Covers new2 3/11/06 10:04 AM Page 1 ed Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2 rray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limi ual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Mu rigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Irrigation Limited Annual Report 2006 Murray Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report Annual Report 2006 Murray Irrigation Limited Annua ed Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report. . 2006. . Murray. . .Irrigation. . . Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2 rray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation. . . Limited Annual Report 2006. Murray. Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limi ...... ual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual. Report 2006 Murray Irrigation Limited Annual Report. 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Mu . . rigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Irrigation Limited Annual Report 2006 Murray Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006. . Murray Irrigation Limited Annual Report Annual Report 2006 Murray Irrigation Limited Annua ed Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006. Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2 . . rray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual. Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limi ual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation. Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Mu . rigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Irrigation Limited Annual Report 2006 Murray Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation. Limited Annual Report Annual Report 2006 Murray Irrigation Limited Annua . ed Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation. M Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2 . u rray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006r Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limi . r ual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited. Annuala Report 2006 Murray Irrigation Limited Annual Report 2006 Mu . y rigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Irrigation Limited Annual Report 2006 Murray Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited. AnnualIr Report Annual Report 2006 Murray Irrigation Limited Annua . r ed Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limitedi gAnnual Report 2006 Murray Irrigation Limited Annual Report 2 . a rray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray. Irrigationti Limited Annual Report 2006 Murray Irrigation Limi . on ual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report. 2006 Murray Irrigation Limited Annual Report 2006 Mu . Lim rigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Irrigation Limited Annual Report 2006 Murray Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report. Annuali Report 2006 Murray Irrigation Limited Annua . . ted OUR VISION: . An 06 . . . nual Report 20 . . Murray Irrigation is recognised as a leader of the irrigation ...... sector in .

OUR MISSION: Manage and maintain Murray Irrigation’s share of the ’s water to support shareholders’ needs;

Operate the most efficient, accountable and responsive irrigation company in Australia;

Meet best practice in customer service and shareholder engagement;

Promote viable and informed shareholder customers in a thriving regional community;

Be proactive in the development and implementation of policies to improve natural resources.

MURRAY IRRIGATION LIMITED A.B.N. 23 067 197 933 MURRAY IRRIGATION LIMITED Peter Merritt

Menindee Lakes

Menindee Weir 32

Area of operations ...... 748,000ha

r e

v i Population R ...... 33,000 including adjacent service towns

g

n

i

l

r a

D Landholdings supplied...... 2,412

Offices ...... , Finley,

Depots ...... Deniliquin, Finley,Wakool,

Water entitlements...... 1,494,312 entitlements from the NSW Murray Regulated River resource

Supply system ...... 2,956km gravity fed earthen channel

Stormwater system...... 1,425km gravity fed earthen channels

Lake Victoria Wentworth

Mildura

bidgee Riv Murrum er Hay

M ur ray River

Bil Moulamein lab on g C re E ek dw W a a r k d o Ri o ve l r R iv er VICTORIA Wakool Deniliquin

Barham Finley Berrigan

Mathoura

Mulwala

ISBN: 0 9802998 0 2 Echuca Copyright 2006

Murray Irrigation Limited Shepparton Registered Office; 443 Charlotte St Deniliquin. PO Box 528 Deniliquin NSW 2710. Telephone 03 5898 3300,fax 03 5898 3301 Website: www.murrayirrigation.com.au ABN: 23 067 197 933 ...... contents . . . . . About this report ...... 2 . . 2005/06 performance ...... 3 . . Our year in review...... 4 . . Chairman’s report ...... 6 . General Manager’s report ...... 8 . . Strategic direction ...... 10 . Management structure...... 12 . . Delivering water ...... 14 Murray Irrigation Limited is Australia’s largest private irrigation . . Commitment to service (15), Delivering water (16), company supplying water to more than 1,600 family farm . Case study: High flow meters (21), Price of water (22), . Challenges (23) businesses in southern NSW.Food is the focus of regional . Managing. . assets...... 24 production including rice, wheat and other cereals, canola, maize, Maintaining. asset integrity (25), Capital. works program (26), tomatoes, potatoes, onions, milk, beef and lamb. . . Maintaining our. infrastructure. (28), Challenges (29),. . . Case Study:Work to refurbish. . . The. Drop. . (29). . . Irrigated agriculture is the foundation of the social and economic Growing our business ...... 30 wellbeing of our towns and businesses; water is a significant Managing income risk (31), Diversifying our investments (32),Water trading (34), part of the region’s capacity to prosper and thrive through High value water use (36), Challenges (37), variable climatic conditions. We strive to operate the most Case Study: Room for growth (37) Engaging with stakeholders...... 38 efficient, accountable and responsive irrigation company possible, Better informed responses (39), Contributing to water maximising the water available for productive use. policy (41), Case study:A new Constitution (43), Industry and community stakeholders (44), Customers and shareholders (47), Challenges (49), We are also committed to our stewardship of this important Case Study: Surveying customer satisfaction (49) part of the Murray Darling Basin. Working with government Protecting our environment ...... 50 and irrigators, through the Murray Land and Water Management Our commitment to the environment (51), Company environmental management (52), Plans, we are investing in on-ground works, education and Case study: Salinity success at Green Gully (55), Murray Land and Water Management Plans (59), awareness, to better manage our natural resources and protect the Case Study: Survey shows wildlife diversity (62), Murray River. Challenges (63) Our company culture...... 64 Our people (65), Our workplace (66), Case study: Speaking of safety (69), Resource use and reuse (72), Case study: Recycling phones for Water Aid (74), Corporate governance (75), Our Directors (76), Challenges (80) Directors’ report...... 81 Financial statements ...... 84 Director’s declaration...... 106 S.A Auditor’s independence declaration ...... 106 MIL Location N.S.W. Independent audit report...... 107 SYDNEY Hume Reservoir GRI index ...... 108 CANBERRA Accuracy and independence...... 110 VIC. MELBOURNE Glossary ...... 111 Dartmouth Reservoir Abbreviations ...... 112 LEGEND Murray Irrigation Ltd Company directory ...... Inside back cover about this report

Our 2006 Annual Report report is available from our website. The financial statements for 2005/06 represents a major effort to improve Throughout this document we have and 2004/05 in this report have been our reporting and increase our indicated where further information prepared in accordance with the new accountability to our shareholders is available from our website, Australian International Accounting and stakeholders. It builds on the www.murrayirrigation.com.au. Standards in order to provide a fair company’s 2004 Environment comparison between years and are not Report and 2005 Sustainability Report Boundaries directly comparable with financial Report, which were prepared as information in last year’s report. We report extensively on operations companion documents to the Annual over which we have legal ownership Report in these years. This year we Reporting Period and direct control, including all sites have combined the reports to provide owned and operated by the company. The company reports on different shareholders and other stakeholders Limited information is provided issues using four different time with a comprehensive evaluation of about business partnerships and periods, as required by our various our broader performance and the joint ventures where we are not funding and regulatory agencies. issues affecting the company. The the controlling authority. Where These are detailed in the table below. format of the 2006 Annual Report information is available we report on Throughout the report we attempt aligns with the our new 2006 ~ 2011 the end use and impacts of the water to identify which of the following Strategic Plan.We are developing we supply for irrigation.This can be reporting periods applies to the performance indicators to better influenced in part by the company’s various data presented. measure our performance, and policies and extension practices, but is encouraging greater integration and subject to the decisions of individual Feedback efficiency across our businesses. irrigators. Information is also provided Annual performance must be viewed Your comments on this report on the upstream and downstream in the context of decisions which are important to us and we have impacts and influences on our affect the long term operation and provided a reply paid feedback irrigation operations. viability of the company as well as form which you can mail to us, the health and productivity of our There were no significant changes or fax back on (03) 5898 3301. region. to the company’s assets and operations For more information or to provide in the past year.A new Company further comment please contact The report uses the Global Constitution adopted in January 2006 Jenny McLeod, Environment & Reporting Initiative’s (GRI) 2002 removed previous restrictions on Communication Manager, Sustainability Reporting Guidelines ownership of Murray Irrigation Murray Irrigation Limited and the Department of Environment Limited Water Entitlements, in P.O. Box 528 Deniliquin NSW 2710, and Heritage Environmental compliance with the National Water telephone (03) 5898 3300, e-mail Reporting Guidelines to report on Initiative (NWI). [email protected]. our economic, environmental, and social performance. For further information about GRI visit www.globalreporting.org.An index Murray Irrigation Reporting Periods of GRI indicators we have reported Murray Irrigation financial year August 1 to July 31 on is on pages 108 to 109. Murray Irrigation also prepares an Irrigation season August 15 to May 15 annual Compliance Report which Water quality and stormwater monitoring Winter: June 1 to August 31 provides detailed information on our Spring: September 1 to December 31 performance in relation to our Summer/Autumn: January 1 to May 31 Environment Protection and Water Murray LWMPs July 1 to June 30 Management Works Licences.This

2 Murray Irrigation Limited Annual Report 2006 2005/06 performance

2005/06 2004/05 4% 4% Licence compliance 5% Water Management Works Licence ✓✓ 6% Environment Protection Licence ✓✓ Operating Licence ✓✓ 58% 23% Financial Irrigation revenue $30.7 M $24.8M Expenditure $31.4M $25.3M Profit (loss) from irrigation $(0.7M) $(0.5M) Total revenue $45.1M $35.4M Water Charges 58% Net Profit (loss) $8.3M $6.3M Govt. Funding – Infrastructure 23% Average price per ML delivered $27.52 $34.26 LWMP Funding – Govt. & Irrigators 6% Interest 5% Water Miscellaneous – Rents and Charges 4% Murray Irrigation allocation 56% 42% MILCast External Revenue 4% Delivered on farm 985,038ML 651,240ML Delivery efficiency 83.6% 78% Revenue: Operating Revenue 1/8/2005 – 31/7/2006 Environment Government LWMP expenditure $7.6M $8.5M Landholder LWMP expenditure $5.7M $5.0M

OH&S 7% Lost time injury frequency rate 40.3 29.2 8% Accident severity rate 93 23 26% Lost time injuries 10 7 17%

120,000 22% 20% March 0-2m August 0-2m

100,000 Wages & Salaries 26% Depreciation 22% State Charges 20%

80,000 Contractors & Consultants 17% Materials & Chemicals 8% Plant & Vehicles 7% Hectares 60,000 Expenditure: Expenditure 1/8/2005 – 31/7/2006

40,000

20,000

0 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997

Watertables: Area of land affected by watertables within 2m of the surface since 1997.

Murray Irrigation Limited Annual Report 2006 3 ...... chairman’s report ...... Welcome to this, my first report as director for four years and . Murray Irrigation Chairman, and became a strong and forthright . . . our first annual report incorporating member of the board. I thank Bill, . . sustainability reporting guidelines. Barry and Ian for their time, effort . . and dedication to their roles at . . . . Following the 2005 board elections ...... Murray Irrigation and wish them and subsequent change to the well in the future. number of external directors we and state governments, environment now have four new faces at the board groups and from irrigators wanting to National Water Initiative table. Irrigators Malcolm Holm and sell their water entitlements and leave Leigh Chappell were elected to the The implementation of the National the industry. The fees are also the Board, and are joined by appointed Water Initiative (NWI) required the subject of an Australian Consumer and external directors Tony Read and company to make constitutional Competition Commission (ACCC) David Hunter. Leigh Chappell changes in the past year which have review. We believe exit fees are a far was elected from the West Berriquin opened the business to external water less traumatic and more equitable region. Malcolm was elected from trade. Shares in the company and method of limiting the adverse the East Berriquin district and is water entitlements have been separated impacts of permanent water trade the first active dairy farmer on the and rules which restricted trading of than the alternative access or land- board.Tony Read is an engineer from entitlements have been removed. based fees being imposed in Victoria. Our shareholders can now sell their Adelaide and David Hunter comes Federal and state governments, Murray Irrigation entitlements to from Sydney, with a background in environmental trusts and managed other shareholders or to buyers who business management and investment schemes are all looking do not own land.They can also keep accountancy. to buy permanent water entitlements. their entitlements if they sell their I welcome these new directors and property and cease to be shareholders look forward to their contribution Strategic Direction in the company. around the board table. I am sure The real challenge for us as a business they will find the experience both Murray Irrigation has strongly is to keep as much water as possible challenging and rewarding. advocated retail tagging and exit fees in productive use within our area to facilitate trade and to reduce the of operations.This is among the issues I would like to record a sincere vote third party impacts of water at the heart of the company’s new of thanks to the retiring directors. entitlements permanently traded from strategic plan which evolved from a Bill Hetherington was chairman of the district. Both are provided for review of our business plan during the board for the past 10 years. Bill within the NWI. It has been the year.The 2006 ~ 2011 Strategic has been and remains a passionate heartening to have state governments Plan was officially adopted in May; advocate, not just for Murray agree to allow retail and valley based a summary of the key strategies Irrigation, but for the whole NSW water tagging to maintain the designed to take the company forward Murray Valley and for irrigation in security characteristics of entitlements are outlined on page 10. general. Melbourne based engineer regardless of who owns them or Barry Ireland was a board member The cost effective delivery of water where the water is actually used. and chairman of the board’s to our customers remains the primary infrastructure committee for 10 years. Our exit fees, however, are coming focus of the company. Investment in Ian Gillett from Jerilderie was a under sustained attack from federal new business opportunities to

6 Murray Irrigation Limited Annual Report 2006 chairmans’ report

generate alternative sources of income Outlook and the wider community to deal and the rationalisation of assets to As I write this report the 2006/07 with. In short, irrigators and their reduce long term maintenance and season outlook is very bleak with water entitlements are being solely operational costs will also be a zero general security allocation. and unfairly targeted as the cause and important going forward. Substantial rainfall in the catchment solution to all the river’s problems. A significant unresolved issue from is required to provide even a basic To all involved in our local irrigation the past year is the payment of $9 allocation for the season.The communities I congratulate you on million tax imposed on government company and individual irrigators your resilience in such tough times. contributions to the Murray Land and are already planning drought strategies As chairman, and as an irrigator myself, Water Management Plans (LWMPs). in the event that spring rains are very I thank all Murray Irrigation staff for Negotiations have continued with low and run-off into our storages their efforts throughout the year. In the Australian Taxation Office and continues at very low levels. times of scarce resources it is easy to the Commonwealth Government At a time when all irrigators and be critical. However the customer and a final decision is expected by the rural communities they support satisfaction survey undertaken earlier the end of 2006. are under enormous pressure due this year has highlighted widespread to the prolonged drought there is appreciaton for the job being done 2005/06 Performance an increasing regional frustration. by staff.Well done one and all. With significant carryover and a Governments and the wider I thank my fellow directors, final allocation of 56% in 2005/06, community seem to be intent on management and all company staff for the season was substantially better taking the soft option of simply their support and commitment than the previous three years. Our buying or taking back irrigators’ during the year. operating profit was in the order water entitlements for environmental of $1.8 million before the write-off purposes. of nine large de-commissioned items of infrastructure.This brought our The report The Science Behind the result from irrigation operations Living Murray identified 23 issues back to a $0.7 million loss. affecting the health of the Murray River. Only seven of these issues This year’s LWMP incentive uptake related to the volumes of water in the Stewart Ellis for on-farm works of $5.1 million river. Many of the others, it appears, Chairman (up from $4.5 million) reflects a are “too difficult” for governments 27th October, 2006. remarkable irrigator resilience given the prolonged drought sequence we are in. Government funding for both LWMP initiatives and asset renewal works will end in four years and the business is striving to achieve the maximum results with the remaining funds. It is with sadness I report an horrific accident involving two company vehicles on March 10, 2006, which claimed the lives of two Wakool based employees and seriously injured another. On behalf of directors, management and staff, I extend sincere condolences to the families of those killed,Allan Murray of Barham and Adrian Tatchell of Moulamein, and wish a speedy recovery for the third staff member involved, Ken Lake.The Murray Irrigation Limited Board of Directors. Back, from left, Michael O’Callaghan, David Hunter, safety and welfare of staff are of prime Max Goudie, Leigh Chappell, Anthony Read, Malcolm Holm, Daniel Liphuyzen; front, from left: importance to the company. Kelvin Baxter, Gordon Ball (Deputy Chairman), Stewart Ellis (Chairman), Alexandra Anthony.

Murray Irrigation Limited Annual Report 2006 7 ...... general manager’s report ...... Last year was a better one for as a result of high volumes carried . irrigators and for Murray Irrigation, for State Water requires some . . in contrast to the difficult seasons consideration in coming years. . . since 2002/03. Climatic conditions . . Communication . . for irrigated cropping were good...... Our engagement with stakeholders . . . The allocation was boosted by water and landholder groups, particularly carried over from the previous year, Southern Irrigators (SRI), significant annual trade into the IPART intensified last year, as we developed region and an advance on future a new constitution for the company, State charges represent a large and water allocations from Snowy Hydro in order to comply with the increasing portion of the total cost of Ltd, which was organised by National Water Initiative (NWI). operating Murray Irrigation.The SunRice. Spring rainfall also allowed The new constitution replaced our maximum charge for bulk water is NSW to repay 225,000ML of water original 1995 Memorandum and determined in NSW by the borrowed from the Barmah-Millewa Articles of Association and was Independent Pricing and Regulatory Forest account, most of which had adopted at the Extraordinary Tribunal (IPART).We made a been provided to our irrigators General Meeting on January 31, significant effort to address IPART’s during the previous three years. 2006.The new trading environment water pricing determination process and the separation of land and water in 2005/06. Engagement commenced Water deliveries entitlements present significant in November 2005 when submissions I commend staff on their hard work challenges for the company, but also opened to respond to proposals for a during the year which helped to provide new opportunities for 260% increase in Murray Valley water achieve a more favourable result for farmers to optimise their water and charges over the next four years.We the company. The efforts of water land assets separately. made two submissions, responded to distribution staff in running the supply five reports from consultants, and system as efficiently as possible Water trading made three face-to-face presentations provided a return to irrigators of an Our water exchange has again been to IPART.We also met with other additional 4% of allocation.This also busy, recognising the importance of irrigation corporations and water allowed for a healthy carryover into a fast, effective and responsive water industry bodies to discuss common the challenging 2006/07 year. A total exchange. Between August 2005 and issues and approaches. Murray of 985,038ML was delivered on farm May 2006 it traded 95,000ML of Irrigation and SRI also requested that with a delivery efficiency of almost temporary water with a total value irrigators write to IPART outlining 84%.The Canal continued of more than $4.3 million.The the impacts of large price increases on to play an important role in the wider exchange has become the market their businesses. river operations, delivering 245,165ML of choice for a number sellers and Extensive cost modelling, and a for downstream water users. Despite buyers and we are keen to increase its previous IPART determination had the enormous value to Murray share of the temporary trading market found that Murray Valley irrigators Irrigation of a full , the as the number of new exchanges and were already paying their share of increasing wear and tear on the canal water traders proliferate. river management costs. However, the

8 Murray Irrigation Limited Annual Report 2006 general manager’s report

draft determination released in July average. Efforts are already underway customer survey indicated they were 2006 indicated a price increase of to secure additional water and to “satisfied” or “very satisfied” with the 79% over four years and a reduction reduce costs where possible. service they received.The results of in the company’s long-held bulk both surveys provided a positive view discount.The proposed Murray Valley Energy of the company, although there increase included a very large portion While a gravity fed irrigation system remains room for improvement, of the NSW’s share of Murrray is extremely energy efficient, our fuel particularly in the eyes of customers Darling Basin Commission (MDBC) consumption and costs have in the areas of effective and efficient costs to the Murray Valley. Further continued to rise, with more than water supply system maintenance and submissions and arguments for a fairer one million litres of petrol and diesel weed control. distribution of these costs resulted in used in the past year.Although much a final determination in September of the increased fuel use relates to Board changes this year of a 23% increase over four improvements in plant operating I would like to reinforce the years plus annual CPI increases in hours, our vehicle policy is a priority chairman’s comments about retiring state government charges. for review. chairman Bill Hetherington, and directors Barry Ireland and Ian Water recovery Staff changes Gillett. I thank them for their During the course of the year it has We welcomed Aaron Drenovski as commitment to the company and also become clear that the Federal Works Manager during the year, their tireless efforts over many years. I Government is absolutely determined taking over the role from Russell also thank current directors and staff to provide the full 500,000ML Webb. Our Policy Manager Jenny for their continuing support. I committed to the Living Murray McLeod has also expanded her congratulate Stewart Ellis on his Initiative.The company has submitted responsibilities to include those of election by the board as chairman three water recovery projects to the Environment Manager following the and I am confident I represent the Water Smart Australia program.We departure of Alex Marshall. staff at Murray Irrigation in looking remain committed to finding water forward to working with him As with many other rural employers, saving for the environment through through the challenges ahead. investment in infrastructure rather it is a challenge to attract professional I welcome our four new directors, than having governments enter the staff to the area.The calibre of who have already made a water market. applicants for vacancies in works and distribution has been high and considerable contribution.With the We have accelerated our program to existing staff continue to develop change of directors we extended the replace drop bar regulator structures their skills and expand their roles planning process for our new strategic with aluminium gates to improve with new responsibilities. However plan to ensure their views and control of water, minimise losses and attracting and retaining professional experiences were included. I believe reduce an obvious occupational staff to the Riverina, particularly in the additional viewpoints have made health and safety risk.The new gates engineering, and related disciplines, it a much better strategy. It will be a are an essential first step in the move has been difficult. challenge now to implement this plan towards remote monitoring and which is focused on long term control of the supply system, although It was obviously a terrible shock to outcomes while struggling with our it may be many years before the everyone at Murray Irrigation when day to day activities shaped by an company can take advantage of the two well regarded staff were killed in increasingly severe drought. service and water efficiency improve- a tragic accident near Bunnaloo on ments of a fully automated system. March 10, 2006.The company continues to make all possible effort The dry winter allowed our off-season to ensure the safety of our employees. works program to be completed on time, but has done nothing to allay Feedback on performance our fears of ongoing drought. Both We conducted our first staff satisfaction George Warne autumn and winter rain has failed and survey and an independent customer General Manager, at the time of writing it appears that service survey in 2006. More than 27th October, 2006. spring rain will also be well below 80% of irrigators responding to the

Murray Irrigation Limited Annual Report 2006 9 ...... strategic direction ...... In February 2005 our board of • Further amalgamation of . directors held a foresighting farms, with the growth of a . . . workshop to identify the key number of much larger units. . . challenges facing the company. This will impact on our local . . communities, changing our . . . . Following this workshop, over a six ...... customer profile and our water month period during 2005/06, senior demand profile. staff and directors began preparing a new five year business plan. The • The end of government funding political and business environment for the Murray Land and Water Commission (ACCC) which is we now face is vastly different to Management Plans in 2010 will reviewing exit fees on permanent the one in which the company was result in a significant slow down trading of water entitlements. founded in 1995.This has required in the development of farms to The 2006 ~ 2011 Strategic Plan is us to seriously rethink our traditional improve water efficiency. a dynamic document which will be assumptions and operations in order • Loss of key staff to other regional reviewed annually in the light of to ensure our continued viability. bodies, particularly government performance, new opportunities and agencies which pay higher wages, The 2006 ~2011 Strategic Plan is changes to the company’s operating could undermine the company’s the result of this work and it clearly environment and assumptions. ability to deliver services. outlines our aims and objectives Summary of key strategies going forward, and the underlying Assumptions reasoning behind our strategies. This summary highlights the six key Three key assumptions underpin strategies that are at the core of that Our challenges our strategic plan. plan. Key issues affecting the future of our 1. Murray Irrigation is and will 1. Providing water services at the business include the following: remain a break-even business for lowest sustainable cost remains core water supply and stormwater • Increased bulk water charges from the key objective of the company. services. State Water resulting in higher 1.1 Delivering water efficiently 2. Climate change will not impact water charges for Murray We will continue to maximise our on catchment yield and available Irrigation’s customers. water delivery efficiency through resources to reduce announced • End of the government ‘dowry’ investment in our staff, technology, allocations below 60%. funding in 2010 for the and infrastructure and maintenance refurbishment of assets means a 3. Permanent water trading programs. reduction in our infrastructure arrangements introduced by 1.2 Controlling costs renewal and maintenance program. Murray Irrigation in 2005/06 are accepted by the National We will exercise tight control over • Competition for Murray Water Commission. our manageable business costs, and Irrigation’s water from other campaign strongly to minimise the irrigators and the environment This last assumption is already impact of government water charges will challenge the viability of under challenge from the Australian on our business and customers. the region. Competition and Consumer

10 Murray Irrigation Limited Annual Report 2006 strategic direction

1.3 Ancillary businesses Any company investment in these enhance the environmental flows We will minimise revenue risk by projects needs to be recovered at and ecosystem values of regional investing in ancillary businesses that commercial rates. waterways and wetlands. offset the price of water to customers. 4. We will seek to influence 5.2 Land and Water Management Plans 2. We will implement a water related policy and We will develop strategies to maintain commercially sound asset strengthen our relationships government natural resource funding management strategy based on with water industry stakeholders, to improve on-farm and regional optimal asset maintenance and particularly our customers. water management efficiency, to replacement to ensure customers 4.1 Maintaining access to water promote the region’s health and receive the current or improved sustainability. We will invest in and actively engage water supply service. in lobbying and communication with 6. We will be a well regarded 2.1 Asset replacement and refurbishment stakeholders, including government, employer in our community, We will manage asset renewal reserves to maintain our access to the NSW with a commitment to continuous to ensure sufficient funds are available water resource. improvement and best practice in to maintain the structural integrity and corporate governance. 4.2 Participation in policy development supply capacity of infrastructure in the 6.1 Staff and company structure long term, once government funding We will seek opportunities to We will manage the business to attract, for asset renewal ends in 2010. contribute to the development of new water related policy and will motivate and retain the high quality 2.2 Asset rationalisation invest in research and evidence to staff needed to deliver the services to We will explore every opportunity support our contributions. We will customers and shareholders identified to rationalise assets and develop increase our involvement in industry in this plan. incentives which will encourage alliances, associations and partnerships, Our company structure will landholders to do the same where particularly the NSW Irrigators’ deliver continuous improvement benefits will accrue to both parties. Council. of existing business operations and implementation of the business plan. 3. We will grow and diversify 4.3 Responding to our customers our water business and support We will improve our relationship 6.2 Corporate governance the growth and diversification of with customers and shareholders We will review the company’s our shareholders’ businesses. through a better understanding of board structure and recommend 3.1 Diversifying water and trading services the key needs and drivers of their changes to shareholders which will provide the most responsive and We will develop alternative water businesses which will help guide efficient board of directors. services to meet the needs of our the provision of information services customers, above and below the and the development of new services We will review the effective current service standards.These new or products. performance of board members and senior management and work services need to be fully cost reflective. 5. We will continue our efforts to continue to improve directorship We will maintain and grow a to maintain and enhance regional and management of the company. water trading platform.We will environmental values. create alternative water products to 5.1 Minimising environmental impacts enhance shareholder viability, attract new customers and protect our We will minimise the adverse impact business revenue. of irrigation on the environment from the operation of our infrastructure. 3.2 High value water use Through policy and extension we will We will encourage the development encourage and support the efforts of George Warne of high value businesses, and a more irrigators to minimise the impacts of General Manager, productive and diverse agricultural irrigation on-farm. 27th October, 2006. base. We will build a partnership We will encourage projects and with the Murray Catchment investments that attract water and Management Authority to promote expand our area of operations. water savings that can be used to

Murray Irrigation Limited Annual Report 2006 11 George Warne GENERAL MANAGER B. Building, Director AWMA Pty Ltd Member AICD management structure

Dean Stubley Jenny McLeod Peter Keyte Marty Sammon MANAGER FINANCE MANAGER ENVIRONMENT MANAGER MILCAST MANAGER BUSINESS AND COMMUNICATION DEVELOPMENT UNIT (Part time contract postion)

Dean Stubley stakeholders. It is also responsible of other customers. It is a fully Manager Finance for the company’s role as the imple- owned subsidiary of Murray Irrigation B. Business ACC, CPA mentation authority for the Murray Limited and is a Quality Assured Land and Water Management Plans business in its own right. The Finance division oversees (LWMPs).The plans provide For more information visit financial reporting, accounts incentives and extension services, www.murrayirrigation.com.au/fpcp/. receivable, accounts payable and encouraging farmers to adopt (Growing our business, p30). management of the company’s best water and natural resource reserves and other investments. management on farm. (Protecting Marty Sammon Finance manages invoicing for more our environment, p50). Manager Business Development than 1,600 customers for water sales, Unit (BDU) with total income from irrigation The Communication division is B. Commerce, Fellow ICA, Member varying between $33.5 million to responsible for developing IMC,AIAST,Managing Director of $50 million, depending on water information and company responses AgriDNA, Licensed Wholesale availability. Irrigation income is the for a range of stakeholders, from Agricultural Investment Scheme Advisor. company’s largest source of income, federal and state governments and followed by government funding in their agencies to local government, The BDU works at an industry and the order of $12 million a year. landholder groups and customers. individual level to provide support Annual turnover varies from $40 Regular information services and services which will attract new million to $65 million (Financial feedback opportunities include our investment and encourage production statements, p84). weekly Talking Water faxstream, with higher value water use.This shareholder and industry information includes evaluation of water require- Jenny McLeod meetings, other company publications ments, the development of new water Manager Environment and and information resources and instruments, sourcing finance, and Communication shareholder focus group. (Engaging addressing investment barriers. It also B Ag. Science (Hons), stakeholders p38) helps to identify and evaluate new MA Organisational Communication opportunities for our own investment, Peter Keyte according to pre-determined The Environment division manages investment criteria. (Growing our our environmental reporting, Manager MILCast business, p30). compliance with Water Management B.Ag Science, MBA, Member AICD Works and Environment Protection MILCast manufactures and supplies David Watts Licences, the development and water related precast concrete Manager Water Distribution implementation of company water structures to irrigation supply use and drainage policies, and companies, including Murray The Distribution division delivers proactive environmental initiatives Irrigation, individual irrigators, water for irrigation to 2,412 in conjunction with other construction contractors and a range landholdings during the irrigation

12 Murray Irrigation Limited Annual Report 2006 corporate structure

Warren Elsbury CORPORATE GROUP VISION: COMPANY SECRETARY AND Prosperous shareholders, dedicated professional staff and a respected DEPUTY GENERAL irrigation community MANAGER • Achieve secure access to a fair share of the Murray River’s Waters. Dip. Bus. Fellow ICS, • Operate the most efficient, accountable and responsive irrigation Member AICD company in Australia. • Support prosperous shareholders and a thriving regional community.

David Watts Evangel Aseervatham Peter Knill Aaron Drenovski Andrew Lelliott MANAGER WATER MANAGER ENGINEERING MANAGER MECHANICAL MANAGER WORKS MANAGER SERVICES DISTRIBUTION ENGINEERING

season from August to May, according drainage construction funded through repairs when our capacity to supply to orders placed via the company’s the Murray LWMPs. Engineering or our water efficiency is jeopardised. IVR water ordering system.There staff also co-ordinate and oversee Programmed maintenance include is a lead time of up to four days for construction contracts for these works weed control and desilting to water orders and a once a day service which total $10 million a year. maintain channel flows, bank building for changes to orders.This requires (Managing assets, p24). and grading to maintain channel co-ordinating channel flows of up to access, rock and rock beaching to more than 12,500ML a day through Peter Knill prevent erosion.Works staff also 1,798 channel regulators and almost Manager Mechanical Engineering carry out minor construction work 5,000 water supply outlets.Water B. Sc. Engineering, Member IEA,ASCE involving company infrastructure, meters are read weekly.We use our The Mechanical Engineering division such as installation of new stock and supply system to redirect river flows is responsible for the roll out of new domestic water supply pipes. around the Barmah-Millewa Choke regulator gates within the supply (Managing assets, p24). for State Water, to meet demand for system.Work includes design manage- Andrew Lelliott down-stream water users.We also ment, co-ordinating and supervising Manager Services provide high security water for the construction work and co-ordinating B Business,ACCT, Cert. EE,ASA towns of Berrigan, Finley,Wakool and operation and maintenance issues the village of Bunnaloo. (Delivering with water distribution staff. The The Services division manages water, p14). operation and maintenance of the company properties including our Evangel Aseervatham Wakool Tullakool Subsurface offices in Deniliquin, Finley and Wakool and depots in Deniliquin, Manager Engineering Drainage Scheme, with its 54 Finley,Wakool, and Moulamein. B. Sc (Hons), Fellow IEA, groundwater pumps and 115kms We currently employ 137 staff and Member ASCE, CPE of subsurface piping, also falls to Services manages recruitment, The Engineering division co- mechanical engineering staff. payroll, training and OH&S issues. ordinates efforts to preserve the (Managing assets, p24). Fleet management, stores, contract structural and design integrity of our Aaron Drenovski management, reception, records, water gravity fed earthen channel system exchange, and the company’s share and structures.This includes 2,956kms Manager Works register are all within this area of the of supply channel and 1,425kms of B. Civil Engineering, B. Business, business. Murray Irrigation is a stormwater escapes, and a total of MBA Quality Assurance ISO9001 and almost 25,000 structures with a The Works division manages urgent Occupational Health and Safety replacement value of more than $500 and routine maintenance of the AS/NZS4801 accredited company. million. It includes preparation of irrigation supply and stormwater (Company culture, p64). designs for company refurbishment system.They respond to urgent and replacement works and major request for channel or regulator

Murray Irrigation Limited Annual Report 2006 13 ...... delivering water ......

Our core business is providing efficient irrigation supply services which maximise water available for productive use.

14 Murray Irrigation Limited Annual Report 2006 delivering water

Commitment to service Information about the company’s relevant in measuring the efforts to develop alternative income performance of our water services. The provision of a water supply streams to offset the water price and Targets have been established for the service is the core activity of the low water sales is provided on page first two indicators below. It has been company, all other business activities 32. Efforts to develop additional more difficult to quantify the water stem from this key function. water services and to facilitate water price target of the “lowest sustainable Providing services to customers at trading are on pages 34-35. cost”, given that we cannot control all the lowest sustainable cost remains elements of the water price - annual In this section, and in each of the our key objective. Our strategies to allocations and state government following sections, we have identified manage the water supply service to charges in particular. customers are: key performance indicators to help monitor our performance. Some • Deliver water as efficiently as indicators have guided our operations possible; over many years. Others have been • Control costs and related impacts developed this year in conjunction on the company’s water price; and with our new strategic plan, and data • Develop alternative income on these indicators may be limited. sources to offset water price rises. We recognise that setting targets will help us to more effectively evaluate This section addresses water availability our performance. However in some and the performance of our water instances throughout this report we delivery services. It discusses initiatives have simply reported against we are undertaking to improve our indicators, as targets and reporting supply efficiency and reduce the processes are still being developed. environmental impact of irrigation Channel attendants use flow supply. It also addresses issues affecting The indicators below are those we meters to calculate the adjustments the price of water. have identified as being the most needed to channel flows.

Performance indicators

Performance

2005/06 2004/05 2003/04 2002/03 2001/02

Murray Irrigation’s announced allocation to be 83% of the announced Murray Valley allocation. 87% 85% 83% 84% 82% Continuing focus on reducing escape losses resulted in a 4% efficiency bonus returned to irrigators as allocation

Deliver 100% of water orders within four days of orders being activated. 99.9% 99.3% N/A N/A N/A Of the 52,982 orders placed only 73 were not met within four days

Water sales as % of entitlements 66% 43.5% 44% 26% 83% – Water price per megalitre $22.57 $20.60 $20.09 $15.60 $14.55 – Average price per megalitre delivered on farm $27.52 $34.26 $31.99 $35.96 $15.49 While the water price increased 9.5%, increased sales reduced the average price per megalitre delivered

N/A - Data not available *A Murray Irrigation allocation of 83% is equivalent to a NSW Murray Valley allocation of 100%.

Opposite page, top: Channel attendant Steve O’Brien adjusts a new channel regulator gate to deliver water to downstream irrigators. Centre: An original structure, removing a drop bar to alter flows. Bottom: SunRice negotiated an advance of water from future allocations to increase the 2005/06 rice crop.

Murray Irrigation Limited Annual Report 2006 15 Delivering water Our access to water Murray Irrigation announced a Under new licensing arrangements general security allocation of 56% for Murray Irrigation is the largest user introduced with the NSW Water customers, (42% in 2004/05). Given of water along the Murray River Management Amendment Act in the relatively insignificant number of in NSW.We take water from 2004, Murray Irrigation has five high security entitlements the government operated infrastructure NSW Murray Regulated River Water company holds, our primary focus is through our open, gravity fed channel Access Licences, detailed in table 1.1. on general security water entitlements system to deliver stock and domestic and allocations. and town water supplies along with In 2005/06 the company’s total In the 2005/06 irrigation season we water for irrigation. In 2005/06 we licenced entitlements (excluding our delivered 985,038ML, with water announced an allocation of 56% for Supplementary Licence) were reduced available from general and high our irrigators. by 1,362 entitlements to 1,494,312 as a result of transfers from our licence. security allocations, carryover, We are committed to delivering There has been some interest in supplementary water, transfers into water as efficiently as possible while converting general security entitle- the region and water made available maintaining the current service ments to high security entitlements, through the 2005/06 Snowy advance. levels to our customers and with an increase in the NSW Murray This was a significant improvement minimising the environmental Valley conversion ratio from 1:0.5 to on deliveries the previous year, which impacts of operating our irrigation 1:0.6. However no conversions have totalled 651,240ML. Figures 1.1 and supply system. Our significant water yet been processed and there were no 1.2 provide a comparison of water use has both immediate and long other changes to the company’s sources contributing to the available term implications for the Murray licences.A discussion about recent resource in 2005/06 and 2004/05. River and surrounding environment. changes to water entitlement Carryover Improving supply efficiency enables ownership and trading is on page 35. the company and customers to In addition to allocation, irrigators maximise the productivity from the Water availability in 2005/06 carried over 210,157ML into the water diverted. Investments by Water availability improved this year 2005/06 season.This was a record irrigators and the company in new over the previous year. The 2005/06 volume of water carried over. technology continue to improve our irrigation season opened with a full Our recent experience indicates that efficiency. We also work closely allocation for NSW Murray Valley irrigators are carrying over larger with state agencies to minimise high security licences and zero amounts, to improve the security for other impacts of irrigation allocation for NSW Murray general their allocation. operations and use our channel security. This increased steadily Differences between the unused network to assist with river because of good rainfall in the water at the end of one irrigation operations and deliver catchment during spring to reach season and water carried over into environmental allocations. 63% by the end of the season. the following season result from annual water trades which occur Table 1.1 between the end of the irrigation Murray Irrigation NSW Murray Regulated River Water Access Licences July 31, 2006 season and the close of intravalley and interstate water trading at the Total Murray Valley Licence type Entitlements (ML) Entitlements end of May. Adjustments also occur High Security town 3,170 when irrigators have more unused 234,000 water than they are permitted to High Security Irrigation 117 carry over. Prior to 2005/06 season Conveyance 300,000 *330,000 the Department of Natural Resources General Security 1,191,025 1,669,007 (DNR) also applied a 5% loss factor Supplementary 221,704 250,000 to carryover water. *Includes 30,000ML adaptive environmental allocation

16 Murray Irrigation Limited Annual Report 2006 delivering water

In July 2006 we increased the total Off allocation – supplementary water 2005/06 Resource volume of water which can be Off allocation water is additional to assigned to a landholding in our 4% irrigators’ annual allocations and comes 7% area of operations from 83% of from two sources.The first source is 7% entitlements to 90% of entitlements, from river flows which can occur as a including allocation and carryover. result of rainfall along unregulated 17% This brings us into line with the tributaries to the Murray River NSW Murray Water Sharing Plan. system. Following spring rain in the 65% There was no increase in the amount catchment surplus flows were offered of carryover permitted, which remains to irrigators as supplementary water at 41% of entitlements. for limited periods in September, Allocation 789,514ML October and November 2005.The Snowy advance Carryover 210,157ML second source of off allocation water Net transfers in 90,184ML On behalf of irrigators Murray comes from water remaining in our Snowy advance 90,879ML Irrigation also entered into a channels at the end of the irrigation Off allocation 49,469ML commercial arrangement with season. Combined, these sources of off Figure 1.1 Snowy Hydro Ltd and DNR for an allocation provided 49,469ML for Resource available for use on farm 2005/06 advance on future water allocations. irrigators compared to 46,803ML (announced allocation 56%) The advance is made from the the year before. annual commitment Snowy Hydro is Barmah-Millewa Borrow required to provide to Murray River 2004/05 Resource Last year we reported in detail on inflows, nominally 1,062,000ML, arrangements which had allowed and was negotiated by SunRice. 5% irrigators to borrow water from the 6% It was the second consecutive year Barmah-Millewa Forest Account 10% such an arrangement was made and which was established as part of the as such we limited the total amount Murray Darling Basin Commission of advance registered against 11% (MDBC) Agreement in 1994.This participating landholdings to 41% 68% borrow totalled 225,000ML at the of entitlements. Snowy Hydro advised start of the 2005/06 irrigation season. us in August 2005 that irrigators Good inflows into the storages in would not have to repay the 2004/05 spring allowed the borrow to be Allocation 583,256ML advance of 86,751ML in the 2005/06 repaid in full. In October the full sum Carryover 95,128ML season. In May 2006 Snowy Hydro of the forest account, totalling Snowy advance 86,751ML advised us that it would defer 450,000ML, was used to generate a Net transfers 47,898ML repayment of both advances until Off allocation 46,803ML three month flood in the Barmah- after the 2006/07 season. The Millewa Forest, on the Murray River Figure 1.2 2005/06 Snowy advance added between Tocumwal and Echuca. Resource available for use on farm 2004/05 90,879ML to the resource available (announced allocation 42%) to irrigators. Wetland watering Murray Irrigation’s channel system Temporary water trading was also used to deliver 2,431ML of Net transfers into the region continue an adaptive environmental allocation to be a significant contributor to managed by the NSW Murray annual water availability. This added Wetlands Working Group to water another 90,184ML, compared to wetlands on private property. Details 47,898ML the previous year. of this initiative are on page 58.

Murray Irrigation Limited Annual Report 2006 17 250,000 Deliveries for State Water programs are all contributing to When we have spare capacity in improved performance. our channel system we are able to The difference between the water we 200,000 divert flows for State Water (water divert and total water delivered on diverted for State Water includes farm is referred to as our losses and water required to meet NSW and our aim is to reduce these as much as River Murray Water commitments). 150,000 possible. Losses include water used Using our channel system effectively for channel filling and draining, meter increases NSW’s capacity to deliver inaccuracy, unrecorded usage, seepage Megalitres water to users downstream of the and escape flows. Some elements are 100,000 Barmah-Millewa choke, which has a relatively fixed, for instance the water daily limit of 8,500ML a day before required to fill channels each year. flows begin to flood out into the Barmah-Millewa Forest. It also Our target is to deliver water with an 50,000 reduces water travel times by up efficiency of 83% which equates to to six days, and decreases associated 0.17ML for every 1ML measured transmission losses such as onto farm. Table 1.2 below indicates DATA NOT AVAILABLE DATA NOT AVAILABLE DATA that the more water we deliver, 0 evaporation and seepage. In 2005/06 2005/06 2004/05 2003/042002/03 2001/02 we diverted 245,165ML for State whether it comes from allocation or Water, compared to 232,057ML the other sources, the more efficient our Figure 1.3 Volume diverted for State Water previous year (figure 1.3). overall performance becomes. Gross diversions referred to below include Work began this year to upgrade the water diverted for State Water and Pericoota Escape which will increase credited escape flows which are added our capacity to divert water through to the Murray River’s resource set for the Deniboota Main Canal into the other users; they are not part of the Murray River from 50ML/day to company’s resource use identified as 200ML/day. This will bring our total net diversions. capacity to divert water for the State from 2,950ML/day to 3,150ML/day. Managing escape losses The most manageable of our loss Delivering water efficiently elements are escape flows at the end The more efficiently we can deliver of channel systems which are not water, the more water we can make accredited. Our aim is reduce these to available for productive use. less than 4% of the company’s net Continuing investment in staff diversions and there have been training, new technology, significant reductions in these flows infrastructure and maintenance since this performance indicator

Table 1.2 Murray Irrigation diversions and delivery efficiency

2005/06 2004/05 2003/04 2002/03 2001/02

Gross diversions 1,642,345ML 1,284,693ML 1,225,616ML 1,094,415ML 1,940,124ML

Net diversions 1,177,898ML 834,784ML 855,675ML 529,329ML 1,509,902ML

Water delivered on farm 985,038ML 651,240ML 658,608ML 399,740ML 1,239,536ML

Losses 192,860ML 183,544ML 197,067ML 129,589ML 270,356ML

Efficiency 83.6% 78% 77% 76% 82%

18 Murray Irrigation Limited Annual Report 2006 delivering water

was introduced in 2003/04 (figure Four days notice is required for 3.5% 1.4).This is achieved by running water orders because our water is channels at the correct design regulated at Hume Weir 233kms 3.0% capacity, with just enough water to upstream (via the river) of our main meet daily deliveries. offtake at and it takes four days to reach our supply system. 2.5% This focus on reducing losses has Our planners and channel attendants enabled us to consistently meet our continue to work with irrigators to commitment to deliver 83% of the 2.0% increase awareness about the announced NSW Murray general importance of ordering water on security allocation to our customers. time and to reduce the number of 1.5% Improved performance in some years late orders, including stops. has resulted in a greater yield on entitlements. In 2005/06, 83% of the Channel attendants also work hard 1.0% state announced allocation to deliver the volumes of water represented a Murray Irrigation ordered on farm with an accuracy of 0.5% allocation of 52%.With efficiency ± 10% which we achieved this year. gains we were able to supply an Training and the growing experience DATA NOT AVAILABLE DATA NOT AVAILABLE DATA allocation of 56%. of new staff members is helping 0.0% 2005/06 2004/05 2003/04 2002/03 2001/02 to improve our performance in this

Ordering water area, along with infrastructure Figure 1.4 Given the large volumes of water improvements on the channel system. Escape losses as percentage of net diversions we divert for irrigation (up to The roll out of new mechanised gates 12,500ML/day) and the potential to to replace the traditional drop bar affect other water users as well as the structures has provided both a safer operation and health of the Murray workplace for channel attendants and 100% River, it is essential our bulk water greater control over channel flows orders are as accurate as possible. Our and on farm deliveries. Matching the aim is to ensure our advance orders requested delivery flows is important in with State Water match required helping irrigators plan their watering 90% diversions with an accuracy of 96% programs and meet crop requirements. or more.We are in daily contact with In October 2005 water planners State Water to adjust water orders and identified potential delivery problems 80% assist with river operations where as a result of an increase in rice possible.Timely ordering from plantings along the Mallan 1 channel irrigators helps us to place accurate in the Wakool district. Discussions 70% orders with State Water. Figure 1.5 were held with customers likely to shows the significant improvement in be affected to better co-ordinate the accuracy of our bulk ordering, water orders.As a result only minimal since the performance indicator was restrictions occurred.Works under- 60% introduced in 2002/03. taken in 2006 have since increased the capacity of the channel by 10%. On-farm deliveries No other delivery restrictions 50% The focus on reducing escape losses occurred as a result of normal 2005/06 2004/05 2003/04 2002/03 2001/02 has resulted in some orders taking operations during the season Figure 1.5: longer to supply, as there is no spare although the Mulwala Canal was Accuracy of bulk water orders placed with water in the channels. However, in operating at full capacity in January State Water 2005/06 we delivered 99.9% of water with a combination of irrigation orders within four days of orders demand and a commitment to divert being activated. flows for State Water.

Murray Irrigation Limited Annual Report 2006 19 Disruptions to supply to the region’s cap performance.The have sourced data from Goulburn- Two incidents during the year caused Valley has only exceeded the cap Murray Water’s offtake which is also minor disruptions to supply although target in one year, 2002/03 when on Lake Mulwala. Murray Irrigation negotiated a the impact on water deliveries was Blue-green algae in the supply system minimal. 180,000ML advance from Snowy Hydro. In most years, blue-green algae have Our Mulwala Canal offtake was not affected the Murray River closed for four hours following a Quality of irrigation water between the and Lake jetski accident at Lake Mulwala in We enjoy some of the best quality Mulwala. In 2005/06 blue-green January.The canal was operating at irrigation water in Australia with algae was detected in Lake Mulwala near capacity of 10,000ML a day at salinity levels ranging from 50-75EC at low levels and transferred through the time.This incident raised some in 2005/06.The median salinity of our supply system.This was, however, public safety issues which have been water diverted for irrigation from the well below predetermined alert levels addressed, including new signage and Murray River at Lake Mulwala, the and no action was required. buoys marking a boating free zone at company’s main supply point, was the offtake. 57EC (table 1.4). Other initiatives In a second incident a regulator gate Our water quality is measured against We are pursuing a number of other on the Mulwala Canal jammed shut other irrigation organisations through initiatives to improve our supply following an electrical problem, the ANCID industry benchmarks. efficiency. which resulted in water backing up, In 2004/05 the quality of water we These include research into an online with some overflow of the canal. supplied to irrigators compared well storage at The Drop regulator, which with those organisations participating Complying with the would allow us to provide water with in the program. It rated third overall. MDBC Cap on diversions less than four days notice, and would also help manage rainfall rejection In 1995 the Murray Darling Basin Internal changes within DNR mean flows in the river system.A feasibility Ministerial Council announced a cap it no longer records salinity at the study for this project was completed on diversions from the Murray River Mulwala Canal offtake.As a result we in July 2006.A funding proposal has at the 1993/94 level of development. been submitted to the Water Smart The cap is valley and state based; there Australia and the Living Murray is a cap for the NSW,the Victorian Table 1.4: Initiative program for this project, Murray and the South Australian Quality of Murray Irrigation supply water* (details page 42). Murray and includes all water SALINITY including unregulated flows. The complete mechanisation of our 2005/06 57EC Table 1.3 shows NSW Murray system and installation of high flow 2004/05 55EC diversions, (including diversions in meters to replace Dethridge outlets 2003/04 54EC unregulated streams) and the Cap to all farms, would also improve water target for that year.As the largest 2002/03 45EC delivery efficiency and control. water user in the NSW Murray Valley 2001/02 53EC Funding for this project is also being our diversions contribute significantly *Data sourced from Goulburn-Murray Water sought through Water Smart Australia.

Table 1.3: Murray Valley performance against MDBC Cap targets. (Source – MDBC)

2005/06 2004/5 2003/04 2002/03 2001/02 Murray Valley diversion cap target N/A 1,625,000 1,533,000ML 452,000ML 2,127,000ML

Total Murray Valley diversions N/A 1,241,000 1,311,000ML 879,000ML 2092,000ML

Total Murray Irrigation diversions 1,177,898ML 834,784ML 855,675ML 529,329ML 1,509,356ML

MIL diversions (% of Valley total) N/A 67% 65% 60% 72%

20 Murray Irrigation Limited Annual Report 2006 delivering water

Charles Sturt University is mechanisms for better informed the CRC for Irrigation Futures and investigating a risk based approach to water trade.A final report is expected University of Melbourne to help irrigation management using climate by the end of 2006. predict the extent of rainfall rejection forecasting.As our access to water is flows resulting from the cancellation RM Consulting Group is preparing based on the climatic variability, a of irrigation orders after rain.The case studies with local irrigators to better understanding of weather model will also evaluate the feasibility identify strategies for dealing with the patterns through analysis of ocean of using online storages or on-farm reliability of irrigation allocations in influences on rainfall, and integrating storages to capture rainfall rejection the Murray Valley.This project is due this with river management would flows to reduce or prevent unseasonal for completion by the end of 2006. allow us to reduce rainfall based flooding along the river, which may rejections of irrigation orders, A model is also being developed as otherwise occur.This project is maximise crop returns and provide part of a PhD research project with expected to be completed in 2007.

...... HIGH FLOW METERS ...... There is no doubt Bill Holden’s farm he could water his crops,. the winter cereals “Tawarri” on the Riverina Highway near in particular, the better the. crops would be. . Deniliquin is a high profile property and “I get 16ML a day through the. magflow many travellers have watched its . and the most I could get through. a wheel development over the past three years. was 10ML a day, and probably not. even . It was one of the first properties in the that, on this property. I can water my .crop . district to have an electromagnetic flow in less than 12 hours. And anything that . . meter (magflow) installed rather than a spills goes into the recycle system, so there’s . Dethridge wheel and Bill says he is pleased nothing wasted.” . . with the results. . He said the shorter watering period Deniliquin. farmer. Bill Holden is pleased with the magflow meter. on his property “Tawarri”. “I couldn’t get the flow rates I wanted with would also provide some water savings, . . . . a wheel, because of the head loss between although he hadn’t calculated how ...... the channel and the supply point. Even much this would be. with two wheels, the flow rate was too “The longer it takes you to water the more Bill has another nine properties, most of slow,” he said. water it takes; it makes sense that you which have already been developed with Bill is a second generation farmer in the save water if you can do it more quickly.” laser grading of irrigation layouts and district - his father was a soldier settler at “And because we put in a magflow we recycle systems. Tullakool. Now he farms closer to didn’t have to remove as much dirt from “You have to take your layout into account, Deniliquin, growing winter cereals, rice in the paddocks to fill the bays, because there but if I was going to do any more work on summer, and raising lambs. wasn’t as much head loss as there would another farm I would consider replacing the He said in his experience, the faster have been with a wheel.” wheels with magflows,” he said.

Murray Irrigation Limited Annual Report 2006 21 $25 The price of water this. In 2005/06 the average price per Fixed Charges megalitre of water delivered on farm Variable Charges For our customers, the water price was $27.52. Figures 1.8 and 1.9 show is a key indicator of the company’s the various components of our water $20 performance. Our aim is to keep the pricing over the past two years. water price as low as possible and as a not-for-profit organisation any A key contributor to the price increase last year was the board’s $15 trading surplus is used to minimise future water price rises. Maintaining recognition that the long term average water sales were likely to $ a balance between the water price and investment in infrastructure to decline. Our budgets from August $10 improve efficiency is difficult. 2005 onwards have been set based on projected average sales of 75%, rather Murray Irrigation is largely a fixed than 79%, which had been the basis cost business. Our operating costs are of previous budgets. Figure 1.7 shows $5 90% fixed, although the water price the downward trend of average water is based on roughly 50% of income deliveries over the past decade. In coming from each of our fixed and conjunction with this, the board has $0 variable charges. Many of the taken a more conservative approach 2005/06 2004/05 2003/04 2002/03 2001/02 company’s costs are a result of factors in rebuilding the supply variation outside its direct control, particularly Figure 1.6: reserve, which has been depleted Increase in Murray Irrigation water price government water charges and during recent low allocation seasons. depreciation. Other factors include: The water price for the 2005/06 • The completion of a number season increased from $20.09 to of major assets which were added $22.57, a rise of 9.5% (figure 1.6). to the company’s asset register and This is based on water sales increased annual depreciation equivalent to 75% of entitlements. costs; Given the ratio of fixed and variable • CPI increases in charges and costs, the actual cost of water to company costs; irrigators, per megalitre delivered, is • The increasing cost of complying greater when allocations are less than with licences and legislation; • CPI increases in state water charges. Figure 1.7: Trend in the 5 year average water deliveries compared to actual deliveries IPART 1,500,000 The Independent Pricing and 1,400,000 Regulatory Tribunal (IPART) 1,300,000 released a draft determination in 1,200,000 1,100,000 June 2006 for state government 1,000,000 water charges for the next four years. 900,000 The original proposal from State 800,000 Water and the DNR sought a 260% 700,000 increase in government water

Megalitres 600,000 500,000 charges, including removing the Delivered 400,000 company’s bulk discount. We 5 year average 300,000 commissioned our own research, 200,000 conducted by RM Consulting 100,000 Group, to analyse the impact of 0 1995/96 1996/97 1997/98 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 proposed increases on our customers.

22 Murray Irrigation Limited Annual Report 2006 delivering water

We also responded to five reports Minimising costs 2005/06 Water price prepared by consultants for IPART Apart from submissions to IPART, and provided three presentations. other strategies to minimise the 8% impacts of cost increases include: 8% In July 2006 IPART’s draft 2% determination provided for a 79% • Careful management of 34% increase, a large portion of which controllable expenditure across 22% included the NSW share of Murray the business, with increases in Darling Basin Commission costs. expenditure offset by increased These costs were charged almost income or medium to long term 26% entirely to the Murray Valley.A cost reductions; further submission and presentation • Seeking alternative income streams Usage Charges – Other 34% to IPART from Murray Irrigation through investment in comple- Entitlement Charges – Other 26% sought to have these costs more mentary ancillary businesses; State Charges 22% Asset Maintenance & Renewal 8% equally shared with other • Evaluation of maintenance LWMP Contributions 8% beneficiaries. IPART’s final ruling operations and cost comparisons Supply Variation Levy 2% handed down in September 2006 with alternative services provided Figure 1.8: set a maximum increase of 23% by contractors will reflect the cost Components of Murray Irrigation’s 2005/06 plus CPI and we retained a bulk of capital; water price discount. • Review of the fixed and variable components of the water price.

2004/05 Water price

9%

9% 30% Challenges 2% Water sales have declined over the The pressure on water prices will past five years as a result of drought continue in coming years, with 23% and changes in irrigator’s water government water charges and demand management - in particular depreciation both likely to rise more 27% the increasing use of carryover. Even quickly than inflation.Although with a return to more normal government charges have now been Entitlement Charges – Other 30% allocation years, carryover may fixed for the next four years we Usage Changes – Other 27% continue to reduce average water expect they will continue to escalate State Charges 23% Asset Maintenance & Renewal 9% sales on an annual basis. beyond that period. It will be LWMP Contributions 9% important that we monitor MDBC, While we continue to improve our Supply Variation Levy 2% State Water and DNR expenditure in water delivery efficiency, we have not order to prepare for the next IPART Figure 1.9: been able to realise the cash value of Components of Murray Irrigation’s 2004/05 price determination process which water saved.To date this water has water price will begin in 2009. been returned to irrigators as a small increase in allocation, which, through The company’s significant asset increased sales, provides a modest refurbishment and modernisation return on the water savings. If program of the past decade will investment in water efficiency continue for another four years.As a projects is to continue, without an result, depreciation costs will also unacceptable impact on water delivery continue to increase at more than prices, we need to develop a CPI as the value of the new mechanism which will recognise the infrastructure assets are added to high value of water consistently saved. balance sheet.

Murray Irrigation Limited Annual Report 2006 23 ...... managing assets ......

Our asset management strategy is commercially sound and based on optimal maintenance and replacement, to maintain and improve our services.

24 Murray Irrigation Limited Annual Report 2006 managing assets

Maintaining asset integrity Performance indicators for our asset management focus on ensuring our Supply and stormwater infrastructure system continues to supply water form the largest item on the now, and into the future, through company’s balance sheet and attract the majority of our annual sound financial management and expenditure.Water infrastructure had the right level of preventative a depreciated value in 2006 of $176 maintenance and refurbishment. million, with an extra $20 million worth of construction in progress. Murray Irrigation also manages $42 million of shire road bridges and culverts on long-term leases.The total value of the assets we maintain is $238 million. Decisions on the management of those assets and the creation of new ones will drive the company’s future costs and charges.We have a high regard for the serious consequences of asset failure which underpins our conservative approach to asset management. Our aim is to achieve an optimal asset management strategy that is cost effective but minimises the risk of failure. Our asset management program has two elements.The first is our capital works program, related to major asset refurbishment and renewal; most of this work is carried out by contractors. The second is our company Above: Mechanical engineering staff, from left, Engineer Rod Priest, Manager Peter Knill and maintenance program which is largely Project Officer Glenn Hayes, inspecting new regulator gates installed in 2006. undertaken by our own staff. Top: Contractors install a new pipe offtake from the Mulwala Canal to a nearby farm.

Performance indicators

Performance

2005/06 2004/05 2003/04 2002/03 2001/02

Number of days water deliveries delayed as a result of infrastructure failure. 00000 There were no instances of structural failure this year.

Build reserves for long term infrastructure maintenance: – Asset renewal reserve total $30.5M $26.8M $21.8M $18.7M $15.8M – Annual levy on entitlements $1.60 $1.55 $1.51 $1.47 $1.42 Annual CPI increases apply to asset renewal reserve

Asset refurbishment design and construction completed as a percentage of annual programmed works (by site) 118% 93% 95% 97% 96% The availability of resources allowed an increase in works from 160 sites to 189 sites.

Opposite page, top: Works Officer Russell Sullivan (left) and Engineer Madan Dhungel oversee installation of a subway. Centre: A wind-up mechanism on new regulator gates improves the operation of gates for staff. Bottom: Murray Irrigation works staff undertake most small scale construction and installation work.

Murray Irrigation Limited Annual Report 2006 25 Capital Works Program government “dowry” provided to where appropriate,Australian Road the company when it was formed in Standards. Our asset management strategy ensures 1995.Almost $70 million of this asset The Value Management Workshop we can maintain or improve water renewal dowry has been spent over involved staff, company directors, supply services in perpetuity.The focus 11 years to upgrade infrastructure irrigator representatives as well as of our asset management program is which had been poorly maintained engineering and construction on preserving our current assets, with under previous government consultants.The mix of attendees relatively little new construction work. ownership. In 2005/06 $10.5 million provided an opportunity to assess We do have a significant stormwater of government funds were spent on and validate the company’s current escape construction and refurbishment capital works ($5.6 million in work standards and explain those program underway but this is not part 2004/05), with an additional $3.6 standards to irrigators. Our current of the capital works program discussed million from the company. here. It is funded through the Murray construction strategies and standards Land and Water Management Plans Government funding will end in remain in place, although another (LWMPs) and is discussed on page 60. 2009/10 and our operating licence workshop will be held in November New stormwater escapes, once requires that we build our own 2006 to evaluate alternative design completed, become company assets reserves to provide ongoing funding and construction methods for future and we are responsibe for ongoing for asset refurbishment. Changes works. in the type and value of assets will operation and maintenance. As part of a cyclic five year external result in changes to long term review of our maintenance and asset Our capital works program includes maintenance requirements.These management program KBR inspected the refurbishment, replacement and were last reviewed by Kellogg Brown infrastructure assets in July 2006 to enhancement of existing structures Root (KBR) in 2002/03. worth more than $10,000, as well as determine the reliability of our any construction of significant new Capital expenditure, including maintenance activities. Initial results assets.Work on structures worth less government and company funding, indicate that we are achieving our than $10,000 is carried out as part has averaged $7 million a year over asset management aims.As part of annual company maintenance. the past 10 years. However we of this review they undertook a Funding comes from two sources: anticipate that with refurbishment condition assessment of five key assets: the company, and the NSW of all major structures completed • Lawson Syphon/ Government through the Asset by 2010, only $4 million a year will Escape, Renewal Program.While many be required for the ongoing capital • Stevens Weir across the Edward projects are clearly funded from one refurbishment and replacement of River (a State Water asset), source or the other, others involve assets.The company currently levies contributions from both. $1.60 per water entitlement for its • Wakool Offtake road bridge and asset renewal reserve which totalled regulator, The mechanisation of regulator gates $30.5 million in July 2006 and is • Mulwala Offtake road bridge and is the company’s main priority in expected to total $45 million by 2010 regulator, terms of capital works, as an essential when government funding ends. first step towards automation or • The Drop Regulator structure on remote operation. Mechanised gates Reviewing construction standards the Mulwala Canal. provide greater control over channel The review took into account flows with potential water efficiency In March 2006 we held a Value refurbishment works underway at gains as well as improved safety for Management Workshop to explain our The Drop.There were no major staff.Work is generally limited to the engineering program to stakeholders concerns to come from this year’s irrigation off-season, in May, June and and review our engineering standards. review. July.The amount of work which can Our conservative approach to be completed is limited by time and infrastructure risk management Mechanising regulator gates contractor availability. Investigations requires that any company assets worth are underway to identify methods more than $100,000 are constructed, The supply system has been which will allow work to be refurbished and maintained to provide operating with gravity fed open undertaken during the irrigation a lifespan of 120 years.Assets worth channels and drop bar regulators since season without disrupting water less than $100,000 are constructed, its construction 70 years ago.The supply to customers. refurbished and maintained to provide mechanisation of regulators represents a lifespan of 80 years.All works are a significant upgrade in the technology Funding capital works undertaken in accordance with these of the company’s irrigation supply A significant portion of funding criteria, and to meet the relevant system. The mechanisation project, for capital works comes from a Australian construction, and which began in 2003/04, has been

26 Murray Irrigation Limited Annual Report 2006 managing assets

expanded from the original 500 sites In the 2005/06 season a major and it will take more than 20 years to all of our 1,268 regulators.This program refurbishing and upgrading at the current rate of replacement will increase the projected cost of radio masts and other communication to upgrade all wheels to magflows work from $14 million to $21 million, system structures took place as well meters. most of which will be funded by as continual upgrades to the SCADA We are developing incentives to government through the Asset software functionality. A further encourage farmers to invest in the Renewal Program.The timeframe has 15 sites were added to the remote new meters which could help to also been extended by a year to 2011. monitoring system and ongoing accelerate this program and allow the Work at 115 sites was completed upgrades occurred at existing sites. company and customers to realise during winter 2006, with another potential water delivery efficiencies 138 sites planned for 2007.To date Other capital more quickly. all major regulators on the system refurbishment works have been mechanised. Benefits of Asset rationalisation the new mechanised gates include: The Drop Regulator is one of the company’s most significant assets. Actively pursuing the amalgamation • Provision for future automation The case study on page 29 reports and rationalisation of assets is a new or remote operation; on the major refurbishment of the strategy for the company. Our asset • More accurate measurement and structure undertaken this year. management program, to date, has control of water; been based on maintaining, upgrading During the winter of 2006 other or replacing all existing infrastructure. • Reduced erosion and major refurbishment works under- The re-configuration of farm supply maintenance on the regulator taken included the replacement of points, regulators and access culverts structures and channels; 23 road culverts and one escape discussed earlier is only a recent • An absolute seal which would structure, six regulators, six offtakes initiative.We now realise that allow a channel to be completely and 10 access culverts. Twelve amalgamation of structures could locked in an emergency; of these projects involved the provide significant capital and consolidation of assets, combining maintenance savings. • Improved workplace safety, metering devices or regulators as particularly for channel attendants. part of a new culvert structure. One option for rationalisation is to transfer ownership of some local Increasing supply capacity Concern about the escalating cost of railing for bridges and access assets to the properties those assets Two projects initiated in the past culverts across channels resulted in service - a strategy other irrigation year have increased the capacity of a redesign of these crossings. The companies are also pursing.We are our supply system.A bypass was new configurations provide wider planning to conduct a review of our installed around a railway culvert and safer channel crossings without system over the next two years to which was limiting supply on the the need for railings and this year identify sites where this might be Mallan 1 Channel in the Wakool provided a capital cost saving of possible before approaching District.Two syphons have added $250,000. landholders, although landholders are 20ML/day, or 10% to the channel’s encouraged to put forward proposals capacity. Construction has also begun Six pipe offtakes were installed, themselves. to increase the capacity of the improving access along channel banks Perricoota Channel from 50ML/day and replacing Dethridge wheels with Marsden Jacob and Associates have to 200ML/day. In addition to the magflow meters.Throughout the year been engaged to help identify savings benefits for irrigators on this channel, 39 magflow meters were installed, and calculate possible incentives we it will also allow us to increase some by contractors and some by can offer landholders to decommission diversions for State Water and River our own works staff. Magflows are or amalgamate assets.This includes Murray Water. now the only metering device the landholdings with multiple Dethridge company will install when new points wheels that could be replaced with a Remote control in our system of supply are requested, or when smaller number of magflow meters Murray Irrigation now has over Dethridge wheels are replaced as without suffering a reduction in 250 sites in its telemetry system part of scheduled asset refurbishment. supply capacity. It will also include that can be either remotely controlled These high flow meters are more supply channels, regulators and access or monitored. Of these, 16 are accurate and offer greater delivery tracks. Our total registered assets monitoring sites for compliance with efficiency with flows to farms of up number 25,000 and our target for our Environment Protection Licence to 16ML/day, rather than 8ML/day rationalisation is to reduce this by while the remainder are located from a Dethridge wheel. Of the 1% by 2010. within the supply or stormwater company’s 3,876 metered supply systems. points, 82 are now magflow meters

Murray Irrigation Limited Annual Report 2006 27 2005/06 Works expenditure Maintaining our infrastructure

6% To more effectively monitor the optimal application rates of Arsenal company’s maintenance program Xpress in controlling the invasive 15% 24% we have made changes to our Infra- emergent weed sagittaria in our supply structure Management Reporting system. The trial has been successful, System (IMRS) this year. New and provided the basis for our 2006 17% classifications will better identify Arsenal program. Good results have 21% the balance between reactive repair been achieved where Arsenal has 17% work and our scheduled maintenance been applied before frosts minimise program. the plant’s uptake of the herbicide. Almost 200kms of channel were Bank build/erosion control Our most significant maintenance sprayed across the full width, and Miscellaneous maintenance & repairs activities include bank building and another 300kms of channel were Access maintenance erosion control, desilting and weed sprayed along the batter only. Weed control removal, grading and sanding of Desilt/deweed access tracks, weed control and minor Repair/replace structure Maintenance of floodplain construction work including the structures installation of magflow meters and Figure 2.1 Murray Irrigation is required to Works expenditure by job type. stock and domestic pipes. More than operate and maintain floodplain Total expenditure $5.0M 4,500 jobs were logged during the year, a mixture of both scheduled structures in accordance with the maintenance and urgent works, NSW Government ‘Guidelines for with 96% of jobs logged completed. floodplain development - Stages 1-4’. Figure 2.1 and table 2.1 summarise In 2005/06 we complied with all Table 2.1: the major maintenance activities requirements of these guidelines. Maintenance works completed in 2005/06 completed during the year. Data from This included works to replace a previous years is not available for subway with a syphon on the 2005/06 (km) comparison. Northern Branch Canal. Bank building 63.4 Efforts to improve efficiency have Safety procedures Desilting 304.8 focused on maximising the operating Works staff prepare safe work hours of our major plant, which have Grading access tracks 967.8 methods statements and risk increased 5.5% over the past year. assessments for all activities.These Sanding access tracks 80.4 A change in the nature of work away are reviewed at an annual workgroup from the installation and maintenance meeting.This year we introduced of structures to more bank mainten- weekly random audits of company ance has contributed to this. worksites to ensure safety procedures Control of seepage and erosion are being followed. Seepage and erosion control works Murray Irrigation does not collect previously carried out as part of the OH&S information from contractors. Asset Renewal Program are now However, contractors are required to undertaken by the company’s works advise us on any incidents on-site staff. In 2005/06 routine works were where any medical assistance is completed at 43 sites within our required, and must also notify us of system. any serious near-miss accidents. Our engineering superintendent’s repre- Weed control sentatives monitor both OH&S and The control of weeds in channels construction standards at contractor’s continues to be a major issue for worksites, as well as random checks Murray Irrigation and we increased on site safety documentation. Last our spraying program this year. In year we conducted six contractor site conjunction with Goulburn-Murray audits targeting OH&S issues and Water we have been involved in a investigated one incident in which an three year trial to determine the excavator was almost overturned.

28 Murray Irrigation Limited Annual Report 2006 managing assets

Challenges

Investment in infrastructure is The limited time in which required to improve the performance construction work can be or our supply system, but the benefits undertaken, during the irrigation of the investment may take many off-season, is a continuing issue for years to realise.The company cannot the completion of our regulator gate currently afford a major roll out of mechanisation program.While dry new magflow meters, in addition to its winters are unwelcome from a water regulator gate mechanisation program. supply viewpoint they do facilitate Many individual irrigators are also our capital works program.With only unable to afford new infrastructure four years of government funding for investments, given four years of low the program remaining it is vital our water allocations and reduced farm construction program stays on track incomes, leading into what is now the and that works are carefully worst drought year on record. prioritised.

...... WORK TO . . . . REFURBISH THE DROP ...... More than 70 years after The Drop prepared by national engineering. regulator was built on the Mulwala Canal, consultants URS Australia .Limited. Echuca . the original radial gates have been firm Ferrier Construction undertook. the replaced. concrete work and civil works with. more . Along with the new gates, a major than 55 cubic metres of concrete poured. at . refurbishment of the regulator has also the site, in five sessions. . . been completed. The total project was Contractor Rowan Ferrier said the project . worth more than $250,000, with work “was a challenge”. . . carried out over seven weeks during June As well as concrete construction, Ferrier’s . . and July 2006. work entailed a large amount of precise Ferrier. Construction staff working on The Drop Regulator. refurbishment, from left, Peter Bird, The Drop is one of the major structures on demolition, earthworks and drainage. . Rob Baldwin and. . Steve Bird. Murray Irrigation’s channel system, with Mr Ferrier said operating the large ...... flows up to 7,000ML a day in the peak of excavator on the small work platforms ...... the irrigation season. It is also the site of a with seven metre drops on each side hydro power plant built in 2002 by Pacific required skilled and careful operation. with them daily. Good communications are Hydro Ltd in conjunction with Murray “Thorough planning and co-ordination essential to the success of any project,” he Irrigation. were needed to meet the deadline and said. Other Murray Irrigation staff involved The new stainless steel radial regulator the high quality construction required in ensuring The Drop was back on line for gates for The Drop were built locally by Bill for the structure. the start of the irrigation season included Young and his staff at Fabway “Murray Irrigation’s Senior Engineer SCADA Operations Supervisor Mark Constructions in Deniliquin. Raju Ranjit and Works Officer Ashley White Cartwright and senior water operations Designs for the refurbishment work were assisted us with the project and we liaised staff Glenn McCalman and Scott Barlow.

Murray Irrigation Limited Annual Report 2006 29 ...... business growth & diversity......

Diversifying our business and providing services to help irrigators generate the best possible returns on their investment in the region will help us to manage industry risks.

30 Murray Irrigation Limited Annual Report 2006 business growth & diversity

Managing income risk Our strategy for growth and diversification is to: The general security water • Invest in business opportunities that resource that we rely on has proven offer an attractive financial return, increasingly variable over the past have synergies with Murray decade. In addition to seasonal Irrigation’s core activities, and take variations in water availability, advantage of the company’s existing more water is being allocated to core competencies and strengths. the environment. Competition for • Support the current water the remaining resource has increased exchange operations and expand prices considerably, particularly its operations to offer a wider when allocations are low. range of water trading products We are taking modest steps to and services to meet the needs diversify our own income sources, of current and future customers. provide our customers with greater • Increase the range of water access to water through water trading, delivery services we provide, to and to help customers develop better meet the needs of a wider enterprises which can afford to pay range of agricultural enterprises. more for water.These initiatives • Facilitate investment by new and Vegetables grown on a property are largely directed through our existing customers in high value near Tocumwal. Business Development Unit (BDU), water uses within Murray established in 2003. Decisions on Irrigation’s area of operations, enterprise activity and land-use • Promote the region as a place change are the responsibility of the where irrigators can maximise individual customers. However, returns on investment in land Murray Irrigation can play a role in and water. encouraging adoption of improved All performance indicators below practices to increase enterprise have been established this year as part viability, including the development of the strategic plan.We have of new water delivery options and reported actual past performance water trading services. Almonds and pistachios have against these indicators where been identified as crops with good information has been available. potential for the region.

Performance indicators

Performance

2005/06 2004/05 2003/04 2002/03 2001/02

Income from ancillary sources as a percentage of budgeted water sales. 3.8% 3.2% 2.4% 2.9% 2.0% Increase largely generated by improved returns from MILCast

Maintain value of Murray Irrigation entitlements – Actual average value of Murray Irrigation entitlements $569.29 $548.27 $430.57 $393.43 $380.42 – Comparison with river entitlements 86.25% N/A N/A N/A N/A

Increase water used on non-stardard crop types1 – Megalitres Water Used 25,465 25,430 24,561 24,489 29,662 – % of total crop water use 3% 4% 4% 3% 2%

1 water used on crop type “other” as recorded through our water ordering system. N/A - Data not available.

Opposite page, top: The dairy industry offers opportunities to increase the value of water used in the region. Centre: Rainbow Trout have been successfully raised and marketed as part of local research into commercial aquaculture in saline groundwater. Bottom: The region produces 75% of NSW’s processing tomato crop.

Murray Irrigation Limited Annual Report 2006 31 2005/06 MILCast sales Diversifying our investments AWMA In 2004 Murray Irrigation entered a Murray Irrigation has investments in 8% joint venture with Automated Water subsidiary businesses, such as MILCast 11% Management Australia and has a 50% and AWMA, that generate benefits for share in the new company AWMA the company and our customers in Pty Ltd. Business operations are based two ways.They provide valuable in Cohuna,Victoria. 24% 57% services to customers, reducing their AWMA is continuing to expand its exposure to poor service and high operations across most facets of the price.They also generate profits that water industry, with customers in can be used to reduce water charges all states of Australia. Its turn-key MIL works & LWMP 57% and could provide a dividend stream solutions to water control include MIL shareholders 24% for shareholders. By managing our design, manufacture, polyethylene Agricultural 11% existing businesses and expanding fabrication, electrical, telemetry Other commercial 8% our investment in other ancillary solutions, project management and Figure 3.1 businesses we can also spread our installation. Figure 3.3 shows this year’s sales by product/service type. MILCast customer profile by value of sales revenue risk more widely. AWMA’s customer base now extends New financial targets for ancillary beyond irrigation farmers and rural businesses established as part of the water authorities to include councils 2004/05 MILCast sales strategic plan this year include: and water treatment plants. • Generating income streams to Profits generated in 2005/06 have been 9% offset budgeted water income retained to fund the company’s growth by 5%; 15% and there was no dividend declared • Increasing contributions from this year.The capital growth of AWMA existing investments by 3% a year; 51% in the 12 months to June 30, 2006 was • Investment in two new businesses estimated at 12%. Capital growth since by 2008. 25% the joint venture company was formed MILCast in April 2004 is estimated at more MILCast is a fully owned subsidiary than 30%. MIL works & LWMP 51% of Murray Irrigation. Based in Finley, Murray Irrigation’s general manager MIL shareholders 25% it provides a growing range of precast George Warne and deputy chairman Agricultural 15% concrete products for irrigation supply, Gordon Ball are directors of AWMA, Other commercial 9% urban and agricultural use. In 2005/06 with the founders of Automated MILCast provided a return of Water Management Australia Brett Figure 3.2 $838,000 to Murray Irrigation, an Kelly and Rick Bilton. For more MILCast customer profile by value of sales information visit www.awma.au.com. increase on the $737,000 return the year before. Figures 3.1 and 3.2 show Hydro power plant MILCast’s customer profile for the In 2002 Pacific Hydro Ltd built a past two years. hydro-electric power plant on Murray A large portion of its business Irrigation’s main supply channel, the continues to lie with Murray Irrigation Mulwala Canal.This green power and local irrigators. However MILCast project was supported by funding is tendering for more precast work from the NSW Sustainable Energy outside the region.A growth in sales Development Authority and Australian to irrigation supply authorities in both Greenhouse Office. Murray Irrigation NSW and Victoria has contributed has a contract with Pacific Hydro for to the strong performance of the the lease of land and supply of water company this year. During the year the to the hydro plant which provides an business worked closely with Southern increasing return to us, to 2010. Rural Water (SRW) in Victoria, in Pacific Hydro has sold power particular, to create customised generated from the plant to the NSW solutions for SRW’s infrastructure. rural electricity supply utility Country

32 Murray Irrigation Limited Annual Report 2006 business growth & diversity

Energy. From 2010 Murray Irrigation Mineral harvesting 2005/06 AWMA sales will assume ownership of the power Groundwater pumped into 4% generated.The sale of this green evaporation basins at the WTSSDS 5% electricity into the national power contains a number of elements 1% grid has the potential to increase our which can be commercially harvested 14% income from this investment. as by-products of the evaporation process: 16% 60% Aquaculture • common salt (NaCl), Research and development continues • gypsum used in agriculture for at Wakool to develop a commercially soil amelioration, viable aquaculture operation raising • bittens (MgCl) a liquid used as a Fabrication 60% fish in saline groundwater.The dust suppressant. Poly pipe 16% research has been underway for four Gypsum and bittens have the highest Automation 14% years and is a joint project between commercial value; salt from the Communication software - JOCOM 5% Murray Irrigation and NSW groundwater is relatively poor quality Plasflow 4% Electrical 1% Department of Primary Industries with a high level of contaminants. (Fisheries) through the NSW Inland We currently have a contract with Figure 3.3 Saline Aquaculture Research Centre. Cheetham Salt Pty Ltd for the AWMA sales by product/service type The groundwater being used is harvesting of these products, which 2005/06 pumped into evaporation basins from will generate some royalties for the the Wakool Tullakool Subsurface company. Cheetham has developed a Drainage Scheme (WTSSDS). process to concentrate and purify the The aim of the project is, initially, salt, increasing its commercial value. to provide a financial return which Cumulatively, since 2004, Cheetham will offset the significant costs of has harvested 22,000 tonnes of salt operating the WTSSDS.This salt and removed 9,000 tonnes from the interception scheme helps to control site. No bittens have been harvested. rising watertables and maintain the Harvesting of the relatively good productivity of 50,000ha in the quality gypsum is expected to begin Wakool district (page 55). Murray this year. Irrigation contributes two thirds Other business opportunities of the operating costs; the state government contributes one third. Murray Irrigation has investment The research will also establish criteria for the evaluation of all new protocols which can be used for the opportunities.The company will development of similar aquaculture not invest in agriculture itself. operations based on saline ground- Two new proposals were considered water in this or other regions. during the year but neither met the required criteria. For the second year Rainbow Trout were successfully raised and sold well Our investment considerations both fresh and smoked through local include more than simply financial butchers in October 2005.A trial of returns and potential to reduce Mulloway during 2006 has indicated water charges.We also consider that growth rates for this species may environmental benefits, such as be too slow to be commercially viable. those generated by the hydro power A smaller scale trial of trout is currently plant, and potential benefits to our underway to establish optimal feeding shareholders through improved access and water quality regimes.Trout have to goods and services. been identified as having the best potential to date and a larger scale trial using a commercial raceway system is proposed for 2006/07.

Murray Irrigation Limited Annual Report 2006 33 150,000 Water trading an increasing share of the temporary trading market from private treaty By facilitating trading, we aim to and auction sales. During the year 120,000 maximise the amount of water 20,730ML were transferred into our available for use in our area of area through exchanges other than operations each year and to increase our own. Figure 3.4 highlights our 90,000 the value of water and water exchange’s share of temporary water entitlements on the respective annual trading onto our licence and from and permanent markets. our licence. 60,000 Megalitres traded Temporary transfers Murray Irrigation Water Murray Irrigation is a net importer Exchange of water.Temporary trading within 30,000 To facilitate temporary water trading the region and from external sources we operate a 24 hour telephone is an important tool for many farm based water exchange founded on the businesses in our area. 0 Australia Competition and Consumer 2005/06 2004/05 Years In 2005/06 the net total of Commission philosophy of providing temporary transfers of water into fair and accessible market mechanism Water traded into MIL* for temporary trade.We do not Water traded into MIL through exchange Murray Irrigation was 93,474ML, Water traded out of MIL* compared to 63,873ML the previous change commission on exchange Water traded out of MIL through exchange year. In addition to normal trading, transactions. *Transaction type undisclosed Murray Irrigation facilitated an It provides live, internet based market Figure 3.4 advance of future allocations from monitoring and history. Purchases are Water exchange market share of internal Snowy Hydro Ltd, which resulted in made by telephone, through an and external water trading. further 98,731ML transferred into Interactive Voice Response System or our area during the year.Together prepaid buyer bids. Murray Irrigation these were equivalent to a 12% customers buying water through the increase in allocation. exchange will have access to their The main sources of temporary water within 24 hours of completing transfers were Murrumbidgee Valley, the transaction (subject to normal Western Murray and South Australia, water ordering requirements). with a growing number of sales from Water can be bought and sold by Victoria.Water exchanges are taking both internal and external customers. The exchange operates from July to May, during the course of our Table 3.1 irrigation season. Summary of Murray Irrigation temporary water trading and water exchange operations The strengths of our exchange 2005/06 2004/05 include: company administration of

Murray Irrigation allocation 56% 42% water transfers and paperwork; transparency of operation; company MIL Water Exchange guarantee of water delivery; almost Number of Sales 1,258 1,155 immediate access to water purchased. Total volume traded 95,068ML 66,729ML Water transferred into our area Total value of sale $4,320,245 $4,968,153 through the exchange represented Average price $/ML $44.33 $73.35 20% net of temporary transfers last Lowest price $/ML $34.00 $44.00 year, compared to 19% the year before.Trading details are reported Highest price $/ML $140.00 $200.00 in table 3.1. In order to promote Murray Irrigaton Area Trade the water exchange we participated Net temporary trade into MIL area 93,474ML* 63,873ML in a water trading forum organised by the Young Irrigation Network in *Excludes transfer from Snowy Hydro Ltd

34 Murray Irrigation Limited Annual Report 2006 business growth & diversity

Berrigan in February 2006, and also entitlements from our licence since. and March 2006 indicated those facilitated bulk transfers of South However under new trading customers who responded were Australian water for listing on the provisions 960 entitlements have been largely satisfied with the current level exchange. transferred from landholdings and are of service (see case study, page 49). held independently of land.These However we recognise that in order Trading Murray Irrigation shares entitlements remain on our licence. to attract new investors we may need and water entitlements to provide different levels of service Capital growth of Murray Irrigation Changes to Murray Irrigation’s in the future. entitlements has been 50% over four constitution in January 2006 mean years. Our aim is to maintain the that Murray Irrigation water We currently offer a single level value of our entitlements at 75% entitlements can now be owned of service at a standard price to all of NSW Murray Regulated River without the need to own land in customers.This standard service general security entitlements.A our region.This opens our water level may not adequately meet the comparison of recent sales indicated entitlements to new markets, which needs of more diverse agricultural our water entitlements were valued presents both risks and opportunities enterprises. Issues include the four at 86.25% of comparative river for local landholders and local day water ordering period, entitlements in 2005/06.With communities. requirements for year round supply, the separation of land and water security of supply and possible During August 2005 there was a entitlements in NSW from July 2004 delivery restrictions. Customers can sudden increase in the number of more entitlements are being sold manage some of these issues through entitlements traded from our licence, independently of land transactions. farm storages and recycle systems to possibly in anticipation of changes We are working with the Department improve their security of supply, and to the company’s trading rules. of Natural Resources and the NSW installation of high flow meters from In less than a month 1,362 Murray Department of Lands to develop an the company’s channels to farms to Irrigation water entitlements were independent record of entitlement improve flow and delivery efficiency. transferred from our licence in seven values for comparison.Alternative separate transactions.The previous avenues of valuation information are Our aim of developing two new year there had been only two water exchanges, water brokers and levels of service for customers by July transactions totalling 405 property agents. 2006 has proven more difficult than entitlements. anticipated.Two different proposals The company’s shares remain linked were developed both focusing on Between August 29, 2005 and to landholdings and can only be variations to water ordering and February 1, 2006, we suspended traded among landholders in our delivery times. However, given the trading of company water entitlements area of operations as part of either company’s current infrastructure, both to external buyers as the transfers a property transaction, or share and presented an unacceptable level of risk processed to that date brought the water entitlement transactions. to the service for other customers. company to the limit we would Shareholders can elect to keep their allow under our existing trading rules. shares when they trade water Further infrastructure investment Trading of entitlements between entitlements, or can surrender them may be required before we can Murray Irrigation landholders to the company. Although the shares confidently offer new services continued. represent ownership of the company’s without jeopardising existing service During this time changes to the significant assets, they have no current levels. A cost benefit analysis of an company’s constitution and trading realisable value. on-line storage on the Mulwala Canal and installation and automation of regulations were formulated to Water services comply with the NWI.These were high flow outlets across the irrigation If the company is to attract a new endorsed by shareholders on January system have been undertaken. Both and more diverse customer base (in 31, 2006. External trading resumed would allow the company to higher value sectors) then it needs to in February 2006, and in conjunction significantly expand its range of provide a suite of service options to with this we introduced an exit fee delivery services. Funding for these better meet customer requirements. on entitlements transferred from our projects is being sought from the licence, to recover the long term A customer survey undertaken Water Smart Australia Programme. capital and operating costs of the through the Australian National Investigations into other new services system.There have been no Committee on Irrigation and are on hold pending the outcome of applications to transfer water Drainage (ANCID) in February these funding applications.

Murray Irrigation Limited Annual Report 2006 35 High value water use but it is difficult to distinguish higher of $729/ML. In January 2006 we value returns from livestock enterprises completed our Dairy Expansion Water use in Murray Irrigation’s area which rely on irrigated pastures - dairy Strategy, in consultation with local focuses largely on annual cropping, farming, for instance.The crop type dairy farmers and Murray Dairy which adapts easily to variable general “Other” provides an indication of (see case study on page 37). The key security water allocations.A large water use on horticulture, viticulture recommendation was to employ a proportion of mixed farm businesses and tree crops, although it also includes regional dairy co-ordinator to develop have sufficient diversity to manage crops like maize. Most water use in this and implement a marketing strategy. fluctuating commodity markets, but category is attributed to tomato and Funding for this position is being most operate with a relatively low potato production in the eastern part sought through the Department of return per megalitre.These enterprises of the region and has remained State and Regional Development. are less able to afford increases in water relatively stable over the past five years. prices, particularly coupled with Figure 3.5 shows water use by crop Horticultural plan unstable markets for their products and type since 2001/02 based on water Horticultural crops in the region increasing competition for water. ordering records. include almonds, olives, stone fruit, Higher value crops will add value to asparagus, tomatoes, vegetables, potatoes Business Development Unit water used within Murray Irrigation. and licquorice. However they represent Local communities will benefit from Murray Irrigation has established the only a small part of the region’s extra skilled and unskilled employment Business Development Unit (BDU) agricultural production and water opportunities to service more intensive to facilitate investment by new and use. In August 2005 we organised industries. It will also help the company existing customers. a workshop with horticultural and investment experts and local council to increase its financial viability by The BDU’s key objectives are to representatives to consider how to enhancing demand for water from market the region, increase shareholder expand local horticultural production. customers with a capacity to pay wealth, source established markets and The workshop has helped to develop higher prices. supply chain alliances, design a regional a horticultural plan which is now investment strategy and portfolio We are actively encouraging customers being implemented. This addresses farming framework for the company to consider enterprises which will infrastructure, delivery service and and promote continuous improvement. provide a greater return per megalitre. water security issues as well as Our target is to have 10% of water Dairy industry providing information for our used on crops with a gross margin customers and investors. of more than $500/ML, although There is a significant number of we anticipate this may be difficult to high value dairy businesses in the Nut crops have been identified as accurately quantify. Our water ordering region with farm gate returns of well suited to the region’s soils and system identifies general crops types, $180 to $250/ML and a gross return climatic conditions, with expanding markets. Further information and horticultural expertise in almonds, 700,000 walnuts and pistachios is being Rice Annual Pasture sought, with the aim of providing 600,000 Perennial Pasure information sessions for local Cereals landholders and potential investors. Other 500,000 Yield Prophet 400,000 Dryland and irrigated cereals are major crops in the region. In 2005 Volume (ML) Volume 300,000 the company sponsored the involvement of six landholders in the 200,000 Yield Prophet program developed by

100,000 the Birchip Cropping Group. Yield Prophet is a web based management

0 tool designed to help growers 2005/06 2004/05 2003/04 2002/03 2001/02 maximise their profitability by assessing Figure 3.5 Murray Irrigation water use by crop type the effect that various management *NB: “Other” includes a number of minor crop types including horticulture and viticulture. actions, including fertiliser and water

36 Murray Irrigation Limited Annual Report 2006 business growth & diversity

applications, would have on yields. part of the MRDB’s “Murray Now” Challenges A review of the project suggested campaign to brand and market the The variability of water supply and further information was required a region, and will be supported by the access to water through annual bout the region’s soil characteristics to development of a website. markets are key issue for the company improve the predictive accuracy of the The company is also developing a going forward. MDBC modelling program.There are nine participants new shareholder information kit which predicts full allocations seven taking part in the program in 2006. providing an overview of company years in 10 has been challenged by the operations and services, policies and Promotion, information past four years of drought.The average rules.This is expected to be and marketing allocation to our irrigators has fallen completed by December 2006. to only 47% over the past five years. A comprehensive information kit to promote the region’s advantages has Business assistance There is a perception that NSW been identified as an issue we need to The BDU works with potential Murray Valley water is a less secure address urgently and work is underway and existing farmers and investors than NSW high security and Victorian on this project. In partnership with the to analyse the water requirements water sources, although the current Murray Regional Development Board and viability of new ventures and to drought is testing this. (MRDB) we have updated a regional identify how the company can help Carryover offers an important manage- profile, launched in September 2006. to overcome any irrigation limitations ment tool for irrigators, to mitigate the This provides a basic overview of that may prevent a development from variability of general security allocations. existing industries, potential areas for proceeding. During the year advice The challenge for Murray Irrigation expansion, climate, soils, water was provided to more than 20 is to ensure potential investors get the availability and business assistance enterprises considering an expansion correct information about managing services.This regional profile will form or diversification of their operations. security with NSW Murray Valley general security water entitlements...... ROOM FOR GROWTH . . . . The dairy industry is one of the key strengths and weaknesses.. . industries in Murray Irrigation’s area of The final report, available. from our operations. The 109 dairies in the region website, highlights significant. potential . represent only 9% of farm businesses but for expansion. Dairy farms. in the area over the past five years they have used, are larger than the national. average, . on average, 25% of available water each allowing farm businesses to be .more season. sustainable with better profit outlooks.. . They produce more than 200 million litres Producers here can generate returns. of of milk a year (20% of the NSW total) 10% to 15%. Internationally, demand. . with a farm gate value of $64 million for dairy products is growing, and . . and a contribution of $54 million to the local processors have the capacity to . regional economy through farm input significantly increase production. Dairy. . farmer Craig Gallpen believes there purchases. Farming at Blighty, Craig and Penny is a positive. . outlook for the dairy industry in In 2005 Murray Irrigation initiated a Gallpen are among those who believe the region. . . . review of the dairy industry in the region, dairying has a positive outlook in the . . . . . with a view to encouraging expansion. region. They have a herd of 350 cows at the moment, given the. drought...... Local dairy farmers, Murray Irrigation and are hoping to build that to 400 But you can manage the climatic risk staff and representatives from the dairy head. with irrigation,” Craig said. Like many industry support organisation Murray “Land is still relatively cheap; it’s other local dairy farmers they use Dairy formed a steering committee to undervalued here,” Craig said. “We are carryover – up to half of their total help prepare the strategy. Dairy farmers close to our markets and we are close to entitlements – to secure their water participated in focus groups and feed suppliers - grain and silage. supply, and they also buy water on the questionnaires to identify the region’s “I think it’s difficult right across Australia temporary water market each year.

Murray Irrigation Limited Annual Report 2006 37 ...... engaging stakeholders ......

We provide a voice for our customers and the region by actively contributing to the development of water policy and strengthening our relationships with stakeholders.

38 Murray Irrigation Limited Annual Report 2006 engaging stakeholders

Better informed responses company and for irrigated agriculture in the region.

The water industry is subject to Fiona Waters changeable climatic and supply This section provides an overview conditions in the short term, and of our efforts to engage with policy powerful political forces affecting makers on behalf of the company and reforms in the longer term. our customers. It also highlights the To successfully respond to these activities we have undertaken in the challenges we need clear and timely past year to strengthen our relationships communication and engagement with stakeholders including govern- ment agencies and industry groups, and Ronan Waters, 4, in a sorgum crop with our stakeholders at all levels. on his family dairy farm near with our customers. Table 4.1 identifies Blighty. This photo by Ronan’s Our key strategies are to: our stakeholders and our relationship mother Fiona won first prize at the Deniliquin show in Murray • Lobby government and influential with them. Irrigation’s Land, Life and Water decision makers at all levels to photo competition. maintain access to water; Our engagement objectives include maintaining good relationships with • Contribute to the development of our stakeholders, and establishing trust government water related policy; and credibility. • Support industry alliances and networks; Identifying meaningful and measurable performance indicators is proving a • Better inform, understand and challenge. Outcomes are not respond to the needs of our necessarily a true reflection of our stakeholders and in particular our efforts, particularly in a political customers. sphere. The table below outlines those Engagement with stakeholders is one indicators we have developed in From left, SRI chairman Ted Hatty of the key principles upon which conjunction with our strategic plan, with NSW Special Minister of Murray Irrigation has been founded. with reports against these targets for State, John Della Bosca, and Murray Irrigation director Malcolm It is essential in developing sound previous years where information is Holm attending a local community policies and direction for the available. meeting to discuss the implications the sale of Snowy Hydro Ltd.

Performance indicators

Performance

2005/06 2004/05 2003/04 2002/03 2001/02

Comply with Nation Water Initiative Restrictions on trading of entitlements removed in ✓✗N/Ap N/Ap N/Ap January 2006

Customer satisfaction (rating out of 5) 4 N/A N/A N/A N/A First customer satisfaction survey undertaken in 2006

Provision of water information to customers – Number of scheduled Talking Water issues and 65 64 60 50 N/A allocation announcements providing regular updates – Additional Talking Water issues 28 9 12 13 Additional issues this year provided timely information about supplementary water, allocation, IPART, director elections, suspension of water trading and EGM.

N/A – Not available; N/Ap – Not applicable

Opposite page, top: Landholders and their families attend a wetland safari in the Berriquin district. Centre: Murray Irrigation’s Manager, Engineering Evangel Aseervatham (left) with Asset Renewal Auditor Ross Middleton from SKM. Bottom: St Joseph’s Primary School students with Murray Irrigation’s OH&S Officer Greg Rowe who organised a farm safety presentation and poster competition at the school.

Murray Irrigation Limited Annual Report 2006 39 Table 4.1: Murray Irrigation’s stakeholders

Stakeholder Relationship Key Issues Customers (1,600 farm businesses) Irrigator customers and water entitlement holders; Water availability, company works and policies, partners in sustainable productivity initiatives business, environmental and water reform issues Board of directors Irrigators and specialists providing leadership for Company policy, planning and strategic direction company Staff Key business resource vital to our success Operation of the business, implementation of company policies NSW Government Sets legislation and policy; funding partner Legislation, Living Murray Initiative, National Water Initiative, natural resource management and asset renewal funding, water reform, water trading, licence compliance NSW Independent Pricing and Reviews and sets our bulk water prices State Government water charges Regulation Tribunal NSW Department of Natural Resources Develops state water policy, represents state Government funding, licence compliance, LWMP interests to the Murray Darling Basin Ministerial implementation, asset renewal works, water Council; regulates company licences; partner in availability, implementation of Water Sharing Plan regional water sharing plan; implements government water policy NSW Department of Environment and Regulates Environment Protection Licence Licence compliance, pollution control Conservation NSW Department of Primary Industries Regulates mining licences, fisheries issues; research Licences, aquaculture and agronomic research, partner; extension activities for landholders impacts of operations on native fish and habitat, recruitment of native fish stock Murray Darling Basin Commission Partners in integrated catchment management and Living Murray Initiative, water savings, water sustainable management of Murray Darling Basin trading, water recovery plans, funding, licence resources compliance, research NSW State Water Bulk water supplier Day-to-day water orders, deliveries and transfers, water trading, availability of supplementary water River Murray Water Assesses water availability. Manages Murray River Changes to water availability storages, flows and operations according to Murray Darling Basin Agreement. Local Government Customer for town water supplies; partner in Impact of reduced water availability on local Murray LWMPs; development consent authority communities, impact of water reform on land for major works; water trader values and rate base, maintenance of local infrastructure, LWMP implementation, town water supplies, water trading Town communities Provider of business services and staff for our Impact of reduced water availability on local company and shareholders communities, economic dependence on irrigated agriculture, environmental initiatives Students Children of our shareholders; future employees History and value of irrigation, environmental shareholders, businesses and community leaders initiatives, water safety Commonwealth of Australia Driving water industry reform, funding partners Implementation of the LWMPs, funding and taxation issues, National Water Initiative, water trading Murray Catchment Management Authority Auspice agency for LWMP investment and Implementation of the LWMPs, managing regional integrated catchment management policy; natural resources, community consultation funding partner MILCast, AWMA Preferred suppliers for company infrastructure, Irrigation infrastructure design, manufacture and provide additional income stream for company installation; business management and profitability Construction contractors Carry out construction works as required for Construction works, OH&S requirements, supply and stormwater systems, landholder works, tendering procedures, contract management LWMP works Southern Riverina Irrigators and Representative landholder lobby groups Operational, political and policy issues landholder associations Focus group Customer group to provide feedback to the Customer service, communication, company operational issues LWMP working groups Provide consultation and direction for LWMP implementation, changes to LWMP initiatives, implementation of Murray LWMPs management of natural resources in the region Conservation groups Partners in projects to achieve integrated catchment Environmental flows, impacts of irrigation on the management and sustainable production, interested landscape, wetland health, environmental stakeholders in the environment performance, implementation of LWMP Other irrigation companies Collaborators on operational issues, promotion of Changes to water availability, water reform, supply irrigation, partners in industry development system efficiencies, operational efficiency Commodity groups: RGA, SunRice, Participants in irrigated agriculture; collaborators in Water availability, productivity research, LWMP Murray Dairy responsible water use and improved productivity implementation Industry groups: Professional networks for information exchange Promotion of region’s initiatives and responsible ANCID, AWA, IAA, NSW Irrigators’ Council and education; joint approaches on water policy, irrigated agriculture reforms and improved water management

40 Murray Irrigation Limited Annual Report 2006 engaging stakeholders

Contributing to water policy • Retail tagging, In April 2006 governments agreed to • Introduction of an exit fee where trial wholesale tagging of entitlements Murray Irrigation is committed to water entitlements were at a valley and state level to facilitate an active role in lobbying government transferred from our licence. permanent water trading. to represent the interests of the company, our irrigators and our The package of changes also provided Exit fees regional communities.We have our shareholders with increased Four NSW irrigation companies continued our efforts to actively flexibility in the ownership of their have introduced exit fees on water participate in this policy arena in land and water assets. entitlements traded from their licence the past year with some success. In conjunction with this we have to recoup the long term costs of Change in the water industry over pursued the merits of expanding operating and maintaining the system. the last decade has been continuous - intervalley and intravalley water This is in line with principles which our irrigators would say relentless. entitlements trade based on wholesale have been endorsed in the Murray Since the early 1990s successive tagging, rather than exchange rates. Darling Basin Commission (MDBC) regulatory changes have directly report, A guide to exit fees and access fees. Tagging water impacted on water availability (both The changes to our constitution mean entitlements for trade total water availability and within the company no longer restricts the season availability) and increased the In the past year the NWI has focused trading of water entitlements from its cost of water. on the expansion of water markets. For licence. Given that half of our water the company this meant changes to Our participation in water policy charges are raised against entitlements, our constitution to remove restrictions during the past year has targeted four this has significant implications for the on the trading of water entitlements. issues. long term viability of the company Last year we reported that extensive and our irrigators. 1. Retail and wholesale tagging of debate had been underway to water entitlements. Related to this determine the extent of the changes In April 2006 the Australian are the constitutional changes the required to comply with the NWI and Competition Consumer Commission company made in January 2006 any additional changes which could (ACCC) was asked to provide advice in order to comply with NSW be made, to benefit our shareholders. to the Federal and State Governments Government’s implementation of the Murray Darling Basin of the National Water Initiative In the past 12 months widespread Ministerial Council on barriers to (NWI). consultation was undertaken before trade, including exit fees.The ACCC changes were drafted and presented to 2. Bulk water pricing and the investigation is disappointing, given our shareholders at an Extraordinary Independent Pricing and the development of our General Meeting in January 2006, Regulatory Tribunal (IPART) exit fee was based on principles and endorsed by an overwhelming determination for 2006 to 2010. established through the MDBC majority (see case study, page 43). and dialogue between the NSW 3. A review of the water resource Government and the NSW irrigation assessment. We have continued working with other NSW irrigation corporations corporations.The outcome of the 4. Applications for Water Smart and NSW Irrigators’ Council to ACCC investigation will have Australia funding. develop a co-ordinated approach to implications for Murray Irrigation’s Expansion of the NSW and Federal Governments exit fee pricing policies. in response to the NWI. trade in entitlements Bulk water pricing State and Federal Governments We have collectively promoted Preparing submissions for IPART’s through the NWI are pursing retail tagging of our entitlements cyclic review of government water expansion of trade in entitlements in conjunction with exit fees as the charges is a time consuming processes (i.e. permanent trade).We responded most justifiable controls on water and absorbs significant staff time and with a package of changes which trading which improve trading other resources. Our efforts in relation would allow increased market access opportunities while limiting the 2006 to 2010 price determination are to our water entitlements.The key third party impacts of trade on our detailed on page 22. elements of this package were: businesses and communities.

Murray Irrigation Limited Annual Report 2006 41 Whilst any price increase is un- resource, both at a political level, and increases to the announced allocation welcome, key elements of the IPART an operational level. These agencies than had originally been anticipated. determination which are consistent include the MDBC’s operational arm with Murray Irrigation’s arguments are: River Murray Water, State Water and Water Smart Australia funding • Differential pricing for Murray DNR. Federal and State Governments are committed to finding more water Irrigation because of the system To bring the company into line with for the environment and market wide benefits provided by our the Water Sharing Plan and other mechanisms will play an increasing operations and our economies NSW Government regulations we role in securing this water. This of scale; initiated the following changes during reform is occurring against a backdrop • Sharing of River Murray Water the year: and MDBC costs more widely of prolonged drought in south eastern • Increased the maximum yield Australia, which is now entering its with government and with other on entitlements from 83% to 90% NSW irrigators; fifth consecutive year, and possibly the (to apply in 2006/07); driest year on record, as indicated by • Water prices set based on long • Increased the general security to the lowest ever recorded catchment term average water sales; high security conversion ratio inflows between July 2005 and August • Efficient use of funds by both from 1:0.5 to 1:06; 2006.The Federal Government, State Water and the Department • Restored 5% loss on water carried through its Water Smart Australia of Natural Resources (DNR). over from 2004/05 to the 2005/06 Programme has $1.6 billion to invest Resource assessment irrigation season following advice in improved water management from DNR that carryover losses nationally. Murray Irrigation identified The NSW Murray Lower Darling would no longer apply. Water Smart Australia funding as an Water Sharing Plan regulates the opportunity to leverage funding from distribution of the NSW share of We continue to seek more frequent our own investment, and the Living the Murray River’s waters between water allocation announcements to Murray Initiative. the environment and consumptive better inform irrigators’ decisions users. Murray Irrigation’s general about crop plantings and water use. Murray Irrigation developed three security entitlements represent 70% In November 2005 we successfully submissions to Water Smart Australia. of licenced entitlements.We are in requested a review of the available These submissions each involved the continual discussion with the NSW resource in conjunction with the recovery of water for the Living Government and its agencies to flooding of the Barmah-Millewa Murray in exchange for government ensure access to our share of the Forest.This resulted in greater and irrigator investment in irrigation infrastructure.The projects included; On route storage in the Murray Irrigation supply system This project involves the construction of an 11GL storage at The Drop Regulator adjacent our main supply channel, the Mulwala Canal. It would result in an environmental dividend for the Living Murray of 8GL and would reduce the frequency and extent of unseasonal flooding in the Barmah-Millewa Forest. It would also allow Murray Irrigation to better match irrigation supply and demand. Murray Irrigation and the Living Murray Initiative have funded a feasibility study into this project which is nearing completion. The National Young Farmers Council reports to Federal Agriculture, Fisheries and Forestry Minister Peter McGauaran. Members visited Murray Irrigation and toured a local farm in July 2006, pictured with local landholder Michael Hughes (right).

42 Murray Irrigation Limited Annual Report 2006 engaging stakeholders

On-farm incentives to estimated 260,000ha, increased of water savings for the environment. improve irrigation efficiency agricultural production and farm It will also promote improved viability, water savings for environ- production from irrigated agriculture. This project aims to upgrade and mental use, new investment and more It includes the rationalisation of outlets improve the efficiency of existing diverse, water efficient agricultural from 3,900 to 3,000, conversion of irrigation layouts, increase agricultural enterprises, and increased economic our standard measurement device, the productivity and create water savings activity in local communities. Dethridge wheel, to magflow meters, for environmental use. Participation and the completion of the mechanis- would be on a voluntary basis, Remote control of high flow outlets ation and remote operation across all modelled on the successful Murray This project will install high flow regulators on our supply system. Land and Water Management Plan outlets and remote operation across (LWMP) incentive program. Benefits Murray Irrigation’s area of operation to A decision on these funding proposals would include significant improve- ensure improved delivery efficiency of from Water Smart Australia is not ments in irrigation efficiency over an the supply system and generate 15GL expected until 2007.

...... A NEW CONSTITUTION . . . . . More than 40 different meetings were minimum change legally .required while held, and four proposals were developed providing a new flexibility in. water . in the process of creating a new company ownership for our shareholders.. constitution for Murray Irrigation. The Key changes removed the company’s. new constitution replaced the company’s . existing restrictions on ownership and. Memorandum and Articles of Association trading of water entitlements. People. who (M&A) and incorporated changes we . did not own land would be able to own . were required to make in order to comply Murray Irrigation water entitlements, but . with the National Water Initiative (NWI) . they would not be able to own shares. . and related NSW Government legislation. . Voting rights would remain only with . . Proposals ranged from a conservative landholders and the company would . . least-change model, to a fully commercial, continue as a not-for-profit operation. . . . for-profit model with separation and In conjunction with the new constitution, . . . . . open trading of both company shares we advised shareholders that we would ...... and water entitlements. In August and be introducing an exit fee on water September 2005 we met with entitlements traded from our licence. Information brochure sent to shareholders in November 2005. government, legal and financial experts, We also introduced retail tagging of shareholders, landholder associations, entitlements.This allows Murray Irrigation Southern Riverina Irrigators, members of water entitlement owners to transfer our focus group and local dairy farmers water allocated to the entitlements public meetings in November, and special to discuss the various models. each year to wherever they want to sessions at each of our offices where A key issue for the company was the use it, without having to transfer the shareholders could meet with our senior need to gain the support of 75% of entitlements from our licence (subject staff to discuss any concerns. shareholders attending the January 2006 to state trading restrictions). At an Extraordinary General Meeting meeting in order to adopt the new In November 2005 all shareholders of members on January 31, 2006, the constitution. As a result of feedback the were mailed information explaining the new constitution was endorsed with an proposals were simplified to provide the proposed changes. This was followed by overwhelming majority.

Murray Irrigation Limited Annual Report 2006 43 Industry & community well as hosting delegations to our Government agencies stakeholders area.These include IPART, DNR, Table 4.4 indicates the formal review State Water, River Murray Water, and consultation meetings held with The company’s involvement in National Water Commission, the the NSW Government agencies in industry alliances and networks is MDBC and the Department of 2005/06. important in gaining wider support Agriculture, Fisheries and Forestry. for our position, and in under- The restructure of DNR last year standing the views of others. We are involved in several agency has changed some of our reporting Directors and senior staff are and industry committees which arrangements, particularly in relation encouraged to represent the company provide opportunities to strengthen to the Murray LWMPs.The Murray on committees which provide our networks and to represent the Catchment Management Authority opportunities to better understand or interests of our company, shareholders (CMA) is now the auspicing agency to influence government water policy and region. Participation in a range for this program.The Murray LWMP development. of practical research and operational Management Committee, which projects also helps to develop best includes government appointed We invest in research and practice in the irrigation industry and auditors Sinclair Knight Merz (SKM), development to provide evidence achieve specific outcomes.Tables 4.2 Murray CMA and Murray Irrigation supporting our arguments including and 4.3 outline our involvement in staff, meets quarterly to review the a river monitoring program we have key external committees and projects program’s progress.Additional initiated and developed in partnership during 2005/06. discussions are held with the Murray with the Murray Darling Freshwater CMA in reviewing targets and Research Centre (page 58). We are also regularly sought out by local, state and national media for incentives which will increase We make regular presentations, comment on water issues and the implementation and further funding representations and submissions to impacts of those issues on our opportunities for specific a range of government agencies, as shareholders and the region. environmental projects.

Table 4.2: Murray Irrigation’s participation in external committees in 2005/06

Organisation Activity NSW Irrigators’ Council Develop collaborative water policy, promotion and political lobbying capacity among the state’s agricultural water users

Living Murray Community Provide community advice to the Murray Darling Basin Ministerial Council’s Community Reference Group Advisory Committee; advice to MDBC on the Living Murray Initiative

Australian National Committee Collaborative industry research, promotion and networking on Irrigation and Drainage (ANCID)

State Water Customer Provide feedback to State Water on its operations, policies and pricing issues Service Committee

Murray Dairy Industry Dairy research and development, production, processing and environment; participants Steering Group include irrigation, dairy and processing industry representatives

Ricegrowers Association Promote environmental best practice among rice growers Environmental Champions Program

Murray Darling Freshwater Improve relationships between the research centre and key regional stakeholders; provide Research Centre Community direction for research priorities, with input from stakeholders including NSW and Victorian Advisory Committee water and irrigation organisations, catchment authorities, state government agencies

Young Irrigation Network Support network to develop skills, opportunities and broaden understanding of water related issues among young people working in any aspect of the irrigation industry

Irrigation Futures Cooperative Contribute to priorities and irrigation research and development projects led by the Research Centre University of Southern Queensland, with other irrigation supply organisations

Rice Environment Policy Improved environmental performance of rice production; participants are irrigation supply Advisory Group organisations, Ricegrowers Association, DNR, DEC

44 Murray Irrigation Limited Annual Report 2006 engaging stakeholders

Government agencies including and government agency represent- during the past year as a result DNR and Department of Primary atives. In addition the review is of the department’s restructure. Industries (DPI) are also represented publicly advertised in local However we remain in regular on the four Murray LWMP steering newspapers with an open invitation contact with DNR about water committees along with Murray to the community.This review day resource availability, issues relating to Irrigation staff and 60 irrigator provides additional opportunities for the regulation of water trading and members. In 2005/06 each of the external input into the continual the implementation of the Murray four working groups held quarterly improvement of the Murray LWMPs. Valley Water Sharing Plan. Discussions meetings.These working groups Almost 70 people attended the with the Department of Environment contribute to the development of review in February 2006. and Conservation (DEC), which LWMP strategies and new initiatives oversees our Environment Protection DNR remains the auspicing agency such as the regional wildlife survey Licence are primarily related to our for the government funded Asset undertaken this year, (page 63) as well reporting requirements and are Renewal Program. Quarterly as reviews of incentives available. ongoing throughout the year. meetings are also held with the An annual public review day is government auditors, SKM, for We are in daily contact with State held to present progress on LWMP reporting and progress review. Water on a range of issues including implementation, seek feedback on Interaction with DNR related to water ordering, river operations and possible improvements to the government funding has reduced water trading. Director Gordon Ball program, report on research and development, and to hear accounts from landholders who have been involved in the plans. Table 4.4: Consultation with regulatory agencies

A variety of stakeholders are invited Regulatory agency Meeting No of Meetings 2005/06 to attend this forum including DNR Asset Renewal Program Audit 4 environment groups, irrigators, DEC Environment Protection Licence 0 local government, local community members, fellow irrigation companies Murray CMA Murray LWMP Program 4

Table 4.3: Murray Irrigation’s participation in external projects in 2005/06

Project Partners Environmental Management Systems Pilot Project Local farmers, Department of Develop practical environmental management systems for irrigated agriculture Agriculture, Fisheries and Forestry

Torrumbarry Cutting Project DNR, MDBC, DPI (Forestry) Managed watering of the Koondrook Perricoota State Forest

Living Murray Water Savings Project Committee MDBC, Murray CMA, DNR Evaluation of an on-line storage at The Drop Regulator

System Harmonisation in the Murray Irrigation System Irrigation Futures CRC Optimise operation of Murray Irrigation’s channel system and assist with management of river flows through modelling

Rice on Beds trial DPI (Agriculture), industries, Investigate more water efficient methods for rice growing landholders

Evaluation of Deniliquin urban effluent reuse options Deniliquin Council Minimise environmental effects of urban effluent

Murray Now Regional branding and regional development promotion Murray Regional Development Board

Wetland Watering on Private Property trials NSW Murray Wetlands Working Improve health and biodiversity of stranded wetlands on private property Group, private landholders

Strategies for combating Sagittarria Goulburn-Murray Water Developing a strategy for combating the weed Sagittarria in our system

Murray Irrigation Limited Annual Report 2006 45 is also a member of State Water’s Council over the past year with two 30%. Details of the survey results are Customer Service Committee, which directors regularly attending meetings. in the case study on page 49. met four times during 2005/06. We have also participated in a number The rice and dairy industries of meetings with other irrigation represent the two largest grower Irrigation industry groups corporations, NSW Irrigators’ groups in our region and we regularly During the past year we have Council and the NSW Government take part in meetings organised by strengthened our relationship with to discuss industry responses to policy Ricegrowers’Association of Australia the peak local landholder group developments unfolding as part of the (RGA), SunRice and Murray Dairy the Southern Riverina Irrigators NWI. to provide advice about water (SRI), with a Memorandum of We continue to support the Australian resource and policy issues. Staff are Understanding between the company National Committee on Irrigation involved in the RGA’s Environmental and SRI established in 2005. Directors and Drainage (ANCID) which Champions Program working group, and SRI members hold quarterly provides a valuable industry forum and act as presenters for the program. meetings to discuss a range of issues through its annual conference each One staff member is also participating including government policy and year. In 2005 we participated in in an RGA leadership program. company operations. By publishing ANCID’s conference at Mildura in information in our weekly Talking This year we have also assisted October, and our precast concrete Water newsletter to our customers SunRice with the planning and business MILCast had a trade stand. we have assisted SRI’s efforts to lobby administration of an advance on Each year we take part in ANCID’s IPART on water pricing issues and future water allocations from Snowy benchmarking study, which will now to raise awareness about the possible Hydro Ltd for ricegrowers in our be undertaken by the National Water implications of the proposed area of operations. Commission. In 2006 we were one privatisation of Snowy Hydro Ltd. of four irrigation supply organisations We are members We also regularly make presentations to participate in ANCID’s customer of Murray Dairy’s Industry Steering at local landholder association and service survey conducted by the Group. Murray Dairy also provided SRI meetings on water issues. Bartley Consulting Group. Surveys us with valuable input in the We have become more actively were issued to 1,400 of our preparation of our Dairy Expansion involved in the NSW Irrigators’ customers, with a response rate of Strategy this year (page 37).

LWMP Management Committee members, from left, Murray Irrigation Environment and Communication Manager Jenny McLeod, Murray CMA General Manager Anthony Couroupis, Murray Irrigation Deputy General Manager Warren Elsbury, LWMP On-Farm Supervisor Michael Pisasale and government appointed program auditor Stephen Harding from SKM.

46 Murray Irrigation Limited Annual Report 2006 engaging stakeholders

Customers and shareholders working groups they can influence 1,500 the direction and framework of these At an operational level, efficient initiatives as well as taking part and communication is required to inform providing their properties as the 1,200 our shareholders as quickly as possible venue for education and promotion. about any issues which will affect On specific projects site meetings are them, particularly issues relating to held with the landholders involved water supply. Well informed staff, to develop a proposal for works, cost 900 directors and shareholders are better share initiatives and participation. able to anticipate and respond to Examples of these undertaken in changing seasonal conditions and 2005/06 include the Murray LWMP 600 Number of Recipients political environments which directly wildlife survey, development of Stage impact on the viability of the 3 of the Wakool Tullakool Subsurface company and shareholders’ businesses. Drainage Scheme and Green Gully We also have a number of initiatives tile drainage project (page 55). 300 designed to support our customers and their families including grants Communication to local schools and sponsorship of Our weekly Talking Water faxstream 0 learn-to-swim programs. and email service is our primary 2005/06 2004/05 2003/04 2002/03 2001/02 method of communicating with our Customer feedback and Figure 4.1: shareholders. Talking Water is issued participation Number of ‘Talking Water’ recipients each Tuesday with general At a formal level our shareholders information about water availability, have input to our operations via shareholder activities, policy issues, the board of directors, with eight relevant meetings, training or funding of the 11 directors elected by the opportunities.Additional shareholders from their geographic faxstreams/emails are issued for electorate.There are five irrigator allocation updates, supplementary landholder associations, and the water and other urgent issues. In company also meets regularly with 2005/06 we issued a total of 92 the peak landholder group in the editions of Talking Water.The number region, SRI. of subscribers increased from 1,104 to To seek direct feedback from 1,208 (figure 4.1). customers, particularly on operational An SMS service is also provided for issues, we have a focus group which urgent information related to water meets quarterly. Membership was availability which may have expanded from 12 to 18 members for commercial implications for the 2005 to 2007 period. customers.There were 12 broadcasts Engagement and discussion with this year, following the successful trial customers is an essential part of our of the service in 2004/05 and the capital works program and our number of subscribers has increased environmental initiatives.Where from 198 to 319. major works are to be carried out on Our weekly radio broadcast on local or adjacent a landholding, the owner radio 1521QN ‘On the Land’ rural is notified 12 months in advance, program and weekly media releases which provides an opportunity to are designed to keep our customers discuss any changes to the location and local communities informed or nature of the infrastructure which about the company’s activities. Media might benefit both parties. releases also target regional and Most environmental initiatives also national media. involve the active participation of our The company did not hold its annual customers.Through the LWMP shareholder meetings this year, as it

Murray Irrigation Limited Annual Report 2006 47 followed an extensive period of that more consistent use across the School sponsorship consultation related to constitutional company will improve its value in Our sponsorship of primary and changes and our attendance at measuring our performance. secondary schools in the region is landholder association meetings designed to support the children of shortly before our own meetings Community initiatives our customers and to provide them were due to be held. In 2004/05 we sponsored an Award with information about irrigated for Innovation in Irrigated Agriculture The scheduled publication of our agriculture and the LWMP program. as part of the Deniliquin & District Talking Water Magazine was This year we increased the sponsorship Business Awards. It was disappointing postponed and the number of LWMP from $200 to $250 for primary schools that this award was discontinued in newsletters published last year fell in our area of operation and from 2005/06.The company chose not to from 12 to 7 as staff were committed $1,500 to $2,000 for each of the three sponsor an alternative award.We to other projects. secondary schools. participated in a number of other Privacy policy community initiatives during the year. Invitations were also sent to schools to attend our Where the Water Flows Murray Irrigation holds significant Where the Water Flows Exhibition exhibition. Classes from all but two information about our customers and The company developed an primary schools in the region visited all landholdings serviced by the exhibition in 2005 to co-incide the exhibition. irrigation supply system.This with its 10th anniversary and several information can help us to quickly other major milestones for irrigation We also inform schools about events identify and contact those customers in the region. It provided a history which might be of interest to their most likely to be affected by a specific of irrigation development and this is students, including the wildlife . issue.We also keep information about now being developed into a website information nights and field walks our contractors. and resource kit for schools and local across the district held as part of the Murray LWMP wildlife survey. In order to protect our customers’ libraries.The exhibition opened at Children were well represented and contractors’ privacy, and to nine venues across the region with among the 1,300 people who took maintain the integrity of our more than 2,400 visitors. part in these events. databases we have a Privacy Policy. Water safety sponsorship This policy is in line with the Privacy This program provides financial Land, Life and Water Act 1998 (Commonwealth) and the support to organisations offering photographic competition 10 national privacy principles set out learn-to-swim or water safety in the Act. We take all reasonable This competition is helping us to programs to primary school aged steps to ensure that our information is establish a collection of images which children. This aims to address the accurate and complete. promote irrigated agriculture, and dangers of the many natural and raise the profile of irrigation in local Before information can be divulged man made water hazards in the communities. Six local show events to any external person or organisation region. Some schools have extended included our competition as part of the customer or contractor must sign their swimming programs to provide their photography sections during a release form.Where data is provided open water safety and life saving 2005. to external organisations that training. One additional school was organisation must concur with our encouraged to the offer a learn-to- We provided prize money for data before it is exchanged. swim program in 2005/06 as a result winners at shows, and these entries of the sponsorship offered by the were automatically submitted for Complaint handling company (table 4.5). One school also regional judging along with other The company also has a Corrective reported it had expanded its program entries submitted independently to Actions Register to help us better to a greater number of students. Murray Irrigation. Final judging for respond to issues raised by both this competition was held in customers and staff. It registers November 2005. Table 4.5: Water safety sponsorship customer complaints, customer The number of entries increased on satisfaction, conformity to procedures, 2006 2005 the previous year, with more than 120 opportunities for improvement, 2 swimming clubs 2 swimming clubs entries overall. Several of the winning external supplier issues and safety 22 primary schools 21 primary schools entries have featured in company issues.While this register was first 1742 places sponsored 1661 places sponsored publications during the past year. established in 2003/04 we recognise

48 Murray Irrigation Limited Annual Report 2006 engaging stakeholders

Challenges - In attempting to influence water Promoting a positive image of policy development it is also irrigation as a valued and environ- Communication expectations from important that we direct our efforts mentally responsible industry is also our customers are increasing, resulting to those issues which will most affect a challenge in light of increasing in a greater demand for information the company and customers. competition for water for in a variety of formats. Mail, news environmental outcomes. Our rural Many of the water policy and trading media and annual meetings are no communities are feeling increasingly issues the company is dealing with are longer enough. Fax, email, website, disenfranchised by city-centric complex and explaining these issues SMS and more face-to-face government policy which shows little clearly to our customers is often presentations and opportunities for understanding of the issues facing difficult. It is important to us that we discussion have become the norm. rural water users. Irrigators are also help customers and shareholders to Continuing to improve our finding it increasing difficult to understand the issues and potential communication and engagement remain resilient and adapt to the impacts on the company, and on their will require the commitment of impacts of policy changes given the own farm businesses. significant company resources. prolonged drought.

...... Excellent/Extremely Satisfied SURVEYING CUSTOMER . 5 . 4 SATISFACTION . 3 . 2 . LEGEND . 1 Poor/Extremely Dissatisfied . . In February and March 2006 Murray communication services. .For water supply Irrigation undertook its first formal survey 81% were satisfied or extremely. satisfied . of customer satisfaction levels and was and 78% were satisfied or extremely. heartened by the positive response from satisfied with communication services.. 32% 33% 32% irrigators. . The ease of water ordering scored most. . Of the 1,410 surveys mailed to customers highly. Minimising the number and the. 434 were returned, a response rate of duration of interruptions to water supply. 30%. also scored well. Water services with a . . . The result show that most of Murray lower score included maintenance of . channel water levels, minimising silt and . Irrigation customers who responded . . are satisfied with the company’s water debris in the system and managing water . allocations during drought. . . delivery and communication services. 44% 42%. 43% ...... The survey was organised through The manner and attitude of staff and the . . . . ANCID, and was conducted by Bartley provision of timely information both Consulting, with Hydro Environmental scored well in the communication services. managing the project and providing data Communication services with lower scores analysis. Other irrigation companies included consulting with customers on taking part in the survey included issues affecting them and responding to Irrigation (NSW), SunWater customer and community needs. 18% 19% 18% (Qld) and Goulburn-Murray Water (Vic). The results show that about 5% of Performance was scored on a scale of 1 customers were dissatisfied with our service. 4% 5% 5% to 5, where 1 was extremely dissatisfied 2% 2% 2% and 5 was extremely satisfied. The We will take part in this survey again Overall Overall Overall Satisfaction Satisfaction Satisfaction average score for water delivery services next year, although a smaller number of with water with with service supply communication provided was 4.1 out of 5, and 4 out of 5 for customers will be asked to take part. (Calculated) (Calculated) (Calculated)

Murray Irrigation Limited Annual Report 2006 49 ...... protecting our environment......

We are undertaking initiatives and developing policies to improve the health and productivity of the regional environment.

50 Murray Irrigation Limited Annual Report 2006 protecting our environment

Our commitment to • Take a lead role in the management salinity, groundwater quality, the environment of major environmental assets in stormwater quality, aquatic the region; ecosystems, monitoring, water Environmental sustainability is an • Encourage landholders to adopt use efficiency, soil health, and integral component of Murray best management practices to biodiversity. Irrigation’s operations and those of minimise the impacts of irrigation our shareholders.We aim to achieve and maximise water use efficiency. a balance between environmental protection and agricultural production. • Continue to develop initiatives to We are committed to addressing the address a range of specific issues direct impacts of providing irrigation identified in our Environment and stormwater services through Policy.These are: watertables, improvements in risk assessment and management systems.We also strive to reduce the indirect impacts of water use by irrigators through company policies and implementation of the Murray Land and Water Management Plans (LWMPs). In 2006, our new strategic plan reinforced our commitment to pro-actively address the impacts of irrigation within the region. Our key strategies are to: • Minimise the impact of irrigation on the local and downstream environment, comply with our

licences and maintain regional Above: Helping to develop protocols for the company’s river monitoring program, Rob Cook from agricultural productivity and the Murray Darling Freshwater Research Centre conducts sweep netting for macroinvertebrates on the Edward River. Top: Surface Drainage Supervisor Richard Gale (left) and Berriquin LWMP environmental values; Working Group Chairman Louis Kelly at a deep ripping demonstration on the banks of the Box Creek near Blighty.

Performance indicators

Performance

2005/06 2004/05 2003/04 2002/03 2001/02

Comply with Licences All issues raised by regulatory agencies regarding our licence compliance during the year have been addressed ✓ ✓✓✓✓ and our compliance status is retained.

Build a collaborative relationship with the Murray Catchment Management Authority (CMA) The company continues to collaborate with the CMA ✓✓N/Ap N/Ap N/Ap regarding LWMP implementation, wetland watering and other initiatives in the local region.

Implement the Murray Land and Water Management Plans – Maintain government investment. G: $7.6M G: $8.5M G:$6.5M G: $7.7M G: $6.5M – Landholders to directly coinvest $5M/year. LH: $5.7M LH: $5M LH: $3.9M LH: $3.4M LH: N/A

N/Ap – Not applicable

Opposite page, top: Aerial view of a dairy farm near Blighty. Centre: landholder Chris Stillard has completed all LWMP works on his property. Bottom: Locally endangered Carpet Python featured at several wildlife information nights.

Murray Irrigation Limited Annual Report 2006 51 2.0 Company environmental and of that, in a normal year, approximately 30-50% is irrigated. 1.8 management The average farm water use intensity

1.6 Company environmental policies across the region as a whole in Company policies provide some 2005/06 was 1.13ML/ha, an increase 1.4 regulation of the way our customers from the previous three years. use water on their farms in order to 1.2 As with the TFWB Policy, our prevent environmental impacts like Rice Growing Policy is aimed at 1.0 rising watertables. reducing watertable rise across the Our Total Farm Water Balance region.There are two parts to the 0.8 (TFWB) Policy, introduced in 1997, policy. Firstly, rice can only be grown Irrigation Intensity (ML/ha) on a paddock that has been tested 0.6 limits water use on farm to 4ML/ha. Where approved best management and approved by Murray Irrigation as 0.4 practices are implemented, water use suitable for rice growing. Secondly, a may be increased up to 6ML/ha.The maximum rice crop water use figure 0.2 policy is based on research by CSIRO is calculated each year based on the that found that an irrigation intensity Rice Environment Policy Advisory 0.0 05/06 04/05 03/04 02/03 01/02 of 1.5 to 5ML/ha would balance Group (REPAG) agreed method of calculation; taking into account Figure 5.1: water use on farm and accessions to Change in irrigation intensity for the Murray the watertable. seasonal rainfall, evaporation and crop Irrigation region water use requirement figures. Water use in the 2005/06 season indicates 20 landholdings exceeded Of the 272,772ha approved for rice their limit, compared to six the growing there were 41,387ha sown in previous year.Two of these land- 2005/06, a significant increase from holdings had approval for 6ML/ha the previous year when only and one was approved for 5ML/ha. 17,863ha were grown. Rice water When the total farm water balance use accounted for approximately 48% limit is exceeded the company of total water use within the Murray reduces the irrigation limit for that Irrigation region.The average volume landholding by the amount the limit of water used for rice production was was exceeded for the following 12.2ML/ha.There were five land- irrigation season. (The TFWB policy holdings that exceeded the crop water is available from our website.) use target in 2005/06 as shown in table 5.1.These growers will be required Overall irrigation intensity within to re-test their paddocks prior to Murray Irrigation’s area has remained approval being granted to grow rice relatively low (figure 5.1). Of the on that area again. (Rice Growing 748,000ha we service, 51% of the Policy and soil testing procedure are area has been developed for irrigation available from our website.)

Table 5.1: Number of landholdings exceeding target rice water use figure

Year 2005/06 2004/05 2003/04 2002/03 2001/02

Number exceeding 5 5 26 0 27 % of growers exceeding 0.6% 1.2% 4.6% 0% 2.5%

52 Murray Irrigation Limited Annual Report 2006 protecting our environment

Monitoring trends in of 20,000ha. Our readings show that vital that the company and groundwater levels in March 2006 14,334ha of land had landholders continue their efforts to Rising watertables, salinity and a shallow watertable (figure 5.2). In reduce accessions. Figure 5.3 shows waterlogging are major threats to the August this had reduced to 7,479ha. the change in depth to watertable since implementation of the Murray health and productivity of our region. The severe drought of 2002/03, LWMPs began and we believe the We monitor a network of 1,500 the continuing dry weather sequence plans have made an important shallow piezometers across and low water allocations have been contribution to the improvement in 960,000ha, taking readings in March factors in the improvement of watertables. and August each year.We also watertable levels over the last five monitor the salinity of groundwater years.The increase in area with a Groundwater of salinity greater than every three years. Groundwater shallow watertable in March 2006 5,000EC is another indicator we use quality samples were collected in highlights the importance of local to monitor the risk of salinity. Since July 2006 and are currently being initiatives to minimise watertable sampling began in 1997 the salinity analysed. accessions. It is likely that the rise is of groundwater in the region has Since 2003 less than 2% of the attributable to the significant increase increased.This is of concern to the region has had a watertable within in water delivered to Murray company. However, while the area two metres of the surface. In 2005/06 Irrigation landholdings in the last with a shallow watertable remains low the area with a shallow watertable irrigation season.The area of shallow this will not affect local biodiversity increased from previous years but watertable is also a significant or agricultural production. remained below the five year average indicator of regional salinity and it is

Figure 5.2: Depth to watertable, Murray LWMP region, March 2006

Murray Irrigation Limited Annual Report 2006 53 Figure 5.3: Change in depth to watertable in the Murray LWMP region July 1995 to August 2006

Figure 5.4: WTSSDS watertable levels, March 2006

54 Murray Irrigation Limited Annual Report 2006 protecting our environment

Controlling watertables in the protecting another 25,000ha. Prior scheme extracted a total of 3,449ML Wakool district to construction in 1981 there were of saline groundwater. 19,200ha in the Wakool region Subsurface drainage can assist in Landholders in the Wakool district with watertables within 1.5m of maintaining watertables at a depth are currently negotiating development the surface. In 2006 only 2,930ha that doesn’t interfere with biodiversity of a third stage of the scheme. In recorded watertables within 2m of and agricultural production. Murray conjunction with the company and the surface (figure 5.4). (A more Irrigation’s major subsurface drainage the Murray LWMPs a review of past detailed description of the WTSSDS operations focus on the Wakool feasibility studies is being undertaken. is available from our website.) Tullakool Subsurface Drainage Landholders are negotiating cost Scheme, a bore field which pumps In combination with dry conditions, sharing arrangements for the project highly saline groundwater into two low allocations and improved water which has an estimated cost of $1.9 evaporation basins. Since it began management on farm, operation of million.An action plan for operating in 1988, the scheme has the scheme’s groundwater pumps has construction of Stage 3 is being successfully controlled shallow been scaled back while still prepared for endorsement by Wakool groundwater, directly protecting maintaining watertables below two landholders and the company. 25,000ha of farmland and indirectly meters. In the past 12 months, the

...... SALINITY SUCCESS . . . AT GREEN GULLY ...... Rising watertables in the Green Gully . . area, near Bunnaloo in southern NSW are . being successfully controlled as the result . . of a new tile drainage project. Local . watertables fell by more than a metre . CSIRO hydrologist Tariq Rana (third from left) explains to local. landholders how the Green Gully tile within a week of completing stage one of . drainage system works. . the project, in June 2006...... Green Gully, approximately 70km south ...... west of Deniliquin, has been exposed to high groundwater and salinity since the It has taken fours year to develop from the system worked and to discuss plans mid 1970s when high rainfall and concept to implementation. Landholders, for stages two and three. extensive flooding raised local watertables. CSIRO, Murray Irrigation and the Murray Project supervisor Michael Pisasale said The gully is the ancestral bed of the Murray CMA have all worked closely together to response to the field day from the local River, and is a key path for stormwater get work underway. Funding has been community had been outstanding. provided through the NSW Strategic through nearby red gum forests. “More than 70 local landholders attended Reserve, Envirofund, and the Cadell Land The project’s aim is to prevent highly along with other interested people from a and Water Management Plan. saline groundwater from contaminating variety of agencies. We have now received stormwater flows in the gully. This will Stage one of the tile drainage was extra funding which will allow us to help to maintain the productivity of the installed at Steve and Ebba Holschier’s complete stages two and three over the surrounding farmland, the health of the property “Paringavale” in June. A field day next two years,” he said. forest and the Murray River. was held at the site to demonstrate how

Murray Irrigation Limited Annual Report 2006 55 Rainfall Managing the quality of our carried out when flows exceed Net Flow ML Deniliquin (mm)

20,000 500 stormwater 5ML/day.Water samples are also Jan-May The discharge of water from our submitted by shareholders when Sept-Dec seeking approval to discharge water Jun-Aug stormwater network has the potential Rain to affect receiving waterways, which into our supply channels and 15,000 400 all ultimately lead to the Murray stormwater escapes in emergency River. Our monitoring program, situations.Testing for salinity, turbidity chemical contingency plan and and nutrients is undertaken in chemical control plan ensure our Murray Irrigation’s water laboratory. 10,000 300 compliance with the conditions of The laboratory has National our Environment Protection Licence Association of Testing Authorities and Water Management Works (NATA) accreditation for salinity, 5,000 200 Licence to minimise the impact of turbidity and total phosphorus testing our activities on receiving waterways. to the internationally recognised standard ISO/IEC 17025:1999. The water quality parameters In November 2005 heavy rain fell 0 100 monitored include: flow, salinity, total 2005/06 2004/05 2003/04 2002/03 2001/02 nitrogen, total phosphorus, turbidity, just after many rice growers had Years blue-green algae, and agricultural applied pesticides to their crops. Figure 5.5: chemicals.There are 16 sites It was disappointing that this resulted Comparison of flow in Murray Irrigation monitored continuously for flow and in chemical contamination of stormwater escapes and rainfall salinity with equipment maintained stormwater, with one environmental, N.B. Flows are net of those recorded in the by Ecowise Environmental. Manual nine notification and two action Finley Escape which is essentially used to monthly sampling for turbidity and levels (table 5.2) requiring activation transfer Murray River water through our of our chemical contingency plan. supply system to supplement flows in the nutrients occurs throughout the year . and testing for molinate, thiobencarb The ELISA molinate testing kits and atrazine occurs between October allow for fast action on detection and December.These tests are only of chemicals. Downstream contamination can be prevented by closing regulating structures and tracing the source of the pollution. Annual surveys conducted as part of the Murray LWMPs are used to identify any changes in chemical use which may require additional products to be added to the monitoring schedule. Monitoring and testing issues may arise for the company in future where changes to landholder chemical use results in changes to our monitoring requirements.Testing for chemicals other than molinate is currently expensive and requires specialist

Box Creek Project Officer Linda Russell takes measurements for the replacement of stock stops along the creek. Fencing and the exclusion of stock where possible, is expected to help improve water quality in the Box Creek, which is a major part of the region’s stormwater network.

56 Murray Irrigation Limited Annual Report 2006 protecting our environment

laboratory procedures which are not by Murray Irrigation. Control inlets Salt (tonnes) Watertable Area (ha) March available locally.Time delays between have been installed on a number of 20,000 80,000 sampling and testing could jeopardise properties to manage flows from Jan-May Sept-Dec implementation of the chemical landholdings into the stormwater Jun-Aug 70,000 contingency plan. escapes, and we have been better at Watertable Area March (0-2m) ha managing our supply system to 15,000 60,000 In 2004/05 the company began reduce escape losses which also developing a stormwater management contribute to flows. 50,000 strategy.The strategy uses a holistic approach to manage risks associated In 2005/06 the impact of our 10,000 40,000 with the operation of stormwater stormwater flows on receiving escapes and includes a risk register, a waterways was undetectable. 30,000 vision, goals, targets, policy and an Salinity action plan.The board have approved 5,000 20,000 the strategy, and the policy and action Salinity levels within the stormwater 10,000 plan are currently being finalised. escapes are variable with median levels ranging from 96 to 1,900EC.The Flow 0 0 total salt load increased slightly from 2005/06 2004/05 2003/04 2002/03 2001/02 In 2005/06 the total volume of 2,629 tonnes in 2004/05 to 3,411 Years stormwater flows continued its tonnes in 2005/06.The presence of Figure 5.6: downward trend, with 8,645ML shallow saline watertables has a Comparison of total salt load and watertable recorded at our monitoring sites, the significant influence on salinity levels levels from the lowest figure for the past 10 years, in stormwater escapes (figure 5.6). with the exception of 2002/03 Particularly in old stormwater escapes, (figure 5.5). Flows in the stormwater which the company inherited at escapes during 2005/06 coincided privatisation, shallow saline watertables with rainfall.The highest daily flows intersect the bed of the stormwater of up to 138ML/day were recorded escape leading to saline flows. In other in the Box Creek Stormwater Escape. cases shallow watertables lead to salt Low flows in the last two years have scalds on the ground surface that coincided with improved result in saline runoff into stormwater management of stormwater escapes escapes during rainfall events.

Table 5.2: Pesticide limits & results

EPA water quality Number of Exceedences limit (μg/L) 2005/06 2004/05 2003/04 2002/03 2001/02

Molinate Environmental 2.5 0 0 0 0 3 Notification 3.4 8 0 0 0 3 Action 14 2 0 0 0 1

Thiobencarb Environmental 1 0 0 0 0 0 Notification 2.8 0 0 0 0 1 Action 4.6 0 0 0 0 0

Atrazine Environmental 2 1 0 0 0 0 Notification 13 1 0 0 0 0 Action 45 0 0 0 0 0

Murray Irrigation Limited Annual Report 2006 57 Net Total Rainfall Nutrients 10 sites being monitored in autumn Phosphorus (tonnes) Deniliquin (mm) 2.0 500 and spring for water quality, fish, Jan-May During 2005/06 total phosphorus Sept-Dec levels ranged from 0.004mg/L to macroinvertebrates, and aquatic and Jun-Aug 1.000mg/L and total nitrogen levels riparian vegetation. Sites are on the Rainfall 1.6 400 from < 0.5mg/L to 2.6mg/L.The Murray River (2), Edward River (2), net total phosphorus decreased from (2),Tuppal Creek, 2004/05 to 2005/06 with 1 tonne Neimur River and Billabong Creek 1.2 300 recorded (figure 5.7). Nitrogen also (2).This program is essentially about decreased to 4.3 tonnes (figure 5.8). providing good quality data which The concentration of nutrients found can be used to make informed 0.8 200 in the stormwater escapes is decisions about our local riverine dependent on the timing of the environment.

0.4 100 rainfall relative to local agricultural Watering wetlands on private property activities. For 2005/06, high levels of Our continuing partnership with nutrients were associated with the landholders and the NSW Murray 0.0 0 rainfall event in November 2005. Wetlands Working Group is directed 2005/06 2004/05 2003/04 2002/03 2001/02 Years Blue-green algae at improving the health of stranded farm wetlands. Since the watering A small blue-green algae outbreak at Figure 5.7: program began in 2001/02 there have Comparison of total phosphorus load and Lake Mulawala in February 2006 was been 142 sites watered on private rainfall from the Murray Irrigation area transferred through the supply system property across the region. In spring and into two stormwater escapes; the 2005 there were 26 sites covering Finley Escape and Deniboota Canal 689ha watered with 2,431ML from a Escape. Recorded levels were low and NSW Government environmental no action was required. allocation.The watering has resulted Net Nitrogen Rainfall More detailed reports on Murray in improvements to vegetation health Load (tonnes) Deniliquin (mm) Irrigation’s stormwater discharges, 10 500 at all sites and regeneration at many. Jan-May chemical contingency and chemical We have observed significant increases Sept-Dec Jun-Aug control plans are in our annual in the diversity and number of Rainfall 8 400 Compliance Report, which can be wildlife in the wetland areas. downloaded from our website. Landholders involved in the program have seen noticeable improvements Other projects 6 300 in their sites.This has contributed to a In addition to water quality more positive view of wetlands among monitoring we also have three landholders and a greater appreciation 4 200 initiatives to improve the health of their value in our landscape. of our local waterways and aquatic Denimein wetland mapping ecosystems. The involvement of Murray 2 100 Monitoring the health of local waterways Irrigation in the ‘wetland watering’ The ecological monitoring program project in the last five years has

0 0 we have established in partnership resulted in an increased awareness of 2005/06 2004/05 2003/04 2002/03 2001/02 Years with the Murray Darling Freshwater the number and diversity of wetlands Research Centre is designed to in the irrigation landscape.The Figure 5.8: provide a better picture of the health Denimein LWMP working group Comparison of total nitrogen discharged of our local waterways.A pilot study instigated a project to gain a greater and rainfall from the Murray Irrigation area to refine the methods and procedures understanding of wetlands and their for the program was conducted in condition in the Denimein region, 2005, with the first formal monitoring to better target of future management undertaken in April 2006.There are and environmental flows.

58 Murray Irrigation Limited Annual Report 2006 protecting our environment

Murray Land and Water and in-kind contributions to works Murray LWMPs, which have four Management Plans on their properties. Government- component plans based on the landholder cost shares for various geographic sub-districts of Berriquin, The Murray LWMPs are a major part LWMP initiatives vary from 100% Cadell, Denimein and Wakool.While of the company’s efforts to address a landholder funded to 100% the boundaries of the Berriquin, number of the environmental impacts government incentive based on levels Denimein and Wakool LWMPs reflect of irrigation and improve the health of public and private good. the boundaries of Murray Irrigation’s supply and stormwater escape and productivity of the local landscape. The LWMPs are extremely important operations, the Cadell plan extends The LWMPs are a 30 year, $498 to the local environment as they beyond the Deniboota District to million natural resource management provide an integrated approach to incorporate dryland farming, private program developed around a strong managing the region’s natural resource irrigation schemes, and river pumpers community-government partnership. issues.The LWMPs are also vital to along the Murray River.The Murray Murray Irrigation as they improve the Implementation began in 1995, with LWMPs address the full spectrum of sustainability of our shareholders’ funding over 15 years from federal land and water management issues businesses and therefore our business and state natural resource and include on-farm works, surface and the region as a whole. management programs. Landholders and subsurface drainage, education, contribute through levies on water Murray Irrigation is the research and development. entitlements, council rates, and cash implementation authority for the

Table 5.3: Total Expenditure of the Murray LWMPs 2005/06

Government Landholder Contribution Funding Item Contribution2 $ Levy3 LWMP Incentives4 Additional5

LWMP Programs Research & Development $207,177 $207,177 Monitoring $202,463 $202,463 Administration $101,003 $101,003 Education $262,119 $262,119

LWMP Incentive Programs

Whole Farm Plans $901,050 $228,212 $211,016 Irrigation Recycling and Storage $3,092,855 $1,842,308 $6,410,565 Actively Manage Native Vegetation $960,412 $1,771,882 $587,509 Perennial Pastures $169,183 $169,183 $5,631,379 Shallow Groundwater Pumping $4,178 $195,570 Sub-Surface Drainage $362 $58,316

Capital Works Program

Stormwater Escape Program $1,670,209 $858,354

Landholder Works Program

Additional Landholder Works1 $32,803,337

Total $7,566,837 $1,693,614 $4,011,587 $45,839,377

1 Includes improved pasture management, improved irrigation layout, conservation tillage, education activities, operation and maintenance, and improved management. 2 Actual government contribution to implementation of each component of the LWMPs. 3 Landholder contribution generated via a direct levy charged on all landholders through their water accounts. 4 Actual landholder financial contribution to implementation of each component of the LWMPs. 5 Additional landholder financial contribution to implementation of each component of the LWMPs as recorded by the annual landholder survey (2005/06).

Murray Irrigation Limited Annual Report 2006 59 On-farm works approved LWMP works totalled $5.7 an irrigation recycling system that The LWMPs aim to facilitate adoption million; contributions to these works would meet LWMP guidelines. of improved farm management from landholders totalled $7.6 million. Progress against vegetation initiatives is practices.The 2010 target is to have Both are detailed in table 5.3. pleasing with improved incentives and 90% of commercial farm businesses Government funding for incentives growing landholder awareness of local adopt key best management practices. totals $75.9 million since 1995. biodiversity. Landholder contributions to LWMP Farm planning is seen as a fundamental works through levies, contributions Surface Drainage first step in setting long-term goals and to approved works and investment in The construction and upgrade of developing a framework for best additional works is estimated at $380 regional stormwater escapes are an practices on farm. million over the same period, based integral component of the LWMPs. Irrigation recycling systems are on company records and annual The ability to remove stormwater as encouraged to improve water use landholder surveys. Government quickly as possible, to either properly efficiency, prevent off-farm discharge funding is committed to the LWMPs constructed storage and recycling of nutrient rich or pesticide affected until 2008, with a further commitment systems or through stormwater water and to reduce accessions to the required for the final two years to escapes, helps to minimise watertable, watertable. Farm storages are designed 2010, in order to complete the salinity and waterlogging issues. to retain all irrigation water and the original program. The stormwater escape construction first flush of rainfall on farm. The Government funded program includes the building of new Two current research projects relate to component of the program is into stormwater escapes, upgrading on-farm works. One is quantifying the its 11th of 15 years.Table 5.4 outlines existing stormwater escapes and value of irrigation recycling and storage the achievements where incentives enhancement of natural drainage systems and should be complete in are available and progress against lines.All stormwater escapes are 2007.The other is developing a best targets. It is disappointing that we have constructed or upgraded to meet management practices guide to not reached our targets in key areas Murray Darling Basin Commission irrigation layouts for farmers starting a such as farm planning and irrigation (MDBC) surface water drainage farm plan or irrigation recycling system. recycling.These targets are very guidelines to drain a rainfall event of ambitious and the ability of farmers to 57mm in 24hrs, within a period of Incentives for vegetation management implement works has been hindered 96hrs. Local councils are the consent include protection of areas of native by economic conditions associated authorities for these works. remnant vegetation, revegetation with drought and commodity prices. with locally indigenous species for In 2005/06 three surface drainage The annual landholder survey indicates biodiversity outcomes, as well as projects were undertaken. that some farmers are undertaking establishment of deep-rooted perennial • Dry Creek Stormwater Escape these works without incentives.We vegetation to control salinity. was completed in April 2006. have identified 75 landholdings with a It is 4.2kms in length and provides In 2005/06 government incentives for farm plan and 116 landholdings with surface drainage to seven land- holdings, covering 1,200ha of land Table 5.4: LWMP On-Farm Implementation Summary surrounding the Dry Creek.The Total number of farms – 3,244 Number of commercial farms – 2,167 Dry Creek is a natural evaporation basin that is highly saline. Incentive Item Works 2006 End of Term completed Milestone Target • The Box Creek Stormwater Escape upgrade is progressing well. Irrigation Accreditation Course 1,013 farms 1,188 1,188 farms More than 60kms of the 50 year Farm Plans 1,049 farms 1,483 farms 1,782 farms old system have been desilted and Irrigation Recycling Systems 805 farms 1,274 farms 1,782 farms 25kms fenced as part of the project to bring it up to current MDBC Storage Systems 521 farms 1,195 farms 1,670 farms stormwater escape standards. Vegetation to reduce Salinity 2,383ha 2,886ha 6,277ha • Planning and design for the up- Native Vegetation 10,799ha 13,581ha 58,771ha grade of six channel escapes in the Perennial Pasture 33,537ha 61,022ha 64,765ha Denimein area has been completed Groundwater Pumping 7,171ML 13,140ML 18,000ML and a decision is pending on the next stage of the project.

60 Murray Irrigation Limited Annual Report 2006 protecting our environment

Table 5.5: Summary of stormwater system

2005/06 2004/05 2003/04 2002/03 2001/02

Number of landholdings connected to stormwater escapes 980 969 908* 910 847

Annual stormwater escape construction expenditure $1,700,000 $4,655,431 $4,086,434 $2,171,422 $4,666,014

Length of stormwater escape channels 1,425km 1,421km 1,222km 1,220km 1,213km

On-farm irrigation recycling expenditure* $4,900,000 $12,544,287 $11,127,654 $9,133,481 $3,987,739

No. landholdings with irrigation recycling systems** 805 727 597 585 608

* Numbers have gone down from 2001/02 to 2002/03 due to amalgamation of landholdings

Table 5.5 outlines the progress of the was 10%).To date we have been able A formal, elected committee presides stormwater escape program in the to effectively analyse and refine a over the implementation of the R&D past five years. number of our benchmarks including program. Coupled with this formal stormwater quality, groundwater committee structure, a strategic plan Subsurface drainage salinity, risk of salinity, rice water use has been developed to focus R&D Where other water use efficiency efficiency and supply water efficiency. efforts into disciplines which will methods fail, public and private directly influence the sustainability of groundwater pumping is able to Education the Murray LWMP area. recover water that has passed the Education is a vital component of Since implementation of the LWMPs rootzone of plants to the watertable. the LWMPs.The program consists first commenced in 1995, 37 projects New private shallow groundwater of formal and informal landholder have been funded and 19 completed licences are no longer issued for education activities.The formal through the program. In 2005/06 irrigation purposes due to a component is the Irrigation there were 22 projects conducted, four moratorium that is currently in Accreditation Course aimed at of which were new projects. Seven force by NSW Government. broadscale adoption of best projects were completed during the However they can be sought for management practices. Informal year and the full reports are available genuine watertable control. education activities include field days, from our website.A brief summary of quarterly newsletters, presentations completed projects follows. Monitoring at information seminars, grower Data collection and monitoring is an groups and public meetings, school Adoption of Best Management Practices essential part of identifying trends and and special interest tours, and media With LWMP implementation measuring performance.The high coverage of events and issues. One- remaining behind target RM level of government investment in the on-one extension activities focus on Consulting Group and region through the LWMPs requires uptake of incentives. University were commissioned to quality monitoring to measure the interview farmers and gain an Murray LWMP R&D program effectiveness of the investment. understanding of the factors To improve our knowledge and We monitor and collect information influencing their adoption of LWMP understanding of natural resource on a wide range of environmental initiatives. RM Consulting Group management issues confronting our factors which helps to continually concluded that the LWMPs could region, the LWMPs fund a research improve our delivery of the program. improve their extension by better and development program.This Data is recorded through field demonstrating the economic value program focuses on increasing our monitoring, company data collection of LWMP works, clearly explaining understanding of the complex systems, short term projects, as well the full cost of works, and justifying environmental issues associated with as an annual survey of 6% of to farmers the standards required in irrigated agriculture in the region landholdings (prior to 2004/05 this order to receive incentives. Charles through locally-based research.

Murray Irrigation Limited Annual Report 2006 61 Sturt University focussed their efforts pumping optimisation model.This constraints and the slow draining on the LWMP vegetation intiatives will allow us to reduce our operating nature of these layouts hindered crop and found that we needed to and maintenance costs while selection and yields.With these continue our focus on one-on-one maintaining the agricultural viability constraints identified, work is interaction with farmers.They also of the Wakool region. Murray continuing through another NSW suggested that the Murray CMA Irrigation staff will gain training in DPI project to improve the could consider more flexible criteria the model and it will be used for performance of these layouts. and recognition of work undertaken future management of the scheme. Improving revegetation methods by farmers in the past. Progressing the design of rice layouts As mentioned previously, we are Optimisation of the Wakool Tullakool In focussing on reducing accessions to progressing well against LWMP Subsurface Drainage Scheme the watertable NSW DPI vegetation initiatives. One strategy The high cost of operating and (Agriculture) studied our current rice for continuing this positive trend is to maintaining the Wakool Tullakool layouts and the effectiveness of improve the methods associated with Subsurface Drainage Scheme led to growing winter crops after rice in revegetation works.Western Murray CSIRO Land and Water developing a these situations.They found that soil Land Improvement Group, a regional

......

. David Webb SURVEY SHOWS . . . . WILDLIFE DIVERSITY ...... A year long wildlife survey in Murray in the Edward River near Moulamein,. . Irrigation’s area of operations has Gilbert’s Whistlers on the Murray. and identified 273 species on 150 sites, Wakool Rivers, three pairs of Bush .Stone- . highlighting the diversity of wildlife found curlews, a flock of 87 Freckled Duck in. the on irrigation farms in the region. This Noorong area, Beaked Geckos, and a . . included 203 birds, 33 reptiles, 28 Gibber Gecko. Several rare skinks not . . mammals and 9 frogs. previously recorded in Murray Catchment . were also discovered, along with three . The study was an initiative of the Murray . Ecologist Matt Herring discovers a yellow- Land & Water Management Plan (LWMP) different blind snake species, Macquarie . footed .antechinus among more than 270 working groups to determine the Turtles near Mulwala and Squirrel Gliders . species of wildlife. identified during his distribution, habitat and local status of near Moama. Methods used to survey . survey of 150 sites. across the region. species in the area, to raise awareness animals included: bird watching, harp . . traps for bats, pitfall traps for reptiles and . . about local wildlife ecology; and promote . . . conservation of native species. Over 500 other ground-dwelling species, Elliot traps ...... expressions of interest were received from for marsupials, spotlighting, recording wildlife. These sessions focused on local landholders keen to be involved in calls, broadcasting calls and log rolling. increasing awareness of species, their the project. From these, 150 sites on 106 Mr Herring said the results of the study habitats and ways farmers can manage farms were selected to survey. The sites highlighted the value of stands of native native vegetation on their properties to covered a range of vegetation types pine, boree, grey box, yellow box and maximise local wildlife. representative of the Murray Valley, of buloke, as well as major waterways like “Many farmers I have spoken to during varying condition. It was the largest and the Murray, Edward and Wakool Rivers the course of the survey are willing to do most extensive survey ever undertaken in and the region’s wetlands. their bit for wildlife by providing good the region. A total of 1293 people attended wildlife habitat on their properties. Because of Albury based ecologist Matthew Herring field days and seminars held in their enthusiasm I am optimistic that the undertook the study with a team of conjunction with the survey showing diversity of species and wildlife wildlife experts. Mr Herring said the strong interest that irrigation farmers populations in the region will increase in highlights of the survey included Platypus and their families have in their local the coming years,” Mr Herring said.

62 Murray Irrigation Limited Annual Report 2006 protecting our environment

community group, undertook trials soil acidity.Their results indicated that in conjunction with local landholders, on local farms to test the establishment coal ash would not be suitable for undertook a preliminary review of and survival of species under different treating soil acidity in the region. the environmental issues associated regimes.Although results were mixed, with the creek.This identified agri- they concluded that direct seeding is Other projects cultural practices, road infrastructure a viable method of revegetation in As well as the R&D program, and intrusion of shallow saline the LWMP region. other projects are initiated through groundwater as the main causes of the LWMPs as opportunities are degradation in the creek. CSIRO Alternative techniques for amelioration of identified. One such project will Land and Water is investigating soil acidity consider options for restoring the the hydrology of the local Soil acidification is a new threat to Jimaringle Creek. groundwater system to identify the Murray LWMP region and Jimaringle Creek restoration options for managing the salinity. although the extent is yet to be fully A comprehensive set of actions to The Jimaringle Creek is a small, quantified the R&D program felt improve the health of the creek ephemeral creek that stretches over there was a need to explore will be developed for discussion in 90kms through the Wakool district. alternative remedies for the problem. the coming year, including ground- The creek is adjacent to the Wakool The University of Technology, Sydney water management, improving Tullakool Subsurface Drainage analysed the chemical and physical vegetation health and incorporating Scheme and is showing signs of properties of coal ash to see if it environmental flows into the system. would be suitable for ameliorating salinisation.The Murray LWMPs,

Challenges LWMP incentives on farm. However projects have been left until the end our extension team faces the of the program. continuing challenge of involving all The prevailing drought conditions will Outstanding projects include: make implementation of the LWMPs sectors of our farming community • Completion of the remaining much more difficult in the coming in LWMP activities. Existing farmers stormwater escape networks in year. Below average local rainfall and who have undertaken LWMP works the Berriquin district, limited irrigation water availability will have already identified the cost savings have a dramatic impact on farm and productivity improvements that • Construction of Stage 3 of the incomes.As a result many landholders result. For new investors purchasing Wakool Tullakool Subsurface are expected to put on hold initiatives relatively undeveloped irrigation Drainage Scheme which require their direct investment. properties the LWMPs provide support • Strategies for managing salinity in At the same time, the LWMP and financial assistance in well planned, the Box Creek stormwater escape. government funding deadline is water efficient farm development. We are also seeking better integration looming. Farm plan incentives are Finalising the designs and securing between our environmental objectives available only until 2008, with other landholder agreement for several and operational staff to further incentives available until 2010.There regional projects and completing improve water use efficiency within is also continued uncertainty about those projects eligible for LWMP the region, reduce watertable the status of government funding funding within the next four years accessions and to ensure compliance beyond 2008. will also be a challenge. Several of the with our licences as well as landholder In 2005/06 there was good uptake of most technically and socially complex compliance with company policies.

Murray Irrigation Limited Annual Report 2006 63 ...... company culture ......

We are committed to a high standard of safety for staff, customers and the public, with a culture of continuous improvement, clear direction, respect and accountability.

64 Murray Irrigation Limited Annual Report 2006 company culture

Our people • Provide best practice corporate governance and strategic Murray Irrigation is one of the largest leadership. private businesses in the region, with a staff of 137 and turnover of more This section provides a profile of our than $45 million this year.Through staff, employment conditions and our corporate leadership we strive to policies including occupational health create a culture of respect and and safety, and resource use. It also accountability within our workplace. profiles our board of directors and Our employment and corporate discusses our corporate governance governance policies and practices structure, policies and practices. provide the framework which Performance targets below are in line enhances opportunities for staff to with our new strategic plan. develop their skills and their ability to help successfully implement our strategic plan. In developing our corporate culture our key strategies are to: • Provide an ethical workplace that values staff contributions; • Provide pathways for on-the-job training and career development; • Develop and implement a comprehensive recruitment and retention strategy; • Maintain a high standard of safety for staff, customers and the public; • Maintain our QA and OH&S accreditation;

Top: IT Officer Matthew Watts. Above: Regional Water Distribution Planner Glenn McCalman checks the SCADA equipment on a Mulwala Canal regulator.

Performance indicators

Target Performance

2005/06 2004/05 2003/04 2002/03 2001/02

Staff turnover at 15% or less 14.9 12.9 13.2 16.3 N/A

Maintain OH&S and QA accreditation ✓✓✓N/Ap N/Ap Accreditation maintenance review conducted in 2006

Reduce Number of Lost Time Injuries LTI target is 0 injuries 10 7 5 4 2

N/A – Not available; N/Ap Not applicable.

Photos, opposite page, top: Murray Irrigation Plant Operator Dave Pearson (left) with students from the at a recent careers expo. Centre: Protective equipment is provided to all staff as needed. Bottom: Share Register Officer Hayley Kelly.

Murray Irrigation Limited Annual Report 2006 65 Our workplace relationships with work colleagues into our Annual Report this year we and would receive assistance with any have changed the reporting period to Murray Irrigation operates offices in safety issue or work complaint they reflect the company’s financial year, Deniliquin, Finley and Wakool, with might have. While this was a positive August 1 to July 31, for both depots in Deniliquin, Finley,Wakool response, 16% disagreed or strongly 2005/06 and 2004/05 figures. and Moulamein.We have 137 disagreed that they would receive Table 6.1 provides a summary of permanent staff. Deniliquin is the assistance with a workplace or safety our workforce profile. Men represent largest centre in the region, with a complaint, or that issues of improper 100% of water distribution, works population of 8,000.This is where the conduct would be taken seriously.As and engineering staff.Women company’s headquarters is located and all staff should feel that their concerns constitute 80% of employees in 72 of our staff are based here.Another will be taken seriously and we must the areas of environment and 39 staff are based in Finley and 25 in work harder to address this, to ensure communication, and 61% in finance Wakool, with one staff member processes and practical support are and services.Women make up only working from the Moulamein depot. available and accessible, and are well 10% of senior management roles and We have eight operational divisions: promoted. business development unit, 9% of the directors. The majority of engineering, environment and Most valued by employees were their our staff have elected to work under communication, finance, MILCast, workmates, equipment and workspace employment contracts, with only 2% services, water distribution and works, provided, job security, working hours choosing to remain on the company’s as described on pages 12-13. and training.There was both support Enterprise Bargaining Agreement. for and concern about the company’s Our workforce has continued to In March 2006 we conducted an vehicle policy. Pay structures and grow over the past year as a result internal staff satisfaction survey. career pathways, clothing policy, of several initiatives.These include Of the 133 surveys distributed 119 communication and the survey itself the expansion of our infrastructure were returned and the results were were other issues of concern. generally positive. Ninety per cent or projects, particularly the installation more of staff indicated they “agreed” Our workplace profile of mechanised gates, and a restructure or “strongly agreed” that they Workforce information in last year’s and expansion of roles within water understood their role within the Sustainability Report was collated distribution. New skills and career company, were involved in work they on a July 1 to June 30 financial year. opportunities are being created enjoyed, had developed good To incorporate this information relating to the operation of the

Table 6.1: Murray Irrigation workplace profile

2005/06 2004/05 2005/06 2004/05 Employees 137 134 Males 113 114

Full time employees 132 129 Females 24 20

Part time employees 5 5 % male employees 84 86.7

Full time equivalent (FTE) 134.45 131.45 % female employees 16 13.3

% male Corporate Group members 90 90

Employees under Enterprise % female Corporate Group members 10 10 Bargaining Agreement 3 3 % male board members 91 90 Employees under contract 134 131 % female board members 9 10 Casual staff 4 2

*Total payroll, including wages, benefits, Average age of workforce (years) 43.6 43 pension and redundancies $8.5m $7.9m

Average age of male employees (years) 45.1 44.4 Turnover rate (%) 14.9 12.9

Average age of female employees (years) 36.4 35.5 Average number of sick leave days per employee (FTE) 5.5 3.8 Average length of service (years) 11.3 12.4 Net position creation (FTE) 3 4.7

*Does not include employee related on-costs.

66 Murray Irrigation Limited Annual Report 2006 company culture

supply system as a result of higher ability and aptitude without regard to also be granted to staff in relation to levels of technology including gender, race, religion, union affiliation formal study requirements. During the expansion of the telemetry or disability. the year 11 staff took a total of 35 system, increased automation and We have a comprehensive Human days of carer’s leave. No staff took monitoring, and the mechanisation Resources manual which includes maternity leave and three staff took of gates. Anti-Harassment,Anti-Discrimination paternity leave. Four staff took paid examination leave in relation to their Staff turnover rates have increased and Workplace Violence policies tertiary studies. from 12.9% to 14.9% in 2005/06, aimed at securing the safety of all and attracting and retaining skilled employees and promoting a fair Changes were also introduced in professionals in an increasingly workplace. Other policies such as August 2005 allowing more flexible competitive employment market counselling and grievance resolution working hours. Office based staff can remains a challenge.The company offer assistance and support when now nominate a later start or earlier held a series of workshops this year needed. finish time, rather than taking rostered to refine its recruitment and retention Many staff were seriously affected by days off.To date only one staff strategy which is due for completion the death of two work mates in an member has taken this option to and adoption in February 2007. horrific motor vehicle accident in alter hours. Exit interviews have been routinely March 2006. Both men were well undertaken with departing staff since known in the tight knit community Volunteering 2004 and are helping to identify of Wakool where they worked. Murray Irrigation allows employees issues the company can respond to Meetings were held with staff in all to volunteer for natural disaster relief, through its new strategy. work centres to inform them about fire fighting and other related services the accident and provide information to the community in the case of local Employment policies about grief management. Counselling emergency events.We also permit We are committed to high quality services were offered to all staff. leave to staff for service to the Defence policies and procedures that provide Follow up meetings and support were Forces. No staff applied for this leave clear direction and create a safe, organised for Wakool staff and others during the year. positive working environment. Our who had worked closely with those policies support the development of involved in the accident. Communicating with staff staff and their ability to contribute to The company’s code of ethics is In the 2006 staff survey, employees the company’s objectives.They also provided to all staff on induction and identified communication as an area recognise that both the company as includes policies on confidentiality, the company could improve upon. a whole and staff members as the giving and receiving of gifts, In addition to work group meetings individuals must be accountable for professional conduct and access to the we have a number of committees for their actions. company’s purchasing, information the discussion of company issues We operate in accordance with systems and sites. Some of our staff including regional OH&S, clothing, Commonwealth and State legislation are also shareholders in the company social, superannuation and workplace regarding child labour and other and own water entitlements. Our consultative committees. human rights issues.We operate protocols to prevent insider trading Our weekly Talking Water newsletter under Australian labour regulations on our water exchange prohibit staff which outlines water related issues and and therefore do not have a specific and directors from both buying and company initiatives and activities for policy regarding freedom of selling water through the exchange in shareholders is also provided to all staff. association. the same season. Initiatives to improve communication We support Equal Employment Leave provisions since the survey was conducted Opportunity (EEO). Our selection The company introduced carer’s include the redevelopment of our process for vacancies focuses on leave this year, which allowed staff to website, which will include an intranet employing the best applicant, free take up to 10 days of their sick leave to improve information sharing about from unfair bias or discrimination. annually to look after direct family company activities and resources Our approach to EEO for current members.This is now covered in the between different work groups. employees covers development, concept of personal leave provisions Corporate reporting processes have training, promotion and recognition of Workchoices. Special leave will been reviewed with more integration of achievements on the basis of their

Murray Irrigation Limited Annual Report 2006 67 Table 6.2: between work groups to better reflect training as part of our OH&S policy. Company required training provided the company’s objectives.The strategic Anyone whose job requires that they during 2005/06 plan is also assisting with greater work alone in the field also under- communication between work groups takes first aid training. Other required Company required Staff training attending as several of the strategies require training is more job specific. In input from several areas to develop and 2005/06 196 compulsory training Manual Handling* 19 implement workable initiatives. courses were undertaken by staff White Card* 46 table 6.2). First Aid* 17 Recognition for staff In order to consolidate and better Our staff newsletter, published Farm Chemical* 20 recognise the skills of our water twice during the year, provides an Acrolein* 1 distribution and works staff we are opportunity to recognise the efforts Confined Space* 26 participating in nationally accredited of staff as well as providing news and Fire Warden & First Attack* 20 Certificate III training programs. information.Two editions were Since 2004/05 all new channel OH&S Committee* 1 published during the year and the attendants have been required to 4WD* 13 December issue included the winners undertake Certificate III in Water Tag & Test* 3 of our annual Staff Excellence Awards. Industry Operations.The program These awards are presented to Power Tools* 24 has also been available to existing employees who provide outstanding GPS & GIS 6 staff members. There are currently performance in their jobs and Total Amount of Training 196 18 channel attendants enrolled with professionalism to our customers. the Riverina College of TAFE. Seven * Training provided in accordance with our Staff provide nominations which will complete their Certificate III in OH&S Policy are reviewed by an awards committee. 2006/07 while the remainder will At the company’s 2005 Christmas complete it the following year. function awards were presented to Wakool LWMP Officer Matt Dean, In 2005/06 we also introduced . OH&S Officer Greg Rowe, Channel Certificate III in Civil Construction Attendant Rhys Chilvers and MILCast as an option for our works staff, and Logistics Officer John Pearce. Long 32 have voluntarily taken part in the service awards are also presented program which is run through the annually, with Water Quality Officer Wodonga Institute of TAFE. Penny Sloane receiving her 10 year Both courses require a mix of formal service award at the Christmas assessment and on-the-job training function. and assessment and take between Training and 12 and 24 months to complete. professional development Further learning: In addition to Annual review: Individual training required by the company, performance and development staff can also request training related reviews are conducted annually to their role to assist with their providing an opportunity for staff and professional development. In 2005/06 their managers to evaluate the past 37 additional training programs were year’s achievements and set goals and approved, including geographic targets for the forthcoming period. information systems, contract Remuneration is also reviewed during management, property vegetation this process.Areas for improvement planning and records management. and training required by managers or We also provide financial assistance requested by staff to assist with their with course fees for staff undertaking work is documented and a plan for tertiary studies relevant to their the following year is developed. employment. Five staff are currently Required training: All staff are studying through this initiative. required to attend manual handling To help staff develop professional

68 Murray Irrigation Limited Annual Report 2006 company culture

networks the company also provides regions, and took away an increased Work Experience: The company membership of one relevant understanding of the regions, their offers a range of work experience professional association. operations and issues faced. Both and work placement opportunities found the experience worthwhile for local high school and university Staff exchange: In 2005/06 Murray personally and professionally. students to provide insight into the Irrigation and Ord Irrigation range of career opportunities available Cooperative in WA initiated an Leadership programs: Murray within our organisation. In 2005/06 exchange of environmental staff Irrigation supports the participation three secondary school students between the two organisations.The of staff in leadership and development completed their Year 10 work aim was to give young professionals programs.This year Berriquin LWMP experience with Murray Irrigation the chance to learn about issues faced Officer Emma Wilson was one of and five university students undertook in other areas to establish professional 24 participants in the Ricegrowers’ work placement with the company as networks and to promote career Association of Australia Development part of their studies.These placements opportunities in the water industry. and Leadership Program.The program were mostly in the work areas of Anna Price, Environmental was designed and delivered by the environment, water policy and Coordinator at Ord Irrigation Australian Rural Leadership Found- engineering. Cooperative, travelled to Deniliquin ation to develop the skills of rice in February and Demelza Brand, growers and the extension staff that We also took part in a careers expo Environment Officer with Murray support them.The program develops organised by Council Irrigation, visited Kununurra in facilitation, leadership, community for secondary school students in the Western Australia in June 2006. engagement, group development and east of the region. They toured their respective conflict resolution skills.

...... SPEAKING OF SAFETY ...... Australian Paralympic weightlifter Kahi Puru “I had to realise after my accident. that was the keynote speaker at a half day you can overcome adversity and. go . safety workshop for Murray Irrigation’s staff forward,” he said. He represented. . and company contractors in Deniliquin, in Australia at the Sydney 2000 Paralympic. December 2005. Games in powerlifting where he was. . Mr Puru was 29 when he was crushed in ranked number one in Australia and . Paralympian Kahi Puru talks to MILCast . Manager Peter Keyte following the safety a forklift accident while working for BHP. seventh in the world. . .workshop. He spoke at the Deniliquin workshop More than 60 people attended the safety . . about his accident, recovery, his transition workshop in December where a range of . . back into the workforce and the effect a issues were discussed. These included . . . workplace injury has, not only on the occupational health and safety issues for . . . . . person involved, but on family and friends. contractors working with Murray Irrigation. The workshop was organised. . .by. Murray...... Mr Puru’s left leg was amputated at the Representatives from Transgrid spoke Irrigation’s OH&S Officer Greg Rowe who hip following his accident and doctors about the issues and risks involved in said the speakers had all been well feared he would not survive. He said he working near high voltage powerlines. received. believed his positive attitude had helped There was also a discussion about “It’s also been good for promoting him survive and he has gone on to techniques for safely laying rock baskets discussion and awareness of safety issues, become a world class athlete and a guest on slopes to help control erosion along and consolidating our relationships with speaker for WorkCover. channels. contractors,” Mr Rowe said.

Murray Irrigation Limited Annual Report 2006 69 2005/06 staff injuries Occupational Health and Safety environment for employees, Despite increased training, improved contractors, customers and visitors. 7% safety procedures and a greater • Ensure staff, contractors and sub- awareness of safety issues among staff, 2% contractors and the public comply 17% OH&S is major concern for the with all OH&S conditions set by 41% company. While the number of lost the company or through time accidents has fallen this year, legislation. the severity of those accidents has 33% increased.The tragic death of two • Ensure works conducted, staff included in these figures has organised or supervised by contributed significantly to this. Murray Irrigation do not harm Manual handling/strain injury – 17 employees, contractors, customers Impact injury – 14 Lost Time Frequency Rate and or endanger the public. Slip/trip/fall injury – 7 Workers Compensation premiums Bite/Sting injury – 3 provide recognised benchmarks for • Comply with and keep up-to- Foreign body injury – 1 our safety performance.At 40.3 days date with all OH&S legislative requirements and current industry Figure 6.1 our Lost Time Frequency Rate is standards. Total Injuries reported in 2005/06 by type. well above our annual target of 15 based on ANCID’s benchmark for the We provide training and information irrigation industry. Poor performance sessions to all staff as part of a has also resulted in our Workers proactive approach, to help achieve 2004/05 staff injuries Compensation premium increasing the above goals.Training required 62% from 2004/05 to 2005/06. Of under our OH&S policy is identified the 36 accidents reported this year in table 6.2. In return, every employee 11% (table 6.3) 26 involved motor vehicles is expected to endeavour to minimise 3% which has resulted in a 17% increase work related injury or illness. 47% in our vehicle insurance. Murray Irrigation is an OH&S and We do not maintain records of Quality Accredited company.We are 39% incidents for our contractors as they committed to the development and are required to provide their own continuous improvement of safety OH&S cover as part of their contract practices regulated by the NSW

Manual handling/strain injury – 17 with us. Occupational Health & Safety Act Impact injury – 14 Time lost to sick leave and 2000, Regulations 2001 and Standards Slip/trip/fall injury – 4 WorkCover for 2005/06 amounted and Codes of Practice. During Bite/Sting injury – 1 2005/06 we successfully maintained Foreign body injury – 0 to 1,120 days, or 8.1 days per staff member, compared to 1,045 days, both our Quality Accreditation to Figure 6.2 or 7.8 days per staff member the ISO9001 and OH&S Accreditation Total Injuries reported in 2004/05 by type previous year. to AS/NSZ4801. The safety and welfare of Murray We operate four local OH&S Irrigation’s employees, visitors, and committees covering each of our contractors is paramount to us.The offices and depots, and representing high number of accidents and injuries all staff members.A central OH&S is both disappointing and frustrating, committee oversees the local particularly given the increased focus committees and liaises with on safety over the past five years. management regarding any issues that arise. Our accident and incident Our OH&S policy commits us to: reporting system continues to operate • Provide a healthy and safe work efficiently, maintaining accurate

70 Murray Irrigation Limited Annual Report 2006 company culture

records of all reported serious and Additional OH&S policies introduced Other health initiatives minor injuries as well as serious near during 2005/06 to help ensure the In a further endeavour to ensure our miss incidents. safety and wellbeing of staff include: staff’s health and wellbeing, Murray Our key OH&S statistics for 2005/06 • A reporting system for all staff Irrigation provides free influenza are summarised in table 6.3.Three working alone in isolated locations vaccination to all staff, annual medical incidents were reported to WorkCover: that requires them to contact their tests for chemical spray operators and a truck accident which resulted in two supervisor three times per day. hearing tests for plant operators. fatalities, and injuries to another staff In the event that an accident Unfortunately hearing tests were member, a serious accident involving occurs to one of our isolated staff suspended in 2005/06 as there was a front end loader in which one staff this will assist in providing more no suitable service provider available. member suffered leg fractures, and, a prompt assistance and improved An alternative service provider is serious near miss when a load slipped identification of their location in still being sought.The flu vaccination off the back of a truck. No provisional the event of an emergency. was provided to 79 staff. Annual improvement or prohibition notices medical tests were carried out on • Procedures for safe in-field were placed on Murray Irrigation 13 chemical spray operators.These maintenance and repairs of plant under the OH&S Act. services were provided through and equipment, and for the safe established company selected Manual handling/strains are our recovery of disabled or damaged medical practitioners in Finley and most common accident, as shown plant. Deniliquin. In addition we ensure in figures 6.1 and 6.2.All accidents that transport to medical services is have been thoroughly investigated • Weekly, random audits of job sites readily available for staff who are through internal auditing and where to ensure that employees are under Workers Compensation. necessary corrective actions have working in accordance with their been implemented to minimise Safe Work Method Statements their reoccurrence. and other job requirements.

Table 6.3 Murray Irrigation accident and injury summary.

2005/06 2004/05 2003/04 2002/03 2001/02

Average No MIL Staff covered by GIO 132 130 129 122 109

Fatalities 2 0 0 0 0

Work Cover reportable incidents 3 4 0 N/A N/A

Investigations conducted by Work Cover 1 0 1 0 N/A

Directions given to MIL to provide documentation under the OH&S Act 1 0 0 0 N/A

Provisional improvement or prohibition notices placed on the company under the OH&S Act 0 0 0 0 N/A

Types of accidents

Near miss incidents 2 5 8 0 N/A

Non lost time injuries 26 35 34 17 18

Lost time Injuries 10 7 5 4 2

Lost Time Injury Frequency Rate 40.3 29.2 N/A N/A N/A

Accident Severity Rate 93 23 N/A N/A N/A

Murray Irrigation Limited Annual Report 2006 71 Table 6.4: Resource use and reuse Water is our key resource input and Summary of Murray Irrigation resource use State Water is the only bulk water The company’s resource use is provider. Water accounted for 20% Energy Per ML focused on providing cost effective consumption delivered of our total expenditure this year. services to our customers; Materials required for the mainte- 2005/06 979,787kwh 1.0kwh expenditure and consumption nance of the channel system and the 2004/05 1,202,351kwh 1.8kwh are under constant review. Price, operation of vehicles and plant 2003/04 1,202,351kwh 1.8kwh quality, the reputation of suppliers 2002/03 1,240,585kwh 3kwh represent the largest resource use and the safety standards of suppliers apart from water, totalling 15% of Total fuel use and products are all important expenditure. considerations in our purchasing (leaded, unleaded and diesel) decisions.We purchase products and Initiatives to reduce resource use and 2005/06 1,009,790L 0.9L services from within our local minimise environmental impacts 2004/05 925,757L 1.3L communities where possible.We include: 2003/04 746,225L 1.0L recognise that the development of • Limits on personal use of vehicles 2002/03 812,070L 1.9L strong local relationships may prove a as outlined in our vehicle policy; Greenhouse gas emissions (t CO2-e) greater long term benefit than short • Recycling paper, ink cartridges, term purchases based only on cost. 2005/06 -2,377.1t -0.002t mobile phones, metal and other 2004/05 -3,404.3t -0.005t Purchasing procedures materials where possible; 2003/04 -3,492.5t -0.005t Detailed purchasing policies and • Disposing of chemical drums 2002/03 N/A N/A tender procedures provide clear through the Drum Muster Office and depot water use direction to staff and help to prevent initiative; theft and fraud, in addition to the • Expanding use of solar power 2005/06 6,801KL 0.007KL gift policy in the company’s code for the operation of structures 2004/05 3,599KL 0.005KL of ethics.Any non-compliance with including communication towers 2003/04 3,969KL 0.006KL and monitoring sites. 2002/03 1,517KL 0.003KL these procedures is reported in our QA system for further action. Information collated on resource use Government auditors also review relates to the financial year to 30th contracts and purchases in relation June, 2006. to work on government funded initiatives, including asset refurb- Table 6.4 summarises our recorded Table 6.5: ishment and Murray LWMP works resource use over the past four years. Summary of waste and paper recycling and incentives. Given the purpose of our company, to supply water for irrigated Waste disposed of Per staff Supplier OH&S systems and member agriculture, we have chosen to procedures are considered during 3 3 standardise our resource use against 2005/06 252.0m 1.8m the supplier evaluation process and 3 3 water deliveries on farm.This will 2004/05 247.5m 2.1m products purchased are subject to 3 3 provide a basis for comparing our 2003/04 267.0m 2.1m health and safety assessments. Risk 3 3 resource use efficiency with other 2002/03 210.0m 1.6m assessments are required on new irrigation organisations based on Waste paper recycled product purchases.Where items may actual performance. Deliveries are affect staff or public safety, the local variable from year to year, as 2005/06 1,125kg 8.2kg OH&S committee is consulted before 2004/05 761kg 5.9kg highlighted in table 1.2 on page 18, the purchase is made. 2003/04 997kg 7.8kg and this year totalled 985,038ML. We are currently working to 2002/03 1,154kg 9.7kg Table 6.5 summarises our waste consolidate our suppliers within local disposal and paper recycling over the communities, to achieve service and past four years. Standardising waste bulk price discounts. No formal disposal this year against deliveries on strategies and targets regarding the farm equated to 0.0002m3/ML environmental impacts of purchasing delivered on farm.This year’s paper decisions and resource use have been recycling equalled 0.001kg/ML developed. delivered on farm.We have reported

72 Murray Irrigation Limited Annual Report 2006 company culture

performance per staff member, as staff During 2005/06 we used total of emissions from diesel, unleaded petrol as individuals can take action to both 1,009,790L of fuel. Of this 965,067L and LPG.While emissions from diesel reduce waste and increase efforts to was diesel, used by in cars and plant, increased, those from electricity and recycle. and 44,723L was unleaded petrol, unleaded petrol both decreased and used by cars only.The increase in total emissions remained steady We are continuing to develop our diesel consumption relates directly to between 2004/05 (3,756t CO2-e) identification and recording of an increase in the operating hours of and 2005/06 (3,750t CO2-e). significant resource use, in line with our major plant during the year. GRI and Department of the The offset from the hydro plant Environment and Heritage Holden Rodeo diesel utilities continues to provide us with a guidelines. represent 94 of our 112 vehicle fleet greenhouse gas credit which this year and they are the most fuel efficient totalled 2,377t CO2 (expressed as Energy use vehicles of their type on the market. negative consumption in table 6.4). Our irrigation supply and stormwater They currently perform at a rate of escape system is gravity operated and 13.1 litres per 100 kilometres, given Water requires very little energy to move local driving conditions. During the year water use at our water. Our electricity consumption is A trial of forced air intake ‘snorkels’ three offices and four depots totalled primarily related to the operation of on some utilities during the year 6,810KL.This includes the operation our offices and depots, and the showed improved engine and fuel of three truck was facilities, and is an Wakool Tullakool Subsurface efficiency and these will be fitted to increase of almost 90% on the Drainage Scheme (WTSSDS). all new Rodeo vehicles. Fleet previous year’s water use.The key Total power use continues to fall, with purchase decisions including fuel contributing factor to the increase a 979,787kwh consumed in 2005/06. efficiency and appropriate vehicle was the installation of water meters This reflects the reduced operating selection are continually reviewed, at our Wakool office and depot and hours of pumps at the WTSSDS given the regular turnover of our Moulamien depot.This provided during the year, although the scheme vehicles at 80,000km or three years. actual water use rather than deemed still accounted for 66% of the total water use for these sites, as had power use. Greenhouse Gas Emissions previously been the case. The key activities that contribute to We are continually working to greenhouse gas emissions are the Waste disposal practices reduce our energy consumption. operation of our vehicle fleet, and 3 Within our supply and stormwater In 2005/06 133.5m of waste was consumption of energy. Our assessed escape system, 323 of the 359 removed from the Deniliquin office greenhouse gas emissions are offset by structures/sites are solar powered. and depot.The Finley office, depot the green power generated from a 3 Of these, six are communication and MILCast created 118.5m that hydroelectric power plant on our towers, 137 are regulators, 13 are was disposed of by CleanAway.The main supply channel, the Mulwala water supply offtakes, 22 are Council removes waste Canal. The power plant has been environmental monitoring sites, 93 from our Wakool office and depot, built at The Drop Regulator, between are escapes and 50 are metered pipe and the Moulamein depot.The cost Berrigan and Finley where a four outlets.These figures include solar of this service is incorporated in metre drop in elevation creates power units installed on 12 regulators council’s waste disposal charge, with enough energy to power a turbine, during the past year. rates, and no record is kept of the generating power which is sold into amount of waste taken. Fuel the national electricity grid (more Table 6.5 outlines volumes of waste The rising cost of fuel and increasing details page 32). The hydro power disposed of from Murray Irrigation fuel use is a major concern for the generation declined this year, from offices and depots between 2002/03 company, with consumption of more 7,160,000 kWh in 2004/05 to and 2005/06. than a million litres this year. 5,813,000 kWh in 2005/06. We maintain fuel pumps at each of We use the Australian Greenhouse our depots in Deniliquin, Finley, Office Factors and Methods Workbook, Wakool and Moulamein, as well as August 2004, to assess supplying staff with fuel cards for use our direct and indirect emissions at selected local service stations. from purchased electricity, and direct

Murray Irrigation Limited Annual Report 2006 73 Recycling company recycled 150 cartridges, Protection Licence.This program Our recycling efforts currently contributing to the 1.8 million also complies with the Pesticides include paper, Cartridges 4 Planet cartridges recycled in Australia last Act (1978).There was a significant Ark, scrap metal and mobile year through the program. increase in all chemical usage in 2005/06 as we stepped up our efforts telephones (see case study below). In 2005/06 we also initiated a to reduce weed infestation.A detailed Our Deniliquin office recycles paper major collection of scrap metal from comparison of previous chemical waste. For 2005/06 we recycled throughout our area of operation use is included in our 2005/06 1,125kg of paper which includes which resulted in more than 70 Compliance Report, available from confidential shredding. tonnes of metal sold for recycling. our website. Chemicals used included Since 2003/04 we have been Hazardous materials 2,900L of Amitrole (740L in 2004/05) recycling printer and photocopier Apart from fuel, the company’s use 45L of Dye (250L in 2004/05), cartridges from all Murray Irrigation 2,040L of Roundup CT (1460L in offices through the ‘Cartridges 4 of hazardous material is generally restricted to chemicals used to control 2004/05), 540L of Roundup360 (no Planet Ark’ program.This initiative previous use), 3,860L of Roundup reduces the volume of non- weeds in and along our supply and stormwater system.The use of these Biactive (1880L in 2004/05), 200L of biodegradable waste going to landfill Simazine (no previous use), 960L of and prevents toxic toner chemicals chemicals is carried out according to our Chemical Control Plan as Arsenal (no previous use) and 7,392kg leaching into waterways, groundwater of Acrolien (5,350kg in 2004/05). and our soils. In 2005/06 the specified in our Environment

...... RECYCLING PHONES . . . FOR WATER AID ...... Murray Irrigation’s mobile phone recycling “A number of international. delegations initiative is helping to raise funds for the visit us each year from places. like China, . charity Water Aid Australia. Staff initiated Korea and even Siberia. When. they tell the recycling program last year, with you about their water issues, you. realise . collection boxes in our Deniliquin, Finley how lucky we are. Water Aid Australia. and Wakool offices. seemed like the ideal charity to support. . In addition to phones the company no with this initiative.” . . longer needs, members of the public have Water Aid works in rural and urban areas. also made donations. Each phone raises in 17 countries throughout Africa, Asia . . $5 for Water Aid, which helps to provide and the Pacific. Ms Norwood said the . safe water, hygiene, sanitation and closest projects to Australia were Timor- . Deniliquin. receptionist Lyn Cartwright with some education to some of the world’s poorest Leste and Papua New Guinea. . of the mobile. phones recycled for Water Aid. people. . . “There’s also a project underway in Nepal . . . . Murray Irrigation Communications Officer and we have staff from Nepal.” ...... Catherine Norwood said in addition to the The phones collected are sent to the “With the constant changes in mobile environmental benefits of recycling, it was Aussie Recycling Program and either phone technology I have no doubt there an easy way the company and local repaired and sold in developing countries, will be more phones to send off for community could help others in need. or the parts are recycled in an recycling before long; donations are “We have really good quality water here - environmentally friendly way. always welcome,” Ms Norwood said. the water we use for irrigation is much There were 79 phones donated by the For more information about better than many people in other parts of company and the community in 2005/06 Water Aid Australia visit the world have to drink,” she said. which raised $395. www.wateraid.org/australia

74 Murray Irrigation Limited Annual Report 2006 company culture

Corporate governance for the company, to ensure it is the company, or is required by law. properly managed, meets its legal and • Should not engage in conduct The Board of directors takes ultimate financial obligations and both protects likely to bring discredit upon the responsibility for the corporate and enhances shareholders’ equity. company. governance of Murray Irrigation The company’s new strategic plan • Have an obligation, at all times, to Limited and aspires to the highest will be important in providing comply with the spirit, as well as standards of corporate governance. direction, guiding the directors’ the letter of the law and with the Significant changes have been made decisions and staff actions, and principles of this code. during the past year, with a new providing accountability to our company constitution endorsed to shareholders and other stakeholders. Composition of the board replace the previous Memorandum and Articles of Association (M&A). The Directors Code of Conduct The Murray Irrigation board consists of 11 non executive directors, eight number of directors on the board was Our directors act under the following of whom are shareholders, know as also increased. Detailed information Code of Conduct. Directors: about directors’ holdings in the member directors and three non- company and attendance at committee • Must act honestly, in good faith member (independent) directors who meetings is included in the Directors’ and in the best interests of the do not hold shares in the company. Report on pages 81 and 83. company as a whole. Member directors are drawn from the • Have a duty to use due care and following geographic regions: At the December 2005 Annual diligence in fulfilling the functions General Meeting (AGM) shareholders East Berriquin 3 members of office and exercising the powers endorsed the results of the postal West Berriquin 1 member attached to that office, using the ballot for the three contested member Denimein 1 member powers of office for a proper director vacancies. Stewart Ellis was Deniboota 1 member purpose, in the best interests of the returned uncontested; Gordon Ball, Wakool 2 members company as a whole. Malcolm Holm and Leigh Chappell Shareholders elect their member • Must recognise that the primary were elected in contested ballots. directors via a postal ballot, with the responsibility is to the company’s Shareholders also endorsed the election confirmed at the following shareholders as a whole but board’s recommendation to appoint AGM.They are elected for a four should, where appropriate, have Anthony Read as a non-member year term, with one-half retiring regard for the interests of all director, replacing the retiring every second year. director Barry Ireland. stakeholders of the company. • Must not make improper use of Non-member directors are nominated The Extraordinary General Meeting information acquired as a director by the member directors to serve (EGM) in January 2006 heralded or take improper advantage of terms of four years. Shareholders significant changes. It followed their position as director. ratify or veto the appointment of the extensive consultation with nominated non-member directors • Must not allow personal interests, shareholders to develop a new at the AGM. (Prior to 2004 non- or the interest of any associated constitution which would allow the member directors were also elected.) person, to conflict with the company to comply with the National non-member directors must have a interests of the company. Water Initiative, maximise the value tertiary qualification and a minimum of the company’s water entitlements • Have an obligation to be of 10 years of experience in a relevant and increase opportunities for our independent in judgement and area of expertise, most particularly in irrigator-shareholders.This process actions and to take all reasonable the areas of finance, engineering or is described in more detail in Chapter steps to satisfy themselves as to the environmental management. 4, page 43.The new company soundness of all board decisions. constitution also expanded the • Must keep confidential any Chairman positions for non-member directors information received in the The chairman of the board is elected from two to three and the board made exercise of the directors’ duties. by the full board for a term of two an interim appointment of David This information remains the years. Hunter to this position pending property of the company and it is endorsement at the 2006 AGM. improper to disclose it, or to allow The past year has been a test of it to be disclosed, unless that directors’ efforts to provide leadership disclosure has been authorised by

Murray Irrigation Limited Annual Report 2006 75 Our directors

Mr Stewart Ellis Mr Gordon Ball Mrs Alexandra Anthony Mr Kelvin Baxter Mr Leigh Chappell Mr Max Goudie Chairman Deputy Chairman

Chairman Member directors Mr Leigh Chappell Mr Stewart Ellis Mrs Alexandra Anthony Age 51 Age 48 Age 49 Mr Chappell is a member director Mr Ellis is a member director who Mrs Anthony is a member director who was elected to represent the has represented the Wakool District who was elected to represent the West Berriquin region in December since 1995. He was returned to the Wakool District in 2003. She is 2005. He is the executive officer of board in 2005 and elected chairman secretary of the Wakool branch of the the Murray Valley Groundwater Users in December 2005. He represents Ricegrowers’Association of Australia Association. Murray Irrigation as a member of (RGA), a Wakool delegate to the Mr Max Goudie the NSW Murray Groundwater RGA central executive and is Age 65 Management Committee, as chairman a member of its water committee. Mr Goudie is a member director of the Snowy Hydro Consultative She is a graduate of the Murray who has represented the Deniboota Committee, and as a delegate to the Darling Basin Leadership Program District since 1995. He was re-elected NSW Irrigators’ Council. He is also and a member of the Australian to the board in 2003. He is a past a member of the Australian Institute Institute of Company Directors. chairman of the Deniboota of Company Directors. Mr Kelvin Baxter Landholders’Association and is a member of the Australian Institute Deputy Chairman Age 54 of Company Directors. Mr Gordon Ball Mr Baxter is a member director Age 59 who has represented the East Mr Malcolm Holm Berriquin region since 1995. He Age 38 Mr Ball is a member director who was re-elected to the board in 2003. Mr Holm is a member director who has represented the East Berriquin He is a member of the Murray was elected to represent the East region since 1995. He was re-elected Darling Basin Environmental Flows Berriquin region in December 2005. to the board in 2005. He represents Project, the Hume to Yarrawonga He is a past chairman of the the company as a member of the Waterway Advisory Group, the Southern Riverina Irrigators, State Water Murray Lower Darling Murray Lower Darling Community chairman of the Blighty branch of Customer Service Committee. Reference Committee and the Living the NSW Farmers’Association, and He is a member of the Australian Murray Community Reference an executive councillor for the NSW Institute of Company Directors Group. He is also chairman of the Farmers’Association. and the Riverina Institute of TAFE Murray Catchment Management Mr Daniel Liphuyzen Advisory Council. He is also a Authority. Age 49 Community Representative on the MDBC Community Reference Mr Liphuyzen is a member director Group for the Living Murray. who has represented the Denimein District since 1995. He was re-elected to the board in 2003. He is chairman of the Denimein Land and Water Management Plan Working Group.

76 Murray Irrigation Limited Annual Report 2006 company culture

Mr Malcolm Holm Mr Daniel Liphuyzen Mr David Hunter Mr Michael O’Callaghan Mr Anthony Read

Non-member directors Mr Anthony Read Mr David Hunter Age 67 Age 55 ME, MBA, FASCE, FIEAust, CPEng Mr Read is a non-member director BEc, FAICD, ICAA, MACS who was appointed to the board in Mr Hunter is a non-member director December 2005. He is a Principal who was appointed to the board in Engineer and Manager Agribusiness February 2006. He retired with Kellogg Brown Root Pty Ltd in in 2005 from his position of Adelaide. He is a member and past Global Senior Partner for Accenture, chairman of the Hydrological Society a management and technology of South Australia and a member of consulting company. He is a non- the Industry Development Board - executive director of AAV Limited, Horticulture advising the Minister for IWM Limited, Forest and Wood Agriculture in South Australia. Products Research & Development Outgoing directors Corporation, and the Australian Government Solicitor Advisory Mr William Hetherington Board. Member director representing West Berriquin 1995-2005 Mr Michael O’Callaghan Board chairman December 1995 – Age 51 December 2005 FICA Mr Ian Gillett Mr O’Callaghan is a non-member Member director representing East director who was appointed to the Berriquin 2001-2005 board in 2003. He is a chartered accountant and is the Senior Partner Mr Barry Ireland of the firm O’Callaghan’s Business Non-member director with expertise Advisers in Albury-Wodonga. He is a in engineering, 1995-2005 director of both the Mercy Centre Lavington, and the Albury Club.

Murray Irrigation Limited Annual Report 2006 77 Board responsibilities • Selecting and recommending any crisis that may occur, The primary role of the board is to auditors to shareholders at general including the sudden incapacity of give direction and exercise judgement meetings. senior personnel including the chairman. in setting the company’s objectives • Selecting the chief executive, and and overseeing their implementation. if necessary replacing him/her, • Ensuring that appropriate These include: setting an appropriate training, evaluation and succession • Protecting the company’s financial remuneration package, ensuring plans are in place for the senior position and its ability to meet its adequate succession, and giving management team. guidance on the appointment and debts and other obligations. • Periodically arrange an remuneration of other senior externally conducted audit of • Adopting a strategic plan for the management. company, and comparing actual the effectiveness of the board’s results with the plan. • Adopting formal processes for the corporate governance processes. selection of new directors and • Periodically communicate the • Adopting an annual budget for recommending them for the board’s corporate governance the financial performance of the consideration of shareholders at policies to shareholders. company and monitoring results. general meetings with adequate • Adopting clearly defined information to allow shareholders The board should be satisfied that it delegations of authority from the to make informed decisions. has, or has access to, the appropriate level of skill in all relevant areas of the board to the general manager. • Establishing key performance law and in relation to the business indicators for board performance • Developing performance and financial affairs of the company. indicators with management. and reviewing its own processes and effectiveness, including The board’s recommendation to the • Determining that the company post mortems on policy EGM in January 2006 to create an has instituted adequate reporting implementation. additional non-member director systems and internal controls position was in response to the • Reviewing the balance of (both operational and financial) nomination of a candidate the board competence on the board. together with appropriate believed would provide additional, monitoring of compliance • Ensuring an effective system is in valuable expertise to the company. activities. place for the management of Committees • Establishing and monitoring complaints. To assist in fulfilling its responsibilities, policies directed to ensuring that • Scheduling periodic meetings to the board has established a number of the company complies with the be attended by directors only. committees, each of which has its law and conforms to the highest own terms of reference, detailing the standards of financial and ethical • Ensuring a comprehensive way the committee operates.All behaviour. induction program is in place for committees report to the full board new directors and that all after each committee meeting and • Determining that the company directors receive appropriate relevant papers and minutes are accounts are in conformity with continuing education. provided to all directors. Committees Australian Accounting Standards are appointed for terms of two years, and are true and fair. • Periodically arrange for an and the current appointments were externally conducted climate made following the Annual General • Ensuring that satisfactory survey of all staff, with reporting Meeting in December 2005. arrangements are in place for of results to the chairman. Management provide reports to auditing the company’s financial meetings of the board committees • Ensuring that the company can affairs and that the scope of the and to the board, and attend these external audit is adequate. respond quickly and effectively to meetings by invitation.

78 Murray Irrigation Limited Annual Report 2006 company culture

Committee membership identifying risks to the company. Tullakool Subsurface Drainage The committee is also charged with Scheme (WTSSDS). Audit and Risk Management the responsibility of recommending • The company’s stormwater escape December 2005 – Present: to the board the appointment, strategy, and accompanying policy Michael O’Callaghan (Chair), removal and remuneration of the and operations manual be Gordon Ball,Alexandra Anthony, external auditors, and reviewing the endorsed, and finalised in Stewart Ellis. terms of their engagement, and the 2006/07. August 2005 – December 2005: scope and quality of the audit. A • The company review it Total Michael O’Callaghan (Chair), representative from the company’s Farm Water Balance policy. Bill Hetherington, Gordon Ball, auditors Johnsons MME may attend • A pumping trial to be undertaken Alexandra Anthony. this meeting by invitation. Johnsons at WTSSDS with a view to Environment MME continue in office in attracting investment in Rainbow accordance with section 327 of the Trout production at the site. December 2005 – Present: Corporations Act 2001. • An Arsenal trial be undertaken Stewart Ellis (Chair), Kelvin Baxter, Key recommendations 2005/06: with the aim of controlling the Max Goudie, Malcolm Holm. • The company prepare a detailed weed sagittaria in the supply August 2005 – December 2005: risk management strategy. system. Stewart Ellis (Chair), • Johnsons MME be re-appointed Bill Hetherington, Kelvin Baxter, as auditors. Infrastructure Committee Max Goudie. • Payment of the second instalment This committee makes recommend- ations on fulfilling the board’s Infrastructure of the 2004/05 water accounts be extended from November 2005 to responsibilities for the maintenance, December 2005 – Present: February 2006. refurbishment and renewal of the Anthony Read (Chair), Gordon Ball, • The company introduce quarterly company’s water supply and drainage Leigh Chappell, Stewart Ellis, Daniel billing from October 2006, (in infrastructure.This includes Liphuyzen. line with State Water’s bill management controls and policies, August 2005 – December 2005: practices). assessment of funding priorities, costs Barry Ireland (Chair), Bill • A credit facility be developed for and performance, refurbishment and Hetherington, Gordon Ball, shareholders and available from renewal strategies, and review of Ian Gillett, Daniel Liphuyzen. October 2006. government infrastructure funding Remuneration • Further steps be taken to appeal and operational agreements. Key recommendations 2005/06: December 2005 – Present: an unfavourable tax ruling against • Pre-fabricated regulator design Stewart Ellis (Chair), Gordon Ball, the company. option for new infrastructure be Michael O’Callaghan. • Additional funding be sought for endorsed. August 2005 – December 2005: the renewal of shire bridges and Bill Hetherington (Chair), culverts. • A value management workshop Kelvin Baxter, Stewart Ellis. be held to review the company’s Environment Committee construction and refurbishment Resources and Nominations The environment committee helps standards. December 2005 – Present: the board to achieve environmental • A submission be made to the Stewart Ellis (Chair), Kelvin Baxter, compliance and implement the National Water Commission for Gordon Ball. Murray Land and Water Management infrastructure funding in exchange August 2005 – December 2005: Plans (LWMPs).The committee also for up to 15GL of company’s Bill Hetherington (Chair), Kelvin oversees environmental audits, conveyance licence. Baxter, Stewart Ellis. maintains communication between Remuneration Committee Audit and Risk Management the board and external agencies, Conditions of employment and Committee reviews the company’s environmental remuneration of senior management This committee assists the board in management and administration of are the responsibility of this committee relation to accounting and reporting environmental agreements with including annual remuneration, practices and related issues.These government. bonuses or other incentives. include: audits, financial information Key recommendations 2005/06: Key committee recommendations and accounting controls, management • Funding options be developed, in 2005/06: of investments, administration consultation with landholders for • The Murray Irrigation Enterprise agreements with government and construction of Stage 3 of Wakool Agreement be endorsed.

Murray Irrigation Limited Annual Report 2006 79 Nominations Committee It is also a board policy that directors Challenges This committee was previously known and staff not be permitted to both as Resources and Nominations buy and sell water on the company The bleak outlook for the season Committee. Its terms of reference and operated water exchange in the same ahead, after 4 years of drought and name were changed during the year. season. low water allocations, will create It’s primary objective is to assess the additional stress for many of our skills required by directors, the general Board remuneration customers, and for the company as a manager and company secretary, to Member directors receive a fixed rate whole.The integrity of our corporate identify suitable candidates as necessary of $22,600 per annum and a day rate governance systems will be tested by and recommend appointments. of $255 for committee meetings and what is shaping up as an extremely Key committee recommendations special projects. Non member difficult year and by continuing water 2005/06: directors receive a fixed rate of reform. • Two applicants be interviewed as $35,375 per annum and day rate of candidates for an external director Retaining skilled staff and $510 for committee meetings and vacancy. maintaining a positive team culture special projects.The chairman of the will be an important part of Board training and board receives a fixed rate of $45,280 successfully managing these issues. professional advice per annum and day rate of $510 for Directors have the right in committee meetings and special OH&S also continues as a significant connection with their duties and projects. challenge – reducing our accident responsibilities as directors, to seek rate and ensuring staff have a safe All Murray Irrigation staff including independent professional advice at the work environment. corporate executives are remunerated company’s expense. Prior written according to our remuneration approval of the chairman is required, management system. Under the which will not be unreasonably system, positions are assessed by withheld.There was a request from Mercer Human Resource Consultants one director to seek additional using the Cullen, Egan & Dell method independent legal advice in relation of rating salaries and wage rates are to the separation of the company’s capped at the 25th percentile of the shares and water entitlements as part national general market. of the new constitution.This request was approved. Company memberships Conflicts of interest Murray Irrigation holds membership of the following organisations: Murray Irrigation directors act in accordance with a Code of Conduct • Australian Water Association as outlined on page 75. In addition, (AWA); directors are asked to resign from • Australian National Committee executive positions on district or on Irrigation and Drainage regional landholder associations upon (ANCID); being elected, to prevent possible • NSW Irrigators Council; conflicts of interest between these • Irrigation Association of Australia groups and the need for directors to (IAA). act in the interests of the company as a whole.

80 Murray Irrigation Limited Annual Report 2006 ...... directors’ report ...... Your directors present their report Directors’ interests . together with the accounts of the The relevant interests of the directors . . . company for the financial year to in the share capital of the company are . . 31 July 2006 and the Auditor’s report as follows: . . . . thereon. Direct Indirect ...... Shareholding Shareholding Directors MEMBER DIRECTORS The following persons were directors Number of meetings held: 10 of the company during the whole of A.M.Anthony Nil 1,589 Number of meetings attended by: the financial year and up to the date G.G. Ball Nil 1,686 A.M.Anthony ...... 10 of this report:- K.S. Baxter Nil 7,028 G.G. Ball ...... 10 A.M.Anthony M.D.Goudie S.G. Ellis 1,000 Nil K.S. Baxter ...... 8 G.G. Ball D.T. Liphuyzen M.D. Goudie 809 1,577 L. Chappell...... 6 S.G. Ellis (chair)...... 10 K.S. Baxter M.J O’Callaghan D.T. Liphuyzen Nil 810 I.A. Gillett ...... 4 S.G. Ellis L. Chappell Nil 1,073 I.A. Gillett,W.L.Hetherington and M.D. Goudie...... 10 M.J. Holm Nil 1,484 B.J. Ireland were directors from the W.L. Hetherington...... 4 beginning of the financial year up to NON-MEMBER DIRECTORS M.J. Holm...... 6 D.R. Hunter...... 4 15th December, 2005. M.J O’Callaghan Nil Nil B.J. Ireland...... 4 A. Read Nil Nil L. Chappell, M. J. Holm and A.L. D.T. Liphuyzen...... 10 Read were directors from 15th D. Hunter Nil Nil M.J. O’Callaghan ...... 9 December 2005 up to the date of this Meetings of directors A.L. Read ...... 6 report. The following table sets out the Principal activity D.R. Hunter was a director from 1st number of meetings of the directors The principal activity of Murray February 2006 up to the date of this held during the financial year to 31 Irrigation Limited during the report. July 2006, and the numbers of period consisted of the supply of Further details are included on page meetings attended by each director. water to landholders within an 76 and 77 of this annual report. area from the Murray River to Billabong Creek, extending 150 kilometres to the west and 100 kilometres to the east of Deniliquin.

Murray Irrigation Limited Annual Report 2006 81 Results: the receipt of both the Land Matters subsequent to the The results of the company for the and Water Management Plan drainage end of the financial period year were as follows: works and the Infrastructure Program As this report goes to print the NSW should not be recognised as revenue Murray general security allocation for $’000 by way of contributed assets of MIL. the 2006/07 season remains at zero. 2006 2005 The company has obtained advice The company also has no conveyance Revenue from over many years in respect to the allocation and has little expectation Irrigation 30,660 24,824 application of the Income Tax Law either allocation will improve before Employee Benefits (9,248) (7,644) to the Land and Water Management the end of the season.The directors Materials and Plans and Infrastructure Program in expect this will result in a loss to the Contracts (5,129) (4,344) order to form this view.The company company of at least $5 million at the Depreciation and will continue to pursue these matters end of the 2006/07 season. Amortisation (7,208) (6,606) to achieve an equitable outcome for the company. In the interval between the end of Bulk Water Supply (6,488) (5,845) the financial year and the date of this Borrowing Costs (26) (28) Dividends report, there has been no other item, Obsolete Assets (2,546) (203) The company is a not for profit transaction or event of a material and Other (759) (640) organisation and no operating surplus unusual nature likely, in the opinion ------may be paid or transferred by way of of the directors, to affect significantly Profit/(Loss) from a distribution of profit to the the operations of the company, the Irrigation (744) (486) members. results of those operations, or the state Other Revenue 14,410 10,558 of affairs of the company, in ------Review of operations subsequent financial years. Profit/(Loss) A total of 985,038 megalitres Likely developments and before Tax 13,666 10,072 of water was supplied for the year expected results of operations Income Tax Expense (5,369) (3,797) to 31 July 2006.This is 203,606 The company’s results are influenced ------megalitres above the five year average. Further details are included on pages by the level of its operating costs and Net Profit/(Loss) 8,297 6,275 14-23 of this annual report. the amounts which are required to be ======set aside to reserves, and the amounts Environmental regulations which are derived by way of income Revenue from contributed assets Murray Irrigation Limited is subject from the sale of water, and other Under the Corporations Act, to New South Wales environmental sources. Due to the unpredictability compliance with the accounting legislation in relation to water and of available resource, government standards is mandatory. Accounting land use.The company holds an demands and river management it standard AASB 1004 requires that Environmental Protection Licence is not possible to predict results. infrastructure works, when issued by the NSW Environment constructed, to the extent to which However, directors will endeavour Protection Authority.This Licence their cost has been met from to protect the viability of the business requires discharges to waterways Government funding, be treated as in all circumstances. Further to be below specified levels of revenue of the company even information on likely developments contaminants.There have been no though the receipt of the funding is in the company’s operations and the breaches of the Licence during the not revenue of the company. Your expected results of operations have financial year to 31st July 2006. directors are concerned that this not been included in this report as, accounting treatment may be Changes in the state of affairs in the opinion of the directors, this may prejudice the interests of the misleading and are of the view that In the opinion of the directors, company. neither the receipt of the Government there were no significant changes funding nor the value of the works in the state of affairs of the company constructed should be recognised as that occurred during the year, not revenue.Accordingly the directors feel otherwise disclosed in this report obliged to explain that in their view and the accounts.

82 Murray Irrigation Limited Annual Report 2006 directors report

Indemnification and Board committees Infrastructure Committee: insurance of officers As at 31st July 2006, Murray Number of Meetings Held: 4 During the financial year the Irrigation Limited had five board Number of meetings attended by: company paid a premium committees. A number of committee A.L. Read* (Chairman) 2 indemnifying officers of the company. membership changes took place G.G. Ball 4 A condition of the contract is that during the year and are denoted by L. Chappell* 2 the nature of the liability indemnified an *. The following table sets out the S.G. Ellis* 2 and the premium payable not be number of committee meetings held I.A. Gillett* 2 disclosed. during the year, and the number of W.L.Hetherington* 2 meetings attended by committee B.J. Ireland* 2 Proceedings on members. D.L. Liphuyzen 4 behalf of the company No person has applied to the Audit and Risk Management Remuneration Committee: Court under section 237 of the Committee: Number of Meetings Held: 2 Corporations Act 2001 for leave to Number of Meetings Held: 5 Number of meetings attended by: bring proceedings on behalf of the Number of meetings attended by: S.G. Ellis* (Chairman) 2 company, or to intervene in any M.J. O’Callaghan (Chairman) 5 G.G. Ball* 1 proceedings to which the company A.M.Anthony 5 W.L.Hetherington* 1 is a party, for the purpose of taking G.G. Ball 5 M.J. O’Callaghan 1 responsibility on behalf of the S.G. Ellis* 3 company for all or part of those W.L.Hetherington* 2 Resources and Nominations proceedings. Committee: Environment Committee: Number of Meetings Held: 1 No proceedings have been brought or Number of Meetings Held: 3 Number of meetings attended by: intervened in on behalf of the Number of meetings attended by: S.G. Ellis* (Chairman) 1 company with leave of the Court S.G. Ellis (Chairman) 3 K.S. Baxter 1 under Section 237 of the K.S. Baxter 1 W.L.Hetherington* 1 Corporations Act 2001. M.D. Goudie 3 Auditor Rounding of amounts to W.L.Hetherington* 1 nearest thousand dollars M.J. Holm* 2 Johnsons MME continue in office in accordance with section 327 of the The company is of a kind referred Corporations Act 2001. to in Class Order 98/0100, issued by the Australian Securities & This report is made in accordance Investments Commission, relating with a resolution of the directors. to the “rounding off” of amounts in the Directors’ report.Amounts in the Directors’ report have been rounded off in accordance with that Class Order to the nearest thousand dollars.

Lead auditor’s independence S.G. Ellis declaration Chairman The lead auditor’s independence 27 October 2006 declaration is set out on page 106 and forms part of the Director’s report.

G.G. Ball Deputy Chairman 27 October 2006

Murray Irrigation Limited Annual Report 2006 83 ...... financial statements ...... Murray Irrigation Limited . . . INCOME STATEMENT . . for the Year Ended 31 July 2006 ...... 2006 2005 Notes $’000 $’000 Revenue from Irrigation Undertaking 2 30,660 24,824 Employee Benefits (9,248) (7,644) Materials and Contracts (5,129) (4,344) Depreciation and Amortisation Expense (7,208) (6,606) Bulk Water Supply Expense (6,488) (5,845) Borrowing Costs (26) (28) Loss on Obsolete Assets 3 (2,546) (203) Other Expenses (759) (640) ------Profit/(Loss) from Irrigation Undertaking Before Income Tax (744) (486) Other Revenue 2 14,410 10,558 ------Profit/(Loss) Before Income Tax 3 13,666 10,072 Income Tax Expense 4 (5,369) (3,797) ------Net Profit 8,297 6,275 ======

The above income statement should be read in conjunction with the accompanying notes.

84 Murray Irrigation Limited Annual Report 2006 financialChapter statementsheading

Murray Irrigation Limited BALANCE SHEET as at 31 July 2006

2006 2005 Notes $’000 $’000 ASSETS CURRENT ASSETS Cash and Cash Equivalents 5 41,047 36,223 Trade and Other Receivables 6 17,151 12,816 Inventories 7 1,175 1,218 Other 8 174 214 ------Total Current Assets 59,547 50,471 ------NON-CURRENT ASSETS Available for Sale Financial Assets 9 6,810 7,847 Investment Accounted for Using the Equity Method 10 1,360 1,250 Property, Plant and Equipment 11 250,113 243,759 Deferred Tax Asset 12 816 754 ------Total Non-Current Assets 259,099 253,610 ------TOTAL ASSETS 318,646 304,081 ------LIABILITIES CURRENT LIABILITIES Trade and Other Payables 13 12,023 9,978 Current Tax Liabilities 14 10,058 0 Provisions 15 2,411 2,199 Other 16 2,899 2,395 ------Total Current Liabilities 27,391 14,572 ------NON-CURRENT LIABILITIES Deferred Tax Liabilities 17 26,686 33,278 Provisions 18 49 47 ------Total Non-Current Liabilities 26,735 33,325 ------TOTAL LIABILITIES 54,126 47,897 ------NET ASSETS 264,520 256,184 ======EQUITY Contributed Equity 19 186,452 186,452 Reserves 20(a) 111,721 100,621 Retained Profits (Accumulated Losses) 20(b) (33,653) (30,889) ------TOTAL EQUITY 21 264,520 256,184 ======

The above balance sheet should be read in conjunction with the accompanying notes.

Murray Irrigation Limited Annual Report 2006 85 Murray Irrigation Limited STATEMENT OF CHANGES IN EQUITY for the Year Ended 31 July 2006

2006 2005 Notes $’000 $’000

Total Equity at the Beginning of the Financial Year 256,184 249,671 Revaluation of Available for Sale Financial Assets recognised directly to Equity 9(a) 56 340 Income Tax on items recognised directly to Equity (17) (102) ------Net Income Recognised Directly in Equity 39 238

Profit for the year 8,297 6,275 ------Total Equity at the End of the Financial Year 264,520 256,184 ======

The above statement of changes in equity should be read in conjunction with the accompanying notes.

86 Murray Irrigation Limited Annual Report 2006 financial statements

Murray Irrigation Limited CASH FLOW STATEMENT for the Year Ended 31 July 2006

2006 2005 Notes $’000 $’000 CASH FLOWS FROM OPERATING ACTIVITIES Cash received from Government 19,558 14,594 Water and Other Income 28,330 27,365 Payments to Suppliers and Employees (41,543) (36,047) Payments to Australian Tax Office (1,982) (922) Receipts from Government for GST 222 1,139 ------4,585 6,129

Interest received on Investments 1,964 2,007 Loan Costs paid (26) (28) ------Net Cash Inflow/(Outflow) from Operating Activities 26 6,523 8,108 ------

CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from Sale of Financial Assests 1,093 0 Payment for Property, Plant and Equipment (4,340) (4,053) Proceeds from Sale of Property, Plant and Equipment 1,548 1,515 ------Net Cash Inflow/(Outflow) from Investing Activities (1,699) (2,538) ------

NET INCREASE/(DECREASE) IN CASH HELD 4,824 5,570

Add Cash at the beginning of the Financial Year 36,223 30,653 ------CASH AT THE END OF THE FINANCIAL YEAR 5 41,047 36,223 ======

The above cash flow statement should be read in conjunction with the accompanying notes.

Murray Irrigation Limited Annual Report 2006 87 Notes to and Forming Part of the FINANCIAL STATEMENTS 31 July 2006

1 Summary of Significant as they apply to not-for-profit Deferred tax assets and liabilities Accounting Policies entities. are offset when there is a legally Reconciliations and descriptions enforceable right to offset current The principal accounting policies of the effect of transitions from tax assets and liabilities. Current adopted in the preparation of the AGAAP to AIFRS on the tax assets and tax liabilities are financial report are set out below. Company’s equity and net income offset where the entity has a These policies have been consistently are set out in Note 31. These legally enforceable right to offset applied to all the years presented, financial statements have been and intends either to settle on a unless otherwise stated. prepared under the historical cost net basis, or to realise the asset and (a) Basis of Preparation convention. settle the liability simultaneously. This general purpose financial (b) Income Tax Current and deferred tax balances attributable to amounts recognised report has been prepared in The income tax expense or directly in equity are also accordance with Australian revenue for the period is the tax recognised directly in equity. equivalents to International payable on the current period’s Financial Reporting Standards taxable income based on the (c) Impairment of Assets (AIFRS), other authoritative national income tax rate adjusted Assets are reviewed for pronouncements of the Australian by changes in deferred tax assets impairment whenever events or Accounting Standards Board, and liabilities attributable to changes in circumstances indicate Urgent Issues Group temporary differences between the that the carrying amount may not Interpretations and the tax bases of assets and liabilities be recoverable.An impairment Corporations Act 2001. and their carrying amounts in the loss is recognised for the amount These financial statements are the financial statements, and to unused by which the asset’s carrying first Murray Irrigation Limited tax losses. amount exceeds its recoverable financial statements to be prepared Deferred tax assets and liabilities amount.The recoverable amount in accordance with AIFRS. are recognised for temporary is the higher of an asset’s fair value AASB1 First-time Adoption of differences at the tax rates less costs to sell and value in use. Australian Equivalents to International expected to apply when the assets As the Company is a not-for-profit Financial Reporting Standards has are recovered or liabilities are entity and the future economic been applied in preparing these settled, based on those tax rates benefits of the Company’s assets is financial statements. which are currently enacted.The not primarily dependent on their Financial statements of Murray relevant tax rates are applied to the ability to generate cashflows, value Irrigation Limited until 31 July cumulative amounts of deductible in use is taken to be depreciated 2005 had been prepared in and taxable temporary differences replacement cost provided that the accordance with previous to measure the deferred tax asset Company would, if deprived of the Australian Generally Accepted or liability.An exception is made asset, replace it. Accounting Principles (AGAAP). for certain temporary differences Accordingly, the Company’s non- AGAAP differs in certain respects arising from the initial recognition current assets are carried at from AIFRS.When preparing of an asset or a liability. No amounts in excess of the values Murray Irrigation Limited’s 2006 deferred tax asset or liability is that would be applied if the financial statements, management recognised in relation to these Company were a ‘for profit’ entity has amended certain accounting temporary differences if they arose in accordance with AIFRS and and valuation methods applied in in a transaction that at the time of had applied the impairment rules the AGAAP financial statements the transaction did not affect of a ‘for profit’ entity. to comply with AIFRS. either accounting profit or taxable (d) Acquisition of Assets Because the Company’s principal profit or loss. The cost method of accounting is purpose is to provide cost Deferred tax assets are recognised used for all acquisitions of assets. effective services to its members, for deductible temporary Cost is determined as the fair rather than to generate profits, the differences and unused tax losses value of the assets given up or directors have determined that the only if it is probable that future liabilities undertaken at the date Company is a not-for-profit entity taxable amounts will be available of acquisition plus costs incidental as defined in AIFRS.Accordingly to utilise those temporary to the acquisition. the Company has applied AIFRS differences and losses.

88 Murray Irrigation Limited Annual Report 2006 financial statements

(e) Revenue Recognition the Company by the State (g) Investments Revenue is recognised for the (including monies sourced from Available for sale financial assets major business activities as follows: the Natural Heritage Trust), are brought to account at fair irrigators and Shires. Some of (i) Water Sales value. Distributions are recognised these funds are expended on the Revenue from the sale of water is in the income statement when construction of drainage assets recognised when the water is receivable. which are contributed to the delivered to customers. Fixed (h) Depreciation of property, Company to control and manage. water charges, asset levy charges plant and equipment and other fixed charges are The accounts have been prepared so as to recognise the value of Depreciation has been calculated recognised on a pro-rata basis on a straight line basis to write off throughout the year. contributed assets as income as the cost of the approved works the cost of assets over their (ii) Recognition of Revenue Arising from programs is incurred by the expected useful lives. Estimates of Contributed Assets Company.This is because the remaining useful lives are made on The Company was incorporated Corporations Act 2001 requires the a regular basis for all assets, with on 23 February 1995 by the NSW directors to prepare financial annual reassessments for major State Government (the State) as a statements that comply with the items. The expected useful lives vehicle to privatise the irrigation relevant accounting standards.The are as follows: undertaking known as Murray effect of Accounting Standard Water Irrigation Area and Districts, an AASB118: Revenue, is to require Infrastructure...... 10 to 100 yrs arm of the then NSW Department the Company to recognise the Leased Assets ...... 40 to 100 yrs of Land and Water Conservation contributed assets when and only (DLWC).The irrigation Buildings and when it is probable that future infrastructure was transferred from Cottages...... 40 yrs economic benefits embodied in the DLWC to the Company on Plant & Equipment....8 to 10 yrs the asset will eventuate and the 23 February 1995.The ownership asset possesses a cost or other Office Equipment ...... 3 to 14 yrs of the Company was transferred value that can be measured Motor Vehicles ...... 4 to 5 yrs from the State to individual reliably. Under AASB118, an asset irrigators on 3 March 1995. (i) Leased Non-Current Assets must have the essential ingredient The State agreed that as part of the of being under the control of the Certain assets comprising shire privatisation process it would bear Company and this happens when road bridges and culverts, have the cost of refurbishing the the particular work has been been leased by the Company from irrigation infrastructure assets to completed.The nature of the public and local authorities for a a value of $82.5 million (indexed assets and the fact that the assets period of 99 years.The Company for inflation, balance remaining cannot be physically detached is obliged to maintain these assets $30.0 million (2005, $35.6 million)) from the infrastructure already during the period of the leases. in order to make good past owned by the Company means These assets, in view of the long deterioration of the infrastructure. that the economic substance of term nature of the leasing The mechanism by which this was the transaction is that the arrangements and the future effected was a Funding Deed under Company gains control of these economic benefits that are likely which the State is to provide the assets at the time of construction. to eventuate, are included in non- funds to the Company over 15 Therefore they are brought to current assets, on the basis of years as reimbursement for the cost account as revenue at this time in control. (Note 11). of works carried out in accordance accordance with the requirements (j) Non-Current Assets with works programs approved by of Australian Accounting Standard Constructed by the Company the State.Assets constructed are AASB118. This is referred to in The cost of non-current assets contributed to the Company to further detail at Note 4. constructed by the Company control and manage. (f) Inventories includes the cost of all materials The Company is also the used in construction, direct labour Raw materials and stores are implementing authority in respect on the project, and an appropriate stated at the lower of weighted of a number of Land and Water proportion of variable and fixed average cost and net realisable Management Plans. Expenditure overhead. on these plans is reimbursed to value.

Murray Irrigation Limited Annual Report 2006 89 (k) Maintenance and Repairs (o) Cash and Cash Equivalents both Government and Irrigators Maintenance, repair costs and For the purposes of the cash are brought to account as minor renewals are charged as flow statement, cash includes receivables.The net unexpended expenses as incurred. deposits at call which are readily amount of cash and receivables are held on behalf of the Plans and (l) Employee Entitlements convertible to cash on hand and are subject to an insignificant risk are therefore brought to account Wages and Salaries and of changes in value, net of as a liability, Funds Held as Annual Leave outstanding bank overdrafts. Implementing Authority. Refer Liabilities for wages and salaries Note 16. and annual leave are recognised (p) Reserves (r) Accounting policy in respect and are measured as the amount (i) Contributed Assets unpaid at the reporting date at Revenue arising from to Financial Instruments expected pay rates in respect of Government Agencies and Murray Irrigation Limited’s employees’ services up to that date Landowners in the form of accounting policies for financial including oncosts. contributed assets, less the amount instruments are detailed in Note Long Service Leave of any loss on disposal of Water 29(a). A liability for long service leave is Infrastructure Assets is transferred (s) Rounding of Amounts recognised, and is measured as the to the Contributed Assets The Company is of a kind present value of the expected Reserve. The purpose of this referred to in Class Order future payments including oncosts reserve is to report the Company’s 98/0100, issued by the Australian to be made in respect of services equity resulting from Government Securities & Investments provided by employees up to the and Landowner asset Commission, relating to the reporting date. Consideration is contributions separately from “rounding off” of amounts in the given to expected future wage profits of the Company’s financial report. Amounts in the and salary levels, experience of irrigation undertaking. financial report have been employee departures and periods (ii) Supply Variation rounded off in accordance with of service. The purpose of this reserve is to that Class Order to the nearest report the amounts set aside to Superannuation thousand dollars. provide the Company with The Company contributes in adequate funds to financially (t) Comparatives accordance with the Government withstand periods of extended Where necessary, comparatives Superannuation Levy. There are low volume water supply to have been reclassified and no liabilities for superannuation. Members. repositioned for consistency with Sick Leave Income arising from the Supply current year disclosures. Employees are entitled to ten days Variation Levy is transferred to (u) Revenue Received in Advance sick leave per annum on a the Supply Variation Reserve Any monies received in advance cumulative basis. No liability is Fund. Refer Note 5 (i). of supply of goods or services brought to account as the The 1995 Business Plan provides rendered are brought to account expected future payments are that if in any year, less than 1.0 as a liability called revenue unlikely to exceed the sick leave million megalitres are sold, the received in advance. entitlements accruing in future difference between actual sales periods. and 1.0 million megalitres at the (m) Interest on Water Debtors water usage price is to be Accounts withdrawn from the Supply Interest is charged on water Variation Reserve and together debtors accounts which are with the levy for that year be overdue and outside of the made available for general usage. normal credit arrangements. (q) Land and Water (n) Doubtful Debts Management Plans A provision for doubtful debts is As stated in Note 1(e)(ii) the raised against water debtors Company is the implementing accounts where the collection of authority in respect of a number the debt may not be received of Land and Water Management within the following 12 months. Plans.Amounts outstanding from

90 Murray Irrigation Limited Annual Report 2006 financial statements

2 Revenue $’000 2006 2005 Revenue from Irrigation Undertaking Income from Water Sales 24,022 18,748 Supply Variation Levy 760 485 Asset Maintenance and Renewal Levy 2,311 2,241 Precast External Sales 1,614 1,268 Other Income 1,295 1,229 Interest on funds of Irrigation Undertaking 658 853 ------Revenue from Irrigation Undertaking 30,660 24,824 ------Other Revenue Interest – Supply Variation, Asset Maintenance and Renewal Funds 1,397 1,181 Land and Water Management Plans Contributed Assets 2,538 4,067 Infrastructure – Contributed Assets 10,475 5,310 ------14,410 10,558 ------Total Revenue 45,070 35,382 ------

3 Profit before Income Tax Net Gains and Expenses Profit before income tax includes the following specific net gains and expenses: $’000 2006 2005 Expenses Net (gain)/loss on disposal of property plant and equipment (303) (344) Write off of obsolete assets (i) 2,546 203 Depreciation: Buildings 56 55 Plant and Equipment 1,957 1,862 Infrastructure 4,351 3,934 ------Total Depreciation 6,364 5,851 ------Amortisation Leased Assets 844 755 Doubtful Debts (10) 34

(i) The Company has reviewed its assets during the year and determined certain infrastucture is no longer required and is unlikely to be used in the future, accordingly these assets have been written off.

Murray Irrigation Limited Annual Report 2006 91 4 Income Tax (a) Income tax expense $’000 2006 2005 Current tax 11,969 574 Deferred tax (i) (6,600) 3,008 Under/(over) provision in prior year 0 215 ------Aggregate income tax expense 5,369 3,797 ======(i) Deferred income tax expense included in income tax expense comprises: Decrease/(increase) in deferred tax assets (note 12) (62) 45 (Decrease)/increase in deferred tax liabilities (note 17) (6,538) 2,963 ------(6,600) 3,008 ------(b) Numerical reconciliation of income tax expense to prima facies tax payable The aggregate amount of income tax attributable to the financial year differs from the amount calculated on the operating profit and extraordinary item. The differences are reconciled as follows: Net profit/(loss) before income tax 13,666 10,072 ------Income tax (expense)/credit calculated @ 30% (2005: 30%) 4,100 3,022 Tax effect of permanent differences: Non-deductible depreciation and amortisation 1,269 560 Other (Under)/over provision in prior year 0 215 ------Income tax (expense)/credit attributable to operating profit 5,369 3,797 ======(c) Amounts recognised directly to equity Deferred tax on revaluation of available for sale assets 17 102 ======

(d) Inherent Uncertainty There continues to be significant uncertainty in respect to the Company’s taxation position.The Company has obtained advice over many years in respect to the application of the Income Tax Law to the Infrastructure Program and Land & Water Management Plans referred to at note 1(e)(ii). However, to date the Australian Taxation Office has expressed a different view on the application of the taxation law to that of the Company and its advisors.While progress is being made, at the date of this report, these matters have yet to be resolved.

Should these matters ultimately be resolved in accordance with the current Australian Taxation Office view, approximately $9.1 million of the current taxation liability (relating to Land and Water Management Plans only) referred to at note 14 may become due and payable immediately. Further additional interest and penalties may be applied to the above which have not been brought to account in this financial report.The additional interest could potentially total up to $4.0 million, although the amount of any interest would depend upon any settlement.

The Company will continue to pursue these matters in an endeavour to achieve an equitable outcome for the Company.

The new accounting standard AASB112: Income Taxes requires that no deferred tax assets or liabilities are brought to account that arise on transactions that at the time of the transaction did not affect either accounting or taxable profits (refer note 1(b)).This affects all assets acquired by the Company at the time of privatisation.This requirement was not contemplated at the time the Company’s asset records were developed.Accordingly, the deferred tax liability has been based on estimates rather than detailed asset records. Future work on asset records may identify a need to adjust the carrying value of the deferred tax liability.

92 Murray Irrigation Limited Annual Report 2006 financial statements

5 Current Assets – Cash and Cash Equivalents $’000 2006 2005

Cash at bank and on hand 41,047 36,223 ======Restrictions are imposed on access to certain of the above funds as follows: Supply Variation Reserve Fund - Restricted (Note (i) below) 760 0 Government Funds received in advance 0 411 Asset Maintenance and Renewals - Restricted (Note (ii) below) 23,716 18,962 Unrestricted Funds 16,571 16,850 ------41,047 36,223 ======(i) Under Rule 15.2 of the constitution, the Supply Variation Reserve Fund was established to provide the Company with adequate funds to financially withstand periods of extended low volume water supply to Members (Note 1(p)(ii)). (ii)Under Rule 15.2 of the constitution, the Asset Maintenance and Renewal Fund was established to cover capital expenditure for refurbishment, replacement and long term maintenance of the Company’s water infrastructure assets. The amount set aside is calculated after considering the advice of independent external consulting engineers.The amount so set aside totals $30,526,000 (2005 $26,809,000) comprising cash $23,716,000 (2005 $18,962,000) and bonds $6,810,000 (2005 $7,847,000), (Notes 5 and 9).

6 Current Assets – Trade and Other Receivables $’000 2006 2005 Water Debtors 10,229 9,375 Less Provision for Doubtful Debts (189) (199) ------10,040 9,176 Land and Water Management Plans (Note 28(ii)) - Due from irrigators 902 1076 Government Agencies - Asset Maintenance and Renewal 2,271 0 - Land and Water Management Plans (Note 28(ii)) 2,360 1,546 - Other 445 172 ------5,076 1,718 Other Debtors 1,133 846 ------17,151 12,816 ======

7 Current Assets - Inventories $’000 2006 2005

Raw Materials and Stores 1,175 1,218 ======

8 Current Assets - Other $’000 2006 2005

Prepayments 174 214 ======

Murray Irrigation Limited Annual Report 2006 93 9 Non-Current Assets - Available for Sale Financial Assets $’000 2006 2005 Commonwealth Indexed Bonds (a) 6,810 7,847 ======(a) Movements in carrying amounts Carrying amount at the beginning of the financial year 7,847 7,507 Revaluation surplus transferred to equity 56 340 Disposals (1,093) 0 ------6,810 7,847 ======

10 Non-Current Assets - Investments Accounted for Using the Equity Method $’000 2006 2005 Investment in AWMA Pty Ltd (a) 1,360 1,250 ======(a) The Company owns 50% of the shares in AWMA Pty Ltd. AWMA Pty Ltd is a manufacturer of irrigation equipment.

11 Non-Current Assets - Property Plant and Equipment $’000 2006 2005 Freehold Land - At Cost 2,043 2,051 ------Water Infrastructure - At Cost 208,607 203,792 Less Accumulated Depreciation 32,329 28,436 ------176,278 175,356 ------Construction-in-Progress - At Cost 19,606 15,925 ------Leased Assets - At Cost (Note 1(i)) 49,013 46,985 Less Accumulated Amortisation 6,818 6,003 ------42,195 40,982 ------Buildings and Cottages - At Cost 2,136 2,194 Less Accumulated Depreciation 567 636 ------1,569 1,558 ------Plant and Equipment - At Cost 8,012 7,435 Less Accumulated Depreciation 4,169 3,601 ------3,843 3,834 ------Office Equipment - At Cost 1,641 1,454 Less Accumulated Depreciation 1,322 1,166 ------319 288 ------Motor Vehicles - At Cost 5,879 5,422 Less Accumulated Depreciation 1,619 1,657 ------4,260 3,765 ------Total Non-Current Assets 250,113 243,759 ======

94 Murray Irrigation Limited Annual Report 2006 financial statements

Reconciliations Reconciliations of the carrying amount of each class of property, plant and equipment at the beginning and end of the current financial year are set out below: Carrying Carrying $’000 amount at Additions Disposals Transfers Depreciation amount 1 August 31 July 2005 2006

Land 2,051 8 2,043 Water Infrastructure 175,356 2,490 7,763 4,351 176,278 Construction in Progress 15,925 13,561 (9,880) 19,606 Leased Assets 40,982 60 2,117 844 42,195 Buildings 1,558 129 63 55 1,569 Plant & Equipment 3,834 925 130 786 3,843 Office Equipment 288 232 201 319 Motor Vehicles 3,765 2,512 1,046 971 4,260 243,759 17,359 3,797 0 7,208 250,113

12 Non-Current Assets – Deferred Tax Asset $’000 2006 2005 The balance comprises temporary differences attributable to: Amounts recognised in profit and loss Employee benefits 738 673 Doubtful debts 57 60 Superannuation 15 13 Audit fees 68 ------816 754 ======

13 Current Liabilities – Trade and Other Payables $’000 2006 2005

Trade Creditors 11,390 9,678 Other Creditors 633 300 ------12,023 9,978 ======

14 Current Liabilities – Current Tax Liabilities $’000 2006 2005 Provision for Income Tax 10,058 0 ======

15 Current Liabilities – Provisions $’000 2006 2005 Employee Entitlements (Note 1(l)) 2,411 2,199 ======

Murray Irrigation Limited Annual Report 2006 95 16 Current Liabilities – Other $’000 2006 2005 Funds Received in Advance 0 411 Land & Water Management Plans – Funds held as Implementing Authority (Notes 1(q) and 28(ii)) 2,899 1,984 ------2,899 2,395 ======

17 Non-Current Liabilities – Deferred Tax Liabilities $’000 2006 2005 The balance comprises temporary differences attributable to: Amounts recognised in profit and loss Consumable stores 203 184 Diesel fuel rebate 50 52 Accrued interest 62 35 Investment in associates 33 0 Capital allowances and depreciation 25,883 32,498 ------26,231 32,769 ------Amounts recognised directly in equity Revaluation of available for sale financial assets 455 509 ------26,686 33,278 ======

18 Non-Current Liabilities – Provisions $’000 2006 2005

Employee Entitlements (Note 1(l)) 49 47 ======

19 Contributed Equity Shares 000’s $’000 2006 2005 2006 2005 Share Capital ------Ordinary shares 1,447 1,447 186,452 186,452 ======

20 Reserves and Retained Profits $’000 2006 2005 (a) Reserves: Contributed Assets 109,899 99,433 Supply Variation 760 0 Assest Revaluation Reserve 1,062 1,188 ------111,721 100,621 ======Movements: Contributed Assets - (Note 1(p)(i)) Balance - 1 August 2005 99,433 90,260 Transfer from Retained Profits 10,466 9,173 ------Balance - 31 July 2006 109,899 99,433 ======

96 Murray Irrigation Limited Annual Report 2006 financial statements

$’000 2006 2005 Supply Variation - (Note 1(p)(ii)) Balance - 1 August 2005 0 0 Transfer from Retained Profits 760 485 Transfer to Retained Profits 0 (485) ------Balance - 31 July 2006 760 0 ======Available for Sale Investments Revaluation Reserve Balance - 1 August 2005 1,188 950 Annual Revaluation 39 238 Transfer to Accumulated Losses (165) 0 ------Balance - 31 July 2006 1,062 1,188 ======(b) Retained Profits (Accumulated Losses) $’000 2006 2005 Balance 1 August 2005 (30,889) (27,991) Net Profit/(Loss) 8,297 6,275 Transfer to Contributed Assets (10,466) (9,173) Transfer to Supply Variation Reserve (760) (485) Transfer from Supply Variation Reserve 0 485 Transfer from Available for Sale Investments Revaluation Reserve 165 0 ------Balance 31 July 2006 (33,653) (30,889) ======(c) Nature and Purpose of Reserves Refer Note 1(p).

21 Equity $’000 2006 2005

Total equity at the beginning of the financial year 256,184 249,671 Changes Due to Bond Valuations 39 238 Total changes in equity recognised in the statement of financial performance 8,297 6,275 ------Total equity at the end of the financial year 264,520 256,184 ======22 Related Parties (a) Key Management Personnel (i) Directors The following persons were directors of Murray Irrigation Ltd for the year ended 31 July 2006: Directors were in office for this entire period unless otherwise stated. A.M.Anthony, G.G. Ball; K.S. Baxter; S.G. Ellis; M.D. Goudie; D.T. Liphuyzen; M.J. O’Callaghan. L Chappell commenced 15 December 2005. M.J. Holm commenced 15 December 2005. A.L. Read commenced 15 December 2005 D.R. Hunter commenced 1 February 2006 W.L.Hetherington from 1 August 2005 to 15 December 2005. I.A. Gillett from 1 August 2005 to 15 December 2005. B.J. Ireland from 1 August 2005 to 15 December 2005

Murray Irrigation Limited Annual Report 2006 97 (ii) Other key management The following persons also had authority and responsibility for planning, directing and controlling the activities of the Company, directly or indirectly, during the financial year: G B Warne General Manager W R Elsbury Deputy General Manager/ Company Secretary E T Aseervatham Engineering Manager A J Drenovski Works Manager P L Keyte MILCast Manager P D Knill Mechanical Engineering Manager A H Lelliott Services Manager J M McLeod Environment/Communication Manager D W Stubley Finance Manager D K Watts Water Distribution Manager All of the above persons were also key management persons during the financial year ended 31 July 2005 except A J Drenovski who commenced employment with the Company on 12 December 2005. (b) Key management personnel compensation 2006 2005 $’000 $’000 Short-term benefits 1,547 1527 Post employment benefits 119 111 (c) Key management personnel equity The aggregate number of shares in the Company held at balance date by key management personnel were: 2006 2005 Ordinary Shares Held 21,565 23,275

(d) Other transactions with key management personnel During the period the Company sold water for cropping and other activities to a number of Directors and other key management personnel or their related entities on commercial terms and conditions no more favourable than those which it is reasonable to expect would have been adopted if dealing with them at arm’s length in the same circumstances.The value of these transactions totalled $502,000 (2005, $404,000). Aggregate amounts payable or receivable from directors and other key management personnel or their related entities as at balance date: 2006 2005 $’000 $’000 Water Accounts Receivable 170 204 Accounts Payable Nil Nil

(c) Loans to key management personnel. There are no loans to directors or other key management personnel.

98 Murray Irrigation Limited Annual Report 2006 financial statements

23 Remuneration of Auditors During the year the auditor earned the following remuneration: $’000 2006 2005 Audit of the financial report 28 27 Other assurance services 10 14 ------Total audit and other assurance services 38 41 Taxation services 810 ------Total remuneration 46 51 ======24 Commitments for Capital Expenditure There were no commitments for expenditure at 31 July 2006, apart from the Deferred Maintenance program estimated at $7.4 million (2005, $7.2 million), for which full reimbursement will be received through the Water Administration Ministerial Corporation. (Note 1(e)(ii)). Proposed expenditure under the Land and Water Management Plans is estimated at $4.0 million (2005, $5.0 million) and will only be committed on the basis that full reimbursement will be received from the Water Administration Ministerial Corporation and MIL Irrigator levies. (Note 1(e)(ii)).

25 Segment Information The Company is involved primarily in the supply and drainage of irrigation water to shareholder customers within the Southern Riverina area of New South Wales.

26 Reconciliation of Operating Profit to Net Cash Inflows from Operating Activities $’000 2006 2005

Profit for the year 8,297 6,275 Depreciation and amortisation 7,208 6,606 Increase/(decrease) in provision for doubtful debts (10) 34 (Gain)/loss on disposal of non-current assets 2,243 (141) Contributed assets (13,013) (9,376) (Increase)/decrease in value of investment in associates (110) 0 Changes in operating assets and liabilities: (Increase)/decrease in receivables (4,396) 804 (Increase)/decrease in inventories 43 (332) (Increase)/decrease in prepayments 40 (8) (Increase)/decrease in deferred tax asset (62) (286) Increase/(decrease) in payables 2,045 1,216 Increase/(decrease) in current tax liabilities 10,058 (133) Increase/(decrease) in provisions 214 (165) Increase/decrease in other liabilities 504 320 Increase/(decrease) in deferred tax liabilities brought to account through the profit and loss (6,538) 3,294 ------Net Cash Provided by/Used in Operating Activities 6,523 8,108 ======

27 Non-Cash Financing and Investing Activities $’000 2006 2005

Contributed assets from Government 13,013 9,376 ======

Murray Irrigation Limited Annual Report 2006 99 28 Land & Water Management Plans i) Details of income and expenditure on the Land & Water Management Plans are as follows: $’000 Berriquin Cadell Denimein Wakool Total 2006 2005 2006 2005 2006 2005 2006 2005 2006 2005 Income Government Agencies 3513 4217 2351 2390 939 898 1365 879 8168 8384 Irrigator Contribution 1659 1503 209 210 128 132 465 428 2461 2273 5172 5720 2560 2600 1067 1030 1830 1307 10629 10657 Expenditure Capital Works 2196 3147 255 750 85 166 1 4 2537 4067 Expenses Incurred 2307 2277 2215 1765 1029 847 1626 1140 7177 6029 (Farm Rebates, Monitoring, Education & Administration) 4503 5424 2470 2515 1114 1013 1627 1144 9714 10096 Net Funds Accumulated / (Expended) 669 296 90 85 (47) 17 203 163 915 561

(ii) Details of the Land and Water Management Plans Funds Held as Implementing Authority are as follows: $’000 Berriquin Cadell Denimein Wakool Total 2006 2005 2006 2005 2006 2005 2006 2005 2006 2005 Income Opening Balance- 176 (120) 1290 1205 505 488 13 (150) 1984 1423 1 August 2005 (Note 16) Add Net Funds Accumulated / (Expended) 669 296 90 85 (47) 17 203 163 915 561 Closing Balance - 845 176 1380 1290 458 505 216 13 2899 1984 31 July 2006 (Note 16) Less: Outstanding Irrigator 620 756 63 74 44 51 175 195 902 1076 Debtors (Note 6) Outstanding Government 949 844 822 415 239 142 350 145 2360 1546 Debtors (Note 6) Total Debtors 1569 1600 885 489 283 193 525 340 3262 2622

Plan Surplus/(Funded by Murray Irrigation Limited) (724) (1424) 495 801 175 312 (309) (327) (363) (638)

100 Murray Irrigation Limited Annual Report 2006 financial statements

29 Financial Instruments (a) Terms, conditions and accounting policies Murray Irrigation Limited’s accounting policies for financial instruments, including the terms and conditions of each class of financial asset, financial liability and equity instrument, both recognised and unrecognised at balance date, are as follows:

Recognised Financial Instrument Note Accounting Policies Terms and Conditions

Financial Assets

Receivables 6 Water debtors are carried at nominal Water debtors are invoiced by 30th June - Water Debtors amounts due less any provision for of each year with payment in full due by doubtful debts. 31st July or half due by 31st July and the other half plus interest due 30th November. Interest is calculated at the rate stipulated in the New South Wales Water Management Act 2000.

- Government Debtors 6 Government debtors are carried at Government debtors reimburse Murray nominal amounts. Irrigation for expenditure on asset maintenance and renewal, or Land and Water Management Plan contracts. Amounts are due on 30 day terms and are interest free.

Investments - Government Bonds 9 Investments are stated at fair value. Investments mature August 2010 with Movements in fair value are recognised interest ranging from 4.66% to 5.12%, directly to equity. Interest is recognised in however when the indexation of the the Financial Statements when earned. capital value is included the real interest rate ranges from 6.75% to 7.41% and will vary according to future Consumer Price Index movements.

- Shares in associates 10 Investments in associates are valued using Dividend payments from equity the equity method. Dividends are investments in associates are determined recognised when received or receivable. by the performance of the associate.

Financial Liabilities

Accounts Payable 13 Liabilities are recognised for amounts to Liabilities are normally settled on 28 day be paid in the future for goods and terms. services received, whether or not billed to Murray Irrigation.

Murray Irrigation Limited Annual Report 2006 101 (b) Interest Rate Risk Murray Irrigation Limited’s exposure to interest rate risk and the effective interest rates of financial assets and

FIXED INTEREST MATURING IN: Total Weighted 2006 Floating 1 Year Over 1 to More Non Carrying Average Interest or Less 5 Years than Interest Amount Effective Rate 5 Years Bearing Balance Interest Sheet Rate $000 $000 $000 $000 $000 $000 % FINANCIAL ASSETS Cashliabilities and Cash both equivalents recognised and 14,245 unrecognised 26,799 at the balance date are as follows: 3 41,047 5.64% Receivables – Water Debtors 11,131 11,131 9.00% Government Agencies 5,076 5,076 N/A Other 1,133 1,133 N/A Investments – Government Bonds 6,810 6,810 4.77%* Shares in other corporations 1,360 1,360 N/A 14,245 37,930 6,810 7,572 66,557 FINANCIAL LIABILITIES

Trade and Other Payables 12,023 12,023 N/A 12,023 12,023

Net Financial Assets * Refer comments at Note 29(a)

FIXED INTEREST MATURING IN: Total Weighted 2005 Floating 1 Year Over 1 to More Non Carrying Average Interest or Less 5 Years than Interest Amount Effective Rate 5 Years Bearing Balance Interest Sheet Rate $000 $000 $000 $000 $000 $000 % FINANCIAL ASSETS Cash and Cash Equivalents 12,421 23,799 3 36,223 5.20% Receivables – Water Debtors 10,451 10,451 9.00% Government Agencies 1,718 1,718 N/A Other 846 846 N/A Investments – Government Bonds 1,093 6,754 7,847 4.70%* Shares in other corporations 1,250 1,250 N/A 12,421 35,343 6,754 3,817 58,335 FINANCIAL LIABILITIES

Trade and Other Payables 9,978 9,978 N/A 9,978 9,978

Net Financial Assets * Refer comments at Note 29(a)

102 Murray Irrigation Limited Annual Report 2006 financial statements

(c) Net Fair Values The aggregate net fair values of financial assets and financial liabilities, both recognised and unrecognised, at the balance date approximates the carrying value in the balance sheet. (d) Credit Risk Exposure Murray Irrigation Limited’s maximum exposure to credit risk at balance date in relation to each class of recognised financial asset is the carrying amount of those assets.

30 Credit Standby Arrangements Unrestricted access was available at balance date to the following lines of credit: $’000 2006 2005 Bill acceptance facility 7,000 8,000 Used at balance date 00 ------Unused at balance date 7,000 8,000 ======

Murray Irrigation Limited Annual Report 2006 103 31 Explanation of Transition to Australian Equivalents to IFRS (1) Reconciliation of equity reported under previous Australian Generally Accepted Accounting Principles (AGAAP) to equity under Australian equivalents to IFRS (AIFRS) (a) At the date of transition to AIFRS: 1 August 2004 Effect of Previous Transition AGAAP to AIFRS AIFRS Note $’000 $’000 $’000 ASSETS CURRENT ASSETS Cash and Cash Equivalents 30,653 0 30,653 Receivables 13,654 0 13,654 Inventories 886 0 886 Other 206 0 206 ------Total Current Assets 45,399 0 45,399 ------NON-CURRENT ASSETS Other Financial Assets (a) 7,400 1,357 8,757 Property, Plant and Equipment 238,310 0 238,310 Deferred Tax Asset 799 0 799 ------Total Non-Current Assets 246,509 1,357 247,866 ------TOTAL ASSETS 291,908 1,357 293,265 ------LIABILITIES CURRENT LIABILITIES Payables 8,762 0 8,762 Current Tax Liabilities 133 0 133 Provisions (b) 823 1,450 2,273 Other 2,075 0 2,075 ------Total Current Liabilities 11,793 1,450 13,243 ------NON-CURRENT LIABILITIES Deferred Tax Liabilities (a) 29,806 407 30,213 Provisions (b) 1,588 (1,450) 138 ------Total Non-Current Liabilities 31,394 (1,043) 30,351 ------

TOTAL LIABILITIES 43,187 407 43,594 ------

NET ASSETS 248,721 950 249,671 ======EQUITY Contributed Equity 186,452 0 186,452 Reserves (a) 90,260 950 91,210 Retained Profits (Accumulated Losses) (27,991) 0 (27,991) ------TOTAL EQUITY 248,721 950 249,671 ======

104 Murray Irrigation Limited Annual Report 2006 financial statements

(b) At the date of the last reporting period under AGAAP: 31 July 2005. Effect of Previous Transition AGAAP to AIFRS AIFRS Note $’000 $’000 $’000 ASSETS CURRENT ASSETS Cash and Cash Equivalents 36,223 0 36,223 Receivables 12,816 0 12,816 Inventories 1,218 0 1,218 Other 214 0 214 ------Total Current Assets 50,471 0 50,471 ------NON-CURRENT ASSETS Other Financial Assets (a) 7,400 1,697 9,097 Property, Plant and Equipment 243,759 0 243,759 Deferred Tax Asset 754 0 754 ------Total Non-Current Assets 251,913 1,697 253,610 ------TOTAL ASSETS 302,384 1,697 304,081 ------LIABILITIES CURRENT LIABILITIES Payables 9,978 0 9,978 Current Tax Liabilities 0 0 0 Provisions (b) 743 1,456 2,199 Other 2,395 0 2,395 ------Total Current Liabilities 13,116 1,456 14,572 ------NON-CURRENT LIABILITIES Deferred Tax Liabilities (a) 32,769 509 33,278 Provisions (b) 1,503 (1,456) 47 ------Total Non-Current Liabilities 34,272 (947) 33,325 ------

TOTAL LIABILITIES 47,388 509 47,897 ------

NET ASSETS 254,996 1,188 256,184 ======EQUITY Contributed Equity 186,452 0 186,452 Reserves (a) 99,433 1,188 100,621 Retained Profits (Accumulated Losses) (30,889) 0 (30,889) ------TOTAL EQUITY 254,996 1,188 256,184 ======(2) Reconciliation of Profit for the year ended 31 July 2005 There was no change in the reported profit for the year ended 31 July 2005 as a result of the adoption of AIFRS. (3) Notes to Reconciliations. (a) Commonwealth bonds previously carried at cost are now required to be carried at fair value. This has resulted in adjustments to the carrying value of reserves and the provision for deferred tax liability. (b) There has been a reallocation as a result of a change in the definition of current and non-current liabilities.

Murray Irrigation Limited Annual Report 2006 105 directors’ declaration

The directors declare that the Company's financial position as at Corporations Act 2001, and financial statements and notes set out 31 July 2006 and of its (b) there are reasonable grounds to on pages 84 to 105: performance, as represented by the believe that the Company will be results of its operations and its (a) comply with Accounting able to pay its debts as and when cash flows, for the financial year Standards, the Corporations they become due and payable. ended on that date. Regulations 2001 and other This declaration is made in mandatory professional reporting In the directors' opinion: accordance with a resolution of the requirements, and (a) the financial statements and directors. (b) give a true and fair view of the notes are in accordance with the

S.G. Ellis G.G. Ball Chairman Deputy Chairman Deniliquin 27 October 2006 auditor’s independence declaration

As lead auditor for the audit of (a) no contraventions of the auditor Murray Irrigation Limited for independence requirements of the the year ended 31 July 2006, Corporations Act 2001 in relation I declare that to the best of my to the audit; and knowledge and belief, there have (b) no contraventions of any been: applicable code of professional conduct in relation to the audit.

Hugh McKenzie-McHarg Partner Albury Johnsons MME 31 October 2006

106 Murray Irrigation Limited Annual Report 2006 independent audit report

ToThe Members of Murray Irrigation Limited

Scope Audit Opinion current taxation liability may We have audited the financial In our opinion, the financial report be payable immediately and the report of Murray Irrigation Limited of the Company is in accordance Company may incur additional (the Company) for the year ended with: interest and penalties.The 31 July 2006 as set out on pages 84 additional interest (which could (a) the Corporations Act 2001, to 106.The Company's directors are potentially total up to $4million) including: responsible for the financial report. and penalties have not been We have conducted an independent (i) giving a true and fair view of brought to account in the audit of the financial report in order the Company's financial financial report. to express an opinion on it to the position as at 31 July 2006 b) The deferred tax liability has members of the Company. and of its performance for been calculated based on estimates the financial year ended on Our audit has been conducted of the temporary differences in that date; and in accordance with Australian depreciation and capital Auditing Standards to provide (ii) complying with Accounting allowances. Future work on asset reasonable assurance as to whether Standards in Australia and the records may result in adjustments the financial report is free of material Corporations Regulations in the carrying value of the misstatement. Our procedures 2001; and deferred tax liability. included examination, on a test basis, (b) other mandatory professional of evidence supporting the amounts reporting requirements in and other disclosures in the financial Australia. report, and the evaluation of accounting policies and significant Inherent Uncertainty Johnsons MME accounting estimates.These Regarding Taxation Chartered Accountants procedures have been undertaken to Without qualification to the form an opinion as to whether, in all opinion expressed above, attention material respects, the financial report is drawn to the following matters. is presented fairly in accordance with As disclosed in note 4 there are Accounting Standards, other significant uncertainties in respect to mandatory professional reporting the Company’s taxation liabilities as Hugh McKenzie-McHarg requirements in Australia and the follows: PARTNER Corporations Act 2001 so as to present a view which is consistent a) We understand the Australian Albury Taxation Office has a different with our understanding of the 31 October 2006 Company's financial position, and view of the application of the performance as represented by the taxation law to that of the results of its operations and its cash Company and its advisors. Should flows. this matter ultimately be resolved in accordance with the current The audit opinion expressed in Australian Taxation Office view, this report has been formed on the approximately $9.1 million of the above basis.

Murray Irrigation Limited Annual Report 2006 107 GRI Index

This report uses the Global Reporting nor does it take a position on the practices against GRI indicators, Initiative’s 2002 Sustainability reliability of the information reported. however we do not report fully on all Reporting Guidelines to report on elements of all indicators. In some For further information about GRI our economic, environmental and instances we need to further develop visit www.globalreporting.org. social performance.The mission of our data processes, in other instances the GRI is to promote international Murray Irrigation has been integrating the indicators are not relevant to our harmonisation of the reporting of GRI guidelines into its environmental business.The following chart indicates relevant and credible corporate and sustainability reporting since 2002. which indicators are applicable, economic, environmental and social This is the Company’s first Annual whether our reporting completely or performance to enhance responsible Report to shareholders to incorporate partially meets GRI guidelines, and decision making processes. GRI has sustainability reporting.We continue to where related information is located not verified the contents of this report, refine our data collection and reporting within the document.

GRI Type Reported Page GRI Type Reported Page Indicator Number Indicator Number

1.1 Full 10-11,13, 3.8 Full 47 Back cover 3.9 Full 38-49 1.2 Full 6-9 3.10 Full 38-49 2.1 Full 1 3.11 Full 35-49 2.2 Full 1 3.12 Full 35-49 2.3 Full 12-13 3.13 Full 22, 25-26, 2.4 Full 12 & 32-33 30-37, & 57

2.5 Full 1 3.14 Full 48, 58, 61, 70

2.6 Full 1 & inside 3.15 Full 80 back cover 3.16 Full 17-19, 48, 52, 2.7 Full 1 56-58 & 72

2.8 Full 13, 14 & 84 3.17 Full Throughout

2.9 Full 40 3.18 N/A - No changes occurred during the reporting period. 2.10 Full 2 3.19 Full Throughout 2.11 Full 2 3.20 Partial 56-58, 70 & 2.12 Full 2 110

2.13 Full 2 4.1 Full 108

2.14 Full 2 EC1 C Full 3 & 84

2.15 Partial Throughout EC2 C N/A - service not provided across geographic regions.

2.16 Full Throughout EC3 C Full 3 & 84

2.17 Full 2 & 108 EC4 C Full - Company payment policy requires us to pay 2.18 Full Throughout on invoice within 28 days.

2.19 Full Throughout EC5 C Full 66 & 84

2.20 Full 2 & 110 EC6 C N/A - Company has no debt or borrowings. There are no dividends from our shares. 2.21 Partial 110 EC7 C Full 32 & 84-105 2.22 Full Throughout EC8 C Full 84-105 3.1 Full 75-80 EC9 C Full 26-28, 59-62 3.2 Full 75 & 84-105

3.3 Full 75 EC10 C Partial 48

3.4 Full 10-11, 75, EC11 A Full - State Water are our only supplier that 78-80 represents greater than 10% of purchases.

3.5 Not reported - Executive compensation is not EC12 A N/A - Company did not spend any money on linked to achievement of goals. non-core business infrastructure in 2005/06.

3.6 Full 12-13 EC13 A Partial 39-44

3.7 Full 75, 10 & EN1 C Partial 72 back cover

C = Core indicator A = Additional indicator

108 Murray Irrigation Limited Annual Report 2006 GRI Type Reported Page GRI Type Reported Page Indicator Number Indicator Number

EN2 C Not reported LA14 A Full 70

EN3 C Full 72-73 LA15 A Full 70

EN4 C Full 73 LA16 A Full 68

EN5 C Full 16, 18 & 73 LA17 A Full 68

EN6 C N/A - Company does not own or manage any HR1 C Full 67 land within biodiversity rich habitats. HR2 C Not reported - The Company operates a purchasing EN7 C Full 51-63 procedure however it does not currently consider human rights issues independently. We comply with EN8 C Full 73 Australian legislation regarding human rights.

EN9 C Not reported - this information is not currently HR3 C Not reported - The Company operates a purchasing available. We will attempt to collate this for our procedure however it does not currently consider 2006/07 report. human rights issues independently. We comply with EN10 C Not reported - this information is not currently Australian legislation regarding human rights. available. We will attempt to collate this for our HR4 C Full 67 2006/07 report. HR5 C Full 67 EN11 C Full 73-74 HR6 C Full - The Company complies with Australian 67 EN12 C Full 56-58 legislation regarding child labour. We do not EN13 C Full 56 however have specific polices regarding this issue.

EN14 C Full 18, 50-63 HR7 C Full - The Company complies with local legislation 67 regarding forced and compulsory labour. We do not EN15 C N/A - Indicator not relevant due to the nature of however have specific policies regarding this issue. our principal product. HR10 A Partial - The Company operates counselling and 67 EN16 C Full - We did not receive any fines and were not grievance resolution policies to deal with workplace issued with any non-compliances during 2005/06. 51 issues.

EN17 A Full 73 HR11 A N/A - The Company does not have security personnel.

EN20 A Full 17-18 & 56-58 HR14 A N/A - The Company is a not-for-profit organisation. All revenue goes towards reducing the water price EN21 A Partial 16, 20 & 42 for shareholders.

EN22 A N/A - We encourage landholders to recycle water SO1 C Partial Throughout on their properties through the LWMP program and associated incentives. We do not however have SO2 C Full 67 information on the volumes recycled. SO3 C Full 39-46 EN23 A Full Inside cover SO4 A Full 5 EN24 A N/A - The Company owns very little land, of that the only impermeable surfaces would be at our SO6 A N/A - There have been no court decisions regarding offices and depots. These areas are minimal. anti-trust and monopoly regulations.

EN25 A Full 17 & 56-58 SO7 A Full 34, 67 & 80

EN26 A Partial 59-62 PR1 C Full 20 & 48

EN27 A Full 55, 58-62 PR2 C N/A - This indicator is not applicable due to the nature of product sold. EN29 A N/A - The Company does not have any operations occurring in or around protected or sensitive areas. PR3 C Full 48-49

EN30 A Not reported - Information not currently available. PR4 A Full - no instances of non compliances with We will attempt to collate it for the 2006/07 report. regulators concerning customer health and safety

EN31 A Full 72, 74 PR5 A Full - no complaints upheld by regulatory bodies regarding product/service customer health and safety EN32 A Full 56-58 PR6 A Full 5, 56 & 70 EN34 A Full 73 PR7 A N/A - This indicator is not applicable due to the EN35 A Full 59, 61 & 100 nature of product sold.

LA1 C Full 66 PR8 A Full 48

LA2 C Full 66 PR11 A Full - There were no substantiated complaints regarding breeches of consumer privacy LA3 C Full 66

LA4 C Full 67-68

LA5 C Full 70

LA6 C Full 70

LA7 C Full 71

LA8 C Partial - All of our staff trained in First Aid are 68 taught precautionary measures regarding HIV/AIDS.

LA9 C Partial 68

LA10 C Full 67

LA11 C Full 12-13, 66, 76-77

LA12 A Full 67-69

LA13 A Full 67-68 & 70

C = Core indicator A = Additional indicator

Murray Irrigation Limited Annual Report 2006 109 accuracy and independence

Given the cost associated with auditing in comparison surveillance audit of the company in August 2006. to the scale of our company and the recent low run of As part of our annual licensing requirements we prepare allocation years our shareholders have experienced, we an annual Compliance Report.This is submitted and have again chosen not to have this report verified by a formally scrutinised by Department of Natural third party at this time. However, much of the Resources (DNR), Department of Environment and information used in preparing this report has been Conservation (DEC), Murray Darling Basin verified by various audit and reviews processes. Commission (MDBC) and NSW Department of Our financial processes and the information in the Primary Industry (NSW DPI). Components of the annual financial statements to shareholders on pages 84 Compliance Report relating to Murray Land and Water to 105 has been audited by Johnsons MME. The Management Plan (LWMP) implementation have been expenditure of government Asset Renewal Program audited for financial and physical validity by SKM on funding on capital works is audited for physical and behalf of the NSW Government.The annual landholder financial validity by Sinclair Knight Merz (SKM) on survey, which measures landholder contributions to the behalf of the NSW Government. Our nationally LWMPs are audited by Dennis E Toohey and Associates accredited water testing laboratory provides information on behalf of SKM. Feedback from agency staff and on stormwater quality.The lab’s procedures and others is received in both written form and through a processes were audited in August 2006 and it has public forum as part of the LWMPs annual review. received re-accreditation. Murray Irrigation is a Quality These external audits help to improve the quality of our Assured Company under the ISO Standard 9001:2000 systems and the information we include in this report. and also has Occupational Health and Safety The external audits Murray Irrigation is subject to, are accreditation AS/NZS4801. Our Quality Auditor SAI outlined in the table below. Global Assurance Services conducted it most recent

External Audits of Murray Irrigation

Area Auditor Date of Audits Quality Assurance SAI Global Assurance Services 6 monthly integrated surveillance audit ISO Standard 9001:2000 3 yearly integrated accreditation OH&S AS/NZS4801

Government funded Asset Sinclair Knight Mertz (SKM) 2 monthly Renewal Program expenditure asset renewal audit

LWMP Annual Landholder Survey Dennis E. Toohey & Associates Annual

LWMP Implementation Sinclair Knight Merz (SKM) At least monthly

NSW Irrigation Corporation Water DEC/DNR Annual Management Works Licence NSW Environment Protection Licence

Water quality testing laboratory National Association of Testing 2 yearly national accreditation Authorities, Australia

Financial accounts Johnsons MME Annual

110 Murray Irrigation Limited Annual Report 2006 glossary

Accessions - see Recharge. pores, cracks and voids in the soil and rock Saturated zone - the area below the 3 Access fee - charge levied against material. watertable where all spaces in soil, sediment 3 landholdings for access to irrigation supply and Hydrogeology - the study of the geological and rock are filled with water. drainage services. aspects of the Earth’s water. 1 Sediment - material that has been deposited 2 Annual Allocation - amount of water Hydrology - the study of water, including from water or wind. (expressed as a percentage of the aggregate of rain, snow and water on the Earth’s surface, Seepage - where water leaks/oozes through all water entitlements) available for distribution covering its properties, distribution, utilisation the ground.2 1 in a season.The NSW Murray Valley allocation etc. Shallow watertable - where the upper relates to the water available for distribution Irrigation demand - Requests or orders for surface of the groundwater is close to the throughout the valley as a percentage of all irrigation water placed by irrigators based on ground surface. entitlements. Murray Irrigation’s allocation their crop/pasture water requirements. relates to the water the company has available Sodicity - the presence of a high proportion for distribution to its customers as a percentage Leakage - the movement of water downwards of sodium ions relative to other cations in the 3 3 of all company entitlements. through the soil, past the plant rootzone. water or soil. Best Management Practice - most desirable Magnetic flow or magflow meter - Stop supply - the suspension of water management practices to be applied to a farm. properly known as an electromagnetic flow deliveries to a nominated landholding usually These practices are based on current best meter - a device to measure water delivered to as a result of breaching the company’s terms of available knowledge. a landholding through a pipe outlet. trade or water supply contract. Biodiversity - The variety of living things. Metered pipe outlets - smaller points of Stormwater escape - channel to drain supply other than the normal Dethridge outlet. stormwater from the landscape. Carryover - Water which has been allocated These pipes are fitted with an electronic meter Subsidiary - a company with at least half of and is available for use in one year, but which is (magnetic flow, Mace or other) and a small not used and remains in the storages for use in its capital stock being owned by another solar panel and battery. Pipes vary in size from company.2 the following irrigation season. 100mm to 600mm.They record instantaneous Communication nodes - small radio masts and totalised flows. Subway - structure under a channel or watercourse having the purpose of drainage. to provide radio coverage of a certain area. Offtake - point at which water leaves one part Dethridge wheel - Standard industry of the river or irrigation system and is Syphon - structure under a channel or metering device, fitted into a channel at the transferred to another, i.e. from the Murray watercourse having the purpose of water point where the supply system delivers water to River to the Murray Irrigation’s supply system, supply. a farm boundary, to measure the volume of from a main channel to a smaller channel, from Temporary water trading - the trading of water which flows from the channel system the channel system to a farm. annual water allocation water onto a farm. Perennial - plant that lives for more than two WAL - water access licence, issued by the Emergent weeds - weeds that emerge from years.1 NSW State Government, representing a legal the water profile i.e. cumbungi, water couch Piezometer - a type of monitoring bore that right to a share of the state’s water resources. and sagittaria. allows measurement of groundwater level at a Water entitlement - contractual and other Escape - a monitored and/or controlled certain depth. rights evidenced to a supply of a nominal structure at the end of channels that record Recharge - the movement of water from the quantity of one ML of water, measured at the flows and hold levels constant.They can be plant rootzone into the saturated groundwater diversion point, inclusive of transmission losses, controlled either on site or operated remotely. zone. as determined by an annual allocation. Evaporation - the process of water changing Regulator - Structure within a channel or Waterlogging - where the soil surface is 3 from a liquid to a vapour (gas). stormwater escape which controls the flow of saturated with water from rising groundwater Evapotranspiration - the total water loss water. or rainfall.3 from a particular area, the sum of evaporation Remnant vegetation - natural areas of native Watertable - the surface below which fissures from water and soil, and transpiration from vegetation, not planted. and pores in the strata are saturated with water. vegetation.1 It roughly conforms to the configuration of the Remote control - control of a system or Exchangeable sodium percentage (ESP) - ground, but is smoother.Where the watertable activity from a distance, usually by means of rises above the ground surface a river, spring or commonly used measure of soil sodicity, ESP is 2 radio, ultrasonic or electrical signals . 1 the proportion of sodium absorbed onto the lake is formed. clay mineral surfaces as a proportion of total Retail tagging - maintaining characteristics Wholesale tagging - maintaining the cation exchange capacity, expressed as a (yield, security, deliverability etc) of water characteristics (yield, security, deliverability etc) allocated to entitlements which are part of a percentage. 3 of water allocated to entitlements at a valley or group water scheme, such as Murray Irrigation, state level, regardless of who owns the Exit fee - the fee imposed by the company in regardless of who owns the entitlements or relation to the transfer of a water entitlement entitlements or where the water allocated to where the water allocated to the entitlements is the entitlements is used. from the company’s water access licence. used. 1 Farm water balance - a state of equilibrium Rootzone - area below the soil surface Definitions from Chambers Science and Technology Dictionary (1991) when rainfall or irrigation water in a landscape occupied by plant roots. 3 is accounted for by the sum of runoff plant 2 Runoff - the proportion of rainfall that flows Definitions from the Collins Dictionary and water use, evaporation, recharge and changes in Thesaurus in one volume (1991) across the ground surface. 3 soil moisture content.3 3 Definitions from Salinity Glove Box Guide by Groundwater - subsurface water in the Salt load - the amount of salt carried in water 3 NSW DPI and NSW DIPNR (2005) saturated zone, including water occupying flows in a given time period.

Murray Irrigation Limited Annual Report 2006 111 abbreviations

ACCC ...... Australian Consumer and Competition Commission LWMP...... Land and Water Management Plan AGM ...... annual general meeting m...... meter ANCID ...... Australian National Committee on Irrigation and m3 ...... cubic metre Drainage MDBC ...... Murray Darling Basin Commission ATO ...... Australian Taxation Office mg/L ...... milligrams per litre AWA ...... Australian Water Association MIL...... Murray Irrigation Limited BDU ...... business development unit ML ...... megalitre CMA...... Catchment Management Authority ML/d ...... megalitres per day CPI ...... consumer price index ML/ha ...... megalitres per hectare CRC ...... cooperative research centre mm...... millimetres CSIRO...... Commonwealth Scientific and Industrial Research MWWG...... NSW Murray Wetland Working Group Organisation NATA ...... National Association of Testing Authorities DEC...... Department of Environment and Conservation N/A ...... not available DNR...... Department of Natural Resources N/Ap ...... not applicable DPI ...... Department of Primary Industries NSW...... New South Wales EC...... electrical conductivity NWC...... National Water Commission EGM ...... extraordinary general meeting NWI...... National Water Initiative EIS ...... environmental impact statement OH&S...... occupational health and safety ESP ...... exchangeable sodium percentage O&M ...... operation and maintenance FTE...... full time equivalent QMS ...... quality management system GIS...... Geographic Information System R&D...... research and development GL...... gigalitres REPAG ...... Rice Environmental Policy Advisory Group GRI...... Global Reporting Initiative RGA ...... Ricegrowers Association of Australia ha ...... hectares SCADA ...... supervisory control and data acquisition hrs ...... hours SEE ...... statement of environmental effects IAA ...... Irrigation Association of Australia SKM...... Sinclair Knight Merz IPART...... Independent Pricing and Regulatory Tribunal SRI...... Southern Riverina Irrigators kg ...... kilograms t...... tonnes KL...... kilolitres t/yr...... tonnes per year KPI...... key performance indicator t CO2...... tonnes of carbon dioxide equivalents kwh ...... kilowatt hours TFWB...... total farm water balance L...... litres μg/L ...... micrograms per litre LPG...... liquid petroleum gas WTSSDS...... Wakool Tullakool Subsurface Drainage Scheme

112 Murray Irrigation Limited Annual Report 2006 Covers new2 3/11/06 10:04 AM Page 2

company directory Peter Merritt

Murray Irrigation Limited Auditors Annual General Meeting Head Office Johnsons MME Will be held at 9.30am on 443 Charlotte Street 520 Swift Street Thursday 14th December, 2006,

Menindee Deniliquin NSW 2710 Albury NSW 2640 at the Deniliquin RSL Club in Lakes Telephone: (03) 5898 3300 End St, Deniliquin. Menindee Bankers Weir 32 Facsimile: (03) 5898 3301 Commonwealth Bank Further Information Area of operations ...... 748,000ha Board of Directors of Australia 241 Cressy Street Additional information about

r Stewart Ellis, Chairman e

v i Population Murray Irrigation is available R ...... 33,000 including adjacent service towns Gordon Ball, Deputy Chairman Deniliquin NSW 2710 g

n

i from the company’s website

l r

a Alexandra Anthony D Landholdings supplied...... 2,412 Engineering Consultants www.murrayirrigation.com.au Kelvin Baxter KBR Offices ...... Deniliquin, Finley,Wakool Information on the website includes: Leigh Chappell 186 Greenhill Road • Annual Reports Depots ...... Deniliquin, Finley,Wakool, Moulamein Max Goudie Parkside Adelaide SA 5063 • Compliance Reports Malcolm Holm Solicitors •Environment/Sustainability Water entitlements...... 1,494,312 entitlements from the Daniel Liphuyzen NSW Murray Regulated River resource Francis Kelly & Grant Reports David Hunter, 144 End Street • Completed Research Reports Supply system ...... 2,956km gravity fed earthen channel Non Member Director Deniliquin NSW 2710 •Company Policies Michael O’Callaghan, • Media Releases Stormwater system...... 1,425km gravity fed earthen channels Taxation Advisors Non Member Director •Talking Water Ernst & Young Lake Anthony Read, Victoria 680 George Street •Water Supply Wentworth Non Member Director Sydney NSW 2000 •Water Exchange Mildura General Manager This Report George Warne bidgee Riv Murrum er Design & production: Hay Company Secretary Paula McKindlay Graphic Design Warren Elsbury M Printer: Waterwheel Press Pty Ltd ur ray River NEW SOUTH WALES Printed on 100% recycled paper: 310gsm Re-Art gloss cover, 80gsm Re-Print text

Bil Moulamein lab on g C re E ek dw W a a r k d o Ri o ve Conargo Swan Hill l r R iv Jerilderie er VICTORIA Wakool Deniliquin

Barham Murray Irrigation Limited is an unlisted public company, formed under the Finley Berrigan

Mathoura Tocumwal Irrigation Corporations Act (1994), that provides irrigation supply and drainage

Mulwala Moama services for its shareholder customers.

ISBN: 0 9802998 0 2 Echuca Copyright 2006

Murray Irrigation Limited Shepparton Registered Office; 443 Charlotte St Deniliquin. PO Box 528 Deniliquin NSW 2710. Telephone 03 5898 3300, fax 03 5898 3301 Website: www.murrayirrigation.com.au ABN: 23 067 197 933 Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irri Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Repo tion Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Irrigation Limited Annual Report 2006 Murray Limited Annual R Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annu Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray. . .Irri. Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual. Repo tion Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Irrigation Limited Annual Report 2006 Murray Limited Annual R Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annu Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irri Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Repo tion Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Irrigation Limited Annual Report 2006 Murray Limited Annual R Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annu Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irri Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Repo tion Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Irrigation Limited Annual Report 2006 Murray Limited Annual R Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annu Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irri Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Murray Irrigation Limited Annual Repo tion Limited Annual Report 2006 Murray Irrigation Limited Annual Report 2006 Irrigation Limited Annual Report 2006 Murray Limited Annual R OUR VISION:

Murray Irrigation is recognised as a leader of the irrigation sector in Australia.

OUR MISSION:

Manage and maintain Murray Irrigation’s share of the Murray River’s water to support shareholders’ needs;

Operate the most efficient, accountable and responsive irrigation company in Australia;

Meet best practice in customer service and shareholder engagement;

Promote viable and informed shareholder customers in a thriving regional community;

Be proactive in the development and implementation of policies to improve natural resources.

MURRAY IRRIGATION LIMITED A.B.N. 23 067 197 933