EAST REGION WATER CORPORATION Annual Report 2007-2008 Water’s Region

East Gippsland Water serves a region covering 21,000 square kilometres in the far south east corner of , with a customer base of 30,741 people. There are 22,816 customers receiving water services and 19,088 receiving wastewater services from the Corporation. East Gippsland Water’s service area extends east from Lindenow and , through Lakes Entrance to Mallacoota near the New South Wales border and as far north as Dinner Plain in the High Country of the Victorian Alps. Ten separate water supply systems serve the communities of Bairnsdale, Bemm River, Bruthen, Buchan, , Dinner Plain, Eagle Point, Johnsonville, Lakes Entrance, Lake Tyers Aboriginal Trust, Lake Tyers Beach, Lindenow, Lindenow South, Mallacoota, Marlo, , Newlands Arm, Newmerella, Nicholson, Nowa Nowa, , , Paynesville, , Sarsfield, Swan Reach and . As well, ten individual wastewater systems serve Bairnsdale, Bruthen, Cann River, Dinner Plain, Eagle Point, Johnsonville, Lakes Entrance, Lake Tyers Beach, Lindenow, Mallacoota, Marlo, Metung, Newlands Arm, Nicholson, Omeo, Orbost, Paynesville, Raymond Island and Swan Reach.

Cover photograph: The water feature at the entrance to East Gippsland Water’s main office in Bairnsdale recycles water collected from the building’s roof.

© State of Victoria, East Gippsland Water Corporation 2008. This publication is copyright. No part may be reproduced by any process except in accordance with the provisions of the Copyright Act 1968. Printed on recycled paper. AT A GLANCE

The Corporation During the reporting period the responsible Ministers were: East Gippsland Region Water Corporation was G The Hon John Thwaites MP, Minister for originally established as East Gippsland Region Water, Environment and Climate Change, Water Authority on 1 January 1995, under the Water from 1 July 2007 to 29 July 2007; Act 1989. It became a Corporation on 1 July 2007. G The Hon John Brumby MP, Minister for It trades as East Gippsland Water. Water, Environment and Climate Change, from 30 July 2007 to 2 August 2007; G The Hon Tim Holding MP, Minister for Water, from 3 August 2007 to 30 June 2008. Contents Page The geographic area covered by the Corporation equates to 10% of the land mass of Victoria and East Gippsland Water’s Region was formerly administered by five Water Boards. Inside front cover In accordance with the Water Act 1989, East Gippsland Water delivers the full range of retail At a Glance 1 water supply functions including water harvesting and storage and urban water supply. It also Vision, Mission and Objectives 2 provides wastewater collection, treatment and recycling services, as well as trade waste services Highlights and Achievements 3 to industrial and commercial customers. G Above, one of the many tours of the Bairnsdale Chairperson’s Report 5 Wastewater Treatment Plant.

Corporate Governance 6 Water 2007/08 People and Culture 10 Serviced properties - domestic assessments 19,860 Social Sustainability 16 - non domestic assessments 2,956

Education 22 Volume of water consumed (ML/y) 4,433 Length of water mains (km) 877 Environmental Sustainability 24 Water treatment plants 9 Water Quality 34 Water disinfection plants 17

Asset Management 42 Separate water supply systems 9

Financial Summary 47 Wastewater 2007/08 Serviced properties Other Information 49 - domestic assessments 17,068 Performance Statements 51 - non domestic assessments 2,020 Volume of wastewater Audit Certificate 58-59 collected (ML/y) 2,838

Financial Report 60 Length of sewer mains (km) 576 Wastewater treatment plants 10 Audit Certificate 87-88 Water re-used % 100% Disclosure Index Inside back cover Separate wastewater systems 10

Annual Report 2007-2008 East Gippsland Water 1 VISION, MISSION AND OBJECTIVES

East Gippsland Water’s Vision

For East Gippsland Water to be recognised as a premier Corporation within the water industry, responsive to the needs of its community, the protection of the environment and the requirements of Government.

Our Mission

Our core purpose is to ensure that...

G Our team provide quality water and wastewater services G Our approach is responsive to customers and the Government G Our operations are cost effective, environmentally sensitive and conducted in a safe and efficient manner

G We use sustainable management principles in all our business activities

Our Objectives

In accordance with the Water Act 1989, East Gippsland Water has the following objectives, which are reflected in its Corporate Plan: G Governance and Regulation

We are committed to meeting the requirements of customers, government and stakeholders. G Environmental Sustainability

We are committed to environmental sustainability in all aspects of water and wastewater service provision. G Asset Management and Development

We are committed to optimising the use of existing physical assets and developing new infrastructure for the delivery of water and wastewater services and emerging requirements. G Management and Operations

We are committed to optimising the use of our human, financial and corporate resources.

Annual Report 2007-2008 East Gippsland Water 2 HIGHLIGHTS AND ACHIEVEMENTS

In its ongoing drive to meet the four key objectives outlined in its Corporate Plan, East Gippsland Water recorded some notable highlights and achievements during the reporting period in the following areas -

Addressing bushfires and floods At the start of the year East Gippsland Water staff and contractors continued their efforts to address water quality and supply issues following the drought, bushfires and floods of the previous financial year. Emergency infrastructure, rapidly installed to clean bushfire-affected water from the Mitchell River, proved reliable and paid dividends with secure, high quality drinking water supplies maintained for some 17,000 customers. This success, together with customers’ water saving efforts, enabled any remaining water restrictions to be removed by the Corporation before the end of August 2007. It also meant significantly depleted water storages were replenished in time for the peak summer holiday season. In addition, East Gippsland Water staff, with help from contractors, worked fast to replace some 200 metres of pipeline under the Mitchell River, which was fractured by the force of the floods at the very end of June 2007. This pipeline, serving customers in Lindenow and Lindenow South, was replaced less than a month later.

Securing high quality water for small towns East Gippsland Water commissioned three new water treatment plants and a pipeline as part of its commitment to ensure high quality drinking water supplies for the region’s smaller communities. New plants came into full-scale operation at Swifts Creek and Cann River, with the Hon Tim Holding MP, Minister for Water, opening the Buchan Water Treatment Plant and a 17 km pipeline connecting Nowa Nowa to Mitchell River water supplies. These projects marked completion of a $7.7 million program of initiatives, which also included commissioning of a new water treatment plant at Bemm River in 2006/07.

Upgrading the Mitchell River supply system... Notable progress was made on a mammoth, $45 million program of works to secure high quality, long term water supplies for some 17,000 customers reliant on the Mitchell River. This is the largest project ever undertaken by the Corporation and takes into account predictions of climate change, with initiatives addressing water treatment, water storage and bulk transfer improvements. Work during the reporting period included completion of the design for a second off-stream water storage at Woodglen, capable of holding some 650 ML of water, with tenders invited for its construction. In addition the design and construct contract for a water treatment plant at Woodglen was tendered and is due to be awarded early in 2008/09.

...and open water storages The Corporation stepped up its program to cover or replace open water storages, recognising the significant benefits to be gained in protecting water quality, and reducing water loss through evaporation and leakage. Pioneering research involving the Corporation and CSIRO had demonstrated how covering open water storage basins dramatically reduced algal blooms and cut evaporation by 90%. Work carried out during the reporting period included installation of a new shadecloth cover over the Lindenow open water storage. On-site work also commenced on a major $1.5 million upgrade, which will include a plastic cover, to the Sunlakes storage, and continued in relation to lining and covering one of the water storages at Wy Yung. Elsewhere, construction work got underway to replace the Eagle Point open water storage, serving the Eagle Point and Paynesville areas, with two large, covered water storage tanks.

Annual Report 2007-2008 East Gippsland Water 3 Far reaching Water Plan East Gippsland Water’s Water Plan 2008-2013 was approved by the Essential Services Commission, the water industry regulator, in July 2008 following consultation during the reporting period. It sets out the Corporation’s challenges, objectives, targets and prices for the five year period and, along with the Water Supply Demand Strategy, reiterates East Gippsland Water’s commitment to provide secure, high quality drinking water supplies. The Plan allows for a significant works program totalling some $67 million to upgrade, replace and construct new infrastructure.

Successful business The Corporation recorded significant achievements in external audits of its operations, receiving continued certification for its OH&S Management System (AS 4801) and Environmental Management System (ISO 14001). For the second year running East Gippsland Water was rated best of 15 corporations audited by Civic Mutual Plus for property risk management, scoring 97% in 2008 compared with 87% in 2007. Its 2008 score for public liability risk management was 97.3%, up 6% on the previous year. The Corporation also achieved 12 months Lost-Time Injury-free for the financial year. This was due to the effectiveness of OH&S systems, training and the conscientiousness of staff.

Environmental licence coup East Gippsland Water joined with the Environment Protection Authority (EPA) Victoria to launch only the second corporate licence in the State, which will enable the Corporation to focus more on initiatives to reduce its environmental impact. The new single licence has replaced ten separate EPA licences for East Gippsland Water wastewater treatment plants. While the licensing requirements remain as vigorous as ever, the move to a single licence has reduced red tape and delivered business savings by allowing the Corporation to concentrate on outcomes.

Leading with wastewater reuse East Gippsland Water was again one of the best performing water corporations in in relation to reclaimed wastewater, as it maintained a 100% reuse record across its ten wastewater treatment plants for the fourth consecutive year. This water is reused on Corporation properties, as well as being supplied to third parties. Golf courses, tree plantations, pasture, alpine woodland and Bairnsdale Racecourse benefit from this resource. It is also used to provide environmentally beneficial flows to wetlands including the internationally renowned Macleod Morass.

Annual Report 2007-2008 East Gippsland Water 4 CHAIRPERSON’S REPORT

On behalf of the Board, and in accordance with the Financial Management Act 1994, I am pleased to present the report of operations of East Gippsland Region Water Corporation for the year ending 30 June 2008. The report demonstrates that East Gippsland Water has continued to operate on a sound basis during the year, maintaining its responsiveness to the social, environmental and financial requirements of our community and the Victorian Government. Developing resilience to the impact of external weather events has been a major focus of the Corporation following the severe drought, devastating bushfires and major floods experienced by much of our region in the previous year. These events will have a lasting impact on our catchments for many years with continuing consequences for our water supply. In order to ensure that we can maintain secure and high quality water supply and wastewater services well into the future, both for our existing customers and the projected growth of our region, the Board has embarked on a far-reaching $67 million program of investment to construct new, and revitalise existing, infrastructure over the next five years. Many towns in East Gippsland, particularly coastal communities, continue to experience significant growth as people from elsewhere in Victoria become increasingly attracted to the lifestyle opportunities available in the region. Such development poses many challenges, not least for this Corporation, as we strive to minimise our environmental footprint in this beautiful part of Australia. In this regard the Board is able to report that the Corporation has maintained its record of 100% wastewater reuse, a new Corporate Licence has been entered into with the Environment Protection Authority and has achieved the successful re-certification of its Environmental Management System. Further measures reflecting the Corporation’s commitment to sustainability best practice are detailed in this report. I am also able to report that the Corporation has risk management processes in place consistent with the Australian/New Zealand Risk Management Standard AS/NZS4360:2004 and an internal control system that enables our management to understand, manage and satisfactorily control risk exposures. The Audit Committee of the Corporation has verified this assurance and also that the risk profile has been critically reviewed within the year. In conclusion I take this opportunity to thank the management and staff located across East Gippsland for their ongoing commitment to the work of the Corporation. The successful outcomes for the year detailed in this report reflect their skill and dedication.

Robert Fordham Chairperson, East Gippsland Water 17 September 2008

Annual Report 2007-2008 East Gippsland Water 5 CORPORATE GOVERNANCE

Robert Fordham - Chairperson Reappointed 1 October 2007 Robert Fordham (B.Comm, Accounting and Economics, and B.A. Political Science) is Chairperson. Robert is a Member of the Standing Committee of the Anglican Church of Australia and a Director of Narkoojee Pty Ltd. Originally an accountant, he was a Member of the Parliament of Victoria from 1970 - 1992. He was a Minister and Deputy Premier of Victoria from 1982 - 1989. Robert is Chairperson of East Gippsland Water’s Remuneration Front row, left to right, Committee. Gail Morley, Jane Rowe, Bernie Smith - Deputy Chairperson (appointed February 2008) Robert Fordham (Chairperson) and Appointed to the East Gippsland Water Board 1 October 2005 Richard Elkington. Bernie Smith is Chairperson of Gippsland Ports and former Chief Executive Officer Back row, left to right, of the Tasmanian Ports Corporation. Past roles include Chief Executive Officer of Robert Supplitt, Samuel Airservices Australia, the Air Traffic Control Corporation, gas companies Kinetik Logan, Les Mathieson Energy and Westar, and also electricity generation corporation, Hazelwood (Managing Director), Power. He was Director of Business Communications for Ericsson Australia, and Eric Sjerp and Bernie Smith General Manager of Maintenance and Engineering for Australian Airlines. (Deputy Chairperson). Bernie has served on a number of Boards. He is a member of East Gippsland Water’s Technical Committee and was previously on the Remuneration The Board Committee. In accordance with Richard McDowell - Deputy Chairperson the Water Act 1989, the First appointed to the Board, 1 January 1995. Retired October 2007 Board of East Gippsland Richard McDowell served on the East Gippsland Water Board until October 2007 Water consists of seven when he was appointed Chair of the Board for neighbouring water corporation, non-executive Directors Gippsland Water. appointed by the Hon As well as Deputy Chairperson of the East Gippsland Water Board, Richard was Tim Holding MP, Minister also Chairperson of the Corporation’s Audit Committee. for Water, based on their skills. Richard Elkington Under amendments to Appointed 1 October 2007 the Act, which came into Richard Elkington has worked for more than 30 years in the effect on 1 July 2007, power generation industry and has held a number of senior operational the former position of management positions. Chief Executive Officer He is currently General Manager Power and Environment with Loy Yang Power. became Managing He is also on the Executive Council of the Victorian Employer’s Chamber of Director and is now Commerce and Industry (VECCI), as well as being a member of the Victorian recognised as a Government Regional Development Advisory Committee. In addition Richard Director on the Board. represents Loy Yang Power and the Latrobe Valley power industry on a host of The Board is responsible committees at state and national level. for the establishment Previously Chair of neighbouring water corporation, Gippsland Water, he brings and oversight of the invaluable water industry expertise to the Board of East Gippsland Water where strategies, policies and he is a member of the Audit Committee. business objectives of Samuel Logan the Corporation. It is Appointed January 2008 committed to performing its role in accordance Samuel Logan (CA B.Bus (Accounting)) is a Chartered Accountant, Registered with the highest standards Tax Agent, and Director and Principal of Riviera Accounting & Taxation Services of Corporate Governance. Pty Ltd. His professional experience includes business advisory services in management improvement, budgeting and financial reporting. He provides accounting and taxation compliance advice to a diverse range of business industries including primary production, transport, manufacturing, retail, and professional organisations. Samuel is Chairperson of East Gippsland Water’s Audit Committee.

Annual Report 2007-2008 East Gippsland Water 6 Gail Morley Appointed 1 October 2005 Gail Morley is Managing Director of a consultancy business and has expertise in organisational development, vocational education and business management. She holds a Bachelor of Arts, a Bachelor of Education and a Graduate Diploma in Office Systems. A graduate member of the Australian Institute of Company Directors, who also serves on the Board of Gippsland Ports, Gail brings significant corporate governance skills to the Board. She is a member of East Gippsland Water’s Remuneration Committee Jane Rowe Appointed 1 October 2005. Resigned from the Board in November 2007 due to her candidacy in the Federal election and was reinstated in January 2008 Jane Rowe is serving her second term as a Councillor of East Gippsland Shire Council, of which she has twice been elected Mayor. She is also a Director of the Municipal Association of Victoria and a Member of the Audit Committees of East Gippsland Shire Council and the Municipal Association of Victoria. She has served as Secretary of the Mitchell River Management Board and as Controller of the local State Emergency Service, and was Incident Controller for the Mitchell River Catchment during the widespread 1998 floods. Jane brings particular expertise in local government and corporate governance to the Board and is a member of East Gippsland Water’s Audit Committee. Eric Sjerp Reappointed 1 October 2007 Eric Sjerp, an Environmental Scientist with a Bachelor of Science degree (Geology and Geography), is Managing Director and Principal Consultant of Ethos NRM Environmental Planning Consultants. He is also a member of: the Environmental Institute of Australia and New Zealand; the Victorian Planning and Environmental Law Association; the East Gippsland Catchment Management Authority’s Technical and Regional Assessment Panel; and the East Gippsland Regional Landfill Environmental Advisory Panel. Eric has extensive professional experience in the fields of environmental impact assessment, natural resource and conservation management, strategic land use planning and government liaison. He is Chairperson of East Gippsland Water’s Technical Committee. Robert Supplitt Reappointed 1 October 2007 Robert Supplitt holds a Bachelor of Engineering (Civil) and a Master of Business Administration, and has worked extensively in the power supply, mineral resource, engineering consulting and construction industries. He is a Director and Principal Consultant in the firm Crossco Consulting Pty Ltd. His professional experience includes civil engineering design and construction, project management, operational management, information technology, business planning and business process improvement. Robert is a member of East Gippsland Water’s Technical Committee and joined the Remuneration Committee in February 2008. Les Mathieson - Managing Director Appointed 1 July 2007. Formerly the Chief Executive Officer of East Gippsland Water for nearly six years and became Managing Director in July 2007 Les Mathieson holds a Bachelor of Arts, a Diploma of Company Directors and a Diploma of Frontline Management, and has many years experience in executive roles within the Victorian water industry. He is the President and an Associate of the Institute of Water Administration and a Director of the Paynesville & District Community Bank. Les is also a Member of the Australian Institute of Management and a Fellow of the Australian Institute of Company Directors.

Annual Report 2007-2008 East Gippsland Water 7 Meeting Attendance Board Audit Technical Remuneration Committee Committee Committee Director Eligible Attended Eligible Attended Eligible Attended Eligible Attended

Robert Fordham1211----22 Bernie Smith 12 12 - - 4 3 2 2 Richard McDowell 3 3 1 1 - - - - Richard Elkington 9 7 2 2 - - - - Samuel Logan 6 6 2 2 - - - - Gail Morley1211----22 Jane Rowe 10 7 3 2 - - - - Eric Sjerp 12 11 - - 4 4 - - Robert Supplitt 12 12 2 2 4 4 - - Les Mathieson 12 12 ------Note: During the reporting period the Board Deputy Chairperson Richard McDowell retired to take up an appointment as Chair of the Board for Gippsland Water. Two new directors were appointed - Richard Elkington and Samuel Logan.

Board Meetings Technical Committee The Board meets formally once a month, with The Technical Committee focuses on effective invited members of the senior executive team. management of technical, operational and Additional meetings are held, as required, to environmental risks, compliance with laws and consider specific issues. regulations and the capital works program. Members: Board Committees G Eric Sjerp (Chairperson) The Board has constituted the following G Bernie Smith committees to assist in meeting its governance G Robert Supplitt obligations, both statutory and to the community. Remuneration Committee Audit Committee The Corporation’s Remuneration Committee The Board of East Gippsland Water has adopted a reviews and makes recommendations to the Board ‘best practice’ Audit Committee Charter. The Audit concerning the performance and remuneration of Committee is chaired by a Board Director other the Managing Director and members of the senior than the Corporation Chairperson and includes executive team. three members of the Board and two independent Members: persons with appropriate financial business G acumen and experience. The Board has also Robert Fordham (Chairperson) G appointed an Internal Auditor who reports Gail Morley directly to the Committee. G Robert Supplitt The Committee determines a systematic internal Ethical Standards audit program that looks at internal processes and controls with a view to testing these processes for The Board of East Gippsland Region Water minimisation of system, financial and operational Corporation acknowledges the need for the risk, and to promote efficiency and effectiveness. highest standards of corporate governance practices and ethical conduct by all Directors, Members: employees and contractors of the Corporation. G Samuel Logan (Chairperson from February 2008) The Board has adopted the Directors’ Code of G Richard McDowell Conduct issued by the Public Sector Standards (Chairperson until September 2007) Commissioner. G Jane Rowe G Richard Elkington (from February 2008) Declaration of Pecuniary Interests G Robert Supplitt (until February 2008) All Board members and senior executives have G Independent member Ken Jones F.P.N.A., C.P.E. - completed a declaration of interests for the appointed 1 January 2007 for three years reporting period. G Independent member Dr. Peter Veenker - appointed 1 January 2007 for three years

Annual Report 2007-2008 East Gippsland Water 8 ORGANISATION STRUCTURE as at 30 June 2008

East Gippsland Water Board of Directors

Managing Director Les Mathieson B. Arts, Dip. Company Directors, Dip Frontline Management AIWA, M. AIM, F. AICD Responsible for G Corporate Management and Development G Strategic Implementation G Public Relations

Executive Manager Executive Manager Executive Manager Executive Manager Corporate Development Operations Finance and Customer Assets and Infrastructure and Services Frank McShane Services Development Brett Millington C Eng, BSc, MI Plant Eng, MSOE. Robert Carlesso Dean Boyd B.Sc (Hons), Grad. Dip. Bus. Responsible for B. Bus. MNIA. BE, MBA, MIE Aust., CP Eng. Responsible for G Operations and Responsible for Responsible for G Human Resources Maintenance G Financial and G Engineering Projects and G Industrial Relations G Environmental Care Management Program Management G Public Relations and Wastewater Accounting Services G Infrastructure Asset G Special Projects G Water Supply and G Revenue and Customer Management G Customer Consultation Treatment Services/Customer G Capital Works G Business Risk Compliance Charter G Developer Works G G Information and Financial Asset Technology Services Management G Financial Risk & Compliance

Annual Report 2007-2008 East Gippsland Water 9 People and Culture

East Gippsland Water invests significant resources into staff training and development to enhance skills and personal advancement, with a clear focus on safe working practices.

Annual Report 2007-2008 East Gippsland Water 10 PEOPLE AND CULTURE

Our Philosophy East Gippsland Water continues to provide a safe and respectful working environment where the personal and professional development of staff is actively encouraged. These principles, alongside the application of safe working practices, are of the utmost importance to enhance the operation of the organisation and lead to ongoing improvements in service delivery. Organisational Development Training East Gippsland Water invests significant resources into staff training and development to enhance skills and personal advancement, with a clear G East Gippsland Water’s Barry Waddell receives focus on safe working practices. life membership of the Water Industry Operators Further to the completion of a training pilot project Association. in conjunction with Goulburn-Murray Water in 2006, the Corporation has continued to provide Revenue & Customer Support Services Manager, ongoing training and assessments at Certificate Carol Ross, won the RMIT University Bachelor of II/III and IV in Water Industry Operations for Commerce Achievement and Excellence Award Operations and Maintenance staff. for the 2007 academic year. She had received a Bachelor of Commerce through RMIT in Bairnsdale, During 2007/08, the majority of staff commenced following four years of committed study. or completed some form of professional or personal development, by pursuing accredited Several staff completed Certificates ll and lll in training along with a diversity of short courses. Water Industry Operations and a significant number also engaged in other training to obtain new work skills and to help with their personal development. Staff undertaking accredited training The beginning of the reporting period saw the 2007/2008 retirement of John Groom, Executive Manager Water Industry Operations Certificate II 10 Corporate Development and Services, following Water Industry Operations Certificate III 10 six years with East Gippsland Water and more than 30 years in the water industry. The Water Industry Operations Certificate IV 6 Corporation benefited greatly from his wealth Business Administration Certificate III 1 of experience when tackling a diverse range of water issues, including his assistance in bringing Business Administration Certificate IV 1 greater transparency to East Gippsland Water Diploma of Frontline Management 2 operations. Leadership Program 1 Employee Health and Well Being Diploma of Business (HR) 3 The Corporation operates a health & wellbeing program which complements its OH&S programs. Advanced Diploma (Accounting) 1 Regular inspections are carried out to ensure that Certified Practising Accountant 1 staff do not suffer adverse health affects caused Finance Certificate IV 1 by exposure to workplace hazards and to address any issues identified at the earliest opportunity. Degree (Bachelor of Commerce) 1 The Corporation provides an Employee Assistance Masters (OHS) 1 Program, which offers staff confidential counselling Certificate in Director Essentials 1 and support for personal and workplace issues that may impact on their well being and work capability. Auditor Training 2 East Gippsland Water employs the services of a TOTAL 42 qualified independent counsellor who regularly visits work sites to discuss arising issues with staff Staff achievements in the strictest confidence. If required, additional support is offered or provided to assist in reaching Bairnsdale Wastewater Treatment Plant operator a resolution. Barry Waddell was awarded life membership of The counsellor also provides Executive the Water Industry Operators Association - a Management with an independent overview of leading national body for the industry. Barry the overall psychological health of the workforce, became only the fifth person to be awarded highlighting any areas of concern. life membership of this group.

Annual Report 2007-2008 East Gippsland Water 11 In addition to the Corporation’s focus on the Two students were engaged by East Gippsland workplace, specific health and well being programs Water during the reporting period to gain were initiated during the reporting period to experience in a work environment over the next enhance staff understanding of health related two years. issues. East Gippsland Water also participates in a Health Promotion Calendar: A calendar of events, graduate engineering training program, in including extensive information for staff in relation partnership with Maunsell AECOM (formerly to national and regional health and well being known as Earth Tech Engineering during the initiatives. reporting period). Fit ‘n’ Healthy Steps Challenge: A 156 day health The Corporation sponsors activities aimed at and fitness program offered to all staff, comprising encouraging active lifestyles involving water, such individual health assessments, use of a personal as the Bairnsdale Triathlon and Multi Sport Festival pedometer, helpful information on fitness training held in 2007/08, as well as various local school programs and healthy eating plans and recipes. programs and youth community events. Women’s and Men’s Health Sessions: Information sessions on health & well being, organised by the Corporation in support of National Women’s and Men’s Health Weeks and led by keynote speakers. These covered the early identification and prevention of prostate, colon, bowel and breast cancers. Corporate Membership: Red Cross Blood Service - Valuable ongoing contributions continued to be made to this service by a dedicated group of staff. Sunsmart Program: Cancer Council Victoria ran information sessions aimed at all employees, raising awareness of the risks from UV exposure.

Organisational Diversity G Staff demonstrate water filtration at a career focussed and Cultural Recognition Action Expo day at Nagle College. Women The application of equal opportunity and merit is a Cultural Respect and Recognition strongly held belief and practice of the Corporation, The Corporation respects the rights and culture supported by appropriate policies and procedures. of East Gippsland’s indigenous people, as well as Staff recruitment and selection processes ensure embracing those of recent immigrants. It continues that fairness and equity is applied. to build relationships to improve understanding of issues experienced by indigenous communities of The Board of the Corporation is skills-based and East Gippsland, while also exploring opportunities two of the seven appointed non-executive for both indigenous and migrating individuals. Directors are women. During the reporting period the Corporation Family-friendly benefits are provided through the supported local NAIDOC celebrations and Certified Enterprise Bargaining Agreement where Indigenous youth days. a 19-day month, banked hours and personal leave provisions provide a high level of flexibility in East Gippsland Water also welcomed three working hours. new employees from the United Kingdom. Maternity leave entitlements are also in line with Public Administration Values Government policy to provide paid parental leave. and Employment Principles Youth East Gippsland Water recognises the influence The Corporation actively provides educational that staff behaviour has on productivity, internal opportunities for school-age people through relationships, the work environment, public information sessions on water conservation and relations and relationships with customers, wastewater management issues. In addition it clients, contractors and the wider community. offers traineeships and work placements in field operations and business administration, as well In accordance with the principles of Equal as providing summer vacation employment for Employment Opportunity and the Victorian Charter students undertaking degree level studies. of Human Rights and Responsibilities, all staff are expected to actively promote a workplace that East Gippsland Water participates in Monash abides by this Charter. The Corporation’s policies University’s Gippsland Campus Co-operative have also been developed to comply with these Education Program. The essence of this initiative principles. is to place students in a work program with industry for the life of their undergraduate course.

Annual Report 2007-2008 East Gippsland Water 12 East Gippsland Water has an identified Equal There was no threat of industrial action during Opportunity Officer and two trained Equal 2007/08. Employment Opportunity Contact Officers who can provide informal counselling to staff. Workforce Data The Corporation has developed a code of conduct As at June 30, 2008 the Corporation employed 76 for staff which is consistent with the Code of people, which was the same number as for the Conduct for Victorian Public Sector Employees. previous year. The breakdown of staff was as follows:

Staff classification Total Male Female

2006/07 2007/08 2006/07 2007/08 2006/07 2007/08

Managing Director and Executive staff 5 5 5 5 0 0 Corporate Services Staff (full time) 20 22 7 10 13 12 Corporate Services (part time & temp) 2 2 0 0 2 2 Technical Services (full time) 10 10 9 7 1 3 Technical Services (part time & temp) 1 0 1 0 0 0 Operations & Maintenance (full time) 38 37 37 36 1 1 Operations & Maintenance (part time & temp) 0 0 0 0 0 0

76 76 59 58 17 18

During the reporting period, training was provided Occupational Health & Safety to all staff in relation to both the Victorian Charter East Gippsland Water continues to ensure it meets of Human Rights and Responsibilities and the its Occupational Health and Safety obligations. Code of Conduct for Victorian Public Sector As a minimum requirement, staff acting in Employees. This training was also incorporated supervisory roles, and all Occupational Health & into all inductions from 1 January 2008. Safety (OH&S) representatives, have completed the People Matter Survey WorkSafe-approved five-day OH&S Health & Safety Representatives course. The State Services Authority selected East Gippsland Water to participate in the 2008 People Matter OH&S forms a major element of the induction Survey, following the high participation rate the program provided to all new staff at Corporation attracted in the previous year. commencement of their employment with Involvement from staff was again very high. East Gippsland Water. There is also a significant emphasis on statutory OH&S-related training. The survey is an invaluable tool for measuring staff perceptions in relation to employment Demonstrating its ongoing commitment to OH&S, principles and values. It helps East Gippsland both internally and in the wider community, the Water to identify where it is performing well, Corporation continued to lead the steering group together with opportunities for improvement of the East Gippsland Occupational Health and provides a useful comparison with other and Safety Network through 2007/08. public sector organisations. East Gippsland Water also maintained its involvement in the Victorian Water Industry Workplace Relations OH&S Network, which receives significant East Gippsland Water’s Employee Consultative support from the Victorian Water Industry Committee continues to provide an invaluable Association. The importance of the network means of communication and information flow was recognised officially in 2007/08 when within the Corporation. It has a role defined in a Victorian Water Association OH&S Steering the Certified Enterprise Bargaining Agreement Committee was created. East Gippsland Water to monitor the contribution made by staff to East is a member of this Committee. Gippsland Water’s performance and its adherence The network provides a forum for sharing industry to Key Performance Indicators. It oversees staff issues and solutions and has proved very active training and continuous improvement programs. and worthwhile since its formation. An extensive review and negotiations were undertaken during the reporting period to establish a revised Enterprise Bargaining Agreement between the Corporation and staff. This is due to be completed before the end of 2008.

Annual Report 2007-2008 East Gippsland Water 13 Significant achievements in OH&S for the 2007/08 year included: G Twelve months Lost-Time Injury-free G Continued certification of East Gippsland Water’s OH&S Management System (OHSMS) against AS/NSZ 4801:2001, with successful completion of the triennial re-certification audit by our certification body, NSC International. The auditor said of the Corporation’s system that: “...it has provided the basis for improved safety performance and formalised processes that have enabled the organisation to achieve in excess of 14 months LTI (Lost-Time Injury) free operations. The system continues to comply with the requirements as detailed in AS/NZS 4801:2001 and their own internal procedures and processes. There have been some excellent initiatives implemented to help prevent exposure to hazards as well as the implementing of good practices in regards to maintaining a healthy workforce.“ G Completion of a program retrofitting an innovative fall prevention system to all East Gippsland Water sewer pump stations. The system, developed by Kennedy’s Aluminium in conjunction with East Gippsland Water, has attracted considerable interest from a number of Victorian and interstate water companies and has been entered in the WorkSafe Victoria Awards 2008. G The development of a set of Civil Construction Safety Guides to support training courses being run by East Gippsland Water. These guides have received endorsement from VicWater as the Victorian Water Industry Civil G Operational staff are put through their paces Construction Safety Guides and have been on practical training courses. provided to all Victorian water corporations, as well as being made available on VicWater’s website. They have been submitted as a joint East Gippsland Water/VicWater entry in the Occupational Health WorkSafe Victoria Awards 2008. and Safety Statistics G The continued use of, and improvements to, Number of Incidents/Lost-Time Incidents extensive OH&S, audit and training plans to Incident reporting, including near misses, reflects address all safety issues. This has included the effectiveness of East Gippsland Water’s safety development of an OH&S strategic plan for system. 2008/09. Early reporting of incidents allows analysis of issues G Introduction of a corporate health and and remedial action to be undertaken, before the well being program. This has included circumstances that gave rise to the incident worsen presentations on men’s and women’s and create a more serious risk of injury, illness health issues, a SunSmart presentation and or property damage. Accordingly, reporting of all participation in the nationwide Fit ‘n’ Healthy incidents is encouraged. Steps initiative by 87% of the Corporation’s Bairnsdale Office staff. A high number of incidents does not necessarily G Achievements against Key Performance reflect badly on the organisation. It is the type of Indicators embedded into the Certified incident, severity of injury and the personal Agreement, to reflect OH&S commitment consequences that are important. Lost time and performance. incidents are those that resulted in a person being absent from work for a full shift, or more, G Participation in other industry forums in due to a workplace injury. preparation for, and following, the introduction of new legislation or guidance material.

Annual Report 2007-2008 East Gippsland Water 14 Incidents 2003/04 2004/05 2005/06 2006/07 2007/08

Total incidents reported 25 25 15 13 16 Lost-time incidents 32430 Medical treatment incidents116741 Working Days Lost 9 174 16 21 0

Average Time Lost Average Time Lost is the average time lost from work per incident in days. For the purpose of this indicator 12 months (220 days) is the maximum time for any single incident. It is calculated against total incidents recorded, as well as against lost time incidents. Average Time Lost = Number of Working Days Lost Number of Incidents in the Period

Average Time Lost 2003/04 2004/05 2005/06 2006/07 2007/08

Total incidents 0.36 6.96 1.07 1.62 0 Lost time incidents 3.00 87.00 4.00 7.00 0

Note: In 2004/05 a single severe accident resulted in a large Risk Management amount of lost time. East Gippsland Water applies risk management as The Corporation is also a member of the the standard management technique in all aspects Department of Sustainability and Environment of its work. It is used in managing issues such as: Water Security Continuity Network and regularly G business operations; reviews measures to manage critical infrastructure. G evaluation and management of new projects; and Public Liability Risk G stakeholder management. Management Audit A risk management system, based on Australian East Gippsland Water’s annual Public Liability Risk Standard 4360, continued to be developed and Management audit was conducted in February enhanced during 2007/08. A significant 2008 by public liability insurer, Civic Mutual Plus. achievement was the implementation of an It covered seven topics including accountabilities, electronic risk management system. property and assets, communication with the public, contracts and contractor management, As part of the risk management system client services, major emergency response and improvement project, East Gippsland Water statutory compliance. developed its strategic risk profile, which is linked directly to the Corporation’s mission and key The Corporation’s 2008 public liability score was strategic objectives. An outcome of this 97.3%, up from 91.3% in the previous year and development is to ensure that key business plan 78.75% in 2006. The 2008 score for property risk activities are directed towards mitigating strategic management was 97%, representing an increase risk issues. of 10% on the 2007 score. The water industry average was 82.9%. Indeed, East Gippsland Water The reporting year also saw an external assessment was rated the best of the 15 water corporations of East Gippsland Water’s risk management system audited for property risk management, for the to identify opportunities for improvement. second year running. Key systems that currently assist in the This performance has translated to reduced management of risk are: insurance premiums for the Corporation, G Environment Management System qualifying it for the maximum discount available. G Drinking Water Quality Management Strategy As a pro-active measure, East Gippsland Water G Occupational Health and Safety Management representatives regularly attend best practice System, including the Contractor Safety forums held by the public liability and property Management System insurer and the Corporation is a member of G Emergency Response System the consultative committee of the Municipal G Capital Works Planning Process Association of Victoria Insurance Committee. G Asset Management System G Accounting Manual G Audit Plan G Financial Management Compliance Framework

Annual Report 2007-2008 East Gippsland Water 15 Social Sustainability

East Gippsland Water provides financial, merchandise and in-kind sponsorship to a number of local organisations and community groups for activities with a focus on water use, conservation and environmental sustainability.

Annual Report 2007-2008 East Gippsland Water 16 SOCIAL SUSTAINABILITY

Management of social and economic impacts The Corporation employs a triple bottom line approach to its decision making and strategic planning. This recognises that the provision of water and wastewater services has the potential for social, economic and environmental impact. Social sustainability is considered when reviewing strategic directions and influences decision-making in relation to water and wastewater services. For example: G East Gippsland Water is committed to a 100% environmentally beneficial, affordable and sustainable reuse of wastewater G It is committed to the provision of high quality, potable water to all communities, not just the larger population centres G The Small Towns Water Quality Improvement Program provides overall benefit to the East Gippsland community through improved quality of drinking water. This investment is designed to have a positive impact on local communities, tourism and future development G The revegetation and passive use of East Gippsland Water land for public purposes is another focus for enhancing environmental and social capital. The Corporation is actively involved with Landcare groups in rehabilitating wetlands. Water Leaks, Exceptional Circumstances G East Gippsland Water’s Permanent Water Saving East Gippsland Water policy allows for dispensation Rules include watering times adjusted to meet on high water usage accounts when customers the needs of the region’s significant older age cannot reasonably have been expected to be group. aware of a water leak. Each case is considered on merit and an amount of $8,177 was adjusted WaterSmart Rebates on accounts during the reporting period. East Gippsland Water supports the Victorian To be eligible, customers must have engaged Government’s Water Smart Gardens and Homes a licensed plumber to confirm the leak and the Rebate Scheme. During the reporting period this circumstances surrounding it, and the repair has included using media releases and newspaper already undertaken. advertisements to promote the availability of rebates for buying and installing rainwater tanks; Community Service Obligations and a showerhead exchange program where East Gippsland Water provides concession relief inefficient showerheads can be swapped free of to some members of the community as part of charge for a three-star rated water saving model. its community services obligations.

WaterSmart Rebates 2007/08 Rebate Type Applications Approved Applications Received Applications Granted $ Rainwater Tank 21 21 $3,300 Greywater System 4 4 $2,000 Tank to Toilet 1 1 $150 Basket Offer 100 100 $3,000 Dual Flush Toilet 10 10 $500 Shower Rose 5 5 $50 Cleaning Device 0 0 $0 Water Conservation Audit 1 1 $50 Not For Profit Organisations 0 0 $0 Large Rainwater Tanks 47 50 $43,400 Total 189 192 $52,450

Annual Report 2007-2008 East Gippsland Water 17 Value of Community Service Obligation provided 2006/07 2007/08 Concessions to pensioners $835,404 $703,504 Rebates to Not-For-Profit Organisations under the Water & Sewerage Rebate Scheme $128,374 $108,746 Utility Relief Grant Scheme payments $4,978 $2,423 Water Concessions on Life Support machines - Haemodialysis $0 $0 Hardship Relief Grant Scheme (Sewerage Connection Scheme) $28,581 $0 Total $997,337 $814,673

AquaRate On Tap news sheet (mailed to account holders), As part of its commitment to continuous again often inviting public comment improvement in the delivery of high quality G Information brochures covering a wide range customer service, East Gippsland Water introduced of topics a new automated software system for handling G The operation of Customer Reference/Advisory accounts, called AquaRate. Committees where appropriate. No committees This system has been designed specifically to were required during 2007/08 meet the needs of the water industry. It has G Monthly, customer service follow-up calls greatly assisted staff with the handling of customer G Monthly, Regional Visits/Consultative Meetings enquiries by providing more accurate account where customers are invited to discuss East information than was available with the Gippsland Water issues with senior management Corporation’s previous system. It has also G An annual, independently conducted enabled a quicker turnaround between customer satisfaction survey to assess how meter readings and the issuing of bills. well Corporation services are being delivered. AquaRate is equipped to hold all East Gippsland Consultation is conducted on specific issues and Water records regarding properties, meters and proposed projects as well as draft East Gippsland transactions in relation to rates and charges. Water strategies and policies where there is a Initially used to produce customer invoices, the significant potential impact on customers and system will be able to register all customer contact the community. details from early in 2008/09. A new Corporate Licence was launched jointly by the Corporation and EPA Victoria during the Communication and Consultation reporting period. East Gippsland Water will be East Gippsland Water utilises a wide range of engaging the community on this licence and communication and consultation methods to relevant actions during 2008/09. engage with its domestic and business customers, Water Plan because they are spread across a vast geographic The Corporation’s Water Plan 2008-2013 contains area spanning some 21,000 square kilometres. key infrastructure projects required over the five-year The methods used include: period to help offset the impacts of climate change G Media releases, advertorials, advertisements and ensure all customers have a secure, high quality and articles published in local newspapers, drinking water supply for the long term future. on the Corporation’s website and broadcast Public feedback was considered in the drafting of on local TV and radio, often inviting public the plan and prior to its approval by the Essential feedback Services Commission, the water industry regulator, G Publicity in the Corporation’s Pipeline newsletter and adoption by the Board of East Gippsland Water (targeted at a selection of key stakeholders) and in June 2008.

G Customer Service staff launch the AquaRate software system for handling accounts.

Annual Report 2007-2008 East Gippsland Water 18 their preferred means to receive information about East Gippsland Water and its services. During the reporting period, 1,628 service-related incidents were recorded (compared with 1,440 during 2006/07). A total of 167 follow-up calls were conducted, with 139 customers very satisfied with the service provided by the Corporation (166 were complimentary in 2006/07), 23 recorded as satisfied (11 in 2006/07) and five as dissatisfied (two were unsatisfactory in 2006/07). Where customers were dissatisfied, their incidents were followed-up further with the aim of reaching a satisfactory resolution. G East Gippsland Water’s Managing Director Customer Satisfaction Survey Les Mathieson, seated, and EPA Victoria Chairman Annual customer satisfaction surveys commissioned Mick Bourke sign the new Corporate Licence. by East Gippsland Water are a vital way to gauge where it is delivering services well and help pinpoint any areas requiring action and In preparing the document the Corporation improvement. considered customer feedback from its annual customer satisfaction survey; monthly customer In 2007, a random survey of 500 customers from follow-up calls; meetings with community and all districts across the region were interviewed over interest groups; and, input from groups consulted the telephone. Bartley Consulting, an independent on particular issues or projects. research consultancy, was engaged to conduct the survey for the Corporation. During the reporting period the exposure draft was published and advertised for further public The results showed that the overall level of comment by East Gippsland Water. It was then satisfaction with East Gippsland Water was high submitted to the Essential Services Commission, and consistent with previous years, despite stress which also conducted public consultation before being placed on drinking water supplies and water issuing its final determination in relation to tariffs, quality following the severe drought, devastating charges and prices. bushfires and significant flood events of 2006/07. Regional Consultative Meetings Indeed the survey revealed 97% of customers to be at least satisfied with the overall level of service The Corporation schedules monthly community provided by the Corporation, the same as for the consultative meetings at towns across the region previous year. Encouragingly, the proportion of very including Omeo, Lakes Entrance, Orbost and satisfied customers increased from 40% to 44%. Mallacoota. These are advertised in advance in the local press, with customers invited to meet with the This may have been due in part to an ongoing, Managing Director and senior management to comprehensive communication program discuss East Gippsland Water issues. including regular media releases, advertorials and advertisements, as well as updates in the Customer Service Follow-up Corporation’s On Tap and Pipeline newsletters. At least 10% of customers who report incidents These were aimed at ensuring customers to the Corporation are contacted by the maintained an accurate understanding of the Communications & Education Officer to assess water situation. In fact the survey showed 98% their experience with East Gippsland Water. This of customers to be at least satisfied with follow-up is conducted by phone on a monthly information provided, compared with 95% basis and is invaluable in gauging how efficiently in 2006, while the proportion very satisfied and effectively staff have responded to incidents, also increased from 37% to 38%. The proportion the quality of customer service provided and any at least satisfied with the ways they were being aspects requiring improvement. The results are encouraged to save water rose from 96% to tabled at the monthly Board meetings. 97% and those very satisfied went up from Incidents reported include those relating to water 33% to 44%. supply (mains and meter), sewers and water quality. While the percentage of customers at least satisfied The follow-up process was reviewed in 2007/08, with the quality of drinking water provided by East with the intention of making it more objective. Gippsland Water dropped from 96% to 91%, likely The ratings complimentary, satisfactory, neutral to be associated with the impact of the bushfires, and unsatisfactory were replaced with a rating the percentage at least satisfied with wastewater system 0 - 10, where 0 - 4 = dissatisfied, services climbed from 96% to 99%. The figures for 5-7=satisfied and 8 - 10 = very satisfied. the supply of water remained unchanged at 96% Where the rating is below 8 customers are asked and likewise for the way East Gippsland Water ‘What would have been needed for the rating to handled customer accounts at 98%. increase?’ Customers are also asked to nominate

Annual Report 2007-2008 East Gippsland Water 19 Annual Customer Satisfaction Survey

% of customers % of customers at least satisfied at very satisfied

2006 2007 2006 2007

Overall satisfaction 97 97 40 44 Water supply 96965953 Wastewater services 96 99 67 68 Water quality 96 91 47 43 Customer accounts 98 98 64 64 The price 85 85 25 22 Service difficulties 96 98 40 53 Information provided 95 98 37 38 Encouraging customers to conserve water 96 97 33 44

Note: The survey is conducted in July each year and considers East Gippsland Water’s performance over the previous 12 months.

Water quality and supply were more of an issue Overall improvements in water supply levels for customers in 2007 than in 2006. This was across the region enabled East Gippsland Water particularly the case for those living in towns to progressively reduce water restrictions in areas connected to the region’s main water supply where they applied, so that by the end of August system, the Mitchell River system, which had 2007 there were no water restrictions in East been impacted by soil and debris following Gippsland. the 2006/07 bushfires. As in previous years there were some reports During 2007/08 this was addressed for Mitchell of dissatisfaction with either water taste or smell River customers through the use of specially among some smaller communities, notably installed water treatment infrastructure, such as Nowa Nowa, Buchan, Swifts Creek and Cann River. water clarifiers and settlement dams. This assisted The Corporation addressed these issues and the in cleaning the river water to drinking standard reporting period saw commissioning of new water and in large enough quantities to meet customer treatment plants at Buchan, Swifts Creek and Cann demand and replenish depleted storages. River to provide consistently high quality drinking water supplies. The commissioning of a 17 kilometre pipeline linking Nowa Nowa residents to the Toorloo Storage Basin at Lakes Entrance, also provided a supply of much better quality drinking water than that previously sourced from Boggy Creek. Included in this project was a new pump station at the Toorloo end and an upgraded water disinfection plant near Nowa Nowa. Of customers surveyed, 41% expressed interest in joining a customer panel for consultation purposes and supplied East Gippsland Water with contact details. These customers have been incorporated into the Corporation’s contacts data base as special interest customers and have become a targeted group to receive information. The Corporation will also seek feedback on special issues from this group. Customer Charter East Gippsland Water adopted its Customer Charter in 2005 following feedback from the local community and Essential Services Commission. This outlines the Corporation’s commitments and obligations to customers, G The Hon Tim Holding MP, Minister for Water, officially with copies available in hard copy and from opens a 17 kilometre pipeline to Nowa Nowa. East Gippsland Water’s website.

Annual Report 2007-2008 East Gippsland Water 20 Water conservation and Web Site Permanent Water Saving Rules East Gippsland Water’s website East Gippsland Water removed water restrictions www.egwater.vic.gov.au aims to provide customers around the region early in 2007/08 and with easy to access information about the maintained a comprehensive communication Corporation and its services. program reminding customers that state-wide Ongoing work to improve the site’s appearance Permanent Water Saving Rules still applied. and usability continued during the reporting period The Corporation reiterated the importance of and a full site renovation is scheduled for the adhering to Permanent Water Saving Rules and 2008/09 financial year. conserving water, as well as highlighting incentives From the home page, customers can link direct available to customers such as the Victorian to pages covering, for example, how to pay a bill Government’s Water Smart Gardens and Homes online; tariffs; the customer charter; media releases; Rebates Scheme. Key messages were conveyed and the environment. There are also direct links to on a regular basis in media releases and in the other related websites. Corporation’s Pipeline and On Tap newsletters Sponsorship distributed to key stakeholders and all account holders. They were also given prominence on East Gippsland Water provides financial, East Gippsland Water’s website. merchandise and in-kind sponsorship to a number of local organisations and community groups for Peak holiday periods, such as Christmas and Easter, activities with a focus on water use, conservation saw reminders about Permanent Water Saving and environmental sustainability. Rules and water conservation circulated to operators of tourist accommodation in East Financial sponsorship provided during Gippsland, aimed at encouraging visitors to the reporting period included to: the region to save water. G Bairnsdale Triathlon and Multi Sport Festival G Bairnsdale Secondary College for participation An advertisement on Permanent Water Saving in the RACV Energy Breakthrough challenge Rules also appeared regularly in the region’s G free newspaper, the East Gippsland News. Lake Entrance Primary School’s Garden Shed Kids G East Gippsland Rotary Home Show and Trade Fair This multi-pronged approach is being maintained (Bairnsdale) in 2008/09. Promotional items In addition the Corporation, through the lead water industry body VicWater, commenced negotiations East Gippsland Water promotional items are with VicRoads to install road signage at the selected on the basis that they comply with entrance to towns, reminding customers and the following criteria: visitors about the presence of Permanent Water G Have a practical application Saving Rules. The aim is to have this approved G Carry an environmental or water conservation and installed during the 2008/09 financial year. message Newsletters/news sheets Water Trailer Three issues of East Gippsland Water’s Pipeline East Gippsland Water’s mobile drinking water trailer newsletter were published during the reporting creates a highly visible and positive image for the period. This is designed to inform selected Corporation at community events. customers - including individuals and key Operating under the slogan “Preserving our organisations - of activities and projects involving environment - Naturally”, it is available free of the Corporation. It is mailed out, but is also charge to community and not-for-profit regional available on the Corporation’s website and over organisations. the counter at any East Gippsland Water office. During 2007/08 the water trailer attracted 20 Six issues of the On Tap news sheet were published bookings and was utilised at a variety of events in the reporting period. This is sent to account including community festivals, major sporting holders, with each issue tailored to specific events, school functions and field days. geographic areas and mailed out to customers Energy and Water Ombudsman Victoria with their account. Customers dissatisfied with any aspect of Information brochures interaction or service performance from a utility East Gippsland Water’s extensive brochure range within Victoria may seek assistance from the includes customer service and environmental Energy and Water Ombudsman Victoria. This is information, as well as covering water conservation, an independent body funded by member utilities. Permanent Water Saving Rules, water restrictions During the reporting period East Gippsland Water and information about the Corporation’s water received two complaints that were referred to and wastewater systems. a higher-level contact in the Corporation for resolution and two complaints that were subsequently investigated by the Energy and Water Ombudsman Victoria.

Annual Report 2007-2008 East Gippsland Water 21 Education

A major message to all groups is the Corporation’s focus on environmental benefit and sustainability as a fundamental requirement of all its operations.

Annual Report 2007-2008 East Gippsland Water 22 EDUCATION

East Gippsland Water employs a range of strategies Six year old Isadora Martin of Tambo Upper Primary to communicate key messages to school-age School topped the Year Prep category at both students and adults, focusing on water regional and state levels with her colourful poster conservation and awareness that water is a finite incorporating the message ‘If there is no water we resource. don’t grow’. A major message to all groups is the Corporation’s A number of primary schools were also visited focus on environmental benefit and sustainability during the week, with students participating in a as a fundamental requirement of all its operations quick-fire water quiz game designed to test their in relation to water, wastewater and reuse. knowledge on the importance of water and water Water Education in Schools conservation. East Gippsland Water is a member of the Victorian Adult Water Education Water Educators’ Network and of a regional water East Gippsland Water handled numerous requests education and communications network involving for infrastructure tours and presentations covering Gippsland Water, Water and various aspects of its activities. Westernport Water. These groups are invaluable Those to benefit included Bairnsdale Rotary Club, for the sharing of ideas and strategies to advance Orbost Women’s Awareness Group, Lakes Entrance water education in schools. Probus and U3A Lakes Entrance. The Corporation responded to a number In addition the Corporation ran a stand at the of requests for presentations and tours of East Gippsland Rotary Home Show and Trade Fair, infrastructure such as water and wastewater providing information on water conservation and treatment plants, covering issues such as incentives available for installing water saving wastewater re-use and the importance of measures. water conservation. World Wetlands Day Well over 100 trees were planted by students from World Wetlands Day, on 2 February, provided a Lucknow Primary School in a joint effort with East great opportunity for the public to tour Bairnsdale’s Gippsland Water to mark World Environment Day, world renowned Macleod Morass and to learn which was on 5 June 2008. about the success of East Gippsland Water and The trees were planted as a native vegetation Parks Victoria initiatives to protect its long term and carbon emission offset on land set aside by health. the Corporation. The initiative provided an ideal The Corporation has been helping to conserve the opportunity for the students to learn more about abundant flora and fauna with recycled water from East Gippsland Water initiatives to mitigate the the nearby Bairnsdale Wastewater Treatment Plant impact of its operations on the environment. and the day was marked by tours of the plant and Careers Expo morass. East Gippsland Water participated in an Action Information Brochures Expo day at Nagle College in Bairnsdale, giving East Gippsland Water’s extensive information Year 9 - 12 secondary students the opportunity brochure range includes: to explore various career choices, including in G Customer service information: account payment the water industry. options, advice to those planning to build or Some 50 local businesses and organisations subdivide, trade waste requirements, water took part, with more than 1,200 students attending meters, care of sewers, care of overflow relief from across East Gippsland and from farther afield. gullies and planting trees near pipes The Corporation ran various activities geared at G Environmental information: Thirty ways to save providing students with some insight into the water; East Gippsland Water’s reclaimed water range of work it does and the issues it faces. reuse at Bruces Track Farm, constructed wetlands Water Week at Macleod Morass, and “Being Water Wise” National Water Week provides a focus for water G Separate brochures explaining the Corporation’s sustainable issues at the national, state and water and wastewater systems, such as the new regional level and the Corporation attracted water treatment plants at Bemm River, Buchan, more than 300 entries in the 2007 National Cann River and Swifts Creek. Water Week Primary Schools Poster Competition. Also, there are brochures covering Permanent Students from Tambo Upper, Meerlieu and St Water Saving Rules and water restrictions. Mary’s primary schools came out East Gippsland’s All brochures are available in hard copy and to winners, with one student also scooping first prize download from the East Gippsland Water website at state level. www.egwater.vic.gov.au

Annual Report 2007-2008 East Gippsland Water 23 Environmental Sustainability

The well-being of the environment, community and economy are closely linked, particularly in relation to the region’s dominant industries of tourism, forestry, fishing and agriculture.

Annual Report 2007-2008 East Gippsland Water 24 ENVIRONMENTAL SUSTAINABILITY

East Gippsland is an environmentally diverse part Government’s Our Water Our Future policy, which of Victoria and the well-being of the environment, is designed to drive initiatives conserving and community and economy are closely linked, securing water supplies for the next 50 years. particularly in relation to the region’s dominant East Gippsland Water’s achievements during industries of tourism, forestry, fishing and the 2007/08 reporting period included: agriculture. Wastewater recycling During 2007/08 the Corporation’s high priority East Gippsland Water maintained its 100% commitment to sustainability and protecting the wastewater reuse record at all ten wastewater environment was reinforced through: treatment plants, retaining its position as one of the G the appointment of a dedicated Sustainability leading water corporations in Victoria and Australia. and Environment Manager; In March 2008, the Corporation’s separate EPA G the joint launch with EPA Victoria of a corporate licences for ten wastewater treatment plants licence designed to help further enhance the were amalgamated into a single corporate licence, environment and deliver savings to business reducing documentation from 113 pages to just nine by reducing time on licence administration. pages. This new agreement with the EPA supports This was only the second licence of its kind to East Gippsland Water’s commitment to sustainability be launched in Victoria. Licensing requirements and improving environmental performance. remain as vigorous as ever. While licensing requirements remain as rigorous as G commitment to develop a Sustainability Strategy ever, it means the Corporation now has more time which will be implemented over the next five available to focus on long-term initiatives aimed at years to tie in with the Corporation’s Water Plan reducing its overall environmental impact. It also 2008-2013. enables it to work more closely with developers Our Water Our future and the tourism industry to reduce levels of water consumption and wastewater produced by During 2007/08 the Corporation continued to customers. progress a number of initiatives from the Victorian

Volume of Wastewater Collected, Treated and Reused

Volume (ML)

2004/05 2005/06 2006/07 2007/08

Wastewater collected 3,146 2,954 2,851 2,838 Wastewater treated 2,822 2,668 2,429 2,730 Wastewater reused 2,822 2,668 2,429 2,730 Actual wastewater reuse 100% 100% 100% 100% Target reuse 100% 100% 100% 100%

Volume of Wastewater Reused per Town/System 2007/08 Town System Number of Annual Wastewater Assessments Volume Re-used (ML) Bairnsdale 6,338 1,148 Cann River* 170 0 Dinner Plain 518 47.4 Lakes Entrance 4,348 603.2 Lindenow 165 19.5 Mallacoota 959 96.8 Metung / Bruthen 1,348 160.1 Omeo 230 33.2 Orbost / Marlo 1,643 267.7 Paynesville 3,369 354.6 Total 19,088 2,730

Note: *Cann River wastewater is being collected and stored in treatment ponds. There is insufficient water for irrigation to pasture at this time.

Annual Report 2007-2008 East Gippsland Water 25 How 100% Reuse is achieved

Location Reuse purpose Bairnsdale Wetlands Tree plantations Racecourse Lindenow Wetlands Paynesville Golf course Pasture Metung Pasture Lakes Entrance Tree plantations Golf course Pasture Omeo Pasture Dinner Plain Alpine Woodland Orbost Tree plantations Pasture Mallacoota Tree plantations Golf course Pasture Cann River Pasture East Gippsland Water supplies wastewater for Pioneering research that the Corporation beneficial reuse on both its own properties and participated in with CSIRO through to 2006/07 to third parties as irrigation water for golf courses, involved covering open water storage basins at tree plantations, pasture, alpine woodland and a Omeo, Mallacoota, Swifts Creek and Cann River racecourse. Wastewater is also reused to provide with shadecloth covers. There was a notable environmentally beneficial freshwater flows to decrease in algal blooms and a 90% reduction wetlands - including the internationally significant, in evaporation, which was cut from a total of Ramsar-listed, Macleod Morass on the outskirts some 29 ML to just 2.9 ML a year. of Bairnsdale - helping to maintain and improve Building on this success, during the reporting wetland biodiversity. period a new shadecloth cover was installed over Water Conservation the Lindenow open water storage. On-site work started on a major $1.5 million upgrade to East East Gippsland Water’s ongoing drive to conserve Gippsland Water’s Sunlakes storage supplying water supplies and reduce its impact on the drinking water to customers in Lakes Entrance environment includes managing water losses, and Kalimna. Due to be finished before the end by replacing old meters and checking pipelines of 2008, this involves installing a plastic cover and property connections to pinpoint and reduce over the entire basin as well as relining the basin leaks under its leak detection program. floor and walls with layers of rock, sand and As a result of works carried out during 2007/08, polyethylene lining material. 48 ML of unbilled water, a combination of As well, a cover was included in the design for a unaccounted water and accounted water refurbished storage basin at Wy Yung. Construction not billed, was saved. This added to a saving of the storage cover and liner continued during the of some 200 ML achieved through works in reporting period and is expected to be completed the previous year. in 2008/09. East Gippsland Water continued its meter replacement initiative, with some 1,800 domestic Elsewhere, construction work got underway to meters and six bulk flow metres replaced during replace the Eagle Point open water storage, 2007/08. Larger meters are also now included on serving the Eagle Point and Paynesville areas, replacement lists which are updated on an annual with two covered water storage tanks capable basis. of holding up to six ML of drinking water each. This $2.5 million project is due for completion in The Corporation focused on the Orbost and 2008/09. Marlo areas to significantly reduce the level of unaccounted water in the Orbost supply system, in part following up on leak detection work carried out in 2006/07. A number of large multi-flow meters were replaced, along with some key bulk meters, to address water previously unaccounted for. Across the region, East Gippsland Water is continuing its bulk water meter testing, verification and replacement program to ensure its water accounting is accurate. Covered storages The Corporation stepped up its program to cover open water storages, or replace them where appropriate, recognising the significant benefits to be gained in protecting water quality. Other benefits include reducing water loss through G Construction of the first covered water storage tank evaporation and leakage. serving Eagle Point and Paynesville commences.

Annual Report 2007-2008 East Gippsland Water 26 Design and planning work progressed to replace the Sarsfield open storage with a covered tank and 2008/09 is expected to see construction work commence. Process Water Efficiencies Water treatment processes have traditionally resulted in loss of water due to the filtering of contaminants and the Corporation has been keen to address this. New water treatment plants commissioned at Buchan, Swifts Creek and Cann River during 2007/08, and at Bemm River (2006/07), have been designed to miminise water wastage. G Sludge dewatering geobags help minimise wastage The sediment removed from raw river water is at water treatment plants. collected as sludge, thickened and any remaining water removed using ‘sludge dewatering geobags’. and commissioned during the reporting period. This reclaimed water is returned to the plants This has the capability to capture and reuse for treatment. The water savings benefit the approximately 18 ML of washwater a year, which environment as less river water needs to be would otherwise have gone into the sewer and extracted. This technique has been reproduced represents a 10% bulk water saving for the water at other Corporation water treatment plants. supply system. Improvements were made to the Mallacoota Similar infrastructure improvements are underway Water Treatment Plant to recycle water used at Orbost and Omeo water treatment plants to in operating the facility (washwater), with the recover washwater, with the projects due to be necessary infrastructure constructed, installed completed during 2008/09. Working with businesses Major non-residential In October 2007 the Corporation invited the water users 2007/08 biggest water users amongst its non-residential customers, all consuming at least 10 ML of water Volumetric Range Number of ML/year Customers a year, to an information session on the Victorian Government’s WaterMAP initiative. This initiative Equal to or greater than 50ML obliges them to prepare and implement water and less than 100ML 1* saving plans. Equal to or greater than 100ML Fifteen East Gippsland customers were required and less than 200ML 1** to submit Water MAPs, with all doing so. Two Equal to or greater than 200ML were classified as major non-residential water and less than 300ML 0 users because their water consumption was at least 50 ML a year. Equal to or greater than 300ML and less than 400ML 0 The Corporation has been working closely with all these customers on the implementation and Equal to or greater than 400ML monitoring of their water saving measures, which and less than 500ML 0 will continue through 2008/09 and subsequent Equal to or greater than 500ML years. and less than 750ML 0 Assisting Local Government Equal to or greater than 750ML The Corporation has been actively involved with and less than 1000ML 0 the development of East Gippsland Shire Council’s Greater than 1000ML 0 Environmental Sustainability Strategy. It is a member of the Council’s Environmental Sustainability Total number of customers 2 Advisory Board, providing specialist input in relation to water conservation and management. Major non-residential water users Community Education and Awareness and their participation in water East Gippsland Water employs a range of strategies conservation programs to communicate key messages to school students and adults to focus on the importance of water Name of Customer’s participation in conservation and to highlight that Permanent Customer water conservation program Water Saving Rules are in force across the region. *Patties Foods Yes, full participation Water Restriction By-law in WaterMAP program Although water restrictions have not been **VEGCO Pty Ltd Yes, full participation applicable in the East Gippsland Water region in WaterMAP program since August 2007, the Corporation has adopted

Annual Report 2007-2008 East Gippsland Water 27 the Model Water Restriction By-law, as released Regional Catchment Management by the Hon Tim Holding MP, Minister for Water. Strategy This will be implemented where relevant. East Gippsland Water provides ongoing assistance Water Supply Demand Strategy with the development and delivery of the Regional Formally adopted by the Board in May 2007, the Catchment Strategy in a number of ways. Corporation’s Water Supply Demand Strategy is It is a member of East Gippsland Catchment a vital driver in determining the direction of East Management Authority’s Program Working Gippsland Water strategies and action plans to Group. The purpose of the group is to improve ensure long term water security. This strategy will the coordination of various activities into a continue to be reviewed and revisited in light of program of works, to meet the objectives of altering supply and demand estimates. Of particular the East Gippsland Regional Catchment Strategy interest is the possible reduction in supply over the and supporting plans. next 10-30 years due to bushfire impact. It also works with East Gippsland Catchment Works continued during the reporting period to Management Authority, Parks Victoria, East address identified deficiencies in the Omeo and Gippsland Shire Council, Alpine Shire Council and Dinner Plain water supply systems. Both systems the Department of Sustainability and Environment may require some form of bulk water on catchment related projects within the augmentation in future years and further Corporation’s water supply districts. In addition detailed work is occurring to validate the findings it acts as a referral authority for works that occur of the strategy and determine the most suitable in the region’s catchments. action plan. The Water Supply Demand Strategy has been Victorian Biodiversity Strategy instrumental in determining the priorities and The Corporation complies with the Victorian direction of East Gippsland Water’s 2008-2013 Biodiversity Strategy through implementation of Water Plan, approved by the Essential Services the East Gippsland Water Biodiversity Management Commission in July 2008. Plan and Asset Register. These have already been East Gippsland Water actively pursues water used to assess existing East Gippsland Water conservation as highlighted elsewhere in this assets/sites for biodiversity significance and risk, report. The target adopted is a 25% reduction and are used to assess new works. in per capita demand by the year 2015, relative The Corporation’s plan is designed to minimise to 1990’s demand. any potential harm to threatened and endangered species by identifying the locations of any previously recorded sensitive species or vegetation types and comparing these with East Gippsland Water sites and activities. During the reporting period it was used to carry out an independent biodiversity assessment of the site identified for a new water treatment plant at Woodglen, prior to the planning of major works. It was also used in relation to additional works at Toorloo Arm storage. The plan also involves training field staff to operate appropriately around sensitive areas. River Health The Victorian Government’s Our Water Our Future policy relating to rivers is being addressed by East Gippsland Water through the Victorian River Health Strategy, which is designed to manage, protect and restore rivers over the long term. The Corporation also works actively to ensure compliance with river health requirements set out in its Statement of Obligations. Drinking water is supplied to all East Gippsland Water customers with minimal impact on existing environmental flows from the Mitchell, Brodribb, Rocky, Betka and Tambo Rivers, and Butchers Creek. The Corporation has no major on-stream dams, while the future of the small 640 ML Nicholson River dam, used for emergency supply during G The at Swifts Creek. extreme drought, is under review.

Annual Report 2007-2008 East Gippsland Water 28 East Gippsland Water actively participates in work and initiatives to protect and improve wetland and river health including: G Through participation in the Gippsland Regional Water Monitoring Partnership Group, which monitors water quality across Gippsland streams and estuaries. The group’s information is crucial G Macleod Morass was the subject of a three year in monitoring catchment health. The Corporation biological study. contributes funds, officers and other resources. period with many tonnes of the fish caught and G Through its membership of the removed, most notably as a result of draining Taskforce, a partnership of organisations including down one large section of the upper morass. the Department for Sustainability and Environment and East Gippsland Catchment Management Wetland Rehabilitation at Metung Authority, established to protect and enhance East Gippsland Water continues to improve the health of the Gippsland Lakes. and enhance the environment at its Metung G By investigating the impact that East Gippsland Wastewater treatment plant, with cooperation from: Water infrastructure and operations may have Tambo Bay Estate residents; Lower Tambo Landcare on local river health and using the results to Group; Green Corps; East Gippsland Catchment minimise any impact. Management Authority; the Department of G Through its ongoing leak detection program Sustainability and Environment; and East Gippsland and water conservation measures designed Institute of TAFE Forestech students. The project to minimise the volume of bulk water diverted involves revegetation and rehabilitation of a section from the region’s streams and aquifers. of land regarded as unsuitable for farming or irrigation adjacent to Tambo Bay on the Transfer of bulk entitlement Gippsland Lakes. East Gippsland Water continued with the process When complete the area will become a valuable to transfer its bulk water entitlement from the community wetland asset and provide a buffer Nicholson and Tambo Rivers across to the Mitchell against encroaching development. River. This will allow the Corporation to consolidate water supply infrastructure around a single, reliable, Office Based Environmental Impacts high quality water supply source. The Corporation continued to review its Bairnsdale As part of the transfer process, discussions office-based activities, as part of its commitment to continued with the Department of Sustainability continually improve resource efficiency and reduce and Environment, East Gippsland Catchment its impact on the environment. Management Authority, Southern Rural Water, There was a significant reduction in water Gippsland Coastal Board and Mitchell River irrigators. consumption per full time staff member compared Initial work was undertaken into future water with 2006/07. A further cut in energy consumption allocation and management of the Mitchell River, per full time staff member was helped by an with REALM modelling used to underpin this work. ongoing program of measures including installation This project will continue to progress in 2008/09, of efficient light fittings and the inclusion of more with the key to demonstrate there is no detrimental fuel-efficient vehicles in the Corporation’s fleet, with, environmental impact from the transfer, but rather for example, the number of hybrids increased from positive outcomes. one to three. Initiatives to raise staff awareness of Macleod Morass environmental issues also brought a reduction in waste generation and paper use. Under EPA licensing requirements, East Gippsland Water’s Bairnsdale Wastewater Treatment Plant Corporate Water Consumption supplies high quality freshwater to the Macleod Morass, near Bairnsdale, via constructed wetlands. Total water consumption at East Gippsland Water’s Bairnsdale office was reduced from 327,045 litres This supply is providing measurable environmental in 2006/07 to 187,700 litres in the reporting period, benefits to the deep, freshwater marsh and East representing a decrease of nearly 43%. Gippsland Water closely monitors the site to ensure its activities have a beneficial impact. This equated to a 3,916 litre reduction in consumption per staff member compared Biological monitoring keeps a check on water quality, with 2006/07, dropping from 8,606 litres frogs, birds, fish, vegetation and macro invertebrates, to 4,690 litres per staff member. as well as pests including European carp. The significant reduction owed much to A three year biological study of the Macleod Morass lower ongoing water requirements for the was completed in 2007/08. The results of this will Corporation’s drought tolerant garden during be reviewed in 2008/09 to determine what level 2007/08, compared with the previous year of future monitoring needs to be undertaken when the garden was installed and needed help during that financial year and beyond. to establish. Another major factor was increased An ongoing project to tackle the carp population staff awareness of the importance of water showed promising results during the reporting conservation.

Annual Report 2007-2008 East Gippsland Water 29 Energy Use

Quantity Quantity Parameter 2006/07 2007/08 Unit Energy Energy used per full time employee 15,750 15,305 Megajoules/FTE*

Energy per square metre of office space 495.9 507.2 Megajoules/m2

Total energy usage 598,510 612,205 Megajoules

Greenhouse gas emissions 231.42 229.3 CO2 Tonnes

Waste Production Total units of waste produced 80.1 75.4 Kg/FTE

Total units of waste recycled 2,000 2,048 Kg

Paper Use Units of paper used per employee 18 17.5 Reams/FTE

Total units of paper used 734 700 Reams

Water Consumption Units of water used per employee 8,606 4,690 Litres per employee

Total units of water consumed 327,045 187,700 Litres

Transport** Total energy consumption 508 997 Gigajoules

Total CO2 equivalent 37.2 73 CO2 -e tonnes

Energy consumption per employee 13.38 26.2 GJ/FTE

CO2 equivalent/per employee 0.98 1.92 CO2 - e tonnes/FTE

Kilometres travelled per employee 4,253 6,442 Km/FTE

Total kilometres travelled (not private or commuting) 161,608 244,792 Km

Percentage of employees using public transport, car pool, cycling or walking to work 5.3% 12%

Note: * FTE = Full time equivalent staff ** Revisions have been made to the way transport emissions are calculated, to further improve accuracy, and these account for the increase in emissions reported for 2007/08 compared with the previous financial year.

Greenhouse Gas Emissions Over the past few years East Gippsland Water has 2007/08 were 7,957 CO2-e tonnes. This set out to minimise energy use and greenhouse represented a very slight increase on the previous gas emissions, with a firm commitment to reduce year’s total of 7,927 CO2-e tonnes and the main the environmental and economic impact of its contributing factor was electricity consumption, operations. which rose from 6,487 to 6,714 CO2-e tonnes. Total greenhouse gas emissions for the This was largely because the Mitchell River Water Corporation’s business and activities for Supply System was operating at a very low level

Annual Report 2007-2008 East Gippsland Water 30 Greenhouse Gas Emissions 2007/08 Electricity Direct Usage Fuel Emission ULP/Diesel LPG

CO2 -e (tonne) CO2 -e (tonne) CO2 -e (tonne) CO2 -e (tonne) Water Treatment and Supply 3,777 46 0 0 Sewage Treatment and Management 2,635 2 0 858 Transport 0 312 25 0 Other (ie office buildings) 302 0 0 0 Total 6,714 360 25 858

Total Greenhouse gas emissions: 7,957 CO2-e tonnes due to the water quality impact of the 2006/07 of more than 100 trees on land set aside by the bushfires. It meant the Corporation had to use Corporation adjoining its Bairnsdale Wastewater pumps 24 hours-a-day to fill up storages prior Treatment Plant and the Macleod Morass. This to the peak holiday period over Christmas. was carried out by students from Lucknow While Bairnsdale office transport emissions Primary School in a joint effort with East recorded an increase due to a more accurate Gippsland Water to mark World Environment calculation of vehicle emissions, the Day on 5 June 2008. organisation-wide impact from transport decreased. Direct emissions from methane Environmental generated at the Corporation’s wastewater Management System treatment plants also decreased for the The Corporation successfully retained certification reporting period, down from 954 CO2-e of its Environmental Management System (ISO tonnes to 858 CO2-e tonnes. 14001) with the triennial re-certification audit conducted by external auditors NCS International Building on the independent energy and during the reporting period. greenhouse gas audits undertaken in the previous year, East Gippsland Water implemented Biosolids Management a number of energy saving initiatives such as replacing old and worn pumps with new In 2008/09 East Gippsland Water contributed energy-efficient models, giving priority to sites to the National Biosolids Research Program. where the greatest energy savings could be Key findings and recommendations from the achieved. The Corporation is also in the process Program were presented in December 2007 of developing a Greenhouse Gas Reduction and a representative from the Corporation Strategy, which will include an action plan for attended the Draft Position Paper launch. achieving greenhouse gas reductions over the Also during the financial year, 500 dry tonnes next 5 years. This is being pursued as part of of biosolids were reused for pasture improvement East Gippsland Water’s 2008-2013 Water Plan. at the Corporations Bruces Track Farm. Environmental Improvement East Gippsland Water is committed to sustainable reuse of biosolids and will continue to incorporate The Corporation has for a number of years recent research into biosolids management plans. applied the practice of planting and sustaining native vegetation in buffer strips, natural forest Water Consumption areas and marginal land next to water courses The reporting period saw a significant reduction associated with its irrigation sites, treatment in water consumption by residential and plants and farms. non-residential customers compared with Some 336 hectares of land not used for farming 2006/07, despite more than 760 additional purposes is managed to enhance the local assessments (customers). environment and, in some cases, is irrigated with Total consumption dropped from 5,107.5 ML to treated water. These areas provide an offset for 4,433.6 ML, representing a reduction of more carbon and native vegetation emissions. Though than 15%. The overall level of water consumption not yet included as a carbon credit, they do reduce per property fell from 0.2316 ML in 2006/07 to East Gippsland Water’s environmental impact. 0.194 ML in 2007/08. During the reporting period further revegetation One factor was the absence of the devastating programs were undertaken, including the planting bushfires that burned in Gippsland in 2006/07,

Annual Report 2007-2008 East Gippsland Water 31 stretching water resources to the limit as customers had been fostered while water restrictions were and the emergency services relied on East in force during much of 2006/07 and into early Gippsland Water supplies to defend properties. 2007/08. These attitudes endured through the There was also a notable, positive change in remainder of the reporting period, with many customer attitudes to water conservation, which customers following a conservative, conscientious approach to water conservation and keen to adopt Native Vegetation water saving measures.

Area currently under Native Vegetation (Natural Bush and Plantations) Location Size - Hectares Vegetation Use Bruces Track Farm 9.9 Tree lots 10 Re-vegetation (including buffers) 50.5 Natural forest Bruces Track (south) 1 Re-vegetation (including buffers) Metung Farm 29.5 Re-vegetation (including buffers) Lindenow 0.5 Re-vegetation (including buffers) Orbost Farm 30 Re-vegetation (including buffers) 130 Natural forest Mallacoota Farm 56 Tree lots 10 Natural forest Bairnsdale Wastewater Treatment 9.5 Tree lots Plant 0.3 Total area 337.2

East Gippsland Water Entitlement Reporting 2007/08

Entitlement Resource Entitlement Total Volume Volume Name Manager Type Entitlement ML/y Diverted ML/y Unused ML/y Bairnsdale Southern Rural Water Bulk 5,902 4,687.6 1,214.4 Lakes Entrance Southern Rural Water Bulk 2,993 0 2,933.0 Bemm River Southern Rural Water Bulk 100 25.3 74.7 Cann River Southern Rural Water Bulk 192 48.7 143.3 Mallacoota Southern Rural Water Bulk 330 125.8 204.2 Bruthen Southern Rural Water Bulk 313 0 313.0 Nowa Nowa* Southern Rural Water Bulk 118 6.1 111.9 Swifts Creek Southern Rural Water Bulk 224 46.1 177.9 Buchan Southern Rural Water Bulk 170 21.8 148.2 Orbost Southern Rural Water Bulk 2,031 773.9 1,257.1 Omeo** Goulburn Murray Water Bulk 77 54.5 22.5 Mallacoota Southern Rural Water Groundwater 80 42.2 37.8 Dinner Plain Goulburn Murray Water Groundwater 60 47.8 12.2 Mitchell System*** Southern Rural water Groundwater 500*** 55.3 N/A

All conditions of East Gippsland Water’s bulk entitlement were complied with during 2007/08. Notes: * The township of Nowa Nowa was connected to the Mitchell River Supply System in November 2007 and extractions from Boggy Creek have ceased. ** East Gippsland Water has been successful in gaining a 77ML bulk entitlement for Omeo, formalising extractions from Butchers Creek. *** East Gippsland Water gained a temporary water licence to extract 500ML from groundwater, to alleviate water supply shortages following the events of 2006/07. Of the 500ML available East Gippsland Water used a total of 93.639ML, 55.333ML of which was taken early in the 2007/08 financial year. This licence has now expired.

Annual Report 2007-2008 East Gippsland Water 32 Water Consumption Statistics by System 2007/08 Average Annual Water Average Creek d where storages may have been emptied for augmentation Accounted Non- Unaccounted not Water Non- Assessment Numbers Residential Residential Total #1 Water Billed #2 Total Residential Residential #3 Total District/System (= Customer Numbers) (ML) Water Non-Revenue Consumption (ML) Water Consumption (ML) #4 Bemm RiverBuchan 89Cann RiverDinner Plain 83 8Mallacoota 149 461Mitchell * 29 67 904 97 * Nowa Nowa 61 16,238Omeo 112 102 216 3Orbost 2,206 522Swifts Creek 1,006 3.8 5.1 18,444 7.067 208 19.6 2007/08Total 23.5 371.2 1,624 0.089 104 19,860 2006/07 0.08Total 10.1 0.997 133.026 71 19,161 2,956 2.062 388 3.9 24 504.2 5.2 20.6 2,893 9 22,816 25.5 279 2,012 2,404.7 22,054 556.3 9 128 17.7 21 3.8 1045.8 104.2 96.4 12.3 3.9 572 161.3 3,450.5 25.7 9.8 11.045 8.9 0.06 6.3 1.309 52.7 12.9 717.6 194 115.2 43.4 3,804.5 5.56 2,867.1 13.6 149.1 17.9 3.9 27.2 255.6 766 1,566.5 16 15.3 23.9 4,433.6 3,334.1 396.4 47.2 10 151.5 20.7 29.2 1,773.4 19.8 13.6 652 4,856.4 4.2 5,107.5 37.5 9 5,007.2 14.2 694.4 28.8 46.3 19.3 27.3 Notes: serviced by Boggy Prior to that it was serviced by the Mitchell River Supply System from November 2007. district was Nowa *Nowa not calculated because of pipe breaks and any water lost through leakages includes water #1 Unaccounted water used for mains flushing, scouring of tanks and basins, bleeds disinfection, an not Billed includes water Accounted Water #2 Non-Revenue Water Consumption excludes Water #3 Total Consumption over the last three years Water Consumption is based on Total Annual Water #4 Average

Annual Report 2007-2008 East Gippsland Water 33 Water Quality

The Corporation recognises that a fundamental part of its role is the delivery of high quality drinking water to the community.

Annual Report 2007-2008 East Gippsland Water 34 WATER QUALITY

Drinking Water Quality Policy Swifts Creek and Bemm River East Gippsland Water is responsible for providing Water Quality Zones drinking water that meets the requirements of Full water treatment plants capable of treating the the Safe Drinking Water Act 2003 and the East variable quality source water at Swifts Creek and Gippsland Water Customer Charter. at Bemm River were constructed, eliminating the use of chlorine dioxide as a disinfectant and its The Corporation recognises that a fundamental byproduct chlorite. The conversion to sodium part of its role is the delivery of safe water hypochlorite disinfection at Bemm River was to the community. This is achieved by completed in August 2007 and conversion at effective management of water quality from Swifts Creek was completed in December 2007. catchment to tap, including reliable water treatment, risk management and responsiveness to customer Buchan Water Quality Zone expectations. This commitment includes establishing In addition, during 2006/07 East Gippsland Water and maintaining a Drinking Water Quality commenced construction of a full water treatment Management System. plant at Buchan to resolve a declared undertaking in relation to potential turbidity non-compliance as Water Quality: Safe Drinking Water a result of the 2003/04 bushfire impact on water Regulations quality. The plant became operational early in the Safe Drinking Water Regulations 2005 in 2007/08 period. conjunction with the Safe Drinking Water Act 2003 Water Quality Performance make provision for the supply of safe drinking water and outline requirements for a risk management Indicators plan; audits; drinking water quality standards; water For detailed water quality results and performance sampling localities (water quality zones); water reports, refer to the East Gippsland Water: Water sampling points; sampling frequency; analysis Quality Annual Report 2007/08, available from requirements; and an Annual Water Quality Report. the Corporation’s Bairnsdale office The report will be available in hard copy format (133 Macleod Street) and from the website and on the Corporation’s website www.egwater.vic.gov.au (www.egwater.vic.gov.au). Drinking Water Quality: Declared Undertakings Safe Drinking Water Act 2003 Section 30 of the Safe Drinking Water Act 2003 East Gippsland Water monitors drinking water allows for the Secretary of the Department of quality in 27 communities, incorporated in 19 Human Services to accept a written undertaking Water Quality Zones. Each Water Quality Zone from a water supplier that certain actions will be encompasses a source water entry point after performed in the event that they are, or are likely to disinfection, and sampling sites normally be, in contravention of the Safe Drinking Water Act customer taps. 2003, or its associated regulations. In accordance with the Safe Drinking Water Act During the 2007/2008 period, East Gippsland 2003 and Safe Drinking Water Regulations 2005, Water requested extensions on the previous designated customer taps are sampled at specified undertakings (2006/2007) for the following frequencies for seven regulated parameters. A brief supplies and water quality parameters: explanation of each parameter is given below. Nowa Nowa Water Quality Zone More detailed explanations can be obtained from Township of Nowa Nowa: Exceedence of Australian the Australian Drinking Water Guidelines 2004 and Drinking Water Guidelines (2004) for Chlorite World Health Organisation Guidelines for Drinking Swifts Creek Water Quality Zone Water Quality. Refer to figures 1-7 on pages 38-41 Township of Swifts Creek: Exceedence of Australian for summaries of water quality performance for Drinking Water Guidelines (2004) for Chlorite the following regulated parameters: Bemm River Water Quality Zone E.coli Township of Bemm River: Exceedence of Australian Escherichia coli (E.coli) is a bacteria found in large Drinking Water Guidelines (2004) for Chlorite numbers in the faeces of humans and other warm blooded animals and serves as a reliable indicator Actions to resolve of recent faecal contamination of water. E.coli declared undertakings should not be detected in drinking water supplies. The recommended limit is no E.coli in 98% of Nowa Nowa Water Quality Zone samples taken in any 12 month period. As part of Water Quality Improvement Works, During 2007/08 there were no detections of E.coli Nowa Nowa commenced receiving higher quality at customer taps in the Corporation’s water supply water sourced from the Mitchell River. This is systems. pumped through a 17 kilometre pipeline from Toorloo Storage Basin at Lakes Entrance, constructed at a cost of $1.7 million. The Boggy Creek water supply was decommissioned in November 2007.

Annual Report 2007-2008 East Gippsland Water 35 Chloroacetic Acids Chloroacetic acids are produced in drinking water as by-products of the reaction between chlorine and naturally occurring organic material in water. Monitoring for three types of chloroacetic acids is undertaken in areas where chlorine based disinfectants are used: G monochloroacetic acid - limit ≤ 0.15 mg/L G dichloroacetic acid - limit ≤ 0.1 mg/L G trichloroacetic acid - limit ≤ 0.1 mg/L During 2007/08 the chloroacetic acids limit was not exceeded. Trihalomethanes Trihalomethanes are present in drinking water as a result of chlorine based disinfection. Chlorine can react with naturally occurring organic material in the water to produce trihalomethanes. The limit for G Testing for turbidity levels takes place on a regular trihalomethanes in drinking water is ≤ 0.25 mg/L. basis. During 2007/08 this limit was not exceeded. By way of comparison, it would be difficult to see Aluminium through a glass of water with a turbidity of more Aluminium may be present in water through than 60 NTU, while ‘crystal clear’ water usually natural leaching from soil and rock, or from has a turbidity of less than 1 NTU. the use of aluminium-based coagulants in the The limit for turbidity in drinking water is “the 95% treatment of water. East Gippsland Water uses upper confidence limit of the mean of samples of aluminium-based coagulants in the treatment drinking water collected in any 12 month period of water in Buchan, Cann River, Bemm River, must be less than or equal to 5.0 NTU.” Swifts Creek, Omeo, Orbost and Mallacoota. * (Refer to Table 1 on opposite page for an There is no health-based guideline for aluminium, explanation of the statistical analysis) however this parameter is monitored to ensure that the treatment process is working effectively At the end of the 12 month period of 2007/08, and efficiently. The limit for aluminium in drinking all sites were compliant for the turbidity limit. water is ≤ 0.2 mg/L. During 2007/08 this limit was not exceeded. ug/l represents microgram per litre, Turbidity or 1 part per billion Turbidity is caused by the presence in water of fine mg/l represents milligram per litre, suspended matter such as clay, silt, small particles, or 1 part per million plankton, algae and other microscopic organisms. Gram - 1000 grams in a kilogram High turbidity can result in water having a ‘muddy’ or ‘dirty’ appearance. Turbidity is reported in Milligram is 0.001 of a gram ‘Nephelometric Turbidity Units’ or NTU.

Annual Report 2007-2008 East Gippsland Water 36 Table 1: Water Quality Reporting Standards

Sampling Parameter Frequency Standard

Microbiological organisms Escherichia coli (E.coli) One sample per week At least 98% of all samples of drinking water collected in any 12 month period contain no Escherichia coli per 100 millilitres of drinking water

Chlorine based chemicals Not relevant for chlorine dioxide treatment (Swifts Creek, Nowa Nowa, Bemm River) or UV treatment (Dinner Plain) Monochloroacetic acid One sample per month 0.15 milligrams per litre of drinking water (100% of all samples) Dichloroacetic acid One sample per month 0.1 milligrams per litre of drinking water (100% of all samples) Trichloroacetic acid One sample per month 0.1 milligrams per litre of drinking water (100% of all samples) Trihalomethanes One sample per month 0.25 milligrams per litre of drinking water (100% of all samples)

Chemicals derived from disinfection or treatment with ozone Not relevant to EGW - no ozone disinfection Bromate One sample per month 0.02 milligrams per litre of drinking water Formaldehyde One sample per month 0.5 milligrams per litre of drinking water

Aluminium based chemicals Relevant for full water treatment plants - Omeo, Orbost and Mallacoota Aluminium One sample per month 0.2 milligrams per litre of drinking water (acid-soluble) Turbidity One sample per week 95% upper confidence limit* of the mean of samples of drinking water collected in any 12 month period must be less than or equal to 5.0 Nephelometric Turbidity Units

* 95% Upper Confidence Limit = mean + t(a) x s √number of turbidity samples Where s = standard deviation t(a) = student t statistic where: degrees of freedom are number of samples - 1 and probability is 0.05

Annual Report 2007-2008 East Gippsland Water 37 Figure 1: E.coli Compliance Number Minimum Maximum % samples Water Quality Zone of Samples (E.coli/100mL) (E.coli/100mL) with zero E.coli Bairnsdale 72 0 0 100% Bemm River # 52 0 0 100% Buchan # 52 0 0 100% Cann River # 51 0 0 100% Dinner Plain # 52 0 0 100% Eagle Point/Paynesville 52 0 0 100% Kalimna 52 0 0 100% Lindenow # 51 0 0 100% Lindenow South # 51 0 0 100% Mallacoota # 52 0 0 100% Merrangbaur 52 0 0 100% Metung 52 0 0 100% Nicholson/Swan Reach 52 0 0 100% Nowa Nowa # 52 0 0 100% Omeo # 52 0 0 100% Orbost # 52 0 0 100% Sarsfield/Bruthen 52 0 0 100% Sunlakes/Toorloo 60 0 0 100% Swifts Creek # 52 0 0 100%

# The Department of Human Services granted a variation to sampling frequency over the 2007 Christmas period and so one sampling event was missed (declared in the Victorian Government Gazette 19/12/07).

Figure 2: Monochloroacetic Acid Compliance Number Minimum Maximum % Water Quality Zone of Samples (mg/L) (mg/L) Compliance Bairnsdale 12 0.005 0.005 100% Bemm River 12 0.005 0.005 100% Buchan 12 0.005 0.005 100% Cann River 12 0.005 0.005 100% Eagle Point/Paynesville 12 0.005 0.005 100% Kalimna 12 0.005 0.005 100% Lindenow 12 0.005 0.005 100% Lindenow South 12 0.005 0.005 100% Mallacoota 12 0.005 0.005 100% Merrangbaur 12 0.005 0.005 100% Metung 12 0.005 0.005 100% Nicholson/Swan Reach 12 0.005 0.005 100% Nowa Nowa # 7 0.005 0.005 100% Omeo 12 0.005 0.005 100% Orbost 12 0.005 0.005 100% Sarsfield/Bruthen 12 0.005 0.005 100% Sunlakes/Toorloo 12 0.005 0.005 100% Swifts Creek # 9 0.005 0.005 100%

# Disinfection processes changed from chlorine dioxide to sodium hypochlorite part way through the financial year and prior to the change monochloroacetic acid was not analysed in these water quality zones.

Annual Report 2007-2008 East Gippsland Water 38 Figure 3: Dichloroacetic Acid Compliance Number Minimum Maximum % Water Quality Zone of Samples (mg/L) (mg/L) Compliance Bairnsdale 12 0.005 0.014 100% Bemm River 12 0.005 0.009 100% Buchan 12 0.005 0.019 100% Cann River 12 0.005 0.029 100% Eagle Point/Paynesville 12 0.005 0.013 100% Kalimna 12 0.005 0.007 100% Lindenow 12 0.005 0.013 100% Lindenow South 12 0.005 0.016 100% Mallacoota 12 0.005 0.028 100% Merrangbaur 12 0.005 0.010 100% Metung 12 0.005 0.005 100% Nicholson/Swan Reach 12 0.005 0.008 100% Nowa Nowa # 7 0.005 0.007 100% Omeo 12 0.005 0.014 100% Orbost 12 0.005 0.016 100% Sarsfield/Bruthen 12 0.005 0.014 100% Sunlakes/Toorloo 12 0.005 0.016 100% Swifts Creek # 9 0.005 0.005 100% # Disinfection processes changed from chlorine dioxide to sodium hypochlorite part way through the financial year and prior to the change dichloroacetic acid was not analysed in these water quality zones.

Figure 4: Trichloroacetic Acid Compliance Number Minimum Maximum % Water Quality Zone of Samples (mg/L) (mg/L) Compliance Bairnsdale 12 0.005 0.026 100% Bemm River 12 0.005 0.010 100% Buchan 12 0.005 0.047 100% Cann River 12 0.005 0.032 100% Eagle Point/Paynesville 12 0.005 0.034 100% Kalimna 12 0.005 0.020 100% Lindenow 12 0.005 0.022 100% Lindenow South 12 0.005 0.026 100% Mallacoota 12 0.005 0.040 100% Merrangbaur 12 0.005 0.021 100% Metung 12 0.005 0.012 100% Nicholson/Swan Reach 12 0.005 0.014 100% Nowa Nowa # 7 0.006 0.035 100% Omeo 12 0.009 0.023 100% Orbost 12 0.005 0.022 100% Sarsfield/Bruthen 12 0.005 0.031 100% Sunlakes/Toorloo 12 0.005 0.021 100% Swifts Creek # 9 0.005 0.005 100% # Disinfection processes changed from chlorine dioxide to sodium hypochlorite part way through the financial year and prior to the change trichloroacetic acid was not analysed in these water quality zones.

Annual Report 2007-2008 East Gippsland Water 39 Figure 5: Trihalomethanes Compliance Number Minimum Maximum % Water Quality Zone of Samples (mg/L) (mg/L) Compliance Bairnsdale 12 0.02 0.07 100% Bemm River 12 0.01 0.03 100% Buchan 12 0.03 0.10 100% Cann River 12 0.02 0.07 100% Eagle Point/Paynesville 12 0.03 0.08 100% Kalimna 12 0.03 0.08 100% Lindenow 12 0.02 0.06 100% Lindenow South 12 0.02 0.06 100% Mallacoota 12 0.06 0.17 100% Merrangbaur 12 0.04 0.09 100% Metung 12 0.04 0.09 100% Nicholson/Swan Reach 12 0.02 0.07 100% Nowa Nowa # 7 0.06 0.10 100% Omeo 12 0.01 0.04 100% Orbost 12 0.01 0.08 100% Sarsfield/Bruthen 12 0.03 0.07 100% Sunlakes/Toorloo 12 0.03 0.08 100% Swifts Creek # 9 0.00 0.02 100% # Disinfection processes changed from chlorine dioxide to sodium hypochlorite part way through the financial year and prior to the change trihalomethane was not analysed in these water quality zones.

Figure 6 : Aluminium Compliance

Number Minimum Maximum % Water Quality Zone of Samples (mg/L) (mg/L) Compliance Bemm River 12 0.01 0.06 100% Buchan # 11 0.01 0.05 100% Cann River # 11 0.01 0.10 100% Mallacoota 12 0.01 0.05 100% Omeo 12 0.01 0.07 100% Orbost 12 0.03 0.13 100% Swifts Creek # 10 0.01 0.06 100% # New Water Treatment Plants were commissioned part way through the financial year. Prior to full water treatment, aluminium was not analysed in these water quality zones.

Annual Report 2007-2008 East Gippsland Water 40 Figure 7: Turbidity Compliance Number Minimum Maximum Comply Water Quality Zone of Samples (NTU) (NTU) 95% UCL (Yes/No) Bairnsdale 72 0.3 11.0 1.5 Yes Bemm River 52 0.4 3.0 1.3 Yes Buchan 52 0.1 14.0 1.4 Yes Cann River 51 0.1 4.1 1.1 Yes Dinner Plain 52 0.1 3.5 0.5 Yes Eagle Point / Paynesville 52 0.3 4.7 1.3 Yes Kalimna 52 0.1 4.9 1.1 Yes Lindenow 51 0.3 22.0 3.1 Yes Lindenow South 51 0.3 6.4 1.7 Yes Mallacoota 52 0.2 5.5 0.9 Yes Merrangbaur 52 0.3 2.0 0.9 Yes Metung 52 0.2 1.5 0.8 Yes Nicholson / Swan Reach 52 0.3 1.8 0.9 Yes Nowa Nowa 52 0.2 11.0 3.1 Yes Omeo 52 0.1 1.8 0.4 Yes Orbost 52 0.1 1.0 0.4 Yes Sarsfield / Bruthen 52 0.2 12.0 1.8 Yes Sunlakes / Toorloo 60 0.2 3.3 1.1 Yes Swifts Creek 52 0.1 15.0 3.8 Yes

Annual Report 2007-2008 East Gippsland Water 41 Asset Management

Total expenditure on the renewal of water and wastewater reticulation network assets for the year totalled approximately $1.2 million.

Annual Report 2007-2008 East Gippsland Water 42 ASSET MANAGEMENT

The delivery of quality water and wastewater services also on a laptop computer for after hours and away to customers is achieved through construction, from the depots. operation and maintenance of the physical assets A valuable feature of the GIS is network tracing. It provided and managed by East Gippsland Water. enables related infrastructure items and data to be These assets comprise the water and sewerage accurately traced; for example identifying all shut-off networks and include pipes, pumps, storages, valves required to isolate a section of water main. treatment plants, buildings, plant and equipment. Also, with customer contact details stored in East The commitments contained in the Corporation’s Gippsland Water’s financial data base and linked Asset Management Policy are aimed at achieving to GIS land parcels, network tracing greatly assists the safe, reliable and effective delivery of services staff to identify customers affected by water service to existing and new customers. disruption. East Gippsland Water is responsible for ensuring The timely entry of data into the system remains that its services meet legislative, stakeholder and a high priority. Entry of as-constructed drawings corporate objectives. During the reporting period into the GIS usually occurs within two weeks of it continued work to ensure that assets were receipt. The on-going tasks of data verification being managed safely, effectively, efficiently and and “cleaning” are commonly based on field with minimal environmental impact. staff reports following visits to assets. Key asset management initiatives identified in the GIS, property and subdivision data are updated Corporation’s Corporate Plan were progressed fortnightly following Vicmap changes to land during the 2007/08 financial year as outlined below. parcel data. Asset Management The process of integrating East Gippsland Water’s System Development Conquest and GIS systems is underway. Water Mains Replacement Model East Gippsland Water’s key asset management processes and procedures are subject to continuous The Corporation’s water main replacement model improvement and have been brought together in provides a risk-based approach to water main an Asset Management Manual, developed to asset management, by identifying those most likely ensure their rigour and transparency. to need replacement. Methods to improve this model will be considered and may be included This manual comprises separate instruction as required. The risk rankings will be incorporated manuals covering the Corporation’s Asset into the asset management system as appropriate. Management System, Capital Works Program, Project Management and Tendering. Land New Assets and Projects Development was due to be added in the A number of significant projects designed to reporting period, but is in the process of being improve services to customers, or to ensure secure redrafted during 2008/09 to include revised water supplies, were either underway or completed Essential Services Commission rules relating to during the reporting period. These included: new customer contributions. Mitchell River Water Supply System - Further enhancements to the Asset Management System were progressed during 2007/08, notably Emergency response works in relation to the implementation of an asset The 2006/07 bushfires caused severe damage management software package called Conquest. to the Mitchell River catchment. This resulted in a serious ongoing water quality issue, with Conquest substantial quantities of soil and bushfire debris Organisation-wide implementation of the washed down the Mitchell River Water Supply Maintenance Management (Work Order) System System, which serves some 17,000 East Gippsland component of the Conquest software package Water customers. continued during the reporting period and will The success of rapidly installed specialist be developed further in 2008/09. This system has infrastructure - including an emergency treatment been developed to enable the Corporation to more plant to clean the Mitchell water to drinking quality effectively and efficiently manage the scheduling of standard - enabled further works undertaken in work tasks for depot and other staff, streamlining the 2007/08 to focus on longer-term benefits. Notable process of task prioritisation and resource allocation. was completion of the new emergency water bore Progress was made in relation to development of field in the Woodglen area and its connection to the Non-Pipeline Asset Register component of the electricity supply. Conquest in 2007/08 and this will continue. Two significant flood events in June 2007 placed Geographic Information System (GIS) Corporation infrastructure under tremendous A key component of East Gippsland Water’s pressure as floodwaters struck the towns of asset management system for water and sewer Bairnsdale, Paynesville and Lakes Entrance, as well infrastructure is the Geographic Information as Raymond Island. The floodwaters also caused System (GIS). a major break in a pipeline serving 550 customers Depot staff have access to the GIS at the depots, in Lindenow and Lindenow South with water from with GIS map viewer software and recent GIS data the Mitchell River.

Annual Report 2007-2008 East Gippsland Water 43 G The new water treatment plant at Swifts Creek.

These events led to the implementation of various basin, and to bring forward commencement flood control works during the reporting period of on-site work from its original start date in and the rapid replacement of some 200 metres of 2009/2010 to the very end of 2007/08 to pipeline for Lindenow and Lindenow South improve water quality for the Lakes Entrance area. customers. The project is due for completion in 2008/09; Mitchell River Water Supply System G Sarsfield - design and planning work progressed, Augmentation Program with on site work to replace the open storage with a covered storage tank due to commence The Mitchell River Water Supply System in 2008/09. Improvement Strategy addresses long term risks associated with water quality and growing water Small Towns Water Quality Improvement demand and complements the Corporation’s New water treatment plants were commissioned Supply Demand Strategy which addresses the at Buchan, Swifts Creek and Cann River, along next 50 years. with a 17 kilometre pipeline linking the residents A program of water treatment, water storage and of Nowa Nowa to Toorloo Storage Basin at bulk water transfer improvement works continued Lakes Entrance. through the reporting period, with some long term These projects marked completion of a $7.7 million initiatives brought forward because of ongoing program of initiatives, which also included a new water quality issues, most notably bush-fire related. water treatment plant at Bemm River in 2006/07, Work on major components of this program to supply the residents with higher quality drinking during the reporting period included: water supplies. G Glenaladale Pumping Station (East Gippsland Mallacoota Water’s main water extraction facility on the The refurbishment of the winter storage at the Mitchell River) - a project to install a new pump Mallacoota Wastewater Treatment Plant was and carry out an electrical upgrade was completed, with the volume of the storage completed, improving the station’s operating increased to allow for future growth of the and energy efficiency, reliability and remote township. This work was required to ensure monitoring capability; the effective containment of treated effluent G Woodglen storage - design work for a second and compliance with EPA requirements. off-stream water storage capable of holding A new water pressure booster pump station some 650 ML of water was completed and was also constructed to service the Mallacoota tenders invited for its construction. On site works west reticulation area, with electrical power are due to commence during 2008/09 and the supplies upgraded to facilitate its operation. storage is expected to come on line early in 2010; Provision was also made for installation of G Woodglen Water Treatment Plant - a design and a new standby diesel generator. construct contract was tendered and is due to be Cann River awarded early in the 2008/09 financial year. The plant is expected to come on line early in 2010; The reporting period saw completion of an irrigation area, pump station and centre pivot G Lindenow - installation of a new shadecloth irrigator for the new Cann River wastewater cover over the open, lined water storage was treatment and reuse scheme. This is due to completed early in 2007/08; commence operation in 2008/09. G Eagle Point - replacement of the open storage with covered tanks progressed, with completion Tambo Bluff Estate due in 2008/09; East Gippsland Water continued to liaise G Wy Yung - Work to line and cover one of the with East Gippsland Shire Council over the open water storages at Wy Wung continued provision of water and wastewater schemes and is due for completion in 2008/09. for the Tambo Bluff Estate, which includes Installation of a filtration plant before the 320 allotments with little or no infrastructure. entry point to Wy Yung basin was completed; This is being progressed by the Council at the G Sunlakes - it was decided to extensively upgrade same time as construction of roads, drainage the open storage, by lining and covering the and electricity infrastructure.

Annual Report 2007-2008 East Gippsland Water 44 Bairnsdale The initial focus has been water quality and the The new Bairnsdale West Pump Station was extensive real-time monitoring of water treatment completed and commissioned in 2007/08, facilities, with work concentrating on the design and some 2,400 metres of antiquated water of field monitoring equipment, computer hardware mains in west Bairnsdale replaced. and software. This $1.1 million program of works is designed Over the next few years the use of the system will to provide some 1,600 nearby households with be expanded to cover other facilities and assets. greatly improved water pressure during peak demand periods and to cope with a future increase Developer Works and Subdivisions in demand, partly due to population growth. For the reporting period, the level of subdivisional Work to provide emergency wet weather storage activity across the region was less than in 2006/07. at Bairnsdale’s Bridge Sewer Pump Station was Approximately 382 new allotments were created delayed as external agency approvals were during 2007/08, compared with 518 previously. withdrawn. The project has been redesigned The value of owner-financed works involving water and is due to be completed during 2008/09. and wastewater assets was in the order of $2.56 Similar projects to provide emergency wet million, compared with $2.67 million the previous weather storage capacity at sewer pump stations year. at Crooke Street in Bairnsdale and at Johnsonville were completed. Research Development and Lakes Entrance and Metung Adoption of New Technology Environmental improvement initiatives which came New technology provides opportunities for into operation at the Bruces Track irrigation area East Gippsland Water to achieve improvements in near Lakes Entrance included a new effluent efficiency, cost-effectiveness and risk management, storage with a holding capacity of 260 ML and along with environmental and/or social benefits. fixed sprinkler irrigation works. During 2007/08 work commenced on the The Bruces Track transfer pump at Lakes Entrance installation of specialist computer hardware Wastewater Treatment Plant was also refurbished, and software at the Corporation’s 20 sewer improving flow efficiency and reducing energy pump stations, to help maximise the efficiency, consumption. performance and reliability of pumping operations. A design review of planned additional recycled This ‘intelligent pump control system’ means water storage and irrigation capacity at Metung that for the first time sewerage flows and pump Wastewater Treatment Plant was conducted. It performance at each station can be very accurately is planned to construct further irrigation within and comprehensively monitored on an hourly, daily existing property boundaries and carry out design and weekly basis. This is significant for the future work on a new winter storage, during 2008/09. because it will enable the Corporation to more readily pinpoint and address potential Omeo and Eagle Point trouble-spots, such as ageing pump stations A program to upgrade existing sewerage working beyond their capacity. It also means that connections with new pump connections for stations will be able to sense sewer inflow changes a number of properties at Eagle Point and Omeo and adapt pump operations accordingly. was completed. Installation of the system was completed in July Sewerage schemes 2008 and is delivering valuable operational Sewerage schemes were commenced at Banksia information for the Corporation. peninsula and Metung in the Rosherville Rd and It can be linked direct to the Supervisory Control Cantrills Rd area. Due for completion during and Data Acquisition system, so that operators can 2008/09, these will improve environmental remotely monitor a pump station’s performance. outcomes by removing risks associated with septic tank effluent. Other examples of new technology recently adopted by the Corporation include: Supervisory Control and Data G use of pump impellor coatings - the Bruces Track Acquisition (SCADA) transfer pump at Lakes Entrance Wastewater Treatment Plant was refurbished and coated and During the reporting period the Corporation as a result its flow rate has improved by 20 l/s, completed installation of its Supervisory Control while energy consumption has reduced by 15%; and Data Acquisition system at 29 key sites. G trial of water clarifiers to remove algae - this was Using remote monitoring, it is designed to provide conducted at the Orbost clearwater storage and early warning of faults or performance issues at key proved successful in removing high levels of facilities such as water treatment plants, wastewater algae prior to the storage going on-line. treatment plants and pump stations. Its objective is In addition East Gippsland Water is looking at to minimise operational problems and improve testing a biological process to reduce sludge equipment reliability, compliance and customer levels at wastewater lagoons. service.

Annual Report 2007-2008 East Gippsland Water 45 Asset Maintenance and Renewals G Mains replacement in Moroney Street Bairnsdale. Almost 40 kilometres of major water mains were air scoured and flushed as part of improvements Orbost. This was part of an ongoing maintenance to water quality. Air scouring clears the insides of program to help ensure the Corporation’s sewer pipes of debris, any biofilm growths, tobacco network operates efficiently. weed and other deposits. In addition, East Gippsland Water installed 26 The main area targeted was Paynesville, Raymond new wastewater pumps to replace old and worn Island and Newlands Arm, where the aim was to pumps that had reached the end of their useful provide the water reticulation system with a lives. The new pumps were installed to ensure thorough clean prior to the commissioning of pump stations could cope with additional the clearwater tank system at nearby Eagle Point. wastewater flows from growth and development occurring across the region. Additional efficiency This work ensured that both the bulk water storage measures included major overhaul and coating source and the delivery reticulation pipework were of the Bruces Track transfer pump. thoroughly cleaned, providing significant water quality improvements to the area. It is estimated that this initiative, together with installation of Variable Speed Drives at Also, the water storage at Swifts Creek was Glenaladale Pumping Station and rural pumps cleaned as part of the commissioning process at Wy Yung, will save the Corporation and for that town’s new water treatment plant. environment approximately 620 tonnes of carbon Improvements were made to the Mallacoota dioxide a year. This equates to an annual power Water Treatment Plant to capture all washwater saving of some $40,000. from the plant, with the necessary infrastructure East Gippsland Water also continued its ongoing constructed, installed and commissioned. This program of works to repair and replace water infrastructure will capture and reuse approximately and sewer mains, replacing pumps, relining 18 ML of washwater every year, which is a major underground pipes and root cutting. bulk water saving for the water supply system. These projects were implemented under the Similar infrastructure improvements are underway Corporation’s strategy to continuously improve at Orbost and Omeo to recover washwater at these the reliability of water and wastewater services water treatment plants. and minimise service interruptions faced by East Gippsland Water contractors carried out customers. sewer cleaning work in the Bairnsdale area, Total expenditure on the renewal of water and Lakes Entrance, Lake Bunga, Metung, Swan Reach, wastewater reticulation network assets for the Paynesville, Newlands Arm, Raymond Island, and year totalled approximately $1.2 million.

Annual Report 2007-2008 East Gippsland Water 46 FINANCIAL SUMMARY

Operating Revenue and Expenditure: 5 Year Comparative Analysis Last 2 Year 03/04 04/05 05/06 06/07 07/08 Movement Actual Actual Actual Actual Actual Comparisons Details $ m $ m $ m $ m $ m $m Revenue Water Fees and Charges 6.136 6.578 7.118 7.836 8.204 0.368 Sewer Fees and Charges 5.955 6.667 7.357 8.235 9.165 0.930 Government Contributions 0.000 0.000 0.000 0.105 0.900 0.795 Interest Earned 0.408 0.443 0.397 0.241 0.125 -0.116 Other Revenue 1.130 1.062 1.006 0.821 0.929 0.108 Developer Capital Contributions 3.248 2.467 3.772 2.666 2.559 -0.107 Total Revenue 16.877 17.218 19.650 19.904 21.882 1.978 Expenditure Operations and Maintenance Expenses 5.380 6.089 7.266 7.064 7.726 0.662 Administration Expenses 3.162 3.720 3.639 4.220 4.795 0.575 Interest Payments 0.000 0.000 0.000 0.011 0.676 0.782 Other expenses 0.977 0.805 0.660 0.267 0.793 0.409 Depreciation 4.444 4.646 4.837 4.953 5.323 0.370 Total Expenditure 13.963 15.259 16.402 16.515 19.313 2.798 Surplus before dividend for the period 2.915 1.958 3.290 3.389 2.569 -0.820

5 YEAR COMPARATIVE REPORT: REVENUE SOURCE BY CATEGORY Revenue Increased water 10 and sewer fees and 9 charges approved by the Essential 8 Services Commission 7 resulted in increased 6 revenue over the period. 5 Major developments 4

$ millions within the region 3 brought an overall growth in gifted 2 assets, while 1 increased developer works boosted 0 administrative Water Fees Sewer Fees Government Interest Earned Other Revenue Developer and Charges and Charges Contributions Capital oncost income. Contributions 03/04 04/05 05/06 06/07 07/08

5 YEAR COMPARATIVE REPORT: EXPENDITURE BY CATEGORY

8

7

6 Expenditure

5 Operational and maintenance costs,

4 along with administration costs, were affected by the ongoing $ millions 3 impact of the 2006/07 bushfires. 2 East Gippsland Water continued

1 with the implementation and maintenance of emergency 0 measures to address water quality Operations and Administration Interest Other Depreciation Maintenance Expenses Payments Expenses issues within the Mitchell River Water Expenses Supply System and ensure sufficient 03/04 04/05 05/06 06/07 07/08 drinking water supplies for customers.

Annual Report 2007-2008 East Gippsland Water 47 Comparative Actual to Budget Report

2007/08 2007/08 Actual Budget Variance $M $M %

Details Revenue Water Fees and Charges 8.20 8.20 0.00% Sewer Fees and Charges 9.17 8.63 6.21% Government Contributions 0.90 0.00 100.00% Interest Earned 0.13 0.09 39.32% Other Revenue 0.93 0.55 68.30% Developer Capital Contributions 2.56 2.10 21.63% Total Revenue 21.88 19.57 11.79% Expenditure Operations & Maintenance Expenses 7.73 8.48 -8.93% Administration Expenses 4.80 4.71 1.87% Interest Payments 0.68 0.80 -15.50% Other expenses 0.79 0.05 1486.00% Depreciation 5.32 5.44 -2.10% Total Operating Expenditure 19.31 19.48 -0.85% Surplus before dividend for the period 2.57 0.10 2576%

Comments on Variances Exceeding 5% Revenue The Corporation received $2.31 million (11.79%) more revenue than budgeted, due in particular to greater than anticipated income from water and wastewater fees and charges, developer capital contributions and interest earnings. Expenditure Actual operating expenditure was 0.85% less than budgeted at $19.31 million instead of $19.48 million. This was partly due to reduced depreciation expense resulting from timing delays in asset commissioning and asset impairment to the value of $793,000. Reduced borrowing costs, as well as savings in total operations, maintenance and staff costs, and a decreased reliance on consultants and contractors, added to less than forecast expenditure.

REVENUE EXPENDITURE

A. Water fees and charges 37% A. Operations and Maintenance water B. Interest earned 1% and wastewater 42% C. Other revenue 4% B. Depreciation 30% D. Developer capital contributions 12% C. Other expenses 2% E. Sewer fees and charges 42% D. Administration expenses 26%

Annual Report 2007-2008 East Gippsland Water 48 OTHER INFORMATION

Freedom of Information The Freedom of Information Act 1982 allows public access to documents held by government entities, which incudes right of access to documents held by East Gippsland Water. Freedom of Information requests need to be made in writing to: Mr Brett Millington, Freedom of Information Officer, East Gippsland Water, PO Box 52, Bairnsdale, Victoria, 3875. The telephone number is (03) 5150 4444. Enquiries can also be e-mailed to [email protected]. The fee for requests was $22.00 during the 2007/08 reporting period (from July 2008 this increased to $22.70). During the reporting period two requests for information were made to the Corporation and both were granted.

Whistleblowers’ Protection Act 2001 The main objective of the Whistleblowers Protection Act 2001 is to encourage and facilitate the making of disclosures of improper conduct or detrimental action by public officers and public bodies. Further information is available from the Victorian Ombudsman’s website at www.ombudsman.vic.gov.au Within the terms of reference of the Whistleblowers Protection Act, no disclosures were made to East Gippsland Region Water Corporation, or to the Ombudsman, for public interest determination or investigation. A copy of East Gippsland Water’s Whistleblowers’ policy is enclosed with this Annual Report.

Implementation of the Victorian Industry Participation Policy During 2007/08, the Corporation did not commence or complete any contracts applicable to the requirements of the Victorian Industry Participation Policy.

Compliance with the Building Act During the reporting period East Gippsland Water complied with the building and maintenance provisions of the Building Act 1993. It also commenced an ongoing assessment of all its buildings for compliance with the Building Code of Australia, specifically in relation to essential safety measures.

National Competition Policy Competitive neutrality seeks to enable fair competition between government and private sector businesses. Any advantages or disadvantages that government businesses may experience, simply as a result of government ownership, should be neutralised. East Gippsland Water continues to implement and apply this principle in its business undertakings.

Financial Management Compliance Framework The Financial Management Compliance Framework was implemented on 1 July 2003. Department of Treasury and Finance developed the framework in response to the Government’s initiative of promoting responsible financial management in the public sector. The framework provides a vehicle for Department of Treasury and Finance to monitor and report on East Gippsland Water’s financial management obligations. The annual certification for 2007/08 rated the Corporation’s compliance at 100%.

Subsequent Events No significant matters arose between the end of the 2007/08 financial year and this Annual Report going to print, which will have a material impact on East Gippsland Water’s financial position.

Annual Report 2007-2008 East Gippsland Water 49 Consultants to the Corporation Consultants costing over $100,000 in the 2007/08 financial year: Number - 0 Consultants costing below $100,000 in the 2007/08 financial year: Number - 6 Total cost of consultants engaged: $75,000 East Gippsland Water engages Maunsell AECOM (formerly known as Earth Tech Engineering Pty Ltd during the reporting period) to provide design and project management services and has done so for a number of years. The Corporation and Maunsell AECOM have a contractual arrangement in place for services covering the provision of feasibility studies, detailed design, project management and construction supervision. This arrangement is independently assessed, benchmarked and validated every three years to ensure that East Gippsland Water receives value for money and that the appropriate governance issues are upheld. The agreement is also monitored against ongoing and annual performance indicators. There are provisions in the agreement and the Corporation’s policies to ensure conflict of interest issues are avoided and the Board of East Gippsland Water also actively oversees the ongoing arrangement. More than 90 per cent of the work completed by the Maunsell AECOM Bairnsdale office is on East Gippsland Water projects. The office avoids any conflict of interest by declining work from developers. The value of the design, project management and construction work, spread over some 70 infrastructure projects and activities undertaken by Maunsell AECOM (Earth Tech Engineering) in 2007/08 for the Corporation, was $2.7 million. The contractual arrangement is non exclusive and the Corporation may also engage other consulting engineers who have expertise in specialist areas.

Major Contracts East Gippsland Water did not enter into any contracts greater than $10 million during the reporting period.

Annual Report 2007-2008 East Gippsland Water 50 PERFORMANCE STATEMENTS

Financial Performance Indicators

Variance Performance Indicator 2006-07 2007-08 2007-08 Favourable Result Result Target (-) Unfavourable F1 Long Term Profitability Earnings before net interest and tax ÷ Average total assets 1.89% 1.67% 0.44% 280.5% F2 Owner’s Investment Net profit after tax ÷ average total equity 1.42% 1.10% 0.06% 1734.9% F3 Long Term Financial Viability Total debt (including finance leases) ÷ total assets 1.85% 7.10% 8.44% -16.2% F4 Liquidity and Debt Servicing (Interest Cover) Earnings before net interest and tax expense ÷ net interest expense 289 5.66 1.14 4.5 F5 Immediate Liquidity and Debt Servicing (Cash Cover) Cash flow from operations before net interest and tax payments ÷ net interest payments 617 8.92 8.50 0.4

Operating Efficiency F6 Water supply Reticulation - costs per Volumetric Measure Operating, Mtc and Admin Costs $3,520,000 $4,104,000 $4,152,000 ML Volume throughput for the year 5,107 4,434 5,116 Recurrent Cost $/ML $689 $926 $812 -14% F7 Water supply Treatment - costs per Volumetric Measure Operating, Mtc and Admin Costs $3,560,000 $3,389,000 $3,939,000 ML Volume throughput for the year 5,107 4,434 5,116 Recurrent Cost $/ML $697 $764 $770 1% F8 Wastewater Reticulation - costs per Volumetric Measure Operating, Mtc and Admin Costs $1,953,000 $2,272,000 $2,943,000 ML Volume throughput for the year 2,851 2,838 3,146 Recurrent Cost $/ML $685 $800 $638 14% F9 Wastewater Treatment - costs per Volumetric Measure Operating, Mtc and Admin Costs $1,648,000 $2,165,000 $1,567,000 ML Volume throughput for the year 2,851 2,730 3146 Recurrent Cost $/ML $578 $793 $498 -59%

Annual Report 2007-2008 East Gippsland Water 51 Service and Environmental Performance Indicators

Performance Indicator Variance (Complying with Essential Services 2006-07 2007-08 2007-08 Favourable Commission definitions Result Result Target (-) Unfavourable Water supply interruptions S1 Number of customers receiving 1 unplanned interruptions in the year 2715 2395 No Target N/A S2 Number of customers receiving 2 unplanned interruptions in the year 878 531 No Target N/A S3 Number of customers receiving 3 unplanned interruptions in the year 482 56 No Target N/A S4 Number of customers receiving 4 unplanned interruptions in the year 131 40 No Target N/A S5 Number of customers receiving 5 unplanned interruptions in the year 20 0 No Target N/A S6 Number of customers receiving > 5 unplanned interruptions in the year 0 0 No Target N/A

Interruption time indicators

S7 Average duration of unplanned water supply interruptions 122 minutes 77 minutes 90 minutes 14% S8 Average duration of planned water supply interruptions 188 minutes 73 minutes 140 minutes 48%

Restoration of water supply

R1 Unplanned water supply interruptions restored within 3 hours 90% 94% No Target N/A R2 Unplanned water supply interruptions restored within 5 hours 98% 99% 99% 0% R3 Unplanned water supply interruptions restored within 12 hours 98% 100% 100% 0%

Reliability of sewerage collection services indicators

R4 Sewer spills from reticulation and branch sewers (priority 1 and 2) Nos. 60 60 97 38% R5 Sewage spilt from emergency relief structures and pumping stations (% of volume transported) 2% 0% 0% -2%

Containment of sewer spillages

R6 Sewerage spills contained within 5 hours 86.7 % 100 % 100% 0%

Annual Report 2007-2008 East Gippsland Water 52 Service and Environmental Performance Indicators (continued)

Performance Indicator Variance (Complying with Essential Services 2006-07 2007-08 2007-08 Favourable Commission definitions Result Result Target (-) Unfavourable Customer complaints indicators

C1 Water quality complaints per 1000 customers 2.15 1.52 6.62 77% C2 Water supply reliability complaints per 1000 customers 0.20 0.10 7.35 99% C3 Sewerage service quality and reliability complaints per 1000 customers 1.30 1.13 4.31 74% C4 Affordability complaints per 1000 customers 0.25 0.15 0.41 64% C5 Billing complaints per 1000 customers 0.90 0.44 No target set N/A C6 Pressure complaints per 1000 customers 0.55 0.49 No target set N/A C7 Sewage odours complaints per 1000 customers 0.05 0.10 No target set N/A C8 Other complaints per 1000 customers 2.40 2.07 2.65 22%

Total of all Facilities E2 Reuse Indicator Effluent reuse (volume) 100% 100% 100% 0% Biosolids reuse (dry mass) 0% 0% 0% 0% E3 Sewage Treatment Standards Number of analyses complying with licence agreements as % of samples 84% 83% 100% -17%

Bairnsdale Reuse Indicator Effluent reuse (volume) 100% 100% 100% 0% Biosolids reuse (dry mass) N/A N/A N/A Sewage Treatment Standards Number of analyses complying with licence agreements as % of samples 98% 98% 100% -2%

Paynesville Reuse Indicator Effluent reuse (volume) 100% 100% 100% 0% Biosolids reuse (dry mass) N/A N/A N/A Sewage Treatment Standards Number of analyses complying with licence agreements as % of samples 29% 29% 100% -71%

Annual Report 2007-2008 East Gippsland Water 53 Service and Environmental Performance Indicators (continued)

Performance Indicator Variance (Complying with Essential Services 2006-07 2007-08 2007-08 Favourable Commission definitions Result Result Target (-) Unfavourable Lindenow Reuse Indicator Effluent reuse (volume) 100% 100% 100% 0% Biosolids reuse (dry mass) N/A N/A N/A Sewage Treatment Standards Number of analyses complying with licence agreements as % of samples 100% 100% 100% 0%

Lakes Entrance Reuse Indicator Effluent reuse (volume) 100% 100% 100% 0% Biosolids reuse (dry mass) N/A N/A N/A Sewage Treatment Standards Number of analyses complying with licence agreements as % of samples 84% 81% 100% -19%

Metung Reuse Indicator Effluent reuse (volume) 100% 100% 100% 0% Biosolids reuse (dry mass) N/A N/A N/A Sewage Treatment Standards Number of analyses complying with licence agreements as % of samples 86% 79% 100% -21%

Dinner Plain Reuse Indicator Effluent reuse (volume) 100% 100% 100% 0% Biosolids reuse (dry mass) N/A N/A N/A Sewage Treatment Standards Number of analyses complying with licence agreements as % of samples 75% 77% 100% -23%

Omeo Reuse Indicator Effluent reuse (volume) 100% 100% 100% 0% Biosolids reuse (dry mass) N/A N/A N/A Sewage Treatment Standards Number of analyses complying with licence agreements as % of samples N/A N/A N/A N/A

Annual Report 2007-2008 East Gippsland Water 54 Service and Environmental Performance Indicators (continued)

Performance Indicator Variance (Complying with Essential Services 2006-07 2007-08 2007-08 Favourable Commission definitions Result Result Target (-) Unfavourable Orbost Reuse Indicator Effluent reuse (volume) 100% 100% 100% 0% Biosolids reuse (dry mass) N/A N/A N/A Sewage Treatment Standards Number of analyses complying with licence agreements as % of samples 100% 100% 100% 0%

Mallacoota Reuse Indicator Effluent reuse (volume) 100% 100% 100% 0% Biosolids reuse (dry mass) N/A N/A N/A Sewage Treatment Standards Number of analyses complying with licence agreements as % of samples 100% 100% 100% 0%

Cann River Reuse Indicator Effluent reuse (volume) 100% 100% 100% 0% Biosolids reuse (dry mass) N/A N/A N/A Sewage Treatment Standard Number of analyses complying with licence agreements as % of samples N/A N/A N/A N/A

Annual Report 2007-2008 East Gippsland Water 55 Performance Report Variances Explained

F1 & F2 A grant received from the Department of Human Services (DHS) and higher than budgeted revenue from developer levies and water and wastewater services, combined with a reduction in the expected fire recovery costs for 2008, increased the profit of the Corporation. The revenue increase was partially offset by increases in operations and maintenance expenditure and asset write downs during the period. F3 The variance in the long term financial viability is a direct result of the Corporation’s investment to enhance and improve asset infrastructure primarily funded through borrowings. The variance records a higher than expected movement as a result of the low base, but this gearing ratio is within future expectations where borrowings are expected to rise to meet capital investments. F6 With the water storages of the Mitchell River Supply System below 60% at the end of June, significant pumping costs were incurred to restore water storage levels back up to 100%. Additional expenditure in response to the June 2007 flood events also added to expenditure including staff, contractors and chemical costs. Increased additional water pipeline cleaning through scouring and proactive maintenance also increased costs for the period. Although water usage for the period was 15% below expectation, this does not correlate with an equivalent reduction in costs as a result of these activities. F9 Significant costs were incurred at the beginning of the period when major flood events in June/July 2007 caused the wastewater pipeline network for Bairnsdale, Paynesville and Lakes to be inundated with flood water. The flood led to an increase in wastewater treatment costs including pumping, labour, irrigation and repairs. Proactive maintenance in wastewater treatment facilities throughout the region was ramped up during 2008, which also resulted in labour, maintenance and repair costs over this period. S8 East Gippsland Water has a policy of minimising any disruption to customers, this applies to both planned and unplanned water supply interruptions. During 2006/07, the time to restore unplanned water supply interruptions was adversely affected by the June floods. The 2007/08 results provide a better normalised result of the Corporation’s performance. Improved results for average duration of unplanned water supply interruptions during 2007/08 have been as a result of staff commitment and focus to reduce results for this planned interruptions target. East Gippsland Water’s mains pipeline cleaning/ air scouring process has also been changed and improved to reduce the time taken for planned interruptions. E3 In March 2008, the Corporation’s ten separate EPA licences for each wastewater treatment plant were replaced with a single Corporate Licence which sets limits for Bairnsdale and Lindenow only. To allow comparison with last year’s performance the overall 2007/08 result has been assessed using the previous individual licence conditions for each of the ten wastewater treatment plants. Most non compliance reported were as a result of salt water infiltration in the Lakes Entrance, Paynesville and Metung systems causing higher than expected electrical conductivity results. Non compliance for Bairnsdale was minor (one test non compliance from forty-eight) and Dinner Plain non compliance was due to the sampling process. Bairnsdale: There was one non conformance due to a single sample containing E.coli levels higher than the licence limits. The high E.coli is suspected to be due to contamination with bird faecal matter. Samples for the rest of the year were well within licence limits. Paynesville: All non conformances were due to electrical conductivity (EC) levels being higher than licence limits. The EC levels are high due to salt water infiltration into sewers under the water table adjacent to the Gippsland Lakes coastline. The infiltration is being addressed through a number of special projects to reduce salt water leakage into the sewer line network. Subsequent reuse through irrigation of the salt water has been assessed by an agricultural consultant and not found to be detrimental. Metung: Suspended solids exceeded the licence limits in one sample for the year and electrical conductivity (EC) exceeded licence limits in two samples for the year. As for Paynesville, the EC levels are high due to salt water infiltration into sewers under the water table adjacent to the Gippsland Lakes coastline. The infiltration is being addressed through a number of special projects to reduce salt water leakage into the sewer line network. Lakes Entrance: All non conformances from this system are due to electrical conductivity being greater than licence limits. Higher EC was recorded as a result of salt water infiltration within sewers under the water table near the Gippsland Lakes. A major program to address salt water infiltration into the sewer pipeline has been successful and tests have determined that salt levels dropped dramatically in the latter part of 2007/08, to the acceptable licence level, due to pipeline repairs in selected areas. Dinner Plain: During August and September 2007 the non compliances were due to Biological Oxygen Demand and suspended solids levels being higher than licence limits. This can be attributed to operational problems with the plant and sampling techniques employed by the operators. The sampling issues have been rectified through operator training. Operational performance will be improved through the installation of an interceptor during 2008/09 to improve sludge settling and therefore reduce the amount of suspended solids discharged from the wastewater treatment plant and reaching the lagoons. A further suspended solids non-compliance in October was due to algae growth, artificiallly altering of the suspended solids readings which affected this compliance target.

Annual Report 2007-2008 East Gippsland Water 56 EAST GIPPSLAND REGION WATER CORPORATION PERFORMANCE STATEMENT CERTIFICATION FOR 2007/08

In our opinion, the accompanying Statement of Performance of East Gippsland Region Water Corporation in respect of the 2007/2008 financial year is presented fairly in accordance with the Financial Management Act 1994. The Statement outlines the relevant performance indicators as determined by the responsible Minister, the actual results achieved for the financial year against pre-determined performance targets for these indicators, and an explanation of any significant variance between the actual results and performance targets. As at the date of signing, we are not aware of any circumstance, which would render any particulars in the Statement to be misleading or inaccurate.

Robert Fordham Les Mathieson Robert Carlesso Chairperson Managing Director Chief Financial Officer Accountable Officer

17 September 2008

Annual Report 2007-2008 East Gippsland Water 57 AUDITOR GENERAL’S REPORT

Annual Report 2007-2008 East Gippsland Water 58 AUDITOR GENERAL’S REPORT

Annual Report 2007-2008 East Gippsland Water 59 FINANCIAL REPORT for the year ended 30 June 2008

Table of Contents Operating Statement 61 Balance Sheet 62 Statement of Changes in Equity 63 Cash Flow Statement 64

Notes to the Financial Report Note 1 Summary of Significant Accounting Policies 65 Note 2 Financial Risk Management 70 Note 3 Operating Statement - Disclosures 72 Note 4 Income Tax Expense 73 Note 5 Cash Assets 73 Note 6 Receivables 73 Note 7 Inventories 73 Note 8 Property, Plant & Equipment 74 Note 9 Intangible Assets 78 Note 10 Payables 78 Note 11 Provisions 78 Note 12 Interest Bearing Liabilities 79 Note 13 Deferred Tax Liabilities 79 Note 14 Contingent Liabilities 79 Note 15 Superannuation 80 Note 16 Lease Commitments 80 Note 17 Contributed Capital 80 Note 18 Asset Revaluation Reserve 80 Note 19 Accumulated Surplus 81 Note 20 Reconciliation of Surplus from Ordinary Activities to Cash provided by Operating Activities 81 Note 21 Capital Commitments 81 Note 22 Reconciliation of Cash 81 Note 23 Auditors Remuneration 82 Note 24 Executive Officers Remuneration 82 Note 25 Responsible Persons Related Disclosures 82 Note 26 Financial Instruments 83 Note 27 Wholesale & Retail Segments 85 Note 28 Events Subsequent to Balance Date 85 Certification of Financial Statements 86 Audit Certificate 87, 88

Annual Report 2007-2008 East Gippsland Water 60 East Gippsland Region Water Corporation Operating Statement for the reporting period 30 June 2008

Note 2008 2007 $000 $000

Revenue from operating activities 1.2 Service Charges 3(a) 12,804 11,689 Metered Charges 4,467 4,329 Trade Waste Charges 97 53 Government Contributions 1.2, 3(a) 900 105 Developer Contributions 3(a) 2,559 2,666 Other Revenue 3(a) 845 747 Total Revenue from operating activities 21,672 19,589 Revenue from non-operating activities Other Income 3(a) 84 74 Interest Income 3(a) 125 241 Total Revenue from non-operating activities 209 316 Total Revenue 21,881 19,905 Expenses Borrowing Costs 1.3 676 11 Depreciation 3(b) 5,180 4,808 Amortisation - Intangible Assets 3(b) 143 145 Employees 5,117 4,956 Environmental Contribution 1.7 590 590 Suppliers and Materials 6,814 5,727 Loss on Assets Disposed 8(b) 793 278 Total Expenses 19,313 16,516 Net Result before tax 2,568 3,389 Income Tax Expense 1.5, 4 (669) (1,008) Result for the Reporting Period 19 1,899 2,381

The accompanying notes form part of these financial statements.

Annual Report 2007-2008 East Gippsland Water 61 East Gippsland Region Water Corporation Balance Sheet as at 30 June 2008

Note 2008 2007 $000 $000

Current Assets Cash and cash equivalents 5, 22 3,681 2,571 Receivables 6 4,021 3,050 Inventories 1.6, 7 543 520 Total Current Assets 8,244 6,141 Non Current Assets Receivables 1.8, 6 140 176 Property, Plant and Equipment 8 178,032 170,882 Intangible assets 9 871 203 Capital Works in Progress 8 10,617 11,938 Total Non Current Assets 189,661 183,199 Total Assets 197,905 189,340 Current Liabilities Payables 10 3,607 4,695 Interest Bearing Liabilities 12, 28 4,000 0 Funds Held in Trust 46 99 Short-term provisions 11(a) 1,100 1,110 Deferred Revenue - Developer Deposits 1.2 651 1,035 Total Current Liabilities 9,405 6,939 Non Current Liabilities Long - Term Provisions 11(b) 96 85 Interest Bearing Liabilities 12 10,000 3,500 Deferred Tax Liabilities 13 6,212 6,330 Total Non Current Liabilities 16,308 9,915 Total Liabilities 25,713 16,854 Net Assets 172,192 172,486 Equity Contributed Capital 17 94,103 94,103 Reserves 18 9,781 11,975 Accumulated Surplus 1.19, 19 68,308 66,409 Total Equity 172,192 172,486

The accompanying notes form part of these financial statements.

Annual Report 2007-2008 East Gippsland Water 62 East Gippsland Region Water Corporation Statement of Changes in Equity for the reporting period ended 30 June 2008

Note 2008 2007 $000 $000

Total Equity at beginning of financial year 172,486 161,812 Gain/(Loss) on Property Revaluation (2,194) 7,004 Net Income recognised directly in equity 18 (2,194) 7,004 Net result for the period 19 1,899 2,381 Total Recognised Income and Expense for the period (295) 9,385 Transactions with the State in its capacity as owner 17 0 1,289 Total Equity at the end of the financial year 172,192 172,486

The accompanying notes form part of these financial statements.

Annual Report 2007-2008 East Gippsland Water 63 East Gippsland Region Water Corporation Cash Flow Statement for the year ended 30 June 2008

Note 2008 2007 $000 $000 Inflows/ Inflows/ (outflows) (outflows) Cash flows from Operating Activities Receipts Rates, Tariffs, Fees and Charges 16,397 16,465 Interest 125 252 Other and GST Collected 2,179 3,074 Payments Interest Paid (623) (1) Employees (5,108) (4,948) Suppliers and Others (inclusive of GST) (9,025) (7,840) Net Cash Inflow from Operating Activities 20 3,945 7,002 Cash flows from Investing Activities Payment for Property, Plant and Equipment (15,912) (16,276) Payments for Intangibles (789) 0 Contributions for Capital Works 3,050 1,442 Trust Monies Received 42 0 Trust Monies Paid (99) (457) Proceeds from Sale of Property, Plant and Equipment 373 145 Net Cash Outflow from Investing Activities (13,335) (15,146) Cash flows from Financing Activities Contributed Capital 17 0 1,289 Proceeds from Borrowings 12 10,500 3,500 Net Cash Inflow from Financing Activities 10,500 4,789 Net Increase in Cash 1,110 (3,355) Cash at the Beginning of Financial Year 2,571 5,926

Cash at end of Financial Year 5, 22 3,681 2,571

Annual Report 2007-2008 East Gippsland Water 64 East Gippsland Region Water Corporation Notes to the Financial Report for the year ended 30 June 2008

Note 1: Summary of Significant Accounting Policies (a) Basis of Accounting General This financial report of East Gippsland Region Water Corporation is a general purpose financial report that consists of an Operating Statement, Balance Sheet, Statement of Changes in Equity, Cash Flow Statement and notes to the financial report. The general purpose financial report complies with Australian equivalents to International Financial Reporting Standards (A-IFRS), other authoritative pronouncements of the Australian Accounting Standards Board and the requirements of the Financial Management Act 1994 and applicable Ministerial Directions. This financial report has been prepared on an accrual and going concern basis. Accounting Policies Unless otherwise stated, all accounting policies applied are consistent with those of the prior year. Where appropriate, comparative figures have been amended to accord with current presentation and disclosure made of material changes to comparatives Classification between Current and Non-Current In the determination of whether an asset or liability is current or non-current, consideration is given to the time when each asset or liability is expected to be realised or paid. The asset or liability is classified as current if it is expected to be turned over within the next twelve months, being the Corporation’s operational cycle. Rounding Unless otherwise stated, amounts shown in the financial statements are expressed to the nearest thousand dollars. 1.1 Historical Cost Convention These financial statements have been prepared under the historical cost convention in conformity with AIFRS, modified by the revaluation of financial assets, certain classes of property, plant and equipment. 1.2 Revenue Recognition Water and Sewerage Charges Rate/tariff and service charges are recognised as revenue when levied or determined. Water usage charges are recognised when the product is provided through metered water volume measure. Wastewater volume measure is based on the metered water volume measure for Dinner Plain. Meter reading is undertaken progressively during the year and an estimation, calculated by multiplying the number of days since the last reading by each customer’s average water volume measure usage, is made at the end of each accounting period in respect of water meters which have not been read at balance date. This amount is included as accrued income for the reporting period. All tariffs for Water and Wastewater include the Environmental Contribution. Developer Contributions/Fees paid by Developers Fees paid by developers to connect new developments to the Corporation’s existing water supply and sewerage systems are recognised as revenue when the construction work and connection to the system has been completed and the contributions are received. In cases where the Corporation has entered into conditional agreements with developers to meet outfall and headworks charges, revenue is recognised at the date of agreement. Developer deposits received for construction works are recognised as deferred revenue until works are completed. Assets acquired at no cost to East Gippsland Region Water Corporation (developer’s capital contributions) are recognised as revenue upon their acceptance by East Gippsland Region Water Corporation for maintenance in perpetuity, and are recorded at their fair value in the financial statements. Government Grants Grants and contributions for capital works, including those received from the Victorian State Government are treated as operating revenue and disclosed in the operating statement as Income for Capital Purposes when received. The only exception to this rule are grants and contributions received from the Victorian State Government, which the Minister for Finance and the Minister for Water, Environment and Climate Change have determined to be for the intention of capital works, and are accounted for as Equity, in accordance with AASB 1004 Contributions. $900,000 was received from the Department of Human Services in June 2008 as revenue for the provision of future capital works. Interest and Rents Interest and rentals are recognised as revenue when earned or when the service is provided. Lease income from operating leases is recognised in income on a straight-line basis over the lease term.

Annual Report 2007-2008 East Gippsland Water 65 East Gippsland Region Water Corporation Notes to the Financial Report for the year ended 30 June 2008

1.3 Borrowing Costs Borrowing costs are recognised as expenses in the period in which they are incurred. Borrowing costs include interest on bank overdrafts and short-term and long-term borrowings, amortisation of discounts or premiums relating to borrowings, amortisation of ancillary costs incurred in connection with the arrangement of borrowings and finance lease charges. 1.4 Investments Investments are brought to account at cost with interest revenue recognised in the Operating Statement on a time proportionate basis that takes into account the effective yield in the financial asset. 1.5 Income Tax For the financial year 2001-02, the Corporation was subject to the rules applicable under the State Equivalent Tax Regime administered by the Victorian Department of Treasury and Finance. The Corporation was notified by the Treasurer, of the Government’s decision to direct Regional Water Corporations to become subject to the National Tax Equivalent Regime (NTER) from 1 July 2002. The NTER is administered by the Australian Taxation Office. The Corporation is subject to Australian Accounting Standard AASB 112 - Income Taxes, as part of the requirement to operate under the National Tax Equivalent Regime. The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the national income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses. Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities are settled, based on those tax rates which are enacted or substantially enacted. The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability. No deferred tax asset or liability is recognised in relation to these temporary differences if they arose in a transaction, other than a business combination, that at the time of the transaction did not affect either accounting profit or taxable profit or loss. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in subsidiaries where the parent entity is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future. Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity. Deferred Tax Assets of $373,496 and provision for deferred income tax liabilities of $6,585,850 (net of tax benefit of carry forward income tax losses of $7,047,710) have been included in the accounts. Realisation of those benefits is contingent upon the future ability of the Corporation to generate taxable income, continued compliance with the conditions of deductibility imposed by the law and the taxation law itself not changing in a manner which would adversely affect the Corporation in realising those benefits. 1.6 Inventories Inventories comprise stores and materials used in the construction of new works and for the repair and maintenance of existing assets. All inventories are valued at the lower of cost and net realisable value. Costs are assigned to inventory quantities on hand at balance date on a weighted average basis. Inventories include goods and other property held either for sale or for distribution at no or nominal cost in the ordinary course of business operations. Inventories held for distribution are measured at the lower of cost and current replacement cost. All other inventories, including land held for sale, are measured at the lower of cost and net realisable value. Where inventories are acquired at no cost, or for nominal consideration, the cost shall be the current replacement cost as at the date of acquisition. Cost for all other inventory is measured on the basis of weighted average cost. Livestock inventory was valued at 30 June 2008 by registered livestock valuer Sharp Fullgrabe & Co Pty Ltd for stock kept at Bruces Track property and by Landmark Kyle & Obst for stock held at the Orbost property. 1.7 Environmental Contribution The Water Industry (Environmental Contributions) Act 2004 amended the Water Industry Act 1994 to make provision for environmental contributions to be paid by water supply Corporations. The Act establishes an obligation for Corporations to pay into the consolidated fund annual contributions for the first period from 1 October 2004 to 30 June 2008 in accordance with the pre-established schedule of payments, which sets out the amounts payable by each Corporation. The purpose for the environmental contribution is set out in the Act, and the funding may be used for the purpose of funding initiatives that seek to promote the sustainable management of water or address water-related initiatives. The environmental contributions are disclosed separately within expenses.

Annual Report 2007-2008 East Gippsland Water 66 East Gippsland Region Water Corporation Notes to the Financial Report for the year ended 30 June 2008

In accordance with Action Point 6.3 of the Victorian Governments White Paper titled “Securing Our Water Future Together”, East Gippsland Water was required to collect an environmental contribution of $590,000 for the 2007/08 Financial Year. This environmental contribution was collected through Water and Wastewater Service and Water Volume fees levied on all accounts. 1.8 Receivables Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns, trade allowances and duties and taxes paid. Receivables are recognised initially at fair value and subsequently measured at amortised cost, less allowance for doubtful debts. Receivables are due for settlement no more than 28 days from the date of recognition for tariff debtors, and no more than 30 days for other debtors. Recovery of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off. A provision for doubtful receivables is established when there is objective evidence that the Corporation will not be able to collect all amounts due according to the original terms of receivables on tenant accounts, as all accounts raised against property owners are collectable on sale of the property and hence have been excluded from any doubtful debt provision, in accordance with A-IFRS requirements. 1.9 Employee Benefits Provision is made for benefits accruing to employees in respect of wages and salaries, annual leave and long service leave when it is probable that settlement will be required and they are capable of being measured reliably. Provisions made in respect of employee benefits expected to be settled within 12 months, are measured at their nominal values, using the remuneration rate expected to apply at the time of settlement. Provisions made in respect of employee benefits which are not expected to be settled within 12 months are measured at their present value of the estimated future cash outflows to be made by the Corporation, in respect of services provided by employees up to the reporting date. Employee benefit on-costs, which include superannuation, work cover and payroll tax, are recognised and included in employee benefit liabilities and costs when the employee benefits to which they relate are recognised as liabilities. All employee entitlements that are due to the employee have been recognised as current liabilities. The only portion of employee benefits that have been recognised as non-current liabilities are long service leave provisions for employees who have not reached the entitlement period of seven years of employment, in accordance with AASB 101 Presentation of Financial Statements. Superannuation The purpose of a superannuation scheme is to accumulate assets to meet members’ benefits as they accrue. The Corporation contributes in respect of its employees to a number of superannuation schemes administered by the State Superannuation Board and the Local Authorities Superannuation Board. The amounts of these contributions are determined by each scheme’s actuary in accordance with statutory requirements. The amount charged to the operating statement in respect of superannuation represents the contributions made by the Corporation to the superannuation plan in respect to the current services of current entity staff. Superannuation contributions are made to the plans based on the relevant rules of each plan. 1.10 Cash and Cash Equivalents For the purposes of the Cash Flow Statement, cash and cash equivalents include cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. 1.11 Borrowings Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the operating statement over the period of the borrowings, using the effective interest method. Borrowings are classified as current liabilities unless the Corporation has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date. 1.12 Property, Plant and Equipment Recognition and Measurement of Assets Acquisition The purchase method of accounting is used for all acquisitions of assets (including business combinations), regardless of whether equity instruments or other assets are acquired. Cost is measured as the fair value of the assets given, shares issued or liabilities incurred or assumed at the date of exchange plus costs directly attributable to the acquisition. Transaction costs arising on the issue of equity instruments are recognised directly in equity.

Annual Report 2007-2008 East Gippsland Water 67 East Gippsland Region Water Corporation Notes to the Financial Report for the year ended 30 June 2008

Where assets are constructed by the Corporation, the cost at which they are recorded includes an appropriate share of fixed and variable overheads and any associated borrowing cost. Assets acquired at no cost or for nominal consideration by the Corporation are recognised at fair value at the date of acquisition. Property, plant and equipment represent non-current assets comprising land, buildings, water infrastructure, sewerage and drainage infrastructure, heritage assets, plant, equipment and motor vehicles, used by the Corporation in its operations. Items with a cost or value in excess of $500 and a useful life of more than one year are recognised as an asset. All other assets acquired are expensed. Repairs and Maintenance Routine maintenance, repair costs and minor renewal costs are expensed as incurred. Where the repair relates to the replacement of a component of an asset and the cost exceeds the capitalisation threshold, the cost is capitalised and depreciated. Infrastructure In accordance with FRD 103 Non-Current Physical Assets, water infrastructure assets are to be measured at cost less any accumulated depreciation and any accumulated impairment losses. Such assets may comprise substructures or underlying systems held by water entities to facilitate the harvesting, storage, treatment and transfer of water to meet customer needs. They also include infrastructure assets that underlie sewage and drainage systems. Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the operating statement. When revalued assets are sold, it is the Corporation’s policy to transfer the amounts included in other reserves in respect of those assets to accumulated funds. The Corporation previously revalued its Infrastructure Assets in 2001 and the estimated useful lives of assets were reassessed at the time of revaluation, and amended accordingly. The Corporation elected to recognise its infrastructure assets at deemed cost from 1 July 2004 on transition to the Australian Equivalent of International Reporting Standards (A-IFRS) as allowed under AASB 1047 First Time Adoption of Australian Equivalent to International Accounting Standards. Assets other than those that are carried at cost are revalued with sufficient regularity to ensure that the carrying amount of each asset does not differ materially from its fair value. This revaluation process normally occurs every three to four years for land and building assets. Revaluation Revaluation increments are credited directly to equity in the revaluation reserve, except that, to the extent that an increment reverses a revaluation decrement in respect of that class of asset previously recognised as expense in determining the net result, the increment is recognised as revenue in determining the net result. Revaluation decrements are recognised immediately as expenses in the net result, except that, to the extent that a credit balance exists in the revaluation reserve in respect of the same class of assets, they are debited to the revaluation reserve. Revaluation increases and revaluation decreases relating to individual assets within a class of property, plant and equipment are offset against one another within that class but are not offset in respect of assets in different classes. Revaluation reserves are not transferred to accumulated funds on derecognition of the relevant asset. Land Assets were revalued in the 2007/8 financial year, in accordance with FRD 103C. All fixed assets excluding land are depreciated on the straight-line basis over the estimated useful lives of the assets to the Corporation. Depreciation and Amortisation of Non-Current Assets Where assets have separate identifiable components that have distinct useful lives and/or residual values, a separate depreciation rate is determined for each component. Land is not depreciated. Depreciation on other assets is calculated using the straight line method to allocate their cost or revalued amounts, net of their residual values, over their estimated useful lives, commencing from the time the asset is held ready for use. The assets residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. Major depreciation periods used are listed below and are consistent with the prior year, unless otherwise stated: The expected useful lives used for each class of assets are: Class of Fixed Asset Useful Life Buildings 67 years Water Infrastructure 10 -100 years Wastewater Infrastructure 10 - 80 years Plant and Equipment 3 - 20 years Motor Vehicles 8 years Office Equipment 1- 10 years Intangible Assets 3 years

Annual Report 2007-2008 East Gippsland Water 68 East Gippsland Region Water Corporation Notes to the Financial Report for the year ended 30 June 2008

The cost of assets constructed by the Corporation includes all direct labour, materials and administration costs used in construction. Works on existing assets are only capitalised if they substantially increase the useful life of the asset. The cost of capital works projects are accumulated as work in progress until the projects have been commissioned. Costs are then transferred to completed works at the end of each month and depreciation is applied from the following month. 1.13 Impairment of Non-Current Assets The carrying amount of East Gippsland Region Water Corporation’s non-current assets has been reviewed in accordance with Australian Accounting Standard AASB136 - Impairment of Assets. Impairment of Assets Goodwill and intangible assets with indefinite useful lives are tested annually as to whether their carrying value exceeds their recoverable amount. All other assets are assessed annually for indicators of impairment, except for; G inventories; G deferred tax assets; G investment property that is measured at fair value; G non-current assets held for sale. If there is an indication of impairment, the assets concerned are tested as to whether their carrying value exceeds their recoverable amount. Where an asset’s carrying amount exceeds its recoverable amount, the difference is written-off by a charge to the operating statement except to the extent that the write-down can be debited to an asset revaluation reserve amount applicable to that specific asset. The recoverable amount for most assets is measured at the higher of depreciated replacement cost and fair value less costs to sell. Recoverable amount for assets held primarily to generate net cash inflows is measured at the higher of the present value of future cash flows expected to be obtained from the asset and fair value less costs to sell. It is deemed that, in the event of the loss of an asset, the future economic benefits arising from the use of the asset will be replaced unless a specific decision to the contrary has been made. An impairment loss on a revalued asset is recognised directly against any revaluation reserve in respect of the same class of asset to the extent that the impairment loss does not exceed the amount in the revaluation reserve for that same class of asset. A reversal of an impairment loss on a revalued asset is credited directly to equity under the heading revaluation reserve. However, to the extent that an impairment loss on the same class of asset was previously recognised in the operating statement, a reversal of that impairment loss is also recognized in the operating statement. From a review of the future net cash flows, the Corporation’s asset values do not exceed their recoverable amount from their continued use and their subsequent disposal and as such, no adjustment to these values was made in the reporting period. If the Corporation was deprived of any of its assets, they would be replaced with new assets to maintain the current function of those assets in place. 1.14 Capitalisation of Administration Expenses The Corporation undertook significant capital works throughout the year. The current policy in relation to these works does not require the recognition of the administrative overhead contribution to the capital works program and the cost of capital works only includes direct administration expenses. 1.15 Government Dividend An obligation to pay a dividend only arises after consultation with the portfolio Minister and the Treasurer and a formal determination is made by the Treasurer. The Corporation does not expect to provide a dividend from the results of this period. 1.16 Goods and Services Tax Revenues, expenses and assets are recognised net of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the Australian Taxation Office (ATO). In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of an item of expense. Receivables and payables are stated inclusive of GST. The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the Balance Sheet. Cash flows arising from operating activities are disclosed in the Cash Flow Statement on a gross basis - i.e, inclusive of GST. The GST component of cash flows arising from investing and financing activities which is recoverable or payable to the taxation Authority is classified as operating cash flows. 1.17 Segmental Reporting - Wholesale/Retail Function The Corporation has no wholesale activities. 1.18 Intangibles Intangible assets represent identifiable non-monetary assets without physical substance. Intangible assets are recognised at cost. Costs incurred subsequent to initial acquisition are capitalised when it is expected that additional future economic benefits will flow to the Corporation.

Annual Report 2007-2008 East Gippsland Water 69 East Gippsland Region Water Corporation Notes to the Financial Report for the year ended 30 June 2008

Amortisation is allocated to intangible assets with finite useful lives on a systematic basis over the asset’s useful life. Amortisation begins when the asset is available for use, that is, when it is in the location and condition necessary for it to be capable of operating in the manner intended by management. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each annual reporting period. In addition, an assessment is made at each reporting date to determine whether there are indicators that the intangible asset concerned is impaired. If so, the assets concerned are tested as to whether their carrying value exceeds their recoverable amount. Intangible assets with indefinite useful lives are not amortised. The useful lives of intangible assets that are not being amortised are reviewed each period to determine whether events and circumstances continue to support an indefinite useful life assessment of that asset. In addition, the entity tests all intangible assets with indefinite useful lives for impairment by comparing their recoverable amount with their carrying amount annually and, whenever there is an indication that the intangible assets may be impaired. Any excess of the carrying amount over the recoverable amount is recognised as an impairment loss. In respect of not-for-profit entities, revaluation increases and decreases relating to individual assets within a class of intangible assets shall be offset against one another within that class but shall not be offset in respect of assets in different classes. A summary of the policies applied to the Corporation’s intangible assets is as follows: Useful Lives Finite Method Used 3 years - straight line Internally Generated/Acquired Internally Generated Impairment Test/Recoverable Amount Testing Amortisation method reviewed at each financial year end 1.19 Correction of a Prior Error The Corporation previously revalued its Infrastructure Assets in 2001 and the estimated useful lives of assets were reassessed at the time of revaluation, and amended accordingly. The Corporation elected to recognise its infrastructure assets at deemed cost from 1 July 2004 on transition to the Australian Equivalent of International Reporting Standards (A-IFRS) as allowed under AASB 1047 First Time Adoption of Australian Equivalent to International Accounting Standards. The 2001 revaluation duplicated the recording of 2 assets in separate asset registers. As a result of duplicating the value of these assets and in accordance with AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors, an adjustment to the prior year balance has been applied. The error has no impact on the net result for the 2006/07 year and has therefore been adjusted against the opening retained earnings as at 1 July 2006. The following adjustments have been made to prior year balances to restate the correct position as at 30 June 2007 had the error occurance in 2000/01 been recognised.

1st July 2006 30th June 2007 Audited Revised Audited Revised 2006/07 Adjustment 2006/07 2006/07 Adjustment 2006/07 $000 $000 $000 $000 $000 $000 Assets Property, Plant and Equipment 153,108 (308) 152,800 171,189 (308) 170,881 Equity Accumulated Surplus 64,336 308 64,028 66,717 308 66,409

Note 2: Financial Risk Management The Corporation’s activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. This note presents information about the Corporation’s exposure to each of these risks, and the objectives, policies and processes for measuring and managing risk. The Corporation’s Board has the overall responsibility for the establishment and oversight of the Corporation’s risk management framework. The Corporation’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Corporation. The Corporation uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate and other price risks and ageing analysis for credit risk. Risk management is carried out by audit and risk management committee under policies approved by the Board of Directors. The Board provides written principles for overall risk management , as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk and investment of excess liquidity.

Annual Report 2007-2008 East Gippsland Water 70 East Gippsland Region Water Corporation Notes to the Financial Report for the year ended 30 June 2008

An effective framework is in place to adequately assess, monitor, manage and report, the significant financial risks to which the Corporation is exposed to as a result of, and in the course of its activities and responsibilities. (a) Risk Exposures The main risks the Corporation is exposed to through its financial instruments are as follows: Market Risk Market risk is the risk that changes in market prices will affect the fair value or future cash flows of the Corporation’s financial instruments. Market risk comprises of foreign exchange risk, interest rate risk and other price risk. The Corporation’s exposure to market risk is primarily through interest rate risk, there is insignificant exposure to foreign exchange risk and other price risk. (i) Interest Rate Risk The Corporation’s exposure to market interest rates relates primarily to the Corporation’s long term borrowings. The Corporation minimises its exposure to interest rate changes on its long term borrowings by holding fixed rate debt. Debt is sourced from Treasury Corporation of Victoria and is managed within a range of Board approved limits with debt levels and interest rates being monitored regularly. In accordance with East Gippsland Water’s Treasury Management Policy, floating debt is limited to less than 20% of the total borrowing portfolio. This debt is restricted to short term borrowings, which limits the exposure to interest rate risk further. The Corporation has minimal exposure to interest rate risk through its holding of cash assets and other financial assets. (ii) Foreign Exchange Risk The Corporation has limited exposure to changes in the foreign exchange rate. Borrowings are not conducted in foreign currencies. (iii) Other Price Risk The Corporation has no significant exposure to other price risk. Market Risk Sensitivity Analysis The sensitivity analysis below has taken into consideration past performance, future expectations, economic forecasts and management’s knowledge and experience of the financial markets, the Corporation believes that a movement of 1% in interest rates is reasonable over the next 12 months.

Interest Rate Risk -1% +1% Carrying Result Equity Result Equity 30 June 2008 amount $000 $000 $000 $000 $000 Financial Assets 7,821 (36) (36) 36 36 Financial Liabilities 17,653 40 40 (40) (40) Total Increase/(Decrease) 4 4 (4) (4)

Credit Risk Credit risk is the risk of financial loss to the Corporation as a result of a customer or counterparty to a financial instrument failing to meet its contractual obligations. Credit risk arises principally from the Corporation’s receivables and financial assets available for sale. The Corporation’s exposure to credit risk is influenced by the individual characterstics of each customer. The receivable balance consists of a large number of residential and business customers which are spread across a diverse range of industries. Receivable balances are monitored on an on-going basis to ensure that exposure to bad debts is not significant. The Corporation has in place a policy and procedure for the collection of overdue receivables. Liquidity Risk Liquidity risk is the risk that the Corporation will not be able to meet its financial obligations as they fall due. The Corporation’s policy is to settle financial obligations within 30 days and in the event of dispute make payments within 30 days from the date of resolution. The Corporation manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities by continually monitoring forecasts and actual cash flows and matching the maturity profiles of financial assets and financial liabilities. To manage liquidity risk East Gippsland Water has in place an ability to access funds via overnight notifications to Treasury Corporation of Victoria in accordance with the Treasurer’s borrowing approval limits. Under the States’ centralised borrowing arrangement, TCV has assumed responsibility for securing adequate access to global financial markets.

Annual Report 2007-2008 East Gippsland Water 71 East Gippsland Region Water Corporation Notes to the Financial Report for the year ended 30 June 2008

Thus, the liquidity risk faced by East Gippsland Water is commensurative with the liquidity risk of the State of Victoria, which is not considered significant. The Corporation’s financial liability maturities have been disclosed in Note 12. b) Fair Value Estimation The carrying value less impairment provision of trade receivables and payables is a reasonable approximation of their fair values due to the short-term nature of trade receivables. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Corporation for similair financial instruments. The carrying amount and aggregate net fair values of financial assets and financial liabilities at balance date have been provided in Note 26. (c) Significant Accounting Policies Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in Note 1 to the financial statements. (d) Significant Terms and Conditions The Corporation’s financial instruments consist mainly of deposits with banks, short term investments, accounts receivable and payable and loans from banking institutions. The Corporation does not have any derivative instruments as at 30 June 2008 (2007: Nil).

Note 3: Operating Statement - Disclosures 2008 2007 $000 $000

(a) Revenue Service Charges Water Charges 3,953 3,631 Wastewater Charges 8,851 8,058 12,804 11,685 Government Contributions Capital 900 0 Operating 0 105 900 105 $900,000 was received from the Department of Human Services in June 2008 as revenue for the provision of future capital works. Developer Contributions Headwork / Outfall Fees 706 439 Landowner Contributions 1,853 2,227 2,559 2,666 Other Revenue Planning Fees 336 267 Farm Operation Income 128 133 Rental Income 84 74 Miscellanous 323 290 Legal Fees Recovered 58 57 929 821 (b) Expenses Depreciation and Amortisation: Buildings 70 54 Water Infrastructure 2,342 2,015 Wastewater Infrastructure 2,205 2,259 Plant, Equipment, Office and Motor Vehicles 564 480 Amortisation - Intangible Assets 143 145 5,324 4,953

Annual Report 2007-2008 East Gippsland Water 72 East Gippsland Region Water Corporation Notes to the Financial Report for the year ended 30 June 2008

Note 4: Income Tax Expense The income tax expense for the financial year differs from the amount 2008 2007 calculated on the profit. These differences are reconciled as follows: $000 $000

Profit from ordinary activities before income tax expense 2,568 3,389 Income tax at 30% 770 1,016 Add/(Deduct) Tax Effect of: - Depreciation on Buildings 21 16 - Entertainment 5 2 - Amortisation of Buildings (35) (25) - Prior Year Correction (92) 0 Aggregate Income Tax Expense 669 1,009 Aggregate income Tax Expense comprises: - Deffered Income Tax Provision 669 1,009

Note 5: Cash Assets 2008 2007 $000 $000

Current Cash on Hand and Bank Accounts 3,635 2,567 Developer Bond Accounts 46 4 3,681 2,571

Note 6: Receivables 2008 2007 $000 $000

Current: Trade Debtors 987 1,649 Other Debtors 3,013 1,243 Less Provision for Doubtful Debt (35) (30) Prepayments 55 188 4,021 3,050 Non Current: Private Schemes 140 176 140 176

Amounts of debts written off as bad debts during the year totaled $30,889 (2007: $17,637)

Note 7: Inventories 2008 2007 $000 $000

Stores at Cost 475 444 Livestock at Valuation 67 76 543 520

Annual Report 2007-2008 East Gippsland Water 73 East Gippsland Region Water Corporation Notes to the Financial Report for the year ended 30 June 2008

Note 8: Property, Plant and Equipment 2008 2007 $000 $000

(a) Classes of Property, Plant and Equipment Land At Fair Value (Crown) 2,492 2,850 At Fair Value (Freehold) 13,627 16,249 At Cost (freehold) 884 0 17,003 19,099 Buildings At Fair Value 4,636 4,636 At Cost 70 0 Less Accumulated Depreciation (68) 0 4,638 4,636 Water Infrastructure At Deemed Cost 64,910 65,093 At Cost 25,354 15,472 Less Accumulated Depreciation (13,466) (11,456) 76,797 69,109 Wastewater Infrastructure At Deemed Cost 65,900 66,122 At Cost 25,310 22,494 Less Accumulated Depreciation (14,513) (12,477) 76,697 76,139 Motor Vehicles At Cost 1,757 1,621 Less Accumulated Depreciation (490) (488) 1,268 1,133 Plant and Equipment At Cost 2,419 1,642 Less Accumulated Depreciation (1,046) (1,090) 1,372 552 Office Equipment At Cost 962 957 Less Accumulated Depreciation (704) (743) 258 213 Total Property, Plant and Equipment 178,033 170,881 Capital Works in Progress Water, At Cost 6,692 9,959 Wastewater, At Cost 3,925 1,979 Total Capital Works in Progress 10,617 11,938

Annual Report 2007-2008 East Gippsland Water 74 East Gippsland Region Water Corporation Notes to the Financial Report for the year ended 30 June 2008

Note 8: Property, Plant and Equipment (continued) Asset Accumulated WDV Proceeds Profit/ Value at Depreciation at Sale from (Loss) Sale Date on Disposal Date Sale on Sale $000 $000 $000 $000 $000

(b) Profit/Loss on Sale of Non Current Assets 2008 Motor Vehicles 603 (186) 417 373 (44) Plant and Equipment 314 (293) 21 0 (21) Office Equipment 181 (178) 3 0 (3) Infrastrucuture 1,111 (385) 726 0 (726)

Total 2,209 (1,042) 1,167 373 (794)

(b) Profit/Loss on Sale of Non Current Assets 2007 Motor Vehicles 256 (78) 178 145 (33) Plant and Equipment 4 (4) 0 0 0 Office Equipment 89 (79) 10 0 (10) Infrastrucuture 492 (257) 235 0 (235)

Total 841 (418) 423 145 (278)

Annual Report 2007-2008 East Gippsland Water 75 East Gippsland Region Water Corporation Notes to the Financial Report for the year ended 30 June 2008

Note 8: Property, Plant and Equipment (continued)

Opening Depreciation Closing WDV Additions Disposals Revaluation Exp WDV $000 $000 $000 $000 $000 $000

(c) Movement during financial year 2008 Land At Fair Value (Crown) 2,850 (358) 2,492 At Fair Value (Freehold) 16,249 (2,622) 13,627 At Cost (Freehold) 0 884 884 19,099 884 0 (2,980) 0 17,003 Buildings At Fair Value 4,636 (70) 4,566 At Cost 0 70 70 4,636 70 0 0 (70) 4,636 Water Infrastructure At Deemed Cost 56,058 (674) 55,384 At Cost 13,051 10,704 (2,342) 21,413 69,110 10,704 (674) 0 (2,342) 76,798 Wastewater Infrastructure At Deemed Cost 56,875 (52) 56,823 At Cost 19,262 2,817 (2,205) 19,874 76,137 2,817 (52) 0 (2,205) 76,697 Motor Vehicles At Cost 1,133 740 (417) (187) 1,269 1,133 740 (417) 0 (187) 1,269 Plant and Equipment At Cost 552 1,090 (21) (249) 1,372 552 1,090 (21) 0 (249) 1,372 Office Equipment At Cost 214 174 (3) (128) 257 214 174 (3) 0 (128) 257 Total 170,881 16,479 (1,167) (2,980) (5,181) 178,033

At 1 July 2007 Cost/fair value 197,136 Accumulated Depreciation and Impairment (26,254) Net Carrying Amount 170,882

At 30 June 2008 Cost/fair value 208,321 Accumulated Depreciation and Impairment (30,288) Net Carrying Amount 178,033

Annual Report 2007-2008 East Gippsland Water 76 East Gippsland Region Water Corporation Notes to the Financial Report for the year ended 30 June 2008

Note 8: Property, Plant and Equipment (continued)

Opening Depreciation Closing WDV Additions Disposals Revaluation Exp WDV $000 $000 $000 $000 $000 $000

(d) Movement during Financial Year 2007 Land At Fair Value (Crown) 1,540 1,310 2,850 At Fair Value (Freehold) 8,338 500 7,411 16,249 At Cost (Freehold) 525 (525) 0 10,403 500 0 8,196 0 19,099 Buildings At Fair Value 1,814 2,851 (29) 4,636 At Cost 1,421 226 (1,622) (25) 0 3,235 226 0 1,229 (54) 4,636 Water Infrastructure At Deemed Cost 56,239 (181) 56,058 At Cost 6,662 8,404 (2,015) 13,051 62,901 8,404 (181) 0 (2,015) 69,109 Wastewater Infrastructure At Deemed Cost 56,929 (54) 56,875 At Cost 17,423 4,098 (2,259) 19,262 74,352 4,098 (54) 0 (2,259) 76,137 Motor Vehicles At Cost 1,106 384 (178) (179) 1,133 1,106 384 (178) 0 (179) 1,133 Plant and Equipment At Cost 512 183 (143) 552 512 183 0 0 (143) 552 Office Equipment At Cost 290 92 (10) (158) 214 290 92 (10) 0 (158) 214 Total 152,800 13,887 (423) 9,425 (4,808) 170,881

At 1 July 2006 Cost/fair value 174,859 Accumulated Depreciation and Impairment (22,059) Net Carrying Amount 152,800

At 30 June 2007 Cost/fair value 197,135 Accumulated Depreciation and Impairment (26,254) Net Carrying Amount 170,881

Annual Report 2007-2008 East Gippsland Water 77 East Gippsland Region Water Corporation Notes to the Financial Report for the year ended 30 June 2008

Note 8: Property, Plant and Equipment (continued) Opening Closing Cost Additions Transfer Cost $000 $000 $000 $000

(e) Capital Works in Progress Water At Cost 9,959 8,391 (11,658) 6,692 Wastewater At Cost 1,979 4,763 (2,817) 3,925 11,938 13,154 (14,475) 10,617

Note 9: Intangible Assets 2008 2007 $000 $000

Cost (Gross Carrying Amount) 1,419 618 Accumulated Amortisation and Impairment (548) (415) Net Carrying Amount 871 203

Opening Written Down Value 203 348 Additions 811 0 Amortisation (143) (145) Net Carrying Amount 871 203

Note 10: Payables 2008 2007 $000 $000

Trade Creditors and Accruals 3,237 4,126 Contractor Deposits and Retention 370 569 3,607 4,695

Note 11: Provisions 2008 2007 $000 $000

(a) Current Annual Leave 464 471 Provision for Long Service Leave 636 638 1,100 1,109 (b) Non-Current Provision for Long Service Leave 96 85 96 85 (c) Employee Statistics Number of Employees 76 76 Number of Effective Full Time Employees 76 75 The present value of employee entitlements that are not expected to be settled within twelve months of balance date have been calculated using the following weighted averages, as advised by the Department of Treasury and Finance. Rostered Days Off were not deemed to be liabilities and no provision was calculated during the reporting period. Assumed rate of increase in wage and salary rates 4.75% Discount Rate 6.57% - 6.91% Settlement Term (years) 7

Annual Report 2007-2008 East Gippsland Water 78 East Gippsland Region Water Corporation Notes to the Financial Report for the year ended 30 June 2008

Note 12: Interest Bearing Liabilities 2008 2007 $000 $000 Current Secured TCV Borrowings 4,000 0 Non-Current: Secured TCV Borrowings 10,000 3,500 Total Interest Bearing Liabilities 14,000 3,500 Borrowings have been secured by charges over water and wastewater revenue. Credit Standby arrangements Bank (TCV) Loan Facilities Total Facilities 16,000 16,000 Used at Balance Date 14,000 3,500 Unused at Balance Date 2,000 12,500 Interest Rate Risk Exposures The following table sets out the Corporation’s exposure to interest rate risk, including the contractual repricing dates and the effective weighted average interest rate maturity periods. Exposures arise predominately from liabilities bearing variable interest rates as the Corporation intends to hold fixed rates to maturity.

TCV Borrowings - Floating 4,000 3,500 TCV Borrowings - Fixed 10,000 0 14,000 3,500 Weighted Average Interest Rate (%) 7.15% 6.42%

Note 13: Deferred Tax Liabilities 2008 2007 $000 $000

The balance comprises temporary differences attributable to: Amounts Recognised in Profit or Loss Employee Benefits (359) (358) Doubtful Debts (11) (9) Other (9) (9) Tax Losses (7,081) (6,201) Depreciation 11,828 10,277 4,369 3,700 Amounts Recognised Directly in Equity Revaluation of property, plant and equipment 1,843 2,630

1,843 2,630

Net Deferred Tax Liabilities 6,212 6,330

Movements Opening Balance at 1 July 6,330 2,902 Charged/(credited) to Operating Statement 669 1,008 Charged/(credited) to Equity (787) 2,420 Closing Balance 6,212 6,330

Note 14: Contingent Liabilities At balance date the Corporation is unaware of any contingent liabilities or contingent assets that have not been disclosed or recorded.

Annual Report 2007-2008 East Gippsland Water 79 East Gippsland Region Water Corporation Notes to the Financial Report for the year ended 30 June 2008

Note 15: Superannuation The Corporation contributes to the following superannuation schemes in respect of its employees with contribution rates varying from 9% - 9.25% of employee salaries. The Fund has two categories of membership, each of which is funded differently. The Fund’s accumulation category, Vision Super Saver, receives both employer and employee contributions on a progressive basis. Employer contributions are normally based on a fixed percentage of employee earnings (9% required under Superannuation Guarantee Legislation). No further liability accrues to the employer as the superannuation benefits accruing to the employees are represented by their share of the net assets of the Fund. The Fund’s Defined Benefit Plan is a multi-employer sponsored plan. As the Fund’s assets and liabilities are pooled and are not allocated by employer, the Actuary is unable to allocate benefit liabilities, assets and costs between employers. As provided under Paragraph 32(b) of AASB 119, East Gippsland Region Water Corporation does not use defined benefit accounting for these contributions. 2008 2007 Contributions by the Corporation during the reporting period are detailed below: $000 $000

AMP Flexible Lifetime Superannuation 0 1 Local Authorities Super - Defined Benefits 99 103 Local Authorities Super - Super Saver 294 255 Victorian State Superannuation Fund 0 10 393 369

The Corporation makes employer contributions to the defined benefit category of the Fund at rates determined by the Trustee on the advice of the Fund’s Actuary. On the basis of the results of the most recent full actuarial investigation conducted by the Fund’s actuary as at 31 December 2005, the current funding arrangements are adequate for the expected Defined Benefit Plan liabilities. The Corporation makes the following contributions: - 9.25% of member’s salaries - the difference between resignation and retrenchment benefits paid to any retrenched employees plus contributions tax.

Note 16: Lease Commitments Receivable 2008 2007 $000 $000

Less than One Year 69 67 One to Five Years 152 188 Over Five Years 345 378 566 633

Lease and rental income is derived from lease of telecommunication tower sites, rental of residential farm property and rental of sites for weather and navigational monitoring facilities with terms between 5 and 20 years.

Note 17: Contributed Capital 2008 2007 $000 $000

Opening Balance 94,103 92,814 Equity Contributions from Victorian Government - Cash 0 1,289 Total Contributed Capital 94,103 94,103

Note 18: Asset Revaluation Reserve 2008 2007 $000 $000

Opening Balance 11,975 4,970 Land Valuation Increment/(Decrement) (2,086) 6,145 Building Valuation Increment 0 860 (2,086) 7,005 Closing Balance 9,888 11,975

Annual Report 2007-2008 East Gippsland Water 80 East Gippsland Region Water Corporation Notes to the Financial Report for the year ended 30 June 2008

Note 19: Accumulated Funds 2008 2007 $000 $000

Balance July 1 66,409 64,028 Surplus from Ordinary Activities 1,899 2,381 Accumulated Surplus at the end of year 68,308 66,409

Note 20: Reconciliation of Surplus from Ordinary Activities 2008 2007 to Cash Provided by Operating Activities $000 $000

Surplus from Ordinary Activities 1,899 2,381 Loss on Sale on Non-Current Assets 793 278 Depreciation and Amortisation 5,323 4,953 Bad Debts 31 18 Income for Capital Purposes (3,459) (2,771) Movement in Assets and Liabilities (Increase)/Decrease in Receivables (966) 405 (Increase)/Decrease in Stock (23) 96 Increase/(Decrease) in Provisions (1) 71 Increase/(Decrease) in Accounts Payable (321) 563 Increase/(Decrease) in Tax Provisions 669 1,008 Net cash provided by operating activities 3,945 7,002 Non Cash Activities Income for Capital Purposes - Donated Developer Assets 922 1,137

Income for capital purposes includes the value of donated developer assets received, where the Corporation gains control of those assets. They represent “non-cash” activities.

Note 21: Capital Commitments 2008 2007 $000 $000

Capital Project Commitments due within 12 months 4,821 6,033

Note 22: Reconciliation Of Cash Cash as at the end of the financial year as shown in the Statement of Cash Flows is reconciled to the related items 2008 2007 in the Balance Sheet as follows: $000 $000

Cash on Hand 1 1 Cash at Bank 3,633 2,566 Developer Bond Accounts 46 4 3,681 2,571

Annual Report 2007-2008 East Gippsland Water 81 East Gippsland Region Water Corporation Notes to the Financial Report for the year ended 30 June 2008

Note 23: Auditor’s Remuneration 2008 2007 $000 $000

Amounts paid/payable to the Victorian Office of the Auditor General (inc. GST) 33 33

Note 24: Executive Officers’ Remuneration The number of Executive Officers’, other than the responsible persons, whose total remuneration falls within the specific bands above $100,000 are as follows: Total Remuneration Base Remuneration 2008 2007 2008 2007 $100,000 - $109,999 1 1 1 $110,000 - $119,999 1 2 2 $120,000 - $129,999 1 2 1 $130,000 - $139,999 1 Total Remuneration 479 350 Total Numbers 4 3

Note 25: Responsible Persons’ Related Disclosures The names of persons who were responsible at any time during the financial year were: Ministers The Hon. John Thwaites MP (1st July 2007 - 3rd August 2007), Minister for Water, Environment and Climate Change. The Hon. Tim Holding MP (3rd August 2007 - 30th June 2008), Minister for Water. Board Chairperson: Robert Fordham Deputy Chairperson: Bernie Smith Director: Robert Supplitt Director: Jane Rowe Director: Eric Sjerp Director: Gail Morley Director (appointed 1st October 2007): Richard Elkington Director (appointed 4th January 2008): Samuel Logan Director (retired 30th September 2007): Richard McDowell Managing Director: Les Mathieson 2008 2007 Remuneration of Responsible Persons’ The number of Responsible Persons’ whose remuneration from the Corporation was within the specific bands were as follows: $0 - $9,999 1 0 $10,000 - $19,999 6 6 $30,000 - $39,999 1 1 $180,000 - $189,999 0 1 $190,000 - $199,999 1 0 Total Numbers 9 8

Remuneration received or receivable by responsible persons’ and related parties in respect of the management of the Corporation during the reporting period was: 326 313 Retirement Benefits The Corporation has made superannuation payments of $27,000 (2007: $25,723) on behalf of the Board Members. Transactions between responsible persons and the Corporation There have been no transactions between responsible persons and the Corporation other than in the normal capacity as ratepayers and consumers.

Annual Report 2007-2008 East Gippsland Water 82 East Gippsland Region Water Corporation Notes to the Financial Report for the year ended 30 June 2008

Note 26: Financial Instruments (a) Terms, Conditions and Accounting Policies The Corporation’s accounting policies including the terms and conditions of each class of financial assets, financial liability and equity instrument, recognised at balance date, are as follows:

Financial Refer Notes Instruments to Accounts Accounting Policies Terms and Conditions

(i) Financial Assets Receivables - 6 Trade Receivables are carried at Credit is allowed for a 28 day Tariffs and Charges nominal amounts due less any term. Interest of 12.25% is provision for doubtful debts. chargeable on overdue A provision for doubtful debts amounts. is recognised when collection of the full nominal amount is no longer probable. Receivables - 6 Private Scheme receivables are Billing is conducted every Private Schemes carried at nominal amounts due. quarter and credit is allowed for a 14 day term. Interest at 6.8% is chargeable on outstanding amounts.

Receivables - 6 Developer charges owing are All charges are to be paid on Developer Charges recognised on the issue of a application for a certificate of certificate of compliance and compliance. are payable on application for a certificate of compliance.

Cash Assets5 Investments and cash at bank Bank bills and short term are brought into account at cost, deposits have an average with interest revenue recognised maturity of 90 days and in the operating statement on effective interest rates of a time proportionate basis that between 6.9% and 7.6%. takes into account the effective yield in the financial asset. (ii) Financial Liabilities Payables - 10 Liabilities are recognised for Trade liabilities are settled as Trade Creditors amounts to be paid in the future cashflows permit, or within 30 and Accruals for goods and services received, days payment terms. Cashflows whether or not billed to the are monitored on a daily basis. Corporation.

Payables - 10 Contract retentions are held Retentions payable on Retentions at between 5% and 10% of satisfactory completion of contract works and repayable 12 months maintenance period. within 12 months of completion of works. Interest Bearing 1 Interest Bearing Liabilities Interest Bearing Liabilities Liabilities are brought into account at are sourced at call (11am) cost, with interest expense and via longer term secured recognised in the operating funds. The effective interest statement on a time rate for the period was 7.02%. proportionate basis that takes into account the effective yield in the financial liability. (iii) Equity Contributed 17 Contributions to the Corporation Capital are recognised as contributed capital with the approval of the Minister for Finance.

Annual Report 2007-2008 East Gippsland Water 83 East Gippsland Region Water Corporation Notes to the Financial Report for the year ended 30 June 2008

Note 26: Financial Instruments (continued) (b) Interest Rate Risk The Corporation’s exposure to interest rate risk and the effective interest rates of financial assets and financial liabilities, both recognised and unrecognised at balance date, are as follows:

Floating Interest Fixed Interest Maturing in: Non-interest Weighted Average Rate 1 year or less Over 1 - 5 years More than 5 years Bearing Interest Rate

Financial 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007 Instruments $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 % %

(i) Financial Assets Cash 3,635 2,567 46 4 7.54 7.54 Receivables: Trade 4,000 2,892 N/A N/A Private Schemes 140 176 6.80 6.80 Total Financial Assets 3,635 2,567 0 0 140 176 0 0 4,046 2,896

(ii) Financial Liabilities Trade Creditors & Accruals 3,653 4,794 0.00 0.00 Borrowings 4,000 3,500 5,000 5,000 7.15 6.42 Total Financial Liabilities 4,000 3,500 0 0 5,000 0 5,000 0 3,653 4,794

(c) Net Fair Values The aggregate fair values of financial assets and financial liabilties, both recognised and unrecognised, at the balance date, are as follows: Total Carrying Amount as per Balance Aggregate Net Sheet Fair Value 2008 2007 2008 2007 Financial Instruments $000 $000 $000 $000 (i) Financial Assets Cash 3,681 2,571 3,681 2,571 Receivables 4,000 2,892 4,000 2,892 Private Schemes 140 176 140 176 Total Financial Assets 7,821 5,639 7,821 5,639

(ii) Financial Liabilities Payables - Trade Creditors and Accruals 3,653 4,794 3,653 4,794 Borrowings - TCV 14,000 3,500 14,000 3,500 Total Financial Liabilities 17,653 8,294 17,653 8,294

(d) Credit Risk Exposure The Corporation’s maximum exposure to credit risk at balance date in relation to each class of recognised financial asset is the carrying amount of those assets as indicated in the Balance Sheet. Concentration of Credit Risk The Corporation minimises concentrations of credit risk in relation to Trade Accounts Receivable by undertaking transactions with a large number of customers. Credit risk in trade and other receivables is managed by payment terms of 14 days.

Annual Report 2007-2008 East Gippsland Water 84 East Gippsland Region Water Corporation Notes to the Financial Report for the year ended 30 June 2008

Note 27: Wholesale and Retail Segments In accordance with directions issued by the Minister for Water under the Financial Management Act 1994, the Corporation is required to provide as part of its financial statements, separate details of the revenue, expenses, assets and liabilities and the results of its wholesale and retail operations. The Corporation does not have any wholesale operations. Details of the retail operations are as follows: Water Wastewater Total 2008 2007 2008 2007 2008 2007 $000 $000 $000 $000 $000 $000

Revenue Sales - External 8,290 7,836 9,078 8,235 17,368 16,071 Developer Contributions 1,197 1,233 1,362 1,433 2,559 2,666 Government Contributions 900 105 0 0 900 105 Other 547 520 508 542 1,054 1,062 Total Service Revenue 10,934 9,694 10,948 10,210 21,881 19,904 Expenses Borrowing Costs 338 5 338 6 676 11 Depreciation 2,689 2,282 2,491 2,527 5,179 4,809 Amortisation 72 73 72 73 143 146 Employees 2,813 2,903 2,304 2,053 5,117 4,956 Environmental Contribution 295 289 295 301 590 590 Suppliers and Materials 4,137 3,595 2,678 2,132 6,815 5,727 Loss on Assets Sold 696 139 98 139 794 278 Total Service Expense 11,039 9,285 8,275 7,230 19,314 16,517 Operating Surplus/(Deficit) From Retail Operations (106) 409 2,673 2,980 2,568 3,389 Income Tax Expense 0 (121) (669) (887) (669) (1,008) Net Surplus for Reporting Period (106) 288 2,004 2,093 1,899 2,381

Note 28: Events Subsequent to the Balance Date Since balance date the Corporation has received notice on the 4th September 2008 that it has an unconditional right to defer settlement for at least 12 months for the $4M TCV loan facilities recorded as current interest bearing liabilities in the financial statements. Had this notice been received prior to 30 June 2008, the Corporation would have recorded a positive working capital position.

Annual Report 2007-2008 East Gippsland Water 85 EAST GIPPSLAND REGION WATER CORPORATION STATUTORY CERTIFICATION FOR 2007/08

We certify that the attached financial statements for East Gippsland Region Water Corporation have been prepared in accordance with Part 7 of the Standing Directions of the Minister for Finance under the Financial Management Act 1994, applicable Financial Reporting Directions, Australian accounting standards and other mandatory professional reporting requirements. We further state that, in our opinion, the information set out in the Operating Statement, Balance Sheet, Statement of Cash Flows, Statement of Changes in Equity and Notes to and forming part of the Financial Statements, presents fairly the financial transactions during the year ended 30 June 2008 and the financial position of the Corporation as at 30 June 2008. We are not aware of any circumstance which would render any particulars included in the financial statements to be misleading or inaccurate.

Robert Fordham Les Mathieson Robert Carlesso Chairperson Managing Director Chief Financial Officer Accountable Officer

17 September 2008

Annual Report 2007-2008 East Gippsland Water 86 AUDITOR GENERAL’S REPORT

Annual Report 2007-2008 East Gippsland Water 87 AUDITOR GENERAL’S REPORT

Annual Report 2007-2008 East Gippsland Water 88 DISCLOSURE INDEX

The Annual Report of the East Gippsland Region Water Corporation is prepared in accordance with all relevant Victorian legislation. This index has been prepared to facilitate identification of the Corporation’s compliance with statutory disclosure requirements. Legislation Disclosure Required Page Ministerial Directions Report of Operations Charter and purpose FRD 22B Manner of establishment and the relevant Ministers 1 FRD 22B Objectives, functions, powers and duties 1, 2 FRD 22B Nature and range of services provided Inside front cover, 1 Management and structure FRD 22B Organisational structure, names and functional areas of responsibility of senior officers 9 FRD 22B Names of Board members 6-8 Financial and other information FRD 22B Workforce data – 2 year comparison of 13 FRD 22B Merit and Equity 12-13 FRD 15B Executive officer disclosures 13, 82 FRD 22B 5 year summary of financial results 47 FRD 22B Summary of financial results for the year 48 FRD 22B Significant changes in financial position for the year 48 FRD 22B Operational and budgetary objectives, and performance against objectives 2-4, 51-55 FRD 22B Major changes or factors affecting performance 56 FRD 22B Subsequent events 49 FRD 22B Details of consultancies over $100,000 50 FRD 22B Details of consultancies under $100,000 50 FRD 12A Major contracts 50 FRD 22B Application and operation of Freedom of Information Act 1982 49 FRD 22B Application and operation of the Whistleblowers Protection Act 2001 49 FRD 22B Compliance with building and maintenance provisions of Building Act 1993 49 FRD 22B Statement on National Competition Policy 49 FRD 22B Occupational Health and Safety policy 13-15 FRD 10 Disclosure index Inside back cover FRD 22B Availability of other information Inside back cover FRD 25 Victorian Industry Participation Policy disclosures 49 SD 4.2 (j) Accountable Officer’s declaration 5 SD 4.5.5 Attestation on compliance with the Australian/NewZealand Risk Management Standard 5 Financial Report Financial statements required under Part 7 of the Financial Management Act 1994 SD 4.2(a) Statement of Changes in Equity 63 SD 4.2(b) Operating Statement 61 SD 4.2(b) Balance Sheet 62 SD 4.2(b) Cash Flow Statement 64 SD 4.2(b) Notes to the financial statements 65-85 SD 4.2(c) Compliance with applicable Australian accounting standards and other authoritative pronouncements 86 SD 4.2(c) Compliance with Ministerial Directions 86 SD 4.2(c) Accountable Officer’s Declaration 86 SD 4.2(d) Rounding of amounts 65 Other disclosures in notes to the financial statements FRD 21A Responsible person and executive officer disclosures 82 FRD 112A Employee superannuation funds 80 Legislation Freedom of Information Act 1982 49 Whistleblowers Protection Act 2001 49 Building Act 1993 49 Victorian Industry Participation Policy Act 2003 49 Financial Management Act 1994 5, 57, 65, 86 Water Act 1989 1 Access to information Information listed in FRD 22B is retained by the Corporation’s Accountable Officer and if not disclosed in this report is available to the Minister, Members of parliament and public. It is held at the Corporation’s office, 133 Macleod Street, Bairnsdale and is available on request subject to the Freedom of Information Act 1982. HEAD OFFICE: 133 Macleod Street Bairnsdale 3875 PO Box 52 Bairnsdale 3875 G Telephone: 1300 720 700 G Facsimile: 03 5150 4477 Email: [email protected] G Website: www.egwater.vic.gov.au BRANCH OFFICES AND DEPOTS BAIRNSDALE: Telephone 03 5152 4012 G Facsimile 03 5152 4197 LAKES ENTRANCE: Telephone 03 5155 1367 G Facsimile 03 5155 4531 MALLACOOTA: Telephone 03 5158 0414 G Facsimile 03 5158 0581 OMEO: Telephone 03 5159 1548 G Facsimile 03 5159 1547 ORBOST: Telephone 03 5154 2205 G Facsimile 03 5154 2510