Enhancing Life and Liveability Melbourne Water Annual Report 2012–13 Contents Overview Page 1 Chairman’s Report Page 2 Managing Director’s Report Page 3 Service delivery Page 4 Water Page 6 Alternative water sources and integrated water cycle management Page 14 Sewerage Page 22 Waterways Page 28 Corporate Page 36 Environmental stewardship Page 38 Relationships Page 46 Financial sustainability Page 52 Organisational capability Page 62 Financial Report Page 68 Performance reporting Page 127 Statutory information Page 140 Overview About us Melbourne Water is owned by the Victorian Government. We manage water supply catchments, treat and supply drinking and recycled water, remove and treat most of Melbourne’s sewage, and manage waterways and major drainage systems in the Port Phillip and Westernport region. In all our business decisions we consider social, environmental and financial effects, and short-term and long-term implications. Our customers include metropolitan water retailers, other water authorities, land developers and businesses that divert river water, and the 1.8 million households that receive waterways and drainage services in the greater Melbourne region. We deliver our services in partnership with others including government agencies, local councils, catchment authorities, contractors and suppliers. About this report Accessibility Melbourne Water’s Annual Report An accessible text format of this report 2012–13 describes our annual progress is available on our website at towards achieving our vision of Enhancing melbournewater.com.au Life and Liveability in the greater Melbourne If you want to obtain a copy of this report, region, and how we met our regulatory or sections of it, in a different accessible obligations from 1 July 2012 to 30 June format, please contact Melbourne Water 2013. The Honourable Peter Walsh MLA, on 131 722 (in Victoria), (03) 9679 7100 Minister for Water, was the Minister if calling from interstate or email responsible for Melbourne Water from [email protected] 1 July 2012 to 30 June 2013. The report reviews our performance Our strategic guide against key performance indicators (KPIs) detailed in our Corporate Plan Melbourne Water’s vision of Enhancing Life and KPIs that meet Ministerial Reporting and Liveability outlines a commitment to Directions. We also report against do our part to improve the quality of life sustainability or water industry-based within the greater Melbourne region. indicators including The Global Reporting The document guides and informs our Initiative (GRI): Sustainability Reporting decisions towards achieving this vision. Guidelines. The GRI Content Index and Melbourne Water’s Strategic Direction our Independent Assurance Statement is available on our website are available on our website melbournewater.com.au melbournewater.com.au Online document As part of Melbourne Water’s commitment to sustainability, we will print a limited number of copies of this report, including 50 for the Victorian Parliament. An online version will be available on the Melbourne Water website melbournewater.com.au 1 Chairman’s Report When our new direction and vision were established in March 2012 the Board was under no illusion about the hard work and commitment required to achieve our goals, and great strides have been made over the past year. Since joining the Melbourne Water The draft strategy, Melbourne’s Water with others to increase reuse of this Board in September I have been Future, outlines greater use of rainwater, resource, particularly South East Water, thrilled with the progress the stormwater and wastewater to conserve which has started construction of a organisation has made in the first drinking water for human use, reduce recycled water pipeline to commercial full year of working to our Strategic pollution flowing into our waterways and residential development north Direction and vision, Enhancing Life and help maintain green open spaces. of the Eastern Treatment Plant. and Liveability. What we do is consistent with these We also drew closer to completing goals and I look forward to the final When our new direction and vision the $75 million Frankston Drainage strategy at the end of 2013 following were established in March 2012 the Improvement Project – the single wide consultation on the draft with Board was under no illusion about the biggest project we have undertaken the community. hard work and commitment required to improve flood protection. The to achieve our goals, and great strides A Cleaner Yarra River and Port Phillip project is scheduled for completion have been made over the past year. action plan helps align our river health by the end of 2013 and will better and stormwater programs with the great protect businesses and homes from In particular, two organisation-wide work being done by other agencies, local flooding in severe wet weather. initiatives emerged in the last year: councils and the community to help Commercial Transformation and We are now entering a new regulatory protect our most iconic natural assets. Service Delivery, aimed at changing period with a lower capital spend, the way we do business, building the With regard to our financial representing a shift from large-scale capacity of our people and improving performance in 2012–13, total cash infrastructure investment to asset the level of service and products for returns to our shareholder were maintenance and renewal, and an our customers. Our customers are $94.7 million ($289.3 million in 2011–12). unwavering commitment to delivering demanding greater choice and value Net loss after tax was $30.1 million high quality services on behalf for money in the delivery of our products (compared with a $274.9 million profit of the community. and services in an environment under in 2011–12). The loss for 2012–13 is In accordance with the Financial pressure from population growth, primarily a result of the return to Management Act 1994, I am pleased urbanisation, ageing infrastructure customers of revenue that was collected to attest that Melbourne Water and climate variability. in 2011–12 to make forecast obligatory Corporation’s Annual Report is payments relating to the Victorian This environment has driven the compliant with all statutory Desalination Plant. These payments emergence of integrated water cycle reporting requirements. were not required due to delays management, with growing demand in the plant’s commissioning. for greater diversity of products and services. Being more commercially In December 2012 we completed focused and re-thinking our existing a $418 million upgrade of the Eastern service offerings is critical to meeting Treatment Plant in Melbourne’s outer Paul Clark these challenges. Of course, we are south-east to treat wastewater to Chairman one part of a broader industry and a much higher standard. The upgrade two major Victorian Government has dramatically strengthened the announcements in 2012–13 have protection of the marine environment provided the ideal regulatory at Boags Rocks in Gunnamatta, where framework for us to continue the majority of the water is currently working toward our vision. discharged. A significant additional benefit is the higher quality of recycled water produced. We have been working 2 Melbourne Water Annual Report 2012–13 Managing Director’s Report It was a year of transition, not only in the scale of what we do, but how we do it. Working closely with the Office of Living Victoria, we are transforming the way our water cycle is managed and how services are provided across the whole water cycle. Transition was a key theme of The capability of our people in these It’s always a pleasure to see the hard 2012–13, the culmination of an areas can only be achieved in a workplace work of our people recognised by era of significant infrastructure where safety and wellbeing are their peers and the public, and several investment and the beginning paramount. On that note, one of the Melbourne Water projects received of a consolidation phase. year’s achievements I’m most proud awards over the past year. of was receiving certification of our The past year was the last of the 2008 The Eastern Treatment Plant Tertiary newly-adopted Australian and New to 2013 regulatory pricing and investment Upgrade received the Water/Wastewater Zealand Safety Standard (AS/NZS period – in which time we delivered Project of the Year at the 2013 Global 4801), which focuses on continuous $3.7 billion of water, sewerage and Water Summit; the Melbourne Main improvement and commitment, not drainage infrastructure. We now shift Sewer Replacement received a Victorian simply compliance. For an organisation investment to a focus on asset Civil Contractors Federation Earth as diverse and complex as Melbourne maintenance and renewal. Award and was awarded the 2012 Water, AS/NZS 4801 was an ambitious Trenchless Society for Technology It was a year of transition, not only target, so I’m highly appreciative of Project of the Year – New Installation. in the scale of what we do, but how the efforts of many people across The Northern Sewerage Project won we do it. Working closely with the the business who worked hard to an Australian Institute of Project Office of Living Victoria, we are achieve certification. Management Award and our Info transforming the way our water It was a particularly busy and successful Program picked up a 2013 Sir Rupert cycle is managed and how services year in our Waterways area, and we Hamer Award and a Gold Knowledge are provided across the whole water were all pleased when a survey of 1,420 Management Excellence Award. cycle. This transformation involves Melburnians found 77% of respondents a shift from predominately centralised I look forward to working with the were satisfied with waterways in the catchment-to-building water and Board and our people as we continue region. This is the highest community wastewater systems to an approach to drive improvement across the business satisfaction rating we have ever that integrates management of to enhance Melbourne’s liveability.