Main Ck (b) 3.5 from CR (c) 36.7 (a) Barringo Ck (c) Hut Res (c) storages (c) Res Bolinda Ck (c) 2.6 from (DJ) day) Estimated evaporation & other SRW – See Note 3 SRW (M) See note 3 11.5 47 83 SRW 21.6 41.9 111 MW losses (e.g: seepage) (ML) (a, iv) 60.4 (DJ) SRW (M) (a, v) Environmental releases (ML) 0 0 105 68.4 SRW 0 0 0 MW 0 (DJ) Volume of environmental and All Monument Ck weir SRW (M) 154 (b) 0 SRW (a, v) SRW 70 (a) 99 (b) 0 (b) MW passing flows (ML) flows(e) 0 (DJ) Passing/environmental requirements SRW (M) Yes Yes See note 2 SRW SRW Yes Yes See note 2 MW met See note 2 (DJ) Amendments to the Bulk Entitlement No (h) No (i) No (f) Yes - see note 1 (d) No (i) No (h) No (i) No (d) No (i) No (f) Failure to comply with the BE, or compliance difficulties experienced No No No No No No No See note 4 See note 4 No or anticipated in the future Western Water’s entitlement unused 1,376 or remaining in storage at end of 48.6 9.78 380 1,080 26.2 43.6 122.5 2,220 6.8% (M) 167.8 88% of Yarra financial year (ML) and % full for the 76% 21.3% 78% 4.3% 5.4% 57% 41% 397 40% (DJ) 46% BE used storage
Western Water annual REPORT 2009/10 83 General information for Bulk There were no new bulk entitlements granted to Western Water Entitlements (BEs) in respect to its water supply systems during the 2009/10 year. There were no bulk entitlements transferred to any of Western Barringo Water’s BEs during 2009/10. Pierce Reservoir is an emergency off stream storage supplied by Barringo Creek and it was not used for supply during the year. Western Water has worked with DSE, SRW and Melbourne Water in the operation of its Bulk Entitlements during the year, and has Lancefield largely complied with the provisions and requirements they contain, The Lancefield bores & Garden Hut Creek are used together as the except as noted below. During another year of extreme drought sources of water for this town after being treated at the Lancefield and climate change impacts, it has continued to be a challenge Water Filtration Plant. to manage the water resource needs of the towns serviced by Western Water. Considerable diversions have been required, and Macedon use of water from the Yarra catchment has been vital. Various (See table for sources) Bawden Reservoir is a small reservoir levels of restrictions to supply were required in every town. now decommissioned. Storages are closely monitored to ensure (See under drought in the main report for details). adequate levels are maintained for fire fighting ( ie: > 60%T his was achieved during all times of transfer from the storages, however, Notes the volume dropped marginally below 60% for 6 weeks due to 1 Due to the ongoing extreme drought/climate change impacts, evaporation and losses). a BE amendment during the year provided for Jacksons Creek Maribyrnong refuge pools to be monitored to ensure adequate oxygen levels Minimal use of water from Rosslynne Reservoir occurred during and other water quality parameters necessary for in-stream the year, and it remained at extremely low levels. 444ML of ecology. This included provision for emergency releases from the the Yarra BE water was transferred into the reservoir as an Rosslynne Reservoir as needed. During the year, the total volume emergency buffer volume for consumptive or environmental use. of these releases was 68.4ML to protect river health. ( During the year, a portion of this buffer volume was released 2 A plan for upgrading our metering system and a plan for to provide flushing flows and improve water quality in the environmental management at the various BE diversions sites downstream reaches of the Jacksons Creek. See note 1 ) is being revised in accordance with recent DSE ‘Guidelines for Metering Programs’ and will be submitted to DSE in Myrniong November 2010. Western Water’s metering program will include Throughout the year, Pykes Creek Reservoir showed an overall recommendations to improve both accuracy and coverage of increase in storage volume, now up to 5.41%. Only the volume compliance metering. At the time of reporting, and prior to shown in the table was taken from this BE, no changes to security metering upgrade as proposed in the plans, compliance with BE of supply were made, and Western Water was able to comply with requirements has been broadly achieved. Detailed compliance the provisions of the BE. will be achieved via improved instrumentation and monitoring, specifically for refinement of passing flow control at Campaspe Riddells Creek Reservoir and Djerriwarrh Creek. 11.75ML of the Yarra BE water was transferred to Riddells Creek BE. 3 SRW provides net inflows and losses adjustments for Merrimu Romsey and Rosslynne reservoirs. This is consistent with previous BE Transfers from both Riddells Creek and the Yarra BE totalling reporting. All losses have been incorporated into inflow values 16.4ML were used to supplement the Romsey supply. An amount provided by SRW. of 173ML for 2009/10 was able to be added to the drought reserve for this BE. 4 Currently there is no effective capability to release water for passing flows from Campaspe Reservoir or Djerriwarrh Werribee Reservoir. Upon completion of the required monitoring plan Djerriwarrh Reservoir is a small raw water supply used for local currently being prepared for DSE, Western Water will implement properties, and also as an emergency volume if needed for Melton measures to enable these flows to be released and monitored in and Bacchus Marsh. accordance to the relevant BE obligations. Western Water has 10 Bulk Entitlements from which it draws water resources and sees Woodend no difficulty in continuing and improving compliance with these 58ML of Yarra BE water and 77ML of Macedon BE water were Bulk Entitlements in the future. diverted to supplement the Woodend supply.
Yarra Due to the impacts of drought, climate change and growth, Western Water’s demand on its Yarra BE continued to be substantially relied upon. No changes to reliability of supply or restriction to the total BE volume was required, however, given the restrictions in Melbourne, Western Water applied the same restrictions as Melbourne, to all customers in towns receiving any Yarra BE water, as required under clause 7.1(a) of the BE. The total taken shown in the table can be split into 5,234 ML taken via the Hillside interface point to Melton and Bacchus Marsh, and 4,639 ML was taken via the Loemans Rd interface point to Sunbury and the Macedon region.
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APPENDIX 2 Occupational Health and Safety Policy
Western Water is committed to providing a healthy and safe Employees and contractors accept responsibility to: workplace for all employees, contractors and visitors. This includes establishing, maintaining and improving safe systems of work, safe • Comply with the OH&S Act 2004, approved workplace plant and equipment, together with the provision of appropriate OH&S procedures and require others to do so training, competent supervision and safety accreditation. • take reasonable care relating to their own health and safety and that of anyone else affected by their work Occupational Health and Safety is both an individual and a shared • Support and promote improvements in work processes and responsibility of all people in the organisation. help reduce or eliminate risks Management accepts accountability for: • Immediately report and rectify if possible and practicable, any hazardous conditions observed, including near misses • So far as is reasonably practicable, providing and maintaining & incidents a working environment that is safe and without risk to health • Actively apply safe work practices by utilising training, • demonstrating a commitment to OH&S performance resources and information provided. • Complying with the OH&S Act 2004 and relevant legislation in providing a safe and healthy work environment • Maintaining and monitoring of an OH&S management system capable of sustaining and continuously improving safety performance • Consulting and sharing information about health and safety issues and measures that can be taken to eliminate or reduce risks in the integration of OH&S into all aspects of work • effective timely action to resolve OH&S issues • effective risk analyses and consultation occurs with respect to any workplace changes that could affect the health and safety of employees • Providing resources to meet the OH&S commitment • effective training and information is provided for employees to perform their tasks in a way that is without risk to health and safety • the effectiveness of the OH&S system, through benchmarking and auditing.
Western Water annual REPORT 2009/10 85 APPENDIX 3 Whistleblowers Protection Procedures 2002
1. Statement of Support to 4. Definitions of Key Terms Whistleblowers Three key concepts in the reporting system are improper conduct, Western Region Water Corporation (Western Water) is committed corrupt conduct and detrimental action. Definitions of these terms to the aims and objectives of the Whistleblowers Protection are set out below. Act 2001 (the Act). It does not tolerate improper conduct by its employees, officers or members, nor the taking of reprisals 4.1 Improper Conduct against those who come forward to disclose such conduct. A disclosure may be made about improper conduct by a public body or public official. Improper conduct means conduct that Western Water recognises the value of transparency and is corrupt, a substantial mismanagement of public resources, accountability in its administrative and management practices, or conduct involving substantial risk to public health or safety and supports the making of disclosures that reveal corrupt or to the environment. The conduct must be serious enough conduct, conduct involving a substantial mismanagement of to constitute, if proved, a criminal offence or reasonable grounds public resources, or conduct involving a substantial risk to for dismissal. public health and safety or the environment. 4.2 Corrupt Conduct Western Water will take all reasonable steps to protect people who make such disclosures from any detrimental action in reprisal for Corrupt conduct means: making the disclosure. It will also take afford natural justice to the • Conduct of any person (whether or not a public official) that person who is the subject of the disclosure. adversely affects the honest performance of a public officer’s 2. Purpose of these Procedures or public body’s functions; • the performance of a public officer’s functions dishonestly or These procedures establish a system for reporting disclosures with inappropriate partiality; of improper conduct or detrimental action by Western Water or • Conduct of a public officer, former public officer or a public its employees. The system enables such disclosures to be made body that amounts to a breach of public trust; to the protected disclosure coordinator or to one of the nominated protected disclosure officers. Disclosures may be made by • Conduct by a public officer, former public officer or a public employees or by members of the public. body that amounts to the misuse of information or material acquired in the course of the performance of their official These procedures are designed to complement normal functions; or communication channels between supervisors and employees. • A conspiracy or attempt to engage in the above conduct. Employees are encouraged to continue to raise appropriate matters at any time with their supervisors. As an alternative, employees may make a disclosure of improper conduct or detrimental action Examples under the Act in accordance with these procedures. • A public officer takes a bribe or receives a payment other than his or her wages or salary in exchange 3. Objects of the Act for the discharge of a public duty. The Whistleblowers Protection Act 2001 commenced operation • A public officer favours unmeritorious applications on 1 January 2002. The purpose of the Act is to encourage for jobs or permits by friends and relatives. and facilitate the making of disclosures of improper conduct by • A public officer sells confidential information. public officers and public bodies. The Act provides protection to whistleblowers who make disclosures in accordance with the Act, and establishes a system for the matters disclosed to be investigated and rectifying action to be taken.
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4.3 Detrimental Action 5.2 Alternative Contact Person The Act makes it an offence for a person to take detrimental action A disclosure about improper conduct or detrimental action by against a person in reprisal for a protected disclosure. Detrimental Western Water or its employees may also be made directly to action includes: the Ombudsman:
• Action causing injury, loss or damage; Energy and Water Ombudsman Victoria • Intimidation or harassment; and GPO Box 469 Melbourne Vic 3001 • discrimination, disadvantage or adverse treatment in relation to a person’s employment, career, profession, trade or Web www.ombudsman.vic.gov.au business, including the taking of disciplinary action. Email [email protected]
Telephone 03 9613 6222 Examples Toll Free 1800 806 314 A public body refuses a deserved promotion of a person who makes a disclosure. The following table sets out where disclosures about persons other than employees of Western Water should be made. A public body demotes or transfers or isolates in the workplace or changes the duties of a whistleblower Person who is the subject of Person/body to whom the due to the making of a disclosure. the disclosure disclosure must be made A person threatens or abuses or carries out other Employee of a public body That public body or the forms of harassment directly or indirectly against the Ombudsman whistleblower, his or her family or friends. Member of Parliament Speaker of the Legislative A public body discriminates against the whistleblower (Legislative Assembly) Assembly or his or her family and associates in subsequent applications for jobs, permits or tenders. Member of Parliament President of the Legislative (Legislative Council) Council Councillor The Ombudsman 5. Reporting System Chief Commissioner of Police The Ombudsman or Deputy 5.1 Contact Persons within Western Water Ombudsman Disclosures of improper conduct or detrimental action by Western Member of the police force The Ombudsman, Deputy Water or its employees may be made to the following officers: Ombudsman or Chief Commissioner of Police • the protected disclosure coordinator: General Manager Commercial Services • the protected disclosure officer(s): General Manager Commercial Services • the welfare manager: Manager Human Resources
All correspondence, phone calls and emails from internal or external whistleblowers will be referred to the protected disclosure coordinator.
Where a person is contemplating making a disclosure and is concerned about approaching the protected disclosure coordinator or a protected disclosure officer in the workplace, he or she can call the relevant officer and request a meeting in a discreet location away from the workplace.
Western Water annual REPORT 2009/10 87 6. Roles and Responsibilities • Appoint a welfare manager to support the whistleblower and to protect him or her from any reprisals; 6.1 Employees • Advise the whistleblower of the progress of an investigation Employees are encouraged to report known or suspected into the disclosed matter; incidences of improper conduct or detrimental action in • establish and manage a confidential filing system; accordance with these procedures. • Collate and publish statistics on disclosures made; All employees of Western Water have an important role to play • take all necessary steps to ensure the identity of the in supporting those who have made a legitimate disclosure. They whistleblower and the identity of the person who is the must refrain from any activity that is, or could be perceived to be, subject of the disclosure are kept confidential; and victimisation or harassment of a person who makes a disclosure. • Liaise with the Managing Director of Western Water. Furthermore, they should protect and maintain the confidentiality of a person they know or suspect to have made a disclosure. 6.4 Investigator 6.2 Protected Disclosure Officers The investigator will be responsible for carrying out an internal investigation into a disclosure where the Ombudsman has referred Protected disclosure officers will: a matter to Western Water. An investigator may be a person from • Be a contact point for general advice about the operation within an organisation or a consultant engaged for that purpose. of the Act for any person wishing to make a disclosure about improper conduct or detrimental action; 6.5 Welfare Manager • Make arrangements for a disclosure to be made privately The welfare manager is responsible for looking after the general and discreetly and, if necessary, away from the workplace; welfare of the whistleblower. The welfare manager will: • Receive any disclosure made orally or in writing (from internal • examine the immediate welfare and protection needs of a and external whistleblowers); whistleblower who has made a disclosure and seek to foster • Commit to writing any disclosure made orally; a supportive work environment; • Impartially assess the allegation and determine whether • Advise the whistleblower of the legislative and administrative it is a disclosure made in accordance with Part 2 of the Act protections available to him or her; (that is, ‘a protected disclosure’); • Listen and respond to any concerns of harassment, • take all necessary steps to ensure the identity of the intimidation or victimisation in reprisal for making disclosure; whistleblower and the identity of the person who is the subject and of the disclosure are kept confidential; and • ensure the expectations of the whistleblower are realistic. • Forward all disclosures and supporting evidence to the protected disclosure coordinator.
6.3 Protected Disclosure Coordinator The protected disclosure coordinator has a central ‘clearinghouse’ role in the internal reporting system. He or she will:
• Receive all disclosures forwarded from the protected disclosure officers; • Receive all phone calls, emails and letters from members of the public or employees seeking to make a disclosure; • Impartially assess each disclosure to determine whether it is a public interest disclosure; • Refer all public interest disclosures to the Ombudsman; • Be responsible for carrying out, or appointing an investigator to carry out, an investigation referred to Western Water by the Ombudsman; • Be responsible for overseeing and coordinating an investigation where an investigator has been appointed;
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7. Confidentiality 8. Collating and Publishing Statistics Western Water will take all reasonable steps to protect the identity The protected disclosure coordinator will establish a secure of the whistleblower. Maintaining confidentiality is crucial in register to record the information required to be published in ensuring reprisals are not made against a whistleblower. the annual report, and to generally keep account of the status of whistleblower disclosures. The register will be confidential and will The Act requires any person who receives information due to the not record any information that may identify the whistleblower. handling or investigation of a protected disclosure, not to disclose that information except in certain limited circumstances. Disclosure The register will contain the following information: of information in breach of section 22 constitutes an offence that is punishable by a maximum fine of 60 penalty units ($6000) or • the number and types of disclosures made to Western Water six months imprisonment or both. during the year; • the number of disclosures referred to the Ombudsman The circumstances in which a person may disclose information for determination as to whether they are public interest obtained about a protected disclosure include: disclosures; • Where exercising the functions of a public body under the Act; • the number and types of disclosed matters referred to Western Water by the Ombudsman for investigation; • When making a report or recommendation under the Act; • the number and types of disclosures referred by Western • When publishing statistics in the annual report of a public body; Water to the Ombudsman for investigation; and • the number and types of investigations taken over from • In criminal proceedings for certain offences in the Act. Western Water by the Ombudsman; However, the Act prohibits the inclusion of particulars in any • the number of requests made by a whistleblower to the report or recommendation that is likely to lead to the identification Ombudsman to take over an investigation by Western Water; of the whistleblower. The Act also prohibits the identification of • the number and types of disclosed matters that Western Water the person who is the subject of the disclosure in any particulars has declined to investigate; included in an annual report. • the number and types of disclosed matters that were Western Water will ensure all files, whether paper or electronic, substantiated upon investigation and the action taken on are kept in a secure room and can only be accessed by the completion of the investigation; and protected disclosure coordinator, protected disclosure officer, • Any recommendations made by the Ombudsman that relate the investigator or welfare manager (in relation to welfare to Western Water. matters). All printed material will be kept in files that are clearly marked as a Whistleblower Protection Act matter, and warn of 9. Receiving and Assessing the criminal penalties that apply to any unauthorised divulging information concerning a protected disclosure. All electronic Disclosures files will be produced and stored on a stand-alone computer 9.1 Has the disclosure been made in accordance with and be given password protection. Backup files will be kept on floppy disc. All materials relevant to an investigation, such part 2 of the Act? as tapes from interviews, will also be stored securely with the Where a disclosure has been received by the protected disclosure whistleblower files. officer or by the protected disclosure coordinator, he or she will assess whether the disclosure has been made in accordance with Western Water will not email documents relevant to a Part 2 of the Act and is, therefore, a protected disclosure. whistleblower matter and will ensure all telephone calls and meetings are conducted in private. 9.1.1 Has the disclosure been made to the appropriate person? For the disclosure to be responded to by Western Water, it must concern an employee, member or officer of Western Water. If the disclosure concerns an employee, officer or member of another public body, the person who has made the disclosure must be advised of the correct person or body to whom the disclosure should be directed. (See the table in 5.2). If the disclosure has been made anonymously, it should be referred to the Ombudsman.
Western Water annual REPORT 2009/10 89 9.1.2 Does the disclosure contain the essential elements 10. Investigations of a protected disclosure? 10.1 Introduction To be a protected disclosure, a disclosure must satisfy the following criteria: Where the Ombudsman refers a protected disclosure to Western Water for investigation, the protected disclosure coordinator will • did a natural person (that is, an individual person rather than appoint an investigator to carry out the investigation. a corporation) make the disclosure? The objectives of an investigation will be: • does the disclosure relate to conduct of a public body or public officer acting in their official capacity? • to collate information relating to the allegation as quickly as • Is the alleged conduct either improper conduct or detrimental possible. This may involve taking steps to protect or preserve action taken against a person in reprisal for making a documents, materials and equipment; protected disclosure? • to consider the information collected and to draw conclusions • does the person making a disclosure have reasonable grounds objectively and impartially; for believing the alleged conduct has occurred? • to maintain procedural fairness in the treatment of witnesses and the person who is the subject of the disclosure; and Where a disclosure is assessed to be a protected disclosure, it is referred to the protected disclosure coordinator. The protected • to make recommendations arising from the conclusions drawn disclosure coordinator will determine whether the disclosure is concerning remedial or other appropriate action. a public interest disclosure. 10.2 Terms of Reference Where a disclosure is assessed not to be a protected disclosure, the Before commencing an investigation, the protected disclosure matter does not need to be dealt with under the Act. The protected coordinator will draw up terms of reference and obtain disclosure officer will decide how the matter should be responded authorisation for those terms by the chief executive officer. to in consultation with the protected disclosure coordinator. The terms of reference will set a date by which the investigation report is to be concluded, and will describe the resources available 9.2 Is the disclosure a public interest disclosure? to the investigator to complete the investigation within the time set. Where the protected disclosure officer or coordinator has received The protected disclosure coordinator may approve, if reasonable, a disclosure that has been assessed to be a protected disclosure, an extension of time requested by the investigator. The terms of the protected disclosure coordinator will determine whether the reference will require the investigator to make regular reports to disclosure amounts to a public interest disclosure. This assessment the protected disclosure coordinator who, in turn, is to keep the will be made within 45 days of the receipt of the disclosure. Ombudsman informed of general progress.
In reaching a conclusion as to whether a protected disclosure is a 10.3 Investigation Plan public interest disclosure, the protected disclosure coordinator will The investigator will prepare an investigation plan for approval by consider whether the disclosure shows, or tends to show, that the the protected disclosure coordinator. The plan will list the issues to public officer to whom the disclosure relates: be substantiated and describe the avenue of inquiry. It will address • Has engaged, is engaging or proposes to engage in improper the following issues: conduct in his or her capacity as a public officer; or • What is being alleged? • Has taken, is taking or proposes to take detrimental action in • What are the possible findings or offences? reprisal for the making of the protected disclosure. • What are the facts in issue? Where the protected disclosure coordinator concludes that the • How is the inquiry to be conducted? disclosure amounts to a public interest disclosure, he or she will: • What resources are required? 1. notify the person who made the disclosure of that conclusion; and At the commencement of the investigation, the whistleblower should be: 2. Refer the disclosure to the Ombudsman for formal determination as to whether it is indeed a public interest • notified by the investigator that he or she has been appointed disclosure. to conduct the investigation;
Where the protected disclosure coordinator concludes that the • Asked to clarify any matters; and disclosure is not a public interest disclosure, he or she will: • Provide any additional material he or she might have.
1. notify the person who made the disclosure of that conclusion; The investigator will be sensitive to the whistleblower’s possible and fear of reprisals and will be aware of the statutory protections 2. Advise that person that he or she may request Western provided to the whistleblower. Water to refer the disclosure to the Ombudsman for a formal determination as to whether the disclosure is a public interest 10.4 Natural Justice disclosure, and that this request must be made within 28 days The principles of natural justice will be followed in any investigation of the notification. of a public interest disclosure. The principles of natural justice concern procedural fairness and ensure a fair decision is reached In either case, the protected disclosure coordinator will make the by an objective decision maker. Maintaining procedural fairness notification and the referral within 14 days of the conclusion being protects the rights of individuals and enhances public confidence reached by Western Water. Notification to the whistleblower is not in the process. necessary where the disclosure has been made anonymously.
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Western Water will have regard to the following issues in ensuring 11. Action Taken after an Investigation procedural fairness: 11.1 Investigator’s Final Report • the person who is the subject of the disclosure is entitled to know the allegations made against him or her and must At the conclusion of the investigation, the investigator will submit be given the right to respond. (This does not mean the person a written report of his or her findings to the protected disclosure must be advised of the allegation as soon as the disclosure coordinator. The report will contain: is received or the investigation has commenced); • the allegation/s: • If the investigator is contemplating making a report adverse • An account of all relevant information received and, if the to the interests of any person, that person should be given the investigator has rejected evidence as being unreliable, the opportunity to put forward further material that may influence reasons for this opinion being formed; the outcome of the report and that person’s defence should be • the conclusions reached and the basis for them; and fairly set out in the report; • Any recommendations arising from the conclusions. • All relevant parties to a matter should be heard and all submissions should be considered; Where the investigator has found that the conduct disclosed by • A decision should not be made until all reasonable inquiries the whistleblower has occurred, recommendations made by the have been made; investigator will include:
• the investigator or any decision maker should not have a • the steps that need to be taken by Western Water to prevent personal or direct interest in the matter being investigated; the conduct from continuing or occurring in the future; and • All proceedings must be carried out fairly and without bias. • Any action that should be taken by Western Water to remedy Care should be taken to exclude perceived bias from the any harm or loss arising from the conduct. This action may process; and include bringing disciplinary proceedings against the person • the investigator must be impartial in assessing the credibility responsible for the conduct, and referring the matter to an of the whistleblowers and any witnesses. Where appropriate, appropriate authority for further consideration. conclusions as to credibility should be included in the investigation report. The report will be accompanied by: • the transcript or other record of any oral evidence taken, 10.5 Conduct of the Investigation including tape recordings; and The investigator will make contemporaneous notes of all • All documents, statements or other exhibits received by the discussions and phone calls, and all interviews with witnesses officer and accepted as evidence during the course of the will be taped. All information gathered in an investigation will investigation. be stored securely. Interviews will be conducted in private and the investigator will take all reasonable steps to protect the Where the investigator’s report is to include an adverse comment identity of the whistleblower. Where disclosure of the identity against any person, that person will be given the opportunity of the whistleblower cannot be avoided, due to the nature of the to respond and his or her defence will be fairly included in the allegations, the investigator will warn the whistleblower and his report. The report will not disclose particulars likely to lead to or her welfare manager of this probability. the identification of the whistleblower.
It is in the discretion of the investigator to allow any witness to 11.2 Action to be Taken have legal or other representation or support during an interview. If a witness has a special need for legal representation or support, If the protected disclosure coordinator is satisfied that the permission should be granted. investigation has found that the disclosed conduct has occurred, he or she will recommend to the chief executive officer the action 10.6 Referral of an Investigation to the Ombudsman that must be taken to prevent the conduct from continuing or occurring in the future. The protected disclosure coordinator may The protected disclosure coordinator will make a decision also recommend that action be taken to remedy any harm or loss regarding the referral of an investigation to the Ombudsman arising from the conduct. where, on the advice of the investigator: The protected disclosure coordinator will provide a written report • the investigation is being obstructed by, for example, setting out the findings of the investigation and any remedial steps the non- cooperation of key witnesses; or taken to the Ombudsman, the whistleblower and the responsible • the investigation has revealed conduct that may constitute Minister: a criminal offence. • Hon. Timothy Holding MP, Minister for Water; or 10.7 Reporting Requirements Where the investigation concludes that the disclosed conduct did The protected disclosure coordinator will ensure the whistleblower not occur, the protected disclosure coordinator will report these is kept regularly informed concerning the handling of a protected findings to the Ombudsman and to the whistleblower. disclosure and an investigation. The protected disclosure coordinator will report to the Ombudsman about the progress of an investigation. Where the Ombudsman or the whistleblower requests information about the progress of an investigation, that information will be provided within 28 days of the date of the request.
Western Water annual REPORT 2009/10 91 12. Managing the Welfare of the • Advise the protected disclosure coordinator or chief executive Whistleblower officer of the detrimental action. The taking of detrimental action in reprisal for the making of a 12.1 Commitment to Protecting Whistleblowers disclosure can be an offence against the Act as well as grounds Western Water is committed to the protection of genuine for making a further disclosure. Where such detrimental action whistleblowers against detrimental action taken in reprisal for is reported, the protected disclosure coordinator will assess the the making of protected disclosures. The protected disclosure report as a new disclosure under the Act. Where the protected coordinator is responsible for ensuring whistleblowers are disclosure coordinator is satisfied that the disclosure is a public protected from direct and indirect detrimental action, and that the interest disclosure, he or she will refer it to the Ombudsman. If culture of the workplace is supportive of protected disclosures the Ombudsman subsequently determines the matter to be a public being made. interest disclosure, the Ombudsman may investigate the matter or refer it to another body for investigation as outlined in the Act. The protected disclosure coordinator will appoint a welfare manager to all whistleblowers who have made a protected 12.4 Whistleblowers Implicated in Improper Conduct disclosure. The welfare manager will: Where a person who makes a disclosure is implicated in • examine the immediate welfare and protection needs of a misconduct, Western Water will handle the disclosure and protect whistleblower who has made a disclosure and, where the the whistleblower from reprisals in accordance with the Act, whistleblower is an employee, seek to foster a supportive work the Ombudsman’s guidelines and these procedures. Western environment; Water acknowledges that the act of whistleblowing should not • Advise the whistleblower of the legislative and administrative shield whistleblowers from the reasonable consequences flowing protections available to him or her; from any involvement in improper conduct. Section 17 of the Act specifically provides that a person’s liability for his or her own • Listen and respond to any concerns of harassment, conduct is not affected by the person’s disclosure of that conduct intimidation or victimisation in reprisal for making disclosure; under the Act. However, in some circumstances, an admission may • keep a contemporaneous record of all aspects of the case be a mitigating factor when considering disciplinary or other action. management of the whistleblower including all contact and follow-up action; and The Managing Director will make the final decision on the advice of the protected disclosure coordinator as to whether disciplinary • ensure the expectations of the whistleblower are realistic. or other action will be taken against a whistleblower. Where All employees will be advised that it is an offence for a person disciplinary or other action relates to conduct that is the subject to take detrimental action in reprisal for a protected disclosure. of the whistleblower’s disclosure, the disciplinary or other action The maximum penalty is a fine of 240 penalty units ($24,000) or will only be taken after the disclosed matter has been appropriately two years imprisonment or both. The taking of detrimental action dealt with. in breach of this provision can also be grounds for making a In all cases where disciplinary or other action is being disclosure under the Act and can result in an investigation. contemplated, the chief executive officer must be satisfied that Detrimental action includes: it has been clearly demonstrated that:
• Causing injury, loss or damage; • the intention to proceed with disciplinary action is not causally • Intimidation or harassment; and connected to the making of the disclosure (as opposed to the content of the disclosure or other available information); • discrimination, disadvantage or adverse treatment in relation to a person’s employment, career, profession, trade or • there are good and sufficient grounds that would fully business (including the taking of disciplinary action). justify action against any non-whistleblower in the same circumstances; and 12.2 Keeping the Whistleblower Informed • there are good and sufficient grounds that justify exercising The protected disclosure coordinator will ensure the whistleblower any discretion to institute disciplinary or other action. is kept informed of action taken in relation to his or her disclosure, and the time frames that apply. The whistleblower will be informed The protected disclosure coordinator will thoroughly document of the objectives of an investigation, the findings of an investigation, the process including recording the reasons why the disciplinary and the steps taken by Western Water to address any improper or other action is being taken, and the reasons why the action is conduct that has been found to have occurred. The whistleblower not in retribution for the making of the disclosure. The protected will be given reasons for decisions made by Western Water in disclosure coordinator will clearly advise the whistleblower of the relation to a protected disclosure. All communication with the proposed action to be taken, and of any mitigating factors that have whistleblower will be in plain English. been taken into account. 12.3 Occurrence of Detrimental Action If a whistleblower reports an incident of harassment, discrimination or adverse treatment that would amount to detrimental action taken in reprisal for the making of the disclosure, the welfare manager will:
• Record details of the incident; • Advise the whistleblower of his or her rights under the Act; and
92 Prepared for growth appendices
13. Management of the Person against 14. Criminal Offences whom a Disclosure has been made Western Water will ensure officers appointed to handle protected Western Water recognises that employees against whom disclosures and all other employees are aware of the following disclosures are made must also be supported during the handling offences created by the Act: and investigation of disclosures. Western Water will take all 1. It is an offence for a person to take detrimental action against reasonable steps to ensure the confidentiality of the person a person in reprisal for a protected disclosure being made. who is the subject of the disclosure during the assessment and The Act provides a maximum penalty of a fine of 240 penalty investigation process. Where investigations do not substantiate units ($24,000) or two years imprisonment or both. disclosures, the fact that the investigation has been carried out, the results of the investigation, and the identity of the person who is 2. It is an offence for a person to divulge information obtained the subject of the disclosure will remain confidential. as a result of the handling or investigation of a protected disclosure without legislative authority. The Act provides a The protected disclosure coordinator will ensure the person who maximum penalty of 60 penalty units ($6,000) or six months is the subject of any disclosure investigated by or on behalf of a imprisonment or both. public body is: 3. It is an offence for a person to obstruct the Ombudsman in performing his responsibilities under the Act. The Act provides • Informed as to the substance of the allegations; a maximum penalty of 240 penalty units ($24,000) or two • given the opportunity to answer the allegations before a final years imprisonment or both. decision is made; 4. It is an offence for a person to knowingly provide false • Informed as to the substance of any adverse comment that information under the Act with the intention that it be acted may be included in any report arising from the investigation; on as a disclosed matter. The Act provides a maximum penalty and has of 240 penalty units ($24,000) or two years imprisonment • His or her defence set out fairly in any report. or both. Where the allegations in a disclosure have been investigated, 15. Review and the person who is the subject of the disclosure is aware of the allegations or the fact of the investigation, the protected disclosure These procedures will be reviewed annually to ensure coordinator will formally advise the person who is the subject of they meet the objectives of the Act and accord with the the disclosure of the outcome of the investigation. Ombudsman’s guidelines.
Western Water will give its full support to a person who is the subject of a disclosure where the allegations contained in a disclosure are clearly wrong or unsubstantiated. If the matter has been publicly disclosed, the Managing Director of Western Water will consider any request by that person to issue a statement of support setting out that the allegations were clearly wrong or unsubstantiated.
Western Water annual REPORT 2009/10 93 Disclosure Index
Western Water’s 2009/10 Annual Report is prepared in accordance with all relevant Victorian legislation. This index facilitates identification of our compliance with statutory disclosure requirements.
Charter and Purpose
FRD 22B Manner of establishment and the relevant Minister 12 FRD 22B Objectives, functions, powers and duties 1-5 FRD 22B Nature and range of services provided 1-5
Management and Structure
FRD 22B Organisational structure 12
Financial and Other Information
FRD 10 Disclosure index 94 FRD 12A Disclosure of major contracts 34 FRD 15B Executive Officer disclosures 14-15 FRD 22B Operational and budgetary objectives and performance against objectives 6-9 FRD 22B Employment and conduct principles 29 FRD 22B Occupational health & safety policy Appendix 2 FRD 22B Summary of financial results for the year 33 FRD 22B Significant changes in financial position during the year 34 FRD 22B Major changes or factors affecting performance 34 FRD 22B Subsequent events 34 FRD 22B Application and operation of Freedom of Information Act 1982 28 FRD 22B Compliance with building and maintenance provisions of Building Act 1993 19 FRD 22B Statement on National Competition Policy 19 FRD 22B Application and operation of Whistleblowers Protection Act 2001 30 FRD 22B Details of consultancies over $100,000 34 FRD 22B Details of consultancies under $100,000 34 FRD 22B Statement of availability of other information 29 FRD 25 Victorian Industry Participation Policy disclosures 19 FRD 22B Workforce data disclosures 29 FRD 121 Infrastructure Assets 3
Legislation
SD 4.5.5 Risk management compliance attestation 15 SD 4.2(g) General information requirements Addressed SD 4.2(j) Sign off requirements 5
Legislation
Freedom of Information Act 1982 28 Building Act 1983 19 Whistleblowers Protection Act 2001 30 Victorian Industry Participation Policy Act 2003 19 Financial Management Act 1994 34 Multicultural Victoria Act 2004 29-30
94 Prepared for growth disclosure index & GLOBAL REPORTING INITIATIVE INDEX
Global Reporting Initiative Index
The Global Reporting Initiative (GRI) is an internationally recognised framework for sustainability reporting. This report has been prepared using the GRI’s G3 Guidelines. All G3-based reports must self-declare an Application Level. As this report is consistent with the Guidelines and addresses more than 10 indicators it meets Application Level C. The following index indicates which GRI indicators have been reported and where they can be located in this report.
GRI Reporting Elements & Indicators P GRI Reporting Elements & Indicators P
Strategy & Analysis Economic Performance Indicators
1.1 Statement from Chairman and CEO 4-5 EC1 economic profile 33 EC2 Financial implications of climate change 34 Organisational Profile EC6 Suppliers: policies & practices & local spend 17, 19, 34 2.1 name of Organisation 1 EC8 Infrastructure development and public benefit 19, 26 2.2 Primary brands, products and/or services 1 Environmental Performance Indicators 2.3 Operational structure of organisation 12 2.4 Location of organisation’s headquarters Rear cover EN3 energy - Direct consumption 25 2.5 Countries of operation 1 EN5 energy saved - conservation and efficiency 24 2.6 nature of ownership and legal form 12 EN6 energy efficiency / renewable energy 24 2.7 Markets served 1 initiatives and reductions in energy requirements 2.8 Scale of organisation 1 EN8 total water withdrawal by source 17, 24 2.9 Significant changes during reporting period 4-5 EN10 Percentage and total volume of water 22 recycled and reused 2.10 Awards received in the reporting period 2 EN12 Impacts to biodiversity 23 Report Parameters EN13 Habitats protected or restored 23 EN14 Biodiversity Management 23 3.1 Reporting period 12 EN16 Greenhouse emissions - direct and indirect 25 3.2 date of most recent previous report 1 EN18 Greenhouse emissions reduction 24-25 3.3 Reporting cycle 1 EN23 Total number and volume of significant spills 7, 26 3.4 Contact person for report Rear cover EN25 Biodiversity - Water bodies and related 23 3.5 Process for determining report content 1 habitats affected by discharge and runoff 3.6 Boundary of the report 1 EN26 Products and services - environmental 20-25 3.7 Limitations on the report 1 impact reduction 3.8 Basis for reporting 1 EN27 Products & Packaging - percentage 22 3.10 explanation of the effect of, and reason for, n/a reclaimed any re-statements of information from earlier reports Social Performance Indicators 3.11 Significant changes in scope, boundary, n/a LA7 OHS Statistics - Lost time injury / disease 31 measurement method from previous period frequency rates by region 3.12 gRI Content Index 95 LA8 Health & Safety - programs to assist 30-31 workforce members, their families Governance, Commitments & Engagement or community members regarding 4.1 governance structure of organisation 12 serious diseases 4.2 Chair / executive officer status 13 LA13 Diversity statistics 29 4.3 unitary board - number of independent / non 13-14 PR1 Products & Services: Customer Health and 26 executive members Safety 4.4 Mechanisms for communication to the board 13-14 PR5 Customer Satisfaction 27 4.14 Stakeholder groups 12 4.15 Process of identification and selection of 20-24 stakeholders
Western Water annual REPORT 2009/10 95 Annual Report Index
Assets at a Glance 3 Service Area Map 1 Audit Committee 14 Service Charges 28 Availability of Other Information 29 Sewer System 26 Awards 2 Target 155 (T155) 27 Biodiversity 23 Vision 3 Biosolids 22 Water Conservation 21 Board Members 13 Water Consumption 16 Board Committees 14 Water Quality 26 Bulk Water Entitlements 17 Water Restrictions 27 Capital Works Committee 14 Water Supply Management 20 Capital Works Investment 19 Water Supply System 26 Complaints Management 27 WaterTight 20 Community Education 20 Whistleblowers Protection Act 30 Community Service Obligations 28 Workforce 29 Customer Advisory Network 26 Workplace Incident Management 31 Customer Satisfaction 27 Customer Service 27 Drinking Water Substitution 22 Drought Response 18 Employment and Conduct Principles 29 Environmental Sustainability 20 Financial Performance 33 Freedom of Information Act 28 Greenhouse Gas Reduction 24 Highlights 2 Inclusiveness 29 Integrated Water Management 21 Occupational Health & Safety 30 Organisational Chart 12 Organisational Profile 1 Our Water Our Future 20 Performance Report 6 Policy Review Committee 14 Population Trends 17 Recycled Water 22 Remuneration Committee 14 River Health 23 Risk Management 15
96 Prepared for growth ANNUAL REPORT INDEX & GLOSSARY
Glossary
Biodiversity The variety of plants, animals and other living things Our Water Our Future The State Government’s action plan to in a particular region. In practice, biodiversity suggests sustaining secure Victoria’s water future for the next 50 years. The plan the diversity of species in each ecosystem as we plan human contains 110 initiatives to change the way we use and manage activities that affect the use of land and natural resources. our water.
Biosolids A solid organic by-product of the treatment of recycled Recycled water Recycled water originates from wastewater, water that can be managed and used safely for nutrient, soil collected from homes and businesses and diverted to a recycled conditioning, energy or other value. water plant where it passes through a series of purification processes, in accordance with recycled water quality standards. Biogas A mixture of methane and carbon dioxide, produced The process includes treatment to reduce undesirable substances by anaerobic digestion of organic waste matter. such as coliforms and brings the recycled water up to a standard Bulk entitlement The right to water held by water corporations that makes it suitable for a wide range of uses, but unsuitable for defined in the Water Act 1989. A bulk entitlement defines the drinking purposes. amount of water that a corporation is entitled to from a river or Renewable resources Naturally occurring raw material or form of storage, and may include the rate of extraction and its reliability. energy which has the capacity to replenish itself through ecological Capital works The development and ongoing maintenance and cycles and sound management practices. These include recycled replacement of infrastructure including water, sewer and recycled water, biosolids and biogas. water systems. Risk management A process to identify, assess, manage, Catchment Area in which water is caught including water sources and control potential events or situations, to provide reasonable such as rivers, streams, groundwater and reservoirs. assurance regarding the achievement of the organisation’s objectives. Climate change Changes in climate such as temperature and rainfall that differ significantly from previous average conditions Sewage Liquid and solid waste disposed from domestic uses and are seen to endure, bringing about corresponding changes of water, such as toilets, bathrooms and kitchens and similar in ecosystems and socioeconomic activity. uses in trade and industry.
Customer advisory network Representatives from the community Sewerage A system of pipes and infrastructure for the collection which meet to consider, discuss and provide feedback on service and transportation of domestic and industrial sewage. issues affecting their region. Stormwater Rainfall that runs off roofs, roads and other surfaces E.coli A strain of the bacterium Escherichia coli, used as an where it flows into gutters, streams, rivers and creeks, and indicator of faecal contamination. eventually into the bays.
Grey water All non-toilet household water, which is produced Sustainable Capable of being continued with minimum long term from baths, showers, wash basins, clothes washing machines, effects on the environment. dishwasher, laundry trough and the kitchen sink. Target 155 The State Government’s initiative encouraging Integrated Water Management The coordinated management of customers to limit residential water consumption to less than water supply, sewerage, recycled water, drainage and stormwater 155 litres per person per day. Also known as T155. systems. It optimises the use of all alternative water sources, Trade waste Waste produced by trade and industry. minimises impact on the natural environment, and ultimately, reduces consumption of treated drinking water. Turbidity Visible suspended materials and pollutants carried in water. Megalitres (ML) One million litres or 1,000 cubic metres. Water quality zone An area with common water quality Meter A device for measuring the quantity and flow rate of water. characteristics, where supply is linked through common water New customer contributions The fees charged to developers supply infrastructure, such as pipes, tanks and pumps. A water or property owners to assist in recovering the costs of extending quality zone is usually a township. and improving water supply and sewer networks servicing WaterTight Western Water’s residential home audit and retrofitting new developments. program targeting households using more than 155 litres per person per day.
Western Water annual REPORT 2009/10 97 Mailing address Western Water PO Box 2371 Sunbury DC VIC 3429
Visit us at 36 Macedon Street, Sunbury Hours 8.15am – 5pm
Website www.westernwater.com.au Email [email protected]
Telephone 1300 650 425 Mobile phone and interstate callers 03 9218 5400 Facsimile 03 9218 5444
© State of Victoria, Western Region Water Corporation (Western Water) 2010. This publication is copyright. No part may be reproduced by any process except in accordance with the provisions of the Copyright Act 1968.
Additional Copies Copies of this report are available from:
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