Annual Report 2012 Annual Report 2012 Report Annual Accountable Officer’S Declaration

Department of Sustainability and Environment and of Sustainability Department

Annual Report 2012 Annual Report 2012 Report Annual Accountable Officer’s declaration

In accordance with the Financial Management Act 1994, I am pleased to present the Department of Sustainability and Environment’s Annual Report for the year ending 30 June 2012.

Greg Wilson Secretary Department of Sustainability and Environment 10 September 2012

Cover image: Boggy Creek, Nowa Nowa Credit: Alison Pouliot Secretary’s foreword

The 2011–12 Annual Report records another signifi cant year Meanwhile, the end of the fi nancial year marked the fi rst year for the department. of the new department structure, with the establishment of regional management teams and consolidated policy functions For the second year running, extreme wet weather and fl ood under Deputy Secretaries. This new structure has provided events presented challenges to the department and its staff. improved coordination, integration and governance and puts the While the rainfall kept water storages high, fl oods heavily department in good stead as we go forward with a continued impacted communities, damaging property, infrastructure emphasis on effective policy and service delivery. and the natural environment and causing evacuations in some townships. The achievements outlined in our Annual Report have been made possible through the efforts of our dedicated and Again, the department and its staff made a signifi cant professional staff and delivery partners. I would like to take contribution to the fl ood effort by assisting emergency this opportunity to thank them for their efforts and dedication services agencies with on-ground support, aircraft and during the year. incident management staff. As was the case in 2010–11, the extreme wet weather delivered obvious challenges to our annual planned burning program. Despite this, the department completed almost 200,000 hectares of planned burning – the program’s highest in 20 years. Yet again, early planning and community engagement enabled major fuel reduction activity over the days available for burning. Greg Wilson The 2011–12 year also saw the department make important Secretary contributions in delivering critical aspects of the Victorian Department of Sustainability Governments’ environment and water policy reform. These and Environment included a comprehensive review of Sustainability Victoria, the review of the Victorian Climate Change Act 2010, the Comrie Review of the 2010–11 Flood Warnings and Response and the Environment and Natural Resources Committee’s Inquiry into Flood Mitigation Infrastructure in Victoria. The Offi ce of Living Victoria was also established this year, to drive the reforms of Living Melbourne, Living Victoria, coordinating water and urban planning. The government’s reforms aim to drive generational change in the way Victorians use rainwater, stormwater and recycled water and provide Victoria’s next major water augmentation. The department also played a key role in fi nalising the $1.2 billion funding agreement with the Commonwealth for Stage 2 of the Northern Victoria Irrigation Renewal Project, and then successfully integrated the project into Goulburn-Murray Water Corporation in July 2012. Considerable work has been undertaken to support the Minister for Water in responding to the Draft Murray-Darling Basin Plan, with the aim of ensuring that the fi nal plan better balances the needs of regional communities and the environment. This has included comprehensive modelling and analysis, as well as establishing and supporting a Victorian community Basin Plan Advisory Group to help analyse the proposed plan’s potential impacts on regional communities.

Department of Sustainability and Environment Annual Report 2012 i Contents

Secretary’s foreword (i) 1. Report of operations 1 Overview 2 Year in brief 3 About DSE 5 Organisational and governance structure 7 Organisational performance 15 Offi ce-based environmental performance 16 Staff performance 28 Financial performance 35 Output performance 38 Effective management of water resources to meet future urban, rural and environmental needs 39 Effective environmental and climate change policy, investment and regulation 44 The community benefi ts from effective management of Victoria’s public and private land assets 53 Reduced impact of major bushfi res and other extreme events on people, infrastructure and the environment 60 2. Financial statements 66 3. Appendices 154 Appendix 1 – Disclosure index 155 Appendix 2 – Executive offi cers – DSE and portfolio authorities 157 Appendix 3 – Sustainability Victoria workforce information 162 Appendix 4 – Budget portfolio outcomes 164 Appendix 5 – Disclosure of grants and transfer payments 169 Appendix 6 – Major entities 176 Appendix 7 – Acts administered 177 Appendix 8 – Implementation of the Victorian Industry Participation Policy `178 Appendix 9 – Consultancies and major contracts 179 Appendix 10 – National Competition Policy 179 Appendix 11 – Compliance with the Building Act 1993 179 Appendix 12 – Freedom of Information 180 Appendix 13 – Compliance with the Whistleblowers Protection Act 2001 181 Appendix 14 – Water Resource Assessment Program 182 Appendix 15 – Sustainable water strategies 186 Appendix 16 – Environmental contributions 188 Appendix 17 – Additional information available on request 189 Appendix 18 – Acronyms 189

ii Department of Sustainability and Environment Annual Report 2012 Report of operations 21

Department of Sustainability and Environment Annual Report 2012 1 Overview

Thrift-leaved Triggerplant (Stylidium armeria). This image was taken at Lake Mountain in February 2012 to document bushﬁ re recovery Photo by Christian Pearson, Misheye

This section sets out the department’s role and purpose, strategic priorities, values and key highlights for the year. It also provides details on the department’s organisational structure and governance arrangements.

• Year in brief • About DSE • Organisational and governance structure

2 Department of Sustainability and Environment Annual Report 2012 Year in brief

A snapshot of the year’s highlights Reforming Victoria’s emergency management arrangements and achievements. DSE continued to implement emergency management initiatives in response to recommendations from the 2009 Victorian Responding to major incidents Bushfi res Royal Commission and the Flood Warnings and Floods swept through Victoria in March and June 2012, Response Review. impacting communities and agricultural activity in 33 local government areas. DSE joined the State Emergency Service Flood warning and response systems and the Department of Primary Industries to provide emergency A web-based Flood Intelligence Platform (popularly known as response and relief services. Floodzoom), will enable emergency services to more accurately DSE deployed aircraft to fl ood areas and provided specialist predict fl oods and fl ood behaviour and allow the public to see fl ood and operations staff in the Incident Control Centres and likely fl ood movements and assess their own fl ood risk. the State Control Centre. Incident management staff and fl ood Real time data collection and delivery systems have been mapping and prediction specialists worked around the clock in developed by Thiess, under contract with DSE and the Northern the centres for several days. Regional Water Monitoring Partnership. The department was closely involved in recovery operations In the March 2012 fl oods, 10 Portable Automated Logger after the Gippsland fl oods in June 2012. When the fl ood effort Systems – or PALS – were deployed to relay water levels in moved from the emergency phase into recovery, DSE and Broken Creek to the Incident Control Centre in Shepparton. Parks Victoria began assessing the damage to assets on public These will be available for future fl oods through DSE’s Regional land such as swimming pools, sporting facilities, walking trails, Water Monitoring Partnerships. caravan parks and parking areas. Improvements at 30 permanent fl ood gauging sites will increase DSE and Regional Development Victoria are administering the access to real-time river height information for fl ood monitoring Flood Recovery Community Infrastructure Fund to help fl ood- by agencies and communities. affected communities rebuild. DSE has also started a series of fl ood studies. The detailed Gippsland was the scene of another major incident response fl ood studies will map the extent and depth of fl ooding expected when routine monitoring of water quality in the Gippsland Lakes during a range of fl oods, including a fl ood that may occur once detected high levels of blue green algae (Cyanobacteri) in in 200 years. The results with guide future fl ood warnings and December 2011. response activities. An incident management team with wide expertise was set up Victorian Bushfi res Royal Commission to manage the algae’s health threat to humans and animals and help the fi shing and tourism industries. recommendations A revised code for bushfi re management was among initiatives DSE worked with the Department of Primary Industries, developed in response to the 2009 Victorian Bushfi res Royal Department of Health, Parks Victoria, East Gippsland and Commission recommendations. Wellington shire councils, the Environment Protection Authority, Monash University, tourism and fi shing bodies. The revised code reinforces that protecting human life is the top priority of bushfi re management. DSE’s role included submitting water and seafood samples for analysis, maintaining contact with fi shing and tourism Other response actions included: representatives, and liaising with algal scientists who provided • DSE, the Country Fire Authority, the Metropolitan Fire and technical expertise and interpreted data. Emergency Services Board and Victoria’s Fire Services After the threat eased, a fi nal advisory warning was lifted in May Commissioner conducting eight multi-agency emergency 2012 allowing fi shing to fully resume on the lakes. response exercises as part of a three-year program to improve Victoria’s emergency response capacity and Planned burning capability. DSE and Parks Victoria completed 834 planned burns treating a • Upgrading fi refi ghting aircraft preparedness and dispatch, total of 197,149 hectares of public land in 2011–12. including trialling fi refi ghting air tanker aircraft, eye in the This was 87 per cent of the target of 225,000 hectares. The sky intelligence platforms and an enhanced integrated total was more than any other year since 1991, despite one of computerised aircraft dispatch system. the wettest years on record. • Collecting data from about 1145 sites across the state as An additional 180,000 hectares was prepared for burning when part of a long-term data collection and biodiversity monitoring weather and other conditions become suitable. program to monitor and model the effects of the planned burning program and bushfi res, including the ecological DSE is signifi cantly increasing the planned burning program impacts of planned burns. in line with 2009 Victorian Bushfi res Royal Commission recommendations. Planned burning is part of an integrated plan to reduce bushfi re risk to people, property and communities.

Department of Sustainability and Environment Annual Report 2012 3 • Creating a prototype software tool for rapidly analysing fi re DSE prepared a whole of government submission in severity and extent of planned burns using satellite imagery. consultation with other Victorian Government agencies. Staff can use this tool to determine whether burn objectives To help prepare the submission, a community-based Basin were achieved and to help predict the effects of a burn on Plan Advisory Group was established and supported by DSE to fuel hazards, fl ora and fauna. examine the potential impacts of the draft plan on the group’s • Developing a statewide hazard map and detailed vegetation communities. and biodiversity mapping to guide planning and decision- DSE will continue to support the Victorian Minister for Water and making. the Victorian Government through the next steps in fi nalising a • Developing collective offset schemes as a simple and quick plan for approval by the Commonwealth Minister for Water. way for permit holders to obtain offsets. Upgrading bridges Offi ce of Living Victoria The four-year Public Land Bridges Project achieved its goal to Living Melbourne, Living Victoria is the State Government’s replace or upgrade 300 bridges and crossings on public land new approach to managing Victoria’s urban water systems to across Victoria. The improved bridges provide better access to achieve a more liveable, sustainable and productive Melbourne water catchments, parks and reserves, forests and other public and Victoria. The Offi ce of Living Victoria (OLV) was established land – especially for fi refi ghting and planned burning. as an administrative offi ce within DSE on 22 May 2012 to drive reform by coordinating urban and water planning. New Landcare facilitators Sixty-eight new Landcare facilitators were recruited as part of DSE will work closely with the OLV and other key stakeholders the Victorian Local Landcare Facilitator Initiative. The facilitators such as other government departments, local government are funded for up to four years to provide organisational support and water utilities in delivering the government’s Living Victoria to Landcare groups and networks to undertake various activities program. such as rejuvenating and repairing wildlife habitats, restoring Victoria and Murray-Darling Basin Plan waterways, improving farmland, building community capacity and protecting coasts. The Murray-Darling Basin Authority (MDBA) continued to develop its proposed Basin Plan – a major issue for Victoria Staff recognised for Black Saturday bravery and DSE – during 2011–12. Twelve staff were presented with Bravery Awards for their The proposed objective of the Basin Plan is to set legally actions on Black Saturday. Four staff also received the National binding environmentally sustainable levels of take for waters Emergency Medal in recognition of their sustained service diverted from Basin river systems to improve resilience for Basin during Black Saturday. ecosystem assets and functions. The key milestone during the year was the release of the MDBA’s draft Basin Plan on 28 November 2011 for a 20-week period of public consultation, which concluded on 16 April 2012.

Celebrating 30 years of Land for Wildlife

Land for Wildlife is celebrating its 30-year anniversary in 2012. The program helps landholders voluntarily protect and enhance biodiversity on their property with the aim of retaining and creating habitat for native animals. Since the program began, 14,800 people representing more than 6000 properties have protected more than 550,000 hectares of private land as habitat for native wildlife. A two-day workshop, to mark the 30-year milestone, was held in Lanceﬁ eld in March 2012, providing the opportunity for DSE to recognise and thank people involved in Land for Wildlife.

4 Department of Sustainability and Environment Annual Report 2012 About DSE

The Department of Sustainability and Environment sustainably Clients and stakeholders manages land, water, fi re and biodiversity, with and for, Victorian communities. DSE collaborates with business and DSE’s diverse clients and stakeholders include: regions across the state to create a healthy environment for • current and future generations of Victorians social and economic wellbeing. DSE is a key partner in the state’s response to emergencies such as bushfi res and fl oods, • indigenous communities and organisations protecting people, property and infrastructure. • local, state, territory and Commonwealth government, Employing more than 2500 staff in 90 locations throughout agencies and authorities Victoria, DSE: • land and water managers, planners, developers and • Acts at a local and regional level to create a healthy information users environment for social and economic wellbeing. • agricultural, transport, forestry and timber industries • Works towards healthy waterways from catchment to coast – • the building industry and real estate organisations the bays, rivers and lakes – for all Victorians to enjoy. • community-based natural resource management and • Helps Victorians to be wiser with their water, resources and environment groups energy in a changing natural environment, to meet the needs of current and future generations. • tourism, sport and recreation groups • Drives sustainability and economic development through • surveying, valuing and planning organisations effi cient recycling and waste management programs. • gas, electricity and water users • Reduces the bushfi re and fl ood risk to people, property and communities. • property owners • Drives effective environmental regulation and monitoring for a • fi nancial institutions prosperous Victoria. • key employer associations and unions.

Strategic goals and priorities Service delivery partners The DSE Corporate Plan 2012–2015 sets a clear direction DSE works closely with a wide range of portfolio agencies that for the department’s work. The plan enables our staff and have regulatory responsibilities and deliver many of the services the millions of Victorians who work with us to gain a clear associated with effective environmental management. These understanding of the department’s priorities to 2015. include: To successfully meet the challenges of sustainable • Alpine Resorts Coordinating Council environmental management, the plan establishes fi ve outcomes for our work: • Alpine resort management boards (5) 1. Effective management of water resources to meet future • Catchment management authorities (10) urban, rural and environmental needs. • Commissioner for the Environment 2. Effective environmental and climate change policy, • Committees of management (1200) investment and regulation. • Environment Protection Authority 3. The community benefi ts from effective management of Victoria’s public and private land assets. • Offi ce of Living Victoria 4. Reduced impact of major bushfi res and other extreme events • Parks Victoria on people, infrastructure and the environment. • Phillip Island Nature Park 5. A high performing and effi cient organisation. • Regional coastal boards (3) The plan helps guide more detailed planning at a local and • Royal Botanic Gardens divisional level, specifi cally considering local needs. Regional strategies have been developed to shape priorities in each of • Sustainability Victoria DSE’s fi ve regions. • Victorian Catchment Management Council • Victorian Coastal Council • Victorian Environmental Assessment Council • Waste management groups (13) • Water corporations (19) • Zoos Victoria. Improving the effectiveness of the portfolio through strengthened governance arrangements is a priority.

Department of Sustainability and Environment Annual Report 2012 5 Ministers

Minister for the Environment and Minister for Water Minister for Bushﬁ re Response Climate Change The Hon Peter Walsh, MP is Victoria’s The Hon Peter Ryan, MP is Victoria’s The Hon Ryan Smith, MP is Victoria’s Minister for Water and Minister for Minister for Bushﬁ re Response, Minister Minister for the Environment and Climate Agriculture and Food Security. He is also for Police and Emergency Services Change and Minister for Youth Affairs. Deputy Leader of the Nationals. and Minister for Regional and Rural Development. He is also Deputy Premier Contact details Contact details and Leader of the Nationals. Level 17, 8 Nicholson Street, Level 20, 1 Spring Street, East Melbourne, Victoria 3002 Melbourne, Victoria 3000 Contact details Telephone: (03) 9637 8890 Telephone: (03) 9938 5954 Level 3, 1 Treasury Place, Fax: (03) 9637 8880 Fax: (03) 9658 4191 Melbourne, Victoria 3000 Email: [email protected] Email: [email protected] Telephone: (03) 9651 1222 Fax: (03) 9651 1188 Email: [email protected]

Values

Make a difference – We make things happen. We are proud of what we do. Act with integrity – We can be trusted. We are consistent in our actions. Respect others – We value diversity. We recognise and accept differences. Work together, support each other – We work with each other to get the job done. We care about each other.

6 Department of Sustainability and Environment Annual Report 2012 Organisational and governance structure

Corporate governance Dr Jane Doolan Deputy Secretary, Water The Secretary, as head of the department, is accountable to the Dr Jane Doolan was appointed Deputy Secretary Water in Minister for Environment and Climate Change and the Minister July 2011. Before her appointment, she held the position of for Water for the overall governance of the department. Executive Director, Sustainable Water Environments in DSE The department’s management and governance structures since 2008. were strengthened during the year with the establishment of two As Deputy Secretary, Jane has responsibility for providing advice principal governance committees – the Senior Leadership Team to government on sustainable water resource management, and the Executive Management Team. including issues such as water industry governance, urban The committees provide leadership and direction to deliver and rural water supply and security, environmental water the department’s outcomes, monitor and oversee operational management, national water reform and oversight of major state performance and ensure compliance and accountability. projects and programs. Jane has more than 20 years experience working in sustainable Senior Leadership Team water resource management, driving key policy initiatives in river The Senior Leadership Team (SLT), led by the Secretary, health, environmental water and catchment management, both provides the department with leadership and direction in pursuit at state and national level. of government priorities and commitments. The SLT is the department’s executive decision-making body and manages Adam Fennessy the relationship with the Ministers and their respective ofﬁ ces. Deputy Secretary, Natural Resources and The SLT meets weekly and comprises the Secretary (Chair), the Environment Policy Deputy Secretaries, the General Manager, Regional Services Adam Fennessy was appointed Deputy Secretary, Natural and the Director, Ofﬁ ce of the Secretary. Resources and Environment Policy in July 2011.

Greg Wilson Adam oversees the Environmental Policy and Climate Change, Secretary Biodiversity and Ecosystem Services and Natural Resources divisions. Adam works collaboratively with the Secretary and the Greg Wilson was appointed Secretary of the department on Senior Leadership Team across DSE to provide support to the 31 August 2009. Minister for Environment and Climate Change, the Minister for Before this, Greg was the Deputy Secretary, Policy and Cabinet Water and to the Cabinet process. Group, Department of Premier and Cabinet. Previous senior Before this Adam was the Executive Director, Environmental leadership roles include Chairperson of the Victorian Essential Policy and Climate Change Division DSE, and held the role Services Commission, Deputy Secretary (Water) DSE, General of Executive Director, Infrastructure and Economics in the Manager, Offi ce of the Regulator General and Senior Economist Department of Premier and Cabinet (DPC). Adam has held at the Department of Treasury and Finance. Greg has also held executive roles in DPC’s Resources and Infrastructure Branch senior roles at Melbourne Water and City West Water. and in DSE’s Offi ce of Water. Adam has also worked as a Commonwealth Government policy and legal adviser in Dr Peter Appleford transport, communications and the arts. Deputy Secretary, Land and Fire Dr Peter Appleford was appointed Deputy Secretary, Land and Dr Gillian Sparkes Fire in July 2011. Before this, Peter was the Executive Director Deputy Secretary, Corporate and Business Services Forests and Parks. Dr Gillian Sparkes was appointed Deputy Secretary, Corporate Peter leads and provides strategic direction for the Land and and Business Services (CBSD) in May 2010. As a member of Fire Group in managing the public land estate on behalf of the department’s Senior Leadership Team, Gillian has executive government for the community benefi t. responsibility for organisational performance and effi ciency outcomes. Key challenges for the group include a series of business reform projects and a range of actions to deliver the government’s CBSD is responsible for keeping our people safe, supported response to the fi ndings of the 2009 Victorian Bushfi res Royal and valued. In addition CBSD provides information Commission. This includes – in close collaboration with portfolio management, legal and other corporate services to strengthen partners – substantially increased planned burning targets. DSE’s internal capacity and underpin the organisation. Peter has more than 10 years experience working in the Gillian has extensive experience as a senior executive in Victoria Government. Before joining DSE, Peter was the the private and public sectors over a long career in the Executive Director Fisheries Victoria at the Department of manufacturing, waste management, water industries and Primary Industries and was responsible for policy, licensing, research sectors. research and development, fi sheries management and compliance functions.

Department of Sustainability and Environment Annual Report 2012 7 Tony Edgar Accredited Purchasing Unit General Manager, Regional Services The Accredited Purchasing Unit (APU) oversees the Tony Edgar was appointed General Manager, Regional Services department’s purchasing policies and practices for general in June 2011. Tony was previously the Executive Director, Land goods and services through delegated powers assigned by and Fire Services and has worked as Regional Director in both the Victorian Government Purchasing Board. The APU also the North West and Gippsland regions. oversees building and construction related procurement. The APU meets fortnightly. Regional Services is responsible for delivering the government’s priorities across regional Victoria in the areas of land and In 2011–12, APU members were: fi re, environment and natural resources, water, strategy and Anthony Connelly (Chair) – Acting Director, Planning Risk and partnerships and business management. As the General Performance Manager, Regional Services Tony leads and provides strategic direction through fi ve Regional Directors to regional services Ian Ireson (Deputy Chair) – Director, Land Registration Services staff to deliver in these areas. John Johnstone (Deputy Chair) – Manager, Strategic Planning Tony has worked in both forest and fi re roles in many locations and Projects around Victoria. He has more than 35 years experience in DSE Michele FitzGerald – Manager, Procurement Policy and APU and its various predecessor organisations. Support Ashley Clearihan Eleanora Georgiou – Manager, Financial Assets and Governance Director, Offi ce of the Secretary Duncan Pendrigh – Acting Executive Director, Forests and Parks Ashley Clearihan was appointed Director, Offi ce of the Secretary on 31 August 2009. Ashley manages relationships with the Owen Swanton – Regional Services Manager, Infrastructure and portfolio Ministers and their offi ces, provides advice and support Procurement. to the Secretary and is responsible for Cabinet, Parliamentary and Ministerial matters. Risk and Audit Committee Before taking up this role, Ashley was the Group Director, North The Risk and Audit Committee is an independent body Region in the Offi ce of Water. Ashley has a long history in the established in accordance with the Standing Directions of the public service, having worked in various senior roles in seven Minister for Finance under the Financial Management Act 1994. State Government departments. He has also worked in the It provides assurance to the Secretary that the department’s risk Commonwealth Public Service and the private sector. and control environment is operating effectively and effi ciently. The committee meets bi-monthly or as determined by the Chair. Executive Management Team In 2011–12, Risk and Audit Committee members were: The Executive Management Team (EMT) is a principal John Rundell (Chair) – Independent member governance group responsible for oversight of the department’s strategic direction and performance, including ensuring legal Dennis Cavagna – Independent member and functional responsibilities are met. David Holden – Independent member The EMT meets monthly and comprises the Secretary (Chair), Director Offi ce of the Secretary, Deputy Secretaries, General Rod Nelson – Independent member Manager Regional Services, Regional Directors, General Dr Peter Appleford – Deputy Secretary, Land and Fire Manager Capital Projects, Chief Finance Offi cer and the Executive Director, Land Victoria. Adam Fennessy – Deputy Secretary, Natural Resources and Environment Policy Dr Gillian Sparkes – Deputy Secretary, Corporate and Business Services Kylie White – Executive Director, Biodiversity and Ecosystem Services.

8 Department of Sustainability and Environment Annual Report 2012 Risk management framework and attestation As part of good governance and in accordance with the requirements of the Victorian Government Risk Management Framework 2007 and the International Risk Management Standard (ISO 31000:2009), which replaces AS/NZS 4360:2004, DSE is committed to the ongoing development, implementation and continuous improvement of its risk management practices and processes. DSE maintains a risk management program, overseen by the Executive Management Team and the Risk and Audit Committee, focusing on: • internal compliance and development of the risk management framework • fostering an appropriate risk culture, behaviours and attitudes • embedding risk management in daily operations • supporting line management to implement improved controls around key risks • implementing an organisation-wide business continuity management program. DSE maintains risk registers at the strategic, operational and project levels. These registers are used to inform the development of the department’s internal audit program. During 2011–12, treatment plans were completed for all strategic risks. The treatment plans are maintained and actively monitored by the risk owner and reported to the Risk and Audit Committee on a quarterly basis.

Risk attestation I, Greg Wilson certify that the Department of Sustainability and Environment has risk management processes in place consistent with the Australian/New Zealand Risk Management Standard (AS/NZS ISO 31000:2009 or its successor) and an internal control system is in place that enables the executive to understand, manage and satisfactorily control risk exposures. The audit committee veriﬁ es this assurance and that the risk proﬁ le of the Department of Sustainability and Environment has been critically reviewed within the last 12 months.

Greg Wilson Secretary Department of Sustainability and Environment 6 August 2012

Department of Sustainability and Environment Annual Report 2012 9 DSE organisational structure as at 30 June 2012

Capital Projects Capital Projects General Manager Executive Director Frank Fisseler Peter Sammut Director

ce of the Secretary Ashley Clearihan Ofﬁ Director Land Victoria Ian Ireson Valuer General Valuer Surveyor General John Tulloch Executive Director Chris McRae Robert Marsh Land Registration Services cer MLA

(Acting) (Acting) Director Director Director Director Services Performance Legal Services Planning, Risk & People & Culture Communications Laura Miller Deputy Secretary Gary Atherton Kirsty Douglas Corporate & Business Bruce Thompson Anthony Connelly Chief Information Ofﬁ Dr Gillian Sparkes Minister for Water The Hon Peter Walsh

(Acting) (Acting) Services Environment Paul Smith Kylie White Secretary & Climate Change Deputy Secretary Natural Resources Executive Director Executive Director Executive Director Ingrid Duncan Natural Resources & Natural Resources Environmental Policy Environmental Sustainability Victoria Corporations (19) Water Board Zoological Parks and Gardens Victorian Catchment Management Council Victorian Coastal Council Assessment Council Victorian Environmental Holder Water Victorian Environmental (13) Management Groups Waste Adam Fennessy Biodiversity & Ecosystem Greg Wilson Greg

Department of Sustainability & Environment MLA

Water (Acting) Urban Water Campbell Environments Fitzpatrick Water Resources Water Deputy Secretary Deputy Secretary Sustainable Water Sustainable Water Executive Director Executive Director Executive Director Executive Director Peter Betson John Riddiford Graeme Turner Graeme Turner Dr Jane Doolan Rural Water & Governance Rural Water c Advisory Committee The Hon Ryan Smith ce of Living Victoria Minister for Environment & Climate Change Minister for Environment Phillip Island Nature Park Phillip Island Nature (3) Regional Coastal Boards Scientiﬁ of Victoria Surveyors Registration Board Sustainability Fund Advisory Panel for Nature Trust Ofﬁ Parks Victoria Board Royal Botanic Gardens

cer Fire (Acting) (Acting)

Land & Fire Public Land Dr Peter Appleford Lee Miezis Forests & Parks Forests Chief Fire Ofﬁ Chief Fire Deputy Secretary Ewan Waller Executive Director Executive Director Executive Director Executive Director Governance Reform cer Fiona Williams Peter Watkinson Duncan Pendrigh

(Acting) Matthew Clancy Chief Finance Ofﬁ

Tony Edgar Tony Peter Farrell General Manager Gippsland Region Regional Services Regional Director Regional Director Regional Director Regional Director Regional Director Regional Director North East Region Port Phillip Region North West Region North West Laurie Dwyer South West Region South West Mike Timpano Alan Goodwin Rodney Warren Portfolio Agencies Catchment Management Authorities (10) Sustainability Commissioner for Environmental Authority Protection Environment Council Alpine Resorts Coordinating (5) Alpine Resort Management Boards 1200) Committees of Management (approximately Board Protection Environment Geographic Place Names Advisory Panel Indigenous Land Management Advisory Bodies (3)

10 Department of Sustainability and Environment Annual Report 2012 Organisational changes The group supports local communities, land holders and government agencies involved in environmental management. Machinery of government changes Key actions to achieve this include enabling effective and Since the state election in November 2010, DSE and the effi cient investment to support environmental outcomes Department of Primary Industries (DPI) have worked together across the state, running clear and consistent processes for to progress relevant government commitments, including the environmental approvals and regulations and collaborating transfer of functions related to game management and wood across government to maximise environmental outcomes in production in native forests on public land from DSE to DPI. whole of government decision-making processes. The group’s These functions were transferred on 16 December 2011. work is underpinned by a strong policy capability, supporting consistent and transparent decision-making. Strengthening DSE As part of the Strengthening DSE initiative, the department Water is making changes to build a highly reliable and effi cient The group – comprising the Rural Water and Governance, organisation centred on a stronger regional presence to make Sustainable Water Environments, Urban Water and Water decisions and deliver services. The initial phase focused on Resources divisions – works with water corporations and organisational restructuring to introduce a new regional model catchment management authorities to manage the allocation for the department to create a more visible, more connected of water resources across Victoria to balance economic, and more empowered regional presence. environmental and social values. Working to improve the environmental condition of our waterways is a high priority along In July 2011, DSE introduced a new organisational structure and with ensuring effective governance arrangements for a high created fi ve regions, including a metropolitan region, each with a performing water sector. Regional Director and with an overall General Manager, Regional Services. In addition, three new Deputy Secretary positions were DSE is working with our partners to deliver projects that created to strengthen our executive structure to better support progress the State Government’s vision for water, including the evolving organisation and its leadership team. developing smart, secure urban water systems, and delivering Australia’s largest irrigation infrastructure renewal project to To build on these changes and ensure we have the fl exibility ensure a more productive, effi cient and sustainable irrigation and effi ciency required to deliver government priorities while industry. strengthening our capacity, capability and presence, DSE is also working on areas of corporate reform. DSE is reviewing Divisions processes for allocating budgets, specifying outcomes, setting priorities and business planning and reporting. Capital Projects The division delivers designated DSE infrastructure projects and Groups assists other agencies with the delivery of major projects. The Land and Fire division’s key current responsibility is delivering the Victorian Desalination Project. The group – comprising the Fire, Forests and Parks, Governance Reform and Public Land divisions and the Offi ce of Corporate and Business Services the Chief Fire Offi cer – manages the public land estate on behalf of government for the community benefi t. The division works collaboratively across the department to provide quality corporate and business support services and The group delivers land and fi re management programs that to drive initiatives to enhance organisational performance. It is reduce the threat and impact of major bushfi res and promotes responsible for ensuring that our people feel safe, supported the use of fi re as a land management tool to deliver healthy and and valued and provides information management, legal and resilient ecosystems. other corporate services. It provides a consolidated and consistent policy direction for Finance and Resources all components of Victoria’s public land estate including state forests, national and state parks, coasts, alpine and Crown land The branch provides key budget and fi nancial management, areas and plays a key role in supporting government priorities in facilities and fl eet services to help the department meet environmental sustainability. outcomes and objectives and to deliver outputs.

Natural Resources and Environment Policy Land Victoria The group – comprising the Biodiversity and Ecosystem The division is responsible for land titles and records, the Services, Environmental Policy and Climate Change and Natural Victorian Water Register, property valuation, surveying, online Resources divisions – is responsible for delivering the effective property information and services and geographic place names. environmental and climate change policy, investment and regulation outcome.

Department of Sustainability and Environment Annual Report 2012 11 Regions

Gippsland Region North East Region Regional Director, Mike Timpano Regional Director, Peter Farrell The region stretches from Melbourne’s outer urban areas in The region is bordered in the north by the Murray River and to the west to the New South Wales border in the east, and is the south by the Great Dividing Range. bounded by the Great Dividing Range to the north and Bass The region covers 40,383 square kilometres and is home Strait to the south. to around 280,000 people. It features spectacular mountain The region covers 41,563 square kilometres and has a country, fertile river valleys and extensive irrigated farmlands on population of more than 260,000 people. It includes some of the plains of the Goulburn and Murray valleys. the fastest growing areas in regional Victoria, including the Bass The headwaters of many of Victoria’s major rivers are located Coast area and townships such as Drouin and Warragul. within the region and the catchments contribute almost half Eighty per cent of the region is Crown land with extensive of the total infl ows to the Murray-Darling Basin. The region areas of native forest and remote wilderness areas in the east. supports multi-million dollar primary production based industries Gippsland’s forest produce includes sawlogs and pulpwood, including grazing, dairy, grains, horticulture, timber and and both the timber industry and the paper manufacturing viticulture, all of which produce quality products for both the industry based at Maryvale are major regional employers. domestic and international markets. About one quarter of Australia’s milk production and most of Staff Melbourne’s dairy and vegetable supplies come from Gippsland. The world’s largest brown coal deposits are found in the Latrobe 255 FTE Valley, which provides 85 per cent of Victoria’s electricity. The region also provides more than 60 per cent of Melbourne’s Offi ces and locations water storage capacity. Benalla (Regional Offi ce), Alexandra, Beechworth, Bright, The region is also home to many popular tourist destinations Broadford, Corryong, Mansfi eld, Marysville, Mitta Mitta, Ovens, and recreational areas, including Phillip Island, Wilsons Seymour, Tallangatta, Toolangi, Wangaratta and Wodonga. Promontory, the Victorian Alps and the Gippsland Lakes. Staff 315 FTE Offi ces and locations Traralgon (Regional Offi ce), Cann River, Erica, Heyfi eld, Noojee, Orbost, Swifts Creek and Yarram.

12 Department of Sustainability and Environment Annual Report 2012 North West Region Port Phillip Region Regional Director, Alan Goodwin Regional Director, Rodney Warren The region is bordered by the Murray River to the north and The region includes metropolitan Melbourne and growth reaches as far south as the Macedon Ranges. corridors, Port Phillip and Western Port bays, the Mornington Peninsula and the Yarra Ranges. The region covers 58,952 square kilometres and is home to around 320,000 people. The southern part includes an urban The region covers 8987 square kilometres and is home to growth corridor with a growing population of commuters from 4.1 million people, or nearly 80 per cent of Victoria’s population, Kyneton and Castlemaine. making it the most densely populated and culturally diverse region in Victoria. The region also includes signifi cant European and indigenous cultural heritage sites, four of the six Living Murray ‘icon sites’ The region includes 236,600 hectares of Crown land, including and high value ecosystems, such as the Box Ironbark forests, Melbourne’s water catchments. The region has more than 900 unique Mallee country and the Northern Plains grasslands. wetlands, including internationally signifi cant Ramsar-listed wetlands at Western Port, Port Phillip Bay and Edithvale- The region is one of the state’s major food producing areas and Seaford. It is home to the largest urban Little Penguin population supplies more than 30 per cent of Victoria’s grains, more than at St Kilda and the last wild population of the Helmeted 40 per cent of its fruit and over 80 per cent of its wine grape Honeyeater in the Bunyip State Park. production. The Murray River, climate and abundance of local produce are central to the region’s heritage and prosperity, Port Phillip has many high profi le sporting, recreational and presenting strong drawcards for a growing local tourist industry. cultural facilities on Crown land, including the Melbourne Cricket Ground, Flemington Racecourse, Albert Park, the Victorian Staff Arts Centre, Melbourne, Werribee and Healesville Zoos and the 160 FTE Royal Botanic Gardens. Offi ces and locations Staff Bendigo (Regional Offi ce), Cohuna, Echuca, Heathcote, 135 FTE Maryborough, Mildura, Rushworth and Swan Hill. Offi ces and locations Box Hill (Regional Offi ce) and Powelltown.

Department of Sustainability and Environment Annual Report 2012 13 South West Region Regional Director, Laurie Dwyer The region extends from Geelong and Bacchus Marsh in the east to the South Australia border and from the Big Desert in the north to the south-west coast. The region covers 77,759 square kilometres – more than one third of the state – and has a population of around 610,000 people. The landscape is a mosaic of public and private; forested and non-forested land. The region encompasses 20 local government areas and includes Geelong and Ballarat, Victoria’s second and third largest cities, and high population growth areas such as Daylesford and the Surf Coast. The region is well known for its agriculture, particularly sheep, meat, wool and dairy. Tourism is also a major industry with visitors enjoying the superb coast and iconic surf beaches, spectacular scenery along the world renowned Great Ocean Road, the rugged beauty of the Grampians, the vast open spaces of the Little Desert and native grasslands of the Victorian Volcanic plains. The only deep water port between Melbourne and Adelaide is situated at Portland in the far south-west and a major part of Victoria’s wind farm industry is located in the region. Staff 300 FTE Ofﬁ ces and locations Ballarat (Regional Ofﬁ ce), Beaufort, Casterton, Cavendish, Colac, Dartmoor, Daylesford, Edenhope, Forest, Geelong, Gellibrand, Hamilton, Horsham, Heywood, Sebastopol and Warrnambool.

Customer Service Centre

Our Customer Service Centre in Wendouree managed 131,850 calls and emails during 2011–12, an average of 11,000 per month with most calls answered in 30 seconds. The Customer Service Centre handled 13,124 emergency-related calls. Of these, 11,111 were on the Victorian Bushﬁ re Information Line and 2013 contacts related to storms and ﬂ oods.

14 Department of Sustainability and Environment Annual Report 2012 Organisational performance

Heyﬁ eldCaption Fire Management – Lorem ipsum Ofﬁ cers, elestorestia Lauren comnis Pini andveligni Mark mentur. Crouch, Ugiaspi doing lastssincia minute ndaest checksassinciis before ignition alis quam of a re planned nem ut burnestiosa near Dargomendellacid. in 2011

The department aims to show leadership in sustainability in all its operations: reducing greenhouse gas emissions, effi ciently using water and energy and other precious resources while responsibly managing waste. The department also responsibly manages its human resources, developing staff skills and protecting our people’s safety and wellbeing every working day. In optimising organisational performance, the department accounts for its fi nancial resources and reports against Victorian Government fi nancial policies and legislation. This section reports on how DSE performed in all these areas in the past year.

• Ofﬁ ce-based environmental performance • Staff performance • Financial performance

Department of Sustainability and Environment Annual Report 2012 15 Ofﬁ ce-based environmental performance

This section reports on environmental Energy use performance primarily in compliance with Energy intensity and total consumption each fell by 4 per cent in Financial Reporting Direction FRD24C 2011–12. ‘Reporting of Offi ce-based Environmental Energy use is measured and reported for DSE buildings across the state, covering all staff and all locations. Energy Data by Government Departments’. consumption is measured in megajoules (MJ) by meters at each building location. The offi ce-based Environmental Management The primary measure of energy effi ciency is ‘energy intensity’ System covers all DSE offi ce activities and expressed as megajoules of energy per building fl oor area (MJ/m2). Overall energy intensity for all DSE buildings aims to minimise the consumption of energy, was 292 MJ/m2. water and paper; to limit the generation of The department continues to include energy saving initiatives waste; to use more sustainable travel; and to in new capital works and retrofi tting existing buildings where improve the effi ciency of the vehicle fl eet. possible. Eighteen offi ce/depot sites were retrofi tted with energy effi cient lighting in 2010–11, and those sites reduced electricity consumption by 8 per cent in 2011–12. Offi ce-based operations DSE installed 12 solar hot water systems at regional offi ce/ Achievements in 2011–12 include: depot sites in 2011–12. The solar hot water systems will reduce electricity and gas consumption and increase the department’s • 10 per cent less emissions from energy use use of renewable energy. • 5 tonnes less paper used than last year Energy-related greenhouse gas emissions • 14 per cent improvement in passenger vehicles effi ciency. Greenhouse gas emissions from DSE’s energy use reduced by The Eco-Offi ce Challenge supports the Environmental a further 10 per cent to 7395 tonnes carbon dioxide equivalent

Management System (EMS), with around 100 volunteer (CO2e) in 2011–12. Eco-Ofﬁ ce Challenge Champions. They educate, advise and DSE has managed energy emissions over several years encourage staff to improve their environmental behaviours by progressively implementing a strategy that places more at work. emphasis on low and no emissions energy sources, including purchasing an increasing proportion of green power (a zero- emission source of electricity).

A solar hot water system at the Heathcote depot

16 Department of Sustainability and Environment Annual Report 2012 Table 1 Energy use indicators

Indicator Comments 2007–08 2008–09 2009–10 2010–11 2011–12

Energy used Energy intensity fell by 4% 300 303 304 304 292 per unit of compared to last year. building space (MJ/m2)

Total buildings All DSE managed buildings are 142,657 143,630 138,812 137,891 137,926 ﬂ oor area (m2) included; with ﬂ oor areas adjusted each year to match actual occupancy.

Energy used Overall energy consumption fell 16,538 14,961 15,182 14,768 15,397 per full time 4% but energy use per FTE was employee 4% more than last year. This was (MJ/FTE) due to a drop in reported FTE.

Percentage of The percentage of green power 28.3% 28.5% 33.4% 31.1% 34.5% green power purchased was increased again purchased (as this year as part of progressively percentage of reducing the department's total electricity energy emissions. used)

Cost of green Green power cost is for green $94,769 $93,629 $112,563 $99,503 $142,356 power ($) power purchased under the Victorian Government State Purchasing contracts for electricity.

Total energy usage segmented by primary source

Electricity non- The greenhouse emission factor 24,013,614 23,409,086 22,421,501 22,923,413 20,574,917 green power for Victorian electricity applies to (MJ) this energy component.

Electricity Accredited green power 9,454,932 9,341,212 11,230,211 9,928,224 10,846,148 green power purchased is a zero-emissions (MJ) energy source.

Electricity total Total electrical energy 33,468,546 32,750,298 33,606,102 32,851,637 31,421,065 consumption consumption has fallen in the last (MJ) ﬁ ve years.

Natural gas Natural gas is mainly used at large 8,223,199 9,514,619 7,796,549 7,877,611 7,806,800 (MJ) regional sites including Bendigo, Benalla, Traralgon and Bairnsdale.

LPG (MJ) LPG is mainly used to heat 1,141,175 1,122,028 844,859 1,144,507 1,067,315 buildings in regional locations.

Total energy all Total energy use has fallen in the 42,832,920 43,386,945 42,293,120 41,873,755 40,295,180 sources (MJ) past ﬁ ve years.

Notes: 1. Total building area (m2) includes all energy-using buildings at all DSE administered sites. This is consistent with energy reporting in previous years and the requirements of Energy Efﬁ cient Government Buildings (government targets) reporting since 2001. 2. FTE used for 2011–12 calculations is 2617 FTE total for DSE at 30 June 2012.

Department of Sustainability and Environment Annual Report 2012 17 Table 2 Total energy-related greenhouse gas emissions segmented by primary source

Indicator Comments 2007–08 2008–09 2009–10 2010–11 2011–12

Electricity non- The lower emissions reﬂ ect less use 8738 8778 8408 7705 6915 green power of non-green power electricity.

(tonnes CO2e)

Natural gas Emissions from natural gas are 471 487 435 403 416

(tonnes CO2e) stable.

LPG Lower emissions are due to less 75 103 49 70 64

(tonnes CO2e) LPG consumption.

Total energy- Total energy emissions fell 9284 9368 8892 8178 7395 related emissions by 10%.

(tonnes CO2e)

Notes: 1. Energy emission factors used are the latest available from the Commonwealth Department of Climate Change, released on 5 July, 2011. 2. Full fuel cycle emissions are used, including relevant factors for Victorian electricity and natural gas.

Water use Effi cient systems and water conservation measures continue to be included in new buildings, refi ts and renovations and as Offi ce water use fell by 1760 kilolitres in 2011–12. DSE used a retrofi ts to sites. These include: total of 21,943 kilolitres of water. • rainwater tanks Water is used for: • dual fl ush and water effi cient toilets • domestic drinking, washing, cleaning and toilet fl ushing • fl ow restrictors and low-fl ow shower heads • building heating and cooling systems (e.g. cooling towers) • water effi cient appliances. • vehicle washdown (at depots). Harvested rainwater is used for toilet fl ushing, vehicle washdown The department classifi es sites into three categories: offi ces, and garden irrigation at some locations. offi ce/depots and depots. DSE total water use is shown below; consumption is separated for each site category.

Table 3 DSE all water usage summary 2011–12

Site category Water use kilolitres Percentage of total use Number of sites

Ofﬁ ce 21,943 68 23

Ofﬁ ce/depot 9190 28 32

Depot 1277 4 25

Totals 32,410 100 80

Notes: 1. All DSE sites are covered by this data. 2. Data is from all locations where metered accounts for potable water use are available. 3. Some DSE locations operate without any reticulated town water supply e.g. river or tank water only. 4. For shared ofﬁ ce tenancies, DSE water use is calculated on a prorata basis per ﬂ oor area occupied.

18 Department of Sustainability and Environment Annual Report 2012 Ofﬁ ce water consumption is summarised in the following tables according to FRD24C requirements. Twenty-three ofﬁ ce locations accommodating 73 per cent of DSE full-time equivalent (FTE) staff are covered.

Table 4 DSE total ofﬁ ce water – owned and leased buildings

Indicator Comments 2007–08 2008–09 2009–10 2010–11 2011–12

Litres per FTE 8343 8027 9637 9653 9667

Litres per year Total water volume is all 10,183,474 13,216,438 23,893,000 23,703,000 21,943,000 ofﬁ ce water consumption at included sites, for whole building use including cooling towers where they exist.

Number of sites 3 13 24 23 23

Percentage of Percentage of sites covered is 3.4% 15.7% 29.3% 29.1% 25% sites the number of sites included divided by the total number of DSE sites.

DSE FTE covered The sum of DSE FTE count at 1221 1412 2044 2049 1890 included sites at 30 June.

Percentage of total The total DSE FTE at included 47% 49% 73% 72% 73% DSE FTE sites divided by total DSE FTE at 30 June.

Department of Sustainability and Environment Annual Report 2012 19 Table 5 DSE ofﬁ ce water – by building type

Building Type Indicator Comments 2007–08 2008–09 2009–10 2010–11 2011–12

Leased Litres per FTE Uses total ofﬁ ce water 9238 9233 11,339 12,270 12,795 buildings consumption and total site FTE count for included sites.

Litres per year Total water volume 9,056,014 10,880,528 19,929,000 20,721,000 19,846,000 is all ofﬁ ce water consumption at included sites, for whole building use including cooling towers where they exist.

Number of sites 3 6 14 13 13

Percentage of sites Percentage of sites 2.3% 7.2% 17.1% 16.5% 13.8% covered is the number of sites included divided by the total number of DSE sites.

DSE FTE covered FTE count at included 980 1179 1678 1631 1496 sites at 30 June.

Percentage of total The total FTE at 38% 39% 60% 58% 57% DSE FTE included sites divided by total FTE at 30 June.

Government- Litres per FTE Data on owned sites 4692 4991 5493 3889 4827 owned not available before buildings 2007–08.

Litres per year Total water volume 1,127,460 2,335,910 3,964,000 2,982,000 3,470,000 is all ofﬁ ce water consumption at included sites, for whole building use including cooling towers.

Number of sites 0 7 10 10 10

Percentage of sites Percentage of sites 1.1% 8.4% 12.2% 12.7% 11.3% covered is the number of sites included divided by the total number of sites.

DSE FTE covered FTE count at included 240 289 366 419 394 sites at 30 June.

Percentage of total The total FTE at 9% 10% 13% 15% 15% DSE FTE included sites divided by total FTE at 30 June.

Notes: 1. Offi ce water use is reported for 23 sites, including major offi ces at 8 Nicholson Street, 570 Bourke Street, Bendigo, Traralgon and Box Hill. 2. Water use is subject to seasonal variation, especially at large offi ces where cooling towers are used in air-conditioning plant. 3. Consumption data before 2009–10 is not directly comparable with later years; with limited sites coverage due to unavailability of data at the time. 4. Water data is reported for all sites where separate metering is available for offi ce-only use. 5. Water use calculations per FTE use the total FTE occupying the site; made up of DSE staff and DPI and Parks Victoria FTE where they jointly occupy DSE premises. 6. Where DSE occupies shared tenancies, prorata DSE water use is calculated from total building use based on fl oor area ratio.

20 Department of Sustainability and Environment Annual Report 2012 Paper use The Eco-Offi ce Challenge Champions lead various behaviour change programs to reduce the use of paper. An ongoing Offi ce paper consumption fell by 2027 reams or 5 per cent – a internal communications campaign also encourages less use of saving of 5 tonnes of paper in 2011–12. A total of 36,194 reams paper, with suggestions on how this can be done. (A4 equivalent) was purchased. The effi ciency of paper use is measured in reams per FTE per year. For 2011–12, 13.8 reams of paper were used per FTE.

Table 6 DSE paper use

Indicator Comments 2007–08 2008–09 2009–10 2010–11 2011–12

Total units of paper used The sustained downward trend in 44,982 50,020 42,074 38,221 36,194 (reams) total paper consumption results largely from behaviour change actions. There is some correlation between paper consumption and FTE count.

FTE DSE FTE at 30 June. 2537 2900 2780 2835 2617

Units of paper used per The downward trend in paper use 17.7 17.2 15.1 13.7 13.8 FTE (reams per FTE) efﬁ ciency in the previous six years has slowed.

Units of paper used per The downward trend in paper use 35.5 34.6 30.3 27.5 27.7 FTE (sheets per FTE per efﬁ ciency in the previous six years day) has slowed.

Percentage 75–100% This category is primarily made 67% 69% 71% 77% 68.9% recycled content copy up of the preferred 'Australian 80' paper purchased (%) paper (80% recycled) and some other 100% recycled A4 paper.

Percentage 50–75% This category comprises 50% 25% 19% 18% 5% 7.2% recycled content copy recycled content A4 papers paper purchased (%) sourced primarily to cover 'out of stock' periods of the preferred 'Australian 80' paper.

Percentage 0–50% This category is almost entirely 4% 12% 11% 18% 24% recycled content copy A3 size and coloured A4 papers paper purchased (%) not available with higher recycled content.

Percentage of white The slippage of this indicator 72.7% 74.8% 76.5% 83.4% 74.4% A4 paper with > 70% reﬂ ects a higher than usual amount recycled content (%) of 50% recycled white A4 paper stock purchased in the last year.

Department of Sustainability and Environment Annual Report 2012 21 Waste management waste collection and cleaning at many sites. Waste collection arrangements were changed at 8 Nicholson Street to adapt to An estimated 189 tonnes of waste was diverted from landfi ll. service changes and improve environmental outcomes for waste Waste management aims to achieve the best separation of at this site. Several regional offi ce/depots improved their waste waste streams to recycling, composting and landfi ll for all management through the introduction of ‘Eco Bins’ and other locations. Special collection services are provided for recyclable innovative solutions. items including batteries, CDs, electronic goods and cork. The Waste data for 2011–12 is based on waste audits conducted service providers include ‘Green Collect’, a non-profi t social at six sites: 8 Nicholson Street, 570 Bourke Street (large offi ces) enterprise, and a commercial polystyrene collection for the and other sites at Box Hill, Bendigo, Benalla and Traralgon. 8 Nicholson Street offi ce. These sites represent 60 per cent of staff (FTE). DSE introduced several changes to its waste management A high overall recycling rate of 85 per cent was achieved for the practices in 2011–12, including new service providers for audited sites. Table 7 Waste production

Indicator Comments 2007–08 2008–09 2009–10 2010–11 2011–12

Number of DSE sites The same six major sites were audited this 76666 audited year as in 2010–11.

Total FTE at audited sites Includes DSE and other FTE at audited sites. 1983 1939 1942 1928 1567

Total DSE FTE reported Changes in FTE each year contribute to the 2537 2900 2780 2836 2617 absolute quantities of waste reported.

Units of waste per FTE by destination

Landﬁ ll (kg/FTE/yr) Combined values for all audited sites in 8.8 7.7 6.4 9.0 13.1 each year.

Compost (kg/FTE/yr) Combined values for all audited sites in 12.1 10.5 10.5 19.1 13.1 each year.

Paper and cardboard Separate paper and cardboard collections NA NA NA NA 48.84 recycling (kg/FTE/yr) in 2011–12.

Co-mingled recycling Combined values for all audited sites in 48.6 64.7 50.5 55.6 10.2 (kg/FTE/yr) each year.

Total waste (kg/FTE/yr) A small increase in waste per FTE. 69.5 83 67.5 83.7 85.3

Total units of waste by destination

Landﬁ ll (kg/yr) Waste to landﬁ ll is only 15 per cent of total 22,830 22,347 17,907 25,411 34,370 waste.

Compost (kg/yr) Reduces emissions from the decomposition 31,246 30,576 29,119 54,263 34,335 of organics in landﬁ ll.

Paper and cardboard Separate paper and cardboard collections NA NA NA NA 127,759 recycling (kg/yr) introduced in 2011–12.

Co-mingled recycling Recycling using a range of available methods 125,964 187,652 140,518 157,613 26,733 (kg/yr) ensures that most waste is not sent to landﬁ ll.

Total waste (kg/yr) A 4% reduction in the total estimated waste 180,040 240,575 187,543 237,287 223,197 quantity compared to last year.

Recycling rate The consistently high recycling rate reﬂ ects 87% 91% 90% 89% 85% (% of total waste) excellent waste management practices in DSE.

Greenhouse emissions Landﬁ ll waste emissions have been 25.3 24.8 17.9 22.9 9.3 from waste to landﬁ ll calculated this year using an adjusted

(tonnes CO2e) emission factor based on the assessed organic content of landﬁ ll waste from recent audits.

Notes: 1. Waste data is derived from waste audits conducted at six sites, using a one-day (24 hour) sample; with values extrapolated based on total reported DSE FTE to estimate total waste quantities for a year. 2. A separate category for paper and cardboard recycling is included this year. Both major ofﬁ ces at 8 Nicholson Street and 570 Bourke Street now separate paper and cardboard from other recycling. The quantity of co-mingled recycling is therefore greatly reduced.

22 Department of Sustainability and Environment Annual Report 2012 Transport use of hybrid vehicles and improved use of other vehicle types, such as LPG cars. Fleet The proportion of hybrid vehicles has increased again this Total energy and associated emissions fell in 2011–12, although year to nearly half of the passenger car fl eet, with 85 hybrid the total kilometres travelled increased by 11 per cent. cars representing 48 per cent of all passenger vehicles. Low- Vehicles effi ciency, as measured by emissions per 1000 emission vehicles account for 68.5 per cent of the passenger kilometres improved by 14 per cent. This refl ects the increased car fl eet.

Table 8 Passenger cars

Indicators Comments 2007–08 2008–09 2009–10 2010–11 2011–12

Total energy The total energy used for 17,179 18,384 18,445 15,191 15,115 consumption from car travel has remained passenger vehicles (GJ) almost constant.

Total associated The total emissions from car 1228 1305 1303 1071 1029 greenhouse gas travel fell by 4%. emissions

(tonnes CO2e)

Associated greenhouse The efﬁ ciency of passenger 0.231 0.225 0.216 0.183 0.158 gas emissions tonnes vehicles improved again –

CO2e per 1000 emissions per kilometres kilometres travelled travelled fell by 16%.

Total passenger The total distance travelled 5,317,696 5,799,107 6,038,365 5,848,988 6,512,473 vehicle trip kilometres in passenger cars increased associated with by 11%. departmental operations (km)

Total unleaded fuel used Increased unleaded petrol 404,185 399,158 379,539 302,492 367,091 by passenger vehicles consumption this year was litres due in part to more use of hybrid cars and less use of LPG vehicles.

Percentage of 85 hybrid cars represent 67.6% 64.1% 72.9% 77.6% 68.5% passenger vehicle ﬂ eet 48% of the ﬂ eet. Low- as low emission and emission vehicles account LPG vehicles for 68.5% of passenger cars.

Note: 1. The above data includes Vic Fleet hire cars.

Department of Sustainability and Environment Annual Report 2012 23 Table 9 Vehicle class

Indicators 2007–08 2008–09 2009–10 2010–11 2011–12

4 cylinder less than 1.8 litre

Total energy consumption from passenger vehicles (GJ) 107 57 NA NA 22

Total associated greenhouse gas emissions 8 4 NA NA 2

(tonnes CO2e)

Associated greenhouse gas emissions tonnes CO2e per 0.225 0.246 NA NA 0.195 1000 kilometres travelled

Total passenger vehicle trip kilometres associated with 34,593 16,983 NA NA 7927 departmental operations (km)

Number of vehicles in this class 22001

4 cylinder over 1.8 litre

Total energy consumption from passenger vehicles (GJ) 4839 3645 4525 2000 1129

Total associated greenhouse gas emissions 354 266 331 146 79

(tonnes CO2e)

Associated greenhouse gas emissions tonnes CO2e per 0.228 0.227 0.277 0.177 0.159 1000 kilometres travelled

Total passenger vehicle trip kilometres associated with 1,552,001 1,172,202 1,194,803 824,059 494,826 departmental operations (km)

Number of vehicles in this class 60 39 40 23 12

6 cylinder sedans and wagons

Total energy consumption from passenger vehicles (GJ) 9641 11,470 10,468 9561 8728

Total associated greenhouse gas emissions 677 800 722 662 586

(tonnes CO2e)

Associated greenhouse gas emissions tonnes CO2e per 0.250 0.248 0.221 0.201 0.157 1000 kilometres travelled

Total passenger vehicle trip kilometres associated with 2,710,129 3,226,337 3,262,703 3,294,566 3,744,184 departmental operations (km)

Number of vehicles in this class 115 139 127 37 80

Hybrid cars

Total energy consumption from passenger vehicles (GJ) 842 1361 1548 2017 3885

Total associated greenhouse gas emissions 62 99 113 147 270

(tonnes CO2e)

Associated greenhouse gas emissions tonnes CO2e per 0.126 0.128 0.122 0.129 0.161 1000 kilometres travelled

Total passenger vehicle trip kilometres associated with 489,361 778,202 930,733 1,142,294 1,679,797 departmental operations (km)

Number of vehicles in this class 30 43 47 60 85

Note: 1. The data by vehicle class accounts for DSE ﬂ eet vehicles only and excludes Vic Fleet hire cars usage.

24 Department of Sustainability and Environment Annual Report 2012 Table 10 DSE Passenger ﬂ eet composition

Year 2007–08 2008–09 2009–10 2010–11 2011–12

Percentage Percentage Percentage Percentage Percentage Count of total Count of total Count of total Count of total Count of total

Hybrid 30 14.5% 43 19.3% 47 22% 60 36.4% 85 47.8%

LPG 48 23.2% 59 26.5% 69 32.2% 45 27.3% 24 13.5%

4 cylinder 62 30% 41 18.4% 40 18.7% 23 13.9% 13 7.3% cars

Other 67 32.4% 80 35.9% 58 27.1% 37 22.4% 56 31.5% vehicles

Total passenger 207 100% 223 100% 214 100% 165 100% 178 100% vehicles

Low emission 140 67.6% 143 64.1% 156 72.9% 128 77.6% 122 68.5% and LPG cars

Notes: 1. The passenger vehicle ﬂ eet now has 47.8 per cent hybrid cars. 2. Appropriate use of vehicle types contributes to improved emissions per 1000 kilometres achieved.

Air travel Staff air travel covering all domestic and international ﬂ ights and the associated greenhouse gas emissions is reported using data received from the government travel agency.

Table 11 DSE Air travel distance and emissions

Indicator 2007–08 2008–09 2009–10 2010–11 2011–12

Total greenhouse emissions associated with air 829 1040 975 800 685 travel (tonnes CO2e)

Total distance travelled by air (km) 2,591,648 3,338,632 3,141,250 2,824,560 2,394,013

Notes: 1. Air travel data is sourced from FCM Travel reports. 2. Variation in the total distance travelled by air is directly attributable to necessary operational demands and available transport modes.

Department of Sustainability and Environment Annual Report 2012 25 Staff travel modes The use of sustainable travel modes for metropolitan and Sustainable travel to and from work hit a new high of 74 per regional staff are much lower and consistent year to year, cent, according to the annual DSE Staff Travel Survey. reﬂ ecting the limited public transport options available and the high reliance on car travel in regional Victoria. Sustainable travel Staff located at major CBD locations reported the highest use of for regional locations is gradually rising. It appears that regional sustainable travel – 92.8 per cent. staff are electing to walk, ride bikes, car share and use train The annual survey measures the behaviours of DSE staff in services more frequently. relation to their travel to and from their workplace. The 2011–12 survey was conducted in October 2011, attracting 801 responses or 31 per cent of staff FTE.

Table 12 Staff travel modes

Indicator Units Comments 2007–08 2008–09 2009–10 2010–11 2011–12

Percentage of employees regularly (>75% of work attendance days) using public transport, cycling, walking, or car pooling to and from work or working from home, by locality type

Whole-of-DSE % There is a continuing high 60.8% 78% 82.8% 77% 74.2% overall use of sustainable transport modes across the department.

CBD sites % Ready availability of public 84.2% 89.8% 85.9% 93.5% 92.8% transport supports a high use of sustainable travel modes.

Metropolitan sites % Higher rates of car use apply 36% 65.5% 56.5% 63.2% 58.7% at metropolitan locations due to less public transport options.

Regional sites % Sustainable travel for 28.6% 27.1% 26.8% 33% 35.6% regional sites is gradually increasing despite limited public transport options.

Notes: 1. Data is obtained from annual Staff Travel Survey. 2. The 2012 DSE Staff Travel Survey attracted 801 total responses.

Sustainable purchasing The department has incorporated sustainable purchasing principles into its procurement policies. The Accredited Purchasing Unit (APU) ensures that sustainability considerations are included in the planning procurement stage, tender speciﬁ cations and in tender evaluation criteria where applicable. A working group was established in 2011–12 to set achievable objectives and implement actions each year to improve the sustainability of the department’s purchasing of goods and services. Current initiatives are focusing on adding to the suite of sustainability clauses that may be included in tender speciﬁ cations and identifying measures to increase the use of environmentally preferred stationery products.

26 Department of Sustainability and Environment Annual Report 2012 New offi ce for Heyfi eld The features include: State-of-the-art environment features and a Level 3 Incident • high performance double glazed opening windows Control Centre make our new $9.2 million Heyfi eld offi ce and • orientation to maximise the passive thermal performance of depot a showcase of functionality for everyday work and fi re the building management. • passive ventilation The 4 Star Green Star (Design) building is the only small offi ce building of that standard in regional Victoria. • solar boosted hot water system The building incorporates the latest thinking on setting up to • all materials and fi nishes chosen to improve indoor air quality support Level 3 incidents – making it a key operations resource • high levels of insulation to reduce demands on air conditioning for the region and Victoria’s fi re management. and lower operating costs It accommodates up to 40 staff for normal business and up to • high effi ciency low-energy lighting 80 staff as a Level 3 Incident Control Centre. • rainwater harvesting Extensive pre-wiring throughout the building enables a fast conversion from a normal offi ce to a Level 3 Incident Control • low water use fi ttings. Centre mode. Offi ce staff moved in during May 2012 followed by depot Additional staff can be added to the open plan offi ce and staff in June 2012. meeting rooms are ready to convert for different functions. An operations room is supported by radio communications which is a permanent base from which to expand into incident control centre mode. Offi ce staff and fi eld staff are incorporated under one roof to facilitate greater cooperation. The front of the building is designed to support community engagement – for example, meetings in the front of the building will not disturb the rest of the offi ce or out of hours meetings can be conducted without opening up the entire offi ce. The building’s environmentally sustainable design lowers operating costs through reduced energy and water demands.

Heyﬁ eld’s new ofﬁ ce and depot incorporates environmentally sustainable design features

Department of Sustainability and Environment Annual Report 2012 27 Staff performance

The department places a high priority • Job Safety Planning – the process and tools used to plan jobs so they can be completed safely on developing a working environment • Safe Work Procedures – written instructions which describe that emphasises safety and wellbeing, how to perform a job safely maximises staff performance and recognises • Safe Operating Instructions – describe the procedure for achievements. This section reports on safely using particular plant/machinery or equipment activities in health and safety, staff services, • Safety Alerts – providing up to date information about hazards workplace relations and staff performance. or hazardous conditions in the workplace • POSSUM – online reporting tool for hazards, inappropriate Safety and wellbeing behaviour, near misses and incidents. DSE protects the safety and wellbeing of its people and Safety Advisors ensures that safety is integral to how we do our work. DSE’s Safety Team has adopted a new business partnering model that incorporates ownership of capacity building The department actively supports the physical and programs and auditing. psychological wellbeing of our people and promotes a healthy workplace by maintaining safe systems of work. To enable the cultural change required to deliver genuine improvements in safety performance, the Safety Advisors The safety and wellbeing of our people is fundamental to the have made more than 100 site and fi eld visits across the state successful delivery of our work programs – and a critical factor during the fi rst half of 2012. The visits take the form of an in supporting our lead-agency role in public land and audit program, enabling the Safety Advisors to coach all DSE fi re management. employees on how to meet their obligations and to integrate The department’s new Safety and Wellbeing Policy was safety into daily tasks and strategic projects. This includes the launched in December 2011, by then WorkSafe Chief Executive rollout of a new site inspection schedule, Hazardous Substance Offi cer Greg Tweedly, who joined with Secretary Greg Wilson and Dangerous Goods audits and embedding the Job Safety and members of the Executive Management Team. The policy Planning process. was developed through an extensive consultation process involving employees, health and safety representatives and Key programs and achievements OHS Consultative Committees. Additionally, our safety culture DSE’s key programs and achievements for 2011–12 include was benchmarked against industries with similar high risk the following: profi les and this research was used as a base to develop • In April 2012, DSE hosted a Safety Forum for its Networked new commitments and accountabilities for all employees, Emergency Organisation (NEO) partners to discuss and swap including executives. safety knowledge. The department aims to demonstrate, through leadership, • New Safe Operating Instructions for the use of plant and the commitment and importance placed on the physical and equipment were launched in May 2012. psychological wellbeing of employees, contractors, visitors and those affected by the work we do. • Around 100 people attended the annual Health Safety Representative (HSR) forum and DSE launched its new HSR The new policy urges all staff to Think Safety and Work Safely role statements in June 2012. to ensure everyone returns home safely and in a good state of mind at the end of each work day. Our commitment to safety • New training programs, Leading Safety in DSE and Job and wellbeing is based on four key pillars: Lead, Understand, Safety Planning were developed in 2011–12 and rolled out Act and Improve. for managers and supervisors during July 2012. Leading Safety in DSE is a WorkSafe endorsed program designed The aim is to build a culture that provides a working to build awareness in managers and team leaders of their environment, resources and support to make safety and obligations under the OHS legislation. The program is wellbeing everyone’s responsibility and it empowers people to mandatory for all DSE employees who have management or be proactive in eliminating and minimising risks and hazards supervisory responsibilities of one or more employees. Job to achieve the highest level of safety possible. The department Safety Planning is the process and tools used to plan jobs continues to encourage a reporting ethos and insistence on so that they can be completed safely. The training program compliance. is mandatory for all DSE employees and provides employees Our safety management system underpins the policy and with the tools to undertake their work safely. includes: • DSE continued to deliver Appropriate Workplace Behaviour • Safety and Wellbeing Strategy awareness sessions across the state. A total of 91 sessions were run in 50 different locations involving about 3000 staff, • Role Statements – for employees, managers, supervisors, including seasonal project fi refi ghters, contract and executives and health and safety representatives temporary staff. • Mandatory online Safety and Wellbeing induction for all • DSE’s rolling 12-month average for the number of standard new starters WorkCover claims is at a fi ve-year low with a 30 per cent drop • Safety and Wellbeing Action Plans developed by location in standard claims compared to last year. The number

28 Department of Sustainability and Environment Annual Report 2012 of stress claims is down 50 per cent on 2010–11 and the Through Winter website, jointly funded by DPI and DSE number of manual handling claims is also 30 per cent down and open to multi-agencies. from 2010–11. • More than 300 WorkHealth checks were conducted as part • DSE continued to provide onsite staff counselling program of the WorkHealth WorkSafe program. through the Employee Assistance Program provider. This • Dangerous goods and hazardous substances audits at program schedules counsellors on a regular basis to visit all DSE workplaces were completed and corrective onsite at DSE ofﬁ ces and depots. actions started. • More than 135 teams participated in the inaugural • DSE evaluated its safety and wellbeing management system, DSE/DPI Walk Through Winter initiative. Teams clipped on POSSUM and began implementing recommendations from pedometers and walked, rode and swam their way through the review. the winter months. Progress was recorded on the Walk

Safety and wellbeing performance measures 2011–12

Description Performance indicator 2008–09 2009–10 2010–11 2011–12

Incidents and hazards(1)

Incidents 1636(2) 609 666 662

Lost time incidents - - 108 83

Hazards - - 153 155

Incident rate per 100 FTE 20.01 20.81(3)

WorkCover(4)

Claims Number of standard claims 86 65 58 43

Rate per 100 FTE 2.71 2.05 1.89 1.5

Standard claims with lost time 60 43 39 11

Rate per 100 FTE 1.89 1.35 1.27 0.39

Fatalities Number of fatalities 0 0 0 0

Claim costs Average cost per claim ($) 53,852 37,919 34,829 37,528

Return to work Percentage of RTW 81.7 72.1 73.7 63.6 (RTW) arrangements initiated for claims exceeding 20 days per 100 FTE

Management Evidence of safety and wellbeing policy, strategy, regular reporting to senior Achieved commitment management, safety criteria in purchasing guidelines.

Consultation and Designated work group structure, health and safety representatives (HSR) and issue Achieved participation resolution procedure in place.

Risk • Internal audits/inspections conducted as planned. Achieved management • Reporting of incidents and injuries. • Investigation of incidents and corrective actions initiated.

Training • Safety and Wellbeing Induction Achieved • Job Safety Planning • HSR training • Management training

Notes: 1. Data sourced from DSE Safety Incident Management System and DSE Fireweb, 2010–11 and 2011–12 data sourced from POSSUM. 2. The signifi cant increase was a result of the 2008–09 bushfi res. 3. The incident and hazard rates based on 2011–12 FTE count represent March 2012 fi gures of 3181 FTE. The FTE’s for March refl ect a true fi gure given this captures the majority of Project Firefi ghters. 4. Data sourced from the Victorian WorkCover Authority. 2011–12 rate based on FTE count of 2802 at 30 June 2012. This excludes external contractors/ consultants and temporary staff employed by employment agencies.

Department of Sustainability and Environment Annual Report 2012 29 Workforce proﬁ le At 30 June 2012, DSE employed 2617 full-time equivalent (FTE) staff across Victoria.

Comparative workforce data

Table 1 Full-time equivalent (FTE) stafﬁ ng trends 2008 to 2012

2012 2011 2010 2009 2008

2617 2836 2780 2900 2537

Table 2 Summary of employment levels in June 2011 and 2012

Ongoing employees Fixed term Total staff and casual

Employees Full time Part time FTE FTE FTE (headcount) (headcount) (headcount)

June 2012 2574 2197 377 2435 182 2617

June 2011 2615 2260 355 2481 355 2836

30 Department of Sustainability and Environment Annual Report 2012 Table 3 Details of employment levels in June 2011 and 2012

2012 2011

Ongoing Fixed term Ongoing Fixed term and casual and casual

Employees Employees FTE FTE FTE FTE (headcount) (headcount)

Gender

Male 1502 1479 92 1543 1518 173

Female 1072 956 90 1072 963 182

Age

Under 25 78 64 14 99 84 36

25–34 540 519 72 569 546 154

35–44 692 637 52 685 635 96

45–54 723 695 22 749 722 38

55–64 492 477 20 471 456 27

Over 64 49 43 2 42 38 4

Classiﬁ cation

Field staff 302 301 20 315 315 27

VPS 1 4 2 3 4 2 3

VPS 2 217 190 24 234 208 52

VPS 3 564 539 36 546 524 89

VPS 4 529 500 38 524 499 87

VPS 5 478 448 32 507 476 43

VPS 6 322 313 15 330 320 27

STS 13 13 1 11 11 1

Science adaptives 59 58 5 53 52 13

Legal adaptives 21 20 4 23 22 4

Executives 40 40 0 41 41 0

Other 25 11 4 27 11 8

Notes: 1. Ongoing employees includes people engaged on an open-ended contract of employment and executives engaged on a standard executive contract who were active in the last full pay period of June. 2. FTE means full-time staff equivalent and is rounded to the nearest whole number. 3. Employees reported with a classifi cation of ‘other’ include the following categories: ministerial chauffeur, principal scientists, cadets and trainees. 4. All fi gures refl ect employment levels during the last full pay period in June each year. 5. Excluded are those on leave without pay or absent on secondment, external contractors/consultants, and temporary staff employed by employment agencies, and people who are not employees but appointees to a statutory offi ce, as defi ned in the Public Administration Act 2004. 6. Employees attached to the Commissioner for Environmental Sustainability are employees of the Department Secretary and are included in the above fi gures. 7. Employees attached to Sustainability Victoria are employees of the Department Secretary and their numbers are included in Appendix 3. Employee numbers are also reported in the Sustainability Victoria Annual Report. 8. The Environment Protection Authority (EPA) is a discrete agency within this portfolio that employs public servants independently of the Department Secretary. The EPA is required to produce its own annual report. Employee numbers for the EPA are published in their annual report.

Department of Sustainability and Environment Annual Report 2012 31 Establishing the Offi ce of the Workplace Appropriate workplace behaviour Conciliator DSE provides a positive, inclusive and supportive work environment which is free from unlawful discrimination, sexual The fi rst Workplace Conciliator in the Victorian Public Sector harassment, victimisation, vilifi cation, bullying and occupational took up his appointment in the department in December 2011. violence. In 2011–12 DSE continued to deliver appropriate Workplace Conciliator Fred Wright provides staff with an workplace behaviour awareness sessions across the state. independent, confi dential, neutral and informal space to discuss A total of 91 sessions were run in 50 different locations involving workplace matters. approximately 3000 staff including seasonal project fi refi ghters, contract and temporary staff. This innovative role was established as part of DSE’s commitment to a workplace that is safe, positive, fair and The two-hour interactive sessions raised awareness of respectful for all staff. appropriate behaviours in the workplace, reinforced the department’s values and behaviours and provided an overview The role, modelled broadly on the Organisational Ombudsman of DSE policies and legislation and the support available within concept, which is well established in the United States, offers the department. The information is being developed into an employees an independent or neutral avenue to discuss online training program for release in late 2012. workplace issues or concerns. After six months in operation, the offi ce is gaining widespread Employment and conduct principles acceptance throughout the department, with employees and managers from all areas seeking advice or assistance on a DSE applies the Public Sector Values and Employment broad range of matters. Principles as set out in the Public Adminstration Act 2004, including the application of merit and equity principles when The role complements existing safety and wellbeing programs, appointing staff. The selection processes ensure that applicants unions and other avenues of assistance. are assessed and evaluated fairly and equitably on the basis As a member of the International Ombudsman Association (IOA) of the key selection criteria and other accountabilities without the DSE Workplace Conciliator complies with the IOA’s Code of discrimination. Ethics and Standards of Practice in performing all aspects of the role. The role functions independently of formal reporting lines Leadership and management within DSE. development Workplace relations In line with the Learning and Development Strategy, management and leadership capability continues to be a high Negotiations for the new Victorian Public Service Agreement priority at all levels in DSE. 2011 continued during 2011–12. As parties could not reach an agreed outcome, Fair Work Australia was called in to arbitrate Leadership and management development activity in 2011–12 an outcome. included: During 2011–12, some Community and Public Sector Union • Continuing the Senior Leadership Program and Regional members undertook protected industrial action in support Leadership Program for 40 VPS Grade 5 and 6 offi cers. of their wage claim. Minimal time was lost with no impact on • A Diploma of Management for 58 participants from Land service delivery. Victoria and Regional Services using a blended learning Negotiations also began for a new Field Staff Agreement. approach. Three programs were completed during 2011–12 This agreement covers DSE staff primarily involved in fi re with two further programs starting in late June 2012 with an suppression, prescribed burning and forestry work. additional 41 participants enrolled. DSE processes portfolio statutory authorities’ enterprise • In February 2012, Engaging People to Deliver Results began. agreements through to government approval, and provides The program, to be rolled out over two years, aims to develop industrial advice and assistance as required. In 2011–12, six the skills of managers in coaching, leadership and developing management logs were processed through to government their people, while also building the capability and confi dence approval, as were 15 fi nal agreements. of managers to have diffi cult conversations. • Continuing the Managing in DSE program, a mandatory Grievances program for all new managers or managers new to DSE. This program provides participants with information about In 2011–12, DSE received 25 new grievances. Five existing the policies and procedures that managers must be aware grievances carried over from the previous fi nancial year were of and apply. also resolved. The table below shows grievances by outcome: • In June 2012 work began on establishing a series of programs to assist managers to support their people Outcome Number during change. The programs will continue during the Withdrawn 4 next fi nancial year.

Not substantiated 8

Rejected 3

Resolved 5

Substantiated 4

Open 1

Total 25

32 Department of Sustainability and Environment Annual Report 2012 North West Indigenous Trainee Program Since then, Port Phillip Region has embarked on several new projects with Wurundjeri including the Bark Canoe project, In June 2012, 16 trainees from the North West Indigenous which involves building a traditional bark canoe. The Wurundjeri Trainee Program graduated after an intensive Tribe Land and Compensation Cultural Heritage Council has 18-month program. also taken over the Indigenous Cultural Awareness Program The trainees completed a Certifi cate III in Conservation and training for DSE. Land Management while working with partner agencies to put As part of the Port Phillip Aboriginal Cultural Heritage Plan, DSE their skills into practice. Some of these skills included fence works with fi ve different indigenous groups across Port Phillip to construction, tree propagation, tree planting and direct seeding, help protect and manage sites of cultural heritage. pest plant and animal control, welding, driving and traffi c management. NAIDOC week celebrations The trainees also completed their General Firefi ghter The annual NAIDOC celebrations provide a unique opportunity qualifi cation, which enables them to participate in fuel reduction for DSE staff and partner agencies to connect with local burns and bushfi re control, and gained practical experience indigenous communities and join with them to celebrate their working on a fi re ground with fi refi ghters. history and culture. It also provides an occasion for local Aboriginal artists and performers to showcase their talents. The program gives indigenous people the opportunity to improve their long-term employment prospects by gaining Events were staged across metropolitan and regional Victoria. qualifi cations and practical experience with organisations such A fl ag-raising ceremony and acknowledgment of country was as DSE, other government agencies and the private sector. observed at each location and elders or traditional owners were invited to provide the traditional Welcome to Country greeting. Graduation ceremonies were held in Mildura and Swan Hill to recognise the trainees’ hard work and celebrate their achievements. DSE is working with the trainees to help them fi nd employment beyond the traineeship.

Diversity and inclusion

Indigenous partnerships in Port Phillip Victorian indigenous communities, as the traditional owners of the state’s land and waters, have a fundamental role in managing Victoria’s natural resources. The Indigenous Partnership Framework sets the department’s overarching policy for facilitating the full, effective and equitable participation of traditional owners and Aboriginal people in all aspects of land and natural resource management. The framework is built around the guiding principles of respect Aunty Dot shows a DSE staff member how to weave and recognition, caring for country, partnerships and capacity building. Reward and recognition In July 2011 a small group of Port Phillip Region staff and Wurundjeri elders planted a tree where the Merri Creek DSE understands the importance of motivating employees to meets the Yarra River. The One Small Step event was about reach their full potential, through recognising and acknowledging recognising and respecting the long history of traditional land achievements and encouraging staff to continue to work in owners in land management. It also focused on the future and accordance with the organisation’s values and behaviours. This provided an opportunity for DSE staff and the Wurundjeri Tribe can lead to better work practices, enhanced staff satisfaction Land and Compensation Cultural Heritage Council to and improved outcomes for those receiving DSE services. initiate relationships. In 2011–12, DSE introduced a new program to recognise outstanding achievers at the local or divisional level. The new program replaces both the previous Departmental and Local Reward and Recognition programs with a tailored program designed to meet the speciﬁ c needs of each work area.

Australian Fire Service Medal 2012 Australia Day Honours Les Vearing, State Wildfi re Investigation and Training Coordinator with Land and Fire, received the Australian Fire Service Medal for his outstanding contribution to emergency services over 25 years. Les was recognised for developing the capability of staff from DSE and partner agencies in fi re suppression and planned burning, and in developing a number of operational initiatives that have improved fi refi ghter safety and effi ciency.

A Wurundjeri person starts up a traditional smoking ceremony to start the One Small Step event

Department of Sustainability and Environment Annual Report 2012 33 Rob Jarvis, State Aircraft Unit Land and Fire, received the Australian Property Institute Award Australian Fire Service Medal for his outstanding contribution to Valuer-General Robert Marsh received the Australian Property ﬁ re preparedness, response and aviation management over 33 Institute’s Whittington Memorial Award. The award recognises years. In recent years, Rob has played an instrumental role in professional excellence and contribution to the property supporting the Victorian State Emergency Service respond to profession. The award was presented at the Excellence in major ﬂ oods and the Department of Primary Industries respond Property Awards held in Melbourne on 28 October 2011. to the major locust plague in 2010.

2012 Queen’s Birthday Honours Alan Goodwin, Regional Director North West, received the Australian Fire Service Medal for his outstanding contribution to improving the effi ciency, effectiveness and safety of fi re management in Victoria. Alan has achieved signifi cant changes in relation to managing fi refi ghter fatigue, leadership of the planned burning program and development of innovative techniques for the planned burning of Mallee fuels to help maintain species diversity while also reducing fuel levels and fi re risk.

Member (AM) in the General Division of the Order of Australia Former long serving DSE employee, Barry ‘Rocky’ Marsden, Valuer-General Robert Marsh (left) receives the award from API President Steve Simpson was made a Member (AM) in the General Division of the Order of Australia in the 2012 Queen’s Birthday Honours list in recognition of his public service in the fi re and emergency services sector and the development of innovative fi refi ghting equipment and technologies. Rocky, who retired from DSE in Leading the Way in Health, Safety 2010, also holds an Australian Fire Service Medal for his and Wellbeing Award many years in working in fi re and emergency services. The Appropriate Behaviours Team – Glynnise Matthews, Bravery Council Honours List Adam Saunders, Colin Henry, Jenni Fenech and Mick Group Bravery Citation Eagles – were joint winners of the Institute of Public Administration Australia (IPAA) Leading the Way in Ten members of DSE’s Toolangi crew received a Group Bravery Health, Safety and Wellbeing Award. Citation in recognition of their actions on Black Saturday. The crew members – Andrew Collard, Michael Lauder, Jarrod The award recognises government departments and Logue, Brian Earl, Brian Lawry, Ray Mackey, Bradley Sexton, agencies that have achieved signifi cant whole-of- Graham Watt, Jarrod Smith and Tim Winter – rescued 19 organisation improvements in safety, return-to-work campers, including nine children, who were trapped in the and/or injury management. Murrindindi Scenic Reserve, which was surrounded by two The award was presented to the team from People and fi re fronts. Culture, Corporate and Business Services Division, in Bravery Medals February 2012. Bravery Medals were awarded to Ben Giovanetti, Roading Coordinator North East Region, and Greg Williamson, Works Coordinator Marysville, for their actions on Black Saturday. Ben and Greg went to the aid of two colleagues stranded at the DSE Marysville offi ce during the fi res.

National Emergency Medal Four DSE staff members received the National Emergency Medal in recognition of their sustained service during a nationally-signiﬁ cant emergency, the 2009 Victorian bushﬁ res. Lauren Hughes, Assistant Fire Manager Gippsland Region, Tony Lovick, Statewide Coordinator Planned Burning, John Steer, District Manager Murrindindi and Leith McKenzie, North East Region District Planning Manager were presented with their medals at ceremonies in Canberra and Flowerdale in February 2012.

34 Department of Sustainability and Environment Annual Report 2012 Financial performance

Five-year ﬁ nancial summary 2012 2011* 2010* 2009* 2008(1) $’000 $’000 $’000 $’000 $’000

Income from government(2) 1,083,674 998,223 1,084,119 1,434,048 1,075,079

Total income from transactions 1,375,567 1,240,658 1,395,494 1,650,477 1,286,549

Total expenses from transactions 1,316,024 1,250,108 1,339,348 1,563,368 1,279,955

Net result from transactions(3) 59,543 (9,450) 56,146 87,109 6,594

Net result for the period 18,808 23,666 (107,846) 72,416 (148,342)

Net cash ﬂ ow from operating activities 127,780 19,369 139,028 98,123 95,758

Total assets 7,622,187 7,810,525 8,686,920 9,108,818 8,932,816

Total liabilities 283,242 367,412 366,273 454,178 425,039

Notes: 1. Figures for 2008 have been recast based on the comprehensive operating statement format and separation of transactions from other economic ﬂ ows. 2. Income from government includes both output and special appropriations. 3. The ‘net result from transactions’ is identical to the ‘net operating balance’ for the general government sector. * Amended for impact of prior period errors and a change in accounting policy.

Current year fi nancial review Other items of revenue also increased this fi nancial year due to funding for new initiatives such as Flood Recovery and Financial performance and business review the Sustainability Accord. In addition, there were increases in In 2011–12, the department recorded a net result from revenue from the Metropolitan Parks Improvement Rate and transactions1 of $59.5 million, which was $69 million higher the BushBroker program. These increases were partially offset than in 2010–11. This improvement is largely due to the recoup by reductions in funding for the Snowy Joint Government of loans from the Public Account. The department borrowed Enterprise and the Environmental Water Program. $42.6 million from the Public Account with the approval of the Expenditure was materially consistent with 2010–11, being Treasurer under 37 of the Financial Management Act 1994. 5 per cent higher. The most signifi cant changes was an increase These advances were repaid by drawing appropriation for which in payments to settle legal disputes (the principal dispute had there is no corresponding expense, as the latter was incurred been with the City of Casey in relation to landfi ll). in 2010–11. This gives rise to accounting defi cits/surpluses as advances are drawn and repaid respectively, representing The net result after other economic fl ows for the period was temporary differences between budget and accounting results. a surplus of $18.8 million compared to the net result of $23.7 million in 2010–11. The increase in income from transactions was primarily due to higher appropriation in 2011–12 for the repayment of the advances referred to above. The department also received increased appropriation funding for a number of initiatives including, Stage 2 of the Northern Victoria Irrigation Renewal Project, planned burning and park rangers. These increases were slightly offset by decreased funding for the Natural Resources Investment Program.

1. DSE considers the net result from transactions to be the appropriate measure of ﬁ nancial management that can be directly attributed to the implementation of government policy. This measure excludes the effects of revaluations (holding gains or losses) arising from changes in market prices and other changes in the volume of assets and liabilities shown under ‘other economic ﬂ ows’ on the Comprehensive Operating Statement, which are outside the control of the department, and more particularly, have no operational funding impacts or implications.

Department of Sustainability and Environment Annual Report 2012 35 Financial position – balance sheet Consequently the department’s net assets reduced by 1.4 per Total assets decreased by $188.3 million from $7,810.5 million cent from last year to $7,338.9 million. in 2010–11 (down 2.4 per cent) primarily due to the transfer Cash fl ows of Crown land to other Victorian government entities and third parties resulting from the whole of government Crown land The department’s net cash infl ow from operating activities reconciliation. This decrease was partially offset by the normal increased by $108.4 million to $127.8 million. This additional growth in the total asset base consistent with asset funding cash refl ects the department’s net result from transactions for appropriated to the department. the year, the impact of non-cash items such as depreciation and movements in fi nancial assets and liabilities. Total liabilities reduced by $84.2 million due to the $72.8 million management of trade creditors since the introduction of the Centralised Invoice Management System. repayment of advances from the public account and better

Controlled expenses from transactions by output Payments for outputs (controlled) $’000 %

Biodiversity 77,420 5.9

Environmental Policy and Climate Change 54,272 4.1

Forests and Parks 231,760 17.6

Land Administration and Property Information 120,813 9.2

Land and Fire Management 314,971 23.9

Natural Resources 106,049 8.1

Public Land 138,279 10.5

Sustainable Water Management and Supply 272,460 20.7

1,316,024 100

36 Department of Sustainability and Environment Annual Report 2012 Financial governance The process for VDPs was announced by the department on DSE diligently exercises its various fi nancial management 3 September 2012. No adjustments have been made to the obligations. The Minister for Finance has implemented various 2011–12 fi nancial statements as the criteria for recognising fi nancial governance frameworks to ensure effective, effi cient expenditure and a termination benefi ts liability relating to the and responsible fi nancial management of public resources, voluntary departure packages had not been met based on the including the Financial Management Compliance Framework requirements of AASB 119 Employee Benefi ts. (FMCF). The FMCF governs compliance with the provisions The department is not able to make a reliable estimate of the of the Financial Management Act 1994, Taxation Compliance fi nancial effect of the VDPs, as the number and classifi cation Rules, Purchasing Card Rules for Use and Administration and of staff that will take up VDPs is not yet known. The department Thefts and Losses Rules. anticipates that the VDP process will be completed before The FMCF provides assurance that all public entities: 31 December 2013. • have implemented appropriate systems for the effective, Victorian Public Service Workplace effi cient and responsible fi nancial management of public Determination 2012 resources and provides a mechanism for government to The Victorian Public Service Workplace Determination 2012 monitor and review compliance with legislation was made by Fair Work Australia on 23 July 2012, which • are complying with legislation in relation to the major federal replaces the 2009 Extended and Varied Version of the Victorian taxes including GST, FBT and PAYG Public Service Agreement 2006. The Workplace Determination takes effect from 29 July 2012 and will remain in force until • have implemented effi cient and effective use of purchasing 31 December 2015. The Workplace Determination provides for cards wage increases of 3.25 per cent and 1.25 per cent on 1 July • report all instances of thefts and losses to the Minister for 2012 and 1 January 2013 respectively over 2012–13, with six Finance on an annual basis. monthly wage increases thereafter. A lump sum payment of $1500 (or equivalent prorata amount for part time employees) DSE’s compliance with the Direction Requirements of the will also be payable to eligible Victorian Public Service FMCF is formally assessed at 30 June each year and the tax employees who received a salary on 1 July 2012 and were compliance component is subject to an independent review. employed on 29 July 2012. DSE also maintains a number of fi nancial policies, procedures As the Workplace Determination takes effect from 29 July 2012, and guidelines to ensure consistency in fi nancial transactions no adjustments have been made to these fi nancial statements and fi nancial reporting. These are reviewed and updated on an other than for the impact on the estimated accrued employee annual basis to ensure ongoing relevance and conformance to benefi ts as at 30 June 2012. external reporting requirements. Financial transactions are subject to regular compliance Online fi nancial delegation training reviews by a compliance team within Finance and Resources. Compliance reviews include Financial Data Quality Assurance In order to exercise a fi nancial delegation, employees must Reviews and Purchasing Card transaction reviews. Exceptions be appointed to a role which requires them to have a fi nancial identifi ed during the compliance reviews are reported to the delegation. They must also be trained in their responsibilities Chief Finance Offi cer (CFO). as a delegated offi cer. DSE has around 660 fi nancial delegates with differing delegation limits based upon their responsibilities Governance of Financial Management training is provided online and the types of positions held. Delegation limits are regularly to all staff applying for the right to exercise fi nancial delegations reviewed. In addition to initial fi nancial delegation training, within the department. All fi nancial delegates are required to refresher training is required to be undertaken every three years. repeat the training every three years. The delegation training incorporates the rules surrounding There is active participation in fi nancial management amongst purchasing, accounts payable, corporate card use, tax leadership teams throughout DSE and fi nancial compliance compliance, ethics, risk management and fraud prevention. It continues to be included in revised work practices. Regular also outlines the compliance checks which are undertaken and communication of the requirements will continue through the implications of non-compliance. As appropriate, reference fi nancial forums and daily work practices. is made to relevant policies and procedures. Delegation training results in an improved level of fi nancial compliance across DSE. Budget portfolio outcome statements During the year, DSE introduced online fi nancial delegation A comparison of the budget portfolio outcome statements training to replace the former classroom style training. This has for the department, as published in the 2011–12 Budget signifi cantly streamlined the training process, with training now Paper No.5, and the actual results for the year can be available upon demand and employees no longer have to travel found at Appendix 4. extensive distances for training. Employees can also work Subsequent events through the course material at their own pace. Voluntary Departure Packages As part of the online training there are a series of test questions which need to be answered by candidates. This is designed to The Victorian Government announced its intention to reduce ensure that candidates have a thorough understanding of their the number of public servants in non-service delivery and responsibilities before receiving their delegation accreditation. back-offi ce roles, with key frontline service delivery areas being exempted. The reductions will be achieved through The introduction of online training was also used as an a combination of natural attrition, a freeze on recruitment, opportunity to enhance the quality of the training material. the lapsing of fi xed term contracts and the offering of Employees have embraced the new way of learning, with Voluntary Departure Packages (VDPs) to encourage positive feedback received. In the six months since its launch, voluntary redundancies. around 260 staff have completed the online training.

Department of Sustainability and Environment Annual Report 2012 37 Output performance

CaptionLatrobe – Lorem River ipsum Bridge elestorestia in Central comnis Gippsland veligni wasmentur. one Ugiaspi of more ssincia than 300 ndaest bridges or assinciiscrossings alis quam upgraded re nem utor estiosareplaced mendellacid.

This section reports on the delivery of The tables report on actual performance against State Budget output targets. Notes explain variations between the 2011–12 the department’s outputs, including details targets and actuals. of key projects and initiatives for the year and performance results against the Changes to output structure output measures set out in the 2011–12 In 2011–12, DSE reviewed its output performance measures Budget Estimates, Budget Paper No. 3 set out in the Budget Paper No.3 Service Delivery. This review was in response to the fi ndings of the Public Accounts and Service Delivery. Estimates Committee’s 102nd Report to Parliament and work undertaken by the Department of Treasury and Finance. The Output performance in 2011–12 department has reviewed its output performance measures and made some better practice improvements to the measures The department’s outputs for 2011–12 contribute to: which are refl ected in the 2012–13 Budget Papers and accepted by the Public Accounts and Estimates Committee in • Effective management of water resources to meet future its 111th Report to Parliament. urban, rural and environmental needs. DSE is undertaking further work on its output performance • Effective environmental and climate change policy, investment measures in 2012–13 to address measures that were not and regulation. reviewed in 2011–12. • The community benefi ts from effective management of Victoria’s public and private land assets. • Reduced impact of major bushfi res and other extreme events on people, infrastructure and the environment.

38 Department of Sustainability and Environment Annual Report 2012 Effective management of water resources to meet future urban, rural and environmental needs

Securing water supplies is a fundamental After the fl oods DSE continued to update and streamline response systems and processes, which were effectively put task of government. into practice when fl oods impacted Gippsland in June 2012. Infrastructure was badly damaged or destroyed in many DSE, in partnership with water corporations communities. When the fl ood effort moved from the emergency and catchment management authorities, phase into recovery, DSE and Parks Victoria began assessing the damage to assets on public land such as swimming pools, is responsible for managing Victoria’s sporting facilities, walking trails, caravan parks and water resources and works closely with parking areas. the community to balance the ecomonic, This year’s signifi cant fl oods came on the back of the fl oods between September 2010 and March 2011, which caused environmental and social values of water widespread damage and loss in more than 104 Victorian towns and help deliver secure water supplies and and communities. healthy waterways and aquifers. Flood Recovery Community Infrastructure Fund DSE is administering $22 million of the $30 million Flood Our priorities for progressing the Victorian Recovery Community Infrastructure Fund to help communities Government’s vision for water include: rebuild after the devastating fl oods that occurred in 2010–11. The fund – run jointly with Regional Development Victoria – is • developing smart, secure urban water helping fl ood-affected areas across the state to repair and rebuild community infrastructure ranging from tennis courts and systems for a liveable and productive swimming pools to public halls and caravan parks. Victoria Around 190 fl ood recovery projects were funded in 2011–12 in the south-west and north-west areas of the state. • delivering Stage 2 of Australia’s largest irrigation infrastructure renewal project in Flood warning and response systems The Review of the 2010–11 Flood Warnings and Response, led northern Victoria by Neil Comrie AO APM, released its Final Report in December 2011. The report made 93 recommendations that will guide • supporting a balanced transition strategy comprehensive reform of Victoria’s emergency management for the Murray-Darling Basin Plan. arrangements. The Minister for Water is leading the development of an implementation plan for recommendations on fl ood warnings and predictions. Responding to rain and fl oods Some of this work was already underway. After the 2010–11 As fl oods swept through Victoria in March and June 2012, fl oods, DSE began developing a Flood Intelligence Platform impacting communities and agricultural activity in 33 local (popularly known as Floodzoom), a web-based tool that will be government areas, DSE joined the State Emergency Service used to predict fl oods and their impacts on communities. The and the Department of Primary Industries (DPI) to provide $12.1 million tool will use weather forecast models, satellite emergency response and relief services. observations, river gauges and hydrological modelling to DSE deployed aircraft and provided incident management staff improve warnings and emergency response. and fl ood mapping and prediction specialists around the clock to work in planning, operations and logistics in the Incident Control Centres and the State Control Centre.

Floods hit Numarkah hospital near Shepparton. Weir Street levee under construction in Nathalia Photo courtesy Country Fire Authority

Department of Sustainability and Environment Annual Report 2012 39 Emergency services will be able to use Floodzoom to more working with local government and water authorities to extend accurately predict fl ood behaviour and the community will be Melbourne Water’s stormwater licensing arrangements, able to view Floodzoom maps to see likely fl ood movements facilitating investment in wastewater reuse guided by the and assess their own fl ood risk. release of sewer mining guidelines, and improving regulatory arrangements to boost the use of alternative water sources. The 2010–11 fl oods highlighted a need for short-term, real time water level information to be accessible from locations without In undertaking this work, DSE will work closely with the OLV and permanent fl ood gauging stations. other key stakeholders such as other government departments, local government and water utilities. Real time data collection and delivery systems known as Portable Automated Logger Systems – or PALS – have since Irrigators have more input into modernisation been developed by Thiess, under contract with DSE and the Australia’s largest irrigation renewal project – the Food Bowl Northern Regional Water Monitoring Partnership. Modernisation project in northern Victoria – has made important In the March fl oods, ten PALS were deployed to relay water progress in 2011–12. levels in Broken Creek to the Incident Control Centre in DSE worked with the project’s delivery partners to introduce Shepparton. These will be available for future fl oods through changes to the connections program to get the irrigation DSE’s Regional Water Monitoring Partnerships. In addition to community more involved. PALS, improvements at some 30 permanent fl ood gauging sites commenced. These improvements will increase access to real Landholders in each connections project will now be involved time river height information for fl ood monitoring by agencies from the start, have access to the same information and have and communities. more say in works on their property. A steering committee elected by landholders will oversee each project. In the 2011–12 Victorian Budget the Government provided $2.4 million to DSE to conduct 25 fl ood studies. These studies There will also be a new independent review panel to deliver will be conducted over four years with 11 currently underway. a fairer result for landholders involved with modernisation.

New vision for Melbourne’s water future The $2 billion project aims to increase irrigation productivity in Victoria’s northern food bowl and return to the environment Living Melbourne, Living Victoria is the State Government’s water lost through system ineffi ciencies. new approach to managing Victoria’s urban water systems to achieve a more liveable, sustainable and productive Melbourne Greater effi ciency is being achieved through channel lining and Victoria. and pipeline construction, automation of channels across the Goulburn-Murray Irrigation District (GMID), metering upgrades This new approach includes increasing the use of alternative and changing the historical layout of the irrigation channels. water sources and improving the integration of water and urban planning to contribute to better environmental, economic and The two-stage irrigation modernisation project aims to recover social outcomes in urban areas. long-term average annual water savings of up to 425 gigalitres (GL) and to increase irrigation water delivery effi ciency from The government appointed the Living Victoria Ministerial around 70 per cent to at least 85 per cent. Advisory Council (the MAC) to provide independent advice on the key changes needed to improve Victoria’s urban Victorian Agriculture, Water and Food Security Minister water system. Peter Walsh and Commonwealth Water and Environment Minister Tony Burke signed a new contract for Stage 2 of the After the MAC outlined its initial advice in the Living Melbourne, project in October 2011. The Commonwealth approved a total Living Victoria Roadmap, released in March 2011, the project budget of $953 million for Stage 2, after a detailed due government requested more detailed recommendations. diligence assessment. In late 2011, the MAC provided its fi nal recommendations for The agreement signed was part of a larger package of consideration by government in the Living Melbourne, Living $1.216 billion that included Stage 2, the sale of Victoria’s Victoria Implementation Plan. half of water recovered from Stage 2, and on-farm works. DSE provided secretariat support to the MAC, which involved The GMID spans 68,000 square kilometres and is home to developing briefi ngs on various urban water policy issues, around 160,000 people. More than 14,000 GMID landholders running stakeholder workshops and helping to prepare the contribute $1.5 billion to the economy each year producing Roadmap and Implementation Plan. dairy foods, fruit and vegetables, wine, nuts and olives. The government responded to the Implementation Plan in Irrigation and dry land farming and linked industries like food April 2012, supporting the MAC’s vision to create ‘a smart processing, packaging, transport and specialist engineering and resilient water system for a liveable, sustainable and productive trades provide jobs for many of the region’s 84,000 workforce. Melbourne’, and committing to several immediate actions, including the establishment of the Offi ce of Living Victoria (OLV) Over the life of the system modernisation, the project will deliver to drive reform by coordinating urban and water planning. The around 280 GL to the environment, either directly or indirectly. OLV was subsequently established as an Administrative Offi ce within DSE on 22 May 2012, and staff from DSE were seconded In July 2012, the project was integrated into Goulburn-Murray to the OLV for a short term, pending the fi nalisation of longer- Water (G-MW) to generate greater value for the state and G-MW term arrangements. customers. The project is due to be completed in 2018. DSE has an important role in delivering the government’s Living Victoria program, including changing the Water Industry Regulatory Order, developing investment guidelines and decision-making tools that better refl ect the value the community places on urban amenity and the environment,

40 Department of Sustainability and Environment Annual Report 2012 Managing the algal outbreak in the Gippsland Lakes Routine monitoring of water quality in the Gippsland Lakes in December 2011 became a major incident response after high levels of blue green algae (Cyanobacteria) were detected. As the seriousness of the threat was revealed, DSE’s response became a fi ve-month operation to manage a health threat to humans and animals – and a challenge for the fi shing and tourism industries. DSE monitoring detected high levels of the algae across large areas of the Gippsland Lakes. The main algal species (Nodularia spumigena) eventually spread throughout the eastern end of the lakes system. Monitoring water quality in the Gippsland Lakes The bloom had potential for widespread environmental, social and economic impacts. Direct contact with algal-affected water Gippsland Lakes Ministerial Advisory Council can cause skin irritations, vomiting, diarrhoea and hay fever-like A Ministerial Advisory Council was established in early 2012 symptoms in humans and animals. In addition, toxins from the to address longer-term issues related to the Gippsland Lakes, blue-green algae affect seafood from the lakes. including the management of algal outbreaks. An incident management team with wide expertise was set The Gippsland Lakes Ministerial Advisory Council (GLMAC) up. DSE worked with the Department of Primary Industries, will provide advice to the Minister for Environment and Climate Department of Health, Parks Victoria, East Gippsland and Change on environmental issues relating to the Gippsland Wellington shire councils, the Environment Protection Authority, Lakes; including all actions in the Gippsland Lakes catchment Monash University, tourism and fi shing bodies. that affect the environmental condition of the lakes. The DSE’s role included submitting water and seafood samples GLMAC will also provide advice to the Minister for Regional for analysis, maintaining contact with fi shing and tourism and Rural Development in relation to the $10 million Gippsland representatives, and liaising with algal scientists who provided Lakes Environment Fund, which has been set up from the technical expertise and interpreted data. Government’s Regional Growth Fund to improve the health of the lakes. The sampling program monitored levels of algae and its toxins, including sampling water at 25 sites and liaising with local A Gippsland Lakes Environment Strategy is to be developed, fi sherman to collect samples of fi sh at fi ve locations, mussels and an initial set of projects has been approved for at three locations, and prawns at fi ve locations in the lakes and implementation during 2012–13. from Bass Strait. Victorian desalination plant nearing completion Ongoing and comprehensive information dissemination was Construction of the Victorian Desalination Plant is 95 per cent critical. Through direct liaison, regional media, community complete with more than 16 million hours worked. meetings, signage, websites and fact sheets, the large range of stakeholders were kept up-to-date with advice regarding Construction and hydrotesting of the two-way 84 kilometre contact with lake water and gutting and gilling fi sh before eating water transfer pipeline is complete and the 87 kilometre power and were warned not to eat prawns, mussels or crabs caught in supply has been energised through to the plant site. the lakes. On site, the last seedling was planted on the reverse osmosis Parks Victoria and local councils erected signs warning people building’s 26,000 square metre green roof. Inside the reverse not to come into contact with affected water. osmosis building and the other 28 buildings onsite, electrical fi tout and completion works are being undertaken and the The tourism industry was represented on the incident 55,000 reverse osmosis membranes are being installed. The management team and this close contact ensured tourism intake and outlet tunnels have been fi lled and seawater is operators kept visitors and locals informed and limited the fl owing through to the seawater lift pump station. On 30 June negative impact on tourism. 2012, the fi rst reverse osmosis desalinated water was produced The fi shing industry was required to gut and gill fi sh. This strict with seawater passing through the fi rst of two stages of reverse provision allowed fi shermen to continue working throughout the osmosis membranes. bloom and helped maintain the viability of commercial fi shing Commissioning is underway in several areas across the project. in the lakes. This became even more important as the incident This process involves a comprehensive series of more than went on and it became clear the outbreak would extend for 200,000 tests and checks carried out on more than 28,500 weeks and months. pieces of equipment to ensure each component of the plant In April and May 2012, algae levels improved enough to lift is functioning correctly and meets quality requirements. the advisory initially on fi sh, and later on prawns and mussels, Commissioning will continue in 2012–13 through phases of allowing fi shing to fully resume on the lakes. performance, production and reliability testing to ensure the plant can produce the required quality and quantity of water. More than 13,000 people have visited the Community Information Centre in Wonthaggi to learn more about the desalination project. More than 2000 people have visited the plant site during more than 150 visits and the project team have delivered over 170 presentations to community groups and schools involving more than 5000 individuals.

Department of Sustainability and Environment Annual Report 2012 41 The Victorian Desalination Plant has entered the commissioning phase

Improving water supply and sewerage services in The grants program has also funded upgrades to Landsborough small country towns and Navarre Water Treatment Plant to provide local residents The Country Towns Water Supply and Sewerage Program with access to a clean drinking water supply for the fi rst time. and the Small Towns Water Quality Fund are helping to fund In July 2011, the Minister for Water announced the fourth sustainable projects aimed at improving water supply services round of the Small Towns Water Quality Fund. In this fi nal round and sewerage management for small towns across Victoria. of funding, $3.9 million was awarded to fund water quality Under the programs, funding is available for water corporations improvement works in more than 20 small towns, many still and local governments to develop wastewater management suffering the affects of poor water quality as a result of the solutions and improve water quality such as new water supply 2011 fl oods. services, septic tank upgrades and wastewater treatment and management solutions for small towns. DSE administers the programs and assesses the business case applications for funding. The innovative Lake Bolac Wastewater Treatment Plant was developed through the grants program. The plant treats wastewater to a very high standard using a combination of large septic tanks and natural biological processes from more than 70,000 plants to break down the waste in a specially constructed wetland area.

Risk Management Award

The Dam Safety Reporting Program team – Siraj Perera, Susan Ryan, Louise Sullivan, Anthony Browne and Reena Ram – received the Institute of Public Administration Australia (IPAA) Risk Management Award in February 2012. The Dam Safety Reporting Program monitors Victoria’s 19 water corporations in dam safety risk management. The collaborative program includes a web-hosted reporting system that enables water corporations to understand their risks and effectively target dam safety investment.

42 Department of Sustainability and Environment Annual Report 2012 Output results Sustainable Water Management and Supply

This output develops policies, provides oversight of, and strategic advice on, regulatory systems and institutional arrangements to drive the sustainable management and efﬁ cient use of Victoria’s water resources. Key areas include river health, sustainable irrigation, ground and surface water, water reuse and recycling, and water sector agency governance and pricing.

Unit of 2011–12 2011–12 Performance measures measure Target Actual

Quantity

Compliance with the Murray-Darling Basin Agreement to maintain a balance in the Salinity number >0 27.11 Register such that the total of salinity credits is in excess of, or equal to, the total of salinity debits

Cumulative water savings realised through water recovery projects megalitres 609,900 585,5122

Estimated net reduction in total load of nitrogen and phosphorus in urban and rural water number 17.5 18.73 systems (tonnes)

Expected water savings through water recovery projects currently being implemented megalitres 58,000 61,3814

Length of river where works have been undertaken to stabilise bank erosion km 127 65.95

Length of river where works have been undertaken, or river frontage protected, to km 1434 1196.95 improve the vegetation in the streamside zone

Length of rivers where works have been undertaken to improve instream health km 69 917.66

Other Victorian retail water entitlements authoritatively housed in the water register per cent 65 707

Rebates approved to households for improved water efﬁ ciency in the house and garden number 30,000 18,7088

Rebates approved for small business for improved water efﬁ ciency number 5000 788

Rivers and wetland systems with improved environmental ﬂ ows being delivered number 32 699

Victorian ‘water shares’ authoritatively housed in the water register per cent 100 100

Water information products delivered for greater accountability in sustainable water number 5 5 resource management

Quality

Bulk water entitlements/environmental entitlements being complied with to ensure per cent 100 100 security of supply, environmental ﬂ ows and compliance with caps

Timeliness

Statutory obligations of Water Corporations complied with, including annual reports per cent 100 100 and audits, corporate plans, and exercises under the Terrorism (Community Protection) Act 2003

Cost

Total output cost $ million 285.2 273.110

Notes: 1. The 2011–12 actual refl ects additional credits secured and no further debits utilised. 2. The 2011–12 actual is lower than the 2011–12 target due to a fi nal assessment of the 2010–11 water savings audit which revised the base and basis for the 2011–12 water savings period. 3. The 2011–12 actual is higher than the 2011–12 target due to increased on-ground works undertaken to improve water systems. 4. The 2011–12 actual is higher than the 2011–12 target due timing of works for Stage 1 of the Northern Victoria Irrigation Renewal Project. 5. The 2011–12 actual is lower than the 2011–12 target due to signifi cant fl oods impacting the completion of some works. 6. The 2011–12 actual is higher than the 2011–12 target due to a reprioritisation of works towards this program to address issues associated with fl ooding. 7. The 2011–12 actual is higher than the 2011–12 target due to increased activity to transition water entitlements to the water register. 8. The 2011–12 actual is lower than the 2011–12 target due to increased rainfall and more relaxed water restrictions. 9. The 2011–12 actual is higher than the 2011–12 target as a result of the Victorian Environmental Water Holder being able to deliver over 516,000 megalitres of environmental water and the incorporation of the Commonwealth and Living Murray environmental water holdings in northern Victoria. 10. The 2011–12 actual is lower than the 2011–12 target due to wetter climatic conditions in 2011–12 impacting on the completion of some works and programs.

Department of Sustainability and Environment Annual Report 2012 43 Effective environmental and climate change policy, investment and regulation

DSE is the Victorian Government’s lead agency for developing and implementing environmental policy. From these policies, we work to invest in projects and programs that have tangible and demonstrable environmental and community beneﬁ ts for Victoria.

Our priorities include:

• supporting local communities and Communities for Nature grants help support practical local action landholders engaged in environmental works In managing the initiative, DSE worked with Landcare groups and networks and also involved catchment management • implementing clear and consistent authorities and other agencies to develop criteria for assessing environmental approval and regulation funding proposals. After running the application and approval process, DSE processes developed a statewide training program for the facilitators and supported a statewide induction training session for the • ensuring effective governance and new staff. investment in environmental programs The initiative focused on recruiting facilitators from within local communities, ensuring facilitators had a good understanding • developing effective policy for of the local area and issues and could work closely with their environmental outcomes and resource local groups. effi ciency. In May 2012, the State Government announced an additional $1 million in funding for on-ground works by Landcare groups and networks and the start of the public comment phase of its 68 new Landcare facilitators draft plan to support Landcare in Victoria. The Landcare ‘family’ in Victoria has welcomed vital new The draft plan outlines the strategic direction the Victorian members who will provide important support to this iconic Landcare program will take to help Landcare to improve volunteer network. Victoria’s environment in the years ahead. Landcare in Victoria covers more than 1000 Landcare and other The draft plan has been developed with input from the Landcare community-based environmental groups, and has over 50,000 community. Public submissions on the draft plan opened in members including farmers, urban residents, landholders, May and closed on 30 June 2012. Submissions will inform the families and students. development of the fi nal strategic plan. These Landcare volunteers are now supported by 68 new Supporting communities to take action Landcare facilitators, recruited under the Victorian Local Landcare Facilitator Initiative. Community groups across Victoria contribute thousands of hours working to enhance their local environment. This work The facilitators are funded for up to four years to provide is being supported by the $20 million Communities for organisational support to Landcare groups and networks to Nature program. undertake various activities such as rejuvenating and repairing wildlife habitats, restoring waterways, improving farmland, The four-year program is providing funding for practical building community capacity and protecting coasts. projects to help communities take positive action to look after the environment. The facilitators will play an important role in supporting Landcare groups in on-ground delivery, building community capacity and The fi rst grant round was announced in April 2012. A DSE partnerships and assisting with advice on project development. assessment panel reviewed 312 grant applications and selected 123 projects – 64 large and 59 small projects – to share more These new facilitators will help groups and networks gain than $4.5 million in grants. additional funding to undertake their activities and become more self-supporting where possible, to make them more resilient to The grants were provided to schools, sporting clubs, community any future changes in funding. and environmental groups, ‘Friends of’ groups, committees of management and traditional owners to conduct projects that will protect and enhance their local environment.

44 Department of Sustainability and Environment Annual Report 2012 The grants support these community groups and organisations to run locally-based projects that focus on issues such as biodiversity and habitat preservation, revegetation, cleaning Whitley Award for Threatened Species up waterways and controlling pests and weeds. Recovery Program Through Communities for Nature, DSE is supporting communities to create lasting improvements to the natural DSE’s Threatened Species Recovery Program won a environment and encouraging people to be actively involved. Whitley Award for the publication: The Bush Stone- curlew in Northern Victoria – Conversations and New online trading system for native Conservation. The Whitley Awards acknowledge vegetation credits outstanding publications dealing with the promotion and conservation of Australasian fauna. DSE launched a trial of the Native Vegetation Exchange (NVX) system – a secure online trading system for native vegetation The 37-page booklet was co-authored by DSE’s Kate credits in February 2012. The NVX makes transactions simpler Stothers and Lance Williams and DPI’s Susan Sleigh and cheaper through an easy to use online system that matches and aims to raise awareness of the plight of the Bush buyers and sellers of native vegetation credits. Stone-curlew. More than 5000 copies of the booklet have been distributed in Victoria, southern New South Removing native vegetation in Victoria generally requires a Wales and South Australia. The award was announced planning permit. Permitted clearing must be offset by protecting in October 2011. and preserving native vegetation of a similar extent or quality – a native vegetation credit. The NVX trial area covers the south-east corner of Victoria – from the eastern suburbs of Melbourne to the Mornington Peninsula and across to Lakes Entrance. holders. They provide opportunities to create large scale strategic offset sites that can provide offsets for many small, The trial is being managed by DSE in partnership with Bass widespread clearing sites. Coast Landcare Network, which supports the offset market in the Gippsland Plains bioregion. BushBroker manages an over-the-counter program, selling offsets from sites in the Victorian Volcanic Plains, Goldfi elds The NVX system – designed by a team from the Californian and Victorian Riverina bioregions. In 2011–12 DSE worked Institute of Technology, led by noted economist Professor with the Municipal Association of Victoria to establish over-the- Charles Plott – is convenient, secure and fair to buyers and counter programs. DSE has set up a network of councils and sellers. It automatically applies Victoria’s rules for offsetting it is anticipated that Baw Baw Shire Council and Yarra Ranges and allows buyers and sellers to quickly and easily search for Council will launch over-the-counter programs before the end potential trades. It also increases the types of trades available of 2012. by allowing multiple buyers and sellers in a trade. Spotted Tree Frog captive release program Trades are instantaneous, buyers and sellers can view all previous trades and all current and previous bids, giving all A captive release project is reintroducing Spotted Tree Frogs participants equal access to information. into the Mount Buffalo National Park. By the end of June 2012, six landowners and three buyers In February 2012, 260 captive-bred Spotted Tree Frogs had completed training and entered the NVX system. Native were released into the park, where they have been extinct vegetation credits from a range of Ecological Vegetation Classes since 1983. It was the fi rst release as part of a three-year within the Gippsland Plains bioregion are currently available reintroduction program to re-establish the species into a within the system. former stronghold. The NVX trial builds on DSE’s environmental markets program, The Spotted Tree Frog (Litoria spenceri) is found in up to 10 which includes ecoTender, BushTender and BushBroker. These catchments in Victoria and one in New South Wales. The initiatives all aim to increase the extent and quality of native species is listed as threatened under the Flora and Fauna vegetation across the entire landscape. Guarantee Act 1988. DSE and Parks Victoria have been working in the Mount Buffalo Victoria planning scheme amendments and collective National Park to create an optimal habitat for the frogs, focusing offset schemes on controlling and eradicating weeds that threaten stream A new rule introduced into Victoria’s planning system in environments critical to Spotted Tree Frog survival. November 2011 provides a planning permit exemption for Importantly, the site of the captive release project is free from landholders to remove native vegetation around existing Chytrid, a deadly frog fungus that is one of the causes of the buildings for bushfi re protection. frog decline worldwide. DSE and the Department of Planning and Community Development introduced the 10/50 rule into Victoria’s planning system as a permanent planning permit exemption in response to a 2009 Victorian Bushfi res Royal Commission recommendation. The Royal Commission also recommended the development of collective offset schemes as a simple and quick way for permit holders to obtain offsets. ‘Over-the-counter’ programs are a way to provide collective offsets. In an over-the-counter program, offsets are established before being split into units to be sold at fi xed prices to permit Spotted Tree Frog. Photo by Glen Johnson (DSE)

Department of Sustainability and Environment Annual Report 2012 45 The Smoky Mouse (Pseudomys fumeus) is listed as a threatened species under Victoria’s Flora and Fauna Guarantee Phascogale research published in Act 1988 and as endangered under Commonwealth legislation. international journal It is restricted to Victoria and south-eastern New South Wales. In Victoria, its distribution is highly fragmented with populations A paper about DSE’s Brush-tailed Phascogale recorded in the Grampians, Otway Ranges, Eastern Highlands, monitoring project, jointly authored by DSE’s Jerry Victorian Alps and coastal East Gippsland. Alexander, Andy Arnold, Peter Johnson, zoologist Merril Halley (formerly with DSE) and Deakin University’s Greg As part of a two-year study, animals on either side of the break Holland, appeared in Biological Conservation, a widely were trapped and marked and some were also ﬁ tted with radio- respected international journal. telemetry collars. It was found that Smoky Mice crossed from one side to the other, sometimes several times on the same The publication means that the results of the long-term night. This suggests that fuel breaks are unlikely to cause long- monitoring project are now available to all and can be term partitioning of Smoky Mouse populations. used to guide future management decisions about this threatened species. This project has collected information on habitat and nesting behaviour of this little-known species, increasing our understanding of its ecology.

Protecting the Growling Grass Frog Post-release surveys in February and March 2012 showed the Land owners are making simple changes to farm dams to help new population of recently released frogs was establishing well preserve an endangered species. beyond expectations. The Growling Grass Frog (Litoria raniformis) is a large, green During the fi rst monitoring, DSE scientists managed to re- frog, once common across Victoria. It is now endangered capture nearly 90 of the captive-bred frogs – an encouraging across its range, with the loss of wetland habitats a particular fi gure, given normally only a small number of the overall threat to its persistence in the landscape. population are found at one time. Importantly, the frogs were found to be mimicking the behaviour of wild frogs. As part of Dams to Habitat, land owners and DSE staff are working together to make simple changes to enhance the The captive release project is part of a National Recovery Plan habitat in farm dams that are located close to known Growling led by DSE in partnership with agencies and groups from Grass Frog populations. Victoria and New South Wales. Growling Grass Frogs prefer wetlands with good plant growth to It is being delivered by DSE in partnership with the Amphibian protect them from predators and to improve their food supply. Research Centre – which was responsible for the captive At each farm dam selected for habitat enhancement, one third husbandry and frog breeding program – and Parks Victoria. of the dam is planted with emergent, submerged and fl oating Monitoring the impact of strategic fuel breaks on the aquatic vegetation. The enhanced habitat is fenced to prevent Smoky Mouse stock access. A small nocturnal rodent living in a fi re danger area in DSE biologists monitor the dams to see if the enhanced habitat Melbourne’s water catchments is being studied to assess the is being used by the Growling Grass Frog. Survey techniques affect of strategic fuel breaks. include listening and spot-lighting for adult frogs at night and trapping for tadpoles; water quality and habitat variables are To improve fi re protection of Melbourne’s water catchments, also measured. DSE, Parks Victoria and Melbourne Water constructed a network of strategic fuel breaks. The project is an example of how private land owners, with help from DSE, can care for endangered species on their land In the weeks that followed the 2009 Black Saturday bushfi res, without impacting on their agricultural practices. Findings from the network of strategic fuel breaks helped fi refi ghters to safely this project are contributing to our knowledge of this fascinating and effi ciently control the damaging fi res and minimise further species and how to care for it. loss of catchment values. Scientists from DSE’s Arthur Rylah Institute for Environmental Research are studying a population of Smoky Mouse living next to a strategic fuel break near Mount Terrible, east of Buxton, to assess whether the fuel breaks affect how animals interact with their habitat.

Smoky Mouse. Photo by Peter Menkhorst (DSE) Growling Grass Frog

46 Department of Sustainability and Environment Annual Report 2012 Rare plants continue to hang on Review of Victoria’s waste policy Snowy River Westringia Waste management is a fundamental community service which provides the basis for a healthy environment, good quality of life DSE Biodiversity Offi cers mounted a daring expedition in and economic growth. November 2011 to fi nd a rare fl owering plant that only lives on sheer cliffs along the Snowy River. DSE is leading a review of waste policy to recommend a new long-term solid waste policy. The review will examine the The Snowy River Westringia (Westringia cremnophila) had only strategic, legislative, institutional and investment settings that been found in the wild twice since its discovery and naming in infl uence the nature and performance of waste management in the 1950s. Only four plants were seen when Westringia was last Victoria. It will focus on solid municipal waste, commercial and found in the wild 10 years ago. industrial waste and construction and demolition waste. The fi ve-person expedition included Neville Walsh, Senior The review is in response to the Victorian Auditor-General’s Conservation Botanist from the Royal Botanic Gardens, who Offi ce performance audit on Municipal Solid Waste was the last person to see the plant in the wild during a survey Management, and because the current waste strategy Towards of the area in 2002. Zero Waste ends in 2014. The habitat for the Snowy River Westringia is very localised on DSE is working with Sustainability Victoria, the Environment sheer 100 metre high cliffs along a short section of the Snowy Protection Authority, the Metropolitan Waste Management River. The team used white-water rafts to access a section Group and Regional Waste Management Groups. of the river cliffs and found more than 500 of the rare plants clinging to the sheer rocks. In March 2012, DSE released the Waste Policy Review Discussion Paper to promote discussion about how Victorians Cuttings of the plants were taken to be raised in the Royal can get the best possible value from the way waste is managed. Botanic Gardens Melbourne as another insurance policy for During a nine-week submission period, 71 responses were the species. received. In East Gippsland, 52 threatened plants and four plant To support and encourage discussion on the Waste Policy communities are the focus of conservation monitoring and Review a stakeholder engagement program was held during management by DSE. This work was funded by the Natural March and April 2012. More than 400 people attended the Resources Investment Program through the East Gippsland 17 workshops across the state, including local council staff Catchment Management Authority. and councillors, the waste and demolition industries, the manufacturing sector, environment groups and non- Timbertop Wattle government organisations. A vulnerable species of wattle that just managed to survive the 2006–07 Great Divide fi res is the focus of a special Boost for local sustainability projects protection initiative. The Victorian Local Sustainability Accord program supports The Timbertop Wattle (Acacia daviesii) survived the fi res with communities to create local solutions for sustainability and only one plant left above the ground, plus a few surviving environmental challenges. root systems. In August 2011, the Minister for Environment and Climate Found only in the Mount Timbertop area, the Timbertop Wattle Change announced 57 local government projects across the was fi rst discovered in 1998. It exists in a fi re prone area and state that will be funded as part of the $5.7 million Victorian has adapted to fi re by reproducing via root suckering. Too much Local Sustainability Accord grants program. fi re, too quickly can have a negative impact on the species. The funding is helping councils undertake a variety of After the Great Divide fi res some shoots that grew from the environmental sustainability and climate change initiatives, surviving root systems were dug up and given to the Euroa in line with local and regional strategies and local Arboretum to be grown in a safe and controlled environment community requirements. to establish a separate species. The initiatives include projects to boost economic development The Euroa Arboretum has had success in growing this species and green jobs in rural Victoria through development of bio- from wild cuttings and has now built up a considerable bank energy, developing community climate preparedness plans, of young Timbertop Wattle plants from genetically diverse setting up green local supply chains through local government populations. purchasing and supporting local industry to respond to growing demand for green products, developing web-based tools to DSE is working with local schools to plant seedlings and with exchange information and developing and trialling environmental land managers to protect the wattle from additional disturbance. standards for the design and construction of civil infrastructure.

DSE Biodiversity Ofﬁ cers Lucy Clausen and Amie Hill in search of the Tulloch Ard Gorge in the Snowy River National Park Snowy River Westringia. Photo by Neville Walsh, Royal Botanic Gardens

Department of Sustainability and Environment Annual Report 2012 47 To help councils apply for grants, DSE developed funding guidelines, held workshops to help councils apply and reviewed applications. The Victorian Government has a The Victorian Local Sustainability Accord is a formal partnership responsibility under the Flora and between the State Government and local government in Fauna Guarantee Act 1988 to protect Victoria. All 79 Victorian local government councils have voluntarily joined. threatened species. These animals and As part of the Living Green in Gannawarra and Surrounds plants contribute signiﬁ cantly to the program, a two-year sustainable living project aimed at biodiversity of their ecosystems. The communities in the local government areas of Gannawarra, knowledge we acquire about these Buloke, Loddon and Swan Hill, more than 300 participants took part in a workshop series. species helps us to then take the The behaviour change project was funded through the third on-ground steps needed to ensure round of the Victorian Local Sustainability Accord and four their survival. local residents created YouTube videos to share their stories.

Janet Bolitho, Chair of the Victorian Local Sustainability Advisory Committee

Victorian Coastal Hazard Guide

DSE released the Victorian Coastal Hazard Guide, a ﬁ rst of its kind for Victoria, in June 2012. The guide intends to improve understanding of coastal hazards such as inundation and erosion and the effects of climate change on these hazards. The guide provides a risk- based approach for incorporating coastal hazards and climate change into decision-making processes for the management of coastal areas.

48 Department of Sustainability and Environment Annual Report 2012 Biodiversity Through this output the department works with land managers and a range of other organisations to protect, enhance and restore biodiversity assets, maintain ecological assets and provide for the sustainable use of Victoria’s ﬂ ora and fauna. The department also improves the understanding of ecosystem services to better inform land use decisions and conducts terrestrial and freshwater ecological research to support the management and protection of biodiversity assets across the state.

Output results Biodiversity

Unit of 2011–12 2011–12 Performance measures measure Target Actual

Quantity

Native vegetation credit trading agreements signed through the BushBroker program number 50 531

Quality

Presentations made and scientiﬁ c publications in peer reviewed journals number 60 652

Timeliness

Game and Wildlife Licence renewals processed by target dates per cent 96 993

Planning referrals relating to native vegetation processed within statutory timeframes per cent 90 82.54

Cost

Total output cost $ million 88.4 77.35

Notes: 1. The 2011–12 actual is higher than the 2011–12 target due to continued landholder support for the BushBroker program which has resulted in an increased demand for offsets. 2. The 2011–12 actual is higher than the 2011–12 target due to increases in developing research in the area of biodiversity. 3. The 2011–12 actual is higher than the 2011–12 target due to operational efﬁ ciencies implemented throughout the 2011–12 year which resulted in a greater number of licence renewals being processed by target dates. 4. The 2011–12 actual is lower than the 2011–12 target due to a change in the planning referrals process that is being implemented in 2012. 5. The 2011–12 actual is lower than the 2011–12 target due to the timing of payments through Native Vegetation Credit Trading Agreements.

Department of Sustainability and Environment Annual Report 2012 49 Natural Resources This output leads policy and investment in research for the achievement of highly productive and sustainable landscapes. It provides a partnership approach with communities, catchment management authorities, other government agencies and research institutes for improvement in the condition of our state’s natural assets through policy implementation, program design, project investment, monitoring and reporting.

Output results Natural Resources

Unit of 2011–12 2011–12 Performance measures measure Target Actual

Quantity

Area covered by the regional land health projects hectares 1.42 1.371 (million)

Landcare members and community volunteers participating in Landcare activities number 81,000 81,000

Regional investment plans proposing natural resources improvement projects submitted, number 10 02 assessed and recommended to responsible Minister(s) for funding

Regional land health projects being implemented number 15–18 16

Quality

Corporate plans submitted by catchment management authorities are aligned with per cent 100 100 ministerial guidelines and template, and meet the requirement of relevant Acts

Regional investment plans align with government directions per cent 100 02

Timeliness

All regional investment plans submitted to Minister/s for approval by the prescribed date date June 2012 02

Catchment management authority corporate plans submitted to the Minister by the number 10 10 prescribed date

Cost

Total output cost $ million 109 106.13

Notes: 1. The 2011–12 actual is lower than the 2011–12 target due to wetter weather conditions which impacted on the delivery of regional land health projects. 2. Catchment management authorities were granted additional time to revise and resubmit their Regional Investment Plans. 3. The 2011–12 actual is lower than the 2011–12 target due a deferral of program activity due to wetter weather conditions.

50 Department of Sustainability and Environment Annual Report 2012 Environmental Policy and Climate Change Through this output, the department leads the development and implementation of strategic, whole of government responses to issues around environmental sustainability and climate change.

Output results Environmental Policy and Climate Change

Unit of 2011–12 2011–12 Performance measures measure Target Actual

Quantity

Major policy papers, strategy reviews or research papers completed number 7 101

Total number of councils participating in the Victorian Local Sustainability Accord number 79 79

Cost

Total output cost $ million 60.7 54.32

Notes: 1. The 2011–12 actual is higher than the 2011–12 target due to a number of papers which were presented at a United Nations Expert Meeting on Ecosystem Accounts held in Melbourne in May 2012. 2. The 2011–12 actual is lower than the 2011–12 target due to the completion of a number of projects following the Commonwealth Government’s move towards the introduction of a carbon price.

Department of Sustainability and Environment Annual Report 2012 51 Statutory Activities and Environment Protection This output protects, cares for and improves beneﬁ cial uses of the environment by developing statutory and non-statutory processes, setting and enforcing goals and standards, and undertaking monitoring and research. The monitoring and research activities help ensure that the beneﬁ cial uses of water are protected, waste management occurs, noise in the community is managed, contamination of land and groundwater is prevented, better management of air quality is promoted and global air quality issues are addressed.

Output results Statutory Activities and Environment Protection

Unit of 2011–12 2011–12 Performance measures measure Target Actual

Quantity

Environmental condition research reports issued, improvement tools, guidelines, policies, number 54 771 systems and plans completed and issued

Increase in EPA notices issued for illegal dumping of waste per cent 15 692

Quality

Hours during which air quality standards were met, as a proportion of hours in the per cent 99 99 reporting cycle

Land audits complying with statutory requirements and system guidelines per cent 90 95.23

Notices complied with by due date or escalation in line with Compliance and Enforcement per cent 95 734 policy

Timeliness

Pollution incident reports acted on within three days per cent 92 955

Statutory actions completed within required timelines per cent 96 946

Cost

Total output cost $ million 181.1 135.37

Notes: 1. The 2011–12 actual is higher than the 2011–12 target due to an increased community need and demand for information on the work of the EPA resulting in an increase in the number of publications released. 2. The 2011–12 actual is higher than the 2011–12 target due to stronger enforcement of the public litter reporting program as well as the introduction of a new iPhone app to report littering and illegal dumping of waste. 3. The 2011–12 actual is higher than the 2011–12 target due to improved operational systems and audit processes between the EPA and environmental auditors. 4. The 2011-12 actual is lower than the 2011–12 target due to notices not complying with EPA’s compliance and enforcement policy. In addition, improved planning of compliance work and standardising of reporting systems and practices during the year will continue to be implemented in 2012–13. 5. The 2011–12 actual is higher than the 2011–12 target due to operational efﬁ ciencies implemented throughout the 2011–12 year which resulted in a greater number of pollution incident reports being acted on within three days. 6. The 2011–12 actual is lower than the 2011–12 target due to service delivery system upgrades which resulted in delays in completing statutory actions within required timelines. 7. The variance is mainly due to lower than expected grant payments out of the Sustainability Fund.

52 Department of Sustainability and Environment Annual Report 2012 The community beneﬁ ts from effective management of Victoria’s public and private land assets

Victoria’s public land, including its parks, forests and coasts, has signifi cant cultural 150 years of Torrens title and recreational value. Effective management of public land is pivotal in protecting Land Victoria is celebrating 150 years of using the Torrens title system for secure and reliable property biodiversity values. transactions. The Torrens title, named after South Australian Sir Robert Richard Torrens – who designed DSE and its agencies manage 8.3 million and implemented it – is a single, indisputable certifi cate of title for an interest in land. All transactions for the hectares of public land assets, including land are registered on the certifi cate of title – transfers, 49,000 kilometres of roads and tracks, mortgages, covenants, easements and leases – and it is guaranteed by the state. The Torrens system 4000 bridges, public toilets, picnic shelters, principles still apply today, with titles computer wharves, jetties, recreational facilities and generated through the Victorian Online Titles System fi refi ghting facilities. and stored electronically.

DSE also works to provide secure, accurate and guaranteed land administration and One step has been to form boards of management and appoint information sources. Our priorities include: traditional owners, community and government representatives to these boards. The appointment process to establish the Gunaikurnai Board of Management is complete and the Yorta • improving our understanding of what Yorta Board of Management is being established. the community values from the use of DSE is also supporting board operations, including resolving public land policy issues, building stakeholder awareness of boards and their role and integrating the role of boards into the broader • continuing to provide effective governance public land management framework. and management of our public land assets Joint management of public land benefi ts both traditional owners and the broader community. • providing land administration services and Formally embracing indigenous land management into existing information. land management practices provides employment opportunities for traditional owners to ‘work on country’. In the Gunaikurnai settlement, DSE is establishing an employment program involving Gunaikurnai people working on Old ways help create future for managing land the jointly-managed land. Incorporating indigenous knowledge, culture and practices The agreements will also help to nurture an appreciation of the into land management practices can help to better protect cultural and natural values that defi ne the land for indigenous the natural environment. DSE has made two agreements with communities, creating a richer experience for everyone who traditional owner groups for jointly managing land under the visits that land. Conservation, Forests and Lands Act 1987. The fi rst management agreement – with the Yorta Yorta Traditional Owner Group – involves establishing a board of management for Barmah National Park, an area of signifi cant cultural value to the Yorta Yorta. The second agreement – with the Gunaikurnai Traditional Owner Group – involves managing 10 areas of land in Gippsland, including the Gippsland Lakes Coastal Park and the Lakes National Park. This agreement is part of a larger native title settlement, which delivers joint management of the land as well as the transfer of Aboriginal Title, access to natural resources and employment positions. In the past year, DSE has worked with the traditional owner groups to bring meaning and action to these agreements. Member of the Gunaikurnai group at the signing of the joint agreement

Department of Sustainability and Environment Annual Report 2012 53 Stabilising the Anderson Point landslip A well-planned communication and engagement strategy was a Fifteen thousand cubic metres of soil was moved during key part of the project. DSE and Glenelg Shire Council worked 15 months of works by DSE and Glenelg Shire Council to in partnership with the community, particularly the Portland stabilise the Anderson Point landslip in Portland. Harbour Walk Community Group. This collaborative process ensured that the general community embraced the project and Stabilising landslips can be complex, large-scale engineering remained supportive until works were completed. and construction projects, moving massive amounts of soil. Protecting beaches and foreshores in Port Phillip The Anderson Point landslip – caused by instability in a section of headland at the point, immediately above steps leading to the As part of ongoing beach renourishment, the Elwood Beach on beach – had been a signifi cant risk to public safety. Port Phillip Bay received a $2.7 million makeover in time for the 2011–12 summer. A highly detailed design was used to provide engineering and earth work solutions to stabilise exposed and fragile The beach was renourished by 60,000 tonnes of sand, coastal cliffs. increasing the beach width to almost 35 metres at high tide. The project – which was completed in May 2012 – involved A rock groyne and a boat ramp were also built to help hold the work on both private and public land and building a major sand in place. access track from the cliff top to the bottom of the Wade Street The renourishment also had the added benefi t of improving slip to allow machinery and construction workers to safely facilities for beachgoers. access the beach from the site compound. The beach renourishment works will protect the foreshore and Earthworks on and above the beach at Anderson Point included public facilities from erosion for between fi ve and 10 years, clearing vegetation and building a compacted soil slope with a depending on extreme weather conditions. rock wall at the base to protect against erosion. With 40 million annual visits to beaches in Port Phillip Bay, Despite the challenges of working in confi ned spaces and sandy healthy beaches are essential for recreation, tourism, the steep rocky environment, the stabilising work has been local businesses and the economy. successful, ensuring the safety of people on the headland and the beach and securing the adjacent residential road access. Erosion at many Port Phillip Bay beaches means they do not have enough natural sand to protect coastal land Local residents and the wider community, including tourists and and infrastructure. visitors to Portland, are benefi tting from the works. Anderson Point is one of Portland’s key environmental, recreational and The Victorian Government will spend $9.6 million over the tourism assets. next four years to continue to protect beaches and foreshores around Port Phillip Bay. The stabilised landslip means people can safely visit the headland and beach. The Portland Harbour Walk, which links Mount Disappointment recreation sites rebuilt tourist features including the historic tram car and war memorial, Major reconstruction works to restore recreational sites at Mount is again able to fi nish along the beach. Disappointment State Forest, near Broadford, were completed in December 2011. The 2009 Black Saturday bushfi res burnt two-thirds of the Mount Disappointment State Forest, destroying all camping and picnic area facilities. Before the fi res, Mount Disappointment brought considerable economic benefi ts to the local community and was a popular tourist area for day visitors and campers. As part of the $1 million project, campsites and visitor facilities at the Number One Camp, Regular Camp, Blairs Hut, Strath Falls and Andersons Gardens have been rebuilt. The works were part of the Victorian and Commonwealth governments’ Rebuilding Together Statewide Bushfi re Recovery Plan.

Earthworks to stabilise the Anderson Point landslip in Portland

Beach renourishment works at Elwood Beach on Port Phillip Bay Restored recreational sites at Mount Disappointment

54 Department of Sustainability and Environment Annual Report 2012 Trail bikes becoming safer and more sustainable GPS expertise tracks earthquake zones Trail bike riding in Victoria is becoming safer and more The largest simultaneous Global Positioning System (GPS) sustainable, thanks to a new partnership initiative between campaign ever conducted in Victoria has helped earthquake DSE and the Transport Accident Commission. research in two of Victoria’s seismic zones. The Ride for Tomorrow project engages trail bike riders to The Victorian Seismic Zone Monitoring project is increasing promote environmentally and socially sustainable riding knowledge about the processes that lead to moderately sized practices, within a context of safe, responsible and legally earthquakes in the Otway and Gippsland regions. compliant riding behaviour. The effects of these earthquakes can be felt further afi eld. A Hospital statistics show that more than 50 per cent of 5.4 magnitude earthquake centred in Moe on 20 June 2012 motorcycle crash injuries result from off-road riding, many of was felt across Victoria. This followed a 4.4 magnitude which occur on land managed by DSE. earthquake that shook the South Gippsland town of Korumburra on 5 July 2011 and was felt in Melbourne’s This high rate of injuries was the subject of a Parliamentary CBD and south-eastern suburbs. Road Safety Committee’s Inquiry into Motorcycle Safety. The project provided evidence on behalf of DSE to the inquiry. The project is improving Victoria’s seismic risk assessment and hazard mitigation efforts and providing insights into the effects of The project also responded to the Victorian Auditor-General’s removing groundwater, gas and oil. report on Motorcycle and Scooter Safety Programs (2011) which made recommendations on safety issues for off-road These insights are crucial to meeting secure, sustainable future motorcycle riders. energy needs and are particularly relevant in Gippsland. In addition to upgrading safety, minimising noise from trail bike For the project monitoring, Offi ce of Surveyor-General Victoria riding and instructing riders on sustainable riding practices are surveyors installed a seismic zone network of 52 custom- important developments as the sport grows in popularity. designed, high-stability ground survey marks 50 kilometres apart across the Otway and Gippsland regions. Compliance and extension operations were conducted across the state in all fi ve DSE regions during 2011–12. In total, 27 The survey marks were located on or near faults and operations engaged more than 500 riders on compliance monoclines (a geologic structure in which all layers are inclined operations and more than 1500 on extension operations. in the same direction). Most of the compliance operations were undertaken jointly with In November 2011, the entire network of survey marks was Victoria Police, a partnership which enables both agencies to observed continuously over one week. The monitoring used more effectively deliver on their safety, legal compliance and Victoria’s AuScope and GPSnet’s continuously operating GPS environmental protection obligations. sites and the 52 GPS receivers. The Trail Bike Riders Code was produced after a stakeholder Solar panel fi eld kits provided a continuous power supply to workshop involving representatives of trail bike riding each GPS receiver battery; temporary electric fences protected organisations, the motorcycle industry and advisory groups. equipment from cattle; and protective conduit, locks and bracing secured equipment from the weather and other likely The code provides a framework for safe, responsible, legal and causes of interference. environmentally sustainable trail bike riding. Based on high-precision observations collected during the It is the fi rst attempt to establish a broadly accepted code GPS survey, geophysicists can determine the geographical of conduct which can be endorsed by all trail bike riding coordinates of each survey mark to precision of a organisations, road safety agencies and public land managers. few millimetres. The project’s other fi eld work included attending major trail bike A similar one-week GPS observing campaign will be conducted rallies and enduro events to promote awareness of sustainable every four years to identify any movement in the survey marks. riding practises. The GPS observations captured during this seismic monitoring To complement this work, the project produced trail bike safety will strengthen Victoria’s existing geodetic survey network and and environment protection television content for incorporation improve the accuracy of the geographical coordinates of all into a dirt bike television program. survey marks across southern Victoria.

The Trail Bike Project encourages riders to respect the environment and Ground survey marks monitor seismic activity other forest users. Photo by Holeshot Images

Department of Sustainability and Environment Annual Report 2012 55 Positioning Victoria as global leaders A network of reference stations – known as Continuously High accuracy positioning and navigation infrastructure, known Operating Reference Stations, or CORS – provide access to the as Vicmap Position-GPSnet, has put DSE at the forefront of GNSS across Victoria. This network now has more than 100 global technological innovation. reference stations delivering Vicmap Position-GPSnet across the entire state, day and night. The service is proving useful to everyone from farmers, engineers and surveyors to emergency services and weather DSE’s collaboration with international researchers through the forecasters. Cooperative Research Centre for Spatial Information provides unique opportunities for Victoria. This includes testing of new Using Global Navigation Satellite Systems (GNSS) technology, satellite systems and the early adoption of Japan’s QZSS the service is able to pinpoint a position anywhere in Victoria positioning satellites, which have recently become operational with an accuracy of plus or minus two centimetres, rather than over the Asian Pacifi c region. the 20 metre resolution of some stand alone GPS units. With demand for the technology growing rapidly, the Victorian By improving the accuracy of precision farming and earth Government provided $1.6 million over four years – beginning in moving equipment, Vicmap Position-GPSnet is helping farmers 2011–12 – for DSE to consolidate its infrastructure and increase save money and increase their crop yields. performance reliability. The introduction of GNSS technology for farmers was instigated The technology is advancing towards the use of multiple satellite through DSE’s Positioning Regional Victoria (PRV) project in positioning systems, offering potential for greater use with new 2008. PRV was supported by Victoria’s Future Farming Strategy applications like autonomous machine control and land based and the Regional Infrastructure Development Fund to improve transport safety systems. farming productivity and sustainability through more precise farming practices and the use of machine guidance for irrigation and construction projects. Vicmap Position-GPSnet could save the Victorian agricultural Sir Rupert Hamer Records sector up to $126 million over 20 years. Management Awards The Australian Spatial Council estimates that rolling out a nationwide network based on the Victorian model would bring in Land Victoria won the most valuable transfer to the gross national benefi ts of $58 billion. Public Record Offi ce Victoria at the Sir Rupert Hamer Records Management Awards in May 2012. The The technology allows farmers to guide tractors and other awards recognise excellence and innovation in records machinery with greater precision, as well as work out where management in the public sector. and when to water crops and pastures. The award was received for transferring the collection Accurately dispersing seeds, fertiliser, weed killer and other of surveyors’ fi eld books and indexes which record chemicals has considerable environmental benefi ts, and the original Crown surveys of the State of Victoria from improved soil structure and water retention means more the early 1800s and early 1900s. The collection also productive crops. includes more than 250,000 images. Farmers are also benefi ting from a reduction in labour, fuel costs and investments in machinery.

Awards for Positioning Regional Victoria Program

DSE’s Positioning Regional Victoria Program won the Infrastructure and Construction Award at the Victorian Spatial Excellence Awards in September 2011 for its Vicmap Position-GPSnet technology. DSE also won the Australian Government’s 2011 Excellence in eGovernment Awards in the Geospatial category.

Award winners including Land Victoria’s Tony Morabito (second from left) and David Boyle (far right)

56 Department of Sustainability and Environment Annual Report 2012 Public Land This output provides for the management of Victoria’s Crown land, including the coast and marine environments. It works towards the improved stewardship of natural, built and historic assets, and incorporates management of public land in partnership with statutory agencies, committees and local government. It recognises the value of a public land estate that can adapt to climate change and cater for community expectations.

Output results Public Land

Unit of 2011–12 2011–12 Performance measures measure Target Actual

Quantity

Beach protection assets repaired number 2 61

Crown land leases directly managed by DSE number 684 7022

Crown land licenses directly managed by DSE number 43 43.92 (‘000)

Participants in Coast Action/Coastcare activities number 25 25 (‘000)

Threatened native species and communities for which speciﬁ cally targeted conservation number 8 8 measures are in place at Royal Botanic Gardens

Visitors to Zoos Victoria at Melbourne, Werribee and Healesville number 1.6 1.83 (million)

Quality

Publicly elected committees of management that have a current statutory appointment per cent 95 91.74

Timeliness

Rent reviews of Crown land leases undertaken within speciﬁ ed time frames per cent 95 98.85

Cost

Total output cost $ million 125.3 138.36

Notes: 1. The 2011–12 actual is higher than the 2011–12 target due to minor emergency sea wall and other repair works undertaken at Portsea, Cannons Creek, Tooradin Foreshore and Daveys Bay. 2. The 2011–12 actual is higher than the 2011–12 target due to general ﬂ uctuations of new leases and surrender or expiration of existing leases. 3. The 2011–12 actual is higher than the 2011–12 target due to the government’s Free Zoos Entry for Children Under 16 policy. 4. The 2011–12 actual is lower than the 2011–12 target due to difﬁ culties in retaining existing committee members and a downward trend in volunteering. 5. The 2011–12 actual is higher than the the 2011–12 target due to a reduced number of complex rent review cases. 6. The 2011–12 actual is higher than the 2011–12 target due to funding for the Flood Recovery Community Infrastructure Fund.

Department of Sustainability and Environment Annual Report 2012 57 Forests and Parks This output provides for the management of Victoria’s state run parks and forests. Through this output, the department manages the balance between development and protection of natural, cultural and community assets for enjoyment and sustainable use. This output works towards the improved stewardship of Victoria’s parks and forests and incorporates direct and delegated management of public land.

Output results Forests and Parks

Performance measures Unit of 2011–12 2011–12 measure Target Actual

Quantity

Number of hectares treated to minimise the impact of pest plants, pest animals and hectares 1100 9641 overabundant native animals in parks managed by Parks Victoria

Number of visits to Parks Victoria managed estate number 88–92 90 (million)

Total area of estate managed by Parks Victoria hectares 4084 40862 (‘000)

Quality

Bay assets rated in average to excellent condition per cent 65–70 65

Level of compliance with environmental regulatory framework for commercial timber per cent 90 993 operations as required by the Forest Audit Program

Park assets rated in average to excellent condition per cent 75–80 79.6

Recreational facilities in state forests with a life expectancy greater than ﬁ ve years per cent 70 70

Cost

Total output cost $ million 216.3 231.84

Notes: 1. The 2011–12 actual is lower than the 2011–12 target due to a deferral of program activity to 2012–13 due to a longer than anticipated lead-in time to resource the initiative. 2. The 2011–12 actual is higher than the 2011–12 target due to an increase in the number of new acquisitions to the parks estate. 3. The 2011–12 actual is higher than the 2011–12 target due to operational efﬁ ciencies. 4. The 2011–12 actual is higher than the 2011–12 target due to the department’s focus on ﬂ ood recovery activities.

58 Department of Sustainability and Environment Annual Report 2012 Land Administration and Property Information

Through this output, the department is working towards ensuring: conﬁ dence and in the integrity and efﬁ ciency of the property system; accessible and transparent property markets; established and accepted natural resource markets; and comprehensive and accessible spatial information to support planning and decision making.

Output results Land Administration and Property Information

Unit of 2011–12 2011–12 Performance measures measure Target Actual

Quantity

Land dealings registered number 760 6801 (‘000)

Maps generated on Land Channel number 18,000 18,5002 (‘000)

Planning certiﬁ cates issued number 35 383 (‘000)

Proportion of title searches supplied (remotely) online per cent 96 96

Reports generated on Land Channel number 1400 19304 (‘000)

Title searches supplied number 2180 21935 (‘000)

Quality

Audited Vicmap digital map base not requiring correction per cent 97 986

Properties sold, bought or leased within 10 per cent of valuation per cent 80 80

Timeliness

Land dealings registered within ﬁ ve days per cent 95 987

New titles (subdivisions) created within three weeks per cent 95 95

Update transactions for the Vicmap digital map base processed within the required per cent 97 997 timeframes

Cost

Total output cost $ million 124.1 120.8

Notes: 1. The 2011–12 actual is lower than the 2011–12 target due to a slowing property market. 2. The 2011–12 actual is higher than the 2011–12 target due to the introduction of a new Bushfi re Prone Area map into the system in September 2011. 3. The 2011–12 actual is higher than the 2011–12 target due to higher than anticipated demand for planning certifi cates. 4. The 2011–12 actual is higher than the 2011–12 target due to new reports being introduced into the system, these being the Bushfi re Prone Area report and the iPhone app for the Planning Property report. 5. The 2011–12 actual is higher than the 2011–12 target due to a minor increase in demand for title searches. 6. The 2011–12 actual is higher than the 2011–12 target due to operational effi ciencies implemented throughout 2011–12. 7. The 2011–12 actual is higher than the 2011–12 target due to improved internal processes and operational effi ciencies.

Department of Sustainability and Environment Annual Report 2012 59 Reduced impact of major bushﬁ res and other extreme events on people, infrastructure and the environment

DSE is one of several agencies responsible The planned burning program aims to maximise the reduction of bushfi re risk across the state, and is guided by fi re behaviour for reducing the threat and impact of models and research about the effects of fi re on different bushfi res to Victorians. For DSE and Victoria’s vegetation types. fi re and emergency services, protecting Consultation with local industries, interest groups, the Country Fire Authority (CFA), councils and communities across Victoria life – fi refi ghters and the community – is the is also a key part of the planned burning program, assisting top priority. On public land, planned burning to plan where to burn in each district, taking into account – the use of fi re under carefully managed bushfi res, planned burns and clearing works in previous years. conditions to reduce fi re fuel – is a key The planned burning program made good headway in spring 2011, when favourable weather allowed crews to treat more strategy used by DSE to reduce bushfi re than 34,000 hectares – signifi cantly more than the average for risk to people, property and communities. that time of year. However, in March and April 2012 – usually peak months for Our priorities include: planned burning – heavy rain swept across eastern Victoria, leaving many areas too wet to burn, while in the west, many areas remained too dry. • continuing to implement the State DSE made the most of every burning opportunity by moving Government’s response to the 2009 resources around the state to conduct burns where and when Victorian Bushfi res Royal Commission, weather and conditions were suitable. Community engagement and communications activities also changed focus as crews including signifi cant increases in planned moved around. burning to reduce fuel loads in the Detailed operational planning and site preparation work was natural environment also undertaken on around 180,000 hectares. These areas are ready for burning when weather and other conditions • reviewing and improving preparation and become suitable. response for extreme events, including In addition, Parks Victoria completed 800 hectares of fuel fl oods and coastal erosion. reduction in outer Melbourne’s bushland – including high risk areas such as the Dandenong Ranges National Park – using non-burning techniques such as slashing. Largest planned burning program achieved in two decades DSE and Parks Victoria completed 834 planned burns treating a total of 197,149 hectares of public land in 2011–12 as part of National award for DSE emergency an integrated plan to reduce bushfi re risk to people, property communications and communities. DSE’s Radio Communications team, based in the North This is 87 per cent of the annual target of 225,000 hectares and East, received the Communications Award from the more than any other year since 1991, despite one of the wettest Association of Public Safety Communications Offi cials years on record. Australasia in April 2012. The annual planned burning program will gradually build to The team has developed and implemented several radio an annual target of 390,000 hectares – or 5 per cent – of communication systems that have been invaluable to public land in response to the government’s commitment to DSE and other agencies during fi re, fl ood and other implement all of the 2009 Victorian Bushfi res Royal Commission natural disasters. The systems include DSE’s fl eet of recommendations. modular off-road radio trailers and mobile omnitronics offi ce systems.

60 Department of Sustainability and Environment Annual Report 2012 Planned burning 2011–12 ﬁ nal results

Fire management zone Total

Strategic Asset wildﬁ re Ecological Region protection moderation management Other

Number of burns 13 39 51 11 114 Gippsland Area treated (ha) 2337 16,765 26,835 330.8 46,267

Number of burns 9 55 50 2 116 North East Area treated (ha) 1875 46,538 17,783 61.3 66,257

Number of burns 25 45 56 0 126 North West Area treated (ha) 832.18 8747 32,380 0 41,958

Number of burns 10 14 36 3 63 Port Phillip Area treated (ha) 184.88 2112 3006 9 5312

Number of burns 6 59 68 2 135 South West Area treated (ha) 43.01 13,387 20,421 20 33,871

Number of burns 280 Regeneration burns Area treated (ha) 3483

Number of burns 63 212 261 18 834

Area treated (ha) 5272 87,548 100,424 421 197,149 Statewide Area treated (ha) as a proportion of the total area 7.2% 6.3% 1.8% 0% 2.7% of the Fire Management Zone

Note: In 2011, DSE implemented changes to its regional boundaries. The key changes include the creation of Port Phillip Region, which previously formed part of Central Region and Gippsland Region which comprises all of the previous East Gippsland Region and part of Central Region.

Department of Sustainability and Environment Annual Report 2012 61 Lorne Stony Track burn The Otway Ranges, a stretch of forest alongside the Great Ocean Road in Victoria’s south-west, where townships are at high risk of bushfi re, was a focus of the 2011–12 planned burning program. Research from major fi res, including the 1983 Ash Wednesday fi re in the Otways, has shown that 80 per cent of houses lost in catastrophic bushfi res are within 100 metres of bush. Using the latest technology, DSE completed modelling on the potential impacts a fi re like Ash Wednesday would have in the Otway Ranges today. The data suggests these impacts could be halved if strategic burns are conducted in the area as part of a long-term plan to manage bushfi re risk on private and Planned burning in the Otway Ranges – stage one of the Stony Track burn. public land. Photo by Mark Corr (DSE)

DSE and Parks Victoria fi re crews conducted a series of This section of the burn closed off the Deans Marsh-Lorne Road complex burns in the Otway Ranges, with a particular focus on for three days and required traffi c diversions. DSE arranged for a three kilometre arc around coastal townships, including Lorne. a vehicle to escort locals to and from their properties during the The planned burning was specifi cally aimed at reducing fuel road closure. loads directly around the town and reducing the risk of embers from nearby fi res starting spot fi res that could threaten houses. Crews continued to patrol the burn over the Easter break. Specialised aircraft carrying heat sensing equipment swept the The 941 hectare Lorne Stony Track burn was a complex area to check for any potential hotspots and ensure burnt edges operation that took two years to plan. The burn area – which lay remained secure. in the path the Ash Wednesday bushfi re burnt into north Lorne in 1983 – was steep and diffi cult to access. It had not been Smoke lingered for several days and was particularly visible burnt since 1983. on Good Friday. Smoke warning signs were placed along the Great Ocean Road to remind motorists to drive with caution. Close to several houses, the burn was only 50 metres from the Advertising and media activities also helped to alert both Great Ocean Road and abutted the Deans Marsh-Lorne Road residents and travellers. for several kilometres. DSE worked with nearby landholders to include private land in the burn to maximise the reduction of The burn was completed successfully and – building on work bushfi re risk. done around Lorne in past four years – will help to signifi cantly reduce the bushfi re risk to this community. The burn’s success relied on strong coordination across agencies such as the Surf Coast Shire, VicRoads, Victoria Working with wineries to reduce impacts of Police, CFA, the local Tourism Information Centre and planned burning Barwon Water. DSE and Parks Victoria are working with the Victorian DSE worked with VicRoads and contractor, Go Traffi c, to wine industry to minimise the impacts of planned burning develop a traffi c management plan to help reduce the impact on grape quality. of a major road closure. In February 2012, DSE and Parks Victoria staff took wine Staff also ensured information fl owed to the local community growers to a recently completed planned burn in the Warby and the Lorne Traders Association so that residents and Ranges – in Victoria’s north-east – as part of a fi eld day held at businesses were aware of what was happening. Bailey’s Winery in Glenrowan. Due to the weather, the best opportunity to carry out the burn Wine growers came up with the idea for the fi eld day during was during the school holidays, shortly before Easter. Lorne’s community consultation about planned burning. popularity as a tourist destination added to the challenging DSE staff explained the process of getting a burn from lines on nature of this burn. a map to the point of ignition. The planned burn was ignited in two phases. In the fi rst The best conditions for planned burning tend to be in autumn phase, 35 hectares were treated over two days, covering the when some grapes are ripening or due to be harvested, which area closest to the Great Ocean Road, houses and critical may result in smoke tainted wine. infrastructure such as the water treatment plant. Taskforces came from across Victoria to support local district crews While the decision to burn is always driven by the need to throughout the burn operation. reduce the risk of damaging bushfi res, DSE and Parks Victoria consider the concerns of stakeholders, such as wineries. Information points were set up at the local Visitor Information Centre, where DSE staff talked to locals and visitors about what In nine DSE fi re districts, communications agreements with was happening. Several community newsletters were delivered regional wine associations helped to identify potential impacts around the neighbourhood to update local residents and on local grape growers. This information was fed into the fi re businesses on progress and impacts such as campsite operations plans, which outline burns over a three-year period. and road closures. While some aspects of these plans were not negotiable, some The second phase – 906 hectares – was completed over details were changed to better meet the needs of wineries, such three days during the week before Easter. as the size of a burn or the season it was conducted. The planned burn was completed using ground ignition In Ovens and Wimmera fi re districts, the wine associations rated for the perimeter along roads and tracks, and aerial ignition each proposed burn according to the level of impact it would using incendiaries from helicopters for the internal areas have on their local vineyards. District DSE and Parks Victoria within the burn. staff then worked out how they could reduce this impact.

62 Department of Sustainability and Environment Annual Report 2012 In Wimmera, the Grampians Wine Association identiﬁ ed eight proposed burns as being of critical concern to the local wine industry. Crews completed ﬁ ve of these burns during spring 2011 instead of autumn 2012. In Ovens, crews carried out the burns that were of least concern to the King Valley Wine Association early in the autumn burn season. As the grape harvest progressed and there were fewer grapes on the vines, crews moved closer to the vineyards. DSE also increased communications with the industry about its immediate burning intentions. A wine industry seven-day burn outlook was introduced, prepared by DSE and distributed weekly to the industry liaison representative.

Vineyards across the state provided harvest schedules, which Loch 7 Road Bridge, Lindsay Island DSE used to guide the scheduling of autumn burns. The wine industry is represented on planned burning Data collection and biodiversity monitoring stakeholder roundtables, which DSE has set up to give DSE has upgraded its program of long-term data collection to stakeholders opportunities to advocate for their industry monitor and model the effects of the planned burning program while gaining a better understanding of each other’s concerns and bushfi res, including the ecological impacts of planned burns and the complexities associated with planned burning. and the achievement of landscape level outcomes. Data is In addition to a statewide roundtable with peak body being collected from about 1145 sites across the state. representatives, roundtables were also held in Wimmera The biodiversity monitoring project – HawkEye – is guiding and Ovens with local representatives. approaches to planned burning in response to a 2009 Victorian Bushfi res Royal Commission recommendation. HawkEye Bridge replacement program reaches 300 mark currently includes monitoring, research, modelling and The W12 Bridge over the Tyers River was the scene of an evaluation of the effects of planned burning on biodiversity. important milestone in June 2012 – the $60 million Public Land Bridges Project achieved its goal to replace or upgrade The HawkEye project is being undertaken in the Mallee, Otways 300 bridges and crossings on public land across Victoria. and foothill forests of Gippsland in partnership with La Trobe, Deakin and Melbourne universities. Additional work has been The improved bridges provide better access to water conducted to monitor the interactions between fi re and fox catchments, parks and reserves, forests and other public land – predation in East Gippsland, weeds in Gippsland, invertebrates especially for fi refi ghting and planned burning. in Murrindindi and fi re in Box-Ironbark forests in central Victoria. The W12 Bridge, which is on W12 track north of Traralgon in Burn severity mapping Gippsland, was the 300th bridge or crossing to be replaced or upgraded as part of the program. Other bridges replaced or DSE created a prototype semi-automated software tool upgraded include: for rapidly analysing fi re extent and severity within planned burns using satellite imagery. The tool will enable DSE staff to • Loch 7 Road Bridge, Lindsay Island in the North West determine if individual planned burn objectives were achieved • Jones Road Bridge, Wentworth River in East Gippsland and help predict the effects of a burn on fuel hazards, fl ora and fauna. DSE will trial the tool across Victoria. • Latrobe River Bridge, Latrobe River Road in Central Gippsland • Johnson Track Bridge, Blanket Bay Creek in the South West • Wheelers Creek Road Bridge, Wheelers Creek in the Future Fire Project receives national North East. innovation award In 2011–12, 98 bridges or crossings were completed bringing DSE and Parks Victoria received the Motorola the total to 303 bridges or crossings upgraded over four years. Innovation Knowledge Agency Award at the DSE has replaced older structures with concrete or steel Australasian Fire and Emergency Service Authorities crossings to comply with Australian Standards. This is vital not Council Conference for the Future Fire Management only for fi refi ghters but also for the local communities who may Project and the Barwon Otway Bushfi re Management rely on access to public land for their work or recreation. Planning Pilot in September 2011. The program represents a signifi cant commitment to maintaining The award recognises demonstrated commitment to public infrastructure, including maintaining bridges and ensuring knowledge management is an accepted and crossings in parts of the state that would be diffi cult to access valued management practice. without them. The Future Fire Management Project and the Barwon Under the Road Management Act 2004, DSE is responsible for Otway Bushfi re Management Planning Pilot are maintaining 49,000 kilometres of roads and tracks in Victoria’s complementary projects that use cutting-edge bushfi re state forests, parks and reserves. Most of these roads are modelling technology to simulate bushfi res and model gravel or earth surfaced, and readily maintained by graders. their potential impacts on human assets, values But without well-maintained bridges and other crossings, and ecosystems. The projects are guiding bushfi re these routes can become impassable. management across public land in Victoria.

Department of Sustainability and Environment Annual Report 2012 63 Bushfi re Hazard and Biodiversity Mapping project New Code of Practice for Bushfi re Management DSE developed a statewide hazard map and detailed vegetation on Public Land and biodiversity mapping to inform planning and decision- In 1995, DSE released the fi rst ever Code of Practice for making in response to recommendations from the 2009 Fire Management on Public Land. The code established the Victorian Bushfi res Royal Commission. framework for fi re management, including planned burning and bushfi re response, across Victoria’s public land. It was The Bushfi re Hazard and Biodiversity Monitoring Project revised in 2006. is delivering implementation actions in response to recommendations 37 and 43 which form part of the After a review of the code in response to a 2009 Victorian Integrated Planning and Building Framework. Bushfi res Royal Commission recommendation, a draft new code was released for public comment in October 2011. DSE worked with the CFA and Department of Planning and A fi nal revised code was tabled in Parliament in April 2012. Community Development – using the latest scientifi c research and spatial modelling technologies combined with detailed The revised code establishes overarching objectives for bushfi re data collection – to develop the hazard and vegetation and management on public land – reinforcing that the protection of biodiversity mapping products for the state. human life is the top priority – along with strategies and actions to achieve those objectives. The project collected 4136 species diversity assessments and more than 5000 condition assessments to inform vegetation Code features include: type and condition across the state. This data builds upon • clear objectives for bushfi re management on public land DSE’s existing dataset and resulted in the new recording of rare and threatened species, improved information on many • risk analysis framework poorly-known species and found species previously thought to be extinct in Victoria. • amended fi re management zones The products have a wide ranging user base, including: • new legislative responsibilities for Incident Controllers • statutory planning decisions • improved monitoring, reporting and evaluation. • land management planning and decision making • information purposes.

Joint exercises to test fi re preparedness ‘The State has adopted a DSE, CFA, the Metropolitan Fire and Emergency Services comprehensive approach to improving Board and Victoria’s Fire Services Commissioner are preparedness for bushfi re response. implementing project Belenus – a three-year program of development exercises to improve Victoria’s emergency This includes signifi cant investment response capacity and capability. in capital works, training, exercising, In the fi rst program of this type in Australia, eight multi- organisational structures, policies and agency emergency response exercises involving DSE, fi re procedures. There is clear evidence and emergency service agencies, local government, other government departments and the community were held. that Victoria is now substantially better The exercises focused on the management of resources, prepared on a regular basis to respond the provision of information to the community and decision- to bushfi re risk than at the time of making by participants. Black Saturday’ – Bushfi res Royal DSE participated on the project’s steering committee, detailed Commission Implementation Monitor preparation of each exercise, and along with its Networked Emergency Organisation partners and other agencies Final Report, July 2012. participated in each of the exercises held across the state.

Aircraft management Firefi ghting aircraft preparedness and dispatch are being upgraded through a range of initiatives, including trialling fi refi ghting air tanker aircraft, eye in the sky intelligence platforms and an enhanced integrated computerised aircraft dispatch system. In November 2011, DSE bought two new forward looking infrared (FLIR) cameras to enhance the capability of the state’s light helicopter fl eet. The two new systems were commissioned for operation in December 2011 and February 2012.

64 Department of Sustainability and Environment Annual Report 2012 Land and Fire Management This output covers activities under an integrated land and ﬁ re management framework, for the effective planning and management of ﬁ re across public land.

Output results Land and Fire Management

Unit of 2011–12 2011–12 Performance measures measure Target Actual

Quantity

Bridges and stream crossings to be replaced or repaired to enable safe access for rapid number 95 981 bushﬁ re response, tourism and commercial operators during the current reporting period

Cumulative number of bridges replaced or repaired to enable safe access for rapid number 300 3031 bushﬁ re response, tourism and commercial operators

Fuel reduction burning completed to protect key assets hectares 225,000 197,1492

Personnel with accreditation in a ﬁ re role number 1500 18563

State forests bridges (on Category 1 roads) with documented inspections per cent 100 100

State forests roads (Category 1) with documented inspection and maintenance programs per cent 100 100

Strategic engagement forums held number 8 94

Quality

Fire controlled at less than ﬁ ve hectares per cent 80 845

Personnel accredited to serve in a senior capacity (level 2 or 3) in a ﬁ re role number 300 2676

Timeliness

Assessments of standards of cover completed prior to ﬁ re season date Nov 2011 Jan 20127

District ﬁ re operations plans completed date Oct 2011 Oct 2011

Fires controlled at ﬁ rst attack per cent 80 868

Readiness and response plans completed prior to ﬁ re season date Dec 2011 Jan 20129

Cost

Total output cost $ million 325.5 315.010

Notes: 1. The 2011–12 actual is higher than the 2011–12 target due to operational effi ciencies implemented throughout 2011–12, enabling the department to repair additional bridges. 2. The 2011–12 actual is lower than the 2011–12 target due to unfavourable weather conditions and fl ooding events impeding burning opportunities. 3. The 2011–12 actual is higher than the 2011–12 target due to new accreditations and re-accreditations of General Firefi ghters. 4. The 2011–12 actual is higher than the 2011–12 target due to improved processes in the development of stakeholder round tables. 5. The 2011–12 actual is higher than the 2011–12 target due to wetter weather conditions throughout the fi re season. 6. The 2011–12 actual is lower than the 2011–12 target due to the longer than anticipated timeframes to transition personnel from level 2 to 3 and due to the need to develop other accreditation processes. 7. The wetter weather conditions in late 2011 impeded the department’s ability to complete assessments of standards of cover prior to the fi re season. 8. The 2011–12 actual is higher than the 2011–12 target due to wetter weather conditions throughout the fi re season. 9. All plans were completed in the fi rst week of January 2012. 10. The 2011–12 actual is lower than the 2011–12 target due to wetter climatic conditions which resulted in a decrease in suppression activities and the planned burning target not being met.

Department of Sustainability and Environment Annual Report 2012 65 Financial Statements 30 June 2012 2

Contents Page Comprehensive operating statement 67 Balance sheet 68 Statement of changes in equity 69 Cash fl ow statement 70 Notes to the fi nancial statements 71 Accountable Offi cer’s and Chief Finance and Accounting Offi cer’s declaration 151 Auditor-General’s report 152

These fi nancial statements cover the Department of Sustainability and Environment as an individual entity and are presented in the Australian currency. The Department of Sustainability and Environment is a Government department of the State of Victoria. Its principal address is: Department of Sustainability and Environment 8 Nicholson Street East Melbourne Victoria 3002 A description of the nature of the department’s operations and its principal activities is included in the Report of Operations. These fi nancial statements were authorised for issue by the Secretary – Mr Greg Wilson and the Chief Finance and Accounting Offi cer – Mr Matthew Clancy on 7 September 2012. For queries in relation to our fi nancial reporting please call 13 61 86, or visit our website www.dse.vic.gov.au.

66 Department of Sustainability and Environment Annual Report 2012 Department of Sustainability and Environment Financial Statements Compre hensive operating statement for the ﬁ nancial year ended 30 June 2012

2012 2011 (i)

Notes $’000 $’000

Income from transactions

Output appropriations 1(f), 25(c) 1,083,674 998,223

Interest 1(f), 4(a) 3,063 2,864

Sale of goods and services 1(f), 4(b) 48,037 43,557

Metropolitan parks improvement rate 1(f), 4(c) 131,482 125,662

Grants 1(f), 4(d) 96,905 45,217

Fair value of assets received free of charge or for nominal consideration 1(f), 4(e) 0 533

Other income 1(f), 4(f) 12,406 24,602

Total income from transactions1,375,567 1,240,658

Expenses from transactions

Employee expenses 1(g), 5(a) (272,425) (270,173)

Depreciation 1(g), 5(b) (49,362) (46,824)

Interest expense 1(g), 5(c) (1,824) (1,714)

Grants and other transfers 1(g), 5(d) (560,244) (522,251)

Capital asset charge 1(g) (75,393) (73,646)

Supplies and services 1(g), 5(e) (338,696) (326,821)

Other operating expenses 1(g), 5(f) (18,080) (8,679)

Total expenses from transactions(1,316,024) (1,250,108)

Net result from transactions (net operating balance) 59,543 (9,450)

Other economic ﬂ ows included in net result

Net gain/(loss) on non–ﬁ nancial assets 1(h), 1(l), 6(a) (37,619) 32,183

Net loss on ﬁ nancial instruments 1(h), 6(b) 0 (13)

Share of net losses of associates, excluding dividends 1(k), 6(c) (1,607) 0

Other gains/(losses) from other economic ﬂ ows 1(h), 6(d) (1,509) 946

Total other economic ﬂ ows included in net result(40,735) 33,116

Net result 18,808 23,666

Other economic ﬂ ows – other non-owner changes in equity

Changes in physical asset revaluation surplus 24 0 (838,312)

Total other economic ﬂ ows – other non-owner changes in equity 0 (838,312)

Comprehensive result 18,808 (814,646)

The comprehensive operating statement should be read in conjunction with the accompanying notes. Note: (i) Refer to Note 33. Correction of prior year errors for details.

Department of Sustainability and Environment Annual Report 2012 67 B alance sheet as at 30 June 2012

Restated As at 1 July 2012 2011 (i) 2010 (i)

Notes $’000 $’000 $’000

Assets

Financial assets

Cash and deposits 1(k), 22, 23(a) 258,218 251,012 238,325

Receivables 1(k), 8 176,055 198,788 230,497

Investments accounted for using the equity method 1(k), 9 9,212 00

Total ﬁ nancial assets443,485 449,800 468,822

Non-ﬁ nancial assets

Inventories 1(l), 10 13,218 11,893 13,595

Non-ﬁ nancial physical assets classiﬁ ed as held for sale 1(l), 11 2,543 628 364

Property, plant and equipment 1(l), 12 7,145,604 7,293,198 8,138,235

Biological assets 1(l), 13 0 24,874 22,296

Intangible assets 1(l), 14 7,315 21,292 41,501

Prepayments 1(l) 10,022 8,840 2,107

Total non-ﬁ nancial assets7,178,702 7,360,725 8,218,098

Total assets7,622,187 7,810,525 8,686,920

Liabilities

Payables 1(m), 15 114,879 199,656 201,080

Borrowings 1(m), 16, 22 30,549 25,130 27,738

Unearned income 1(m) 113 291 148

Provisions 1(m), 17 137,701 142,335 137,307

Total liabilities283,242 367,412 366,273

Net assets 7,338,945 7,443,113 8,320,647

Equity

Accumulated surplus/(deﬁ cit) (212,281) (231,089) (254,755)

Physical asset revaluation surplus 24 5,642,080 5,642,080 6,480,392

Contributed capital 1(o) 1,909,146 2,032,122 2,095,010

Net worth 7,338,945 7,443,113 8,320,647

Commitments for expenditure 1(p), 20

Contingent assets and contingent liabilities 1(q), 21

The balance sheet should be read in conjunction with the accompanying notes. Note: (i) Refer to Note 33. Correction of prior year errors for details.

68 Department of Sustainability and Environment Annual Report 2012 S tatement of changes in equity for the ﬁ nancial year ended 30 June 2012

Physical asset revaluation Accumulated Contributions surplus deﬁ cit by owner Total

Notes $’000 $’000 $’000 $’000

Balance at 1 July 2010 6,468,268 (196,829) 2,095,010 8,366,449

Net effect of correction of errors (i) 33 12,124 (57,926) 0 (45,802)

Restated balance at 1 July 2010 (i) 6,480,392 (254,755) 2,095,010 8,320,647

Net result for the year 0 23,666 0 23,666

Other comprehensive income for the year (i) 24 (838,312) 0 0 (838,312)

Capital appropriations 25 0 0 200,117 200,117

Capital contributions of non-current assets 0 0 (118,900) (118,900)

Capital contributions transferred to portfolio 0 0 (144,105) (144,105) entities

Restated balance at 30 June 2011 (i) 5,642,080 (231,089) 2,032,122 7,443,113

Net result for the year 0 18,808 0 18,808

Capital appropriations 25 0 0147,327 147,327

Capital contributions of non-current assets 0 0 (148,166) (148,166)

Capital contribution transferred to portfolio 0 0 (122,137) (122,137) entities

Balance at 30 June 20125,642,080 (212,281) 1,909,146 7,338,945

The statement of changes in equity should be read in conjunction with the accompanying notes. Note: (i) Refer to Note 33. Correction of prior year errors for details.

Department of Sustainability and Environment Annual Report 2012 69 C ash ﬂ ow statement for the ﬁ nancial year ended 30 June 2012

2012 2011

Notes $’000 $’000

Cash ﬂ ows from operating activities

Receipts

Receipts from Government 1,196,473 1,069,803

Receipts from other entities 202,128 207,122

Goods and Services Tax recovered from the ATO (i) 54,275 32,626

Interest received 3,086 2,797

Total receipts 1,455,962 1,312,348

Payments

Payments of grants and other transfers (582,243) (542,174)

Payments to suppliers and employees (668,722) (675,445)

Capital asset charge payments (75,393) (73,646)

Interest and other costs of ﬁ nance paid (1,824) (1,714)

Total payments (1,328,182) (1,292,979)

Net cash ﬂ ows from operating activities 23(d) 127,780 19,369

Cash ﬂ ows used in investing activities

Payments for investments (ii) (12,000) 0

Payments for non-ﬁ nancial assets (58,973) (104,159)

Sales of non-ﬁ nancial assets 7,253 3,198

Net cash ﬂ ows used in investing activities(63,720) (100,961)

Cash ﬂ ows from/(used in) ﬁ nancing activities

Owner contributions by State Government 147,327 200,117

Payments of capital contributions (122,137) (144,105)

Repayments of ﬁ nance leases (9,225) (10,904)

Proceeds from advances 0 69,141

Repayments of advances (72,819) (19,970)

Net cash ﬂ ows from/(used in) ﬁ nancing activities (56,854) 94,279

Net increase in cash and cash equivalents7,206 12,687

Cash and cash equivalents at the beginning of the ﬁ nancial year 251,012 238,325

Cash and cash equivalents at the end of the ﬁ nancial year 23(a) 258,218 251,012

Non-cash ﬁ nancing and investing activities are disclosed in Note 23(c). The cash ﬂ ow statement should be read in conjunction with the accompanying notes. Notes: (i) Goods and Services Tax recovered from the ATO is presented on a net basis. (ii) Includes interests in associates.

70 Department of Sustainability and Environment Annual Report 2012 Notes to the ﬁ nancial statements 30 June 2012

Contents Page Note 1. Summary of signifi cant accounting policies 72 Note 2. Departmental (controlled) outputs 90 Note 3. Administered (non-controlled) items 95 Note 4. Income from transactions 101 Note 5. Expenses from transactions 102 Note 6. Other economic fl ows included in net result 104 Note 7. Revision of accounting estimates 104 Note 8. Receivables 105 Note 9. Investments accounted for using the equity method 106 Note 10. Inventories 107 Note 11. Non-fi nancial physical assets classifi ed as held for sale 107 Note 12. Property, plant and equipment 108 Note 13. Biological assets 114 Note 14. Intangible assets 115 Note 15. Payables 116 Note 16. Borrowings 117 Note 17. Provisions 118 Note 18. Superannuation 120 Note 19. Leases 121 Note 20. Commitments for expenditure 123 Note 21. Contingent assets and contingent liabilities 124 Note 22. Financial instruments 124 Note 23. Cash fl ow information 134 Note 24. Reserves 135 Note 25. Summary of compliance with annual parliamentary and special appropriations 136 Note 26. Ex-gratia payments 137 Note 27. Annotated income agreements 138 Note 28. Trust account balances 140 Note 29. Responsible persons 141 Note 30. Remuneration of executives 141 Note 31. Remuneration of auditors 143 Note 32. Subsequent events 143 Note 33. Correction of prior year errors 143 Note 34. Glossary of terms and style conventions 148

Department of Sustainability and Environment Annual Report 2012 71 Notes to the ﬁ nancial statements 30 June 2012

No te 1. Summary of signiﬁ cant accounting policies

These annual fi nancial statements represent the audited • non-fi nancial physical assets which, subsequent to general purpose fi nancial statements for the Department of acquisition, are measured at a revalued amount being their Sustainability and Environment (the department) for the period fair value at the date of the revaluation less any subsequent ending 30 June 2012. The purpose of the report is to provide accumulated depreciation and subsequent impairment users with information about the department’s stewardship of losses. Revaluations are made with suffi cient regularity to resources entrusted to it. ensure that the carrying amounts do not materially differ from their fair value; (a) Statement of compliance • productive trees in commercial native forests which are These general purpose fi nancial statements have been prepared recognised at their fair value less costs to sell; and in accordance with the Financial Management Act 1994 (FMA) and applicable Australian Accounting Standards (AAS) which • the fair value of any other asset is generally based on its include Interpretations, issued by the Australian Accounting depreciated replacement value. Standards Board (AASB). In particular, they are presented in a manner consistent with the requirements of AASB 1049 (c) Reporting entity Whole of Government and General Government Sector The fi nancial statements cover the department as an individual Financial Reporting. reporting entity. Where appropriate, those AAS paragraphs applicable to The department is a government department of the State of not-for-profi t entities have been applied. Victoria, established pursuant to an order made by the Premier under the Administrative Arrangements Act 1983. Accounting policies are selected and applied in a manner which ensures that the resulting fi nancial information satisfi es the Its principal address is: concepts of relevance and reliability, thereby ensuring that the substance of the underlying transactions or other events Department of Sustainability and Environment is reported. 8 Nicholson Street East Melbourne Victoria 3002 To gain a better understanding of the terminology used in this report, please refer to Note 34. Glossary of terms and style The department is an administrative agency acting on behalf of conventions. the Crown. These annual fi nancial statements were authorised for issue by The fi nancial statements include all the controlled activities of the Secretary on 7 September 2012. the department. (b) Basis of accounting preparation and measurement The following business unit of the department, for the purpose of this report, is included in the reporting entity: The accrual basis of accounting has been applied in the preparation of these fi nancial statements whereby assets, • The Offi ce of the Environmental Monitor is an administrative liabilities, equity, income and expenses are recognised in the offi ce of the department established under section 11 of the reporting period to which they relate, regardless of when cash is Public Administration Act 2004. The Monitor provides regular received or paid. reports to the Minister for Environment and Climate Change, but is administratively responsible to the Secretary of the Judgements, estimates and assumptions are required to be department. The Order in Council creating the administrative made about the carrying values of assets and liabilities that are offi ce became effective on 1 January 2008. not readily apparent from other sources. The estimates and associated assumptions are based on professional judgements The following statutory bodies of the department, for the derived from historical experience and various other factors that purpose of this report, are excluded from the reporting entity: are believed to be reasonable under the circumstances. Actual • The Commissioner for Environmental Sustainability was results may differ from these estimates. established by the Victorian Government in November 2003 Revisions to accounting estimates are recognised in the period under the Commissioner for Environmental Sustainability in which the estimate is revised and also in future periods that Act 2003 to provide an independent voice that audits and are affected by the revision. Judgements and assumptions reports on environmental sustainability. The Commissioner made by management in the application of AASs that have for Environmental Sustainability is designated as a separate signifi cant effects on the fi nancial statements and estimates reporting entity and is excluded from the department’s relate to: fi nancial report. • the fair value of land, buildings, infrastructure, plant and • The Victorian Environmental Water Holder was established equipment (refer to Note 1(l)); by the Victorian Government in July 2011 under the Water Amendment (Victorian Environmental Water Holder) Act • superannuation expense (refer to Note 1(g)); and 2010 to manage the State’s environmental water holdings. • actuarial assumptions for employee benefi t provisions based The Victorian Environmental Water Holder is designated on likely tenure of existing staff, patterns of leave claims, as a separate reporting entity and is excluded from the future salary movements and future discount rates (refer to department’s fi nancial report. Note 1(m)). A description of the nature of the department’s operations These fi nancial statements are presented in Australian dollars, and its principal activities is included in the report of operations and have been prepared in accordance with the historical cost in the Annual Report which does not form part of these convention, except for: fi nancial statements.

72 Department of Sustainability and Environment Annual Report 2012 Notes to the ﬁ nancial statements 30 June 2012

No te 1. Summary of signiﬁ cant accounting policies (continued)

Objectives and funding Disclosures related to administered items can be found in The department’s overall objective is to promote and manage Note 3. Administered (non-controlled) items. the sustainable use of Victoria’s natural and built environments Funds held in trust through its responsibilities in the Environment, Water and Climate Change portfolios. This includes having healthy Other trust activities on behalf of parties external and natural assets; effi ciently using natural resources; to the Victorian Government reducing environmental impacts; and ensuring liveable The department receives monies in a trustee capacity for and sustainable communities. various purposes and holds it in a number of trust funds. The department is predominantly funded by accrual based Trust funds where the department has discretion to deploy their parliamentary appropriations for the provision of outputs that are resources for its own benefi t or the achievement of its objectives further described in Note 2. Departmental (controlled) outputs. It are controlled trust funds. Controlled trust funds are recognised provides, on a fee for service basis, various goods and services. in these fi nancial statements. Outputs of the department Trust funds where the department does not have the discretion Information about the department’s output activities, and the to deploy the resources for its own benefi t or the achievement expenses, income, assets and liabilities which are reliably of its objectives are administered trust funds. These transactions attributable to those output activities is set out in the output and balances are reported in Note 3. Administered (non- activities schedule (Note 2. Departmental (controlled) outputs). controlled) items. Information about expenses, income, assets and liabilities The department does not hold any trust funds on behalf of third administered by the department are given in the schedule parties external to the Victorian Government. of administered expenses and income and the schedule of administered assets and liabilities (Note 3. Administered Disclosures related to trust fund transactions and balances can (non-controlled) items). be found in Note 28. Trust account balances.

(d) Basis of consolidation (e) Scope and presentation of fi nancial statements In accordance with AASB 127 Consolidated and Separate Comprehensive operating statement Financial Statements, the consolidated fi nancial statements Income and expenses in the comprehensive operating exclude bodies within the department’s portfolio that are statement are classifi ed according to whether or not they not controlled by the department and therefore are not arise from ‘transactions’ or ‘other economic fl ows’. This consolidated. Bodies and activities that are administered (see classifi cation is consistent with the whole of government explanation below under administered items) are also not reporting format and is allowed under AASB 101 Presentation controlled and not consolidated. of Financial Statements. Consistent with the requirements of AASB 1004 Contributions, ‘Transactions’ and ‘other economic fl ows’ are defi ned by the contributions by owners (that is, contributed capital and its Australian System of Government Finance Statistics Concepts, repayment) are treated as equity transactions and, therefore, do Sources and Methods 2005 and Amendments to Australian not form part of the income and expenses of the department. System of Government Finance Statistics, 2005 (ABS Catalogue Jointly controlled assets or operations No. 5514.0) (the GFS manual, refer to Note 34. Glossary of terms and style conventions). Interests in jointly controlled assets or operations are not consolidated by the department, but are accounted for in ‘Transactions’ are those economic fl ows that are considered accordance with the policy outlined in Note 1(k) Financial assets. to arise as a result of policy decisions, usually interactions between two entities by mutual agreement. Transactions also Administered items include fl ows within an entity, such as depreciation where the Certain resources are administered by the department on owner is simultaneously acting as the owner of the depreciating behalf of the State. While the department is accountable for asset and as the consumer of the service provided by the the transactions involving administered items, it does not have asset. Taxation is regarded as mutually agreed interactions the discretion to deploy the resources for its own benefi t or the between the Government and taxpayers. Transactions can be achievement of its objectives. Accordingly, transactions and in kind (e.g. assets provided/given free of charge or for nominal balances relating to administered items are not recognised as consideration) or where the fi nal consideration is cash. departmental income, expenses, assets or liabilities within the ‘Other economic fl ows’ are changes arising from market re- body of the fi nancial statements. measurements. They include: Administered income includes fees from land titles transactions • gains and losses from disposals; revaluations and and environmental contributions from Victorian water impairments of non-fi nancial physical and intangible assets; businesses. Administered assets include the state’s share of jointly controlled assets. Administered liabilities include income • actuarial gains and losses arising from defi ned benefi t that has been received but not yet earned. superannuation plans; Except as otherwise disclosed, administered resources are • fair value changes of fi nancial instruments and agricultural accounted for on an accrual basis using the same accounting assets; and policies adopted for recognition of the departmental items in • depletion of natural assets (non-produced) from their use or the fi nancial statements. Both controlled and administered items removal. of the department are consolidated into the fi nancial statements of the state. The net result is equivalent to profi t or loss derived in accordance with AASs.

Department of Sustainability and Environment Annual Report 2012 73 Notes to the ﬁ nancial statements 30 June 2012

No te 1. Summary of signiﬁ cant accounting policies (continued)

Balance sheet Output appropriations Assets and liabilities are presented in liquidity order with assets Income from the outputs the department provides to the aggregated into fi nancial assets and non-fi nancial assets. Government is recognised when those outputs have been delivered and the relevant minister has certifi ed delivery of those Current and non-current assets and liabilities (non-current outputs in accordance with specifi ed performance criteria. being those assets or liabilities expected to be recovered or settled in more than 12 months) are disclosed in the notes, Interest where relevant. Interest income includes interest received on bank term deposits Statement of changes in equity and other investments and the unwinding over time of the discount on fi nancial assets. Interest income is recognised using The statement of changes in equity presents reconciliations the effective interest method which allocates the interest over of non-owner and owner changes in equity from the opening the relevant period. balance at the beginning of the reporting period to the closing balance at the end of the reporting period. It also Net realised and unrealised gains and losses on the revaluation shows separately changes due to amounts recognised in the of investments do not form part of income from transactions, ‘Comprehensive result’ and amounts recognised in ‘Other but are reported either as part of income from other economic economic fl ows – other movements in equity’ related to fl ows in the net result or as unrealised gains or losses taken ‘Transactions with owner in its capacity as owner’. directly to equity, forming part of the total change in net worth in the comprehensive result. Cash fl ow statement Cash fl ows are classifi ed according to whether or not they Sale of goods and services arise from operating, investing, or fi nancing activities. This Income from the supply of services classifi cation is consistent with requirements under AASB 107 Income from the supply of services is recognised by reference Statement of Cash Flows. to the stage of completion of the services being performed. The For cash fl ow statement presentation purposes, cash and cash income is recognised when: equivalents includes bank overdrafts, which are included as • the amount of the income, stage of completion and current borrowings on the balance sheet. transaction costs incurred can be reliably measured; and Rounding • it is probable that the economic benefi ts associated with the Amounts in the fi nancial statements have been rounded to the transaction will fl ow to the department. nearest $1,000, unless otherwise stated. Please refer to the end Under the stage of completion method, income is recognised of Note 34. Glossary of terms and style conventions for a style by reference to the successful completion of milestones in convention explaining that minor discrepancies in totals of tables individual contracts in each annual reporting period. are due to rounding. Income from sale of goods (f) Income from transactions Income from the sale of goods is recognised when: Income is recognised to the extent that it is probable that the economic benefi ts will fl ow to the department and the income • the department no longer has any of the signifi cant risks and can be reliably measured at fair value. rewards of ownership of the goods transferred to the buyer;

Appropriation income • the department no longer has continuing managerial involvement to the degree usually associated with ownership, Appropriated income becomes controlled and is recognised by nor effective control over the goods sold; the department when it is appropriated from the Consolidated Fund by the Victorian Parliament and applied to the purposes • the amount of income, and the costs incurred or to be defi ned under the relevant appropriations act. Additionally, the incurred in respect of the transactions, can be reliably department is permitted under section 29 of the FMA to have measured; and certain income annotated to the annual appropriation. The • it is probable that the economic benefi ts associated with the income which forms part of a s29 agreement is recognised by transaction will fl ow to the department. the department and the receipts paid into the Consolidated Fund as an administered item. At the point of income Sale of goods and services includes regulatory fees which are recognition, s29 provides for an equivalent amount to be added recognised at the time the regulatory fee is billed. to the annual appropriation. Examples of receipts which can form part of a s29 agreement are Commonwealth specifi c Metropolitan parks improvement rate purpose grants, municipal council special purpose grants, the The metropolitan parks improvement rate is recognised as proceeds from the sale of assets and income from the sale of income when it is received. products and services. Grants Where applicable, amounts disclosed as income are net of returns, allowances, duties and taxes. All amounts of income Income from grants (other than contributions by owners) over which the department does not have control are disclosed is recognised when the department obtains control over as administered income in the schedule of administered income the contribution. and expenses (see Note 3. Administered (non-controlled) items). Income is recognised for each of the department’s major activities as follows:

74 Department of Sustainability and Environment Annual Report 2012 Notes to the ﬁ nancial statements 30 June 2012

No te 1. Summary of signiﬁ cant accounting policies (continued)

Where such grants are payable into the Consolidated Fund, Depreciation they are reported as administered income (refer to Note 1(d) All infrastructure assets, buildings, plant and equipment and and (i)). For reciprocal grants (i.e. equal value is given back by other non-fi nancial physical assets (excluding items under the department to the provider), the department is deemed to operating leases, assets held-for-sale and land) that have fi nite have assumed control when the department has satisfi ed its useful lives are depreciated. Depreciation is generally calculated performance obligations under the terms of the grant. For non- on a straight-line basis, at rates that allocate the asset’s value, reciprocal grants, the department is deemed to have assumed less any estimated residual value, over its estimated useful control when the grant is receivable or received. Conditional life. Refer to Note 1(l) for the depreciation policy for leasehold grants may be reciprocal or non-reciprocal depending on the improvements and to Note 7. Revision of accounting estimates terms of the grant. for the impact resulting from the change in useful lives of certain assets. Fair value of assets and services received free of charge or for nominal consideration The estimated useful lives, residual values and depreciation Contributions of resources received free of charge or for nominal method are reviewed at the end of each annual reporting period, consideration are recognised at fair value when control is and adjustments made where appropriate. obtained over them, irrespective of whether these contributions The following estimated useful lives for the different asset are subject to restrictions or conditions over their use. classes are used in the calculation of depreciation: Contributions in the form of services are only recognised when a fair value can be reliably determined and the services would Asset class Useful life have been purchased if not received as a donation. Buildings and structures 5 to 100 years Other income User charges and fees Roads 80 years

The department recognises controlled and administered user Plant and equipment 3 to 20 years charges and fees at the time an invoice is issued for the goods or services provided, or cash is received where no invoice Historic, cultural and environment assets 99 years supports the goods or service provided. The exceptions are receipts for Land Titles services, and a portion of log sales, Term of lease Buildings leasehold improvement which are invoiced monthly based on an annual royalty, (1 to 15 years) averaged over 12 months. Where the provision of goods and services is incomplete at the reporting date, the value of the Term of lease Finance leased motor vehicle assets incomplete portion is recognised as unearned income for the (1 to 5 years) period and classiﬁ ed as a liability.

Other income Where assets have separately identifi able components, those Amounts disclosed as income are, where applicable, net of components are assigned useful lives distinct from the item returns, allowances and duties and taxes. of plant and equipment to which they relate and depreciated accordingly. All other amounts of income over which the department does not gain control are disclosed as administered income in the Land, earthworks, land under declared roads, and core cultural schedule of administered items (see Note 3. Administered (non- assets, which are considered to have an indefi nite life, are not controlled) items). depreciated. Depreciation is not recognised in respect of these assets because their service potential has not, in any material (g) Expenses from transactions sense, been consumed during the reporting period. Expenses from transactions are recognised as they are incurred, Intangible produced assets with fi nite useful lives are and reported in the fi nancial year to which they relate. depreciated as an expense from transactions on a systematic (typically straight-line) basis over the asset’s useful life. Employee expenses Depreciation begins when the asset is available for use, that is, Refer to the section in Note 1(m) regarding employee benefi ts. when it is in the location and condition necessary for it to be capable of operating in the manner intended by management. These expenses include all costs related to employment (other than superannuation which is accounted for separately) The consumption of intangible non-produced assets with fi nite including wages and salaries, fringe benefi ts tax, leave useful lives is not classifi ed as a transaction, but as amortisation entitlements, redundancy payments and WorkCover premiums. and is included in the net result as an other economic fl ow. The amortisation period and the amortisation method for an Superannuation intangible asset with a fi nite useful life are reviewed at least at The amount recognised in the comprehensive operating the end of each annual reporting period. statement is the employer contributions for members of both Intangible assets with indefi nite useful lives are not depreciated defi ned benefi t and defi ned contribution superannuation plans or amortised, but are tested annually for impairment. that are paid or payable during the reporting period. The Department of Treasury and Finance (DTF) in their Annual Interest expense Financial Statements, disclose on behalf of the State as the Interest expense is recognised in the period in which it is sponsoring employer, the net defi ned benefi t cost related to the incurred. Refer to Note 34. Glossary of terms and style members of these plans as an administered liability. Refer to conventions for an explanation of interest expense items. DTF’s Annual Financial Statements for more detailed disclosures in relation to these plans.

Department of Sustainability and Environment Annual Report 2012 75 Notes to the ﬁ nancial statements 30 June 2012

No te 1. Summary of signiﬁ cant accounting policies (continued)

Grants and other transfers Financial Reporting Direction (FRD) 117 Contributions of Grants and other transfers to third parties (other than Existing Non-Financial Assets to Third Parties and FRD 119 contributions to owners) are recognised as an expense in Contributions by Owners. Land that is not eligible to be treated the reporting period in which they are paid or payable. They as a return of equity is derecognised. include transactions such as: grants, subsidies, other transfer Impairment of intangible assets payments made to State owned agencies, local government and community groups. Refer to Note 34. Glossary of terms Intangible assets with indefi nite useful lives (and intangible and style conventions for an explanation of grants and assets not yet available for use) are tested annually for other transfers. impairment (as described below) and whenever there is an indication that the asset may be impaired. Capital asset charge All other assets are assessed annually for indications of The capital asset charge is calculated on the budgeted carrying impairment, except for: amount of applicable non-fi nancial physical assets. • inventories (refer Note 1(l)); Supplies and services • non-fi nancial physical assets held for sale (refer Note 1(l)); and Supplies and services costs are recognised as an expense in the reporting period in which they are incurred. The carrying • certain biological assets related to agricultural activity (refer amounts of any inventories held for distribution are expensed Note 1(l)). when distributed. If there is an indication of impairment, the assets concerned are tested as to whether their carrying value exceeds their Other operating expenses recoverable amount. Where an asset’s carrying value exceeds Other operating expenses generally represent the day-to-day its recoverable amount, the difference is written off as an other running costs incurred in normal operations. economic fl ow, except to the extent that the write-down can be debited to an asset revaluation surplus amount applicable to Fair value of assets and services provided free of that class of asset. charge or for nominal consideration If there is an indication that there has been a change in the Contributions of resources provided free of charge or for estimate of an asset’s recoverable amount since the last nominal consideration are recognised at their fair value when impairment loss was recognised, the carrying amount shall the transferee obtains control over them, irrespective of be increased to its recoverable amount. This reversal of the whether restrictions or conditions are imposed over the use of impairment loss occurs only to the extent that the asset’s the contributions, unless received from another government carrying amount does not exceed the carrying amount department or agency as a consequence of a restructuring of that would have been determined, net of depreciation or administrative arrangements. In the latter case, such a transfer amortisation, if no impairment loss had been recognised in will be recognised at its carrying value. prior years. Contributions in the form of services are only recognised when It is deemed that, in the event of the loss or destruction of an a fair value can be reliably determined and the services would asset, the future economic benefi ts arising from the use of the have been purchased if not donated. asset will be replaced unless a specifi c decision to the contrary (h) Other economic fl ows included in the net result has been made. The recoverable amount for most assets is measured at the higher of depreciated replacement cost and Other economic fl ows measure the change in volume or value of fair value less costs to sell. Recoverable amount for assets assets or liabilities that do not result from transactions. held primarily to generate net cash infl ows is measured at the higher of the present value of future cash fl ows expected to be Net gain/(loss) on non-fi nancial assets obtained from the asset and fair value less costs to sell. Net gain/(loss) on non-fi nancial assets and liabilities includes realised and unrealised gains and losses as follows: Refer to Note 1(l) in relation to the recognition and measurement of non-fi nancial assets. Net gain/(loss) on disposal of property, plant and equipment Net gain/(loss) on fi nancial instruments Any gain or loss on the disposal of property, plant and Net gain/(loss) on fi nancial instruments includes: equipment is recognised at the date of disposal and is • realised and unrealised gains and losses from revaluations of determined after deducting from the proceeds the carrying value fi nancial instruments at fair value; of the asset at that time. • impairment and reversal of impairment for fi nancial Net gain/(loss) arising from changes in fair value less instruments at amortised cost (refer to Note 1(j); and point-of-sale costs of biological assets • disposals of fi nancial assets. Refer to Note 1(l) – Biological assets. Revaluations of fi nancial instruments at fair value Recognition and derecognition of non-fi nancial assets Refer to Note 1(j) Financial instruments. Land is recognised when the department identifi es specifi c land parcels that it controls and their cost can be reliably determined. Share of net profi ts/(losses) of associates, Where land has been received at no cost the fair value is excluding dividends determined by the Valuer-General Victoria. Refer to Note 1(d) Basis of consolidation. Land transferred to third parties and other Victorian government entities is treated as a return of equity in accordance with

76 Department of Sustainability and Environment Annual Report 2012 Notes to the ﬁ nancial statements 30 June 2012

No te 1. Summary of signiﬁ cant accounting policies (continued)

Other gains/(losses) from other economic fl ows Other income Other gains/(losses) from other economic fl ows include the Amounts disclosed as income include revenue from the gains or losses from: metropolitan water businesses for the Northern Victoria Irrigation Renewal Project, which is recognised as revenue based on the • the revaluation of the present value of the long service leave proportion of Stage 1 of the project that has been completed. liability due to changes in bond interest rates; and • transfer of amounts from the reserves and/or accumulated (j) Financial instruments surplus to net result due to disposal or derecognition or Financial instruments arise out of contractual agreements that reclassifi cation. give rise to a fi nancial asset of one entity and a fi nancial liability or equity instrument of another entity. Due to the nature of the (i) Administered income department’s activities, certain fi nancial assets and fi nancial The department does not gain control over assets arising from liabilities arise under statute rather than a contract. Such administered income, consequently no income is recognised in fi nancial assets and fi nancial liabilities do not meet the defi nition the department’s fi nancial statements. The department collects of fi nancial instruments in AASB 132 Financial Instruments: these amounts on behalf of the State. Accordingly, the amounts Presentation. For example, statutory receivables arising from are disclosed as income in the schedule of Administered Items taxes, fi nes and penalties do not meet the defi nition of fi nancial (see Note 3. Administered (non-controlled) items). instruments as they do not arise under contract. However, guarantees issued by the Treasurer on behalf of the department Appropriations – Payments on behalf of the State are fi nancial instruments because, although authorised under Appropriation revenue is recognised on an accrual basis based statute, the terms and conditions for each fi nancial guarantee for the provision of outputs delivered through payments on may vary and are subject to an agreement. behalf of the state (POBOS). Where relevant, for note disclosure purposes, a distinction is made between those fi nancial assets and fi nancial liabilities that Land titles income meet the defi nition of fi nancial instruments in accordance with Revenue for the provision of land titles data is recognised AASB 132 and those that do not. on behalf of the state on an accrual basis when services are delivered. The following refers to fi nancial instruments unless otherwise stated. Provision of services Categories of non-derivative fi nancial instruments Revenue for the provision of services is recognised on behalf of the state on an accrual basis when services are delivered. Loans and receivables Loans and receivables are fi nancial instrument assets with fi xed Licenses and leases and determinable payments that are not quoted on an active Amounts disclosed as income include revenue for the sale of market. These assets are initially recognised at fair value plus timber resources to Australian Paper, which is recognised on any directly attributable transaction costs. Subsequent to initial behalf of the state on an accrual basis when goods measurement, loans and receivables are measured at amortised are delivered. cost using the effective interest method, less any impairment. Royalties Loans and receivables category includes cash and deposits Royalty revenue is recognised on an accrual basis in (refer to Note 1(k)), term deposits with maturity greater than accordance with the relevant legislation and agreements. three months, trade receivables, loans and other receivables, but not statutory receivables. Special purpose grants Financial liabilities at amortised cost The department’s administered grants mainly comprise funds provided by the Commonwealth to assist the State Financial instrument liabilities are initially recognised on the Government in meeting general or specifi c service delivery date they are originated. They are initially measured at fair value obligations, primarily for the purpose of aiding in the fi nancing plus any directly attributable transaction costs. Subsequent of the operations of the recipient, capital purposes and/or for to initial recognition, these fi nancial instruments are measured on passing to other recipients. The department also receives at amortised cost with any difference between the initial grants for on passing from other jurisdictions. Grant revenue recognised amount and the redemption value being recognised is recognised on an accrual basis. Refer to Note 1(f) – Income in profi t and loss over the period of the interest-bearing liability, from transactions for the accounting of grants. using the effective interest rate method (refer to Note 34. Glossary of terms and style conventions). Environmental contribution Financial instrument liabilities measured at amortised cost Water authorities are required to contribute towards initiatives include all of the department’s contractual payables, deposits to improve the sustainable management of water. These held and advances received, and interest-bearing arrangements contributions are collected through the Environmental other than those designated at fair value through profi t or loss. Contribution Levy and recognised as revenue when the department has the right to receive them on behalf of the state Offsetting fi nancial instruments in accordance with AASB 1004 Contributions. Financial instrument assets and liabilities are offset and the net amount presented in the consolidated balance sheet when, and Jointly controlled assets received free of charge only when, the department concerned has a legal right to offset On behalf of the State, the department jointly controlled assets the amounts and intend either to settle on a net basis or to of the Murray-Darling Basin Authority. Jointly controlled assets realise the asset and settle the liability simultaneously. received free of charge give rise to revenue, which is recognised on an accrual basis.

Department of Sustainability and Environment Annual Report 2012 77 Notes to the ﬁ nancial statements 30 June 2012

No te 1. Summary of signiﬁ cant accounting policies (continued)

Reclassifi cation of fi nancial instruments The classifi cation depends on the purpose for which the Subsequent to initial recognition and under rare circumstances, investments were acquired. Management determines the non-derivative fi nancial instruments assets that have not been classifi cation of its investments at initial recognition. designated at fair value through profi t or loss upon recognition, Any dividend or interest earned on the fi nancial asset is may be reclassifi ed out of the fair value through profi t or loss recognised in the comprehensive operating statement as category, if they are no longer held for the purpose of selling or a transaction. repurchasing in the near term. Investments accounted for using the equity method Financial instrument assets that meet the defi nition of loans and receivables may be reclassifi ed out of the fair value Associates are those entities over which the department through profi t and loss category into the loans and receivables exercises signifi cant infl uence, but not control. category, where they would have met the defi nition of loans Investments in associates are accounted for in the fi nancial and receivables had they not been required to be classifi ed as statements using the equity method. Under this method, the fair value through profi t and loss. In these cases, the fi nancial department’s share of the post-acquisition profi ts or losses of instrument assets may be reclassifi ed out of the fair value associates is recognised in the net result as other economic through profi t and loss category, if there is the intention and fl ows. The share of post-acquisition movements in revaluation ability to hold them for the foreseeable future or until maturity. surpluses and any other reserves is recognised in both the Available-for-sale fi nancial instrument assets that meet the comprehensive operating statement and the statement of defi nition of loans and receivables may be reclassifi ed into the changes in equity. The cumulative post acquisition movements loans and receivables category if there is the intention and ability are adjusted against the cost of the investment. to hold them for the foreseeable future or until maturity. Joint ventures are contractual arrangements between the department or a subsidiary entity and one or more other party (k) Financial assets to undertake an economic activity that is subject to joint control. Cash and deposits Joint control only exists when the strategic, fi nancial and Cash and deposits, including cash equivalents, comprise cash operating decisions relating to the activity require the unanimous on hand and cash at bank, deposits at call and those highly consent of the parties sharing control (the venturers). liquid investments with an original maturity of three months Interests in jointly controlled entities are accounted for in the or less, which are held for the purpose of meeting short term fi nancial statements using the equity method, as applied to cash commitments rather than for investment purposes, and investments in associates. which are readily convertible to known amounts of cash and are subject to an insignifi cant risk of changes in value. Investments in jointly controlled assets and operations In respect of any interest in jointly controlled assets, the Receivables department recognises in its administered fi nancial statements: Receivables consist of: • its share of jointly controlled assets; • contractual receivables, which include mainly debtors in relation to goods and services, loans to third parties, accrued • any liabilities that it had incurred; investment income, and fi nance lease receivables (refer to • its share of liabilities incurred jointly by the joint venture; Note 1(n) – Leases); and • any income earned from the selling or using of its share of the • statutory receivables, which include predominantly amounts output from the joint venture; and owing from the Victorian Government and GST input tax credits recoverable. Receivables that are contractual are • any expenses incurred in relation to being an investor in the classifi ed as fi nancial instruments. Statutory receivables are joint venture. not classifi ed as fi nancial instruments. For jointly controlled operations the state recognises: the assets Contractual receivables are classifi ed as fi nancial instruments that it controls and the liabilities that it incurs; expenses that it and categorised as loans and receivables (refer to Note 1(j) incurs; and its share of income that it earns from selling outputs for recognition and measurement). Statutory receivables are of the joint venture. recognised and measured similarly to contractual receivables (except for impairment), but are not classifi ed as fi nancial Derecognition of fi nancial assets instruments because they do not arise from a contract. A fi nancial asset (or, where applicable, a part of a fi nancial asset or part of a group of similar fi nancial assets) is derecognised Receivables are subject to impairment testing as described when: below. A provision for doubtful receivables is recognised when there is objective evidence that the debts may not be collected, • the rights to receive cash fl ows from the asset have expired; and bad debts are written off when identifi ed (refer to Note 1(k) – or Impairment of fi nancial assets). • the department retains the right to receive cash fl ows from Investments and other fi nancial assets the asset, but has assumed an obligation to pay them in full without material delay to a third party under a ‘pass through’ Investments are classifi ed in the following categories: arrangement; or • fi nancial assets at fair value through profi t or loss; • the department has transferred its rights to receive cash fl ows • loans and receivables; from the asset and either: • held-to-maturity; and (a) has transferred substantially all the risks and rewards of the asset; or • available-for-sale fi nancial assets.

78 Department of Sustainability and Environment Annual Report 2012 Notes to the ﬁ nancial statements 30 June 2012

No te 1. Summary of signiﬁ cant accounting policies (continued)

(b) has neither transferred nor retained substantially all the This condition is regarded as met only when: risks and rewards of the asset, but has transferred control • the asset is available for immediate use in the current of the asset. condition; and Where the department has neither transferred nor retained • the sale is highly probable and the asset’s sale is expected substantially all the risks and rewards or transferred control, the to be completed within 12 months from the date of asset is recognised to the extent of the department’s continuing classifi cation. involvement in the asset. These non-fi nancial physical assets, related liabilities and Impairment of fi nancial assets fi nancial assets are measured at the lower of carrying amount At the end of each reporting period, the department assesses and fair value less costs to sell, and are not subject to whether there is objective evidence that a fi nancial asset or depreciation or amortisation. group of fi nancial assets is impaired. All fi nancial instrument assets, except those measured at fair value through profi t or Property, plant and equipment loss, are subject to annual review for impairment. All non-fi nancial physical assets are measured initially at cost and subsequently revalued at fair value less accumulated Receivables are assessed for bad and doubtful debts on a depreciation and impairment. Where an asset is acquired regular basis. Those bad debts considered as written off by for no or nominal cost, the cost is its fair value at the date mutual consent are classifi ed as a transaction expense. Bad of acquisition. Assets transferred as part of a machinery of debts not written off by mutual consent and the allowance for government change are transferred at their carrying amount. doubtful receivables are classifi ed as other economic fl ows in the net result. The initial cost for non-fi nancial physical assets under a fi nance lease (refer to Note 1(n)) is measured at amounts equal to the The amount of the allowance is the difference between the fair value of the leased asset or, if lower, the present value of the fi nancial asset’s carrying amount and the present value of minimum lease payments, each determined at the inception of estimated future cash fl ows, discounted at the effective the lease. interest rate. Non-fi nancial physical assets such as national parks, other In assessing impairment of statutory (non-contractual) fi nancial Crown land and heritage assets are measured at fair value assets, which are not fi nancial instruments, professional with regard to the property’s highest and best use after due judgement is applied in assessing materiality using estimates, consideration is made for any legal or constructive restrictions averages and other computational methods in accordance with imposed on the asset, public announcements or commitments AASB 136 Impairment of Assets. made in relation to the intended use of the asset. Theoretical (l) Non-fi nancial assets opportunities that may be available in relation to the asset are not taken into account until it is virtually certain that the Inventories restrictions will no longer apply. Inventories include goods and other property held either for sale, The fair value of cultural assets and collections, heritage assets or for distribution at zero or nominal cost, or for consumption in and other non-fi nancial physical assets that the department the ordinary course of business operations. intends to preserve because of their unique historical, cultural or Inventories held for distribution are measured at cost, adjusted environmental attributes, is measured at the replacement cost for any loss of service potential. All other inventories are of the asset less, where applicable, accumulated depreciation measured at the lower of cost and net realisable value. Where (calculated on the basis of such cost to refl ect the already inventories are acquired for no cost or nominal consideration, consumed or expired future economic benefi ts of the asset) and they are measured at current replacement cost at the any accumulated impairment. These policies and any legislative date of acquisition. limitations and restrictions imposed on their use and/or disposal may impact their fair value. Cost includes an appropriate portion of fi xed and variable overhead expenses. Cost is assigned to high value, low volume Road network assets (including earthworks of the operational inventory items on a specifi c identifi cation of cost basis. Cost road networks) are measured at fair value, determined by for all other inventory is measured on the basis of weighted reference to the asset’s depreciated replacement cost. The average cost. roads managed by the department are defi ned as Rural Class 5 and are sub-divided into fi ve sub-classes as follows: Bases used in assessing loss of service potential for inventories held for distribution include current replacement cost and • 5A Primary: All-weather road, predominantly two lane and technical or functional obsolescence. Technical obsolescence mainly sealed occurs when an item still functions for some or all of the tasks • 5B Secondary: All-weather two lane road, formed and it was originally acquired to do, but no longer matches existing gravelled or single lane sealed road with gravel shoulders technologies. Functional obsolescence occurs when an item no longer functions the way it did when it was fi rst acquired. • 5C Minor: Generally all-weather, single lane two-way unsealed formed road, usually lightly gravelled Non-fi nancial physical assets classifi ed as held • 5D Access: Substantially single lane, two-way, generally dry for sale weather formed (natural materials) track/road Non-fi nancial physical assets (including disposal group assets) are treated as current and classifi ed as held for sale if their • 5E Tracks: Predominantly single lane, two-way earth tracks carrying amount will be recovered through a sale transaction (unformed) at or near the natural surface level. rather than through continuing use.

Department of Sustainability and Environment Annual Report 2012 79 Notes to the ﬁ nancial statements 30 June 2012

No te 1. Summary of signiﬁ cant accounting policies (continued)

Costs associated with 5E roads and minor tracks and trails are equity’ reduces the amount accumulated in equity under the expensed as the costs are incurred, as these roads, tracks and asset revaluation surplus. trails have a useful life of less than one year. Revaluation increases and decreases relating to individual The fair value of infrastructure systems and plant, equipment assets within a class of property, plant and equipment, are and vehicles, is normally determined by reference to the offset against one another within that class but are not offset asset’s depreciated replacement cost. For plant, equipment in respect of assets in different classes. Any asset revaluation and vehicles, existing depreciated historical cost is generally a surplus is not normally transferred to accumulated funds on reasonable proxy for depreciated replacement cost because of derecognition of the relevant asset. the short lives of the assets concerned. Recognition and derecognition of land Certain assets are acquired under fi nance leases, which may Land is recognised under the categories set out at Note 12. form part of a service concession arrangement. Refer to Notes Property, plant and equipment when the department identifi es 1(n) Leases and 1(p) Commitments for more information. specifi c parcels of land, park, forest or reserve that it controls The cost of constructed non-fi nancial physical assets includes and their cost can be reliably determined. The department the cost of all materials used in construction, direct labour on considers relevant information, such as the purpose for which the project, and an appropriate proportion of variable and fi xed a particular parcel has been reserved, to determine the parcels overheads. of Crown land over which it has control and records this information in its Land Information Management System. Where For the accounting policy on impairment of non-fi nancial land has been received at no cost the fair value is determined by physical assets, refer to impairment of non-fi nancial assets the Valuer-General Victoria. under Note 1(h) Impairment of non-fi nancial assets. The department is not always made aware of changes to The department capitalises expenditures on individual items the status of Crown land, as grants and reservations can be of $5,000 or more, and records these as non-fi nancial assets. made under legislation that is not administered by either of the Aggregate expenditure on items that will, when completed, Ministers who hold portfolio responsibility for the department result in non-fi nancial assets that provide future economic (for example, Crown grants may be issued under the Project benefi ts is recognised as construction in progress. Development and Construction Management Act 1994). Leasehold improvements Consequently, the department may become aware that it no longer controls a parcel of Crown land in a reporting period The cost of leasehold improvements is capitalised as an asset later than that in which the initial decision (e.g. the issue of a and depreciated over the shorter of the remaining term of the Crown grant) to change the status was made. As a result, the lease or the estimated useful life of the improvements. disclosures relating to Crown land only refl ect those Crown land transactions of which the department is aware. Revaluations of non-fi nancial physical assets Non-fi nancial physical assets are measured at fair value on Land is derecognised when it is not eligible to be treated a cyclical basis, in accordance with the FRDs issued by the as a return of equity. Gains or losses on the recognition or Minister for Finance. A full revaluation normally occurs every derecognition of land are recognised in the net result (other fi ve years, based upon the asset’s government purpose economic fl ows). classifi cation but may occur more frequently if fair value assessments indicate material changes in values. Independent Third party transfers valuers are generally used to conduct these scheduled Land transferred to third parties is treated as a return of equity revaluations. Certain infrastructure assets are revalued using via administered expenses as per the requirements of FRD 117 specialised advisors. Any interim revaluations are determined in Contributions of Existing Non-Financial Asset to Third Parties. accordance with the requirements of the FRDs. Biological assets Revaluation increases or decreases arise from differences Productive trees in commercial native forests are recognised as between an asset’s carrying value and fair value. biological assets. These biological assets are measured at fair Net revaluation increases (where the carrying amount of a class value less costs to sell and are revalued at 30 June each year. of assets is increased as a result of a revaluation) are recognised For productive trees, revaluation to fair value is determined using in ‘Other economic fl ows – other movements in equity’, and a discounted cash fl ow method based on expected net future accumulated in equity under the asset revaluation surplus. cash fl ows, discounted by a current market determined rate. However, the net revaluation increase is recognised in the net result to the extent that it reverses a net revaluation decrease An increase or decrease in the fair value of these biological in respect of the same class of property, plant and equipment assets is recognised in the consolidated comprehensive previously recognised as an expense (other economic fl ows) in operating statement as an other economic fl ow. the net result. Intangible assets Net revaluation decreases are recognised in ‘Other economic fl ows – other movements in equity’ to the extent that a credit Purchased intangible assets are initially recognised at cost. balance exists in the asset revaluation surplus in respect of the Subsequently, intangible assets with fi nite useful lives are same class of property, plant and equipment. Otherwise, the carried at cost less accumulated depreciation and accumulated net revaluation decreases are recognised immediately as other impairment losses. Costs incurred subsequent to initial economic fl ows in the net result. The net revaluation decrease acquisition are capitalised when it is expected that additional recognised in ‘Other economic fl ows – other movements in future economic benefi ts will fl ow to the department.

80 Department of Sustainability and Environment Annual Report 2012 Notes to the ﬁ nancial statements 30 June 2012

No te 1. Summary of signiﬁ cant accounting policies (continued)

When the recognition criteria in AASB 138 Intangible Assets are Advances from the Public Account were made pursuant to met, internally generated intangible assets are recognised and section 37 of the Financial Management Act 1994 and represent measured at cost less accumulated depreciation/amortisation payments made in advance of receiving appropriation funding. and impairment. These advances are recognised at the gross value of amounts owing and have not been discounted to the present value of Currently, intangible assets reported by the department are future cash fl ows. software related. Where expenditure exceeds $300,000 on the development of databases, the department recognises Borrowings databases as assets, at the value of the total expenditure on the All interest bearing liabilities are initially recognised at fair value of development of the database. the consideration received, less directly attributable transaction Refer to Note 1(g) Depreciation and Note 1(h) Impairment of costs (refer also to Note 1(n) Leases). The measurement basis non-fi nancial assets. subsequent to initial recognition depends on whether the department has categorised its interest-bearing liabilities as Expenditure on research activities is recognised as an expense either fi nancial liabilities designated at fair value through profi t in the period in which it is incurred. or loss, or fi nancial liabilities at amortised cost. Any difference An internally-generated intangible asset arising from between the initial recognised amount and the redemption value development (or from the development phase of an internal is recognised in net result over the period of the borrowing using project) is recognised if, and only if, all of the following are the effective interest method. demonstrated: Unearned income (a) the technical feasibility of completing the intangible asset Unearned income consists of amounts received in advance from so that it will be available for use or sale; customers for goods and services that are to be delivered or (b) an intention to complete the intangible asset and use or provided by the department after the reporting date. sell it; Provisions (c) the ability to use or sell the intangible asset; Provisions are recognised when the department has a present (d) the intangible asset will generate probable future economic obligation, the future sacrifi ce of economic benefi ts is probable, benefi ts; and the amount of the provision can be measured reliably. (e) the availability of adequate technical, fi nancial and other The future sacrifi ce of economic benefi ts includes costs resources to complete the development and to use or sell associated with insurance claims, restoration and rehabilitation the intangible asset; and related to bushfi re activities involving the department, and other environmental activities such as native vegetation offsets. (f) the ability to measure reliably the expenditure attributable to the intangible asset during its development. The amount recognised as a liability is the best estimate of the consideration required to settle the present obligation at Other non-fi nancial assets reporting period, taking into account the risks and uncertainties Prepayments surrounding the obligation. Where a provision is measured using the cash fl ows estimated to settle the present obligation, its Other non-fi nancial assets include prepayments which represent carrying amount is the present value of those cash fl ows, using payments in advance of receipt of goods or services or that part discount rate that refl ects the time value of money and risks of expenditure made in one accounting period covering a term specifi c to the provision. extending beyond that period. When some or all of the economic benefi ts required to settle (m) Liabilities a provision are expected to be received from a third party, the receivable is recognised as an asset if it is virtually certain that Payables recovery will be received and the amount of the receivable can Payables consist of: be measured reliably. • contractual payables, such as accounts payable, statutory Employee benefi ts payables and accruals. Accounts payable represent liabilities for goods and services provided to the department prior to Provision is made for benefi ts accruing to employees in respect the end of the fi nancial year that are unpaid, and arise when of wages and salaries, annual leave and long service leave for the department becomes obliged to make future payments in services rendered to the reporting date. respect of the purchase of those goods and services; and (i) Wages and salaries, annual leave and sick leave • statutory payables, such as goods and services tax and fringe Liabilities for wages and salaries, including non-monetary benefi ts tax payables. benefi ts, annual leave and accumulating sick leave are Contractual payables are classifi ed as fi nancial instruments and recognised in the provision for employee benefi ts, classifi ed categorised as fi nancial liabilities at amortised cost (refer to Note as current liabilities. Those liabilities which are expected to be 1(j)). Statutory payables are recognised and measured similarly settled within 12 months of the reporting period, are measured to contractual payables, but are not classifi ed as fi nancial at their nominal values. Those liabilities that are not expected to instruments and not included in the category of fi nancial be settled within 12 months are also recognised in the provision liabilities at amortised cost, because they do not arise from for employee benefi ts as current liabilities, but are measured at a contract. the present value of the amounts expected to be paid when the liabilities are settled using the remuneration rate expected to apply at the time of settlement.

Department of Sustainability and Environment Annual Report 2012 81 Notes to the ﬁ nancial statements 30 June 2012

No te 1. Summary of signiﬁ cant accounting policies (continued)

(ii) Long service leave Finance leases Liability for long service leave (LSL) is recognised in the provision Department as lessor for employee benefi ts. Amounts due from lessees under fi nance leases are recorded Unconditional LSL is disclosed in the notes to the fi nancial as receivables. Finance lease receivables are initially recorded statements as a current liability, even where the department at amounts equal to the present value of the minimum lease does not expect to settle the liability within 12 months, because payments receivable plus the present value of any unguaranteed it will not have the unconditional right to defer the settlement residual value expected to accrue at the end of the lease term. of the entitlement should an employee take leave within Finance lease receipts are apportioned between periodic 12 months. interest income and reduction of the lease receivable over the term of the lease in order to refl ect a constant periodic rate of The components of this current LSL liability are measured at: return on the net investment outstanding in respect of the lease. • nominal value – component that the department expects to settle within 12 months; and Department as lessee At the commencement of the lease term, fi nance leases are • present value – component that the department does not initially recognised as assets and liabilities at amounts equal expect to settle within 12 months. to the fair value of the lease property or, if lower, the present Conditional LSL is disclosed as a non-current liability. There is value of the minimum lease payment, each determined at the an unconditional right to defer the settlement of the entitlement inception of the lease. The lease asset is depreciated over the until the employee has completed the requisite years of service. shorter of the estimated useful life of the asset or the term of the This non-current LSL liability is measured at present value. lease. Any gain or loss following revaluation of the present value of Minimum fi nance lease payments are apportioned between non-current LSL liability is recognised as a transaction, except reduction of the outstanding lease liability and periodic fi nance to the extent that a gain or loss arises due to changes in expense, which is calculated using the interest rate implicit in bond interest rates for which it is then recognised as an other the lease and charged directly to the comprehensive operating economic fl ow (refer to Note 1(h) – Other economic fl ows statement. Contingent rentals associated with fi nance leases included in net result). are recognised as an expense in the period in which they are incurred. (iii) Termination benefi ts Termination benefi ts are payable when employment is Operating leases terminated before the normal retirement date, or when an Department as lessee employee accepts voluntary redundancy in exchange for these benefi ts. The department recognises termination benefi ts Operating lease payments, including any contingent rentals, when it is demonstrably committed to either terminating the are recognised as an expense in the comprehensive operating employment of current employees according to a detailed statement on a straight-line basis over the lease term, except formal plan without possibility of withdrawal or providing where another systematic basis is more representative of the termination benefi ts as a result of an offer made to encourage time pattern of the benefi ts derived from the use of the leased voluntary redundancy. Benefi ts falling due more than 12 months asset. The leased asset is not recognised in the balance sheet. after the end of the reporting period are discounted to All incentives for the agreement of a new or renewed operating present value. lease are recognised as an integral part of the net consideration agreed for the use of the leased asset, irrespective of the Employee benefi ts on-costs incentive’s nature or form or the timing of payments. Employee benefi ts on-costs such as payroll tax, workers In the event that lease incentives are received to enter compensation and superannuation are recognised separately into operating leases, the aggregate cost of incentives are from the provision for employee benefi ts. recognised as a reduction of rental expense over the lease term Onerous contracts on a straight-line basis, unless another systematic basis is more representative of the time pattern in which economic benefi ts An onerous contract is considered to exist when the from the leased asset are consumed. unavoidable cost of meeting the contractual obligations exceeds the estimated economic benefi ts to be received. Present (o) Equity obligations arising under onerous contracts are recognised as a provision to the extent that the present obligation exceeds the Contributions by owners estimated economic benefi ts to be received. Additions to net assets which have been designated as contributions by owners are recognised as contributed capital. (n) Leases Other transfers that are in the nature of contributions or A lease is a right to use an asset for an agreed period of time in distributions have also been designated as contributions exchange for payment. by owners. Leases are classifi ed at their inception as either operating Transfers of net assets arising from administrative restructurings or fi nance leases based on the economic substance of the are treated as distributions to or contributions by owners. agreement so as to refl ect the risks and rewards incidental Transfers of net liabilities arising from administrative to ownership. Leases of property, plant and equipment are restructurings are treated as distributions to owners. classifi ed as fi nance leases whenever the terms of the lease Transfers of net assets to third parties are treated as a return of transfer substantially all the risks and rewards of ownership equity via administered expenses, as required under FRD 117 from the lessor to the lessee. All other leases are classifi ed as Contributions of Existing Non-Financial Assets to Third Parties. operating leases.

82 Department of Sustainability and Environment Annual Report 2012 Notes to the ﬁ nancial statements 30 June 2012

No te 1. Summary of signiﬁ cant accounting policies (continued)

(p) Commitments Commitments for expenditure and contingent assets and Commitments for future expenditure include operating liabilities are also stated inclusive of GST. and capital commitments arising from contracts. These (t) Foreign currency balances/transactions commitments are disclosed by way of a note (refer to Note 20. Commitments for expenditure and Note 3. Administered All foreign currency transactions during the fi nancial year are (non-controlled) items) at their nominal value and inclusive of brought to account using the exchange rate in effect at the date the goods and services tax (GST) payable. In addition, where of the transaction. Foreign monetary items existing at the end it is considered appropriate and provides additional relevant of the reporting period are translated at the closing rate at the information to users, the net present values of signifi cant date of the end of the reporting period. Non-monetary assets individual projects are stated. These future expenditures cease carried at fair value that are denominated in foreign currencies to be disclosed as commitments once the related liabilities are are translated at the rates prevailing at the date when the fair recognised in the balance sheet. value was determined. Foreign currency translation differences are recognised in other (q) Contingent assets and contingent liabilities economic fl ows and accumulated in a separate component of Contingent assets and contingent liabilities are not recognised equity, in the period in which they arise. in the balance sheet, but are disclosed by way of a note (refer to Note 21. Contingent assets and contingent liabilities) and, if (u) Events after the reporting period quantifi able, are measured at nominal value. Contingent assets Assets, liabilities, income or expenses arise from past and liabilities are presented inclusive of GST receivable or transactions or other past events. Where the transactions result payable respectively. from an agreement between the department and other parties, the transactions are only recognised when the agreement (r) Service concession arrangements is irrevocable at, or before, the end of the reporting period. The department sometimes enters into certain arrangements Adjustments are made to amounts recognised in the fi nancial with private sector participants to design and construct or statements for events which occur after the reporting period and upgrade an asset used to provide public services. These before the date the fi nancial statements are authorised for issue, arrangements are typically complex and usually include the where those events provide information about conditions which provision of operational and maintenance services for a existed in the reporting period. Note disclosure is made about specifi ed period of time. These arrangements are often referred events between the end of the reporting period and the date the to as either public private partnerships (PPPs) or service fi nancial statements are authorised for issue where the events concession arrangements (SCAs). relate to conditions which arose after the end of the reporting The department pays the operator over the period of the period and which may have a material impact on the results of arrangement, subject to specifi ed performance criteria being subsequent years. met. At the date of commitment to the principal provisions (v) Correction of a prior period error of the arrangement, these estimated periodic payments are allocated between a component related to the design and Changes have been made to refl ect accounting errors. The construction or upgrading of the asset and components related effect of the changes is summarised at Note 33. Correction of to the ongoing operation and maintenance of the asset. The prior year errors. former component is accounted for as a lease payment. The remaining components are accounted for as commitments for (w) Comparative amounts operating costs and capital expenditure which are accounted for Where practical, comparative amounts are presented and in the comprehensive operating statement and balance sheet as classifi ed on a basis consistent with the current year. they are incurred. The commitments relating to the Victorian Desalination Plant The department has entered into a PPP with the Aquasure have been restated to include GST and the present value of consortium to build and operate the Victorian Desalination ‘Other commitments’ in accordance with guidance issued Plant. This item has been classifi ed as administered because by DTF. Refer to Note 3. Administered (non-controlled) items the department is acting on behalf of the State, rather than in for commitment disclosures relating to the Victorian its own right. The lease, capital and operating commitments are Desalination Project. disclosed in Note 3. Administered (non-controlled) items (b) as both GST inclusive and exclusive amounts. (x) AASs issued that are not yet effective Certain new AASs have been published that are not mandatory (s) Accounting for the goods and services tax (GST) for the 30 June 2012 reporting period. DTF assesses the impact Income, expenses and assets are recognised net of the amount of all these new standards and advises the department of their of associated GST, except where the GST incurred is not applicability and early adoption where applicable. recoverable from the taxation authority. In this case, the GST As at 30 June 2012, the following AASs have been issued by payable is recognised as part of the cost of acquisition of the the AASB but are not yet effective. They become effective for asset or as part of the expense. the fi rst fi nancial statements for reporting periods commencing Receivables and payables are stated inclusive of the amount of after the stated operating date as follows: GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the balance sheet. Cash fl ows are presented on a gross basis. The GST components of cash fl ows arising from investing or fi nancing activities which are recoverable from, or payable to the taxation authority, are presented as operating cash fl ow.

Department of Sustainability and Environment Annual Report 2012 83 Notes to the ﬁ nancial statements 30 June 2012

No te 1. Summary of signiﬁ cant accounting policies (continued)

Applicable for annual reporting Impact on departmental Standard / Interpretation Summary periods beginning on ﬁ nancial statements

AASB 9 Financial Instruments This standard simplifi es 1 January 2013 Detail of impact is still being requirements for the assessed. classifi cation and measurement of fi nancial assets resulting from Phase 1 of the IASB’s project to replace IAS 39 Financial Instruments: Recognition and Measurement (AASB 139 Financial Instruments: Recognition and Measurement).

AASB 10 Consolidated This Standard establishes 1 January 2013 Not-for-profi t entities are Financial Statements principles for the presentation not permitted to apply and preparation of this Standard prior to the consolidated fi nancial mandatory application date. statements when an The AASB is assessing the entity controls one or applicability of principles in more other entities AASB 10 in a not-for-profi t and supersedes those context. requirements in AASB 127 As such, impact will be Consolidated and Separate assessed after the AASB’s Financial Statements deliberation. and Interpretation 112 Consolidation – Special Purpose Entities.

AASB 11 Joint Arrangements This Standard requires 1 January 2013 Not-for-proﬁ t entities are entities that have an interest not permitted to apply in arrangements that are this Standard prior to the controlled jointly to assess mandatory application date. whether the arrangement The AASB is assessing the is a joint operation or joint applicability of principles in venture. AASB 11 shall be AASB 11 in a not-for-proﬁ t applied for an arrangement context. that is a joint operation. As such, impact will be It also replaces parts of assessed after the AASB’s requirements in AASB 131 deliberation. Interests in Joint Ventures.

AASB 12 Disclosure of This Standard requires 1 January 2013 Not-for-profi t entities are Interests in Other Entities disclosure of information that not permitted to apply enables users of fi nancial this Standard prior to the statements to evaluate mandatory application date. the nature of, and risks The AASB is assessing the associated with, interests applicability of principles in in other entities and the AASB 12 in a not-for-profi t effects of those interests context. on the fi nancial statements. As such, impact will be This Standard replaces the assessed after the AASB’s disclosure requirements in deliberation. AASB 127 and AASB 131.

84 Department of Sustainability and Environment Annual Report 2012 Notes to the ﬁ nancial statements 30 June 2012

No te 1. Summary of signiﬁ cant accounting policies (continued)

Applicable for annual reporting Impact on departmental Standard / Interpretation Summary periods beginning on ﬁ nancial statements

AASB 13 Fair Value This Standard outlines the 1 January 2013 Disclosure for fair value Measurement requirements for measuring measurements using the fair value of assets and unobservable inputs liabilities and replaces the are relatively onerous existing fair value deﬁ nition compared to disclosure for and guidance in other AASs. fair value measurements AASB 13 includes a ‘fair using observable inputs. value hierarchy’ which ranks Consequently, the Standard the valuation technique may increase the disclosures inputs into three levels using for public sector entities that unadjusted quoted prices in have assets measured using active markets for identical depreciated replacement assets or liabilities; other cost. observable inputs; and unobservable inputs.

AASB 119 Employee Benefi ts In this revised Standard 1 January 2013 Not-for-profi t entities are for defi ned benefi t not permitted to apply superannuation plans, this Standard prior to the there is a change to mandatory application date. the methodology in the While the total calculation of superannuation superannuation expense expenses, in particular there is unchanged, the revised is now a change in the split methodology is expected to between superannuation have a negative impact on the interest expense (classifi ed net result from transactions as transactions) and actuarial of the general government gains and losses (classifi ed sector and for those few as ‘Other economic fl ows Victorian public sector entities – other movements in that report superannuation equity’) reported on the defi ned benefi t plans. comprehensive operating statement.

AASB 127 Separate Financial This revised Standard 1 January 2013 Not-for-profi t entities are Statements prescribes the accounting not permitted to apply and disclosure requirements this Standard prior to the for investments in mandatory application date. subsidiaries, joint ventures The AASB is assessing the and associates when an applicability of principles in entity prepares separate AASB 127 in a not-for-profi t fi nancial statements. context. As such, impact will be assessed after the AASB’s deliberation.

AASB 128 Investments in This revised Standard sets 1 January 2013 Not-for-proﬁ t entities are Associates and Joint Ventures out the requirements for not permitted to apply the application of the equity this Standard prior to the method when accounting for mandatory application date. investments in associates The AASB is assessing the and joint ventures. applicability of principles in AASB 128 in a not-for-proﬁ t context. As such, impact will be assessed after the AASB’s deliberation.

AASB 1053 Application of This Standard establishes a 1 July 2013 The Victorian Government Tiers of Australian Accounting differential ﬁ nancial reporting is currently considering Standards framework consisting the impacts of Reduced of two tiers of reporting Disclosure Requirements requirements for preparing (RDRs) for certain public general purpose ﬁ nancial sector entities and has not statements. decided if RDRs will be implemented to the Victorian Public Sector.

Department of Sustainability and Environment Annual Report 2012 85 Notes to the ﬁ nancial statements 30 June 2012

No te 1. Summary of signiﬁ cant accounting policies (continued)

Applicable for annual reporting Impact on departmental Standard / Interpretation Summary periods beginning on ﬁ nancial statements

AASB 2009-11 Amendments This Standard gives effect 1 January 2013 No signiﬁ cant impact to Australian Accounting to consequential changes is expected from these Standards arising from arising from the issuance of consequential amendments AASB 9 [AASB 1, 3, 4, 5, AASB 9. on entity reporting. 7, 101, 102, 108, 112, 118, 121, 127, 128, 131, 132, 136, 139, 1023 and 1038 and Interpretations 10 and 12]

AASB 2010-2 Amendments This Standard makes 1 July 2013 The Victorian Government to Australian Accounting amendments to many is currently considering Standards arising from Australian Accounting the impacts of Reduced Reduced Disclosure Standards, including Disclosure Requirements Requirements Interpretations, to introduce (RDRs) for certain public reduced disclosure sector entities and has not requirements to the decided if RDRs will be pronouncements for implemented in the Victorian application by certain types public sector. of entities.

AASB 2010-7 Amendments These consequential 1 January 2013 No signiﬁ cant impact to Australian Accounting amendments are in relation to is expected from these Standards arising from AASB the introduction of AASB 9. consequential amendments 9 (December 2010) [AASB 1, on entity reporting. 3, 4, 5, 7, 101, 102, 108, 112, 118, 120, 121, 127, 128, 131, 132, 136, 137, 139, 1023 and 1038 and Interpretations 2, 5, 10, 12, 19 and 127]

AASB 2010-8 Amendments This amendment provides 1 January 2012 This amendment provides to Australian Accounting a practical approach for additional clariﬁ cation through Standards – Deferred Tax: measuring deferred tax practical guidance. Recovery of Underlying Assets assets and deferred tax [AASB 112] liabilities when measuring investment property by using the fair value model in AASB 140 Investment Property.

AASB 2010-10 Further The amendments ultimately 1 January 2013 No signiﬁ cant impact is Amendments to Australian affect AASB 1 First-time expected on entity reporting. Accounting Standards – Adoption of Australian Removal of Fixed Dates for Accounting Standards and First-time Adopters provide relief for ﬁ rst-time [AASB 2009-11 and adopters of Australian 2010-7] Accounting Standards from having to reconstruct transactions that occurred before their date of transition to Australian Accounting Standards.

AASB 2011-2 Amendments The objective of this 1 July 2013 The Victorian Government to Australian Accounting amendment is to include is currently considering Standards arising from the some additional disclosure the impacts of Reduced Trans-Tasman Convergence from the Trans-Tasman Disclosure Requirements Project – Reduced Disclosure Convergence Project (RDRs) and has not decided if Requirements and to reduce disclosure RDRs will be implemented in [AASB 101 and 1054] requirements for entities the Victorian public sector. preparing general purpose ﬁ nancial statements under Australian Accounting Standards – Reduced Disclosure Requirements.

86 Department of Sustainability and Environment Annual Report 2012 Notes to the ﬁ nancial statements 30 June 2012

No te 1. Summary of signiﬁ cant accounting policies (continued)

Applicable for annual reporting Impact on departmental Standard / Interpretation Summary periods beginning on ﬁ nancial statements

AASB 2011-3 Amendments This amends AASB 1049 1 July 2012 This amendment provides to Australian Accounting to clarify the defi nition of clarifi cation to users preparing Standards – Orderly Adoption the ABS GFS Manual, and the whole of government of Changes to the ABS to facilitate the adoption and general government GFS Manual and Related of changes to the ABS sector fi nancial reports on the Amendments [AASB 1049] GFS Manual and related version of the GFS Manual to disclosures. be used and what to disclose if the latest GFS Manual is not used. No impact on departmental or entity reporting.

AASB 2011-4 Amendments This Standard amends 1 July 2013 No signiﬁ cant impact to Australian Accounting AASB 124 Related Party is expected from these Standards to Remove Disclosures by removing consequential amendments Individual Key Management the disclosure requirements on entity reporting. Personnel Disclosure in AASB 124 in relation to Requirements individual key management [AASB 124] personnel (KMP).

AASB 2011-6 Amendments The objective of this Standard 1 July 2013 The Victorian Government to Australian Accounting is to make amendments to is currently considering Standards – Extending Relief AASB 127 Consolidated the impacts of Reduced from Consolidation, the Equity and Separate Financial Disclosure Requirements Method and Proportionate Statements, AASB 128 (RDRs) and has not decided if Consolidation – Reduced Investments in Associates RDRs will be implemented in Disclosure Requirements and AASB 131 Interests in the Victorian public sector. [AASB 127, 128 and 131] Joint Ventures to extend the circumstances in which an entity can obtain relief from consolidation, the equity method or proportionate consolidation.

AASB 2011-7 Amendments This Standard outlines 1 January 2013 No signiﬁ cant impact to Australian Accounting consequential changes is expected from these Standards arising from the arising from the issuance consequential amendments Consolidation and Joint of the ﬁ ve ‘new Standards’ on entity reporting. Arrangements Standards to other Standards. For [AASB 1, 2, 3, 5, 7, 9, 2009- example, references to 11, 101, 107, 112, 118, 121, AASB 127 Consolidated 124, 132, 133, 136, 138, and Separate Financial 139, 1023 and 1038 and Statements are amended Interpretations 5, 9, 16 to AASB 10 Consolidated and 17] Financial Statements or AASB 127 Separate Financial Statements, and references to AASB 131 Interests in Joint Ventures are deleted as that Standard has been superseded by AASB 11 and AASB 128 (August 2011).

AASB 2011-8 Amendments This amending Standard 1 January 2013 Disclosures for fair value to Australian Accounting makes consequential measurements using Standards arising from AASB changes to a range of unobservable inputs is 13 [AASB 1, 2, 3, 4, 5, 7, 9, Standards and Interpretations potentially onerous, and 2009-11, 2010-7, 101, 102, arising from the issuance may increase disclosures 108, 110, 116, 117, 118, 119, of AASB 13. In particular, for assets measured using 120, 121, 128, 131, 132, 133, this Standard replaces depreciated replacement 134, 136, 138, 139, 140, 141, the existing deﬁ nition cost. 1004, 1023 and 1038 and and guidance of fair Interpretations 2, 4, 12, 13, value measurements 14, 17, 19, 131 and 132] in other Australian Accounting Standards and Interpretations.

Department of Sustainability and Environment Annual Report 2012 87 Notes to the ﬁ nancial statements 30 June 2012

No te 1. Summary of signiﬁ cant accounting policies (continued)

Applicable for annual reporting Impact on departmental Standard / Interpretation Summary periods beginning on ﬁ nancial statements

AASB 2011-9 Amendments The main change resulting 1 July 2012 This amending Standard to Australian Accounting from this Standard is a could change the current Standards – Presentation of requirement for entities presentation of ‘Other Items of Other Comprehensive to group items presented economic fl ows- other Income [AASB 1, 5, 7, 101, in other comprehensive movements in equity’ that will 112, 120, 121, 132, 133, 134, income (OCI) on the be grouped on the basis of 1039 and 1049] basis of whether they are whether they are potentially potentially reclassifi able to reclassifi able to profi t or loss profi t or loss subsequently subsequently. (reclassifi cation adjustments). No other signifi cant impact These amendments do not will be expected. remove the option to present profi t or loss and other comprehensive income in two statements, nor change the option to present items of OCI either before tax or net of tax.

AASB 2011-10 Amendments This Standard makes 1 January 2013 No signiﬁ cant impact to Australian Accounting consequential changes to is expected from these Standards arising from AASB a range of other Australian consequential amendments 119 (September 2011) Accounting Standards and on entity reporting. [AASB 1, 8, 101, 124, 134, Interpretations arising from 1049 and 2011-8 and the issuance of AASB 119 Interpretation 14] Employee Beneﬁ ts.

AASB 2011-11 Amendments This Standard makes 1 July 2013 The Victorian Government to AASB 119 (September amendments to AASB is currently considering 2011) arising from Reduced 119 Employee Beneﬁ ts the impacts of Reduced Disclosure Requirements (September 2011), to Disclosure Requirements incorporate reduced (RDRs) and has not decided if disclosure requirements into RDRs will be implemented in the Standard for entities the Victorian public sector. applying Tier 2 requirements in preparing general purpose ﬁ nancial statements.

AASB 2011-12 Amendments This Standard makes 1 January 2013 There may be an impact for to Australian Accounting amendments to AASB 1 new agencies that adopt Standards arising from First-time Adoption of Australian Accounting Interpretation 20 Australian Accounting Standards for the ﬁ rst time. [AASB 1] Standards, as a No implication is expected consequence of the issuance for existing entities in the of IFRIC Interpretation Victorian public sector. 20 Stripping Costs in the Production Phase of a Surface Mine. This Standard allows the ﬁ rst-time adopters to apply the transitional provisions contained in Interpretation 20.

88 Department of Sustainability and Environment Annual Report 2012 Notes to the ﬁ nancial statements 30 June 2012

No te 1. Summary of signiﬁ cant accounting policies (continued)

Applicable for annual reporting Impact on departmental Standard / Interpretation Summary periods beginning on ﬁ nancial statements

2011-13 Amendments This Standard aims to 1 July 2012 No signifi cant impact to Australian Accounting improve the AASB 1049 is expected from these Standard – Improvements to Whole of Government consequential amendments AASB 1049 and General Government on entity reporting. Sector Financial Reporting at the operational level. The main amendments clarify a number of requirements in AASB 1049, including the amendment to allow disclosure of other measures of key fi scal aggregates as long as they are clearly distinguished from the key fi scal aggregates and do not detract from the information required by AASB 1049. Furthermore, this Standard provides additional guidance and examples on the classifi cation between ‘transactions’ and ‘other economic fl ows’ for GAAP items without GFS equivalents.

2012-1 Amendments to This amending Standard 1 July 2013 As the Victorian whole of Australian Accounting prescribes the reduced government and the general Standards - Fair Value disclosure requirements government (GG) sector are Measurement - Reduced in a number of Australian subject to Tier 1 reporting Disclosure Requirements Accounting Standards as a requirements (refer to AASB [AASB 3, 7, 13, 140 and 141] consequence of the issuance 1053 Application of Tiers of AASB 13 Fair Value of Australian Accounting Measurement. Standards), the reduced disclosure requirements included in AASB 2012-1 will not affect the ﬁ nancial reporting for Victorian whole of government and GG sector.

AASB Interpretation 20 This Interpretation clariﬁ es 1 January 2013 No signiﬁ cant impact is Stripping Costs in the when production stripping expected on entity reporting. Production Phase of a costs should lead to the Surface Mine recognition of an asset and how that asset should be initially and subsequently measured.

Department of Sustainability and Environment Annual Report 2012 89 Notes to the ﬁ nancial statements 30 June 2012

N ote 2. Departmental (controlled) outputs

A description of departmental outputs performed during the species native to Victoria are known to be threatened with year ended 30 June 2012, and the objectives of these outputs, extinction. The department has developed a number of are summarised below. innovative approaches for protecting natural assets, including the use of market-based instruments such as EcoTender. Sustainable Water Management and Supply Objectives to which the output group contributes Description of output group This output contributes to the departmental objective of Effective management of Victoria’s water supply and promoting new standards for protecting the natural environment. its quality is fundamental to our economy, society and environment. Issues requiring continued attention include Biodiversity salinity, the health of rivers and estuaries, reliable water The department works with land managers and a range of supply and water quality and pricing. other organisations to protect, enhance and restore biodiversity Objectives to which the output group contributes assets, maintain ecological assets and provide for the sustainable use of Victoria’s fl ora and fauna. The department This output contributes to the departmental objective of also improves the understanding of ecosystem services to delivering sustainable water management and supply. better inform land use decisions. The department also conducts terrestrial and freshwater ecological research to support Sustainable Water Management and Supply the management and protection of biodiversity assets across This output develops policies, provides oversight of, and the state. strategic advice on, regulatory systems and institutional arrangements to drive the sustainable management and effi cient Natural Resources use of Victoria’s water resources. Key areas include river health, This output leads policy and investment in research for the sustainable irrigation, ground and surface water, water reuse achievement of highly productive and sustainable landscapes. It and recycling, and water sector agency governance and pricing. provides a partnership approach with communities, Catchment Management Authorities, other government agencies and Healthy and Productive Land research institutes for improvement in the condition of our Description of output group state’s natural assets through policy implementation, program Victoria’s public land including its parks, forests and coasts design, project investment, monitoring and reporting. have signifi cant cultural and recreational value and are Effective Management of Fire pivotal in protecting biodiversity values. Victoria’s diverse public land estate also supports tourism and other Description of output group important industries. The department will work with its Networked Emergency Organisation partners (including Parks Victoria, Department of Objectives to which the output group contributes Primary Industries, Department of Planning and Community This output contributes to the departmental objective Development, Melbourne Water and VicForests) to further of promoting new standards for protecting the natural improve our response to fi re risk and make adjustments to land environment. management, fi re suppression, planned burning and recovery activities. The department will also refi ne how fi re management Public Land is understood and translated into operational policies This output provides for the management of Victoria’s Crown and procedures. land, including the coast and marine environment. It works towards the improved stewardship of natural, built and Objectives to which the output group contributes historic assets, and incorporates management of public land This output contributes to the departmental objective of in partnership with statutory agencies, committees and local reducing the threat of fi re. government. It recognises the value of a public land estate that can adapt to climate change and cater for Land and Fire Management community expectations. This output covers activities under an integrated land and Forests and Parks fi re management framework, for the effective planning and management of fi re across public land. This output provides for the management of Victoria’s state run parks and forests. Through this output, the department Effective Adaptation to the Impacts of Climate Change manages the balance between development and protection of natural, cultural and community assets for enjoyment and Description of output group sustainable use. This output works towards the improved Climate change is an evolving policy area for all levels of stewardship of Victoria’s parks and forests and incorporates government. At a national level, the focus is on reducing direct and delegated management of public land. Australia’s greenhouse gas emissions, helping communities, industries and governments adapt to a changing climate and A Healthy and Resilient Natural Environment working with other countries to fi nd a global solution. The Description of output group Commonwealth Government has a policy to reduce greenhouse gas emissions by at least 5 per cent below 2000 levels by Victoria’s land, water and biodiversity are under pressure as 2020. For State agencies like the department a key focus is on a result of climate change, a growing population, changing implementing policies that will be complementary to national land use patterns, changes to fi re regimes, habitat loss and action, maximise the potential for the ‘green economy’ in degradation, invasive species and other threatening processes. Victoria and help communities and businesses adapt to the Native vegetation on private land is still experiencing a net loss impact of climate change. in area and quality, with nearly a third of rivers and streams in poor or very poor condition. In addition, more than 1000

90 Department of Sustainability and Environment Annual Report 2012 Notes to the ﬁ nancial statements 30 June 2012

N ote 2. Departmental (controlled) outputs (continued)

Objectives to which the output group contributes Objectives to which the output group contributes This output contributes to the departmental objective of This output contributes to the departmental objective of adapting to the impacts of climate change. promoting new standards for protecting the natural environment, and supports a thriving Victorian economy by providing secure, Environmental Policy and Climate Change accurate and guaranteed land administration and information Through this output, the department leads the development and provision services. implementation of strategic, whole of government responses to issues around environmental sustainability and climate change. Land Administration and Property Information Through this output, the department is working towards Land Administration and Property Information ensuring: confi dence in the integrity and effi ciency of the property system; accessible and transparent property markets; Description of output group established and accepted natural resource markets; and Effective property markets are of fundamental importance comprehensive and accessible spatial information to support to economic development in Victoria. Trusted systems planning and decision making. and information services ensure confi dence and security in ownership, property boundaries and valuation. Emerging markets, such as those relating to water, can capitalise on the systems and infrastructure already established in Victoria for management of land transactions.

Department of Sustainability and Environment Annual Report 2012 91 (i) 0 0 0 0 (10) 271 287 (483) $’000 2,767 5,378 2,947 5,103 3,028 3,315 2011 (5,233) (6,792) (94,746) (17,197) (46,941) 287,005 300,433 (128,754) (300,146) (201,578) (201,578) (198,263) Management Land and Fire Land and Fire 3 0 0 0 0 0 0 2012 (586) $’000 4,585 7,928 5,530 2,111 (1,465) (3,106) 299,039 317,082 (16,983) (96,467) (22,505) (15,765) (49,788) (17,566) (15,455) (15,455) (125,875) (314,971) (i) 0 0 0 0 (1) 47 (83) (75) 180 123 133 226 (330) $’000 2,075 2011 (1,582) (9,643) (3,114) (1,104) (1,104) (3,340) (4,218) (15,950) (83,986) 105,978 108,309 (111,649) 0 0 0 0 0 0 0 91 58 392 (50) (15) (49) 2012 (265) $’000 4,461 (1,747) (1,089) (8,563) (1,797) (1,405) (1,405) 101,831 106,441 (12,463) (83,605) (106,049)

(i) 0 0 0 0 0 65 (16) 250 258 315 849 (739) (116) (860) $’000 1,164 2011 (1,732) (5,217) (1,863) (1,180) (1,180) 39,517 17,634 56,670 (28,671) (17,362) (55,821) 0 0 0 0 0 0 (6) 185 2012 (162) (178) (963) $’000 2,651 3,744 8,980 3,744 62,056 21,508 86,400 (5,068) (3,299) (7,895) (2,022) (5,236) (32,934) (30,129) (77,420) (i) 0 (3) 120 533 131 (237) (396) $’000 2,857 1,126 1,781 6,908 2011 (3,636) 82,883 35,392 45,945 52,853 45,828 (29,462) (40,154) (17,358) (26,552) 124,703 (117,795) (352,285) (352,285) (299,432) 2 0 0 0 0 39 (57) 2012 (145) (278) $’000 3,063 1,601 6,152 7,673 6,295 78,689 38,785 23,775 13,825 13,825 (3,009) 145,952 (22,113) (66,075) (16,537) (30,210) (138,279) (i) 0 0 0 0 13 176 870 681 (316) (132) $’000 6,002 2011 (4,280) (1,629) 36,408 13,098 (53,109) (30,236) (12,002) (11,948) (12,002) (12,818) (23,950) 213,404 268,912 (192,028) (281,730) 1 0 0 0 0 0 0 Sustainable Water Sustainable Water (29) 2012 (186) (103) $’000 5,677 5,904 44,013 (2,548) (1,378) (6,629) 248,180 (57,088) (28,256) (183,058) Management and Supply Public Land Biodiversity Natural Resources ows included in net result (6,814) ows – other non-owner changes in ows – other non-owner changes in equity ows included in net result ontrolled income and expenses ontrolled ote 2. Departmental (controlled) outputs (continued) ote 2. Departmental (controlled) Income from transactions Income from Output appropriations nancial instruments Net gain/(loss) on fi of net losses associates, excluding dividends Share Interest Other gains/(losses) from other economic fl ows other economic fl Other gains/(losses) from Sale of goods and services rate parks improvement Metropolitan other economic fl Total Fair value of assets received free of charge or for nominal free Fair value of assets received consideration Grants Other income Total income from transactions income from Total 303,774 Depreciation Interest expense Interest Grants and other transfers Capital asset charge Supplies and services Other operating expenses Total expenses from transactions expenses from Total (272,460) Net result Net result 24,500 Expenses from transactions Expenses from Employee expenses Net result from transactions (net operating balance) from Net result 31,314 Other economic fl surplus Changes in physical asset revaluation Total other economic fl Total equity result Comprehensive 24,500 Other economic fl nancial assets Net gain/(loss) on non-fi Notes to the fi nancial statements 30 June 2012 Notes to the fi N Schedule A - C for the year ended 30 June 2012

92 Department of Sustainability and Environment Annual Report 2012 (i) 0 (13) 533 946 $’000 2,864 2011 (1,714) (8,679) (9,450) 33,116 23,666 43,557 45,217 24,602 32,183 (73,646) (46,824) 998,223 125,662 (838,312) (838,312) (814,646) (522,251) (270,173) (326,821) 1,240,658 (1,250,108) 0 0 0 0 2012 $’000 3,063 18,808 18,808 48,037 96,905 12,406 59,543 (1,824) (1,607) (1,509) 131,482 (40,735) (75,393) (49,362) (18,080) (37,619) (560,244) (272,425) (338,696) 1,083,674 1,375,567 (1,316,024) (i) 7 0 0 0 (8) 79 165 (296) (286) $’000 1,656 2011 (7,298) (7,298) (1,657) (5,091) (7,513) 12,319 (15,663) (23,176) (30,474) (48,114) (60,852) (12,432) (15,820) 107,154 121,215 (128,728) 0 0 0 0 0 0 19 448 (50) Property InformationProperty Totals 2012 (449) (230) $’000 10,787 (1,140) (5,003) (8,014) (1,161) (8,155) (1,607) (9,992) 109,110 120,364 (10,441) (10,441) (47,341) (58,104) Land Administration and (120,813) (i) 0 0 0 0 (2) 83 25 54 (97) (48) 210 262 (736) (736) (230) $’000 2,309 2011 (2,566) (3,302) (1,295) (2,828) 39,634 42,051 (13,541) (13,793) (15,875) (44,879) Climate Change 0 0 0 0 0 6 0 0 (11) (67) 2012 (566) (566) (179) (887) $’000 2,285 1,920 1,897 51,958 56,169 (9,949) (2,396) (2,463) (17,160) (14,054) (12,032) (54,272) Environmental Policy and Environmental (i) (ii) 0 0 0

(2) 48 (90) (86) 892 722 (204) 7,138 $’000 3,833 9,005 2011 (9,201) (4,670) (1,913) (1,867) 90,270 (14,674) 122,648 218,365 (262,129) (262,129) (254,991) (180,435) (209,360) 0 0 0 0 0 for details. 665 (19) (83) Forests and Parks Forests 2012 (221) (388) $’000 1,503 92,697 11,709 (8,011) (2,936) 132,811 (18,797) (18,778) (185,546) Biological assets (ii) Refer to Note 13. for details. ows – other non-owner changes in equity 0 ows included in net result (3,019) ows – other non-owner changes in equity ows included in net result Correction of prior year errors ote 2. Departmental (controlled) outputs (continued) ote 2. Departmental (controlled) Net result Net result 4,606 Notes: (i) Refer to Note 33. Other economic fl surplus Changes in physical asset revaluation other economic fl Total Grants and other transfers Income from transactions Income from Output appropriations Comprehensive result result Comprehensive 4,606 Interest Sale of goods and services Capital asset charge Metropolitan parks improvement rate parks improvement Metropolitan Grants Fair value of assets received free of charge or for nominal consideration free Fair value of assets received Other income Total income from transactions income from Total 239,385 Expenses from transactions Expenses from Employee expenses Supplies and services Depreciation Other operating expenses Interest expense Interest Total expenses from transactions expenses from Total (231,760) Net result from transactions (net operating balance) from Net result 7,625 Other economic fl nancial assets Net gain/(loss) on non-fi Net gain/(loss) on fi nancial instruments Net gain/(loss) on fi of net losses associates, excluding dividends Share ows other economic fl Other gains/(losses) from Total other economic fl Total Notes to the fi nancial statements 30 June 2012 Notes to the fi N income and expenses for the year Schedule A - Controlled ended 30 June 2012

Department of Sustainability and Environment Annual Report 2012 93 (i) (i) (i) (ii) 2010 2010 2010 (i) (i) (i) $’000 $’000 $’000 $’000 $’000 $’000 2011 2011 2011 33,088 48,568 20,539 17,734 20,539 17,734 53,627 66,302 11,024 12,544 42,603 53,758 10,950 11,419 10,950 11,419 17,951 19,237 449,800 468,822 367,412 366,273 367,412 366,273 2,479,847 2,818,350 2,472,846 2,810,532 2,490,797 2,829,769 7,360,7257,810,525 8,218,098 8,686,920 7,443,113 8,320,647 2012 2012 2012 $’000 $’000 8,830 8,830 7,645 $’000 42,299 24,298 24,298 66,597 36,248 30,349 443,485 283,242 283,242 2,679,564 2,680,749 2,688,394 7,178,702 7,622,187 7,338,945 (i) (i) (i) 2010 2010 2010 (i) (i) (i) $’000 $’000 $’000 $’000 $’000 $’000 2011 2011 2011 70,947 76,219 70,947 76,219 56,505 75,932 68,668 111,521 68,20835,700 77,608 31,744 35,700 31,744 117,719 103,404 117,719 103,404 174,484 49,076 242,692 126,684 206,992 94,940 2,780,767 3,026,190 2,851,714 3,102,409 2,795,209 3,026,477 1,835,008 2,151,845 1,884,059 2,143,728 1,952,727 2,255,249 2012 2012 2012 $’000 $’000 $’000 60,587 60,587 35,119 43,109 31,369 31,369 119,769 119,769 (15,687) 364,464 407,573 376,204 2,327,876 2,388,463 2,353,344 1,837,911 1,973,367 1,957,680 (i) (i) (i) 2010 2010 2010 for details (i) (i) (i) Natural Resources Management Land and Fire and Parks Forests Biological assets 9,731 18,156 6,883 7,831 5,140 12,499 $’000 $’000 $’000 $’000 5,352 10,241 $’000 $’000 16,61411,474 25,987 13,488 11,474 13,488 2011 2011 2011 (3,509) 5,087 80,907 95,374 80,907 95,374 74,506 130,901 19,176 16,891 10,315 11,737 15,667 21,978 19,176 16,891 105,779 163,168 186,686 258,542 112,180 127,641 168 7,560 2012 2012 2012 $’000 $’000 $’000 70,081 25,376 14,244 (3,949) Environmental Policy and Climate ChangeEnvironmental Information Land Administration and Property Totals Sustainable Water Management and SupplySustainable Water Public Land Biodiversity for details. (ii) Refer to Note 13. Correction of prior year errors ote 2. Departmental (controlled) outputs (continued) ote 2. Departmental (controlled) Net assets 79,514 Net assets (867) Total liabilitiesTotal 15,943 Total liabilitiesTotal 11,162 Liabilities 15,943 Non-fi nancial assets Non-fi assetsTotal Liabilities 10,295 11,162 Total assetsTotal 95,457 Non-fi nancial assets Non-fi Assets Financial assets Assets Financial assets Assets Notes: (i) Refer to Note 33. Financial assets Non-fi nancial assets Non-fi Total assetsTotal Liabilities 7,728 11,284 Total liabilitiesTotal 11,284 Net assets (3,556) Notes to the fi nancial statements 30 June 2012 Notes to the fi N assets and liabilities as at 30 June 2012 Schedule B - Controlled

94 Department of Sustainability and Environment Annual Report 2012 0 0 0 0 0 0 0 0 0 0 0 34 (12) 137 115 (356) (915) (356) (915) (696) (696) (219) 2011 $’000 Management Land and Fire Land and Fire 0 0 0 0 0 0 0 0 0 0 0 0 49 17 44 110 2012 (342) (342) (232) $’000 (2,946) (2,946) (2,714) (2,714) 0 0 2 0 0 0 0 0 0 0 0 0 12 23 560 560 747 (187) (187) 2011 3,466 3,503 $’000 (2,756) (2,756) 0 0 8 0 0 0 0 0 0 0 0 0 6 0 (87) (87) (89) 2012 (176) (176) 2,161 2,175 $’000 (2,264) (2,264) 0 0 0 0 0 0 0 0 0 0 0 38 188 201 (422) (422) (211) (211) (211) 2011 2,407 2,834 $’000 (3,045) (3,045) 0 0 0 0 0 0 0 0 0 0 0 e operating statement, cash fl ow statement and of changes in e operating statement, cash fl 12 to these activities are reported as administered items in this note. as administered reported to these activities are 360 (61) 2012 (589) (589) (528) (528) 3,420 3,147 6,939 $’000 (7,000) (7,000) 0 0 8 0 0 2 0 0 0 0 0 0 51 890 2011 7,090 8,041 $’000 (5,732) (13,773) (39,913) (13,773) (39,913) (34,181) (34,181) 0 0 0 0 0 9 0 0 0 0 0 0 10 825 2012 6,845 7,689 $’000 (3,082) (10,771) (56,306) (10,771) (56,306) (53,224) (53,224) 0 0 0 0 0 34 (575) (575) 2011 1,601 2,717 $’000 (7,486) 69,420 28,937 90,399 20,092 (31,312) (30,717) 213,200 (357,258) (144,633) (287,743) (144,633) (144,058) 0 0 0 85 Sustainable Water Sustainable Water 2012 2,294 1,579 $’000 69,420 44,034 44,034 29,724 26,107 68,021 48,648 20,623 (2,683) (8,093) (29,379) (102,943) Management and Supply Public Land Biodiversity Natural Resources ows – other ows 26,107 ows – other non- ows included in Total administered net result from transactions from net result administered Total (net operating balance) Environmental contribution Environmental Total administered expenses from transactions expenses from administered Total (143,098) Special purpose grants Other operating expenses Royalties result comprehensive administered Total 118,789 Payments into the Consolidated Fund Licences and leases Total administered other economic fl administered Total non-owner changes in equity Other expenses associated with jointly controlled Other expenses associated with jointly controlled assets Provision of services Provision Administered other economic fl Administered owner changes in equity surplus reserve Changes in physical asset revaluation Depreciation of jointly controlled assets of jointly controlled Depreciation Land Titles income Administered net resultAdministered 74,755 Administered expenses from transactions expenses from Administered POBOS Administered income from transactions income from Administered – POBOS Appropriations Total administered other economic fl administered Total Total administered income from transactions income from administered Total 191,746 Administered other economic fl Administered net result the administered nancial assets Net gain/(loss) on non-fi Other income Jointly controlled assets received free of charge free assets received Jointly controlled Notes to the fi nancial statements 30 June 2012 Notes to the fi items (non-controlled) Note 3. Administered nancial statements (balance sheet, comprehensiv included in the fi c departmental operations which are In addition to the specifi on behalf of the state. The transactions relating equity), the department administers or manages other activities and resources

Department of Sustainability and Environment Annual Report 2012 95 0 0 0 2011 1,276 6,489 $’000 (7,486) 20,092 69,420 31,523 90,746 26,934 28,937 (80,924) (80,924) (31,312) (30,717) 248,514 523,931 (670,976) (601,461) (147,045) (227,969) (227,969) (4) 908 2012 4,609 5,740 $’000 68,124 20,623 69,420 40,565 44,034 48,643 44,034 23,348 29,045 29,724 (2,683) (8,093) 233,792 480,724 (35,956) (35,956) (29,379) (440,159) (400,000) 0 0 0 0 0 0 0 0 0 0 0 0 71 (488) (488) 2011 2,203 1,715 1,715 $’000 18,950 248,514 267,535 (265,332) (265,332) 0 0 0 0 0 0 0 0 0 0 0 0 17 Property InformationProperty Totals (93) 2012 $’000 Land Administration and 19,964 (1,316) (1,409) (1,316) (1,409) 233,792 253,773 (253,866) (253,866) 0 0 0 0 0 0 0 0 0 0 0 0 0 25 37 62 (42) (104) (177) (104) (219) (177) (219) 2011 $’000 Climate Change 5 0 0 0 0 0 0 0 0 0 0 0 0 0 5 0 (33) (28) (33) 2012 (168) (196) (168) (196) $’000 Environmental Policy and Environmental (i) 0 0 0 0 0 0 0 0 0 0 24 267 344 2011 1,188 5,039 $’000 22,024 28,619 (28,352) (44,409) (28,352) (44,142) (44,409) (44,142) Forests and Parks Forests 9 0 0 0 0 0 0 0 0 0 (4) 100 766 2012 4,329 $’000 13,083 (4,498) (4,026) (8,524) (22,781) for details. ows (4,026) ows – other ows included in ows – other Annotated income agreements Other income Total administered expenses from transactions expenses from administered Total transactions from net result administered Total (net operating balance) (22,785) Other operating expenses net resultAdministered (8,524) Jointly controlled assets received free of charge free assets received Jointly controlled Administered other economic fl Administered net result the administered nancial assets Net gain/(loss) on non-fi Total administered other economic fl administered Total Payments into the Consolidated Fund result comprehensive administered Total Special purpose grants contribution Environmental Other expenses associated with jointly controlled Other expenses associated with jointly controlled assets other economic fl administered Total non-owner changes in equity Royalties Depreciation of jointly controlled assets of jointly controlled Depreciation Administered other economic fl Administered non-owner changes in equity surplus reserve Changes in physical asset revaluation Total administered income from transactions income from administered Total 18,287 Provision of services Provision Licences and leases Land Titles income Note: (i) Refer to Note 27. Administered expenses from transactions expenses from Administered POBOS Administered income from transactions income from Administered – POBOS Appropriations Notes to the fi nancial statements 30 June 2012 Notes to the fi items (continued) (non-controlled) Note 3. Administered

96 Department of Sustainability and Environment Annual Report 2012 0 0 1 0 0 42 18 17 60 2011 $’000 (12,630) 1,907,740 1,920,352 1,907,740 1,907,680 Management Land and Fire Land and Fire 0 0 3 1 0 0 11 15 339 2012 (529) $’000 2,615,296 2,615,486 2,615,296 2,615,281 0 7 1 0 0 25 24 57 577 2011 $’000 (2,102) 393,073 394,598 393,073 393,016 1 6 0 1 0 20 91 20 46 (45) 2012 $’000 283,808 283,761 283,807 283,762 9 4 1 9 0 0 0 (6) 10 2011 $’000 (3,026) 456,450 459,467 456,450 456,441 3 3 1 2 0 0 0 94 (5) 2012 (137) $’000 722,745 722,788 722,745 722,743 0 19 110 483 193 2011 $’000 6,759 7,081 2,634 2,634 (5,583) 975,355 977,821 972,721 968,274 8 0 0 0 104 102 649 113 2012 $’000 7,254 7,477 775,397 774,644 775,397 767,920 0 689 2011 $’000 1,469 36,218 44,357 26,721 371,418 373,576 683,087 709,808 3,690,788 2,900,405 2,980,980 3,317,212 3 0 Sustainable Water Sustainable Water 512 2012 $’000 6,973 73,482 13,804 368,431 776,695 2,761,336 Management and Supply Public Land Biodiversity Natural Resources nancial assets nancial 790,499 nancial assets nancial 2,835,330 nancial assets nancial nancial assets nancial Total administered assets administered Total 3,625,829 Administered liabilities Administered and accruals Creditors Administered fi Administered Cash Deposits repayable Receivables Unearned income Investment in portfolio entities Other liabilities Total administered fi administered Total Total administered liabilities administered Total 375,407 Administered non-fi Administered Other assets Total administered net assets administered Total 3,250,422 Share of jointly controlled assets of jointly controlled Share Total administered non-fi administered Total Notes to the fi nancial statements 30 June 2012 Notes to the fi items (continued) (non-controlled) Note 3. Administered

Department of Sustainability and Environment Annual Report 2012 97 431 810 129 2011 2,030 $’000 31,468 47,999 381,779 378,810 683,087 714,555 8,950,523 8,569,317 8,617,747 9,332,302 214 103 2012 $’000 7,294 1,461 14,235 73,484 383,943 776,695 790,930 376,332 9,347,664 8,865,732 8,940,677 9,731,607 0 0 0 0 26 782 167 416 589 2011 $’000 (7,737) 1,166,763 1,174,866 1,167,545 1,167,545 0 0 0 4 0 Property InformationProperty Totals 793 150 133 180 639 2012 $’000 Land Administration and 1,021,230 1,021,710 1,022,023 1,022,023 9 0 0 0 0 9 2 0 0 2011 $’000 (2,544) 383,697 383,706 383,706 386,248 Climate Change 1 0 0 0 0 1 0 0 39 (61) 2012 $’000 Environmental Policy and Environmental 299,571 299,572 299,572 299,594 0 8 0 (i) 22 205 175 2011 $’000 2,113 2,113 2,137 (2,165) 357,440 355,532 357,645 355,560 Forests and Parks Forests 0 0 2 36 149 430 164 (55) 2012 $’000 386,413 for details. nancial assets nancial 430 nancial assets nancial 386,507 nancial assets nancial Annotated income agreements nancial assets nancial Total administered liabilities administered Total 202 Other liabilities Cash Administered fi Administered Total administered fi administered Total non-fi Administered Other assets assets of jointly controlled Share non-fi administered Total assets administered Total liabilities Administered and accruals Creditors 386,937 Receivables Investment in portfolio entities Note: (i) Refer to Note 27. Deposits repayable Unearned income Total administered net assets administered Total 386,735 Notes to the fi nancial statements 30 June 2012 Notes to the fi items (continued) (non-controlled) Note 3. Administered

98 Department of Sustainability and Environment Annual Report 2012 Notes to the ﬁ nancial statements 30 June 2012

Note 3. Administered (non-controlled) items (continued)

Victorian Desalination Plant The State of Victoria has an obligation to make water security Under accounting standards, availability based Public Private payments to the consortium provided the plant is maintained Partnerships are treated as fi nance lease arrangements. to the appropriate standard. The water security payments comprise of an operating and maintenance component, a The department has classifi ed this item as administered, as it is capital component and a fi nance lease component including acting on behalf of the state rather than in its own right, and will GST, where applicable. recognise the fi nance lease liability on the general government sector balance sheet upon successful commissioning of the The state also has an obligation to purchase the High plant. The lease liability is to be directly offset by a sub-lease Voltage Alternating Current transmission line assets from agreement between the department, on behalf of the state, the consortium. and the Melbourne Water Corporation. The fi nance leases disclosed below are exclusive of GST. At the whole of state level, these internal funding arrangements Disclosure for Lessors – Victorian Desalination Plant between the department, on behalf of the state, and the Finance Lease Melbourne Water Corporation are eliminated. The Statement of Obligations for the Melbourne Water Leases Corporation requires them to pay all costs under the Project Disclosure for Lessees – Victorian Desalination Plant Deed with AquaSure, and gives rise to a receivable equal to the Finance Lease value of the fi nance lease liability. On 30 July 2009, the State of Victoria entered into a 30 year The desalination plant assets are intended to transfer from the Project Agreement with the AquaSure consortium to build department to the Melbourne Water Corporation at the end of and operate the desalination plant in Wonthaggi. The project the project contract term presently planned for 2039. operation term will commence from the date of commercial Subject to commercial acceptance of the desalination plant, acceptance, which is intended to occur by 15 November 2012. the department, on behalf of the State, will recognise a fi nance Construction of the desalination plant began in lease liability, and a receivable of equal value. September 2009. The Project Deed, signed on 30 July 2009, gives rise to a fi nance lease liability between the department and the AquaSure consortium.

Department of Sustainability and Environment Annual Report 2012 99 Notes to the ﬁ nancial statements 30 June 2012

Note 3. Administered (non-controlled) items (continued)

Commitments for expenditure The following commitments have not been recognised as liabilities in the ﬁ nancial statements:

Present value Nominal values

2012 2011 2012 2011 $’000 $’000 $’000 $’000

Uncommissioned public private partnership commitments

Minimum future lease payments: Finance lease payable from commencement date (i)

Not later than one year 306,561 121,297 321,042 127,911

Later than one year but no later than ﬁ ve years 1,679,657 1,683,437 2,260,735 2,298,736

Later than ﬁ ve years 2,537,437 2,718,921 11,941,205 12,477,889

Minimum future lease payments 4,523,655 4,523,655 14,522,982 14,904,536

Less: GST recoverable from the Australian Taxation Ofﬁ ce (411,241) (411,241) (1,320,271) (1,354,958)

Total minimum lease payments 4,112,414 4,112,414 13,202,711 13,549,578

Other commitments (ii)

Operation and maintenance commitments

Not later than one year 23,746 10,207 26,120 11,227

Later than one year but no later than ﬁ ve years 154,949 149,515 215,928 208,355

Later than ﬁ ve years 424,891 418,441 1,982,502 2,039,412

Operation and maintenance commitments603,586 578,163 2,224,550 2,258,994

Capital expenditure commitments

Not later than one year 246,138 0 270,728 0

Later than one year but no later than ﬁ ve years 15,124 234,730 21,084 286,652

Later than ﬁ ve years 122,255 114,305 638,684 644,269

Capital expenditure commitments383,517 349,035 930,496 930,921

Total other commitments (inclusive of GST) 987,103 927,198 3,155,046 3,189,915

Less: GST recoverable from the Australian Taxation Ofﬁ ce (89,737) (84,291) (286,822) (289,992)

Total other commitments (exclusive of GST) 897,366 842,907 2,868,224 2,899,923

Total commitments for public private partnerships 17,678,028 18,094,451 (inclusive of GST)

Less: GST recoverable from the Australian Taxation Ofﬁ ce (1,607,093) (1,644,950)

Total commitments for public private partnerships 16,070,935 16,449,501 (exclusive of GST)

Notes: (i) The present value of the ‘Minimum future lease payments’ has been discounted to the date of commercial acceptance using the interest rate implicit in the lease. (ii) The present value of ‘Other commitments’ has been discounted to the 30 June 2012 using a nominal pre tax rate.

100 Department of Sustainability and Environment Annual Report 2012 Notes to the ﬁ nancial statements 30 June 2012

N ote 4. Income from transactions

2012 2011 $’000 $’000

(a) Interest

Interest from trust and other ﬁ duciary activities:

Albury-Wodonga Land Transfer Trust Fund 31 18

Parks and Reserves Trust 3,032 2,839

State digital map working account 0 7

Total interest from trust and other ﬁ duciary activities 3,063 2,864

Total interest 3,063 2,864

(b) Sales of goods and services

User fees and charges 48,037 43,557

Total sale of goods and services 48,037 43,557

Metropolitan parks improvement rate (i) 131,482 125,662

Total metropolitan parks improvement rate 131,482 125,662

(d) Grants

Commonwealth grants 11,684 25,366

Grants from portfolio entities 83 1,219

Grants from other public bodies 6,755 9,717

Other state government grants 78,383 8,915

Total grants 96,905 45,217

(e) Fair value of assets received free of charge or for nominal consideration:

Land 0 533

Total fair value of assets received free of charge or for nominal consideration 0 533

(f) Other income

Settlements and reimbursements 12,406 24,602

Total other income 12,406 24,602

Note: (i) Metropolitan parks improvement rate This rate commonly known as the ‘parks charge’ is an annual levy on all commercial and residential properties in the Melbourne and metropolitan areas. The Water Industry Act 1994 determines how the parks charge is to be levied and requires that money collected be spent on developing and managing open space, parks, waterways and bays within the metropolitan area for the purposes of conservation, recreation, leisure, tourism and navigation. The parks charge is paid into the Parks and Reserves Trust Account controlled by the department on behalf of the Minister for Environment and Climate Change. By agreement with the department, the parks charge is billed and collected by the three metropolitan retail water companies and is paid directly into the trust account. For 2011–12 the minimum charge was levied at the rate of $65.18 (2011: $63.75) and the rate in the dollar of Net Annual Value was 0.393 cents (2011: 0.385 cents).

During the 2011–12 ﬁ nancial year a total of $130.456 million (2011: $122.633 million) was disbursed from the trust for the following purposes:

• Parks Victoria • Purchase of public open space

• Zoological Parks and Gardens Board • Other projects approved by the Minister in line with the Water Industry Act 1994. • Royal Botanic Gardens

• Shrine of Remembrance

Department of Sustainability and Environment Annual Report 2012 101 Notes to the ﬁ nancial statements 30 June 2012

Note 5. Expenses from transactions

2012 2011 $’000 $’000

(a) Employee expenses

Salaries and wages (206,051) (204,414)

Superannuation (19,613) (19,814)

Leave expenses (26,317) (28,828)

Termination beneﬁ ts (1,709) (695)

Other on-costs (fringe beneﬁ ts tax, payroll tax and workcover levy) (18,735) (16,422)

Total employee expenses (272,425) (270,173)

(b) Depreciation

Depreciation of property, plant and equipment

Buildings and structures (11,027) (9,909)

Buildings leasehold improvements (1,983) (1,437)

Finance lease assets (11,209) (10,257)

Plant, machinery and equipment (7,697) (9,573)

Roads infrastructure (13,056) (7,737)

Historical, cultural and environmental assets (16) (14)

Total depreciation of property, plant and equipment (44,988) (38,927)

Depreciation of software

Software (4,374) (7,897)

Total depreciation (49,362) (46,824)

Interest on ﬁ nance leases (1,821) (1,692)

Other interest expense (3) (22)

Total interest expense (1,824) (1,714)

(d) Grants and other transfers

Sustainable Water Management and Supply (183,058) (192,028)

Public Land (66,075) (40,154)

Biodiversity (7,895) (5,217)

Natural Resources (83,605) (83,986)

Land and Fire Management (15,765) (5,233)

Forests and Parks (185,546) (180,435)

Environmental Policy and Climate Change (17,160) (13,541)

Land Administration and Property Information (1,140) (1,657)

Total grants and other expense transfers(560,244) (522,251)

102 Department of Sustainability and Environment Annual Report 2012 Notes to the ﬁ nancial statements 30 June 2012

Note 5. Expenses from transactions (continued)

2012 2011 $’000 $’000

(e) Supplies and services

Community awareness and publicity (2,427) (3,802)

Contract and professional services (172,219) (172,578)

Equipment maintenance and hire (26,707) (30,251)

General expenses (37,866) (21,983)

IT costs (10,974) (10,599)

Laboratory, farm and livestock expenses (872) (1,039)

Motor vehicle costs (9,014) (8,364)

Ofﬁ ce and accommodation (32,108) (30,095)

Ofﬁ ce expenses (6,248) (8,425)

Payments for shared services (23,902) (21,909)

Postage and telephone (11,903) (12,764)

Travel and subsistence (4,456) (5,012)

Total supplies and services (338,696) (326,821)

(f) Other operating expenses

Fair value of services provided free of charge or for nominal consideration:

Services (177) (149)

Total fair value of services provided free of charge or for nominal consideration(177) (149)

Operating lease rental expenses:

Minimum lease payments - operating leases (779) (642)

Total operating lease rental expenses(779) (642)

Subtotal (956) (791)

Cost of goods sold/distributed (3,842) (7,792)

Research and development costs immediately expensed (28) (4)

Settlement of litigation (i) (13,254) (92)

Total other operating expenses(18,080) (8,679)

Note: (i) 2011–12 settlement amounts predominantly relate to the settlement of a landﬁ ll case. 2010–11 settlement amounts relate predominantly to the settlement of various land registry claims.

Department of Sustainability and Environment Annual Report 2012 103 Notes to the ﬁ nancial statements 30 June 2012

Note 6. Other economic ﬂ ows included in net result

2012 2011 $’000 $’000

(a) Net gain/(loss) on non-ﬁ nancial assets

Net gain on disposal of property, plant and equipment 5,873 3,273

Net gain arising from changes in fair value less estimated point–of–sale costs 0 9,531 of biological assets (Note 13)

Net recognition of non-ﬁ nancial assets (Note 1(l)) 11,422 42,764

Recognition of inventory 0 270

Impairment of intangible assets (Note 14) (3,949) (16,458)

Write down of inventory (5) 0

Write down of non-ﬁ nancial assets (50,960) (7,197)

Total net gain/(loss) on non-ﬁ nancial assets (37,619) 32,183

(b) Net loss on ﬁ nancial instruments

Net loss on loans and receivables(i) 0 (13)

Total net loss on ﬁ nancial instruments 0 (13)

Share of net losses of associates, excluding dividends (1,607) 0

Total share of net losses of associates, excluding dividends(1,607) 0

(d) Other gains/(losses) from other economic ﬂ ows

Net gain/(loss) arising from revaluation of long service leave liability(ii) (1,495) 28

Other provision discount rate adjustments (14) 918

Total other gains/(losses) from other economic ﬂ ows(1,509) 946

Notes: (i) This item represents the net (increase)/decrease in the provision for doubtful debts, bad debts and other debt from other economic ﬂ ows – refer to Note 1(h).

(ii) Revaluation gain/(loss) due to changes in bond rates. N ote 7. Revision of accounting estimates

(a) Reassessment of estimated useful lives of assets During the ﬁ nancial year the department reassessed the estimated total useful lives of certain assets including buildings, structures and other items of plant and equipment (to better reﬂ ect the period for which these assets are retained). Assuming the assets are held until the end of their estimated useful lives, departmental depreciation in relation to these assets will be reduced by the following amounts for the next 4 years:

Year ending 30 June $

2013 650,249

2014 319,896

2015 273,550

2016 110,916

Refer to Note 1(g) for the department’s depreciation accounting policy.

104 Department of Sustainability and Environment Annual Report 2012 Notes to the ﬁ nancial statements 30 June 2012

N ote 8. Receivables

2012 2011 $’000 $’000

Current receivables

Contractual

Trade receivables (i) (Note 22) 11,664 15,986

Provision for doubtful contractual receivables (i) (Notes 8(a), 22) (72) (74)

Accrued income (ii) (Note 22) 599 1,527

Accrued interest (ii) (Note 22) 190 212

12,381 17,651

Statutory

Amounts owing from Victorian Government (iii) 106,295 128,370

GST input tax credit recoverable 5,452 8,285

111,747 136,655

Total current receivables 124,128 154,306

Non-current receivables

Statutory

Amounts owing from Victorian Government (iii) 51,927 44,482

Total non-current receivables 51,927 44,482

Total receivables 176,055 198,788

Notes: (i) The average credit period on sales of goods and services and for other receivables is 30 days. No interest is charged on trade debtors for the fi rst 30 days from the date of the invoice. Thereafter, interest is charged at 10.5% p.a. (2011: 10.5% p.a.) on the outstanding balance of invoices relating to forest activities and land licences. The interest rate is determined under the Penalty Interest Rate Act 1983. A provision has been made for estimated irrecoverable amounts from the sale of goods when there is objective evidence that an individual receivable is impaired. The movement in the allowance of $(2,000) was recognised in the operating result for the current fi nancial year. (ii) No interest is charged on accrued receivables for the outstanding balance. An allowance is made for estimated irrecoverable amounts from the sale of goods, determined by reference to past default experience. No such allowance has been made in this fi nancial year for accrued receivables. (iii) The amounts recognised from Victorian Government represent funding for all commitments incurred through the appropriations and are drawn from the Consolidated Fund as the commitments fall due.

2012 2011 $’000 $’000

(a) Movement in the provision for doubtful debts

Balance at beginning of the year 74 61

Reversal of provision of receivables written off during the year as uncollectible (2) (3)

Reversal of unused provision recognised in the net result (29) 0

Amounts recovered during the year 0 3

Increase in provision recognised in the net result 29 13

Balance at end of the year 72 74

(b) Ageing analysis of receivables Refer to Table 22.3 in Note 22. Financial instruments for the ageing analysis of contractual receivables.

(c) Nature and extent of risk arising from receivables Refer to Note 22. Financial instruments for the nature and extent of risks arising from contractual receivables.

Department of Sustainability and Environment Annual Report 2012 105 Notes to the ﬁ nancial statements 30 June 2012

Note 9. Investments accounted for using the equity method

Associates accounted for using the equity method The department has an investment in an associate entity, National E-Conveyancing Development Limited (NECDL). NECDL was established in January 2010 to develop a single national electronic conveyancing system for settling property transactions. The department transferred the intellectual property (IP) rights for its electronic conveyancing system to NECDL in exchange for $6.75 million of equity in the company. The department also subscribed to shares in NECDL at a cost of $4.07 million. Both transactions occurred during the current ﬁ nancial year and were initially recognised at cost. The carrying value of the investment has been written down to reﬂ ect the department’s share of the carrying value of NECDL’s net assets (see Note 6(c)).

Ownership interest

2012 2011 Country of incorporation % $’000 % $’000

Non-current investments in associates

National E-Conveyancing Development Limited Australia 24.2 9,212 00

Total investments 9,212 0

2012 2011

$’000 $’000

Summarised ﬁ nancial information of associate:

Current assets 19,315 0

Non-current assets 23,490 0

Total assets 42,805 0

Current liabilities 4,443 0

Non-current liabilities 322 0

Total liabilities 4,765 0

Net assets 38,040 0

Share of associate’s net assets 9,212 0

Contingent liabilities and capital commitments The department’s share of the contingent liabilities, capital commitments and other expenditure commitments of its associates are disclosed in Note 21. Contingent assets and contingent liabilities and Note 20. Commitments for expenditure.

106 Department of Sustainability and Environment Annual Report 2012 Notes to the ﬁ nancial statements 30 June 2012

N ote 10. Inventories

2012 2011 $’000 $’000

Current inventories

Supplies and consumables – at cost

Fire Stores 9,045 7,421

Publications held for distribution 71 68

Seed bank 1,941 1,774

Weedicides 117 110

Other stores and materials 1,630 2,115

12,804 11,488

Inventories held for distribution

Publications held for sale – at cost 414 405

Total inventories 13,218 11,893

The value of seed in the seed bank at 30 June was calculated on the basis of the cost of collection.

Note 11. Non-ﬁ nancial physical assets classiﬁ ed as held for sale

2012 2011 $’000 $’000

Non-ﬁ nancial physical assets classiﬁ ed as held for sale

Land held for sale – at carrying amount 121 446

Finance lease motor vehicles – held for sale 2,422 182

Total non-ﬁ nancial physical assets classiﬁ ed as held for sale2,543 628

Land held for sale represents the carrying amount of Crown land deemed surplus to the needs of the state. As Crown land is unalienated from the Crown, it does not have a cost of acquisition. No development costs have been incurred in preparing this land for sale. The department intends to dispose of this land within the next 12 months. Finance lease motor vehicles held for sale represent vehicles identiﬁ ed for immediate disposal in their current condition through the VicFleet disposal process. It is anticipated that these disposals will be completed within the next 12 months.

2012 2011 $’000 $’000

Movements in non-ﬁ nancial physical assets classiﬁ ed as held for sale

Carrying amount at start of year 628 364

Reclassiﬁ cation of land held for sale from Crown land 121 446

Reclassiﬁ cation of vehicles held for sale from plant and equipment 2,422 182

Disposals (628) (364)

Carrying amount at end of year 2,543 628

Department of Sustainability and Environment Annual Report 2012 107 Notes to the ﬁ nancial statements 30 June 2012

Note 12. Property, plant and equipment

2012 2011 (i) 2010 (i) $’000 $’000 $’000

Land (ii)

Freehold land

At fair value 0 304 291

Total freehold land 0 304 291

Crown land - Land and unused roads

At fair value 2,294,734 2,409,808 3,034,898

Total Crown land - Land and unused roads 2,294,734 2,409,808 3,034,898

Crown land - National parks

At fair value 1,062,005 1,052,442 1,342,969

Total Crown land - National parks 1,062,005 1,052,442 1,342,969

Crown land - State forests

At fair value 1,149,674 1,149,365 1,412,136

Total Crown land - State forests 1,149,674 1,149,365 1,412,136

Crown land - Conservation reserves

At fair value 642,095 636,610 882,569

Total Crown land - Conservation reserve 642,095 636,610 882,569

Crown land - Metropolitan parks

At fair value 308,802 306,150 469,105

Total Crown land - Metropolitan parks 308,802 306,150 469,105

Crown land - Land used for operational purposes

At fair value 74,324 73,851 63,150

Total Crown land - Land used for operational purposes 74,324 73,851 63,150

Total land 5,531,634 5,628,530 7,205,118

Buildings and structures (ii)

At fair value 476,096 425,664 299,791

Less accumulated depreciation (25,529) (13,479) (80,285)

Total buildings and structures450,567 412,185 219,506

Roads (ii)

At fair value 1,044,767 1,044,491 624,519

Less accumulated depreciation (13,056) 0 (108,672)

Total roads1,031,711 1,044,491 515,847

Plant and equipment (ii)

At fair value 93,283 92,764 105,557

Less accumulated depreciation (55,780) (51,058) (59,621)

37,503 41,706 45,936

Under ﬁ nance lease at cost 53,320 47,755 42,045

Less accumulated amortisation (24,607) (22,478) (14,807)

28,713 25,277 27,238

Total plant and equipment66,216 66,983 73,174

108 Department of Sustainability and Environment Annual Report 2012 Notes to the ﬁ nancial statements 30 June 2012

Note 12. Property, plant and equipment (continued)

2012 2011 (i) 2010 (i) $’000 $’000 $’000

Assets under construction at cost

Buildings and structures 57,526 90,505 76,656

Roads 271 0 52

Plant and equipment 6,146 48,965 46,551

Total assets under construction at cost63,943 139,470 123,259

Historic, cultural and environment assets (ii)

At fair value 1,561 1,561 1,461

Less accumulated depreciation (28) (22) (130)

Total historic, cultural and environment assets1,533 1,539 1,331

Total property, plant and equipment7,145,604 7,293,198 8,138,235

Note: (i) Refer to Note 33. Correction of prior year errors for details. (ii) Schedule of valuations

2012 2011

Land – all classes 30 June 2012 30 June 2011 (managerial assessment (independent valuation) of fair value)

Buildings and structures 30 June 2012 30 June 2011 (managerial assessment (independent valuation) of fair value)

Roads 30 June 2012 30 June 2011 (managerial assessment (independent valuation) of fair value)

Plant and equipment 30 June 2012 30 June 2011 (managerial assessment (managerial assessment of fair value) of fair value)

Historic, cultural and environment assets 30 June 2012 30 June 2011 (managerial assessment (independent valuation) of fair value)

Department of Sustainability and Environment Annual Report 2012 109 Notes to the ﬁ nancial statements 30 June 2012

Note 12. Property, plant and equipment (continued)

Land Costs associated with 5E roads are expensed as the costs are In accordance with FRD 103D Non-Current Physical Assets, incurred, as these roads have a useful life of less than one year. all land holdings are measured at their fair value at the date of Roads will be subject to a physical inspection and revaluation revaluation. Revaluations of all land parcels, both Crown and by the Valuer-General Victoria in accordance with the revaluation freehold, were conducted by the Valuer-General Victoria as at cycle outlined in FRD 103D, scheduled for 2015–16. 30 June 2011. Buildings and structures The fair value of the land was determined from market based evidence by appraisal undertaken by professionally qualifi ed Buildings and structures were revalued as at 30 June 2011 valuers. The land is valued by direct comparison with sales of by the Valuer-General Victoria. During 2011–12, management land in the surrounding area and then adjusted to account for conducted a fair value assessment of all building and structures factors such as land size, site attributes, topography, shape and by applying indicators provided by the Valuer-General Victoria. location. A discount is also applied for the notional community As the assessment indicated an immaterial movement in value service obligation (or restricted use) associated with the land. had occurred, no change to carrying amounts is required. During 2011–12, management conducted a fair value Buildings and structures constructed or acquired during assessment of all land parcels by applying indicators provided 2011–12 are shown as fair value. by the Valuer-General Victoria. As the assessment indicated Buildings and structures will be subject to a physical inspection an immaterial movement in value had occurred, no change to and revaluation by the Valuer-General Victoria in accordance carrying amounts is required. with the revaluation cycle outlined in FRD 103D, scheduled for All recognitions in the current fi nancial year have been valued by 2015–16. the Valuer-General Victoria. Plant and equipment The department’s next formal revaluation is due in 2015–16 in The department measures items of plant and equipment at accordance with the revaluation cycle outlined in FRD 103D. cost on initial recognition as an asset. Subsequent to initial Additional information for some categories of Crown land is recognition, FRD 103D requires that all non-current physical provided as follows. assets are measured using the revaluation method. During 2011–12, the department considered whether there is National parks evidence that a market based fair value exists for these assets The area of public land set aside as national parks, which and whether the evidence indicates a fair value materially include state parks, wilderness parks, and other parks different from the existing carrying value (depreciated cost). The established under the National Parks Act 1975, comprises a assessment identifi ed that for a number of classes there is no diverse range of Crown land parcels permanently reserved for market in which fair value could be reliably measured. Where a the benefi t of the public. market existed for the remaining classes, there was no evidence that the market indicated fair value that was materially different State forests from the carrying amount. As such, the department considers State forests include Crown land parcels managed to balance a that the carrying value represents a fair approximation of fair variety of uses. These values include conserving fl ora and fauna, value for all classes of plant and equipment. protecting water catchments and water supply, providing timber for sustainable forestry, protecting landscape, archaeological Historic, cultural or environment assets and historic values, and providing recreational and educational Historic, cultural or environment assets comprise items deemed opportunities. Timber resources set aside for harvesting from worthy of preservation because of their social rather than areas of state forest are separately valued and disclosed in fi nancial benefi ts they provide to the community. They include Note 13. Biological assets. collections, artefacts, heritage furniture and artworks. The basis of valuation of historic, cultural or environment assets is net Conservation reserves realisable value. Historic, cultural and environmental assets were Land conservation reserves include Crown land parcels set revalued as at 30 June 2011 by the Valuer-General Victoria. aside for conservation of specifi c ecosystems, animal and plant Management undertook a fair value assessment of these assets species, geomorphological features and signifi cant historical and during 2011–12 and deemed that the existing carrying value cultural qualities. represented a fair approximation of fair value. Roads Historic, cultural and environmental assets will be subject to a physical inspection and revaluation by the Valuer-General Operational road networks were revalued as at 30 June 2011 Victoria in accordance with the revaluation cycle outlined in by the Valuer-General Victoria. During 2011–12, management FRD 103D, scheduled for 2015–16. conducted a fair value assessment of these roads by applying relevant indicators. As the assessment indicated an immaterial movement in value had occurred, no change to carrying amounts is required. Roads constructed during 2011–12 are shown as fair value. The cost of these roads includes all materials used in construction, direct labour and any other costs which are directly attributable to the project.

110 Department of Sustainability and Environment Annual Report 2012 Notes to the ﬁ nancial statements 30 June 2012

Note 12. Property, plant and equipment (continued)

Aggregate depreciation The cost of improvements to or on leasehold properties is Aggregate depreciation allocated during the year is recognised depreciated over the unexpired period of the lease or the as an expense and disclosed in Note 5(b) to the fi nancial estimated useful life of the improvement to the department, statements. Depreciation is charged on a straight-line basis over whichever is the shorter. the expected useful life of the asset. An assessment of useful lives is conducted on an annual basis. During the reporting period, the department may hold Refer to Note 7. Revision of accounting estimates for the impact other assets, which include items of historical, cultural or resulting from the change in useful lives of certain assets. environmental signifi cance. Such assets are deemed worthy of preservation because of social rather than fi nancial benefi ts they provide to the community. The nature of these assets means that there are certain limitations and restrictions imposed on their use and/or disposal. These assets are not depreciated.

Department of Sustainability and Environment Annual Report 2012 111 Total $’000 $’000 assets Historical, cultural and environment environment $’000 under Assets construction $’000 Plant and equipment $’000 Roads and $’000 (11,346) (7,737) (19,830) 0 (14) (38,927) Buildings structures Land $’000 used for purposes operational $’000 parks Metropolitan Metropolitan $’000 reserves Conservation State $’000 forests $’000 parks National for details. $’000 roads unused Land and 0 (446)00 0 533 (12,741)0 0 0 (10,107) 0 9,764 00 0 1,317 0 31,7710000 3,629 0 569 0 (21) 0 0 0 0 (664) 0 0 0 8,413 (879) (686) 0 0 24,858 0 (2,192) 0 0 0 9,109 (758) (182) 0 0 (31,958) 1,019 (11,754) (2,376) 0 0 0 (3,867) 0 (183) (7,175) 0 0 0 (628) (10) (25,202) 0 30,646 533 0 (68,062) 0 22,407 (147) 0 0 00 0 (41,501) 0 0 0 0 58 0 (45,802) 0 0 0 0 0 0 0 (41,443) 13 (555,104) (307,085) (264,088) (213,665) (163,680) 1,870 163,689 540,949 0 0 232 (796,869) 291 3,102,960 1,342,969 1,389,729 882,716 469,105 63,150 219,506 515,847 73,174 123,259 1,331 8,184,037 291 3,034,898 1,342,969 1,412,136 882,569 469,105 63,150 219,506 515,847 73,174 123,259 1,331 8,138,235 304 2,409,808 1,052,442 1,149,365 636,610 306,150 73,851 412,185 1,044,491 66,983 139,470 1,539 7,293,198 land $’000 Freehold Freehold (i) Correction of prior year errors (i) (i) (i) Note: (i) Refer to Note 33. Balance at 1 July 2010 of correction Net effect of prior year error

Net transfers in – of free Resources charge Net transfers (out) – Contribution by owners Net transfers in/(out) – other categories from to Note 14) (refer Revaluation increments / (decrements) Recognition / (write (derecognition), down) of assets party transfersThird expense Depreciation to Note 5(b)) (refer 0 (32,900) 0 0 (43,906) 0 (120) (98) 0 0 0 0 (77,024) AdditionsDisposals cation to Reclassifi ed as held asset classifi to for sale (refer Note 11) 0 0 (4,595) 0 3,175 (10) 0 0 2,843 (250) of correction Net effect 1,389of prior year errors 0 11,615 (341) 14,557 0 0 20,333 0 55,344 0 0 109,256 0 0 (5,196) Restated balance at 1 July 2010 Restated balance at 1 July 2011 Notes to the fi nancial statements 30 June 2012 Notes to the fi plant and equipment (continued) Note 12. Property, purpose group. in the ‘Public Safety and Environment’ Movements in carrying amounts - All departmental assets are

112 Department of Sustainability and Environment Annual Report 2012 Total $’000 $’000 assets Historical, cultural and environment environment $’000 under Assets construction $’000 Plant and equipment $’000 Roads and $’000 Buildings structures Land $’000 used for purposes operational $’000 parks Metropolitan Metropolitan $’000 reserves Conservation State $’000 forests $’000 parks National for details.

$’000 roads unused Land and 0 0 0 000000 32500000 0 0 (61,044) 0 1,565 0 0 000000 00000 00 11,423 0 515 00 0 0 0 0 0 0 0 0 0 1,222 0 0 0 0 (2,240) 0 0 (12) 0 752 0 0 (1,915) 0 0 0 (12) (13,010) 0 (13,056) (51,699) (57,742) (18,906) 10 (39,538) 0 (16) (44,988) 0 2,294,734 1,062,005 1,149,674 642,095 308,802 74,324 450,567 1,031,711 66,216 63,943 1,533 7,145,604 304 2,409,808 1,052,442 1,149,365 636,610 306,150 73,851 412,185 1,044,491 66,983 139,470 1,539 7,293,198 land (304) (8,705) 7,609 309 955 2,652 (2,517) 49,254 276 1,889 (49,982) 0 1,436 $’000 Freehold Freehold Correction of prior year errors (i) (i) Refer to Note 33. Note: Restated balance at 1 July 2011 Net transfers in – of free Resources charge Net transfers in/(out) – Contribution by owners Net transfers in/(out) – other categories from to Note 14) (refer Revaluation increments / (decrements) Recognition / (write (derecognition), down) of assets (refer to Note 6(a)) party transfersThird expense Depreciation to Note 5(b)) (refer Balance at 30 June 02012 (51,101) 0 0 (647) 0 0 0 0 0 (905) 0 (52,653) AdditionsDisposals cation to Reclassifi ed as held asset classifi to for sale (refer Note 11) 0 0 (5,972) 0 389 0 0 4,662 0 0 3,002 0 4,387 0 0 21,996 0 27,059 (4,223) 0 0 61,495 (3,494) 0 0 (13,689) Notes to the fi nancial statements 30 June 2012 Notes to the fi plant and equipment (continued) Note 12. Property,

Department of Sustainability and Environment Annual Report 2012 113 Notes to the ﬁ nancial statements 30 June 2012

N ote 13. Biological assets

2012 2011 ’000 m3 ’000 m3

Timber volume (cubic metres) 0 40,000

2012 2011 $’000 $’000

Commercial native forests 0 24,874

On 16 December 2011, the Premier announced a Machinery of Government change which transferred the power to make an Allocation Order in accordance with Part 5 of the Sustainable Forests (Timber) Act 2004 from the Minister for Environment and Climate Change to the Minster for Agriculture and Food Security. Consequently, the management of Victoria’s commercial timber has been transferred to the Department of Primary Industries from the Department of Sustainability and Environment, effective from 23 December 2011. The biological assets were transferred at their carrying value through equity in accordance with FRD 119 Contributions by Owners. Prior to the transfer, the department recognised productive trees in commercial native forests as biological assets. The department determined the volume of timber in State forests that was available to VicForests for the purposes of harvesting and/or selling by reference to the Allocation to VicForests (Amendment) Order 2010 and Allocation to VicForests (Further Amendment) Order 2010 and the associated Timber Release Plans (TRPs). At 30 June 2011, there were two TRPs: the 2011 TRP (which expires in June 2016 and replaces the 2006 TRP which expired in June 2011) and the 2009 TRP (which expires in June 2014), both of which had been prepared by VicForests and approved by the Secretary of the department. The fair value of that timber was determined in accordance with AASB 141 Agriculture by discounting the net future cash ﬂ ows VicForests expected to earn, using a real, pre-tax discount rate of 9.47% to calculate the Net Present Value.

Reconciliations Reconciliations of the carrying amounts of biological assets at the beginning and end of the current and previous ﬁ nancial year are set out below.

2012 2011 $’000 $’000

Movements in carrying amounts of commercial native forests

Carrying amount at beginning of period 24,874 22,296

Gain arising on change in accounting estimates 0 6,775

Transfer of timber rights to VicForests 0 (6,953)

Gain arising from the expiry of timber rights from VicForests 0 2,756

Transfer to the Department of Primary Industries under s30 of the (24,874) 0 Public Administration Act 2004

Carrying amount at end of period 0 24,874

114 Department of Sustainability and Environment Annual Report 2012 Notes to the ﬁ nancial statements 30 June 2012

Note 14. Intangible assets

2012 2011 $’000 $’000

Software

Gross carrying amount at beginning of period at cost 44,566 56,484

Accumulated depreciation (39,661) (23,391)

Accumulated impairment (3,949) (16,458)

956 16,635

Construction in progress – at cost 6,359 4,657

Net book value at end of period 7,315 21,292

Depreciation of intangible assets Capitalised expenditure on intangible assets, such as databases and software, is depreciated on a straight-line basis over an estimated useful life of between 3 and 10 years. Aggregate depreciation allocated during the year is recognised as an expense and disclosed in Note 5(b) to the ﬁ nancial statements.

Signiﬁ cant intangible assets The department has software development expenditure for a number of systems. The major components of the carrying amount of software is the Fire and Emergency Portal under development. The expected cost of the system is $21.50 million and is anticipated to be completed in 2015.

2012 2011 $’000 $’000

Movements in carrying amounts

Carrying amount at start of year 21,292 41,501

Additions 3,953 4,657

Net transfers from other categories (Note 12) (1,436) 183

Disposals (8,171) (694)

Depreciation expense (i) (4,374) (7,897)

Impairment expense (ii) (3,949) (16,458)

Carrying amount at end of year 7,315 21,292

Notes: (i) Depreciation expense is included in the line item ‘depreciation’ in the comprehensive operating statement. (ii) The impairment expense relates to the Government Infrastructure Management System (GIMS). The current GIMS platform will not be supported by the software supplier past November 2012 and as such, has been impaired in accordance with AASB 136 Impairment of Assets. The department is reviewing alternative asset management system options. The 2011 impairment expense related to the Electronic Conveyancing System.

Department of Sustainability and Environment Annual Report 2012 115 Notes to the ﬁ nancial statements 30 June 2012

Note 15. Payables

2012 2011 $’000 $’000

Current payables

Contractual

Trade creditors (i) (Note 22) 18,606 31,135

Accrued grants and other transfers (Note 22) 3,880 6,887

Accrued capital contributions (Note 22) 12,718 19,201

Other accrued expenses (Note 22) 40,848 30,791

Other (includes superannuation) payable (i) (Note 22) 468 239

76,520 88,253

Statutory

Advance from the Public Account (ii) 9,253 76,488

Taxes payable 2,007 2,232

11,260 78,720

Total current payables 87,780 166,973

Non-current payables

Statutory

Advance from the Public Account (ii) 27,099 32,683

Total non-current payables 27,099 32,683

Total payables 114,879 199,656

Notes: (i) The average credit period is 30 days. No interest is charged on the trade creditors or other payables for the ﬁ rst 30 days from the date of the invoice. Thereafter, interest may be charged at differing rates determined by the individual trade arrangements entered into. (ii) These advances are for varying terms and do not normally bear interest. The advances are unsecured and the term of the advance is usually agreed by the Minister at the time the advance was provided.

(a) Maturity analysis of contractual payables Refer to Table 22.4 in Note 22. Financial instruments for the maturity analysis of contractual payables.

(b) Nature and extent of risk arising from contractual payables Refer to Note 22. Financial instruments for the nature and extent of risks arising contractual from payables.

116 Department of Sustainability and Environment Annual Report 2012 Notes to the ﬁ nancial statements 30 June 2012

Note 16. Borrowings

2012 2011 $’000 $’000

Current borrowings – secured (i)

Finance lease liabilities (Notes 1(n), 19) 15,086 15,151

Total current borrowings 15,086 15,151

Non-current borrowings – secured (i)

Finance lease liabilities (Notes 1(n), 19) 15,463 9,979

Total non-current borrowings 15,463 9,979

Total borrowings (Note 22) 30,549 25,130

Note: (i) Secured by the leased assets.

(a) Maturity analysis of borrowings Refer to Table 22.4 in Note 22. Financial instruments for the maturity analysis of borrowings.

(b) Nature and extent of risk arising from borrowings Refer to Note 22. Financial instruments for the nature and extent of risks arising from borrowings.

Department of Sustainability and Environment Annual Report 2012 117 Notes to the ﬁ nancial statements 30 June 2012

Note 17. Provisions

2012 2011 $’000 $’000

Current provisions

Employee beneﬁ ts – annual leave (i) (Note 17(a))

Unconditional and expected to be settled within 12 months (iii) 17,398 15,629

Unconditional and expected to be settled after 12 months (iv) 488 763

Employee beneﬁ ts – long service leave (i) (Note 17(a))

Unconditional and expected to be settled within 12 months (iii) 37,425 38,088

Unconditional and expected to be settled after 12 months (iv) 7,848 6,654

63,159 61,134

Provisions related to employee beneﬁ t on-costs: (Note 17(a) and 17(b))

Unconditional and expected to be settled within 12 months (iii) 10,442 10,232

Unconditional and expected to be settled after 12 months (iv) 1,588 1,413

12,030 11,645

Onerous lease contracts (ii) (Notes 17(b) and 19) 1,481 840

Provision for insurance deductibles (Note 17(b)) 22,286 21,025

Provision for ﬁ re rehabilitation (Note 17(b)) 5,799 9,238

Provision for native vegetation offset (Note 17(b)) 9,738 10,905

Provision for ﬂ ood recovery works (Note 17(b)) 2,222 3,856

Other (Note 17(b)) 10,354 13,289

Total current provisions 127,069 131,932

Non-current provisions

Employee beneﬁ ts (i)(iv) (Note 17(a)) 5,643 5,556

Employee beneﬁ ts on-costs (iv) (Note 17(a) and 17(b)) 1,075 1,058

Onerous lease contracts (ii) (Notes 17(b) and 19) 3,914 3,789

Total non-current provisions 10,632 10,403

Total provisions 137,701 142,335

118 Department of Sustainability and Environment Annual Report 2012 Notes to the ﬁ nancial statements 30 June 2012

Note 17. Provisions (continued)

2012 2011 (a) Employee beneﬁ ts and related on-costs $’000 $’000

Current employee beneﬁ ts (i)

Annual leave entitlements 17,886 16,392

Long service leave entitlements 45,273 44,742

63,159 61,134

Non-current employee beneﬁ ts (i)

Long service leave entitlements (iv) 5,643 5,556

Total employee beneﬁ ts 68,802 66,690

Current on-costs 12,030 11,645

Non-current on-costs (iv) 1,075 1,058

Total on-costs 13,105 12,703

Total employee beneﬁ ts and related on-costs 81,907 79,393

Notes: (i) Provisions for employee beneﬁ ts consist of amounts for annual leave and long service leave accrued by employees, not including on-costs. (ii) The provision for onerous lease contracts represents the present value of the future lease payments that the department is presently obligated to make in respect of onerous lease contracts under non-cancellable operating lease agreements, less income expected to be earned on the lease including estimated future sub-lease income, where applicable. The estimate may vary as a result of changes in the utilisation of the leased premises and sub-lease arrangements where applicable. The unexpired term of the leases vary up to a maximum of 15 years. (iii) The amounts disclosed are nominal amounts. (iv) The amounts disclosed are discounted to present values.

(b) Movement in provisions Onerous Insurance Native Flood lease deduct- Fire vegetation recovery On-costs contracts ibles rehab. offset works Other Total $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Opening balance 12,703 4,629 21,025 9,238 10,905 3,856 13,289 75,645

Additional provisions recognised 607 752 1,832 446 65 1,079 1,885 6,666

Reductions arising from payments/other sacriﬁ ces of (444) 0 (571) (3,885) (1,232) (2,713) (4,820) (13,665) future economic beneﬁ ts

Unwind of discount and effect of 239 14 0 0 0 0 0 253 changes in the discount rate

Closing balance 13,105 5,395 22,286 5,799 9,738 2,222 10,354 68,899

Current 12,030 1,481 22,286 5,799 9,738 2,222 10,354 63,910

Non-current 1,075 3,914 0 0 0 0 0 4,989

13,105 5,395 22,286 5,799 9,738 2,222 10,354 68,899

Department of Sustainability and Environment Annual Report 2012 119 Notes to the ﬁ nancial statements 30 June 2012

Note 18. Superannuation

Government Employees’ Superannuation Fund Employees of the department are entitled to receive superannuation benefi ts and the department contributes to both defi ned benefi t and defi ned contribution plans. The defi ned benefi t plan provides benefi ts based on years of service and fi nal average salary. The department does not recognise any defi ned benefi t liability in respect of the plan because the entity has no legal or constructive obligation to pay future benefi ts relating to its employees; its only obligation is to pay superannuation contributions as they fall due. The Department of Treasury and Finance discloses the State’s defi ned benefi t liabilities in its disclosure for administered items. However, superannuation contributions paid or payable for the reporting period are included as part of employee benefi ts in the comprehensive operating statement of the department. The name, details and amounts expensed in relation to the major employee superannuation funds and contributions made by the department are as follows:

Contribution outstanding at Paid contribution for the year year end

2012 2011 2012 2011 Fund $’000 $’000 $’000 $’000

Deﬁ ned beneﬁ t plan:

Emergency Services Superannuation Scheme 6,507 6,690 0 0

Deﬁ ned contribution plans:

Victorian Superannuation Fund – Vic Super Scheme 11,129 11,207 0 0

Various other 1,977 1,917 0 0

19,613 17,897 0 0

The bases for contributions are determined by the various schemes. All employees of the department are entitled to varying levels of benefi ts on retirement, disability or death. Some superannuation plans provide defi ned benefi ts based on years of service and fi nal average salary. The others are classifi ed as contribution schemes. Contributions by the department of a minimum of 9% of employee’s wages and salaries are legally enforceable on the department. The above amounts were measured as at 30 June of each year or in the case of employer contributions they relate to the years ended 30 June.

120 Department of Sustainability and Environment Annual Report 2012 Notes to the ﬁ nancial statements 30 June 2012

N ote 19. Leases

Disclosure for Lessees – Finance Leases Finance leases relate to motor vehicles leased through the VicFleet lease facility. The lease term is the period over which the vehicle is to be leased. Generally, vehicles must be retained for three years or 60,000 kms, whichever occurs fi rst. On disposal of the vehicle any profi t or loss on sale is borne by the department. The fi nance leases disclosed below are exempt from GST.

Minimum future lease Present value of minimum payments future lease payments

2012 2011 2012 2011 $’000 $’000 $’000 $’000

Finance lease liabilities payable

Not later than one year 16,528 16,221 15,086 15,151

Later than one year but no later than ﬁ ve years 16,513 10,406 15,463 9,979

Minimum future lease payments 33,041 26,627 30,549 25,130

Less: Future ﬁ nance charges (2,492) (1,497) 0 0

Present value of minimum lease payments 30,549 25,130 30,549 25,130

Included in the ﬁ nancial statements as:

Current ﬁ nance lease liability (Note 16) 15,086 15,151

Non-current ﬁ nance lease liability (Note 16) 15,463 9,979

30,549 25,130

The weighted average interest rate implicit in the leases is 6.78% p.a (2011: 6.96% p.a).

(a) Maturity analysis of ﬁ nance lease liabilities Please refer to Table 22.4 in Note 22. Financial instruments for the maturity analysis of ﬁ nance lease liabilities.

(b) Nature and extent of risk arising ﬁ nance lease liabilities Please refer to Note 22. Financial instruments for the nature and extent of risks arising from ﬁ nance lease liabilities.

Department of Sustainability and Environment Annual Report 2012 121 Notes to the ﬁ nancial statements 30 June 2012

Note 19. Leases (continued)

Disclosure for Lessees – Operating Leases Operating leases predominantly relate to offi ce and other facilities with lease terms of between two to fi fteen years, some with options to extend the lease. Some operating lease contracts contain annual market review clauses. Other leases will consist mainly of aircraft leases relating to fi re bombing services. Such leases have terms between one to fi ve years. The department does not have an option to purchase the leased assets at the expiry of the lease period. All amounts shown in the leases note are nominal amounts.

2012 2011 $’000 $’000

Non-cancellable operating leases payable

Not later than one year 93,686 26,363

Later than one year but no later than ﬁ ve years 85,105 55,690

Later than ﬁ ve years 262 526

Total commitment for operating leases (inclusive of GST) 179,053 82,579

Less: GST recoverable from the Australian Taxation Ofﬁ ce (16,277) (7,507)

Total commitments for operating lease expenditure 162,776 75,072

In respect of non-cancellable operating leases the following liabilities have been recognised:

Current

Onerous lease contracts (Note 17) 1,481 840

Non-current

Onerous lease contracts (Note 17) 3,914 3,789

5,395 4,629

122 Department of Sustainability and Environment Annual Report 2012 Notes to the ﬁ nancial statements 30 June 2012

Note 20. Commitments for expenditure

2012 2011 $’000 $’000

Capital expenditure commitments

Not later than one year 60,570 190,025

Later than one year but no later than ﬁ ve years 269,026 160,355

Later than ﬁ ve years 20,432 0

Total capital expenditure commitments 350,028 350,380

Remuneration commitments

Not later than one year 3,050 3,763

Total remuneration commitments 3,050 3,763

Other expenditure commitments

Other operating commitments

Not later than one year 157,361 88,142

Later than one year but no later than ﬁ ve years 858,909 55,562

Later than ﬁ ve years 72,234 4,463

1,088,504 148,167

Department’s share of associate’s capital expenditure commitments

Not later than one year 214 0

214 0

Total other expenditure commitments 1,088,718 148,167

Total commitments for expenditure (inclusive of GST) 1,441,796 502,310

Less GST recoverable from the Australian Taxation Ofﬁ ce (15,507) (11,028)

Total commitments for expenditure (exclusive of GST) 1,426,289 491,282

Lease commitments Finance lease liabilities and non-cancellable operating lease commitments are disclosed in Note 19 to the ﬁ nancial statements.

Department of Sustainability and Environment Annual Report 2012 123 Notes to the ﬁ nancial statements 30 June 2012

Note 21. Contingent assets and contingent liabilities

2012 2011 $’000 $’000

Details and estimates of amounts of contingent liabilities are as follows:

Quantiﬁ able contingent liabilities

Damages claims 2,838 13,000

Public liability insurance claims 22,145 21,050

Breach of contract 5,100 5,100

Other 23,125 2,018

53,208 41,168

Unquantiﬁ able contingent liabilities The department does not have any unquantiﬁ able contingent liabilities.

Contingent assets The department does not have any contingent assets.

Associates The department does not have quantiﬁ able or unquantiﬁ able contingent assets or liabilities in relation to its investment in NECDL.

Note 22. Financial instruments

(a) Financial risk management objectives and policies The department’s principal fi nancial instruments comprise: • cash assets; • term deposits; • receivables (excluding statutory receivables); • payables (excluding statutory payables); • borrowings; and • fi nance lease payables. Details of signifi cant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement, and the basis on which income and expenses are recognised, with respect of each class of fi nancial asset, fi nancial liability and equity instrument above are disclosed in Note 1 to these fi nancial statements. The department’s activities may expose it to the risks of changes in foreign currency exchange rates and interest rates. The department does not enter into derivative fi nancial instruments to manage these exposures, nor does it enter into or trade fi nancial instruments for speculative purposes. The main purpose in holding fi nancial instruments is to prudentially manage the department’s fi nancial risks within the Government policy parameters. The department’s main fi nancial risks include credit risk, liquidity risk, interest rate risk and foreign currency risk. The department manages these fi nancial risks in accordance with its fi nancial management policies.

124 Department of Sustainability and Environment Annual Report 2012 Notes to the ﬁ nancial statements 30 June 2012

Note 22. Financial instruments (continued)

The carrying amounts of the department’s contractual ﬁ nancial assets and ﬁ nancial liabilities by category are in Table 22.1.

Table 22.1: Categorisation of ﬁ nancial instruments

2012 2011

Contractual Contractual Contractual Contractual fi nancial fi nancial fi nancial fi nancial assets – liabilities at assets – liabilities at loans and amortised loans and amortised receivables cost Total receivables cost Total $’000 $’000 $’000 $’000 $’000 $’000

Contractual ﬁ nancial assets

Cash and deposits 258,218 0 258,218 251,012 0 251,012

Receivables (i)

Trade receivables 11,592 0 11,592 15,912 0 15,912

Accrued income 599 0 599 1,527 0 1,527

Accrued interest 190 0 190 212 0 212

Total contractual ﬁ nancial 270,599 0 270,599 268,663 0 268,663 assets

Contractual ﬁ nancial liabilities

Payables (ii)

Trade creditors 0 18,606 18,606 0 31,135 31,135

Accrued grants and other 0 3,880 3,880 0 6,887 6,887 transfers

Accrued capital contributions 0 12,718 12,718 0 19,201 19,201

Other accrued expenses 0 40,848 40,848 0 30,791 30,791

Other payables 0 468 468 0 239 239

Borrowings

Finance lease liabilities 0 30,549 30,549 0 25,130 25,130

Total contractual ﬁ nancial 0 107,069 107,069 0 113,383 113,383 liabilities

Notes: (i) The amount of receivables disclosed excludes statutory receivables (i.e. Amounts owing from Victorian Government and GST input tax credit receivable) totalling $163.674 million (2011: $181.137 million) – Refer Note 8. Receivables. (ii) The amount of payables disclosed excludes statutory payables (i.e. Amounts owing to Victorian Government for advances from the Public Account and taxes payable) totalling $38.359 million (2011: $111.403 million) – Refer Note 15. Payables.

Department of Sustainability and Environment Annual Report 2012 125 Notes to the ﬁ nancial statements 30 June 2012

Note 22. Financial instruments (continued)

Table 22.2: Net holding gain/(loss) on ﬁ nancial instruments by category

2012 2011

Total interest Total interest income/ Impairment income/ Impairment (expense) loss Total (expense) loss Total $'000 $’000 $’000 $'000 $’000 $’000

Contractual ﬁ nancial assets

Cash and deposits 31 0 31 25 0 25

Receivables (i) 0 (2) (2) 0 (13) (13)

Short term deposits 3,032 0 3,032 2,839 0 2,839

Total contractual ﬁ nancial 3,063 (2) 3,061 2,864 (13) 2,851 assets

Contractual ﬁ nancial liabilities

Payables (3) 0 (3) (22) 0 (22)

Borrowings (1,821) 0 (1,821) (1,692) 0 (1,692)

Total contractual ﬁ nancial (1,824) 0 (1,824) (1,714) 0 (1,714) liabilities

Note: (i) The amount of receivables disclosed excludes statutory receivables (i.e. Amounts owing from Victorian Government and GST input tax credit receivable) totalling $163.674 million (2011: $181.137 million) – Refer to Note 8. Receivables.

The net holding gains or losses disclosed above are determined as follows: • for cash and cash equivalents, loans or receivables and available-for-sale fi nancial assets, the net gain or loss is calculated by taking the movement in the fair value of the asset, the interest income, plus or minus foreign exchange gains or losses arising from revaluation of the fi nancial assets, and minus any impairment recognised in the net result; • for fi nancial liabilities measured at amortised cost, the net gain or loss is calculated by taking the interest expense, plus or minus foreign exchange gains or losses arising from the revaluation of fi nancial liabilities measured at amortised cost.

(b) Credit risk Credit risk arises when there is the possibility of the department’s counter party defaulting on their contractual obligations resulting in fi nancial loss to the department. Credit risk is measured at fair value and is monitored on a regular basis. Credit risk associated with the department’s contractual fi nancial assets is minimal because the main debtor is the Victorian Government. For debtors other than Government, it is the department’s policy to only deal with entities with high credit ratings of a minimum Triple-B rating and to obtain suffi cient collateral or credit enhancements where appropriate. The department reviews receivables for impairment consistent with the ageing disclosed in Table 22.3. In addition, the department does not engage in hedging for its contractual fi nancial assets and mainly obtains contractual fi nancial assets that are on fi xed interest, except for cash assets, which are mainly cash at bank. As with the policy for debtors, the department’s policy is to only deal with banks with high credit ratings. Provision of impairment for contractual fi nancial assets is recognised when there is objective evidence that the department will not be able to collect a receivable. Objective evidence includes fi nancial diffi culties of the debtor, default payments, debts which are more than 60 days overdue, and changes in debtor credit ratings. The carrying amount of contractual fi nancial assets recorded in the fi nancial statements, net of any allowances for losses, represents the department’s maximum exposure to credit risk without taking account of the value of any collateral obtained.

126 Department of Sustainability and Environment Annual Report 2012 Notes to the ﬁ nancial statements 30 June 2012

Note 22. Financial instruments (continued)

Contractual fi nancial assets that are either past due or impaired There are no material fi nancial assets which are individually determined to be impaired. Currently the department does not hold any collateral as security nor credit enhancements relating to any of its fi nancial assets. There are no contractual fi nancial assets that have had their terms renegotiated so as to prevent them from being past due or impaired, and they are stated at the carrying amounts as indicated. The following table discloses the ageing only of contractual fi nancial assets that are past due but not impaired:

Table 22.3: Ageing analysis of contractual ﬁ nancial assets

Past due but not impaired Not past Carrying due and not Less than 1 1 month – 3 months – amount impaired Month 3 months 1 year 1 – 5 years

$‘000 $‘000 $‘000 $‘000 $‘000 $‘000

2012

Cash and deposits 258,218 258,218 0 0 0 0

Receivables(i)

Trade receivables 11,592 9,374 1,822 319 77 0

Accrued income 599 599 0 0 0 0

Accrued interest 190 190 0 0 0 0

Total 270,599 268,381 1,822 319 77 0

2011

Cash and deposits 251,012 251,012 0 0 0 0

Receivables(i)

Trade receivables 15,912 13,822 712 1,059 283 36

Accrued income 1,527 1,527 0 0 0 0

Accrued interest 212 212 0 0 0 0

Total 268,663 266,573 712 1,059 283 36

Note: (i) Ageing analysis of receivables excludes statutory receivables totalling $163.674 million (2011: $181.137 million) for amounts owing from the Victorian Government and GST input tax credit recoverable as these amounts are not contractual and are therefore outside the scope of this disclosure – Refer to Note 8. Receivables.

(c) Liquidity risk Liquidity risk arises when the department is unable to meet its fi nancial obligations as and when they fall due. The department operates under the Government fair payments policy of settling fi nancial obligations within 30 days and in the event of a dispute, making payments within 30 days from the date of resolution. The department’s maximum exposure to liquidity risk is the carrying amounts of fi nancial liabilities as disclosed in the face of the balance sheet. The department manages its liquidity risk by: • close monitoring of its short-term and long-term borrowings by senior management, including monthly reviews on current and future borrowing levels and requirements; • maintaining an adequate level of uncommitted funds that can be drawn at short notice to meet its short-term obligations; • holding investments and other contractual fi nancial assets that are readily tradeable in the fi nancial markets; • careful maturity planning of its fi nancial obligations based on forecasts of future cash fl ows; and • a high credit rating for the State of Victoria, which assists in accessing debt market at a lower interest rate. The department’s exposure to liquidity risk is deemed insignifi cant based on prior period data and current assessment of risk. Cash for unexpected events is generally sourced from liquidation of available-for-sale fi nancial investments.

Department of Sustainability and Environment Annual Report 2012 127 Notes to the ﬁ nancial statements 30 June 2012

Note 22. Financial instruments (continued)

The following table discloses the contractual maturity analysis for the department’s contractual ﬁ nancial liabilities.

Table 22.4: Maturity analysis of contractual ﬁ nancial liabilities

Maturity dates

Carrying Nominal Less than 1 month – 3 months amount amount (i) 1 month 3 months – 1 year 1–5 years 5+ years $’000 $‘000 $‘000 $‘000 $‘000 $‘000 $‘000

2012

Payables: (i)

Trade creditors 18,606 18,606 17,611 305 152 538 0

Accrued grants and other 3,880 3,880 3,880 0 0 0 0 transfers

Accrued capital contributions 12,718 12,718 12,718 0 0 0 0

Other accrued expenses 40,848 40,848 40,848 0 0 0 0

Other payables 468 468 468 0 0 0 0

Borrowings:

Finance lease liabilities 30,549 30,549 3,792 1,889 9,405 15,463 0

Total 107,069 107,069 79,317 2,194 9,557 16,001 0

2011

Payables: (i)

Trade creditors 31,135 31,135 28,152 1,112 1,874 (3) 0

Accrued grants and other 6,887 6,887 6,887 0 0 0 0 transfers

Accrued capital contributions 19,201 19,201 19,201 0 0 0 0

Other accrued expenses 30,791 30,791 30,791 0 0 0 0

Other payables 239 239 239 0 0 0 0

Borrowings:

Finance lease liabilities 25,130 25,130 5,551 3,075 6,525 9,979 0

Total 113,383 113,383 90,821 4,187 8,399 9,976 0

Note: (i) Ageing analysis of payables excludes statutory payables totalling $38.359 million (2011: $111.403 million) for amounts owing to the Victorian Government for advances from the public account and taxes payable as these amounts are not contractual and are therefore outside the scope of this disclosure. Refer Note 15. Payables.

128 Department of Sustainability and Environment Annual Report 2012 Notes to the ﬁ nancial statements 30 June 2012

Note 22. Financial instruments (continued)

(d) Market risk The department’s exposures to market risk are primarily through interest rate risk with only insigniﬁ cant exposure to foreign currency risks. Objectives, policies and processes used to manage each of these risks are disclosed below.

Foreign currency risk The department occasionally transacts in foreign currencies where the counterparty invoices in a foreign currency. The foreign currency risk is managed by ensuring that the period from the initial transaction and settlement is short (less than 30 days). Based on past and current assessment of economic outlook, it is deemed unnecessary for the department to enter into any hedging arrangements to manage the risk. The department had no exposure to foreign currency risk as at either 30 June 2011 or 30 June 2012.

Interest rate risk Exposure to interest rate risk solely relates to cash balances held in deposits at variable interest rates. Minimisation of risk is achieved by undertaking fi xed rate or non-interest bearing fi nancial instruments. The department’s sole fi nancial liabilities are VicFleet motor vehicle leases. The department’s interest bearing liabilities are managed by VicFleet and interest rates are fi xed at the inception of the lease. The department’s exposure to interest rate risk is set out in the Table 22.5.

Table 22.5: Interest rate exposure of ﬁ nancial instruments

Interest rate exposure Weighted average Carrying Fixed Variable Non-interest effective amount interest rate interest rate bearing interest rate $‘000 $‘000 $‘000 $‘000

2012

Financial assets

Cash and deposits 4.57% 258,218 20,779 25,950 211,489

Receivables

Trade receivables 0.00% 11,592 0 0 11,592

Accrued income 0.00% 599 0 0 599

Accrued interest 0.00% 190 0 0 190

Total ﬁ nancial assets 270,599 20,779 25,950 223,870

Financial liabilities

Payables

Trade creditors 0.00% 18,606 0 0 18,606

Accrued grants and other transfers 0.00% 3,880 0 0 3,880

Accrued capital contributions 0.00% 12,718 0 0 12,718

Other accrued expenses 0.00% 40,848 0 0 40,848

Other payables 0.00% 468 0 0 468

Borrowings

Finance lease liabilities 6.78% 30,549 30,549 0 0

Total ﬁ nancial liabilities 107,069 30,549 0 76,520

Department of Sustainability and Environment Annual Report 2012 129 Notes to the ﬁ nancial statements 30 June 2012

Note 22. Financial instruments (continued)

Table 22.5: Interest rate exposure of ﬁ nancial instruments

Interest rate exposure Weighted average Carrying Fixed Variable Non-interest effective amount interest rate interest rate bearing interest rate $‘000 $‘000 $‘000 $‘000

2011

Financial assets

Cash and deposits 4.70% 251,012 20,087 22,492 208,433

Receivables

Trade receivables 0.00% 15,912 0 0 15,912

Accrued income 0.00% 1,527 0 0 1,527

Accrued interest 0.00% 212 0 0 212

Total ﬁ nancial assets 268,663 20,087 22,492 226,084

Financial liabilities

Payables

Trade creditors 0.00% 31,135 0 0 31,135

Accrued grants and other transfers 0.00% 6,887 0 0 6,887

Accrued capital contributions 0.00% 19,201 0 0 19,201

Other accrued expenses 0.00% 30,791 0 0 30,791

Other payables 0.00% 239 0 0 239

Borrowings

Finance lease liabilities 6.96% 25,130 25,130 0 0

Total ﬁ nancial liabilities 113,383 25,130 0 88,253

130 Department of Sustainability and Environment Annual Report 2012 Notes to the ﬁ nancial statements 30 June 2012

Note 22. Financial instruments (continued)

Sensitivity disclosure analysis and assumptions Taking into account past performance, future expectations, economic forecasts, and management’s knowledge and experience of the fi nancial markets, the department believes the following movements are ‘reasonably possible’ over the next twelve months (the cash rate, exchange rate and infl ation rate are all sourced from the Reserve Bank of Australia): • a parallel shift of +1.0% and -1.0% in market interest rates (AUD) from the year-end base rate of 3.50% (2011: 4.75%). Table 22.6 discloses the impact on net operating result and equity for each category of fi nancial instrument held by the department at year-end as presented to key management personnel, if the above movements were to occur.

Table 22.6: Interest rate risk sensitivity

2012 Interest rate risk

-1.0% +1.0% (100 basis points) 100 basis points)

Carrying amount Net result Net result $’000 $‘000 $‘000

Contractual ﬁ nancial assets:

Cash and cash equivalents (i) 258,218 (671) 671

Receivables (ii) 12,381 0 0

Total impact (671) 671

Contractual ﬁ nancial liabilities:

Payables (ii) 76,520 0 0

Borrowings (iii) 30,549 0 0

Total impact 0 0

Notes: (i) All cash and cash equivalents are held in Australian Dollars. $46.729 million cash and cash equivalents were held on deposit at variable interest rates. The remainder of the balance was held in non-interest bearing accounts. This item is not subject to any other identifi ed risk sensitivities. (ii) The carrying amount is denominated in Australian Dollars and is non-interest bearing. This item is not subject to the identifi ed risk sensitivities. (iii) Borrowings relate to fi nance lease liabilities associated with motor vehicles. Each contract has interest fi xed at the inception of the lease. This item is not subject to identifi ed risk sensitivities.

Department of Sustainability and Environment Annual Report 2012 131 Notes to the ﬁ nancial statements 30 June 2012

Note 22. Financial instruments (continued)

Table 22.6: Market risk exposure – interest rate

2011 Interest rate risk

-0.5% +0.5% (50 basis points) (50 basis points)

Carrying amount Net result Net result $’000 $‘000 $‘000

Contractual ﬁ nancial assets:

Cash and cash equivalents (i) 251,012 (313) 313

Receivables (ii) 17,651 0 0

Total impact (313) 313

Contractual ﬁ nancial liabilities:

Payables (ii) 88,253 0 0

Borrowings (iii) 25,130 0 0

Total impact 00

Notes: (i) All cash and cash equivalents are held in Australian Dollars. $42.579 million cash and cash equivalents were held on deposit at variable interest rates. The remainder of the balance was held in non-interest bearing accounts. This item is not subject to any other identifi ed risk sensitivities. (ii) The carrying amount is denominated in Australian Dollars and is non-interest bearing. This item is not subject to the identifi ed risk sensitivities. (iii) Borrowings relate to fi nance lease liabilities associated with motor vehicles. Each contract has interest fi xed at the inception of the lease. This item is not subject to identifi ed risk sensitivities.

132 Department of Sustainability and Environment Annual Report 2012 Notes to the ﬁ nancial statements 30 June 2012

Note 22. Financial instruments (continued)

(e) Fair value The fair value of fi nancial instrument with standard terms and conditions and traded in active liquid markets are determined with reference to quoted market prices. The department considers the carrying amount of fi nancial assets and fi nancial liabilities recorded in the fi nancial statements to be a fair approximation of their fair values, because of the short-term nature of the fi nancial instruments and the expectation that they will be paid in full. The following table shows that the fair value of most of the contractual fi nancial assets and liabilities are the same as the carrying amounts.

Table 22.7: Comparison between carrying amount and fair value

2012 2011

Carrying Carrying amount Fair value (i) amount Fair value (i) $’000 $‘000 $’000 $‘000

Contractual ﬁ nancial assets

Cash and deposits 258,218 258,218 251,012 251,012

Receivables (i)

Trade receivables 11,592 11,592 15,912 15,912

Accrued income 599 599 1,527 1,527

Accrued interest 190 190 212 212

Total contractual ﬁ nancial assets 270,599 270,599 268,663 268,663

Contractual ﬁ nancial liabilities

Payables (ii)

Trade creditors 18,606 18,606 31,135 31,135

Accrued grants and other transfers 3,880 3,880 6,887 6,887

Accrued capital contributions 12,718 12,718 19,201 19,201

Other accrued expenses 40,848 40,848 30,791 30,791

Other payables 468 468 239 239

Finance lease liabilities 30,549 30,549 25,130 25,130

Total contractual ﬁ nancial liabilities 107,069 107,069 113,383 113,383

Notes: (i) The amount of receivables disclosed exclude statutory receivables (i.e. Amounts owing from Victorian Government and GST input tax credit receivable) totalling $163.674 million (2011: $181.137 million) – Refer Note 8. Receivables. (ii) The amount of payables disclosed exclude statutory payables (i.e. Amounts owing to Victorian Government for advances from the Public Account and taxes payable) totalling $38.359 million (2011: $111.403 million) – Refer Note 15. Payables.

Department of Sustainability and Environment Annual Report 2012 133 Notes to the ﬁ nancial statements 30 June 2012

Note 23. Cash ﬂ ow information

2012 2011 $’000 $’000

(a) Reconciliation of cash and cash equivalents

Cash at bank and on hand (i) (1,048) (1,081)

Funds held in trust – cash 212,537 209,643

Funds held in trust – short term deposits 46,729 42,450

Total cash and cash equivalents 258,218 251,012

Balance per cash ﬂ ow statement 258,218 251,012

Note: (i) Due to the State of Victoria’s investment policy and government funding arrangements, the department does not hold a large cash reserve in their bank accounts. Cash received by the department from the generation of income is generally paid into the State’s bank account, known as the Public Account. Similarly, any departmental expenditure, including those in the form of cheques drawn by the department for the payment of goods and services to its suppliers and creditors are made via the Public Account. The process is such that, the Public Account would remit to the department the cash required for the amount drawn on the cheques. This remittance by the Public Account occurs upon the presentation of the cheques by the department’s suppliers or creditors.

(b) Short term deposits

The deposits earn interest at ﬂ oating interest rates currently at 3.45% p.a. (2011: 4.70% p.a.).

2012 2011 $’000 $’000

Acquisition of non-current assets by means of ﬁ nance leases 19,459 9,706

(d) Reconciliation of net result for the reporting period to net cash inﬂ ow/(outﬂ ow) from operating activities

Net result for the reporting period 18,808 23,666

Non-cash movements

Net gain on disposal of property, plant and equipment (5,873) (3,273)

Depreciation 49,362 46,824

Increase/(decrease) in provision for doubtful debts (2) 13

Assets received free of charge or for nominal consideration 0 (533)

Net recognition of non-ﬁ nancial assets (11,422) (42,764)

Write-down of non-ﬁ nancial assets 50,960 7,197

Impairment of intangible assets 3,949 16,458

Net gain arising from changes in fair value less estimated point-of-sale costs of biological assets 0 (9,531)

Movements included in investing and ﬁ nancing activities

Share of associate’s losses, excluding dividends 1,607 0

Movements in assets and liabilities

Decrease in receivables 22,742 31,696

Decrease/(increase) in inventories (1,327) 1,702

Decrease/(increase) in prepayments 9,258 (6,733)

Decrease in payables (5,477) (51,464)

Increase/(decrease) in provisions (4,628) 5,969

Increase/(decrease) in other liabilities (177) 142

Net cash inﬂ ow from operating activities 127,780 19,369

134 Department of Sustainability and Environment Annual Report 2012 Notes to the ﬁ nancial statements 30 June 2012

Note 24. Reserves

2012 2011 (i) 2010 (i) $’000 $’000 $’000

Physical asset revaluation surplus

Balance at the beginning of the year 5,642,080 6,480,392 6,468,268

Increment/(decrement) on revaluation during the year resulting from:

Buildings and structures 0 163,689 0

Historical, cultural and environment assets 0 232 0

Crown land - Conservation reserves (4,783) (213,607) (85)

Crown land - Land and unused roads 0 (596,605) (10,198)

Crown land - Land used for operational purposes 13 1,870 0

Crown land - Metropolitan parks 0 (163,680) 0

Crown land - National parks 4,783 (307,085) 0

Crown land - State forests 0 (264,088) 22,407

Freehold land (13) 13 0

Roads 0 540,949 0

Balance as at the end of the year 5,642,080 5,642,080 6,480,392

Net change in reserves 0 (838,312) 12,124

Note: (i) Refer to Note 33. Correction of prior year errors for details.

Nature and purpose of reserves Asset revaluation surplus The asset revaluation surplus is used to record increments and decrements on the revaluation of non-current physical assets, as described in accounting policy Note 1(l).

Department of Sustainability and Environment Annual Report 2012 135 $’000 Variance $’000 applied Appropriation Appropriation Total Total $’000 authority parliamentary

$’000 Section 32 In accordance with accrual output-based management procedures ‘Provision for ‘Provision with accrual output-based management procedures In accordance re those that are undertaken on behalf of the state over which department has those that are re $’000 Section 30 Financial Management Act 1994 illion relates to the carryover of output appropriations available in 2012 for use in 2013 for proposed expenditure on a expenditure available in 2012 for use 2013 proposed to the carryover of output appropriations illion relates ure on a number of major initiative projects and appropriation funding approved but not required. funding approved and appropriation on a number of major initiative projects ure $’000 Section 29 $’000 Treasurer Advance from Advance from Appropriation Act Appropriation $’000 29,12129,540 0 0 0 0 0 0 603 0 29,724 29,540 29,724 28,937 0 603 30,31833,588 0 0 3,982 3,512 0 0 504 0 34,804 37,100 34,394 36,076 410 1,024 Annual 927,252768,530 28,229 107,456127,086 108,830242,577 150,577 5,379 18,040 (758) 21,372 42,582 31,979 55,578 7,094 1,119,131 758 (21,372) 1,055,029 1,065,143 81,348 9,100 998,223 53,988 257,153 280,324 56,806 144,942 200,117 112,211 80,207 1,074,235 125,496 186,068 0 16,194 1,401,993 1,263,353 138,640 appropriation (ii) (i) Murray (i) Controlled of outputs – Department Provision Sustainability and Environment State contribution under the Darling Basin Act 1993 Total 1,113,777 33,608 155,394 0 138,033 1,440,812 1,274,203 166,609 Provision of outputs – Environment of outputs – Environment Provision Authority Protection Administered Additions to net assets (ATNAB) Additions to net assets (ATNAB) Notes: of outputs (i) Provision Authority of $0.4 m Protection of output for the department $54.0 million and Environment The 2012 variance in provision number of major initiative projects. number of major initiative projects. (ii) Addition to net assets (ATNAB) expendit to the carryover of funding available in 2012 for use 2013 proposed The 2012 variance of $112.2 million relates As at 30 June 2012 As at 30 June 2011 Notes to the ﬁ nancial statements 30 June 2012 Notes to the ﬁ Note 25. Summary of compliance with annual parliamentary and special appropriations (a) Summary of compliance with annual parliamentary appropriations by the department for year. received The following table discloses the details of various parliamentary appropriations transactions a activities of the department. Administered disclosed as ‘controlled’ outputs’ and ‘Additions to net assets’ are or discretion. no control

136 Department of Sustainability and Environment Annual Report 2012 Notes to the ﬁ nancial statements 30 June 2012

Note 25. Summary of compliance with annual parliamentary and special appropriations (continued)

(b) Summary of compliance with special appropriations

Appropriation Applied

2012 2011 Authority Purpose $’000 $’000

Output special appropriations

Section 10 of the Financial Appropriation of Commonwealth grants etc. 18,531 0 Management Act 1994

Capital special appropriations

Section 10 of the Financial Appropriation of Commonwealth grants etc. 2,385 0 Management Act 1994

Total special appropriations 20,916 2,385

Provision of outputs

Annual Parliamentary Appropriations 25(a) 1,065,143 998,223

Special appropriations 25(b) 18,531 0

Total provision of output appropriations applied 1,083,674 998,223

Additions to net asset base

Annual Parliamentary Appropriations 25(a) 144,942 200,117

Special appropriations 25(b) 2,385 0

Total additions to net asset appropriations applied 147,327 200,117

Note 26. Ex-gratia payments

The department did not make any ex-gratia payments in 2011–12 or 2010–11.

Department of Sustainability and Environment Annual Report 2012 137 Notes to the ﬁ nancial statements 30 June 2012

Note 27. Annotated income agreements

The following is a listing of section 29 annotated income agreements approved by the Treasurer:

2012 2011 $’000 $’000

Capital items

Grassland Reserves 2,970 0

2,970 0

Commonwealth speciﬁ c purpose payments – capital

Barwon Water/ Shell Recycling 6,500 10,000

Black Rock Water Recycling Project 6,000 0

Expanding Tourism Option 0 200

Extending Water Recycling at Torquay 1,000 0

Goldﬁ elds Super Pipe Ballarat 0 (500)

Latrobe Drilling 0 250

Warnambool Roof Harvesting 476 0

13,976 9,950

User charges, or sales of goods and services

BushBroker 164 193

Commercial Forest 72 481

Electronic Conveyancing 10,746 11,086

Land Titles Ofﬁ ce 356 349

Landata 15,913 14,832

Mapping 2,482 3,228

Northern Victoria Irrigation Renewal Project 21,570 44,251

Parks User Fees and Werribee Mansion 4,718 4,940

Queenscliff Harbour Redevelopment 52 52

Sale of timber resources to Australian Paper (i) 11,523 19,508

Spears Project 777 0

Water Register – Planning 381 365

Water Register – State 1,320 891

70,074 100,176

Note: (i) On 16 December 2011, the Premier announced a Machinery of Government change which transferred the management of Victoria’s commercial timber to the Department of Primary Industries from the Department of Sustainability and Environment, effective from 23 December 2011. The department had an agreement under the Forests (Wood Pulp Agreement) Act 1996 that legislated for the supply of wood for pulp from the department to Australian Paper Pty Ltd until 2030; the agreement has also been transferred to the Department of Primary Industries. The annotated income above only reﬂ ects that which was due in the current ﬁ nancial year prior to the transfer. Annotated income after the transfer date has been retained by the Department of Primary Industries.

138 Department of Sustainability and Environment Annual Report 2012 Notes to the ﬁ nancial statements 30 June 2012

Note 27. Annotated income agreements (continued)

2012 2011 $’000 $’000

Commonwealth speciﬁ c purpose payments – output

Bureau of Meteorology Water Information Improvements 635 1,365

Caring for our Country 29,988 31,325

MDB - Environmental Works and Measures Feasibility Program 1,610 0

National Ground Water Action Plan 1,127 900

National Water Initiative – Living Murray 0 8,883

National Framework for Compliance and Enforcement 35 0

North East Victoria Bushﬁ re Spotting Digital Regions Initiative 0 506

National Water Commission – Accounting for all Signiﬁ cant Water Users 631 0

Raising National Water Standards 144 79

Rehabilitation of Threatened Species 0 1,870

Sustainable Ground Water Management 0 493

Water Register – Commonwealth 0 963

Water Register – Commonwealth – Stage 2 554 0

34,724 46,384

Total annotated income agreements 121,744 156,510

Department of Sustainability and Environment Annual Report 2012 139 Notes to the ﬁ nancial statements 30 June 2012

Note 28. Trust account balances

The following is a listing of trust account balances in cash, cash equivalents and investments relating to trust accounts controlled and administered by the department.

2012 2011

$’000 $’000

Controlled trusts

Albury-Wodonga Land Transfer Trust Fund 830 636

Department Suspense Trust Fund 79 15

DTF VicFleet Trust (i) 4,155 0

Minor Asset Replacement 80 557

Parks and Reserves Trust 46,868 42,743

Plant and Machinery Trust Fund 46,618 43,002

Project Trust Fund 142,069 157,900

Revenue Suspense 62 94

Snowy River Flow Trust Fund 0 0

Stores Suspense 5,009 6,644

Treasury Trust – Small Scale Community Support Fund 0 0

Treasury Trust – Floods 13,496 502

Total controlled trusts 259,266 252,093

Administered trusts

CH Barbour Forestry Foundation 8 8

Forests Commission Prizes and Scholarships 0 3

J Gilmore Farm Water Supply and Hanslow Cup 40 56

Natural Disaster Relief Fund 405 486

Paid Parental Leave Treasury Trust Fund 27 0

Public Service Commuters Club (ii) (73) (36)

Securities Trust Fund 41 42

Sidney Plowman Award 22 4

Treasury Trust 916 844

Victorian State Foresters Association 74 71

Total administered trusts 1,460 1,478

Trust Accounts opened or closed by the department during 2012 The Commercial Forestry Working Account, Landata Working Account, NRMS Investigation/Education Trust Fund and State Digital Map Working Account were closed during the year. The Treasury Trust – Small Scale Community Support Fund and Paid Parental Leave Treasury Trust Fund were opened during the year.

Third party funds under management No third party funds were held under management for either 2011–12 or 2010–11. Notes: (i) VicFleet is part of a Trust Fund held by the Department of Treasury and Finance. Any defi cit represents a loss on the early termination of individual motor vehicle fi nance leases by the department. The department is required to reimburse the Trust Fund held by the Department of Treasury and Finance for any defi cit balance. (ii) The Department of Treasury and Finance acknowledges that due to the nature of the Public Service Commuters Club, this fund will run a cash defi cit during the year as public transport tickets are purchased upfront and recovered through payroll over the year. DTF uses advances from the public account or similar mechanisms to manage this across the whole of the Victorian Government.

140 Department of Sustainability and Environment Annual Report 2012 Notes to the ﬁ nancial statements 30 June 2012

Note 29. Responsible persons

In accordance with the Ministerial Directions issued by the Minister for Finance under the Financial Management Act 1994, the following disclosures are made regarding responsible persons for the reporting period.

Names The persons who held the positions of Ministers and Accountable Ofﬁ cers in the department are as follows:

Minister for Water The Hon Peter Walsh MP 1 July 2011 to 30 June 2012 Minister for Environment and Climate Change The Hon Ryan Smith MP 1 July 2011 to 30 June 2012 Secretary Mr Greg Wilson 1 July 2011 to 30 June 2012

Acting arrangements Minister Walsh acted as Minister for Environment and Climate Change during the periods 1 July 2011 to 12 July 2011 and 4 January 2012 to 10 January 2012. The Hon Michael O’Brien MP acted as Minister for Environment and Climate Change during the period 4 June 2012 to 6 June 2012. Mr Adam Fennessy acted in the position of Secretary of the department during the period 16 January 2012 to 27 January 2012.

Remuneration Remuneration received or receivable by the Accountable Ofﬁ cer in connection with the management of the department during the reporting period was in the range:

2012 2011 No. No.

Income band

$410,000 – $419,999 1 1

Amounts relating to Ministers are reported in the ﬁ nancial statements of the Department of Premier and Cabinet.

Other transactions Other related transactions and loans requiring disclosure under the Directions of the Minister for Finance have been considered and there are no matters to report.

Note 30. Remuneration of executives

The number of executive offi cers, other than Ministers and the Accountable Offi cer, and their total remuneration during the reporting periods are shown in the fi rst two columns in the table below in their relevant income bands. The base remuneration of executive offi cers is shown in the third and fourth columns. Base remuneration is exclusive of bonus payments, long service leave payments, redundancy payments and retirement benefi ts. Several factors have affected total remuneration payable to executives over the year. A number of employment contracts were completed and renegotiated and a number of executives received bonus payments during the year. These bonus payments depend on the terms of individual employment contracts. Some contracts provide for an annual bonus payment whereas other contracts only include the payment of bonuses on the successful completion of the full term of the contract. A number of these contract completion bonuses became payable during the year. A number of executive offi cers retired, resigned or ceased employment in the past year. This has had a signifi cant impact on total remuneration relating to executives due to the inclusion of annual leave, long-service leave and other cessation payments. The table below identifi es in aggregate the total number of executive offi cers employed by the department between 1 July 2011 and 30 June 2012 compared to 1 July 2010 and 30 June 2011. As of 30 June 2012, the department employed 40 executive offi cers (2011: 41 executive offi cers).

Department of Sustainability and Environment Annual Report 2012 141 Notes to the ﬁ nancial statements 30 June 2012

Note 30. Remuneration of executives (continued)

Remuneration of executive ofﬁ cers

Total remuneration Base remuneration

2012 2011 2012 2011 No. No. No. No.

Income band

Less than $100,000 8 7 10 7

$110,000 – $119,000 1 1 1 1

$120,000 – $129,999 1 2 0 3

$130,000 – $139,999 1 2 2 2

$140,000 – $149,999 1 0 1 1

$150,000 – $159,999 2 5 5 10

$160,000 – $169,999 6 5 6 3

$170,000 – $179,999 6 5 7 2

$180,000 – $189,999 4 1 3 3

$190,000 – $199,999 4 3 4 3

$200,000 – $209,999 3 4 2 2

$210,000 – $219,999 1 1 1 2

$220,000 – $229,999 3 3 2 3

$230,000 – $239,999 2 2 1 2

$240,000 – $249,999 0 3 2 1

$250,000 – $259,999 1 0 0 0

$260,000 – $269,000 1 0 0 0

$270,000 – $279,999 1 0 1 2

$290,000 – $299,999 0 2 0 0

$320,000 – $329,999 0 0 1 1

$350,000 – $359,999 0 1 0 0

$360,000 – $369,999 1 0 0 0

$370,000 – $379,999 0 1 0 0

$390,000 – $399,999 1 0 0 0

$540,000 – $549,999 1 0 0 0

Total number of executives 49 48 49 48

Total annualised employee equivalent 42.2 41.1 42.2 41.1

Total amount $’000 8,908 8,561 7,785 7,906

142 Department of Sustainability and Environment Annual Report 2012 Notes to the ﬁ nancial statements 30 June 2012

Note 31. Remuneration of auditors

2012 2011

$’000 $’000

Victorian Auditor-General’s Ofﬁ ce

Audit of the ﬁ nancial statements 269 260

Other audit services: acquittals 17 0

286 260

Note 32. Subsequent events

Voluntary Departure Packages The Victorian Government announced its intention to reduce the number of public servants in non-service delivery and back-offi ce roles, with key frontline service delivery areas being exempted. The reductions will be achieved through a combination of natural attrition, a freeze on recruitment, the lapsing of fi xed term contracts and the offering of Voluntary Departure Packages (VDPs) to encourage voluntary redundancies. The process for VDPs was announced by the department on 3 September 2012. No adjustments have been made to the 2011–12 fi nancial statements as the criteria for recognising expenditure and a termination benefi ts liability relating to the voluntary departure packages had not been met based on the requirements of AASB 119 Employee Benefi ts. The department is not able to make a reliable estimate of the fi nancial effect of the VDPs, as the number and classifi cation of staff that will take up VDPs is not yet known. The department anticipates that the VDP process will be completed before 31 December 2013.

Victorian Public Service Workplace Determination 2012 The Victorian Public Service Workplace Determination 2012 was made by Fair Work Australia on 23 July 2012, which replaces the 2009 Extended and Varied Version of the Victorian Public Service Agreement 2006. The Workplace Determination takes effect from 29 July 2012 and will remain in force until 31 December 2015. The Workplace Determination provides for wage increases of 3.25 per cent and 1.25 per cent on 1 July 2012 and 1 January 2013 respectively over 2012–13, with six monthly wage increases thereafter. A lump sum payment of $1,500 (or equivalent pro-rata amount for part time employees) will also be payable to eligible Victorian Public Service employees who received a salary on 1 July 2012 and were employed on 29 July 2012. As the Workplace Determination takes effect from 29 July 2012, no adjustments have been made to these ﬁ nancial statements other than for the impact on the estimated accrued employee beneﬁ ts as at 30 June 2012.

Note 33. Correction of prior year errors

The errors described below have been adjusted by restating each of the affected ﬁ nancial statement line items for the prior year.

(a) Errors in recording asset transfers As part of the ongoing State Crown land reconciliation, a number of duplicate Crown land parcels have been identifi ed that were recorded both by the department and another government entity. Adjustments have been made to correct prior year balances. Apart from the impact on the prior year operating results of these errors, these items also included valuations booked by the department in prior years. During the year, the confi rmation of forest area size at 30 June 2012 identifi ed a discrepancy. This discrepancy has resulted in an error of $24.4 million.

The net impact of these errors is: 2010–11 Opening balances • an overstatement of property, plant and equipment of $45.802 million; • an overstatement of accumulated surplus of $57.926 million; and • an understatement of the physical asset revaluation surplus of $12.124 million. 2010–11 • an overstatement of property, plant and equipment of $41.443 million; and • an overstatement of the physical asset revaluation surplus of $41.443 million. The below section titled ‘Restatement of ﬁ nancial statements as a result of the correction of an error’ shows the restatement of each line item affected by the error.

Department of Sustainability and Environment Annual Report 2012 143 Notes to the ﬁ nancial statements 30 June 2012

Note 33. Correction of prior year errors (continued)

(b) Restatement of ﬁ nancial statements as a result of the correction of an error – 30 June 2011 comparative year Financial statement line item affected:

Correction of 2011 Restated Actual 2011 errors 2011 Comprehensive operating statement (Extract) Notes $’000 $’000 $’000

Net result 23,666 0 23,666

Other economic ﬂ ows – other non-owner changes in equity

Changes in physical asset revaluation surplus 24 (796,869) (41,443) (838,312)

Total other economic ﬂ ows – other non-owner changes in (796,869) (41,443) (838,312) equity

Comprehensive result (773,203) (41,443) (814,646)

Correction of errors Correction to 30 June of 2011 Restated Actual 2011 2010 errors 2011 Balance sheet (Extract) Notes $’000 $’000 $’000 $’000

Non-ﬁ nancial assets

Property, plant and equipment 1(l),12 7,380,443 (45,802) (41,443) 7,293,198

Total non-ﬁ nancial assets 7,447,970 (45,802) (41,443) 7,360,725

Total assets 7,897,770 (45,802) (41,443) 7,810,525

Net assets 7,530,358 (45,802) (41,443) 7,443,113

Equity

Accumulated deﬁ cit (173,163) (57,926) 0 (231,089)

Physical asset revaluation surplus 24 5,671,399 12,124 (41,443) 5,642,080

Contributed capital 2,032,122 0 0 2,032,122

Net worth 7,530,358 (45,802) (41,443) 7,443,113

144 Department of Sustainability and Environment Annual Report 2012 Notes to the ﬁ nancial statements 30 June 2012

Note 33. Correction of prior year errors (continued)

Correction of errors Correction to 30 June of 2011 Restated Actual 2011 2010 errors 2011 Note 12 – Property, plant and equipment (Extract) $’000 $’000 $’000 $’000

Crown land – Land and unused roads

At fair value 2,519,371 (68,062) (41,501) 2,409,808

Total Crown land – Land and unused roads 2,519,371 (68,062) (41,501) 2,409,808

Crown land – State forests

At fair value 1,126,958 22,407 0 1,149,365

Total Crown land – State forests 1,126,958 22,407 0 1,149,365

Crown land – Conservation reserves

At fair value 636,699 (147) 58 636,610

Total Crown land – Conservation reserves 636,699 (147) 58 636,610

Total land 5,715,775 (45,802) (41,443) 5,628,530

Total property, plant and equipment 7,380,443 (45,802) (41,443) 7,293,198

Correction of Restated Actual 2011 2011 errors 2011 Note 24 – Reserves (Extract) $’000 $’000 $’000

Physical asset revaluation surplus

Balance at the beginning of the ﬁ nancial year 6,468,268 12,124 6,480,392

Crown land – Conservation reserves (213,665) 58 (213,607)

Crown land – Land and unused roads (555,104) (41,501) (596,605)

Crown land – State forests (264,088) 0 (264,088)

Balance at the end of the year 5,671,399 (29,319) 5,642,080

Net change in reserves (796,869) (41,443) (838,312)

Department of Sustainability and Environment Annual Report 2012 145 Notes to the ﬁ nancial statements 30 June 2012

Note 33. Correction of prior year errors (continued)

(c) Restatement of ﬁ nancial statements as a result of the correction of an error – 30 June 2010 comparative year Financial statement line item affected:

Correction Restated Actual 2010 of error 2010 Comprehensive operating statement (Extract) Notes $’000 $’000 $’000

Net result from transactions (net operating balance) (9,450) 0 (9,450)

Other economic ﬂ ows included in net result

Net loss on non-ﬁ nancial assets 1(h),1(l), 6(a) (163,621) (57,926) (221,547)

Total other economic ﬂ ows included in net result (163,922) (57,926) (221,848)

Net result (107,846) (57,926) (165,772)

Other economic ﬂ ows – other non-owner changes in equity

Changes in physical asset revaluation surplus 24 0 12,124 12,124

Total other economic ﬂ ows – other non-owner changes in 0 12,124 12,124 equity

Comprehensive result (107,846) (45,802) (153,648)

Correction Restated Actual 2010 of error 2010 Balance sheet (Extract) Notes $’000 $’000 $’000

Non-ﬁ nancial assets

Property, plant and equipment 1(l),12 8,184,037 (45,802) 8,138,235

Total non-ﬁ nancial assets 8,263,900 (45,802) 8,218,098

Total assets 8,732,722 (45,802) 8,686,920

Net assets 8,366,449 (45,802) 8,320,647

Equity

Accumulated deﬁ cit (196,829) (57,926) (254,755)

Physical asset revaluation surplus 24 6,468,268 12,124 6,480,392

Contributed capital 2,095,010 0 2,095,010

Net worth 8,366,449 (45,802) 8,320,647

146 Department of Sustainability and Environment Annual Report 2012 Notes to the ﬁ nancial statements 30 June 2012

Note 33. Correction of prior year errors (continued)

Correction of Restated Note 12 – Property, plant and equipment (Extract) Actual 2010 error 2010 $’000 $’000 $’000

Crown land – Land and unused roads

At fair value 3,102,960 (68,062) 3,034,898

Total Crown land – Land and unused roads 3,102,960 (68,062) 3,034,898

Crown land – State forests

At fair value 1,389,729 22,407 1,412,136

Total Crown land – State forests 1,389,729 22,407 1,412,136

Crown land – Conservation reserves

At fair value 882,716 (147) 882,569

Total Crown land – Conservation reserves 882,716 (147) 882,569

Total land 7,250,920 (45,802) 7,205,118

Total property, plant and equipment 8,184,037 (45,802) 8,138,235

Correction of Restated Note 24 – Reserves (Extract) Actual 2010 error 2010 $’000 $’000 $’000

Physical asset revaluation surplus

Balance at the beginning of the ﬁ nancial year 6,468,268 0 6,468,268

Crown land – Conservation reserves 0 (85) (85)

Crown land – Land and unused roads 0 (10,198) (10,198)

Crown land – State forests 0 22,407 22,407

Balance at the end of the year 6,468,268 12,124 6,480,392

Net change in reserves 0 12,124 12,124

Department of Sustainability and Environment Annual Report 2012 147 Notes to the ﬁ nancial statements 30 June 2012

Note 34. Glossary of terms and style conventions

Glossary of terms • to receive cash or another fi nancial asset from another entity; or Associates Associates are all entities over which an entity has signifi cant • to exchange fi nancial assets or fi nancial liabilities with infl uence but not control, generally accompanying a another entity under conditions that are potentially shareholding and voting rights of between 20 per cent and favourable to the entity; or 50 per cent. (d) a contract that will or may be settled in the entity’s own equity instruments and is: Biological assets • a non-derivative for which the entity is or may be obliged Biological assets may comprise of commercial forests and to receive a variable number of the entity’s own equity also any living animal, plant or agricultural produce that is the instruments; or harvested product of biological assets. • a derivative that will or may be settled other than by the Borrowings exchange of a fi xed amount of cash or another fi nancial Borrowings refers to interest-bearing fi nance leases and other asset for a fi xed number of the entity’s own equity interest-bearing arrangements. instruments.

Comprehensive result Financial instrument The net result of all items of income and expense recognised for A fi nancial instrument is any contract that gives rise to a fi nancial the period. It is the aggregate of operating result and other non- asset of one entity and a fi nancial liability or equity instrument owner movements in equity. of another entity. Financial assets or liabilities that are not contractual (such as statutory receivables or payables that arise Capital asset charge as a result of statutory requirements imposed by governments) The capital asset charge represents the opportunity cost of are not fi nancial instruments. capital invested in the non-fi nancial physical assets used in the provision of outputs. Financial liability A fi nancial liability is any liability that is: Commitments (a) A contractual obligation: Commitments include those operating, capital and other outsourcing commitments arising from non-cancellable • to deliver cash or another fi nancial asset to another entity; contractual or statutory sources. or

Depreciation • to exchange fi nancial assets or fi nancial liabilities with another entity under conditions that are potentially Depreciation is an expense that arises from the consumption unfavourable to the entity; or through wear or time of a produced physical or intangible asset. This expense is classifi ed as a ‘transaction’ and so reduces the (b) A contract that will or may be settled in the entity’s own ‘net result from transaction’. equity instruments and is:

Effective interest method • a non-derivative for which the entity is or may be obliged to deliver a variable number of the entity’s own equity The effective interest method is used to calculate the amortised instruments; or cost of a fi nancial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that • a derivative that will or may be settled other than by exactly discounts estimated future cash receipts through the the exchange of a fi xed amount of cash or another expected life of the fi nancial instrument, or, where appropriate, fi nancial asset for a fi xed number of the entity’s own a shorter period to the net carrying amount of the fi nancial asset equity instruments. For this purpose the entity’s own or fi nancial liability. equity instruments do not include instruments that are themselves contracts for the future receipt or delivery of Employee benefi ts expenses the entity’s own equity instruments. Employee benefi ts expenses include all costs related to employment including wages and salaries, fringe benefi ts tax, Financial statements leave entitlements, redundancy payments, defi ned benefi ts Depending on the context of the sentence where the term superannuation plans, and defi ned contribution superannuation ‘fi nancial statements’ is used, it may include only the main plans. fi nancial statements (i.e. comprehensive operating statement, balance sheet, cash fl ow statements, and statement of changes Ex-gratia payments in equity); or it may also be used to replace the old term Ex-gratia payment is the gratuitous payment of money where no ‘fi nancial report’ under the revised AASB 101 (September 2007), legal obligation exists. which means it may include the main fi nancial statements and the notes. Financial asset A fi nancial asset is any asset that is: (a) cash; (b) an equity instrument of another entity; (c) a contractual or statutory right:

148 Department of Sustainability and Environment Annual Report 2012 Notes to the ﬁ nancial statements 30 June 2012

Note 34. Glossary of terms and style conventions (continued)

Grants and other transfers Net result Transactions in which one unit provides goods, services, assets Net result is a measure of fi nancial performance of the (or extinguishes a liability) or labour to another unit without operations for the period. It is the net result of items of income, receiving approximately equal value in return. Grants can either gains and expenses (including losses) recognised for the period, be operating or capital in nature. excluding those that are classifi ed as ‘other non-owner changes in equity’. While grants to governments may result in the provision of some goods or services to the transferor, they do not give the Net result from transactions/net operating balance transferor a claim to receive directly benefi ts of approximately Net result from transactions or net operating balance is a equal value. For this reason, grants are referred to by the key fi scal aggregate and is income from transactions minus AASB as involuntary transfers and are termed non-reciprocal expenses from transactions. It is a summary measure of the transfers. Receipt and sacrifi ce of approximately equal value ongoing sustainability of operations. It excludes gains and may occur, but only by coincidence. For example, governments losses resulting from changes in price levels and other changes are not obliged to provide commensurate benefi ts, in the form of in the volume of assets. It is the component of the change in net goods or services, to particular taxpayers in return for worth that is due to transactions and can be attributed directly their taxes. to government policies. Grants can be paid as general purpose grants which refer to grants that are not subject to conditions regarding their use. Net worth Alternatively, they may be paid as specifi c purpose grants Assets less liabilities, which is an economic measure of wealth. which are paid for a particular purpose and/or have conditions attached regarding their use. Non-fi nancial assets Non-fi nancial assets are all assets that are not ‘fi nancial assets’. General government sector It includes inventories, land, buildings, road networks, land The general government sector comprises all government under roads, plant and equipment, cultural and heritage assets, departments, offi ces and other bodies engaged in providing intangible and biological assets. services free of charge or at prices signifi cantly below their cost of production. General government services include those Non-produced assets which are mainly non-market in nature, those which are largely Non-produced assets are assets needed for production that for collective consumption by the community and those which have not themselves been produced. They include land, subsoil involve the transfer or redistribution of income. These services assets, and certain intangible assets. Non-produced intangibles are fi nanced mainly through taxes, or other compulsory levies are intangible assets needed for production that have not and user charges. themselves been produced. They include constructs of society such as patents. Grants for on-passing All grants paid to one institutional sector (e.g. a state general Non-profi t institution government entity) to be passed on to another institutional A legal or social entity that is created for the purpose of sector (e.g. local government or a private non-profi t institution). producing or distributing goods and services but is not permitted to be a source of income, profi t or other fi nancial gain Intangible produced assets for the units that establish, control or fi nance it. Refer to produced assets in this glossary. Other economic fl ows Intangible non-produced assets Other economic fl ows are changes in the volume or value of an Refer to non-produced asset in this glossary. asset or liability that do not result from transactions. It includes: Interest expense • gains and losses from disposals, revaluations and impairments of non-fi nancial physical and intangible assets; Costs incurred in connection with the borrowing of funds includes interest on bank overdrafts and short-term and • actuarial gains and losses arising from defi ned benefi t long-term borrowings, amortisation of discounts or premiums superannuation plans; relating to borrowings, interest component of fi nance leases repayments, and the increase in fi nancial liabilities and • fair value changes of fi nancial instruments and agricultural non-employee provisions due to the unwinding of discounts to assets; and refl ect the passage of time. In simple terms, other economic fl ows are changes arising from market re-measurements. Interest income Interest income includes unwinding over time of discounts on Payables fi nancial assets and interest received on bank term deposits and Includes short and long term trade debt and accounts payable, other investments. grants, taxes and interest payable.

Joint ventures Produced assets Joint ventures are contractual arrangements between the Produced assets include buildings, plant and equipment, department and one or more other parties to undertake an inventories, cultivated assets and certain intangible assets. economic activity that is subject to joint control. Joint control Intangible produced assets may include computer software, only exists when the strategic ﬁ nancial and operating decisions and research and development costs (which does not include relating to the activity require the unanimous consent of the the start up costs associated with capital projects). parties sharing control (the venturers).

Department of Sustainability and Environment Annual Report 2012 149 Notes to the ﬁ nancial statements 30 June 2012

Note 34. Glossary of terms and style conventions (continued)

Receivables Style conventions Includes amounts owing from government through appropriation Figures in the tables and in the text have been rounded. receivable, short and long term trade credit and accounts Discrepancies in tables between totals and sums receivable, accrued investment income, grants, and interest ofncomponents reﬂ ect rounding. Percentage variations in all receivable. tables are based on the underlying unrounded amounts.

Sales of goods and services The notation used in the tables is as follows: Refers to income from the direct provision of goods and (xxx.x) negative numbers services and includes fees and charges for services rendered, 200x year period sales of goods and services, fees from regulatory services and work done as an agent for private enterprises. It also includes 200x-0x year period rental income under operating leases and on produced assets The ﬁ nancial statements and notes are presented based on the such as buildings and entertainment, but excludes rent income illustration for a government department in the 2011–12 Model from the use of non-produced assets such as land. User Report for Victorian Government Departments. The presentation charges includes sale of goods and services income. of other disclosures is generally consistent with the other Supplies and services disclosures made in earlier publications of the department’s annual reports. Supplies and services generally represent cost of goods sold and the day-to-day running costs, including maintenance costs, incurred in the normal operations of the department.

Taxation income Taxation income represents income received from the State’s taxpayers and includes: • levies (including the environmental levy) on statutory corporations in other sectors of government; • the metropolitan parks improvement rate; and • other taxes, including landﬁ ll levies, licence and concession fees.

Transactions Transactions are those economic fl ows that are considered to arise as a result of policy decisions, usually an interaction between two entities by mutual agreement. They also include fl ows within an entity such as depreciation where the owner is simultaneously acting as the owner of the depreciating asset and as the consumer of the service provided by the asset. Taxation is regarded as mutually agreed interactions between the government and taxpayers. Transactions can be in kind (e.g. assets provided/given free of charge or for nominal consideration) or where the fi nal consideration is cash. In simple terms, transactions arise from the policy decisions of the government.

150 Department of Sustainability and Environment Annual Report 2012 Notes to the ﬁ nancial statements 30 June 2012

Ac countable Ofﬁ cer’s and Chief Finance and Accounting Ofﬁ cer’s declaration

The attached fi nancial statements for the Department of Sustainability and Environment have been prepared in accordance with Standing Directions 4.2 of the Financial Management Act 1994, applicable Financial Reporting Directions, Australian Accounting Standards including Interpretations, and other mandatory professional reporting requirements. We further state that, in our opinion, the information set out in the comprehensive operating statement, balance sheet, statement of changes in equity, cash fl ow statement and accompanying notes, presents fairly the fi nancial transactions during the year ended 30 June 2012 and fi nancial position of the department at 30 June 2012. At the time of signing, we are not aware of any circumstance which would render any particulars included in the fi nancial statements to be misleading or inaccurate. We authorise the attached fi nancial statements for issue on 7 September 2012.

Greg Wilson Matthew Clancy Secretary Chief Finance Ofﬁ cer Department of Sustainability and Environment Department of Sustainability and Environment Melbourne Melbourne 7 September 2012 7 September 2012

Department of Sustainability and Environment Annual Report 2012 151 152 153 Appendices 13

Contents Page Appendix 1 – Disclosure index 155 Appendix 2 – Executive ofﬁ cers – DSE and portfolio authorities 157 Appendix 3 – Sustainability Victoria workforce information 162 Appendix 4 – Budget portfolio outcomes 164 Appendix 5 – Disclosure of grants and transfer payments 169 Appendix 6 – Major entities 176 Appendix 7 – Acts administered 177 Appendix 8 – Implementation of the Victorian Industry Participation Policy 178 Appendix 9 – Consultancies and major contracts 179 Appendix 10 – National Competition Policy 179 Appendix 11 – Compliance with the Building Act 1993 179 Appendix 12 – Freedom of Information 180 Appendix 13 – Compliance with the Whistleblowers Protection Act 2001 181 Appendix 14 – Water Resource Assessment Program 182 Appendix 15 – Sustainable water strategies 186 Appendix 16 – Environmental contributions 188 Appendix 17 – Additional information available on request 189 Appendix 18 – Acronyms 189

154 Department of Sustainability and Environment Annual Report 2012 Appendix 1 Disclosure index

The annual report is prepared in accordance with all relevant Victorian legislation and pronouncements. This index has been prepared to facilitate identiﬁ cation of the department’s compliance with statutory disclosure requirements.

Legislation Requirement Page reference

Ministerial Directions

Report of Operations – FRD Guidance

Charter and purpose

FRD 22C Manner of establishment and the relevant Ministers 5–6

FRD 22C Objectives, functions, powers and duties 5

FRD 22C Nature and range of services provided 5

Management and structure

FRD 22C Organisational structure 10

Financial and other information

FRD 8B Budget portfolio outcomes 164–168

FRD 10 Disclosure index 155–156

FRD 12A Disclosure of major contracts 179

FRD 15B Executive ofﬁ cer disclosures 157

FRD 22C, SD 4.2 (k) Operational and budgetary objectives and performance against objectives 38–65

FRD 22C Employment and conduct principles 32

FRD 22C Occupational health and safety policy 28–29

FRD 22C Summary of the ﬁ nancial results for the year 35–36

FRD 22C Signiﬁ cant changes in ﬁ nancial position during the year 35–36

FRD 22C Major changes or factors affecting performance 35–36

FRD 22C Subsequent events 37

FRD 22C Application and operation of Freedom of Information Act 1982 180

FRD 22C Compliance with building and maintenance provisions of Building Act 1993 179

FRD 22C Statement on National Competition Policy 179

FRD 22C Application and operation of the Whistleblowers Protection Act 2001 181

FRD 22C Details of consultancies over $10,000 179

FRD 22C Details of consultancies under $10,000 179

FRD 22C Statement of availability of other information 189

FRD 24C Reporting of ofﬁ ce-based environmental impacts 16–27

FRD 25A Victorian Industry Participation Policy disclosures 178

FRD 29 Workforce data disclosures 30–31

SD 4.5.5 Risk management compliance attestation 9

SD 4.2(g) General information requirements 1–65

SD 4.2(j) Sign-off requirements inside cover

Department of Sustainability and Environment Annual Report 2012 155 Legislation Requirement Page reference

Ministerial Directions (continued)

Financial report

Financial statements required under Part 7 of FMA

SD 4.2(a) Statement of changes in equity 69

SD 4.2(b) Operating statement 67

SD 4.2(b) Balance sheet 68

SD 4.2(b) Cash ﬂ ow statement 70

Other requirements under Standing Directions 4.2

SD 4.2(c) Compliance with Australian accounting standards and other authoritative 72 pronouncements

SD 4.2(c) Compliance with Ministerial Directions 72

SD 4.2(d) Rounding of amounts 74

SD 4.2(c) Accountable Ofﬁ cer’s declaration 151

SD 4.2(f) Compliance with Model Financial Report 72

Other disclosures as required by FRDs in notes to the ﬁ nancial statements

FRD 9A Departmental disclosure of administered assets and liabilities 95–98

FRD 11 Disclosure of ex-gratia payments 137

FRD 13 Disclosure of parliamentary appropriations 136

FRD 21B Disclosures of responsible persons, executive offi cer’s and other personnel 141 (contractors with signifi cant management responsibilities) in the fi nancial report

FRD 102 Inventories 107

FRD 103D Non-current physical assets 108–111

FRD 104 Foreign currency 83

FRD 106 Impairment of assets 79

FRD 109 Intangible assets 115

FRD 107 Investment properties 78

FRD 110 Cash ﬂ ow statements 70

FRD 112C Deﬁ ned beneﬁ t superannuation obligations 120

FRD 113 Investments in subsidiaries, jointly controlled entities and associates 78

FRD 114A Financial instruments – general government entities and public non-ﬁ nancial 124–128 corporations

FRD 119 Contribution by owners 82

Legislation

Building Act 1983 179

Financial Management Act 1994 72

Freedom of Information Act 1982 180

Victorian Industry Participation Policy Act 2003 178

Water Act 1989 182–187

Water Industry Act 1994 188

Whistleblowers Protection Act 2001 181

156 Department of Sustainability and Environment Annual Report 2012 Appendix 2 Executive ofﬁ cers – DSE and portfolio authorities

Executive offi cer data The following tables disclose the executive offi cers of the department and its portfolio agencies for 30 June 2012: An executive offi cer (EO) is defi ned as a person employed as • Table 1 discloses the number of executive offi cers in the a public service body head or other executive under Part 3, categories of ‘ongoing’ and ‘special projects’ and the total Division 5 of the Public Administration Act 2004. All fi gures number of executive offi cers for the department. refl ect employment levels at the last full pay period in June of the current and corresponding previous reporting year. • Table 2 provides a breakdown of executive offi cers according to gender. The defi nition of an executive offi cer does not include Governor in Council appointments as statutory offi ce holders. • Table 3 provides a reconciliation of executive numbers presented between the report of operations and Note 30 The total group of executives is classifi ed into two categories Remuneration of executives in the fi nancial statements. based on the following defi nitions: • Table 4 provides the total executive numbers for all of the • ‘ongoing’ executives are executives who are responsible for department’s portfolio agencies. functions or outputs that are expected to be ongoing at the end of the reporting period • Tables 1 to 4 also disclose the variations, denoted by ‘var’, between the current and previous reporting periods. Current • ‘special projects’ executives are executives who are employed vacancies are shown in Table 2. for a specifi c project. These projects are generally for a fi xed term and relate to a specifi c government priority.

Table 1 Number of executive ofﬁ cers classifed into ‘ongoing’ and ‘special projects’

Class All Ongoing Special projects

No. Var No. Var No. Var

Secretary 1 0 1000

EO–1 1 0 1000

EO–2 19 1 18000

EO–3 25 -1 25 -1 0 0

Total 46 0 45 -1 0 0

Table 2 Breakdown of executive ofﬁ cers into gender

Class Male Female Vacancies

No. Var No. Var No. Var

Secretary 100000

EO–1 100000

EO–2 9 -3 5 -1 5 5

EO–3 191521-4

Total 30 -2 10161

Department of Sustainability and Environment Annual Report 2012 157 The number of executives in the report of operations is based executive levels, nor does it disclose separations, vacant on the number of executive positions that are occupied at the positions, executives whose remuneration is below $100,000, end of the fi nancial year. Note 30 in the fi nancial statements nor does it include the Accountable Offi cer. Separations are lists the actual number of and amount of remuneration paid those executives who received more than $100,000 in the to executive offi cers over the course of the reporting period. fi nancial year and have left the department during this year. The fi nancial statements note does not distinguish between To assist readers, these two disclosures are reconciled below.

Table 3 Reconciliation of excutive numbers

2012 2011

Executives with total remuneration over $100,000 41 41

Executives employed with total remuneration below $100,000 8 7

Add

Vacancies (Table 2) 65

Accountable Ofﬁ cer (Secretary) 11

Less

Separations from DSE 44

Executives who moved to non-executive roles 5 2

Executives who commenced leave without pay 1 2

Total executive numbers 46 46

At 30 June 2012, the department employed 40 executive ofﬁ cers and had six vacancies.

158 Department of Sustainability and Environment Annual Report 2012 NoYesNADSE011011000 No Yes NA DSE 1 0 1 0 -1 0 -1 YesYes Yes Yes DSE DSE DSEYes DSEYes Yes 1 Yes DSE 0Yes 11 DSE DSEYes Yes 4 12 DSE Yes DSE 0Yes 4 1 DSE 0 DSEYes Yes 1 DSE 0 6 Yes DSE 1 0 1Yes DSE 0 DSE 6 7 1 1 Yes DSE 0Yes 3 0 6 0 DSE 0 1Yes Yes 0 1 3 1 DSE 0 -5 Yes DSE 2 2 1 DSE 0 1 0 DSE -5 2 2 2 DSE 0 2 0 5 0 2 0 0 0 1 0 2 4 5 1 1 0 2 5 0 0 4 1 1 1 -1 2 6 -1 0 4 0 -1 0 1 -1 3 5 1 0 5 3 1 1 0 6 -1 0 0 0 0 0 0 0 Reported Department 2011 2012 Change cers for the department’s portfolio agencies cers for the department’s Organisation nameBarwon Coast Committee of Management CorporationBarwon Region Water Bellarine Bayside Coastal Committee Yes Committee of Capel Sound Foreshore Management Inc Yes Central Gippsland Region Water YesCorporation Yes 2011 Central Highlands Region Water DSECorporation Yes 2012 Yes CorporationColiban Region Water DSE of Continuing Education and Arts Centre DSE 2011Alexandra Inc DSECorangamite Catchment Management 0 DSE 2012Authority DSE FemaleEast Gippsland Catchment Management YesAuthority 1 2 CorporationEast Gippsland Region Water Male 0 Yes Alpine Resort Management Falls Creek ActiveBoard 1 DSE 8 Female Yes Gippsland and Southern Rural Water 1Corporation Male DSEGippsland Ports Committee of Management Yes 10 0Glenelg Hopkins Catchment Management Active 1Authority Yes Female DSE 0Goulburn Catchment Management Broken 2 1Authority 0 Male DSE Yes CorporationGoulburn Murray Rural Water 7 Active Corporation Region Water Goulburn Valley 7 1 DSE Grampians Wimmera Mallee Water 1 0 YesCorporation 7 Yes DSE Ocean Road Coast Committee IncGreat 9 0Lake Mountain Alpine Resort Management 1 Yes 5Board Yes 0 0 Lower Murray Urban and Rural Water Yes DSE 0 0Authority 0 DSE 5Mallee Catchment Management Authority DSE Yes 7 1 -1 DSE 0 0 0 DSE Yes 0 7 -1 1 0 DSE 0 Yes 5 6 0 2 4 DSE 0 5 6 DSE 0 2 4 1 0 0 1 0 4 0 1 0 6 0 2 4 0 0 6 1 1 4 1 0 1 3 0 1 0 1 0 0 0 2 0 0 0 0 1 1 Table 4 Number of executive ofﬁ Table

Department of Sustainability and Environment Annual Report 2012 159 No Yes N/A DSE 0 1 1 0 0 0 0 -1 -1 YesYes Yes Yes DSEYes DSE DSEYes Yes DSE Yes DSE 1Yes DSE 1 DSE Yes 0Yes DSE DSE 2 0 Yes 1 0 DSEYes DSE 3 1 0 Yes 1 2 DSE 1 1 DSE 0 1 2 0 DSE 2 0Yes 0 1 4 1 0 3 1 Yes -1 3 1Yes 1 DSE 1 0 1 0 Yes DSE 4 2 0 1 0 0 DSE -1 1 1 3 1 DSE 0 0 0 1 -1 2 1 0 1 0 2 0 3 0 2 1 1 -1 0 2 0 1 0 0 0 2 2 0 0 2 0 0 0 0 0 cers for the department’s portfolio agencies (continued) cers for the department’s Mt Buller and Stirling Alpine Resort Management Board Mt Hotham Resort Management BoardNorth Central Catchment Management Authority North East Catchment Management YesAuthority CorporationNorth East Region Water YesNorthern Renewal Victoria Infrastructure Project Parks Victoria DSE of Park Board YesPhillip Island Nature Management DSE and Public Parks Point Leo Foreshore YesReserves Committee of Management Inc Port Phillip and Westernport Catchment 0 DSEManagement Authority BoardRoyal Botanic Gardens DSE CorporationSouth Gippsland Region Water 1The Mint Incorporated (Victoria) for Nature Trust Yes Yes 0 1 Corporation Region Water Wannon Gippsland Catchment Management West Yes Yes YesAuthority 3 0 CorporationWestern Region Water DSE DSE Yes CorporationWesternport Region Water YesWimmera 3 Catchment Management DSE DSE 1Authority No DSE Yes YesWinton Committee Wetlands Yes Yes DSE 0 BoardZoological Parks and Gardens Yes 6 Yes 0 1 DSETotal Yes Yes N/A DSE 1 14 3 DSE 4 0 DSE DSE Yes DSE DSE Yes 20 5 3 0 DSE DSE 4 0 Yes 1 1 Yes 4 DSE 6 0 5 0 1 0 0 DSE 0 0 DSE 11 1 0 DSE 5 4 2 4 1 1 15 5 5 0 0 0 4 3 4 1 1 -2 3 6 1 6 0 1 0 -3 0 0 8 0 1 6 5 2 0 -5 1 1 5 0 0 0 5 3 0 0 0 4 34 0 1 1 0 0 0 0 9 163 1 1 1 0 197 0 0 0 0 1 0 32 1 0 163 1 195 0 -2 0 -2 Organisation name CorporationMelbourne Water Management Group Waste Metropolitan Mt Baw Alpine Resort Management Board Yes Yes Yes 2011 Yes 2012 DSE DSE 2011 DSE DSE 2012 Reported Female 0 8 Male Department 1 Active 38 Female 1 Male 46 Active 0 Female 7 2011 Male 1 Active 38 1 45 0 -1 2012 0 0 -1 0 Change Table 4 Number of executive ofﬁ Table

160 Department of Sustainability and Environment Annual Report 2012 Sustainability Victoria executive ofﬁ cers 2011–12

Table 1 Number of executive ofﬁ cers classiﬁ ed into ‘ongoing’ and ‘special projects’

Class All Ongoing Special projects

No. Var No. Var No. Var

EO–1 0 -1 0 -1 0 0

EO–2 202000

EO–3 1 -2 1 -2 0 0

Total 3 -3 3 -3 0 0

Table 2 Breakdown of executive ofﬁ cers into gender for ‘ongoing’ and ‘special projects’

Class Ongoing Special projects

Male Female Vacancies Male Female Vacancies

No. Var No. Var No. No. Var No. Var No.

EO–1 0 1 0 -1 00000 0

EO–2 2 0 0 -1 00000 0

EO–3 0 -2 1 0 20000 0

Total 2 -1 1 -2 20000 0

Table 3 Reconcialiation of executive numbers

2012 2011

Executives with total remuneration over $100,000 3 5

Executives employed with total remuneration below $100,000 0 0

Add

Vacancies (Table 2) 20

Accountable Ofﬁ cer (Secretary) 01

Less

Separations from Sustainability Victoria 30

Executives who moved to non-executive roles 1 0

Executive ofﬁ cers who commenced leave without pay 0 0

Total executive numbers 36

Table 4 Number of executive ofﬁ cers for the department’s portfolio entities

Portfolio agencies Total Vacancies Male Female

No. Var No. No. Var No. Var

Sustainability Victoria 3 -3 2 2 -1 1 -2

Department of Sustainability and Environment Annual Report 2012 161 Appendix 3 Sustainability Victoria workforce information

Table 1 Full-time equivalents (FTE) stafﬁ ng trends 2008 to 2012

2012 2011 2010 2009 2008

113 147 138 134 121

Table 2 Summary of employment levels in June 2011 and 2012

Fixed term Ongoing employees1 Total staff and casual

Employees Full time Part time FTE2 FTE2 FTE2 (headcount) (headcount) (headcount)

June 2012 102 85 17 95 18 113

June 2011 122 107 16 117 30 147

Notes: 1. Ongoing employees includes people engaged in an open-ended contract of employment and executives engaged on a standard executive contract who were active in the last full pay period of June. 2. FTE means full-time staff equivalent. 3. Figures shown in workforce data staffi ng refl ect the corrected comparison in 2011 and 2012. 4. All fi gures refl ect employment levels during the last full pay period in June of each year. 5. Excluded are those on leave without pay or absent on secondment, external contractors/consultants, and temporary staff employed by employment agencies. 6. Figures shown in workforce data staffi ng trends are FTEs as opposed to headcount which has been reported in previous years.

162 Department of Sustainability and Environment Annual Report 2012 Table 3 Details of employment levels in June 2011 and 2012

2012 2011

Fixed term Fixed term Ongoing1 and casual Ongoing and casual

Employees Employees (headcount) FTE2 FTE2 (headcount) FTE2 FTE2

Gender

Male 42 41 6 53 52 4

Female 59 53 12 69 64 26

Age

Under 25 0 0 0 0 0 1

25–34 24 23 7 31 30 14

35–44 37 33 7 43 40 10

45–54 25 24 1 34 33 4

55–64 14 13 2 14 14 1

Over 64 1 1 1 0 0 0

Classiﬁ cation

VPS 1 0 0 0 0 0 0

VPS 2 1 1 0 1 1 1

VPS 3 9 8 1 11 10 1

VPS 4 31 27 8 30 28 16

VPS 5 36 34 6 41 38 11

VPS 6 21 21 2 32 32 1

STS 220110

Executives 2 2 1 6 6 0

Total 102 95 18 112 117 30

Notes:

1. Ongoing employees includes people engaged in an open-ended contract of employment and executives engaged on a standard executive contract who were active in the last full pay period of June. 2. FTE means full-time staff equivalent. 3. Figures shown in workforce data staffi ng refl ect the corrected comparison in 2011 and 2012. 4. All fi gures refl ect employment levels during the last full pay period in June of each year. 5. Excluded are those on leave without pay or absent on secondment, external contractors/consultants, and temporary staff employed by employment agencies. 6. Figures shown in workforce data staffi ng trends are FTEs as opposed to headcount which has been reported in previous years.

Department of Sustainability and Environment Annual Report 2012 163 Appendix 4 Budget portfolio outcomes

The Budget Portfolio Outcomes provides a comparison between The following budget portfolio outcomes statements are not the actual fi nancial statements of all general government sector subject to audit by the Victorian Auditor-General’s Offi ce and are entities within the portfolio and the forecast fi nancial information not prepared on the same basis as the department’s fi nancial published in Budget Paper No. 5 Statement of Finances statements as they include the consolidated fi nancial information 2011–12 (BP5). The budget portfolio outcomes comprise the of the following entities: comprehensive operating statements, balance sheets, cash • Department of Sustainability and Environment fl ow statements, statements of equity and administered item statements. The budget portfolio outcomes have been prepared • Commissioner for Environmental Sustainability on a consolidated basis and include the general government sector entities listed below. Financial transactions and balances • Victorian Environmental Water Holder are classifi ed into either controlled or administered categories • Environment Protection Authority. as agreed with the Treasurer in the context of the published statements in BP5.

Departmental comprehensive operating statement

2011–12 2011–12

Published Actual budget Variance $ million $ million % Note

Output appropriations 1,118.0 1,164.5 (4%) Interest 10.5 6.6 59% Sales of goods and services 53.2 41.6 28% 1 Grants 98.2 96.8 1% Fair value of assets and services received free of charge or for nominal 0.2 0.0 - consideration Other income 327.3 305.1 7% Total income from transactions 1,607.4 1,614.6 0% Employee benefi ts 309.6 319.5 (3%) Depreciation 52.4 49.7 5% Interest expense 2.0 2.4 (17%) Grants and other transfers 626.1 596.2 5% Capital asset charge 76.4 76.4 0% Other operating expenses 385.6 471.4 (18%) 2 Total expenses from transactions 1,452.1 1,515.6 (4%) Net result from transactions (net operating balance) 155.3 99.0 57% Net loss on non-fi nancial assets (37.5) 0.0 - 3 Net loss on fi nancial instruments and statutory receivables/payables (0.5) (0.6) (16%) Other losses from other economic fl ows (3.3) 0.0 - Total other economic fl ows (41.4) (0.6) 6,797% Net result 113.9 98.5 16% Changes in physical asset revaluation reserve 0.0 0.0 - Total other economic fl ows – other non-owner changes in equity 0.0 0.0 - Comprehensive result 113.9 98.5 16%

Notes: 1. Additional revenue was received for the Sustainability Accord and BushBroker Native Vegetation Offsets. 2. Expenditure for a number of Trust Fund projects was lower than budgeted. In addition, adverse weather conditions decreased the amount of planned burning that was completed. 3. This predominantly relates to the write-down of assets used during the design and testing phase of the Victorian Desalination Plant. As the plant is now nearing commercial acceptance these assets are no longer required.

164 Department of Sustainability and Environment Annual Report 2012 Departmental balance sheet

2011–12 2011–12

Published Actual budget Variance $ million $ million % Note

Cash and deposits 272.1 242.7 12% 1 Receivables 232.9 269.5 (14%) 2 Other fi nancial assets 205.6 120.5 71% 1 Investments accounted for using the equity method 9.2 0.0 - Total fi nancial assets 719.7 632.7 14% Inventories 13.2 13.6 (3%) Non-fi nancial assets classifi ed as held for sale including disposal group 2.6 0.4 545% assets Property, plant and equipment 7,172.8 8,645.1 (17%) 3 Intangible assets 7.9 56.7 (86%) 4 Other 10.5 2.6 303% Total non-fi nancial assets 7,207.0 8,718.3 (17%) Total assets 7,926.7 9,351.1 (15%) Payables 94.7 161.2 (41%) 5 Borrowings 32.3 20.6 57% 6 Provisions 151.8 156.0 (3%) Total liabilities 278.8 337.8 (17%) Net assets 7,647.9 9,013.2 (15%) Accumulated surplus/(defi cit) 82.7 (75.8) (209%) Reserves 5,644.9 6,487.9 (13%) 3 Contributed capital 1,920.3 2,601.1 (26%) 3 Total equity 7,647.9 9,013.2 (15%)

Notes: 1. Relates to unspent funds to the credit of the Trust Fund, as a result of timing differences between receipts and expenses. 2. The movement is due to reductions in amounts owing from trade and statutory debtors. 3. The ﬁ ve-yearly revaluation scheduled for 2010–11 was not completed until after the budget was published. The 2010–11 revaluation resulted in the devaluations of property plant and equipment due to current economic conditions and Community Service Obligations attached to land controlled by the department. In addition, the whole of government Crown land reconciliation and reporting project has resulted in the derecognition or contribution to third parties of a number of land assets. 4. The decrease is predominantly due to the impairment to the fair value of the Electronic Conveyancing system, which had not been sold at the time the budget was published. 5. The movement is mainly due to the repayment of a number of advances made under s37 of the Financial Management Act 1994. 6. Due to an increase in the number of motor vehicles leased under the VicFleet ﬁ nance lease facility.

Department of Sustainability and Environment Annual Report 2012 165 Departmental cash ﬂ ow statement

2011–12 2011–12

Published Actual budget Variance $ million $ million % Note

Receipts from government 1,157.0 1,174.1 (1%)

Receipts from other entities 328.8 416.0 (21%)

Goods and Services Tax recovered from the ATO 38.6 0.0 -

Interest received 3.9 6.6 (41%)

Other receipts 15.3 11.5 33%

Total receipts 1,543.6 1,608.2 (4%)

Payments of grants and other transfers (605.0) (596.2) 1%

Payments to suppliers and employees (678.6) (787.3) (14%)

Capital asset charge (75.5) (76.4) (1%)

Interest and other costs of ﬁ nance paid (1.8) (2.2) (17%)

Total payments (1,360.9) (1,462.0) (7%)

Net cash ﬂ ows from operating activities 182.7 146.2 25%

Net investment 9.3 (30.7) (130%)

Payments for non-ﬁ nancial assets (65.5) (212.8) (69%)

Proceeds from sale of non-ﬁ nancial assets 0.5 0.0 -

Net (purchase)/disposal of investments – policy purposes (10.3) 0.0 -

Net cash ﬂ ow from/(used in) investing activities (66.1) (243.5) (73%)

Owner contributions by State Government (52.6) 161.6 (133%)

Net borrowings 10.0 (72.9) (114%)

Net cash ﬂ ows from/(used in) ﬁ nancing activities (42.6) 88.7 (148%)

Net increase/(decrease) in cash and cash equivalents 74.0 (8.7) (951%)

Cash and cash equivalents at the beginning of the ﬁ nancial year 198.1 251.4 (21%)

Cash and cash equivalents at the end of the ﬁ nancial year 272.1 242.7 12% 1

Notes: 1. These movements reﬂ ect the variations explained in the departmental controlled comprehensive operating statement and balance sheet.

166 Department of Sustainability and Environment Annual Report 2012 Departmental statement of changes in equity

2011–12 2011–12

Published Actual budget Variance $ million $ million % Note

Opening accumulated surplus/(deﬁ cit) (31.2) (174.3) (82%)

Net result 113.9 98.5 16%

Closing accumulated surplus/(deﬁ cit) 82.7 (75.8) (209%)

Opening contributions by owners 2,043.4 2,439.5 (16%)

Net transactions with owners in their capacity as owners (123.1) 161.6 (176%)

Closing contributions by owners 1,920.3 2,601.1 (26%)

Opening physical asset revaluation reserve 5,662.1 6,487.9 (13%)

Other comprehensive income (17.2) 0.0

Closing physical asset revaluation reserve 5,644.9 6,487.9 (13%)

Total equity 7,647.9 9,013.2 (15%) 1

Notes: 1. These movements reﬂ ect the variations explained in the departmental controlled comprehensive operating statement and balance sheet.

Department of Sustainability and Environment Annual Report 2012 167 Departmental administered items statement

2011–12 2011–12

Published Actual budget Variance $ million $ million % Note

Appropriations – Payments made on behalf of the state 29.7 281.9 (89%) 1

Fair value of assets and services received free of charge or for nominal 20.6 0.0 - consideration

Sales of goods and services 265.0 658.0 (60%) 1

Grants 6.7 22.2 (70%)

Interest 0.0 207.0 (100%) 1

Other income 176.8 178.8 (1%)

Total administered income from transactions 498.9 1,348.0 (64%)

Expenses on behalf of the state 0.0 260.1 (100%) 1

Grants and other transfers 29.4 21.8 35%

Payments into the consolidated fund 417.8 770.8 (46%) 1

Depreciation 8.1 0.0 -

Total administered expenses from transactions 455.3 1,052.7 (57%)

Income less expenses 43.6 295.3 (88%)

Total other economic ﬂ ows included in net result (36.0) 0.0 -

Net result (7.7) 295.2 (103%)

Total other economic ﬂ ows – Other non-owner changes in equity 277.0 0.0 -

Comprehensive result 284.7 295.2 (4%)

Cash and deposits 1.4 1.0 37%

Receivables 88.2 4,323.7 (98%) 1

Other ﬁ nancial assets 0.1 0.1 (0%)

Other 13.8 100.5 (86%) 2

Property, plant and equipment 657.0 543.6 21% 3

Intangible assets 119.7 76.5 56% 4

Total administered assets 880.1 5,045.4 (84%)

Payables 384.0 83.7 359% 1

Borrowings 0.0 4,203.0 (100%) 1

Total administered liabilities 384.0 4,286.7 (91%)

Net assets 496.2 758.6 (35%)

Notes: 1. Commercial acceptance for the Victorian Desalination Plant is now expected to occur on 15 November 2012. Consequently, income and expenditure for the operation of the plant, the recognition of a ﬁ nance lease receivable and payable, and the recognition of revenue from Melbourne Water Corporation will not occur until 2012–13. 2. Represents the reduction in the State’s proportional share of of prepaid assets now converted to physical assets and contributed by the Commonwealth controlled Murray-Darling Basin Authority (MDBA) relating to Living Murray initiatives. 3. Represents the proportional share of MDBA assets relating to the River Murray operations. The assets were re-valued during 2011–12. 4. Represents the proportional share of intangible assets contributed by the Commonwealth controlled MDBA relating to the Living Murray initiatives.

168 Department of Sustainability and Environment Annual Report 2012 Appendix 5 Disclosure of grants and transfer payments

DSE has provided assistance through the payments of grants and transfer payments to certain companies and organisations. Financial assistance provided in 2011–12 was as follows:

Sustainable Water Management Sustainable Water Management $ $ and Supply and Supply (continued) Northern Victoria Irrigation Renewal Project 71,985,000.00 Shire of Campaspe 260,000.00 Goulburn Broken Catchment Management 19,680,868.91 Brimbank City Council 250,000.00 Authority East Gippsland Region Water Corporation 248,168.00 State Trustees Ltd 14,400,000.00 Loddon Shire Council 245,000.00 Rural Finance Corporation of Victoria 12,810,000.00 Barwon Region Water Corporation 224,620.00 Department of Primary Industries 7,661,500.00 Parks Victoria 202,500.00 North Central Catchment Management 6,479,738.75 Environment Victoria 200,000.00 Authority Bacchus Marsh College 188,000.00 East Gippsland Catchment Management 4,381,660.00 Authority Moira Shire Council 185,000.00 West Gippsland Catchment Management 4,366,000.00 Gannawarra Shire Council 180,000.00 Authority Wellington Shire Council 150,000.00 Mallee Catchment Management Authority 4,087,500.00 Manningham City Council 148,500.00 Murray-Darling Basin Authority 3,900,000.00 Western Region Water Corporation 143,500.00 Corangamite Catchment Management 3,629,250.00 UOM Commercial Ltd 142,100.00 Authority Wannon Region Water Corporation 134,355.50 North East Catchment Management 3,037,349.00 Authority Central Gippsland Region Water 129,977.44 Corporation Victorian Environmental Water Holder 2,315,086.04 Central Highlands Region Water 125,851.65 Kingston City Council 2,000,000.00 Corporation Wimmera Catchment Management 1,951,810.91 Monash Melbourne 125,000.00 Authority FAME (Foundation for Australia's Most 122,455.00 Glenelg Hopkins Catchment Management 1,939,200.00 Endangered Species Inc) Authority Coliban Region Water Corporation 120,380.00 Environment Protection Authority 1,747,000.00 Friends of Lower Kororoit Creek 110,000.00 Port Phillip and Westernport Catchment 1,487,632.01 Management Authority North East Region Water Corporation 102,984.83 City West Water Ltd 1,267,720.89 Goulburn Valley Region Water Corporation 102,480.00 Department of Justice 1,214,837.00 City of Maribyrnong 100,000.00 South East Water Ltd 1,153,126.97 eWater CRC 100,000.00 Yarra Valley Water Ltd 1,035,659.67 Ofﬁ ce of Water (New South Wales) 100,000.00 Gippsland and Southern Rural Water 738,721.35 South Gippsland Region Water 94,655.05 Corporation Corporation Greater Shepparton City Council 665,360.00 Yorta Yorta Nation Aboriginal Corporation 89,400.45 The University of Melbourne 580,000.00 Lower Murray Urban and Rural Water 89,150.00 Corporation Goulburn-Murray Rural Water Corporation 523,120.13 Westernport Region Water Corporation 82,620.00 Department of Planning and Community 500,000.00 Development Friends of Melton Botanic Garden 60,052.73 City of Melbourne 436,000.00 Bayside City Council 50,000.00 CSIRO 350,665.45 VicUrban 50,000.00 Pentland Hills Landcare Group Inc 329,410.00 Conservation Volunteers Australia 48,433.00 Mildura Rural City Council 325,000.00 Victoria State Rose Garden Supporters 36,000.00 Werribee Park Inc Department of Sustainability, Environment, 323,180.00 Water, Population and Communities National Environment Protection Council 33,853.91 (Commonwealth government) Ferristex Pty Ltd 30,000.00 Swan Hill Rural City Council 310,000.00 The People and Parks Foundation 27,272.73 Melbourne Water Corporation 273,385.52 National Water Commission 24,287.96

Department of Sustainability and Environment Annual Report 2012 169 Sustainable Water Management Natural Resources (continued) $ $ and Supply (continued) Southern Dandenongs Landcare Group 32,000.00 Zoological Parks and Gardens Board 23,605.27 Upper Campaspe Combined Landcare 32,000.00 Curlewis Golf Club 20,000.00 Groups Australasian Native Orchid Society (Vic 17,500.00 Blampied Kooroocheang Landcare Group 31,166.00 Group) Inc Kiewa Catchment Landcare Group Inc 31,166.00 Other (recipients each receiving less than 254,160.28 Nillumbik Shire Council 30,002.00 $5,000) Basalt to Bay Landcare Network 30,000.00 183,057,646.40 Heytesbury District Landcare Network 30,000.00 Kara Kara Conservation Management 27,806.00 Natural Resources $ Network Inc North Central Catchment Management 9,602,429.00 Belyond Bolac CAG 27,000.00 Authority Far East Victoria Landcare Inc 27,000.00 Goulburn Broken Catchment Management 8,660,029.00 Horsham Rural City Council 27,000.00 Authority Hughes Creek Catchment Collaborative 27,000.00 Glenelg Hopkins Catchment Management 8,359,829.00 Authority Loddon Plains Landcare Network 27,000.00 Corangamite Catchment Management 8,035,849.00 Murrayville Landcare Group 27,000.00 Authority Otway Community College 27,000.00 Mallee Catchment Management Authority 7,941,029.00 Southwest Goulburn Landcare Inc 27,000.00 North East Catchment Management 7,353,074.45 Surf Coast and Inland Plains Network 27,000.00 Authority Woady Yaloak Catchment Group 26,191.00 Department of Primary Industries 6,508,339.00 Bellarine Landcare Group Inc 26,060.00 Port Phillip and Westernport Catchment 6,478,686.00 Management Authority Buloke and Northern Grampians Landcare 25,932.00 Network West Gippsland Catchment Management 6,417,229.00 Authority Upper Hopkins Land Management Group 25,179.00 Wimmera Catchment Management 5,917,829.00 Southern Otway Landcare Network Inc 24,450.00 Authority Trust for Nature Victoria 24,149.50 East Gippsland Catchment Management 5,823,874.00 Pentland Hills Landcare Group Inc 24,000.00 Authority Department of Agriculture, Fisheries and 22,768.00 Deakin University 461,000.00 Forestry (Commonwealth Government) Goulburn Murray Landcare Network Inc 206,220.00 Friends of Willow Park 19,330.00 University of Melbourne – Department of 200,000.00 Upper Deep Creek Landcare Network 19,322.00 Forest and Ecosystem Science Kowree Farm Tree Group Inc 19,000.00 East Gippsland Landcare Network Inc 81,000.00 Snowy River Interstate Landcare 15,350.00 Bird Life Australia 73,500.00 Committee Birds Australia 73,500.00 Victorian Landcare Council Inc 15,000.00 Hindmarsh Landcare Network 56,225.00 Leigh Catchment Group 13,627.00 Hamillton to Coleraine Railway Line 50,200.00 Mandurang Strathﬁ eldsaye Landcare 10,200.00 Landcare Group Network Landcare Australia Ltd 40,000.00 Warrnambool City Council 10,037.00 Lexton Landcare Group Inc 39,500.00 Mid Loddon Sub-Catchment Management 8,815.00 Connecting Country (Mount Alexander 38,000.00 Group Region) Inc David Beatty 6,000.00 Western Melbourne Catchments 38,000.00 JC and NT Smith 5,200.00 Network Inc Other (recipients each receiving less than 62,318.39 Mornington Peninsula Shire Council 33,750.00 $5,000) Bass Coast Landcare Network Inc 33,000.00 83,605,200.34 Friends of the Helmeted Honeyeater Inc 32,500.00 Upper Mount Emu Creek Landcare 32,380.00 Network Cardinia Environment Coalition Inc 32,160.00 Geelong Landcare Network 32,000.00 Mitta Valley Landcare Group Inc 32,000.00 Ovens Landcare Network 32,000.00

170 Department of Sustainability and Environment Annual Report 2012 Public Land $ Public Land (continued) $ Zoological Parks and Gardens Board 17,575,349.82 Cavendish Recreation Reserve 129,834.01 Royal Botanic Gardens Board 12,936,000.00 Dooen Recreation Reserve Committee of 126,835.94 Management Loddon Shire Council 4,740,749.00 VR Fish 125,445.25 Mt Baw Baw Resort Management Board 3,495,357.00 Yarriambiack Shire Council 122,824.00 Lake Mountain Alpine Resort Management 2,941,536.32 Board Port Campbell Recreation Reserve 120,000.00 Committee of Management Inc Pyrenees Shire Council 2,611,030.35 Panmure Recreation Reserve 119,622.13 Hepburn Shire Council 2,220,625.50 Port Phillip City Council 116,934.36 Mildura Rural City Council 1,580,445.77 Redda’s Park Recreation Reserve Inc 103,444.00 City of Port Phillip 1,288,349.09 Seaspray Surf Life Saving Club Inc 100,000.00 Parks Victoria 1,157,000.00 Mornington Peninsula Shire Council 87,786.26 Central Goldﬁ elds Shire Council 1,114,425.31 Frankston City Council 82,960.38 City of Greater Bendigo 962,587.17 City of Kingston 79,868.01 Shrine of Remembrance 827,000.00 Alpine Shire Council 70,000.00 Macedon Ranges Shire Council 821,096.55 North Central Catchment Management 70,000.00 Newbridge Recreation Reserve 812,453.41 Authority Phillip Island Nature Park Board of 728,076.36 Ballarat Environment Network Inc 61,311.82 Management Crib Point Stony Point Parks and 56,000.00 Shire of Campaspe 475,429.91 Foreshore Committee of Management Inc Buloke Shire Council 466,455.22 East Gippsland Shire Council 55,766.16 Northern Grampians Shire Council 366,000.00 Deep Lake Recreation Reserve Committee 55,475.20 Major Projects Victoria – Secretary to the 332,463.94 Warracknabeal Memorial Swimming 53,908.36 Department of Business and Innovation Pool Inc Trust for Nature Victoria 321,193.00 Gippstown Heritage Park 53,899.09 Lake Marma Committee of Management 288,785.20 The Mint Inc 50,772.73 Barwon Coast Committee of Management 271,939.31 Walwa Tourist Park Inc Committee of 50,000.00 Bayside City Council 265,333.57 Management The Committee of Management 251,294.55 Otway Coast Committee of Management 49,951.81 Narrawong Camping and Recreation Southern Grampians Shire Council 48,587.00 Reserve Corporation Bass Coast Shire Council 47,237.37 Falls Creek Alpine Resort Management 251,000.00 Board Clunes Waterways Reserve Committee Inc 45,070.40 Mt Alexander Shire Council 238,749.04 Indigo Shire Council 44,000.00 Kingston City Council 226,947.27 Lake Bolac Foreshore Committee of 41,059.78 Management Inc Riverside Recreation Reserve 225,555.00 Hindmarsh Shire Council 40,608.00 Bellarine Bayside Foreshore Committee of 215,549.19 Management Glenrowan Public Park Reserve Committee 40,000.00 of Management ANZAC Memorial Park Inc 212,853.53 Horsham Showgrounds Committee of 38,572.73 City of Greater Geelong 207,364.08 Management Knox City Council 200,000.00 Brim Recreation Reserve Committee 37,327.55 City of Ballarat 198,164.55 Mt Buller and Mt Stirlling Alpine Resort 35,650.00 Great Ocean Road Committee of 187,692.84 Management Board Management Capel Sound Foreshores Committee of 34,450.67 Gannawarra Shire Council 186,661.77 Management Inc Gentle Annie Reserve Inc 180,000.00 Yaapeet Community Club Inc 33,977.90 Corangamite Shire Council 170,981.55 San Remo Foreshore Reserve Committee 31,818.18 Hobsons Bay City Council 166,418.05 of Management Horsham Cycling Club Inc 164,425.80 Warracknabeal Bowling Club Inc 30,305.00 Murtoa Showyards Reserve Committee of 160,715.28 Archbolds Ore Treatment Works Inc 30,000.00 Management Emu Plains Racecourse and Recreation 30,000.00 Rochester Recreation Reserve Committee 144,826.00 Reserve Committee of Management of Management Moyne Shire Council 30,000.00 Ferny Creek Recreation Reserve 130,493.00

Department of Sustainability and Environment Annual Report 2012 171 Public Land (continued) $ Public Land (continued) $ Johnny Mullagh Recreation Reserve 29,700.00 Balnarring Foreshore Parks and Reserves 14,332.11 Committee Inc Committee of Management Lakes Entrance Recreation Reserve 28,360.00 Kyneton and Hanging Rock Racing 13,000.00 Committee of Management Club Inc Koorlong Public Hall Committee 27,500.00 Kamarooka Recreation Reserve 12,524.00 Committee of Management Blackwood Crown Reserves Committee of 27,360.00 Management Jeparit Recreation Reserve 12,471.80 Loch Sport Foreshore Committee of 25,650.00 Stanley Recreation Reserve 12,145.00 Management Yarragon Public Hall Committee 12,000.00 Beulah Memorial Recreation Reserve 25,377.00 Lanceﬁ eld Mechanics Institute Committee 11,856.96 Coonooer Bridge Reserves Committee of 24,209.80 of Management Management Dunkeld Public Lands Committee 10,940.00 Warrnambool City Council 23,384.43 Old Riverside School Recreation Reserve 10,744.50 Three Creeks Landcare Network Inc 22,727.27 Committee of Management Heytesbury District Landcare Network 22,727.27 Friends of Chinamans Creek Inc 10,000.00 Point Danger Committee of Management 22,727.27 Majorca Victoria Park Gardens and Public 10,000.00 Hall Committee Durham Ox Mechanics Institute Committee 22,719.80 of Management Nandaly Public Hall and Recreation 10,000.00 Reserves Committee Camperdown-Timboon Rail Trail 22,478.09 Management Committee Inc Tourism Victoria 10,000.00 Friends of the Hooded Plover (Mornington 22,200.00 Tchum Lake Aquatic Club Inc 9,867.00 Peninsula) Inc Darlington Mechanics Institute and 9,425.00 Nyah District Memorial Hall Committee of 22,156.90 Recreation Reserve Management Fenton’s Creek Recreation Reserve 9,246.00 Caledonian Park Committee of 22,000.00 Committee of Management Management Inc Colley’s Engineering 8,911.39 Woomelang Soldiers Memorial Park and 21,000.00 Dromana Foreshore Committee of 8,880.14 Childrens Playground Management Inc Noradjuha Memorial Hall 20,596.02 Ararat Regional Bio-Links Network Inc 8,800.00 Swan Hill Rural City Council 20,000.00 Rupanyup Bowling Club 8,555.80 Warrnambool Mountain Bike Club Inc 19,945.00 Power Creek Reserve 8,355.79 Apsley Recreation Reserve Committee 19,715.00 Wangaratta Racecourse Reserve 8,181.82 Merricks Beach Foreshore Committee of 19,305.19 Committee of Management Inc Management Wesley Hill Public Hall Inc 7,970.00 Balcombe Estuary Rehabilitation Group Inc 18,180.00 Borough of Queenscliffe 7,940.61 Tarnagulla Recreation Reserves Committee 17,732.00 Mornington Environmental Association 7,805.65 of Management South Gippsland Landcare Network Inc 7,260.00 Skipton Mechanics Institute Reserve 17,648.40 Committee of Management Chatsworth Recreation Reserve 7,238.00 Committee of Management Inc Cape Paterson Residents and Ratepayers 16,300.00 Association Inc Mandurang Recreation Reserve 7,150.00 Committee of Management Moorabool Shire Council 16,000.00 Stewart Park Committee of Management 7,140.10 Yarriambiack Creek Development 16,000.00 Committee View Street Public Hall Committee 7,086.00 Kyabram Fauna Park 15,880.00 Golden Beach Surf Life Saving Club 7,022.35 Victoria Inc Sandy Point Foreshore Committee of 15,480.00 Management Mount Macedon Memorial Cross 6,990.42 Reserve Inc Ararat Rural City Council 15,456.56 Surf Coast Shire 6,906.33 White Cliffs to Camerons Bight Foreshore 15,375.22 Reserves Committee of Management Inc Robertsons Beach Progress 6,800.00 Association Inc Leitchville Memorial Hall Committee of 15,000.00 Management Inc Cornish Hill Reserve Committee 6,272.73 of Management Kyneton Racecourse and Recreation 15,000.00 Reserve Inc Bancoora Surf Life Saving Club 6,134.75 Somers Foreshore Committee of 14,457.97 Yarram Yarram Landcare Network 6,000.00 Management Phillip Island Nature Park 5,943.68

172 Department of Sustainability and Environment Annual Report 2012 Public Land (continued) $ Biodiversity $ Sunshine Reserve Conservation and 5,925.00 Parks Victoria 1,562,345.50 Fireguard Group Nargundy Pty Ltd 1,129,246.36 Moyston Public Park (former Racecourse) 5,605.00 Department of Primary Industries 1,079,617.00 Ballarat City Council 5,245.58 Grant Flynn 325,581.82 Gippsland Plains Rail Trail Committee of 5,000.00 Greenhouse Balanced 170,174.07 Management Goulburn Broken Catchment Management 145,000.00 Laanecoorie Mechanics Institute 5,000.00 Authority Committee of Management Webster 138,600.00 Marlo Landcare Group 5,000.00 Michelle Eustice 122,404.80 Other (recipients each receiving less than 80,011.00 $5,000) Mount Rothwell Biodiversity Pty Ltd 97,399.61 66,074,711.09 Syer Stephen and Woodward Elisabeth 93,397.27 The University of Melbourne 90,702.73 Start Bros 88,013.16 Forests and Parks $ Hydratest 85,000.00 Parks Victoria 167,688,845.36 Henderson 84,250.00 VicForests 12,722,542.89 JA Michelson and RJ Michelson 84,000.00 The University of Melbourne 2,300,000.00 Mid-Loddon Sub-Catchment Management 81,600.00 Department of Transport 796,000.00 Group Four Wheel Drive Victoria 300,000.00 Bullmore 80,300.00 Yorta Yorta Nation Aboriginal Corporation 260,909.09 Cohuna Neighbourhood House 75,000.00 Native Title Services Victoria Ltd 260,241.00 Connecting Country (Mt Alexander 75,000.00 Shire of Yarra Ranges 250,000.00 Region) Inc Barengi Gadjin Land Council 233,000.00 National Trust of Australia (Victoria) 75,000.00 Department of Primary Industries 222,889.00 Wandobah Pastoral 72,470.00 Gunaikurnai Land and Waters Aboriginal 113,709.00 North Central Catchment Management 71,815.00 Corporation Authority City of Casey 99,431.82 David K Hung 59,727.33 Nillumbik Shire Council 70,377.80 Joseph Perri 58,636.36 Cardinia Shire Council 60,000.00 J Alden and PJ Morison 56,882.27 Mornington Peninsula Shire Council 36,363.65 Chris and Helen Morris 55,125.00 Tourism Victoria 20,000.00 Stephen Watson 43,656.82 Other (recipients each receiving less than 111,393.25 Kilter Pty Ltd 43,150.00 $5,000) Strathallan Golf Club Inc 43,000.00 185,545,702.86 Zoological Parks and Gardens Board 40,000.00 Sharp Transport 34,499.97 Land and Fire Management $ Mornington Peninsula Shire Council 34,194.41 Parks Victoria 12,983,810.81 CJ Lewis and SE Lewis 33,830.53 The University of Melbourne 1,000,000.00 Ballarat Environment Network Inc 30,700.00 Alpine Shire Council 275,000.00 Tania Kirby 29,705.50 Deakin University 223,250.00 Trust for Nature Victoria 28,779.25 Bushﬁ re CRC Ltd 200,000.00 The Dunes (Victoria) Pty Ltd 27,727.27 Department of Primary Industries 165,147.00 Phillip Island Nature Park 27,500.00 La Trobe at Beechworth 48,250.00 Friends of Steele Creek Inc 27,198.00 Country Fire Authority 37,052.00 Surf Beach Sunderland Bay Coastcare 25,000.00 La Trobe University 25,000.00 Victorian Health Promotion Foundation 25,000.00 Macedon Ranges Shire Council 13,000.00 Dromana Foreshore Committee of 24,585.00 Other (recipients each receiving less than 795,086.24 Management Inc $5,000) First Tallow Pty Ltd 23,829.30 15,765,596.05 Peter John Kelly 22,193.68 David and Ruth Marnie 20,000.00 Post Ofﬁ ce Hill Action Group 19,900.00

Department of Sustainability and Environment Annual Report 2012 173 Biodiversity (continued) $ Biodiversity (continued) $ Prom Meats 19,512.00 JL and C Stephens 7,500.00 Eris O’Brien 17,808.25 GJ McNaughton Pastoral Co 6,568.18 Merricks Beach Foreshore Committee of 17,000.00 Friends of Campbells Creek 6,500.00 Management Inc KJ and J Hooper 6,480.00 Great Ocean Road Coast Committee of 15,909.09 Avoca and District Landcare (A and DL) 6,430.00 Management Mornington Railway Preservation 6,400.00 AT Bail and FJ Main 15,000.00 Society Inc Auchmeddan Pty Ltd 14,770.00 Tarneit Senior College 6,400.00 VicSuper Ecosystem Services Pty Ltd 14,560.91 Richard Morrow 6,399.47 Active Seeds 14,463.17 Westbourne Grammer School 6,213.00 Terry Brown and NJ McMaster 13,750.00 King and Shiau Pty Ltd 6,171.80 Phillip Island Conservation Society Inc 13,000.00 Peter Douglas Robinson 6,052.00 Roger Nelson 12,805.00 Rural City of Wangaratta 6,000.00 DE and RL Farley 12,500.00 Somers Foreshore Committee of 6,000.00 Friends of Iramoo 12,000.00 Management DW and SR McGillivray 11,800.00 David K Morris 5,600.00 Warrigal Creek Nominees 11,750.00 Upper Maribyrnong Catchment Group 5,600.00 Craig and Melissa Woods 11,400.00 Robert Swinburn 5,545.45 Reid Mather 11,000.00 GJ and PL Herbert 5,500.00 Garryowen Banool Pty Ltd 10,500.00 Newham and District Landcare Group 5,310.00 Lesley and Peter Finedon 10,450.00 Warracknabeal Special Developmental 5,310.00 School Carl Preis and Marina Andersen 10,260.00 Anglesea Aireys Inlet Society for the 5,100.00 Batesford Fyansford Stonehaven 10,000.00 Preservation of Flora and Fauna Landcare Inc Pamela Cale 5,000.00 Bellbird Dell Advisory Committee 10,000.00 Geoffrey Covey and Bronwyn Laycock 5,000.00 Bittern Bushland Preservation 10,000.00 Association Inc Glenda Elliott – Kangaloola Wildlife 5,000.00 Community College Gippsland Ltd 10,000.00 Loretta Saunders 5,000.00 Copperﬁ eld College 10,000.00 MS Wyanda Lublink 5,000.00 Friends of Sherbrooke Forest Inc 10,000.00 San Remo Foreshore Reserve Committee 5,000.00 of Management Greening Australia – Victoria 10,000.00 Suzanne M Starbuck 5,000.00 Hogan Park (Emerald) Committee of 10,000.00 Management Inc Teesdale Grassy Woodlands Committee 5,000.00 CL and HM Hooke 10,000.00 Wildlife of Werribee Inc 5,000.00 Melbourne Girls College 10,000.00 Other (recipients each receiving less than 548,728.75 $5,000) Ocean Grove Coastcare Inc 10,000.00 7,894,756.16 Point Danger Committee of Management 10,000.00 Sunraysia Institute of TAFE 10,000.00 Land Administration and Property Southern Otway Landcare Network 9,990.00 $ Information Landsborough Landcare Group 9,950.00 Dius Computing Pty Ltd 450,000.00 Ilena Miranda Therese Young 9,375.00 CRC for Spatial Information 310,000.00 Peter J and Brenda V Flynn 9,374.30 ANZLIC the Spatial Information Council 71,300.00 Scoresby Primary School 9,370.00 Other (recipients each receiving less than 309,114.08 Wattle Flat Pootilla Landcare Group 9,296.00 $5,000) St Mary’s School Lanceﬁ eld 9,260.00 1,140,414.08 Malsem Family Trust 9,250.00 Friends of Edwards Point Reserve Inc 9,100.00 Gippsland Plains Conservation 8,739.03 Management Network Grampians to Little Desert Biolink 8,500.00 Friends of Williams Road Beach 8,103.00 ST and JE Mills 7,663.75

174 Department of Sustainability and Environment Annual Report 2012 Environmental Policy and Environmental Policy and $ $ Climate Change Climate Change (continued) Sustainability Victoria 10,569,397.00 Bass Coast Shire Council 20,000.00 The University of Queensland 1,809,460.19 Borough of Queenscliffe 20,000.00 Department of Justice 1,000,000.00 Indigo Shire Council 20,000.00 National Association of Charitable 500,000.00 Nillumbik Shire Council 20,000.00 Recycling Organisations Greater Shepparton City Council 19,575.00 Pyrenees Shire Council 400,000.00 Ina Winneford Bertrand 15,750.00 University of Melbourne 200,000.00 Whitehorse City Council 15,300.00 City of Melbourne 180,000.00 Trust for Nature Victoria 15,224.70 City of Greater Bendigo 115,000.00 Corangamite Shire Council 15,000.00 Moreland City Council 111,825.00 Shire of Yarra Ranges 15,000.00 Southern Grampians Shire Council 110,000.00 Golden Plains Shire Council 13,500.00 South Gippsland Shire Council 103,549.00 George Belcher 12,750.00 Darebin City Council 100,420.00 City of Greater Dandenong 12,500.00 Colac Otway Shire 98,375.00 J Alden and PJ Morison 12,500.00 Wimmera Catchment Management 90,000.00 Greening Australia – Victoria 12,385.00 Authority Gunyah Plant Farm 11,250.00 Department of Trade and Investment 80,000.00 Regional Infrastructure and Services (NSW) Mountain Pepper Farm 10,800.00 Victorian Local Governance Association 80,000.00 Hepburn Shire Council 10,000.00 Knox City Council 75,000.00 Mansﬁ eld Shire Council 10,000.00 Moorabool Shire Council 62,000.00 Shire of Campaspe 10,000.00 Gannawarra Shire Council 60,000.00 Peter John Kelly 8,877.47 City of Boroondara 50,000.00 SL Jackson Contracting Pty Ltd 8,500.00 Moira Shire Council 48,625.00 Cleaveland Park Pty Ltd 8,049.25 Benalla Rural City Council 45,000.00 Christopher Murray 7,875.00 East Gippsland Shire Council 42,500.00 AM and JM Fraser 7,765.12 Wyndham City Council 40,000.00 DE and RL Farley 7,500.00 Central Goldﬁ elds Shire Council 35,000.00 Painkalac Pastoral CO Pty Ltd 6,550.00 City of Wodonga 32,727.27 MJ and SK O’Brien 6,500.00 Buloke Shire Council 30,000.00 Ian M Gunn 6,250.00 City of Ballarat 30,000.00 Milparinka Farm 6,000.00 City of Maribyrnong 30,000.00 VicSuper Future Farmings Landscapes 5,790.00 Hume City Council 30,000.00 Tony John Webber 5,625.00 Northern Grampians Shire Council 30,000.00 Ilena Miranda Therese Young 5,625.00 Strathbogie Shire Council 30,000.00 RL and SN Gundry 5,000.00 Manningham City Council 29,000.00 Shire of Campaspe 5,000.00 Glenelg Shire Council 27,500.00 Yarra City Council 5,000.00 MD and SM Woods 26,650.00 Yarriambiack Shire Council 5,000.00 Baw Baw Shire Council 25,000.00 Other (recipients each receiving less than 191,634.72 $5,000) Cardinia Shire Council 25,000.00 17,159,802.90 Mt Alexander Shire Council 25,000.00 Total grants and other expense Surf Coast Shire 25,000.00 560,243,829.88 transfers Swan Hill Rural City Council 25,000.00 Warrnambool City Council 25,000.00 Wellington Shire Council 25,000.00 Garryowen Banool Pty Ltd 22,780.00 North Central Catchment 22,100.00 Management Authority Glenelg Hopkins Catchment 22,000.00 Management Authority DG Carmichael and GJ Ficken 21,818.18

Department of Sustainability and Environment Annual Report 2012 175 Appendix 6 Major entities

Environment and climate change • Sustainability Victoria • Trust for Nature (Victoria) • Alpine Advisory Committee1 • Victorian Catchment Management Council • Alpine Resorts Coordinating Council • Victorian Coastal Council • Central Coast Regional Coastal Board • Victorian Environmental Assessment Council • Committees of management for Crown land reserves • Victorian Environmental Water Holder • Commissioner for Environmental Sustainability • Victorian Local Sustainability Advisory Committee • Corangamite Catchment Management Authority • Victorian Mineral Water Committee1 • East Gippsland Catchment Management Authority • West Gippsland Catchment Management Authority • Environment Protection Authority • Western Coast Regional Coastal Board • Environment Protection Board • Wimmera Catchment Management Authority • Falls Creek Alpine Resort Management Board • Zoological Parks and Gardens Board • Geographic Place Names Advisory Panel • Gippsland Lakes and Coast Regional Coastal Board Water • Glenelg Hopkins Catchment Management Authority • Barwon Region Water Corporation • Goulburn Broken Catchment Management Authority • Central Gippsland Region Water Corporation • Hunting Advisory Committee2 • Central Highlands Region Water Corporation • Indigenous land management advisory bodies • Coliban Region Water Corporation • Lake Mountain Alpine Resort Management Board • East Gippsland Region Water Corporation • Mallee Catchment Management Authority • Gippsland and Southern Rural Water Corporation • Metropolitan Waste Management Group • Goulburn Valley Region Water Corporation • Mount Baw Baw Alpine Resort Management Board • Goulburn-Murray Rural Water Corporation • Mount Buller and Mount Stirling Alpine Resort • Grampians Wimmera Mallee Water Corporation Management Board • Lower Murray Urban and Rural Water Corporation • Mount Hotham Alpine Resort Management Board • Melbourne Water Corporation • National Parks Advisory Council • North East Region Water Corporation • North Central Catchment Management Authority • Ofﬁ ce of Living Victoria3 • North East Catchment Management Authority • South Gippsland Region Water Corporation • Parks Victoria • State Owned Enterprise for Irrigation Modernisation in • Port Phillip and Westernport Catchment Management Northern Victoria4 Authority • Sustainable Water Strategy Consultative Committees5 • Reference Areas Advisory Committee • Wannon Region Water Corporation • Regional Waste Management Groups • Water Supply Protection Area Consultative Committees • Royal Botanic Gardens Board • Western Region Water Corporation • Scientiﬁ c Advisory Committee • Westernport Region Water Corporation • Surveyors Registration Board of Victoria • Victorian Water Trust Advisory Council • Sustainability Fund Advisory Panel

Notes: 1. There have been no members of this committee since 30 June 2011. 2. Responsibility for the Hunting Advisory Committee transferred to the Minister for Agriculture and Food Security in December 2011 as part of machinery of government changes. 3. The Ofﬁ ce of Living Victoria is an administrative ofﬁ ce in relation to the Department of Sustainability and Environment, established on 22 May 2012. 4. This entity merged with Goulburn-Murray Water Corporation effective on 1 July 2012. 5. The Gippsland Region Sustainable Water Strategy Consultative Committee and the Western Region Sustainable Water Strategy Consultative Committee both ceased to exist on 10 November 2011. There are no other Sustainable Water Strategy Consultative Committees in existence after that date.

176 Department of Sustainability and Environment Annual Report 2012 Appendix 7 Geographic Place Names Act 1998 Heritage Rivers Act 1992 Acts administered Instruments Act 1958 This Act is administered by the Minister for Environment and DSE is responsible for administering a number of acts of Climate Change insofar as it relates to the management and Parliament. More information is available on our website at administration of the Offi ce of the Registrar-General and the www.dse.vic.gov.au Offi ce of Titles. This Act is otherwise administered by the Attorney-General. Minister for Environment and Climate Land Act 1958 Change This Act is administered by the Minister for Environment and Aboriginal Lands Act 1991 Climate Change except for certain specifi ed areas of land managed by other agencies such as the Offi ce of Corrections, This Act is jointly and severally administered with the Minister Courts Services and the Department of Health. for Aboriginal Affairs. Land Conservation (Vehicle Control) Act 1972 Alpine Resorts Act 1983 Section 3 of this Act is jointly administered with the Minister for Alpine Resorts (Management) Act 1997 Agriculture and Food Security. Catchment and Land Protection Act 1994 M elbourne and Olympic Parks Act 1985 This Act is jointly and severally administered with the Minister The Minister for Environment and Climate Change is responsible for Water. for sections 24–28 of the Act. The remaining provisions are Climate Change Act 2010 administered by the Minister for Sport and Recreation. Coastal Management Act 1995 National Environment Protection Council (Victoria) Act 1995 Commissioner for Environmental Sustainability Act 2003 National Parks Act 1975 Conservation, Forests and Lands Act 1987 Parks Victoria Act 1998 Part 8A of the Act is jointly managed with the traditional owner Pollution of Waters by Oil and Noxious Substances Act 1986 Land Management Board. The Act is jointly administered The Minister for Environment and Climate Change is responsible with the Minister for Agriculture and Food Security. Insofar for sections 8–13, 18–23 and 23B, 23D, 23E, 23G, 23J, 23K, as it relates to the exercise of powers for the purposes of the 23L and 24E. Sections 30 and 47 are jointly administered with Catchment and Land Protection Act 1994, these powers are the Minister for Ports. The Act is otherwise administered by the jointly and severally exercised with the Minister for Water. Minister for Ports. Crown Land (Reserves) Act 1978 Reference Areas Act 1978 This Act is administered by the Minister for Environment and Royal Botanic Gardens Act 1991 Climate Change except for certain specifi ed Crown allotments administered by other Ministers and the Assistant Treasurer. Safety on Public Land Act 2004 Cul-de-sac Applications Act 1965 The Minister for Environment and Climate Change is responsible for the provisions enforcing public safety zones for the purposes This Act is administered by the Minister for Environment and of timber harvesting operations. As it relates to those matters, Climate Change insofar as it relates to the management and the Act is jointly and severally administered with the Minister for administration of the Offi cer of the Registrar-General and Agriculture and Food Security. the Offi ce of Titles. The Act is otherwise administered by the Attorney-General. State Owned Enterprises Act 1992 Environment Protection Act 1970 The Minister for Environment and Climate Change is responsible for Division 2 of Part 2 insofar as it relates to the Victorian Fences Act 1968 Plantations Corporation. The Minister for Water is responsible This Act is administered by the Minister for Environment and for Division 2 Part 2 insofar as it relates to the Water Training Climate Change insofar as it relates to vermin-proof fences in Centre. The Act is otherwise administered by the Minister for Section 19. The Act is otherwise administered by Attorney- Multicultural Affairs and Citizenship and the Treasurer. General. Subdivision Act 1988 Flora and Fauna Guarantee Act 1988 The Minister for Environment and Climate Change is responsible Certain sections of this Act are jointly administered with the for administering this Act insofar as it relates to the management Minister for Agriculture and Food Security. of the Offi cer of the Registrar-General and the Land Titles Offi cer. The Act is otherwise administered by the Minister for Forestry Rights Act 1996 Consumer Affairs and the Minister for Planning. This Act is jointly and severally administered with the Minister for Survey Coordination Act 1958 Agriculture and Food Security. Surveying Act 2004 Forests Act 1958 Sustainability Victoria Act 2005 This Act is jointly and severally administered with the Minister for Agriculture and Food Security.

Department of Sustainability and Environment Annual Report 2012 177 Sustainable Forest (Timber) Act 2004 Appendix 8 This Act is jointly administered with the Minister for Agriculture and Food Security Implementation of Temperance Halls Act 1958 Transfer of Land Act 1958 the Victorian Industry This Act is administered by the Minister for Environment and Participation Policy Climate Change insofar as it relates to the management and administration of the Offi cer of the Registrar-General and the Offi ce of Titles. The Act is otherwise administered by the In October 2003 the Victorian Parliament passed the Victorian Attorney-General. Industry Participation Policy Act 2003 which requires public bodies and departments to report on the implementation of Valuation of Land Act 1960 the Victorian Industry Participation Policy (VIPP). VIPP requires opportunities for local supply and/or participation to be identifi ed Divisions 1 and 2 of Part III and Divisions 4 and 5 of Part III as part of the tendering process. Departments and public where they relate to the determination of appeals by a Land bodies are required to apply VIPP in all tenders over $3 million in Valuation Division of the Victorian Civil and Administrative metropolitan Melbourne and $1 million in regional Victoria. Tribunal are administered by the Attorney-General. Victorian Conservation Trust Act 1972 Contracts commenced Victorian Environment Assessment Council Act 2001 During 2011–12, DSE commenced nine contracts totalling Victorian Plantations Corporation Act 1993 $29.3 million in value to which the VIPP applied. The contracts commenced included one in metropolitan Melbourne with a Wildlife Act 1975 total value of $5.8 million, seven in regional Victoria with a value Certain sections of this Act are jointly administered with the of $15.1 million and one statewide with a value of $8.4 million. Minister for Agriculture and Food Security. The commitments by contractor under VIPP included: Zoological Parks and Gardens Act 1995 • an overall level of local content ranging from 75 to 100 per cent of the total value of the contracts Minister for Water • 116 full-time equivalent jobs Catchment and Land Protection Act 1994 • 22 apprenticeships/traineeships This Act is jointly and severally administered with the Minister for • benefi ts to the Victorian economy in terms of skills and Environment and Climate Change. technology transfer including: staff development program, Conservation, Forests and Lands Act 1987 hydrogeology, formwork construction, pile driving, crane operation and high strength concrete production and curing. The Minister for Water is responsible for administering this Act insofar as it relates to the exercise of powers for the purposes of the Catchment and Land Protection Act 1994. These Contracts completed powers are jointly and severally exercised with the Minister for During 2011–12, DSE completed seven contracts totalling Environment and Climate Change. $34.4 million in value to which VIPP applied. The contracts Groundwater (Border Agreement) Act 1985 included two in metropolitan Melbourne with a total value of $16.9 million, four in regional Victoria with a total value of $8.5 Melbourne Water Corporation Act 1992 million and one statewide with a total value of $9 million. Murray Darling Basin Act 1993 The outcomes reported by contractors under VIPP included: State Owned Enterprises Act 1992 • an overall level of local content ranging from 95 to 100 per The Minister for Environment and Climate Change is responsible cent of the total value of the contracts for Division 2 of Part 2 insofar as it relates to the Victorian • 46 full-time equivalent jobs Plantations Corporation. The Minister for Water is responsible for Division 2 Part 2 insofar as it relates to the Water Training • six apprenticeships/traineeships Centre. The Act is otherwise administered by the Minister for • benefi ts to the Victorian economy in terms of increased skills Multicultural Affairs and Citizenship and the Treasurer. and technology transfer including: onsite training in bridge Water Act 1989 construction, software developed for data capture and the use of GPS in groundwater sampling. Water Effi ciency Labelling and Standards Act 2005 Water Industry Act 1994 This Act is administered by the Minister for Water except for Parts 4, 4A, 7 and 8, which are administered by the Minister for Environment and Climate Change.

178 Department of Sustainability and Environment Annual Report 2012 Appendix 9 Appendix 11 Consultancies and Compliance with the major contracts Building Act 1993

DSE complies with the Building Act 1993, the Building Consultancies Regulations 2006 and associated statutory requirements and amendments. Either an Occupancy Permit or a Certifi cate of Details of consultancies greater than $10,000 Final Inspection is obtained for new facilities or for upgrades to The department did not engage any consultants during existing facilities endorsed by a Municipal Building Surveyor or a 2011–12 where the total fees payable were valued in excess Registered Building Surveyor Practitioner. of $10,000 (exclusive of GST). Major works projects commenced or completed in 2011–12 Details of consultancies less than $10,000 include: The department did not engage any consultants during • Erica offi ce refurbishment 2011–12 where the total fees payable were valued at less • Alexandra greenfi elds site than $10,000 (exclusive of GST). • Anglesea offi ce and depot redevelopment Major contracts • Daylesford depot redevelopment During 2011–12, DSE did not enter into any contracts greater • Heidelberg offi ce refurbishment than $10 million in value. • Laverton statewide seed shed Appendix 10 • Toolangi offi ce and carpark. National Competition Maintenance of buildings in a safe and serviceable condition Policy DSE’s leased portfolio is managed by the Department of Treasury and Finance’s Shared Service Provider. In 1996, the federal, state and territory governments agreed DSE has a facilities management contract with Five D Holdings to review and, where appropriate, reform all existing legislative Pty Ltd for the balance of its owned portfolio across 190 sites. restrictions on competition. Under National Competition Policy, The owned portfolio includes offi ces, combined offi ce/depot the fundamental legislative principle is that legislation, including sites, depots, residences, airbases and fi re lookout towers. future legislative proposals, should not restrict competition Five D is responsible for maintaining the buildings in a safe and unless it can be demonstrated that: serviceable condition and for providing the annual essential • the benefi ts of the restriction to the community as a whole safety measures report for the buildings. Quality assurance, outweigh the costs performance measures and governance are incorporated into the contract to ensure that contract requirements are met and • the objectives of the legislation can only be achieved by standards maintained. restricting competition. The department completed a full hazardous substances and DSE has reviewed all legislation under its control, and continues dangerous goods audit at all managed sites in 2010–11. to apply the competition assessment guidelines in the Victorian Works connected with the audit began in 2011–12. Guide to Regulation to all new legislative proposals. Competitive neutrality requires government businesses to ensure where services compete – or potentially compete – with the private sector, any advantage arising solely from their government ownership be removed if they are not in the public interest. Government businesses are required to cost and price these services as if they were privately owned and thus be fully cost refl ective. Competitive neutrality policy provides government businesses with a tool to enhance decisions on resource allocation. This policy does not override other policy objectives of government and focuses on effi ciency in the provision of service. DSE is working to ensure that the department fulfi ls its requirements on competitive neutrality.

Department of Sustainability and Environment Annual Report 2012 179 The average processing time was 55 days. The number of days Appendix 12 taken was: Freedom of Information Number Per cent

The Freedom of Information Act 1982 gives everyone the 0 – 45 days 65 58% right to seek access to documents held by government. The department’s Freedom of Information (FOI) Unit can be 46 – 90 days 26 23% contacted on 9637 8186. FOI requests have to be made in writing. A request can be 91+ days 22 19% submitted using the website FOI Online (www.foi.vic.gov.au) or by sending an application to: The department also responded to an additional 23 requests. The outcomes were: Freedom of Information Department of Sustainability and Environment PO Box 500 Number East Melbourne Victoria 3002 Request not processed * 15 From 1 July 2012, the application fee to make an FOI requests is $25.10. For people on a low income, DSE can waive this fee. Transferred 8 There may be further charges depending on the time it takes to ﬁ nd the documents and photocopy them and the number of *Request not processed includes: Act does not apply as documents are pages to be photocopied. available for payment of a fee; all requested documents released outside For the period 1 July 2011 to 30 June 2012, the department the Act; request withdrawn by applicant; deposit or access charges not received 120 new FOI requests. They came from: paid.

The Secretary received 12 applications for an internal review of Number Per cent decisions to deny access to some or all documents requested. The results of these internal reviews were: Individuals 29 24%

Lawyers 33 28% Number

Journalists 17 14% Original decision upheld 10

Members of Original decision varied 2 22 18% Parliament Original decision overturned 0 Community groups 7 6% Three applications for review of an FOI decision were made Companies 12 10% to the Victorian Civil and Administrative Tribunal (VCAT). VCAT varied the agency decision for one application. The second was withdrawn and the third is ongoing. Two applications received in the previous fi nancial year were also fi nalised this year. VCAT The total number of requests received was similar to the number affi rmed the decision on one and the second application was received in 2010–11. The department received a similar number withdrawn. of requests from Members of Parliament (22 compared to 18 in 2010–11) and journalists (17 compared to 19 in 2010–11). Fewer requests were received from individuals (29 compared Ombudsman enquiries to 46 in 2010–11). A greater number of requests were received The Ombudsman referred 19 general enquiries and/or from lawyers (33 compared to 27 in 2010–11). complaints to the department in 2011–12. For the same period, the department made decisions on 113 Of these enquiries, 17 were satisfactorily resolved on receipt requests. Twenty-seven of these requests were received during of the department’s response. One enquiry is ongoing. the previous fi nancial year. The outcomes were: The Ombudsman investigated one departmental project in 2011–12. While the investigation found no fault with the Number Per cent department’s processes, the Ombudsman did recommend that the department enhance relevant policies in relation to Full access granted 41 36% these processes. Partial access No formal complaints were received from the Ombudsman 46 41% granted about FOI requests handled by the department.

Access denied 11 9%

No relevant 15 14% documents found

180 Department of Sustainability and Environment Annual Report 2012 Alternatively disclosures of improper conduct of detrimental Appendix 13 action by the department or its employees may also be made Compliance with directly to the Ombudsman. The Ombudsman Victoria the Whistleblowers Level 9, 459 Collins Street (North Tower) Melbourne Victoria 3000 Protection Act 2001 Telephone: (03) 9613 6222 Toll free: 1800 806 314 Internet: www.ombudsman.vic.gov.au The Whistleblowers Protection Act 2001 encourages and Email: [email protected] assists people in making disclosures of improper conduct by public offi cers and public bodies. The Act provides protection to people who make disclosures in accordance with the Act Further information and establishes a system for the matters disclosed to be Written guidelines outlining the system for reporting disclosures investigated and rectifying action to be taken. of improper conduct or detrimental action by the department or DSE is committed to the aims and objectives of the its employees are available on the department’s website: Whistleblowers Protection Act 2001. It does not tolerate www.dse.vic.gov.au. improper conduct by its employees, offi cers or members, nor the taking of reprisals against those who come forward to Disclosures under the Whistleblowers disclose such conduct. Protection Act 2001 The department recognises the value of transparency and accountability in its administrative and management practices, The number and types of disclosures for the period 1 July 2011 and supports the making of disclosures that reveal corrupt to 30 June 2012: conduct, conduct involving a substantial mismanagement of public resources, or conduct involving a substantial risk to Disclosures Number public health and safety or the environment. Number of disclosures meeting the requirements 0 DSE will take all reasonable steps to protect people who make of Part 2 of the Act, made to the department such disclosures from any detrimental action in reprisal for making the disclosure. It will also afford natural justice to the Number of disclosures referred to the 0 person who is the subject of the disclosure to the extent it is Ombudsman legally possible. Number of disclosures referred to the 0 department by the Ombudsman Reporting procedures Number of disclosures referred by the 0 Disclosures of improper conduct or detrimental action by department to the Ombudsman to investigate the department or its employees may be made to the following offi cers: Number of investigations of disclosures taken 0 over by the Ombudsman from the department Protected Disclosure Coordinator Ms Jennifer Berensen Number of requests by complainants to have 0 Senior Adviser, Privacy and Ombudsman their disclosure investigated by the Ombudsman PO Box 500 East Melbourne Victoria 3002 Number of disclosures the department has 0 Telephone: (03) 9637 8697 declined to investigate Fax: (03) 9637 8128 Email: [email protected] Number of disclosed matters that were 0 substantiated on investigation Protected Disclosure Offi cer Number of recommendations made by the 0 Ms Kim Reeves Ombudsman related to the department Manager, FOI Privacy and Ombudsman PO Box 500 East Melbourne Victoria 3002 Telephone: (03) 9637 9730 Fax: (03) 9637 8128 Email: [email protected]

Department of Sustainability and Environment Annual Report 2012 181 • reporting for the monthly water report, the annual water Appendix 14 quality reports and the longer-term water quality trend reports. Water Resource All surface water data collected through the partnerships is available via the Victorian Water Resources Data Warehouse (www.vicwaterdata.net). Summary reports on historical longer- Assessment Program term trends of surface water quality and the current status water quantity are available on the data warehouse and the Monthly Water Report on www.water.vic.gov.au. Background Victorian water resources data warehouse Under Section 22 (1) of the Water Act 1989, the Minister is The Victorian Water Resources Data Warehouse required to ensure that a continuous program of assessment (www.vicwaterdata.net) was launched in June 2000 and of the water resources of the state is undertaken. Under contains current and historical information on stream fl ow, Section 22 (2), the water resources assessment program must groundwater levels, water quality and river health for Victoria. provide for the collection, collation, analysis and publication of information about: A project to replace the Victorian Water Resources Data Warehouse began in April 2009 and is due to be completed (a) the availability of water, including surface water and in late 2012. The system is based on industry standard groundwater software Hydstra, and will increase the access and useability of (ab) the use of one water source as a substitute for another groundwater and surface water information. water source Groundwater (ac) the environmental water reserve Groundwater occurrence varies in size and volume throughout (b) the disposal of wastewater (including trade waste, Victoria. It lies beneath all parts of the state but is not always sewage and saline water) useable. Its potential for use is generally dependent on salinity and how much water can be extracted (aquifer yield). The (c) the use and re-use of water resources location of aquifers is independent of surface water basins, with (d) fl oodwaters some aquifers extending beneath several. (e) drainage and waterway management While groundwater can be a reliable source of water, its overuse can result in failure of supply. Groundwater has a value when it (f) water quality (including salinity) is extracted for a range of uses including irrigation, commercial, (g) in-stream uses of water urban or stock watering, and when left in situ where it may support groundwater dependent ecosystems including (ga) current and historic levels of allocation and use of surface contributing to base fl ow in streams and wetlands or supporting water and groundwater a variety of terrestrial fl ora. (gb) current and historic condition of waterways and aquifers Victoria monitors around 2500 bores on a quarterly basis to (h) anything else that the Minister decides is appropriate. understand the groundwater level trends. Additionally, rural water corporations conduct monthly monitoring of about 500 Section 26 of the Act requires DSE to report annually on these bores. Accurate monitoring data is important and helps with the areas. The information below summarises the processes in resolution of management issues, questions or disputes raised place to collect and provide information about these areas. by groundwater users. Groundwater supplies across Victoria are showing signs of a) Availability of water improvement following record rainfalls. After two years of above average rainfall, levels in groundwater management units are Surface water continuing to recover. In June 2012, 44 of the 61 groundwater The state’s surface water resources assessment network management units were showing either stable or increasing comprises around 770 sites monitored through four regional short term trends. Increasing groundwater levels are usually water monitoring partnerships. These partnerships comprise 43 found in shallower water table aquifers. Deeper aquifers respond public and private organisations, and include state government extremely gradually to changes in use and rainfall and could departments and statutory bodies, water corporations, take many years to recharge. catchment management authorities, local shires and councils, the Bureau of Meteorology, the Murray-Darling Basin Authority All groundwater data, including data collected during 2011–12, and other regional bodies. is available via the Victorian Water Resources Data Warehouse (www.vicwaterdata.net). Summary reports on historical Surface water monitoring services are procured by DSE on longer term trends in groundwater levels across the state are behalf of the regional water monitoring partnerships to ensure available on the departmental website (www.water.vic.gov.au). effi ciency and statewide consistency in data quality. Information on groundwater use and trends is also provided in The program delivers legislative obligations under section 22 the annual Victorian Water Accounts. of the Act and section 126 of the Commonwealth Water Act 2007 and contributes to a range of business needs across the ab) Use of one water source as a partnership including: substitute for another water source • operational decision making Under Ministerial Reporting Direction 03, water corporations are • compliance reporting required to provide information in their annual reports on how they addressed obligations to meet the initiatives contained • fl ood warning in the government’s sustainable water use objectives. This • statewide policy development for water resources includes any projects undertaken to meet targets set in the entity’s corporate plan to deliver water recycling and water • river health management conservation. Water corporations’ annual reports are tabled in Parliament. 182 Department of Sustainability and Environment Annual Report 2012 ac) Environmental water reserve Barmah-Millewa Environmental Water Allocation, and 81 billion litres was delivered from water available under other Victorian The Environmental Water Reserve (EWR) is the legal term for environmental entitlements. water set aside for the environment under the Water Act 1989. The EWR comprises water defi ned by: Environmental water delivery during 2011–12 benefi ted 59 Index of Stream Condition river reaches and 10 wetlands including: • entitlements for the environment which are called either environmental bulk entitlements or environmental entitlements • Thomson, Macalister, Yarra and Moorabool rivers in southern Victoria • the operation of caps on licensed consumptive water use (such as sustainable diversion limits or permissible • Wimmera, McKenzie and Glenelg rivers in western Victoria consumptive volumes), and conditions on consumptive • Corangamite wetlands including Hospital swamps bulk entitlements, licences and permits, and as set out in management plans. • Goulburn, Campaspe and Loddon rivers and Broken, Gunbower, Birches in northern Victoria, and Sandilong creeks The majority of the EWR is set aside through the latter. • Living Murray Icon sites – including Barmah-Millewa Forest, In regulated systems, the EWR is established through Gunbower Forest and Lindsay Island (Lake Wallawalla) in environmental entitlements, environmental bulk entitlements and northern Victoria various operational conditions on consumptive water use. The environmental entitlements and environmental bulk entitlements • Mallee River Murray wetlands – including Lake Powell and refer to water usually held in and released from storages. They Heywoods Lake in northern Victoria are held by the Victorian Environmental Water Holder (VEWH), • Mallee wetlands – including Roselyn wetland and Barbers which was established on 1 July 2011 as an independent Swamp in northern Victoria statutory body responsible for making decisions on the most effi cient and effective use of Victoria’s environmental water • Round and Cardross lakes – important habitat for the entitlements. Environmental watering decisions by the VEWH threatened Murray Hardyhead in northern Victoria. are guided by seasonal watering proposals prepared by each of Full details of 2011–12 environmental watering activities will the catchment management authorities and Melbourne Water. be provided in the Victorian Environmental Watering Booklet, VEWH weighs the regional priorities identifi ed in these proposals currently under development. Previous watering booklets can be to develop an annual seasonal watering plan for the state. The found on the DSE website (www.water.vic.gov.au/environment/ plan specifi es the objectives for the use of the water, planned rivers/fl ows). storage releases and monitoring requirements. The operation of the VEWH is overseen by the Minister for Environment and In unregulated rivers, the EWR is set aside either through Climate Change. Further details about VEWH can be found on conditions on licences, caps or through statutory water its website (www.vewh.vic.gov.au). management plans. Water corporations are responsible for ensuring that these conditions for the EWR are met. The Water Holdings held by VEWH increased during 2011–12 through a number of entitlement amendments and issuing of During 2011–12, the State Government implemented improved new environmental entitlements. Amendments were made to the environmental fl ows and management conditions in priority, fl ow Macalister River Environmental Entitlement 2010 (increasing the stressed unregulated and regulated rivers by: entitlement volume by 8 billion litres) and the Bulk Entitlement • fi nalising Victoria’s fi rst integrated surface water and (Goulburn system – Snowy Environmental Reserve) Order 2004 groundwater management plan for the Upper Ovens River (increasing the entitlement volume by 21.5 billion litres). Two new entitlements were granted to provide the environment’s • continuing the development of two other streamfl ow one-third share of audited water savings from the Northern management plans Victoria Irrigation Renewal Project (NVIRP), through the creation of the Environmental Entitlement (River Murray – NVIRP Stage 1) • expanding the use of smart meters to provide real time 2012 (audited long-term average savings of 5.5 billion litres) and information on water use and stream fl ows, enabling better Environmental Entitlement (Goulburn System – NVIRP Stage 1) fl ow sharing arrangements to manage Victoria’s water 2012 (audited long-term average savings of 23.4 billion litres). resources These entitlements replace the original entitlements granted in • improving estimates of water interception by farm dams 2010. Increases to the Water Holdings also occurred through throughout the state the transfer of 41 water shares from Water for Rivers, the joint government enterprise established to undertake the water • progressing the revision of the FLOWS methodology for recovery under the Snowy River Water Recovery Program. determining water requirements for streams and the Estuary Environmental Flows Assessment Methodology During 2011–12, central and eastern Victoria had higher than average rainfall, particularly in East Gippsland, with most of • fi nalising the Western Region and Gippsland Region the rest of the state having close to average conditions. The sustainable water strategies exceptions were parts of the Corangamite, Glenelg Hopkins and • continued discussions with North East Water about co- Mallee catchment management areas with signifi cantly lower investment to improve environmental fl ows in the Ovens River than average rainfall. In most of the state, environmental water use was lower than the volume available allowing VEWH to carry • working with East Gippsland Water and East Gippsland over water for 2012–13. Catchment Management Authority to complete a business case for the removal of Nicholson River Dam. More than 516 billion litres of environmental water was delivered in Victoria in 2011–12, including water from the Living Murray Program (96 billion litres) and the Commonwealth Environmental Water Holder (198 billion litres). Additionally, more than 141 billion litres was delivered to Barmah Forest from water available under the Victorian component of the

Department of Sustainability and Environment Annual Report 2012 183 b) Disposal of wastewater (including trade emergency management arrangements. Roughly one third of waste, sewage and saline water) these recommendations relate to DSE’s portfolio. In response to the report, DSE is working collaboratively with Regional water corporations are required to provide a relevant agencies to improve and enhance fl ood information in performance report on wastewater disposals, as part of the three key areas: report of operations in their annual reports. The performance report includes indicators related to fi nancial, service delivery • Flood gauging improvements: upgrades to existing river and environmental performance. Specifi c wastewater indicators heights gauges and installation of new rainfall and river height are prepared for reliability of collection services, quality of gauges. disposal and management. The annual reports are tabled in • Flood mapping and risk assessments: mapping fl oods for Parliament. use in emergency response and land use planning, and the identifi cation of mitigation measures. c) Use and re-use of water resources • Flood intelligence platform: a software platform that integrates See section ab) above, ‘The use of one water source as a fl ood observations and fl ood mapping with potential impacts substitute for another water source’. before, during and after a fl ood event. This software will enable better agency cooperation and inform communities d) Floodwaters with locally specifi c fl ood advice. To date, upgrades to river heights gauges have focused on Floodplain management the regions affected by the 2011 fl oods, with some 40 gauge DSE is the lead agency for coordination of fl oodplain upgrades completed or underway. Funding has been provided management in Victoria. One of its primary functions is to help through the Natural Disaster Resilience Grants Scheme for 13 reduce fl ood risks and reduce the costs of damages to the fl ood mapping studies in 2011–12, and applications for community. DSE assists catchment management authorities 2012–13 are being considered jointly with the Offi ce of the and municipalities to improve their knowledge of fl ood risk Emergency Services. Extensive consultation is underway to locations and ensuring that new development is compatible with identify and scope the key requirements for the fl ood the fl ood risk. intelligence platform. Regional fl oodplain management strategies developed by DSE has also provided information to the Environment and each catchment management authority provide a framework Natural Resources Committee (ENRC) Parliamentary Inquiry into through which high priority fl ood studies are carried out and Flood Mitigation Infrastructure in Victoria. This inquiry is due to fl oodplain management strategies are implemented. These are table its report on 31 August 2012. generally funded using a combination of local, state and federal Completion of the updated Victoria Flood Management Strategy funding. DSE contributes to the funding, provides input where will be informed by the outcomes of the Victorian Floods Review appropriate, helps assess funding bids and monitors progress. and the ENRC Inquiry. Following major fl ooding in 2010–11, Victoria experienced DSE has also been working closely with other departments and signifi cant fl ood events in March 2012 in the north-east of the agencies on sea level rise issues. In June 2012, the Victorian state, and in June 2012 in Gippsland and the central region. Government announced a policy position on appropriate These fl oods were of a lesser scale than those in 2010–11, development in Victoria’s seaside communities. In line with the but still caused signifi cant damage to many communities. new policy, DSE has developed guidelines to help catchment DSE provided numerous support staff, as required, to SES-led management authorities make decisions about building in operations at the state and incident level. areas subject to possible sea level rise, when referred planning The experiences of the 2010–11 fl oods provided valuable applications from council. The updated guidelines will help local lessons for agencies in responding to operational and strategic governments manage risks from future sea level rise and allow issues in the 2012 fl oods. For example: appropriate development in coastal towns. • Though not to the same extent as in 2011 in Mildura and DSE is working with relevant councils on four local coastal the Lower Loddon, the experience gained then in the hazard assessments, in priority coastal areas to help them plan management of residual water was applied in the Broken for potential fl ooding associated with sea level rise and storm Creek system. surges. • The 2010–11 fl oods highlighted a need for short-term, real time water level information to be accessible from locations e) Drainage and waterway management without permanent fl ood gauging stations. In the March 2012 fl oods, ten Portable Automated Logger Systems (PALS) Waterway management were deployed to relay water levels in Broken Creek to the The implementation of waterway management actions is the Incident Control Centre in Shepparton. These PALS will also responsibility of catchment management authorities across be available for future events through DSE’s Regional Water Victoria and Melbourne Water in the Port Phillip and Western Monitoring Partnerships. Port region under the Water Act 1989. In 2011–12 the State Government invested more than $23.3 million in the protection • A FloodMap facility has been incorporated into DSE’s and restoration of Victoria’s rivers and wetlands. As the FireWeb, as one of the fi rst steps in the transition to an all caretakers of river health, catchment management authorities hazards approach to emergency management. FloodMap invest these funds according to agreed works programs and makes the spatial information that has been gathered in the at the end of the year report their achievements. The delivery Victoria Flood Database over many years readily available to of projects and services through these agreed works programs fl ood response operational staff. is tracked and reported annually through performance reports. In December 2011, the Victoria Flood Review (of fl ood warnings These reports are consolidated to demonstrate the statewide and response to the 2010–11 events) released its Final Report. effort to protect and restore the health of Victoria’s rivers and The report made 93 recommendations for reform to Victoria’s wetlands. For many catchment management authorities,

184 Department of Sustainability and Environment Annual Report 2012 2011– 12 has again meant responding to major fl oods and SAFE is funded by the Commonwealth Government to progress working with local community to restore damaged rivers and the management of groundwater in Victoria. The SAFE project fl oodplains, including actions to repair stream erosion and will ensure all of Victoria’s groundwater is included in an damaged fencing. appropriate management area and that there is consistency in the way groundwater is managed across the state. This includes f) Water quality (including salinity) developing: • management boundaries across the state so that Surface water quality monitoring program management responsibilities can be geographically allocated Water quality monitoring is conducted at about 300 partnership • guidance for decisions about managing each area sites across the state. A range of water quality parameters are either continuously monitored or sampled at regular intervals • guidelines for better determining the volume of groundwater from these sites, and cover a range of physical, chemical, available for use. nutrient, metal, anion, cation, organic load and algal analyses. Data from the monitoring network is made publicly available gb) Current and historic condition of through the Victorian Water Resources Data Warehouse. waterways and aquifers g) In-stream uses of water Assessment of river, wetland and estuary condition Stream use Waterway condition or health in Victoria is measured using a number of integrated monitoring tools known as the Index Refer to the ‘Environmental water reserve’ section above for of Stream Condition (ISC), Index of Wetland Condition (IWC) details regarding the in-stream use of water and the Index of Estuary Condition (IEC). These assessments are carried out every eight years and they measure statewide ga) Current and historic levels of condition and the long-term effectiveness of the river health allocation and use of surface water and rehabilitation programs. The results of the third ISC assessment are undergoing fi nal analysis, before their release in the second groundwater half of 2012. A similar program has been developed for wetlands, where 587 priority wetlands were assessed for the Groundwater fi rst time during 2010–11. An Index of Estuary Condition (IEC) is Groundwater is extracted for a variety of purposes, including in the fi nal stages of being trialled across 40 estuaries. town water supply, rural domestic consumption, stock watering, irrigation and industry. Areas of signifi cant demand are classifi ed h) Victorian Water Accounts as water supply protection areas (WSPAs) or groundwater management areas (GMAs). The Victorian Water Accounts (VWA) is an annual statewide summary of Victoria’s water resources. The Victorian Water In 2010–11, groundwater take and use licence entitlements Accounts 2009–2010, the seventh annual report to provide a totalled around 1000 billion litres with 200 billion litres extracted, summary of water availability, water allocation and use at bulk which is signifi cantly less than the volume used in 2009–10. water supply level, was publicly released in October 2011. In 2010–11, groundwater accounted for approximately 7 per Including a statewide overview and basin water accounts for the cent of total water used in Victoria. Urban use accounted for 29 Victorian river basins, the accounts form a publicly available approximately 5 per cent of total groundwater used, domestic record of surface water and groundwater resources for the and stock using 27 per cent and the Latrobe Valley coal water year 1 July 2009 to 30 June 2010. mines approximately 13 per cent. The remaining groundwater extracted was for irrigation, commercial purposes and for Published in hard copy and online, the VWA documents water salinity control. availability and provides assessments of rainfall, streamfl ow and groundwater levels, as well as water storage information. Around 70 towns have a groundwater entitlement as either a Information regarding water taken for consumptive use and supplementary or primary water supply however, due to the water set aside for environmental purposes is provided in wetter conditions and availability of surface water resources in the context of the Victorian water allocation framework. The 2010–11, only 57 of these licences recorded any extraction. framework sets out entitlements to water. Information on reuse These towns include the major rural centres of Geelong of treated wastewater is also reported in the accounts. and Ballarat. In 2010–11, approximately 11 billion litres of groundwater was extracted for urban supply. The largest The VWA sources key data from the state’s surface water urban user is the City of Greater Geelong, with extraction of and groundwater monitoring networks, and draws on approximately three billion litres. information from water businesses, DSE, the Essential Services Commission, the Murray-Darling Basin Authority and catchment Increased demands for access to groundwater have come management authorities. from a range of sources including exploration and mining. New earth resource technologies are also looking to groundwater The 2009–2010 VWA complements the work being undertaken to support their extraction processes. In order to manage within Victoria and nationally to improve on water accounting groundwater effectively across the state, the Secure Allocations, and reporting. Future Entitlements (SAFE) project was initiated.

Department of Sustainability and Environment Annual Report 2012 185 • promoting greater indigenous involvement in water Appendix 15 management by awarding four full scholarships to indigenous Victorians to study the Graduate Certifi cate of River Health Sustainable water Management (Action 9.1) • coordinating stakeholder feedback, through the Victoria’s strategies Basin Plan Advisory Group, and providing Victorian input into the development of the Murray-Darling Basin Plan (Actions Sustainable water strategies set out long-term plans to secure 3.1 to 3.5, 7.1 and 7.3). each region’s water future. The strategies identify threats to Given the close links between the remaining Northern water availability in the region and identify policies and actions Region SWS actions and the Murray-Darling Basin Plan, to help water users, water corporations and catchment and the signifi cant implications the Basin Plan will have on management authorities manage and respond to those threats water management in northern Victoria, DSE will undertake over the next 50 years. a stocktake of any remaining or ongoing Northern Region Four regional sustainable water strategies that cover the state SWS actions to determine the best way to build them into the were produced between 2006 and 2011. The fi rst strategies arrangements for implementing the Basin Plan, and in doing so, completed were the Central Region Sustainable Water Strategy draw these actions to a close. This stocktake will occur shortly (SWS) in 2006 and the Northern Region SWS in 2009. The after the Basin Plan is fi nalised (expected second half of 2012). Gippsland Region SWS and the Western Region SWS were completed in November 2011. Western Region and Gippsland Region Further information on sustainable water strategies is available Sustainable Water Strategies on the DSE Water website http://www.water.vic.gov.au/ programs/sws The Western Region and Gippsland Region Sustainable Water Strategies were released on 10 November 2011. Background The Western Region covers agricultural and urban centres including Colac, Port Campbell, Horsham, Stawell, Ararat, Under section 22J of the Water Act 1989, DSE is required to Hamilton, Warrnambool and Portland. River basins include include in its annual report an update on any current sustainable the Otway coast, Corangamite, Hopkins, Glenelg, Portland, water strategies and on any current draft strategies. The report Millicent, Wimmera, Avoca and the southern half of the Mallee. must: The Gippsland Region spans the area south of the Great (a) specify the measures being taken to implement the strategy Dividing Range in Victoria from the Latrobe River catchment (b) identify the priorities that apply to actions required by the and the Strzelecki Ranges, to the New South Wales border implementation plan. in the east. The larger urban centres within the region include Warragul, Traralgon, Wonthaggi, Sale and Bairnsdale. SWS actions implemented in previous fi nancial years are reported in corresponding DSE annual reports. The two strategies include a number of common policies and actions as well as region-specifi c policies and actions. Common Northern Region Sustainable Water policy themes include: Strategy • recognising existing rights and confi rming that permanent changes to existing entitlements cannot be made arbitrarily The Northern Region includes Victoria’s share of the River • improving understanding of risks to water resources, including Murray, and its Victorian tributaries – the Kiewa, Ovens, Broken, climate variability and uses of water that are outside the Goulburn, Campaspe and Loddon river systems. Major urban entitlement framework centres in the region include Wodonga, Wangaratta, Benalla, Shepparton, Bendigo, Swan Hill and Mildura. • establishing local management plans to clearly document water sharing arrangements DSE, water corporations and catchment management authorities continue to implement actions from the Northern • ensuring the management of licensed groundwater use is Region SWS following its release on 9 December 2009. Most better aligned with the characteristics of each groundwater actions in the Northern Region SWS have been completed or system are of an ongoing nature. A number of remaining actions are • encouraging existing water supplies to be used as effi ciently linked to the Murray-Darling Basin Plan, which is expected to be as possible through a number of actions, and allowing more fi nalised in the second half of 2012 and will set new ‘sustainable water to be allocated where it is available under caps and diversion limits’ on water consumption in northern Victoria. risks to third parties are low Key actions progressed in 2011–12 include: • protecting the region’s environment, including setting • establishing the Victorian Environmental Water Holder in July precautionary caps on consumptive use in unregulated rivers 2011 (Action 7.2) • greater involvement of traditional owners. • reviewing water restrictions and permanent water savings The Western Region SWS looked closely at the potential measures (Action 8.4) adverse impacts of signifi cant land use change on water • continuing to review and refi ne carryover, spillable water availability and set out a statewide framework for monitoring account and reserve rules to ensure they are working and managing this impact in resource stressed areas. It also effectively (Action 5.4) considered and identifi ed actions in relation to the water sharing and management arrangements for the new • updating water corporations’ water supply-demand strategies Wimmera-Mallee pipeline. and drought response plans (Action 8.1)

186 Department of Sustainability and Environment Annual Report 2012 The Gippsland Region SWS includes an action to establish a Central Region Sustainable drought reserve in Blue Rock Reservoir to provide entitlement- holders on the Latrobe River system with access to additional Water Strategy temporary supplies in times of drought. It also includes actions The Central Region includes greater Melbourne, and the urban to provide additional water for the environment in the Thomson centres of Geelong, Ballarat, Sunbury, Bacchus Marsh and parts River (8 gigalitres) and the Latrobe River (10 gigalitres). The of West Gippsland. The Central Region SWS includes a series strategy also identifi ed policies and actions to manage of actions and augmentations to meet the region’s water needs extractive industries and the impacts of mining on other for the next 50 years. The strategy was released in 2006, and groundwater users. updated in 2007 when the previous State Government released After the release of the strategies in November, implementation its Water Plan, in response to continued low rainfall across the plans have been developed for each action and the various state. tasks have been allocated to DSE, water corporations or Most actions in the Central Region SWS have been catchment management authorities to implement in accordance implemented or are of an ongoing nature. The government is with the strategy timelines. Progress on implementation will be focused on implementing the Living Melbourne, Living Victoria reported in next year’s annual report. initiative, which aims to establish Victoria as a world leader Initial progress made since the release of the strategies includes: in integrated water cycle management. The government has established the Offi ce of Living Victoria to deliver key aspects • continuing to progress planning required to upgrade and of this initiative, including administering the Leading the Way – refi ne the groundwater monitoring network (Gippsland Living Victoria Fund and preparing Integrated Water Cycle Plans Region SWS Action 3.8 (GR 3.8), Western Region SWS for Melbourne’s four main growth areas and inner Melbourne. Action 4.9 (WR 4.9) Further information on the Living Melbourne, Living Victoria initiative can be found at www.water.vic.gov.au/livingvictoria • signifi cantly progressing the sale of growth water saved through the Wimmera-Mallee Pipeline Project (WR 6.3) DSE will undertake a stocktake of any remaining or ongoing Central Region SWS actions to explain how they relate to the • continuing to identify potential new groundwater management Living Melbourne, Living Victoria initiative and confi rm how they boundaries, which will progressively established over the next will be drawn to a close. few years (GR 3.15, WR 4.1) • commencing a program to monitor and track water use outside the entitlement (GR3.14, WR 3.4) • updating water corporations’ water supply-demand strategies and drought response plans (GR 4.8, 5.3, 6.6, 6.9, 7.3, WR 3.16, 7.2, 8.2, 9.1, 10.1) • promoting greater indigenous involvement in water management by awarding four full scholarships to Indigenous Victorians to study the Graduate Certifi cate of River Health Management (GR 4.12, WR 3.24).

Department of Sustainability and Environment Annual Report 2012 187 Appendix 16 Environmental contributions

Legislation was passed in September 2004 requiring water 2011–12 was the ﬁ nal year of the second tranche of the authorities to make an environmental contribution to fund environmental contribution, which collected $277 million over initiatives to improve the sustainable management of water, the four-year period. This resulted in the following expenditure equivalent to 5 per cent of urban authorities’ revenues and 2 per against approved initiatives consistent with the purposes of the cent of rural water authorities’ revenues. In September 2006, environmental contribution – $68.9 million in 2008–09; $68.2 the previous government approved the continuation of the million in 2009–10; $47 million in 2010–11 and $42 million in rates for a second tranche of the environmental contribution to 2011–12. In addition, $60.9 million of Living Murray Initiative commence in 2008–09. expenditure, funded from the second tranche, was incurred in 2007–08. Section 195 of the Water Industry Act 1994 requires the department to report on the details of expenditure funded by environmental contributions by water supply authorities in its annual report.

2009–10 2010–11 2011–12 Program title Expenditure Expenditure Expenditure $'000 $'000 $'000 Output Groundwater management 1,340.6 2,114.0 2,399.3 Policy and management of unregulated rivers 2,117.3 620.9 1,732.1 Environmental Water Reserve management 3,835.9 4,608.3 5,470.9 River health monitoring 5,185.6 1,765.6 2,280.0 Large scale river restoration 12,385.2 12,417.5 11,449.3 Farm catchments and modernisation 2,998.4 3,000.0 3,000.0 Sustainable water strategies 1,355.8 933.8 555.7 Manage water risks – climate variability 772.4 408.5 831.5 Unbundling and water register 1,318.9 1,444.6 1,484.3 Improved accounting of water resources 1,659.5 1,923.6 1,647.8 Continue the Werribee Vision 1,458.8 3,223.4 3,069.5 Groundwater Monitoring and Assessment Program 109.4 726.6 0.0 Bulk entitlements and water sharing agreements compliance framework 26.0 169.4 369.5 Water policy administration 10.4 185.6 71.7 Regional water management capability 590.2 681.8 723.3 Small Towns Water Quality Fund 233.1 89.7 97.6 Stormwater and urban recycling 1,524.3 2,290.6 1,257.3 Top 1500 industry program 185.8 373.1 28.4 Water Smart Garden and Homes Rebate 3,894.2 4,519.2 1,591.1 Water Smart Farms 2,499.1 2,500.0 0.0 Onsite recycling projects 1,350.0 0.0 0.0 CMA regional works program 1,000.0 0.0 0.0 Groundwater Management and Assessment Program 1,099.0 0.0 0.0 State Observation Bore Network (SOBN) 30.9 0.0 0.0 Total projected output funding 46,980.6 43,996.3 38,059.4 Asset State Observation Bore Network (SOBN) 153.3 0.0 0.0 Groundwater management – technical appraisals 348.2 0.0 0.0 Foodbowl modernisation project 14,500.0 0.0 0.0 Small Towns Water Quality 4,190.7 3,029.2 3,904.7 Stormwater and urban recycling 1,419.6 0.0 0.0 Continue the Werribee Vision 600.0 0.0 0.0 Total projected asset funding 21,211.8 3,029.2 3,904.7 Total Environmental Contribution Tranche 2 68,192.4 47,025.5 41,964.1

188 Department of Sustainability and Environment Annual Report 2012 Appendix 17 Appendix 18 Acronmyns Additional information AAS Australian Accounting available on request Standards

AIIMS Australasian Inter-service In compliance with the requirements of the Standing Directions Incident Management System of the Minister for Finance, details in respect of the items listed below have been retained by the department and are available ARI Arthur Rylah Institute for to the relevant ministers, Members of Parliament and the public Environmental Research on request (subject to freedom of information requirements, if applicable). CFA Country Fire Authority (a) A statement that declarations of pecuniary interests have CMA Catchment Management been duly completed by all relevant officers of the Authority department. (b) Details of shares held by senior officers as nominee or held CRC Cooperative Research Centres beneficially in a statutory authority or subsidiary. DPC Department of Premier and (c) Details of publications produced by the department about Cabinet the activities of the department and where they can be obtained. DPCD Department of Planning and Community Development (d) Details of changes in prices, fees, charges, rates and levies charged by the department for its services, including services DPI Department of Primary that are administered. Industries (e) Details of any major external reviews carried out in respect of DSE Department of Sustainability the operation of the department. and Environment (f) Details of any other research and development activities undertaken by the department that are not otherwise DTF Department of Treasury and covered either in the report of operations or in a document Finance which contains the financial statement and eportr of operations. EMS Environmental Management System (g) Details of overseas visits undertaken including a summary of the objectives and outcomes of each visit. EPA Environment Protection Authority (h) Details of major promotional, public relations and marketing activities undertaken by the department to develop EWR Environmental Water Reserve community awareness of the services provided by the department. FMCF Financial Management (i) Details of assessments and measures undertaken to improve Compliance Framework the occupational health and safety of employees, not FOI Freedom of Information otherwise detailed in the report of operations. (j) A general statement on industrial relations within the FRD Financial Reporting Directive department and details of time lost through industrial accidents and disputes, which are not otherwise detailed in FTE Full-time Equivalent the report of operations. (k) A list of major committees sponsored by the department, the purposes of each committee and the extent to which the purposes have been achieved. (l) Details of all consultancies and contractors including: • consultants/contractors engaged • services provided • expenditure committed to for each engagement. The information is available on request from: Anthony Connelly Acting Director, Planning, Risk and Performance 8 Nicholson Street East Melbourne Victoria 3002 Telephone: (03) 9637 8672 Email: [email protected]

Department of Sustainability and Environment Annual Report 2012 189 ISO International Organisation for Standardisation

MDBA Murray-Darling Basin Authority

MFB Metropolitan Fire Brigade

MW Melbourne Water

NA Not Applicable

NEO Networked Emergency Organisation

NVX Native Vegetation Exchange

NVIRP Northern Victoria Irrigation Renewal Project

OHS Occupational Health and Safety

OLV Ofﬁ ce of Living Victoria

PFF Project Fireﬁ ghter

PPP Public Private Partnership

PV Parks Victoria

SCC State Coordination Centre

SES State Emergency Service

SGV Surveyor-General Victoria

SV Sustainability Victoria

VBRC Victorian Bushﬁ res Royal Commission

VEWH Victorian Environmental Water Holder

VGV Valuer-General Victoria

VGPB Victorian Government Purchasing Board

VIPP Victorian Industry Participation Policy

Units of measure

L Litre G Gigalitre ML Megalitre Ha Hectare

190 Department of Sustainability and Environment Annual Report 2012 Published by the Victorian Government Department of Sustainability and Environment Melbourne September 2012. © The State of Victoria Department of Sustainability and Environment 2012 This publication is copyright. No part may be reproduced by any process except in accordance with the provisions of the Copyright Act 1968. Authorised by the Victorian Government, 8 Nicholson Street, East Melbourne. Print managed by Finsbury Green. Printed on recycled paper. ISSN 1449–1028 (print) ISSN 1449–1036 (online) For more information contact the DSE Customer Service Centre 136 186 Disclaimer This publication may be of assistance to you but the State of Victoria and its employees do not guarantee that the publication is without flaw of any kind or is wholly appropriate for your particular purposes and therefore disclaims all liability for any error, loss or other consequence which may arise from you relying on any information in this publication. Accessibility If you would like to receive this publication in an accessible format, such as large print or audio, please telephone 136 186, or email [email protected] Deaf, hearing impaired or speech impaired? Call us via the National Relay Service on 133 677 or visit www.relayservice.com.au This document is also available in PDF format on the internet at www.dse.vic.gov.au Department of Sustainability and Environment and of Sustainability Department

Department of Sustainability and Environment Customer Service Centre 136 186 [email protected] visit www.dse.vic.gov.au Head office 8 Nicholson Street, East Melbourne Victoria 3002 Tel (03) 9637 8000 Fax (03) 9637 8100 Land Victoria 570 Bourke Street, Melbourne Victoria 3000 Tel (03) 8636 2010 Fax (03) 8636 2596 Regional offices 71 Hotham Street, Traralgon Victoria 3844 Tel (03) 5172 2111 Fax (03) 5172 2100 89 Sydney Road, Benalla Victoria 3672 Tel (03) 5761 1611 Fax (03) 5761 1628 Corner Midland Highway and Taylor Street,

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