Sustainability Report 2007/08 our vision Working together Contents to ensure a 2 Overview 10 2007/08 in review 11 Chairman and Managing sustainable Director’s report 12 water 22 sewerage water 30 waterways 38 recycled water 44 protecting our future natural environment energy and greenhouse Biodiversity waste 54 Our relationships 60 Our people, our workplace 68 Business efficiency 74 Corporate governance and risk management

79 financial Report Front cover: The Waterwall at the National Gallery of Victoria (NGV) 128 appendices The NGV is committed to achieving and promoting water conservation. With the assistance and support statutory information of Water, the Water Trail has been developed to promote the value of water to NGV global Reporting visitors. The Waterwall at the entrance to NGV International marks the beginning of the Water Trail. Initiative content index Using recycled water, the constant flow creates a natural filter between the bustle of the city and independent the calm seclusion and ambience of the Gallery. assurance statement Opposite: Kids at Cherry , Altona

sustainability report 2007–2008 1 About this report Reporting principles Previously, we produced about 2000 printed reports a year to distribute to our Melbourne Water’s Sustainability Report As with last year’s report, information stakeholders and the community. We also 2007/08 describes our progress towards for the Sustainability Report 2007/08 was made the report available online via our achieving our vision of Working Together prepared consistent with the following website. Consistent with our sustainability to ensure a Sustainable Water Future, principles relating to content and quality: principles, we have gradually reduced the and how we met our business obligations number of printed publications we produce, from 1 July 2007 to 30 June 2008. › Balance – reporting favourable including our Sustainability Report. and unfavourable outcomes In most cases where printed copies are The report reviews our performance against › Comparability – enabling required (particularly for people with Key Performance Indicators (KPIs) detailed in information to be compared on accessibility issues), we produce small our Corporate Plan, and against a selection a year-on-year basis, and with quantities using environmentally friendly of relevant sustainability or water industry- appropriate industry benchmarks based indicators. It has used the Global printing processes on recycled paper. Reporting Initiative (GRI): Sustainability › Accuracy – making every effort Last year, we produced 500 printed copies Report Guidelines to guide reporting. to ensure accuracy of data (including 80 required for the Victorian › Timeliness – aligning Parliament) of the Sustainability Report overview The reporting boundary covers areas that reporting processes on 100% recycled paper. Melbourne Water is responsible for as an organisation. We have not included details › Clarity – explaining the concepts This year we have produced the required of contractors or stakeholders, unless stated. using clear and concise language copies for Parliament and a summary › Reliability – data can be sourced and version for distribution. We have made Melbourne Water is committed to the stands up to the assurance process the online document user-friendly so process of assurance and verification, that people can access sections of most and engaged an independent auditor › Materiality – ensuring that important interest to them more readily. to assess this report. The Independent business issues are covered Assurance Statement is on page 148. › Stakeholder inclusiveness – These printed copies were produced on identifying stakeholders and 100% recycled paper using sustainable Stakeholder addressing their interests printing processes. consultation › Sustainability context – explaining Online document how initiatives impact on our Consultation and research with internal business sustainability, and and external stakeholders about last year’s This report is available on the Melbourne sustainability more broadly sustainability report helped shape this Water website, melbournewater.com.au, document. The research, conducted via › Completeness – ensuring transparency along with financial statements and interviews and group discussions in June in the coverage of major business issues. comprehensive social and environmental data for 2007/08. For people without and July 2008, found that the report was Creating a more an appealing document, with content/ internet access, please contact Melbourne information, structure and design rated sustainable report Water on 131 722 for a CD of this report. highly. This consultation and research: We produced our first Sustainability We welcome your feedback and invite you › Refined and developed the reporting Report, Towards Sustainability, in 2005, to fill in the form, which is on our website process so that the document is soon after we had developed our strategic under ‘Publications’, then ‘Reports’. responsive to stakeholder needs framework. This document, Sustainable Water – A Strategic Framework, outlined Accessibility › Enabled Melbourne Water to stay our high-level goals and objectives for informed about the issues that achieving our vision. If you would like to receive sections Our values are important to stakeholders of this publication in large print, › W e recognise that we achieve more by working collaboratively › Ensured the report demonstrates Towards Sustainability was our first please telephone 131 722 or email best-practice transparency attempt to assess our performance [email protected] › W e behave with integrity and accountability against the framework and sustainability indicators. At the time, we also produced › W e attain excellence through creativity and innovation › Strengthened existing relationships an Annual Report. The following year, and helped build new ones. we combined the reports as sustainability › W e celebrate our achievements and learn from our experiences principles became more fully integrated into our business processes. › W e work with openness, transparency and accountability

Main inlet carrier, Western Treatment Plant

2 Melbourne water sustainability report 2007–2008 3 Who we are Who we work with Government Melbourne Water is a water An independent Board of Directors The Essential Services Commission Owner, resource manager owned by is responsible for the governance of regulates prices and monitors legislator department of department of the Victorian Government. Melbourne Water. During 2007/08, service performance. We work & policy treasury & finance sustainability & Environment the following Ministers were across several arms of the Victorian maker We manage Melbourne’s water responsible for Melbourne Water. Government, including the Statement of obligations / legislation / regulations / policy supply catchments, remove The Honourable John Thwaites was Department of Sustainability and and treat most of Melbourne’s Minister for Water, Environment and Environment and the Department sewage, and manage rivers Climate Change until 29 July 2007, of Treasury and Finance. and creeks and major drainage the Honourable John Brumby was Essential Environment Department of department systems throughout the Port Minister for Water, Environment Our customers include the protection Phillip and Westernport region. metropolitan retail water Regulators Services authority sustainability of human and Climate Change from 30 June Commission victoria & environment services 2007 to 2 August 2007, and the businesses – City West Water, Our people have diverse skills South East Water, Yarra Valley and expertise and we place a Honourable Tim Holding was Minister for Water from 3 August 2007. Water – other water authorities, high priority on building strong councils, land developers and partnerships and relationships EPA Victoria and the Department businesses that divert river water. regulations / Licences / guidelines with the community and all of Human Services regulate our other stakeholders (see the environmental and public We work with a wide range of Our relationships, page 54). health aspects of our business. partners including the Melbourne Water and Westernport Catchment We are responsible for managing Management Authority, the service $8.7 billion of water supply, providers Service waterways Municipal Association of Victoria, agreements charter sewerage and drainage assets, as Sustainability Victoria and well as natural assets such as rivers universities. Research organisations, Metropolitan, and creeks. These assets service such as the CSIRO and Cooperative rural & regional Councils water authorities 3.4 million people in an area Research Centres, engineering spanning 12,800 square kilometres. consultants and contractors who carry out tasks ranging from inspecting and maintaining Customer contracts assets to catchment surveillance and litter removal, also assist Energy & Water us to achieve our objectives. Ombudsman Victoria Water, Recycled We are involved with a wide Customers sewerage water waterways customers customers Customers range of community stakeholders Consumer including ‘Friends of’, Landcare, Utilities Advocacy resident and environment groups, Centre advisory bodies, rural landowners and the education sector.

Industry Structure and Regulatory Framework

Jetty north-east of the Western Treatment Plant, Port Phillip Bay

4 Melbourne water sustainability report 2007–2008 5 Water resources Natural Financial viability Our people, Relationships › Protect and conserve Melbourne’s environment › Increase business value through our workplace › Identify and meet customer existing water resources innovation and efficiency service expectations › Improve environmental outcomes › Provide a safe and enjoyable › Protect our water supply from all aspects of our business › Balance investments and work environment which › Develop enduring partnerships catchments from bushfire levels of service and risk brings out the best in people with retail water businesses, › Improve river health and developers and other the marine environment › Attract and retain a diverse, › Develop alternative water › Maximise resource efficiency customers through open and resources, including recycled motivated, skilled and › Improve biodiversity transparent communication water, that meet our customers’ › Maintain sound governance experienced workforce current and future needs › Build cooperation with all levels › Meet planned reductions › Ensure investment decisions › Encourage our people to in greenhouse emissions of government and regulators › Increase water resource efficiency. are sustainable develop and share knowledge and increased use or export gained from each other › Deliver planned › Further develop programs of renewable energy. and stakeholders shareholder returns. to support corporate Public health social responsibility › Reward employees’ › Supply high quality and performance against the › Preserve and promote reliable drinking water Infrastructure delivery of our business our cultural heritage › Deliver safe sewage transfer, › Ensure stringent regulatory objectives obligations are met › Foster the exchange of treatment and disposal › Foster a Melbourne Water knowledge with the community › Manage flood risk. › Provide efficient and effective culture that encourages capital planning processes sustainable behaviour › Develop collaborative and maintenance programs relationships with suppliers › Ensure that sustainability to gain support for our › Develop and implement principles underpin our sustainability principles efficient capital investment workplace policies and and operations programs practices › Engage and inform the community to seek support for › Minimise waste disposal and › Encourage and recognise our projects and priorities. maximise resource recovery. innovation and ideas for our goals sustainable improvements.

Sewage treatment lagoon, Western Treatment Plant

6 Melbourne water sustainability report 2007–2008 7 Our sustainability Our sustainability Statement of How we rate Office-based approach principles Obligations sustainability Melbourne Water’s sustainability Sustainable Water – A Strategic Melbourne Water’s commitment to Our Statement of Obligations to the Minister performance was benchmarked against Melbourne Water established several Key Framework formalises Melbourne sustainability will be demonstrated by: for Water now contains sustainability publicly listed companies considered to Performance Indicators to measure our Water’s commitment to sustainability management principles that mirror those be world leaders in sustainability. On the office sustainability performance. These and outlines our sustainability principles. › Protecting and conserving in the Water (Governance) Act 2006, 2006/07 Dow Jones Sustainability World began in 2007/08, when we met our Melbourne’s water resources which was proclaimed on 1 July 2007. Indexes of financial, environmental and KPI for paper use but we didn’t achieve our social criteria, Melbourne Water increased It also links our work to Victorian Government › Protecting and improving the targets in other areas including water use, its score from the previous year from strategies and policies including Our Water environment, including biodiversity These principles are: despite effective systems being in place Our Future, Our Environment Our Future, the 69% to 71%, placing us 3% behind the (see Our people, our workplace, page 60). Central Region Sustainable Water Strategy › Our leadership, scientific research, › The need to ensure that water resources leading company. and Melbourne 2030 Metropolitan Strategy. creativity and innovation are conserved and properly managed The paper consumption target was included On the Australian Sustainable Asset › Ensuring responsible risk management for sustainable use and for the benefit in our employees’ Enterprise Agreement. The framework provides the context for of present and future generations Management Sustainability Index for Water, energy and waste will be in the › Sharing information and fostering 2006/07, Melbourne Water increased Melbourne Water’s planning process, › The need to encourage and facilitate Enterprise Agreement from 2008/09 and our collaborative working relationships its score from 69% in 2005/06 to 71% ensuring that economic, environmental community involvement in the making performance in meeting these targets will be in 2006/07, placing us 5% behind the and social impacts are considered. › Maintaining long-term and implementation of arrangements considered when determining salary increases. leading company. These benchmarking financial viability relating to the use, conservation and The framework was developed by Melbourne assessments were the most recent as of Our LivingSmart program, which began › Contributing to the health management of water resources Water’s Board and senior management 30 June 2008. (see Business efficiency, in June 2006, was revised this year to of the community team with input from our people, and › The need to integrate both long-term page 68). include a greater emphasis on a sustainable in consultation with government, water › Demonstrating corporate and short-term economic, environmental, office environment. industry and community stakeholders. social responsibility social and equitable considerations › Ensuring intergenerational › The need for the conservation equity by considering short- of biological diversity and term and long-term implications ecological integrity to be a in all decision making fundamental consideration › Providing an environment where › If there are threats of serious or employees are encouraged to irreversible environmental damage, achieve their potential. lack of full scientific certainty as to measures to address the threat should not be used as a reason for postponing such measures. The Statement of Obligations also requires Melbourne Water to develop and implement programs for assessing, monitoring and continuously improving our sustainability Melbourne Water’s Planning Framework performance, including: Dow Jones Sustainability Index – GLobal Water Utility Index Comparison › Responding to climate change › Maintaining and restoring Customer & Shareholder/ Regulators Community government natural assets 05/06 06/07 › Using resources more efficiently MELBOURNE WATER 100 › Managing everyday AVERAGE INDUSTRY SCORE

Melbourne Water Board rking environmental impacts. HIGHEST INDUSTRY SCORE a Leadership Team & Employees Melbourne Water has developed initiatives

81 80 80 80 79

in each of these key areas and included 79 76 74 these in our 2008/09 – 2010/11 Corporate 74 73 enchm 71 70 70

Plan and Draft 2008 Water Plan. 69 Strategic Framework B 66 63

(vision & Goals) 61 60 46

Corporate plan (3 Years) 44 40 40

Water plan (5 years) & eporting 37 R 34 ($’s, Actions, KPI’s) 34 26 24 20 Project & service delivery onitoring, onitoring,

M 0

Sustainable Business Outcomes TOTAL ECONOMIC ENVIRONMENTAL SOCIAL % SCORE DIMENSION DIMENSION DIMENSION

8 Melbourne water sustainability report 2007–2008 9 2007/08 in review Chairman and Managing Director’s report

Melbourne Water and our Improving efficiency Changing our culture The long-term challenge of creating a As the caretaker of waterways, we rolled We’ve since developed a 65-point sustainable water future has been at the out tree planting, weed removal and flood health and safety improvement plan, 729 employees faced another A range of information technology A second analysis of Melbourne Water’s forefront for us in 2007/08. protection services into more parts of the and are refocusing our business to challenging and chronically enhancements included a capital culture found significant improvement in urban and rural fringe. We’ve worked closely make 2008/09 above all, a safer year. dry year, which featured: management system to improve constructive behaviour in our workplace. Against a backdrop of continued drought, with these communities to work out what support and monitoring of our Safety failure debate on climate change and low storage needs to be done in our new areas of Finally, we must acknowledge the capital works program. Delivering results levels, we’ve been advancing two key efforts of our team at Melbourne Water. A serious injury to one of our valued responsibility, and starting from 2008/09, projects in response – reconnection of Your intelligence, passion and sheer employees was the most distressing and This year, Melbourne Water: these programs will be supported by the Investing in research Tarago Reservoir and the Sugarloaf Pipeline. hard work is at the core of this journey disappointing aspect of our performance. waterways and drainage charge. › Supplied 381,097 million litres of water towards a sustainable water future – and We did not achieve our goal of zero lost Invested $4 million in research and (7.4% less than last year) to the retail Through this and other major projects, our As a business, we’ve made clear something of which we can all be proud. time injuries (LTIs), with two LTIs technology projects – mainly in drinking water businesses, reflecting water capital works program has expanded fourfold commitments to improving the inherent affecting our employees and four water, waterways and wetlands, treatment, restrictions and conservation initiatives from last year to reach $1 billion in 2008/09 sustainability of our day-to-day operations. In accordance with the FMA 1994, affecting our contractors. marine and wastewater – to enhance on behalf of the Victorian Government. This includes cutting net greenhouse gases we are pleased to present the Report scientific knowledge, reduce environmental › Treated a total of 266,105 million to zero by 2018, a target we’ve started work of Operations for Melbourne Water and public health risks and improve litres of sewage at the Eastern The size of this challenge – or rather, how we Working smarter on by bringing the first of six ‘mini-hydro’ for the year ending 30 June 2008. efficiency, productivity and innovation. and Western treatment plants meet it – mandates an innovative approach. Sweeping changes were introduced plants online. These plants generate clean (down 2.5% on last year) 30 September 2008 to the way we deliver a significantly Developed strategic relationships with We’ve established an alliance model for power from water moving around the › In partnership with the metropolitan increased capital works program, with PUB Singapore and Mekerot, Israel’s our major projects, which binds Melbourne system, and once all six are operational, retailers, supplied 66,742 million litres alliance contracts established with our national water company, who are world Water and our delivery partners to share they’ll provide enough energy equivalent of recycled water. This is 23.2% of the project partners that align values and leaders in membrane technology, water responsibility for design, budgets and to that used by 5000 homes. total amount of sewage treated in objectives and provide commercial recycling and seawater desalination. timelines. It’s early days but already this metropolitan Melbourne, exceeding the Of everything we do, sending our people incentives for superior performance. approach has given us more flexibility in Government’s target of 20% by 2010. home from work safely is the most Cutting greenhouse gas emissions how we resource our projects as well as This compared with 22.5% last year important. This responsibility automatically Building our water future access to more know-how. The first of six mini hydro-electricity plants becomes greater in the face of an expanding A $417.8 million capital works program was commissioned as part of our target to › Protected and improved waterways, Cheryl Batagol Input from the private sector led us to capital works program, and the year was to help secure Melbourne’s water future achieve zero net greenhouse gas emissions water quality and drainage infrastructure Chairman forge four more alliances, each lasting marred by what we regard as an included the Sugarloaf Pipeline, the by 2018. We exceeded our target of a 40% to service urban growth, investing five years, to work towards a sustainable unacceptable safety performance. reconnection of Tarago Reservoir and reduction in greenhouse gas emissions from $32 million on 200 projects water future. These alliances cover our the Eastern Treatment Plant upgrade. the 2000/01 baseline. › Delivered a net profit after tax of $67.6 A major incident at Brooklyn left one of major business areas: sewage treatment, million – about half that of last year. This our employees seriously injured, requiring drainage, water supply, and waterways was due to higher operating expenditure months of recuperation and leaving a Increasing energy needs and stormwater quality. including employee and borrowing costs significant impact on his family. Though Our energy consumption climbed by 9.6% to support our significantly increased not as serious, there were several other due to increased pumping requirements Young people are among the most capital works program, depreciation passionate sustainability champions incidents involving contractors. associated with managing drought conditions. Rob Skinner and a writedown of superannuation out there. We spoke to thousands of Managing Director assets due to market conditions and students this year through our education employee defined benefit obligations. programs, explaining the water cycle and giving them a personal stake in the health of their local rivers and creeks.

Cardinia Reservoir

10 Melbourne water sustainability report 2007–2008 11 Goals related to water › Supply high quality and reliable drinking water › Protect and conserve Melbourne’s existing water resources › Protect our water supply catchments from bushfire › Develop new and alternative water resources to diversify and secure supplies for current and future customers › Increase water resource efficiency › Develop and implement efficient capital investment and operations programs › Ensure stringent regulatory obligations are met

Key achievements Disappointment › With our alliance partners, › Water quality targets for completed preliminary turbidity and aluminium construction work on a were not achieved treatment plant at Tarago Reservoir, which will supply 15,000 million litres of water Challenges to Melbourne by mid-2009 › Securing Melbourne’s water › Completed investigations future by delivering major capital into the Sugarloaf Pipeline works on time and budget Water corridor, paving the way using alliance partnerships for construction activities › Monitoring and modelling › Developed and provided drinking climate patterns to ensure water quality standards to we are flexible in meeting the Government to support the Melbourne’s water needs and desalination project design in touch with customer needs › Construction works are on › Continuing to plan and cater schedule for a new water for future growth, particularly main in St Albans, which in Melbourne’s west will service expanding › Securing non-rainfall dependent areas west of Melbourne sources of water given the › Constructed five small strong possibility that low filtration plants to ensure inflows will continue safe water supply to › Carefully managing and Upper Yarra communities conserving existing water reserves until new sources progressively come on line

12 Melbourne water sustainability report 2007–2008 13 Overview Changing rainfall patterns Storage levels continue to drop This year, streamflows into the four Major projects include: A collaborative approach major harvesting storages (Maroondah, Autumn inflows to our four major harvesting Our storages continued to fall To deliver this significantly expanded Melbourne’s drinking water is highly O’Shannassy, Upper Yarra and Thomson) › A desalination plant for reservoirs in 2008 were the lowest on record, throughout the year, with Stage 3a capital program, Melbourne Water regarded by the community. Most of it were 89% above the previous year but only Melbourne near Wonthaggi revealing the additional pressures we face water restrictions remaining in force has implemented alliance partnering – comes from more than 156,000 hectares one-third of the average for 1998-2007. through changing rainfall patterns. until at least 30 November 2008. › Modernising of Victoria’s Food Bowl a collaborative style of engaging of protected catchments high up in the irrigation system to capture lost water for project partners that harnesses a Yarra Ranges east of Melbourne. The lack of traditional autumn rain to wet By 30 June 2008, the storage level had Our Water Our Future farms, the environment and Melbourne team approach and reduces capital the catchments, accompanied by shorter, dropped to 29.5% (523,526 million litres). Water flows from the catchments Melbourne Water and our alliance partners › Expansion of Victoria’s water grid, risks in a tight labour market. more intense rainfall, reflects predicted This compared with 30.7% (544,415 million to nine major reservoirs that have are working with the Victorian Government, including the Sugarloaf Pipeline, climate change impacts. litres) at the same time the previous year. Over the next five years, four program a capacity of 1,773,000 million litres. the retail water businesses, the community to transfer up to 75,000 million litres of water a year from the alliances will handle numerous water Without autumn rain, dry soils impacted With the drought entering its 11th year, the and other stakeholders to deliver a major This water is of excellent quality and requires Goulburn River to Melbourne asset creation and maintenance projects by heavy rain later in the year created extent of the drought has raised questions capital works program to secure our water only minimal treatment at water treatment (see also Business efficiency, page 68). increased levels of turbidity due to erosion about the impact climate change is having supply for the future, including water sources › Reconnecting Tarago Reservoir to (disinfection) plants. Bulk water is transferred and more exposed banks in reservoirs that on our water resources. The prolonged dry that do not depend on rainfall. Melbourne’s water supply system through about 1030 kilometres of water Sugarloaf Pipeline were already at low levels, causing potential conditions during 2007/08 highlighted the › Upgrading Melbourne’s Eastern Treatment mains and 200 kilometres of aqueducts and Our Water Our Future – The Next Stage Melbourne Water is responsible for water quality issues. need to continue efforts to conserve supplies Plant to provide 135,000 million litres of tunnels to about 60 service reservoirs in the of the Government’s Water Plan sets out funding and constructing the $750 million and find new water sources. recycled water (see Sewerage, page 22) metropolitan area and delivered to the retail Dry soils also soaked up the rain leading a $4.9 billion infrastructure program to Sugarloaf Pipeline project linking the water businesses, which distribute it to to reduced run-off, so that even when we Winter and spring rain boosted the storage boost Victoria’s water supplies, and prepare › Supporting the retail water businesses Goulburn River near Yea to the Sugarloaf individual customers. received good falls, dam levels declined. level to more than 40% by November 2007, for the possibility that the record low to deliver water conservation Reservoir in Melbourne’s north-east. The but the record low 2008 autumn inflows inflows to reservoirs may continue. programs for homes and industry. project is being constructed by an alliance. reflected the extent of the ongoing drought. The new projects will increase the total We are also contributing $300 million supply for Melbourne by 240,000 million towards the Government’s $1 billion litres a year by 2011 – about half of our Food Bowl Modernisation project, which current annual water use. will save about 225,000 million litres of water through improvements to irrigation infrastructure across the Goulburn and Murray river systems. Water savings will be shared equally between irrigators, Melbourne and the environment.

Rainfall as measured at the Reservoirs: For 2007 – 2008 Annual inflow to melbourne’s main harvesting reservoirs (thomson, upper yarra, O’Shannassy & Maroondah) July 2007 – Long Term Lowest Previous Catchment June 2008 Average* Variation Year Since 1,400,000 THOMSON 879.4 mm 1,039.5 mm 15.4 % below 2002-03 (712.0 mm) HISTORICAL INFLOWS UPPER YARRA 851.4 mm 1,051.9 mm 19.1 % below 2002-03 (829.5 mm) AVERAGE INFLOW 1913-2006 590 GL/YEAR 1,200,000 O’SHANNASSY 1,117.0 mm 1,274.9 mm 12.4 % below 2006-07 (901.6 mm) AVERAGE INFLOW 1997-2006 387 GL/YEAR MAROONDAH 780.7 mm 1,056.2 mm 25.2 % below 2002-03 (771.6 mm)

YAN YEAN 477.8 mm 658.0 mm 27.4 % below 1,000,000 590 GL/year * Long Term Average (30 year mean 1978 – 2007)

800,000 387GL/year

Streamflow as measured into the Reservoirs: For 2007 – 2008 600,000

July 2007 – Long Term Lowest Previous INFLOW TO STORAGE (ML) Catchment June 2008 Average* Variation Year Since 400,000 THOMSON 159,146 ml 206.690 ml 23.0 % below 2006-07 ( 92,110 ml) UPPER YARRA 80,459 ml 132,870 ml 39.4 % below 2006-07 ( 30,171 ml) O’SHANNASSY 54,203 ml 90,690 ml 40.2 % below 2006-07 ( 28,556 ml) 200,000 MAROONDAH 48,183 ml 77,490 ml 37.8 % below 2006-07 ( 21,166 ml) TOTAL 341,991 ml 507,740 ml 32.6 % below 2006-07 (180,003 ml) 0

* Long Term Average (30 year mean 1978 – 2007) 1913 1915 1917 1919 1921 1923 1925 1927 1929 1931 1933 1935 1937 1939 1941 1943 1945 1947 1949 1951 1953 1955 1957 1959 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007

14 Melbourne water sustainability report 2007–2008 15 The pipeline project involves: Reconnecting Tarago The desalination plant will deliver 150,000 This year, we developed the Melbourne Joint and the Water Learn it Live it! schools Managing our million litres of water a year to Melbourne, Water Conservation Plan. The plan aims to program, which educates and motivates Reconnection of the Tarago Reservoir to › Constructing a 70-kilometre Geelong, South Gippsland and Westernport. meet the water conservation actions and young people to save water. current supplies Melbourne and Westernport region water pipeline from the Goulburn It will be capable of providing about one- targets set out in the Victorian Government’s supplies is the first major water supply River to third of Melbourne’s annual water supply Central Region Sustainable Water Strategy Detecting and fixing leaks Dealing with drought project to be delivered under the from a source that is independent of rainfall. (October 2006) and the supporting Water Melbourne Water invested $4.5 million The chronically dry conditions led to further › Building two pumping stations near Yea Government’s Next Stage Water Plan. and a balancing water storage facility Supply-Demand Strategy for Melbourne this year to detect and repair leaks as reductions in environmental flows in the The project will include an 85-kilometre The Tarago Project aims to ensure the (October 2006) for the period 2007 to 2015. quickly as possible, focusing particular and Thomson River to ensure › Upgrading the Winneke underground pipeline to connect the plant sustainability of the Tarago Reservoir attention on aqueducts. continuing supplies of drinking water. water treatment plant to a transfer main at Berwick and then to Under the plan, the water authorities catchment and its waterways, increase . have committed to the following targets: Upgrades and maintenance works on An additional 10,000 million litres of water › Upgrading the water distribution the security of local and regional water our aqueducts will save a total of about a year from each river was made available network to increase the area supplies, and provide community benefits. supplied from Sugarloaf Reservoir To prepare for the integration of the › 30% reduction in per capita 500 million litres of water a year. to augment water supplies as part of desalination plant into our water supply drinking water consumption by Work on the Tarago treatment plant emergency drought contingency planning. › Investigating hydro-electricity system, we undertook investigations into 2015 to 296 litres per person A water-based spray-on liner was applied began in November. It is located in generation options on the water quality, operational requirements, per day, from the 1990s average to 450 metres of the Coranderrk Aqueduct, Heading into summer, this meant Drouin West, nine kilometres south-west of downstream end of the pipeline. issues associated with securing entitlements which delivers drinking water to Silvan environmental flows in the Yarra River the reservoir on the route of the existing › 30% reduction in per capita to the water, resource and yield planning, Reservoir. Comprehensive preparation and downstream of the Yering Gorge pumping In April, we began working with our alliance Tarago-Westernport Pipeline, and is residential water consumption network augmentation, use of renewable bypass arrangements were required to station were reduced to 200 million litres a partners on planning, environmental scheduled for completion in mid-2009. by 2015 to 174 litres per person assessments, engineering designs, energy and other sustainability features. per day, from the 1990s average enable these works to be undertaken. day. Stringent environmental safeguards are community and landowner consultation, We have worked closely with the Baw Baw in place to monitor the health of the Yarra › 8000 million litre saving by 2015 Four kilometres of the downstream project management and construction. Shire Council on the project, and during Conserving our precious resource and Thomson rivers. in the non-residential sector. section of Maroondah Aqueduct were 2007/08 made improvements to the town In the face of prolonged severe drought, relined in March, complementing works Swingler Weir, normally under water in the The alliance completed survey works along planning provisions in the Tarago catchment. Melbourne Water and the retail water Melburnians are saving water at record the previous March. Melbourne Water Thomson Reservoir, has been rehabilitated preferred pipeline corridors, including core A planning scheme amendment reduces businesses also continued to support the levels. Although Melbourne has one million teams also rebuilt and repaired the and is diverting water flows in the Thomson drilling works and approved requirements risk of water supply contamination from Victorian Government’s Our Water Our more people today than in the early 1980s, foundation of bluestone pitchers from River to help manage drought conditions. for the first stage of the Winneke upgrade. sewage and septic sources, and provides Future behavioural change campaign. we were able to cut water consumption to which the Wallaby/Silver Aqueduct The weir is upstream of the Thomson clear strategic and statutory direction This year Melbourne Water contributed We also contacted property owners and levels last seen during the Ash Wednesday was built more than 100 years ago. Reservoir dam wall and was submerged in for land use and rural activity within the $1.1 million to the campaign, which explained whether they would be affected, summer of 1982/83. 1998 before being exposed by dropping Tarago catchment. is managed by the Department of and announced a $5 million grants program The six-strong pipe repair team fixed Sustainability and Environment on behalf water levels. to provide long-term social benefits to Last summer Melbourne used about 102,000 180 leaks in Melbourne Water pipework, of the metropolitan water authorities. communities along the preferred pipeline Desalination plant million litres compared with 111,800 million with two crews operating at times during The weir diverts water flow from the litres the previous summer – a reduction of corridor (see Our relationships, page 54, The Our Water Our Future – Next Stage the year. This year, we also trialled new Thomson River directly to the Upper Yarra 9%, and 22% lower than the average of the This year the campaign focused on and Protecting our natural environment, of the Government’s Water Plan includes correlation (acoustic) technology and Reservoir. This gives greater flexibility to past five years. promoting Stage 3a water restrictions page 44). the $3.1 billion desalination plant to be through the media; continuing the a water balancing process. balance Thomson and Upper Yarra storage constructed near Wonthaggi, which is being Water Saver Garden Centre program, levels and manage transfer flow rates Despite these savings, Melbourne Water and Melbourne Water’s leakage managed by the Victorian Government as which provides education and practical during continued drought conditions. the retail water businesses are working and loss rate is about 1%. a public-private partnership. collaboratively to ensure secure water supplies advice to customers on developing and for the future and to meet the Government’s maintaining water-efficient gardens goal to reduce water consumption by 30% through accredited garden centres; by 2015 compared with the 1990s.

Water in storage – Melbourne Water Storage Data for 2007/08

100% Reservoir Capacity 1 July 2007 30 June 2008 Yearly (at full supply) Difference (%) 90% Volume (ML) % full Volume (ML) % full Thomson 1,068,000 209,933 19.7% 193,962 18.2% -1.5% 80% PERMANENT RESTRICTIONS 70% 1 MAR 2005 Upper Yarra 200,000 100,953 50.5% 95,980 48.0% -2.5% STAGE 2 – 1 AUG 2003 60% O’Shannassy 3,000 2,626 87.5% 2,458 81.9% -5.6% STAGE 2 – 1 NOV 2006 50% Maroondah 22,000 8,474 38.5% 5,472 24.9% -13.6% 40% Sugarloaf 96,000 23,433 24.4% 15,712 16.4% -8.0% STAGE 1 – 1 NOV 2002 30% STAGE 1 – 1 SEP 2006 STAGE 3 – 1 JAN 2007 Yan Yean 30,000 5,292 17.6% 4,591 15.3% -2.3% 20% Greenvale 27,000 17,684 65.5% 22,277 82.5% 17.0% 10% STAGE 3A – 1 APR 2007 Silvan 40,000 35,652 89.1% 35,869 89.7% 0.5% 0% Cardinia 287,000 145,101 50.6% 147,205 51.3% 0.7% Total 1,773,000 549,148 31.0% 523,526 29.5% -1.5% JAN ‘97 JAN ‘98 JAN ‘99 JAN ‘00 JAN ‘01 JAN ‘02 JAN ‘03 JAN ‘04 JAN ‘05 JAN ‘06 JAN ‘07 JAN ‘08 JAN

16 Melbourne water sustainability report 2007–2008 17 As part of emergency drought contingency For 2007/08, Melbourne Water met In November, two drinking water samples Further monitoring was undertaken to The Melbourne Water-funded helicopter Catering for growth planning, we have prepared and tested two requirements for water pressure, taken from the Whittlesea Main exceeded identify the extent of the bloom and the began operation in November, along with fire Melbourne Water has identified actions major portable pumps for extracting water microbiological standards, and Bulk Water Supply Agreement levels of presence of the toxin, microcystin. Algal prevention programs such as road clearing, to increase efficiency and effectiveness from the Thomson Reservoir below the disinfection by-products. Targets were 0.1 milligrams per litre for aluminium. numbers at six of the seven monitoring road grading and fuel break slashing. in supplying Melbourne’s water. Planning intake point, and prepared aerators for use not met for turbidity and aluminium. The samples recorded aluminium levels sites exceeded the 5000 cells/mL level continues to ensure the water supply in the to maintain of 0.14 and 0.21 milligrams per litre. for a notifiable incident, and the highest Melbourne Water attended pre-season fire infrastructure needs are met for growing water quality under low-level conditions. The turbidity issues were caused by heavy The second sample was slightly above reading was 68,000 cells/mL. meetings organised by the Country Fire areas, particularly west of Melbourne. storms in late June 2007 across the Upper the Australian Drinking Water Guidelines Authority, the Department of Sustainability This includes planning for significant In December, the Government agreed to Yarra catchment, which was very dry after limit for aesthetic water quality of 0.2 Extensive sampling of the reservoir and and Environment and local municipalities, upgrades to transfer systems. a temporary qualification of the Southern record low rains during 2006. In July 2007, milligrams per litre. Aluminium at these downstream in the Tarago River found and about 300 kilometres of fire breaks Rural Water (SRW) Thomson/Macalister water entering the reservoir contained high that the algae seemed to be confined to protecting Melbourne Water catchments levels can cause aesthetic issues, such as We began construction work on a new Bulk Entitlement, allowing SRW’s Thomson levels of suspended matter washed off hard the reservoir. Melbourne Water worked were completed along the Thomson and cloudiness in water. No customer complaints 2.6-kilometre water main in St Albans in drought reserve to be transferred via the dry ground and scoured from exposed silt closely with the Department of Upper Yarra catchment boundaries. were attributable to these results. January, and are on schedule to complete Melbourne water supply system to supply beds in shallow streams. Sustainability and Environment, the the project in the latter half of 2008. The drought-affected irrigators in the Werribee It has not been possible to identify the Department of Human Services, Southern At the end of the prescribed burning season, work is one of several improvements to the and Bacchus Marsh irrigation districts. Turbidity levels in the reservoir increased and cause of these higher than normal results. Rural Water and Gippsland Water, and Melbourne Water firefighters took part in a St Albans-Werribee water supply system, boil water notices were issued to Upper Yarra No elevated aluminium was recorded in determined that it was not appropriate training program with the Department of which will increase the capacity of We are also working with the Department communities, as water from the Upper Yarra the source water from the Winneke water to dose the reservoir, nor was it necessary Sustainability and Environment, Country Melbourne Water’s supply system and of Sustainability and Environment and the Reservoir is unfiltered and the turbidity had treatment plant, and all other relevant to interrupt supply to Neerim South. Fire Authority and Parks Victoria to improve service Wyndham, the fastest growing retail water businesses to oversee two new the potential to affect disinfection processes. operational conditions were normal at their skills and expertise in operational municipality in Victoria. These works Smart Water Fund studies into the socio- the time. Analysis of water samples continued, with firefighting and fire planning. economic costs of water restrictions, and We worked closely with Yarra Valley Water algae levels dropping towards the end of followed the development of a strategy alternative forms of restrictions. and the Department of Human Services to Melbourne Water also worked with City March. The incident was closed on 15 april. We began a $1 million, five-year research with City West Water. manage community concerns and impacts, West Water to develop an improvement program with Melbourne University to Major renewal projects included replacement and boil water notices were lifted in August plan following several taste and odour examine the potential impacts of bushfire in Maintaining high quality Protecting the catchments of a 100-year-old cast iron water main from water supply when turbidity levels dropped. complaints from City West Water customers. our water supply catchments and the best With low rainfall and extended hot ways to protect them. Scientists will test Preston to North Essendon, and upgrade Melbourne Water consistently meets To prepare for any future incidents we Algal bloom in Tarago Reservoir weather, Melbourne Water was on full how bushfires within the catchment might of steel water storage tanks at St Albans, stringent requirements in the distribution have constructed five small filtration plants alert again this year to protect our water Sydenham, Yuroke and Somerton to address A blue-green algal bloom in Tarago Reservoir move under different conditions, and how of safe, high quality drinking water. to ensure safe water supply to Upper Yarra supply catchments from bushfire. corrosion of the floor plates. was detected in late January as a result of various mitigation strategies would work. communities. routine algal monitoring of water samples. The water supply system is managed A total of 112 firefighters were in place for Melbourne Water and Parks Victoria began We are also investing considerable effort according to the Hazard Analysis and To protect the wider Melbourne water the 2007/08 fire season, with 50 casuals and into identifying leakage points in the Increased reservoir inspections identified a culling program to reduce numbers of Critical Control Point system, which uses supply, we restricted distribution of 30 volunteers supplementing 32 permanent water supply network, including reviewing surface scum caused by the algae and a sambar deer in Melbourne’s water supply audits and accreditation to ensure quality water through the Upper Yarra conduit, staff based at Healesville, Warburton, 40 steel water tanks and using new small number of dead fish, and an incident catchments. The results of more than five management from collection, treatment which caused sediment to settle in the Wallaby Creek and Thomson Reservoir. technology to detect leaks on large was declared on 6 February 2008. years’ research into the environmental and and distribution to customers. pipe. This was later cleared through potential health impact of deer were used diameter trunk water mains. maintenance cleaning operations. Melbourne Water supplies Gippsland Water to support an application for a permit to This year we supplied 381,097 million with water from the reservoir for the nearby cull up to 400 deer over 12 months. litres of drinking water to the retail township of Neerim South, and also releases water businesses. This compares with water from the reservoir into the Tarago 411,747 million litres in 2006/07, and River for Southern Rural Water customers. 444,365 million litres in 2005/06.

water sourced from catchment basins 1996/97 – 2007/08 Daily Water Use for Melbourne

2007/08 2006/07 1990’s * 1,320 MILLION LITRES 2005/06 2004/05 2003/04 AVERAGE ** 1,215 MILLION LITRES 2002/03 01 JULY 06 - 1,128 MILLION LITRES Water supplied to retailers 07/08 2001/02 30 JUNE 07 2000/01 yarra Valley Water 37.7% (143,683ml) 1999/00 01 JULY 07 - 1,040 MILLION LITRES 30 JUNE 08 sOuth East Water 35.1% (133,655ml) 1998/99 City West Water 24.4% (93,074ml) 1997/98 western Water 2.7% (10,441ml) 1996/97 gippsland Water 0.1% (244ml) MILLION 0 200 400 600 800 1000 1200 1400 LITRES total consumption = 381,097ml ML (,000) 50 100 150 200 250 300 350 400 450 500 550 PER DAY * BASED ON 8 YEAR WINTER AVERAGE (1 JULY TO 30 JUNE 1992-1999) YARRA BASIN THOMSON BASIN ** BASED ON 5 YEAR WINTER AVERAGE (1 JULY 2002 TO 30 JUNE 2007)

18 Melbourne water sustainability report 2007–2008 19 Corporate water Water was used for toilet flushing, showers, drinking and washing dishes, consumption as well as fire services. Water-efficient dishwashers and other FTEs include all our employees plus fittings, as well as shower timers, were all contractors, consultants, trainees, installed this year at selected sites to secondees and any other people who encourage water efficiency. This follows utilise a Melbourne Water site. the introduction of dual-flush toilets and waterless urinals in our head office Separate metering for office water was at East Melbourne. installed at six Melbourne Water sites in December (Maroondah, Yan Yean, Olinda, However, we were unable to achieve our Silvan, Thomson and Devilbend). target of 7800 litres per FTE (Full Time Equivalents) per year for our office water In 2008/09, other office water consumption use. Our result was 8600 litres per FTE per is being collated, along with water bill year, also higher than last year’s figure of information for Warburton, Preston, 7942 litres per FTE. A leaking cooling tower Upper Yarra and Healesville, and metering during summer compromised this result. information for the administration building at the Eastern Treatment Plant, Another issue arose from encouraging our to form an expanded set of sites for the people to use more sustainable modes of office water baseline. Other investigations transport to get to work, such as bicycles will also occur next year to determine and walking. Inevitably this meant that our the capacity for office water metering people showered at work. at other Melbourne Water sites. This result is only for water use at our head office at 100 Wellington Parade, East Melbourne. The average number of FTEs at this office during the year was 352 – about 40% of Melbourne Water’s total.

Key performance indicators – water Case study: An innovative partnership 2006/07 2007/08

Target Result Target Result Target met Reconnection of the Tarago Reservoir to the Melbourne By the end of June 2008 the construction program and Westernport water supply systems is three had achieved a major milestone – completion of the Production/storage months ahead of schedule, thanks to a cooperative base and walls of the 72-metre diameter concrete and innovative approach by a collaborative partnership tank for holding 20 million litres of treated water. Operate water supply system within 100 99.58 100 100 building the treatment plant at Drouin West. environmental requirements – % compliance The benefits of sharing knowledge and expertise with The Tarago Reservoir is expected to deliver 15,000 million our alliance partners were demonstrated through an Contribute to the Government’s 2.5 2.8 2.9 4.2 15% water conservation target (%) litres of water a year, and a water treatment plant is innovative method of constructing the tank walls. necessary to ensure high quality, reliable supplies. Water transfer Steel cables were fitted in pre-stressed concrete panels, Our construction partners in the project – Baulderstone which were tightened after concrete pours, to create Reduce system losses as a percentage of water 0.76 1 <1 0.98 Hornibrook and United Group Joint Venture, GHD Pty Ltd, watertight seals. This proved to be fast and cost effective supplied to retail water businesses (%) and Sinclair Knight Merz – began earthworks and roadworks in compared with traditional steel tank construction. October, and began work on the treatment plant in January. The panels were manufactured offsite, increasing Compliance with retail water business pressure requirements 99.6 99.9 99.6 100 safety by reducing working hours and plant movements as set out in the Bulk Water Service Agreements (%) Project Manager Andrew Ackerman, of Baulderstone onsite and minimising the risk of weather delays. Hornibrook, said the partnership approach allowed Water quality Compliance with BWSA water quality requirements (%): rapid response and valuable sharing of ideas. A critical element of the construction program has been keeping the community and neighbours well Microbiological standards (E.coli) 99.99 100 99.99 100 “Bringing the ideas and experience from four organisations informed about construction activities such as night working together as one team on one job gives us works and noise (see Our relationships, page 54). Disinfection by-products 100 100 100 100 the ability to move quickly and introduce new ideas and innovative ways of working,” Andrew said. Aesthetics (turbidity) 86.8 91.7 86.8 79.4* ×

Aesthetics (aluminium) 99.9 99.2 99.9 99.75** ×

Target met Target exceeded × Target not met * Target was not achieved mainly due to high turbidity in the source water from Upper Yarra Reservoir caused by the June 2007 storm event. ** Target was not achieved due to two results from the Yan Yean supply to Whittlesea in which the pH stabilisation exceeded BWSA standards. Plant operations were reviewed and no reasons for the higher aluminium level were identified. However, the higher results could be connected with the shutdown of the plant, where a residual volume of water remains in the tank until the next time the reservoir starts up.

20 Melbourne water sustainability report 2007–2008 21 Goals related to sewerage › Deliver safe sewage transfer, treatment and disposal › Improve river health and the marine environment Sewerage› Minimise waste disposal and maximise resource recovery › Develop and implement efficient capital investment and operations programs sewerage › Ensure stringent regulatory obligations are met

› Managing the impacts of Key achievements Disappointments lower average inflows at our › The upgrade of the Eastern › Despite extensive research, work treatment plants as a result of Treatment Plant entered a new with regulators and business case the drought and climate change phase with the beginning of development, little progress was trials to determine the preferred made towards meeting our targets › Managing the impacts of higher technology for tertiary treatment for beneficial use of biosolids peak flows in the future at as initial ammonia reduction Western Treatment Plant due works were completed › A grassfire started by a power to the impacts of catchment fault burned for almost 24 hours growth and wet weather › Construction works began on a in a decommissioned sludge spill reduction works in the major new sewerage pipeline in drying pan at the Western sewerage transfer system Melbourne’s northern suburbs Treatment Plant at a time of that will cater for growth and extreme bushfire danger. › Identifying opportunities for protect local waterways beneficial uses of biosolids at the Eastern and Western › The sludge drying pans at the Challenges treatment plants Eastern and Western treatment plants were upgraded to › Resolving the future of › Balancing the need to reduce improve drying efficiency, the ocean outfall from the the environmental impact of biosolids quality, environmental Eastern Treatment Plant the discharge from the Western compliance and safety Treatment Plant with the role › Preparing the treatment plants the discharge plays in providing › We continued working on the to meet the likely impacts of nutrients for shorebird habitat Metropolitan Sewerage Strategy climate change such as storm as well as other planning intensity, wet weather flows, sea › Implementing and optimising and investigation projects level rise and the implications of additional odour control at for the Eastern and Western rising average temperatures on the Western Treatment Plant treatment plants to meet concrete corrosion and odour to minimise impacts at the future challenges, including adjacent River Walk development. consideration of climate change as a key driver for adaptation.

Odour Control Facility, Western Treatment Plant

22 Melbourne water sustainability report 2007–2008 23 Overview Sewage as a resource Metropolitan Sewerage Strategy New way of working The trials will enable Melbourne Water to This year, Melbourne Water gained a test technologies for filtration, advanced deeper understanding of the ecology of Climate change is also a key focus of the Melbourne Water formed the Sewage Melbourne Water’s sewerage system Melbourne Water regards sewage as a treatment and disinfection of recycled water, the rock platform and flora and fauna at Metropolitan Sewerage Strategy, a joint Treatment and Pump Station Alliance includes the city’s major treatment plants – resource, not a waste product. Our two and will enable intensive monitoring and the discharge point. Studies show that loss initiative with the retail water businesses that in June 2008 to reduce capital delivery the Eastern Treatment Plant at Bangholme sewage treatment plants play an analysis of results using online instruments of the alga H Banksia on the Boags Rocks is due to be completed by September 2009. risks in a tight labour market. and the Western Treatment Plant at important role in achieving our sustainable and an onsite laboratory. More than 10 platform may be due to ammonia toxicity Werribee – as well as 399 kilometres of water vision and meeting the challenge of The strategy is designed to identify The alliance with our project partners treatment trains or sequences are being near the outfall but the effects further sewers and three major pumping stations. climate change. Both these plants produce principles and actions to help build a robust enables us to work more efficiently tested with detailed sampling plans and away may be due to competition by other recycled water of a high enough quality and flexible sewerage system for the future, and promote innovation, new ideas operational conditions. species favoured by elevated nutrients. The retail water businesses collect sewage for use in agriculture and horticulture. and contribute to integrated water cycle and new technologies. and trade waste from households and Under our Works Approval with EPA Victoria, In a report to EPA Victoria, Melbourne Water A proportion of the effluent is further planning for Melbourne. The strategy is businesses, which is sent for treatment at Melbourne Water is due to decide the proposed future monitoring to detect treated to make it suitable for use in considering possible changes to climate, The five-year alliance covers Melbourne Bangholme or Werribee. They also manage preferred technology in early 2009. We will changes arising from improvements in residential and commercial developments urban growth, population and living Water’s sewage treatment plants and pollutants in industrial sewage through also make a recommendation to implement effluent quality arising from ammonia (see Recycled water, page 38). standards over the next 50 years. pumping stations, and is expected to trade waste agreements with industry. include a total of about 100 employees, additional advanced treatment as part of the removal, reduced nutrients, reduced solids A potential risk of climate change is This year, significant advances were contractors and design consultants by tertiary upgrade in the context of decisions following filtration, and reduced discharge In 2007/08, an average of 312 million significant rises in sea levels combined made in finalising the methodology, the end of 2008 (see Business efficiency, around extension of the South Eastern Outfall. flow caused by increased water recycling. litres a day of sewage flowed to the with storm tides, which would cause consulting with stakeholders and page 68). Eastern Treatment Plant and 415 million The upgrade, which was announced by the infrastructure and operational issues developing scenarios for the strategy. Improving the plant’s performance litres a day of sewage flowed to the for the Eastern and Western treatment Victorian Government in October 2006, Eastern Treatment Construction began during the year on a Western Treatment Plant. plants. Melbourne Water is investigating A workshop with CSIRO found the main means that the plant will produce Class A biofilter to treat the air from the inlet works, implications for planning, management issues resulting from climate change Plant (rather than the current Class C) recycled water. Melbourne Water treated a total of which is currently vented direct to the and operation of these major assets. were likely to be storm intensity and wet 266,105 million litres of sewage at these The Eastern Treatment Plant typically atmosphere. This work is in addition to weather flows, and the implications of Environmental improvements plants (down 2.5% on last year and treats about 40% of Melbourne’s recent modifications to the existing return rising average temperatures on concrete 11.3% on 2005/06) due to water sewage and services about 1.5 million Reducing ammonia in the effluent activated sludge channel biofilter. corrosion and odour. CSIRO is to further restrictions and conservation measures people in Melbourne’s south-eastern Melbourne Water completed works during examine these issues and sea level rises increasing greywater reuse. and eastern suburbs. the year to upgrade the six existing aeration Together these initiatives will significantly for input into the strategy. tanks. Construction of additional tanks will reduce odour emissions from the site to help The vast majority of inflows – which be completed by 2010. meet EPA Victoria licence requirements. have fallen significantly during the drought – come from households The upgrade is the first stage of a significant Three stages of works are associated with and commercial businesses. and complex project to reduce the level the plant’s odour reduction strategy, which of ammonia in the treated effluent being was based on odour sampling and analysis, An increasing amount of fully treated Melbourne Water’s sewerage system discharged into the marine environment modelling, odour complaints history, design effluent is recycled and the rest flows via at Boags Rocks. The plant is now reducing standards and a cost-effective works the 56-kilometre South Eastern Outfall ammonia in the effluent by 75%. program to meet these standards. pipeline to the Mornington Peninsula where it is discharged into Bass Strait at Boags Previous studies examining the effect of The next stage of works includes covering Rocks under an EPA Victoria licence. treated effluent on the marine environment the primary sedimentation tanks and settled have found that ammonia levels were sewage channels and treating the air from New opportunities for reuse having a detrimental impact on the marine under the covers. The final stage is an odour environment. Reducing the level of ammonia control plant on a ventilation stack associated A new phase in the evolution of the with the South Eastern trunk sewer. Eastern Treatment Plant has begun is reducing the impact of effluent at the outfall and ensuring that Melbourne Water meets our with the construction of a facility to Further works to upgrade the sludge drying EPA Victoria licence requirements for the plant. PXiiXMXcc\p trial tertiary treatment technologies. precinct were completed. These works have NXk\i Environmental monitoring improved environmental compliance, drying :`kpN\jk In February, Melbourne Water began and harvesting efficiency, the quality of B\n Monitoring around the ocean outfall at NXk\i the 12-month trials, which are the first biosolids harvested and the safety of drying Boags Rocks commissioned by Melbourne Efik_N_Xi] stage and a vital part of the plant’s operations while reducing operational risks. 9iffbcpe ?fgg\ij:ifjj`e^ major upgrade to tertiary treatment. Water assesses the environmental impacts of the discharge from the plant and likely The sludge drying pans were refurbished, Efik_IfX[ The trials are determining the best N\jk\ie Dfi[`XccfZ impacts of upgraded treatment and other which involved removing unsuitable clay Ki\Xkd\ek Dfi[`XccfZEf%( N\kN\Xk_\iGJ possible treatment method, and will effluent management options. material, restoring the clay liner and placing GcXek Dfi[`XccfZEf%) K_Xd\j help to design the works and refine recycled crushed concrete over the pans Gifd\eX[\ the cost of the upgrade, which is due The long-term monitoring program, GfikG_`cc`g9Xp Jflk_

24 Melbourne water sustainability report 2007–2008 25 Extended power outage Protecting the environment Undercover sludge removal trials have been Fire flares in sludge This year, construction began at all five Reducing waste – undertaken and two contractors prepared Stage 1 shaft sites: Brearley Reserve A fire on an electricity pole owned by Mixing zone study Sparks from a fault in a powerline beneficial use of our distributor cut power to the plant proposals for a full-scale undercover sludge started a grass fire at a remote near Bell Street in Pascoe Vale; Melbourne Water continued work to improve for 16 hours in July. The duty shift team removal program for the 25 West anaerobic decommissioned sludge drying pan at De Chene Reserve, Coburg; Carr Street, biosolids understanding of the way the discharge started generators and equipment in reactor. It is anticipated that a contract for the Western Treatment Plant in January. North Coburg; Vanberg Road, Essendon; from the Western Treatment Plant disperses the construction and commissioning of the and Bass Street, Pascoe Vale South. Melbourne Water’s strategy for the beneficial order of priority to prevent a spill from use of biosolids is to focus on energy into Port Phillip Bay, and how to retain the undercover desludging system will be awarded The fire occurred on a day of total fire ban, the sewerage system and then restore as recovery for biosolids produced and stored at benefits of the discharge while reducing in late 2008 with full-scale desludging with a more severe fire risk forecast the The De Chene Reserve shaft was much of the treatment process as possible. the Western Treatment Plant, geotechnical environmental impacts in the mixing zone. of the reactor to begin in July 2009. following day. It ignited the sludge, which completed in May and the first of two fill applications for biosolids stored at the The available power from the generators flared and smouldered, producing thick Stage 1 tunnel-boring machines was In 2007/08, Melbourne Water worked with Eastern Treatment Plant and land application enabled the plant’s immediate Managing odour smoke visible for many kilometres. launched and began tunnelling towards research partners in two areas, identifying for biosolids produced in future, provided essential operation to be restored. A risk assessment completed in June Carr Street (see Our relationships, page 54). target areas for detailed examination by the quality of the biosolids is acceptable. All possible flows were diverted 2007 recommended a staged program Melbourne Water employees and assessing likely parameters of concern in contractors and Country Fire Authority Melbourne Water is replacing a section of to the Western Treatment Plant. of further works to prevent odour A feasibility study into energy recovery the mixing zone, including a substantial firefighters worked throughout the day the 110-year-old Melbourne Main Sewer reaching the plant boundary. for the stored biosolids at the Western Subsequent analysis showed that the effluent toxicity testing program, and to contain the blaze, which took almost to meet increased capacity of the central Treatment Plant continued during the year. treated effluent complied with the undertaking trials to improve delivery Major improvement works include chemical a full day to extinguish. business district and the Docklands. The study confirmed the suitability of the requirements of the EPA Victoria discharge of effluent to the valuable migratory dosing at the Hoppers Crossing pumping A new 2.4-kilometre sewer is being built stored biosolids as a fuel, scoped the licence and Class C recycled water. shorebird habitat on the shoreline. station, decommissioning of the main An abandoned pipeline was from the Docklands to Swallow Street in necessary equipment and associated costs eastern carrier, and replacement and recommissioned, enabling a significant As a result of this work, we will be focusing Port Melbourne, where it will connect to for processing facilities, and identified the The fire was started by a build-up of extension of the 55 East lagoon cover. amount of recycled water to be dust on the pole and rain, which caused our efforts in 2008/09 on improving our pumped onto the burning sludge the Hobsons Bay main sewer. The project need for pilot trials to demonstrate the tracking (arcing) between the conductors. understanding of the role played by The new cover will have an innovative during the evening and overnight. includes a crossing of the Yarra River effectiveness of the proposed technologies. particulate organic carbon in helping to design, which will allow removal of small upstream of the Charles Grimes Bridge. At the Eastern Treatment Plant, Melbourne Western Treatment sustain the high shorebird populations, and segments to enable open areas of the lagoon Sewerage transfer To build the sewer, six shaft sites, between Water progressed the concept for use of on the fate of nitrogen from the discharge. to be desludged using conventional methods Plant 10 and 15 metres deep, will be excavated. biosolids as a geotechnical fill in road such as dredging. Previously desludging Using this work, Melbourne Water will Landmark sewer projects begin The shaft sites will enable the use of construction and other civil works. The Western Treatment Plant treats about could be carried out only when large sections develop an action plan for management of Works began on a five-year sewerage project tunnel-boring machine technology and 52% of Melbourne’s sewage and services of the cover were removed, which released the mixing zone. The plan will aim to reduce that will cater for substantial growth in pipe-jacking methods. Melbourne Water has worked with about 1.6 million people in the central, odorous gases. The cover will be replaced by the impact of the discharge on the marine Melbourne’s northern suburbs and protect EPA Victoria to develop guidelines for northern and western suburbs. the end of 2010. environment without compromising the and improve local waterways from sewage Construction is due to begin in August environmental management of projects 2008 and is scheduled to be completed using biosolids as a fill, and will proceed Internationally recognised wetlands at the benefit of the discharge to the shorebird Upgrading drying pans spills that can occur after heavy rain. in 2012 (see Our relationships, page 54). once these guidelines have been finalised. 11,000-hectare site are listed under the habitat and to other conservation values. Construction of 24 sludge drying pans, The $650 million Northern Sewerage Project Ramsar Convention and protected by covering about 50 hectares, was completed involves the construction of 13 kilometres of An extensive sampling and analysis program detailed conservation plans. Improving performance Managing odour during the year and the pans were brought deep tunnel sewers along the was completed at the Eastern Treatment Melbourne Water conducted an odour risk Undercover desludging into operation. The pans enable sludge to Valley from Coburg to Reservoir and the Plant. Data collected will be used to assess In recent years, Melbourne Water completed assessment across the sewerage transfer Sludge that builds up in the lagoons can be dried and harvested efficiently, reducing at Pascoe Vale. the acceptability of Melbourne Water’s environmental upgrades that complement system, with sites ranked according to affect the efficiency of the anaerobic odour risk from the treatment processes biosolids for various recycling schemes. the natural processes in the plant’s lagoon criteria including odour complaint history, reactors in processing sewage and reduce and creating opportunities for beneficial Construction is in two stages, with the systems with new technology. Nitrogen hydrogen sulphide monitoring, corrosion the amount of biogas produced that is use of biosolids. first managed by Melbourne Water and Assisting Barwon Water discharges to Port Phillip Bay fell to 1239 data and ventilation status. used to help power the Western Treatment the second by Yarra Valley Water. Work tonnes this year, a reduction of 67% since The pans, which have an impermeable Melbourne Water also agreed to extend its Plant. Odour and safety concerns do not began on Stage 1 in August and Stage 2 2000/01, exceeding targets set in the Port clay liner and a lime stabilised earth The assessment identified several priority memorandum of understanding with Barwon allow removal of the covers to desludge the following month. The project is Phillip Bay Environmental Study. floor, are designed to dry 20,000 tonnes sites requiring risk mitigation works. These Water in relation to biosolids management the lagoons. scheduled to be completed in mid-2012. a year of sludge. are at Box Hill South, Carlton, Port until June 2011. Barwon Water biosolids Most construction is taking place 15 to 64 Melbourne, Footscray and East Brighton. have been stored and dried at the Western metres below ground. Tunnel-boring machines Odour control and treatment facilities Treatment Plant (for subsequent beneficial are being used to build the tunnels, which will be constructed at these sites over use) for the past three years until a the next five years. Sedimentation tank, Eastern Treatment Plant are then lined to create the sewer pipes. permanent biosolids processing facility is built at its Black Rock Treatment Plant. Management practices have ensured that no significant odour impacts have been detected at the Western Treatment Plant boundary.

In May, Barwon Water began transporting dried biosolids to two farms in the Balliang area for use as fertiliser.

26 Melbourne water sustainability report 2007–2008 27 Key performance indicators – sewerage

2006/07 2007/08

Target Result Target Result Target met

Western Treatment Plant treatment/disposal EPA Victoria licence compliance:

Compliance with discharge licence requirements (%) 100 100 100 100

- Offensive odours beyond the boundary (number) 0 0 0 0

- Nitrogen discharged to Port Phillip Bay (tonnes) 3100 1560 3100 1239

Eastern Treatment Plant treatment/disposal EPA Victoria licence compliance:

Compliance with discharge licence requirements 100 100 100 100

- Ammonia discharged (milligrams per litre) 30 12 5 2.4

- Offensive odours beyond the boundary (number) 0 0 0 0

- No litter 0 0 0 0

Sewerage transfer EPA Victoria State Environment Protection Policy compliance for sewerage system spills:

System failure – zero spills due to 0 0 0 1* × sewerage system failure (number)

Hydraulic deficiency – progressively achieve 0 0 0 0 zero spills due to storm events of a severity of up to 1-in-5 years by 2011 (number)

Complaints relating to transfer 16 11 11 8 system odour (number) (cumulative) Case study: Managing peak flows Biosolids management Maximise sustainable reuse of biosolids The $650 million Northern Sewerage Project will bring Once this extra capacity has been built, the % of biosolids reused annually at ETP 100 0 100 0** × significant benefits for Merri and Moonee Ponds Creeks, two other channels (the eastern carrier and the protecting them from sewage spills during heavy rain. western carrier) will be decommissioned. % of biosolids reused annually at WTP 33 0 33 0** × At the other end, Melbourne Water is designing an upgrade This will deliver social and environmental benefits. Trade waste Work with retail water businesses to to the Western Treatment Plant at Werribee to ensure the The eastern carrier is an open channel and can be a improve trade waste management: plant can cater for increased peak flows, especially in wet significant source of odour near the plant’s eastern weather, when the Northern Sewerage Project comes on line. boundary and the future River Park (formerly Werribee Number of high risk non-compliant trade waste N/A N/A 0 0*** Field) residential development. The western carrier is discharges to Melbourne Water’s sewerage system Melbourne Water planners are evaluating three susceptible to flooding in extreme rainfall events. options to enable the plant to deal with greater Target met Target exceeded × Target not met volumes of sewage as a result of the project. The wet weather upgrade will mean the plant can continue * Target was not achieved due to the failure of an air valve at Mordialloc No. 1 pump station in April 2008. to meet, under increased flow conditions, requirements of the Scheduled maintenance has been arranged for all air valves on the rising main. Planned works will increase the capacity of the southern carrier, State Environment Protection Policy that it has the capacity ** Targets were not achieved. The non-typical properties of Melbourne Water biosolids, such as clay at the Eastern Treatment Plant and one of three channels that distribute sewage to treatment heavy metal contamination at the Western Treatment Plant, constrain the opportunities for sustainable use. It is anticipated that reuse to contain a one in five-year rainfall event. The upgrade of biosolids from ETP will proceed upon release of guidelines for the environmental management of projects using biosolids as a fill. lagoons at the plant. The options are to raise the height of the works are expected to be completed by the end of 2010. channel walls, build a duplicate channel or install a new pipeline. *** This indicator consolidates the two trade waste indicators used in last year’s Sustainability Report.

28 Melbourne water sustainability report 2007–2008 29 Goals related to waterways › Improve river health and the marine environment › Manage flood risk › Improve environmental outcomes from all aspects of our business › Engage and inform the community to seek its support for our projects and priorities › Develop and implement efficient capital investment and operations programs › Ensure stringent regulatory obligations are met

› Protecting existing environmental Key achievements Disappointment values and river health while › Completed extensive work › We did not achieve our cumulative providing services for urban to prepare the five-year target of reducing nitrogen by 59 growth associated with Waterways Water Plan, which tonnes in waterways flowing to projected population growth sets out expected investment Port Phillip Bay through wetlands of 800,000 people by 2030 in waterway health and flood and other on-ground works. We protection across the region. achieved a 56.1-tonne reduction › Understanding and responding The plan was endorsed by the but are still on track to achieve a to the needs and expectations Essential Services Commission 100-tonne reduction by 2010. of diverse communities in a region with 3.8 million › Finalised the Waterways Water people and 38 councils. Quality Strategy to manage Challenges effects of stormwater, urban development pressures and › With more than 100,000 rural land management, and properties identified at risk improve water quality in the Port of flooding, an increase in Phillip and Westernport region household numbers and possible climate change impacts, flood › Released the Port Phillip and and drainage management will Westernport Region Flood need to anticipate and adapt Management and Drainage to changing circumstances Strategy, and began working with councils, emergency service › Managing the potential impacts organisations, researchers of climate change on river health waterways and the community to such as increased average and implement key actions summer temperatures, reduced rainfall and more intense storms › Preparations and extensive community and stakeholder › Working with water users to communications were completed protect environmental flows for the introduction of a new in our rivers and creeks waterways and drainage charge in our extended operating area.

Badger Creek, Healesville

30 Melbourne water sustainability report 2007–2008 31 Overview Demands for water have placed further What we manage Alliance partnering Our Waterways Operating Charter translates Environmental flows pressures on the Yarra and Thomson these strategic and policy objectives into Melbourne Water is responsible for Our job is to manage rivers and creeks, rivers through reduced environmental Melbourne Water established the Waterways actions, and outlines our responsibilities, A need to increase water storage capacity in five major river catchments within the floodplains and the regional drainage flow entitlements. Alliance in June 2008. The alliance will goals and targets for the next five years as Maroondah Reservoir to capture potential 12,800 square kilometre Port Phillip and system. In this role we recognise that deliver about $70 million of capital works required under our Statement of Obligations. spring rain resulted in a staged transfer of Westernport region – Werribee, Maribyrnong, all land-based activities can affect the At the same time, continued urban over the next five years, with about 90 water to Sugarloaf Reservoir via the Watts Yarra, Dandenong and Westernport. health of our rivers, creeks and the bays, growth and possible climate change waterways projects and 20 stormwater After extensive consultation with customers River and the Yarra River, rather than via the impacts increasing the likelihood of sudden, and stakeholders, the 2008-2013 Waterways and seek to balance social, economic In this region we manage about 8400 quality projects to be delivered by 2010. Maroondah Aqueduct. intense storms prompted action to raise Operating Charter was approved by our and environmental outcomes. kilometres of rivers and creeks, 1439 community awareness of tolerable flood The alliance with our project partners Board in September. Although this involved additional pumping kilometres of drains, drainage and waterway These outcomes include ensuring that risk and prevention strategies. reduces capital delivery risks in a tight labour at Yering Gorge, the staged release of assets valued at $2.7 billion, 123 wetlands, our rivers, creeks and wetlands are healthy, market, improves efficiency, and encourages As continued dry conditions place water into the rivers mimicked natural 277 monitoring stations on waterways and with more native animals and plants; Urban growth – with Melbourne’s innovation and the use of new technologies additional stress on waterways, we have environmental flows, consistent with drains, and 77 urban . providing a safe level of flood protection population increasing by 1200 each week – (see Business efficiency, page 68). developed drought response contingency the 2005 Environmental Flows study. also raises water quality issues. Shortage plans for 18 wetlands supporting significant for communities; engaging the community The region is also home to an estimated As well as being a much needed addition of land for constructed urban wetlands biodiversity values, along with installation in activities to improve our rivers and creeks; 3.8 million people, and almost one-quarter Managing waterways of water to the system, this provided a means that we need to find new ways to of depth gauges to monitor water levels. managing urban development to protect of the region is urbanised. Land uses range valuable opportunity to collect water remove nutrients and other pollutants A major focus for 2007/08 was the successful waterways; meeting targets for water from high density urban development quality and streamflow data showing from stormwater to meet long-term water development of the Waterways Water Plan, This work, which was carried out with quality; and, using research and monitoring through to agriculture, and great diversity how the river behaves under these flows. quality targets for nitrogen removal. which sets out expected investment in river environmental restoration consultants, listed to guide long-term decisions. of high value ecosystems supporting 1860 health and flood protection across the region, the wetland values, the water requirements This year we completed four new streamflow species of native plants and 600 species This year, waterways experienced We have accelerated our efforts to including in our extended waterways and of these values, and actions that might be management plans for the , and of native animals. continued pressures associated with shift the emphasis away from treating drainage operating area. taken to supply water when needed. for the Yarra tributaries Stringybark Creek, stormwater on a site-by-site basis to low flows and dry conditions as we The Victorian Government extended , and Steels, Pauls and Dixons a whole-of-catchment approach. The Water Plan covers 2008/09 to During 2007/08, we began to develop endured our 11th year of drought. our waterways and drainage boundary Creeks. These plans seek to balance 2012/13 and was endorsed by the 20 Year River Health ‘Vision’ templates, in November 2005 to cover the whole environmental, social and economic Rainfall was at historically low levels, A key focus this year was the development Essential Services Commission in June. designed to show the typical ‘end state’ Port Phillip and Westernport region. demands on waterways. We have now resulting in less water being available of the Waterways Water Plan, which sets that rehabilitation projects should achieve. The new areas include the Upper completed six of the eight plans required by for environmental needs, river diverters out how Melbourne Water will fulfil our We also successfully completed an This will help deliver consistent outcomes Maribyrnong and Werribee catchments 2010, as set out in the Operating Charter. and supply to metropolitan Melbourne. responsibilities for waterways, drainage and extensive two-year communication across Melbourne Water, and allow Landcare and the Mornington Peninsula. floodplain management in the Port Phillip and program with communities, councils and groups and other external parties a better The Victorian Government reduced Westernport region over the next five years. stakeholders in our extended area to explain understanding of our goals. environmental flows in the Yarra River and the services and benefits we provide. Thomson River by 10,000 million litres a We successfully purchased ownership rights year. This is a temporary measure brought for a section of Mordialloc Creek reserve These services and benefits include funds about by extreme drought and record low from two of three industrial landowners, for the community to improve their rivers inflows to reservoirs. and creeks, river health improvements and allowing a rehabilitation project to proceed. investigations, stormwater management The Environmental Emergency Contingency An independent study assessed the waterways and drainage and water sensitive urban design, urban Plan now includes an annual review of the performance of 20 river health-related development planning and approvals to impact on the rivers’ environmental health. projects, comprising capital, maintenance ensure sustainable growth, flood protection We undertook additional monitoring of and grants works, and concluded that they and flood warning systems, and drainage Yarra River habitat and water quality, generally had a good fit with best practice maintenance and improvements. and this data will be used to assess the and were of very good quality. impact of low flows on river health. Consistent with the Water Plan, these Managing weeds continued, with a project MARIBYRNONG services and benefits will be funded With Southern Rural Water, we reviewed beginning in the upper to remove by a waterways and drainage charge bulk water entitlements and environmental large tracts of highly invasive Mexican from July 2008 for about 170,000 flows for the to more woody weed or elegant poison berry. properties in our extended operating accurately reflect low flow situations. area (see Business efficiency, page 68). Under the proposed regime, environmental YARRA We are seeking community and stakeholder input to guide a works program that will flows will be released occasionally to Victorian River Health Strategy address the loss of rock beaching along reflect natural flushing events, rather WERRIBEE To provide clear direction on long-term the banks of the lower Maribyrnong River. than a constant flow that depletes management of waterways, we refer to a In recent years, large sections of the rock Southern Rural Water’s reserves. beaching have deteriorated, and exposed number of important strategies and plans River diverters faced their toughest year in the riverbanks to erosion. including Melbourne Water’s Corporate Plan, 2007/08, with diversions banned from nine Water Plan, Regional River Health Strategy, DANDENONG N waterways and another two on restrictions. Better Bays and Waterways Plan, Waterways Very serious conditions have led to an Water Quality Strategy, Flood Management increased number of compliance issues, with PORT PHILLIP BAY and Drainage Strategy and the Port Phillip formal warnings issued and prosecutions and Westernport Regional Catchment DRAINAGE PUMPING STATIONS underway. A strawberry farmer in Cockatoo Management Strategy. RETARDING BASINS was successfully prosecuted by Melbourne WETLANDS WESTERN PORT Water for stealing water from Cockatoo CHANNEL (MODIFIED WATERWAY) Creek, and fined $5000. UNDERGROUND DRAIN NATURAL WATERWAY BASS STRAIT PRIMARY RIVER BASIN CATCHMENT WATERWAYS AND DRAINAGE BOUNDARY BOAGS ROCKS

32 Melbourne water sustainability report 2007–2008 33 Our new Customer Charter for Diversion For the first time we have developed a Managing stormwater quality Our nitrogen reduction program improves A detailed survey of the West Street drain Monitoring, Services sets out the rights and obligations ‘real time’ Yarra River flood forecasting water quality in waterways and the bays by catchment in Hadfield has revealed that In February, the Lower Yarra and Living for diversion customers and Melbourne model covering the entire catchment, removing nitrogen and other pollutants from about 1000 properties would be subject investigations Rivers Stormwater Quality programs were Water, and specifies the relevant standards and we continued our relationship with stormwater. This year we began working on a to inundation to a one in 100-year storm and research combined. These programs help to improve and conditions of service to be met relating VicRoads to ensure major roadworks such pilot project that recreates an urban forest in event. Melbourne Water worked closely waterway water quality through grants and to diversion licensing activities. The charter as Eastlink deliver flood protection benefits. an existing retarding basin in Cornwall Street, with the City of Moreland to include this Melbourne Water undertakes extensive working with councils and other groups to was approved by the Essential Services Blackburn South. It provides low cost, low information in the local planning scheme monitoring, investigations and research manage stormwater run-off. Commission and came into effect in March. Water quality in maintenance stormwater control and through a Special Building Overlay. to develop a comprehensive information base to support our activities and report The combined $20 million program is on pollution removal. Melbourne Water and the Department of waterways As the planning referral authority across on progress to government, stakeholders target and during 2007/08 we spent $7 Sustainability and Environment are trialling the Port Phillip and Westernport region, and the community. We completed the Waterways Water Quality million on grants and provided capacity Urban growth an innovative streamflow management plan we processed 9907 statutory applications Strategy, which outlines actions needed building support from our specialist panel We monitor and investigate water quality, tender process. Under this process, farmers Melbourne Water aims to ensure urban (planning permit referrals from councils) to manage the effects of stormwater, of water sensitive urban design consultants. streamflow, fish, threatened and flagship submit a tender price they would be willing development achieves appropriate standards compared with 9411 last year. urban development pressures and rural land species, weeds, sediments, litter and to receive in return for surrendering all or management and improve water quality For example, we are providing financial and of flood protection while providing Our decision to prevent inappropriate physical stream condition. part of their water allocation or agreeing to in the Port Phillip and Westernport region. in-kind support to Monash and Melbourne infrastructure in new growth areas that can development in floodplain areas was be managed to new (higher) environmental universities for Smart Water Fund projects protect water quality and the environment. tested in the Victorian Civil Administration We also research the impacts of climate flow rules. The strategy recognises that urban wetlands to develop an innovative pilot stormwater change and urbanisation in stream ecology, During 2007/08, we spent $32 million Tribunal, with the tribunal finding in our alone will not cope with expected increases quality project in the Little Stringybark methods of urban stormwater treatment, and to reimburse developers for constructed favour in relation to Kananook Creek Flood management in nutrients carried by stormwater from Creek catchment. The project engages understanding links between the catchment works on 200 urban development projects. in Frankston, Moonee Ponds Creek in and drainage expanded urban areas, and recommends residents in competitive bidding to install and estuarine and marine receiving waters. a range of actions including raingardens Tullamarine, in Ivanhoe, raingardens and rainwater tanks to reduce We worked closely with VicRoads on the This year we released the Port Phillip and in homes, expanded council use of water and the Yarra River in Toorak. Melbourne Water has 136 monitoring stormwater run-off and improve stream EastLink project to complete $17.6 million Westernport Region Flood Management and sensitive urban design, rural water quality sites across our region. Each site is health across the catchment. in water main, waterway, drain and sewerage To improve urban stormwater impacts Drainage Strategy, and began working with treatment, and regulation of development. monitored monthly and results are alterations. In a world first, stormwater and reduce flooding risks associated with councils, emergency service organisations In May, the City of Melbourne committed reported to EPA Victoria. run-off from all 45 kilometres of Eastlink urban redevelopment, we are working with researchers and the community to The strategy will also inform the Better Bays to municipality-wide stormwater quality road surfaces is treated through a network of councils, developers and designers to include implement key actions. and Waterways Water Quality Improvement targets, shifting stormwater management Water quality across the region varies 60 wetlands, raingardens and other stormwater management requirements for Plan for the Port Phillip and Westernport emphasis from a site-by-site focus to a from excellent in the forested headwaters treatment measures before reaching local residential buildings in the next generation A central part of the discussion paper was region, which is scheduled to be completed whole-of-catchment focus. to poor in urban areas. Generally, water the introduction of debate about tolerable in late 2008. This is a joint project with EPA waterways. five-star building standards. The proposed quality has improved since regular and intolerable flood risks, which seeks to Victoria and the Federal Department of We secured $60,000 funding for phase standards can be achieved with rainwater monitoring began in the early 1970s but help the community understand that like Environment and Heritage aimed at creating two of the Lower Yarra Litter Strategy from tanks or small raingardens. has remained relatively stable in the past bushfire, flooding cannot be prevented an integrated water quality plan for Western Sustainability Victoria, and our efforts to decade, reflecting the difficulty of dealing in all instances, and that awareness and Port, Port Phillip Bay, and the rivers and improve stormwater quality were recognised with widespread sources of pollution in preparation are effective ways to reduce risks. estuaries within the catchment. at the annual Stormwater Industry stormwater run-off across Melbourne. Association of Victoria Awards for For Melbourne, predicted climate change As a result of this work, we are developing stormwater excellence, with Melbourne effects include increases in temperature, a $5 million Rural Land Management Water receiving two awards for projects reduced annual rainfall and more intense Program across our extended areas. introducing raingardens into schools (see storm events rather than normal winter and The program will include support for Community and stakeholder engagement, spring rain, resulting in sudden large volumes landholders in priority catchments for page 36) and litter prevention initiatives in of run-off and increased risk of flash flooding. on-farm water quality improvements as Victoria Street, Richmond. well as the construction of regional water A pilot flood education and awareness quality wetlands to capture and treat We began works to divert polluted low flows Case study: Tiny fish a large prize program has begun in the City of Maroondah, water pollutants and manage flows. These from the Prahran Main Drain to sewer, as and the cities of Manningham and Darebin wetlands filter water before it flows to our part of the Yarra Pollution Hot Spot Program. have started work on pilot flood management rivers and creeks, and eventually the bays. South East Water and Melbourne Water Two days of netting and electro-fishing around Lancefield Rhys says threats to the species included loss of instream plans with support from Melbourne Water worked together to design and implement in February yielded the prize researchers were after – 157 of habitat diversity, stock access, vegetation clearing, the predatory and the State Emergency Service. We are working with the Department of the project. the nationally and state-threatened Yarra pygmy perch. habits of mosquitofish and redfin, and prolonged drought. Sustainability and Environment (DSE) We are also working with the Victoria State on EcoTender, a market-based incentive Working with councils to improve water The survey, at six sites along , was commissioned “Now that we have more information, we can think Emergency Service to develop a community program designed to address salinity, quality is a critical aspect of our activities by Melbourne Water freshwater ecologist Rhys Coleman. about our priorities to improve conditions and extend education and awareness program in the its habitat,” he says. “It’s an opportunity for us to protect biodiversity and improve water and we helped the City of Yarra develop and “When Melbourne Water’s operating area was extended in 2005, Port Phillip and Westernport Region. The work with the Deep Creek Landcare Group.” quality and river health on private rural launch its water sensitive urban design it included the upper Maribyrnong River system,” he says. “Since program will build on existing FloodSmart land. A pilot program will run in the guidelines. The guidelines are a blueprint for then, we have been looking very carefully at the condition of the The study recommends improving the quality and diversity and StormSmart programs recently Westernport catchment later this year, designing and building a water-sensitive city streams, learning about their values and threats to their health.” of instream plants and habitat, fencing off the streamside developed in other Victorian regional centres. with an initial investment by DSE of that will result in cleaner water in the Yarra banks, removing willows and other weeds, specific $1.5 million for funding on-ground works, River and better use of recycled stormwater It was known that Yarra pygmy perch, Nannoperca A research agreement with RMIT University plantings on banks and a drought management plan. and by Melbourne Water of $400,000 for in parks and open space. obscura, had been found in the Lancefield reaches of will improve our understanding of social program development and on-ground works. Deep Creek, an eastern tributary of the Maribyrnong. Construction of a special offstream billabong would or intangible impacts of flooding on the Melbourne Water has also involved 38 act as a haven and could help reintroduce the species Scientists found healthy populations at all six sites. The community, and we have developed a Due to the continued dry conditions in councils in an analysis of the assistance into areas where it was historically found. tiny native fish – usually four to six centimetres long – flood risk assessment framework with input 2007/08 there was a significant increase councils need to manage stormwater more preferred shallow, calm pools with dense aquatic plants. from the Department of Sustainability in applications for the use of stormwater effectively, and provided recommendations and Environment, Department of Human across Melbourne, and we began work to each council based on the findings. Reaches that had been fenced off from cattle contained Services, Victoria State Emergency Service, on a policy and licensing framework for more fish than those with direct stock access. Insurance Council of Australia, RMIT, and managing stormwater use. other stakeholders.

34 Melbourne water sustainability report 2007–2008 35 During 2007/08 we undertook a range of Community and A total of 870 grants valued at Key performance indicators – waterways investigations including geomorphology $3.04 million were awarded to private studies of waterways in our extended stakeholder landowners, community groups, councils operating area; Yarra River environmental engagement and other agencies, with 167 kilometres 2006/07 2007/08 flows; Dights Falls fish migration study; of waterways improved through fencing, Target Result Target Result Target met frog studies in the Bass River, French Island About 600 community groups are weed control and revegetation with more and Phillip Island; and surveyed platypus actively involved in water and land than 333,000 native plants. This compares management across our region. Achieve 2007 Waterways Operating 100 94.7 100 100 populations in the Bass River, Little River, with $2.06 million funding for 587 grants Charter performance targets (%) Upper Maribyrnong River and Werribee This year we developed a Waterways improving 117 kilometres of waterways Drainage and flood protection River catchments. Stakeholder Engagement and with 307,000 plants last year. Communications Framework to provide We carried out pollution tracking surveys Since 1996, we have invested more than All new development complies with 100 100 100 100 in the (Yarraville) and Elster clear direction on priorities and actions $8.3 million in the Stream Frontage flood protection standards (%) Creek catchments, studied fish populations for stakeholder engagement and Management program, helping private communication over the next five years. Planning controls further reduce the number 250 267 250 450 in the French Island, , landowners with waterway frontages of flood prone properties in redevelopment areas Tarago River and Bunyip River catchments, A new Community Support Program to erect more than 733 kilometres of by approximately 250 per year (number) and developed an Upper Yarra riparian funded by Melbourne Water and the fencing and plant more than 1.1 million vegetation management plan. native trees and shrubs. Reduce flood prone properties through 36 36 81 79* × Port Phillip and Westernport Catchment expenditure on flood mitigation works (number) Using helicopters and GPS-linked cameras, Management Authority will provide A Stream Frontage Management Program we recorded aerial survey details of about nine coordinators to work directly with partnership with GippsDairy planned for the Stormwater quality 740 kilometres of waterways within the community and environment groups Upper Lang Lang catchment will engage with across the region over the next five years. Cumulative reduction in pollutant/nitrogen loads 56 54.5 56 56.1 Bunyip, Lang Lang, Dandenong and Koo Wee dairy farmers and help us to understand in urban stormwater run-off in accordance with the Environment Management Plan for Port Phillip Bay (tonnes) Rup catchments. Similar footage captured Community groups and councils across the their waterway management needs. from previous projects was used to assist in Port Phillip and Westernport region shared weed mapping, identify erosion sites and fish The Raingardens in Schools Program, Waterways condition more than $3 million in grants to help which helps students understand the barriers, for works planning and to locate protect and improve rivers and creeks as important drought refuge areas. relationship between stormwater and water % achievement of three-year implementation targets assigned 100 100 100 100 part of Melbourne Water’s grants program. quality in rivers, creeks and bays, achieved to Melbourne Water from the Regional River Health Strategy its target of completing 20 raingardens in The Community Grants, Corridors of Land development Green and Stream Frontage Management primary schools in the past year. Program fund projects including habitat Property development applications processed 100 100 100 100 Community participation in our within specified response times (%) improvement and weed control, and Waterwatch water monitoring program support and promote work undertaken increased significantly this year All new growth areas in redevelopment corridors 100 100 100 100 by private and public land managers. (see Our relationships, page 54). to have drainage schemes in place within three years of significant subdivisional activity commencing (%)

Create 10 redevelopment schemes per year with priority 10 14 10 19 given to areas of high new development activity (number)

Raingarden at Toorak Primary School Streamflow diversions

Number of streamflow diverter licences >5 million litres/yr 732 704 732 797 metered or assessed for metering at 30 June (number)

Target met Target exceeded × Target not met * Target was not achieved. However, the overall target is to protect 149 vulnerable properties over the three-year Water Plan period since 2005/06. In that time, the number of vulnerable properties protected was 183.

36 Melbourne water sustainability report 2007–2008 37 Goals related to recycled water › Ensure stringent regulatory obligations are met › Develop alternative water resources, including recycled water, that meet our customers’ current and future needs › Develop and implement effective capital investment and operations programs

› Building on the success at Key achievements Disappointments Hoppers Crossing pumping › In partnership with the › Algal blooms in the Western station, continuing to substitute metropolitan retail water Treatment Plant lagoons resulted drinking water with recycled water businesses, we recycled in several days of interrupted and other alternative sources in 23.2% of the total amount recycled water supply Melbourne Water operations of recycled water in metropolitan Melbourne, › We were unable to identify a › Improving the prevention and exceeding the Government’s commercially viable way of management of algal blooms target of 20% by 2010 reducing salinity in recycled water. in the Western Treatment Plant lagoons, and reducing the impact › Began using recycled water of algal blooms on the reliability to lubricate pumps and cool Challenges of recycled water from the plant motors at Hoppers Crossing › Managing demand for recycled pumping station. This initiative › Reducing salt levels in sewage water as sewage inflows to entering the Western Treatment will save 100 million litres treatment plants decrease, Recycled Water of drinking water a year Plant and recycled water supplied demand for alternative water from the plant, especially › Established a new permanent sources increase, and traditional given a lower dilution of salt standpipe facility for City water sources such as river due to reduced inflows. West Water customers at the water and groundwater become Western Treatment Plant limited as a result of drought › Obtained third party certification › Meeting customer demand of our recycled water quality especially during peak summer management system at the periods while ensuring quality Western Treatment Plant. and reliability of recycled water

Sewage treatment lagoon, Western Treatment Plant

38 Melbourne water sustainability report 2007–2008 39 Overview We worked together with the retail Recycling west The certification provides further This is primarily a result of a reduction in City West Water is considering the use of water businesses to investigate a of Melbourne assurance of water quality to meet the sewage inflows of about 12%, caused by reverse osmosis membrane technology to Recycled water is a valuable resource number of potential recycling projects stringent requirements of customers and the drought, water conservation measures reduce salt levels in the recycled water. and a key tool in achieving our vision of a to help meet these targets and produce Melbourne Water is using recycled water Government legislation and guidelines. and water restrictions. This has led to a This design work will continue in 2008/09. sustainable water future. Use of recycled a Metropolitan Reuse and Recycling Plan. to lubricate and cool eight large pumps reduction in the dilution of salt in the Once complete, the scheme will enable As part of the ongoing third party water improves the sustainability of our This plan summarises the priority projects following a $750,000 upgrade of the recycled water previously achieved from 9000 homes to use recycled water for certification of the system, Lloyds will water supplies by conserving drinking water, to be included in the next Water Plan for Hoppers Crossing pumping station. This higher domestic (low salt) sewage inflows. garden watering and toilet flushing. conduct process surveillance audits river water and groundwater. It protects Melbourne, as required by the Victorian is saving more than 100 million litres of Water will also be supplied for some every six months to ensure the systems The EPA Victoria licence limit of 1250 the environment by reducing discharges Government. Further investigation into the drinking water a year, and reducing the open space irrigation in the area. are being maintained and optimised. milligrams per litre for the salt concentration of treated effluent to our bays and oceans, technical details and cost of these potential site’s drinking water demand by 85%. and frees up water for the environment projects will continue in the coming years. The latest audits, conducted in April, in untreated sewage entering the plant will Algal blooms interrupt supply and economic growth. The upgrade, completed in December, found no issues of concern. be reduced to a median of 1000 milligrams Class A recycled water produced at the followed extensive testing to ensure per litre in 2009. Western Treatment Plant begins as Class Recycled water supplied this year Managing salinity However, we face significant challenges the operating efficiency of the pumping C water sourced from the 25 West and Together with the retail water businesses, Southern Rural Water is working with to meet increasing demand for recycled station was not compromised by the Significant work has been undertaken by the 55 East lagoons and is then further treated we supplied 66,742 million litres of growers in the Werribee Irrigation District to water and the need to provide a product use of recycled water. retail water businesses in the past few years (disinfected) with UV and chlorine. suitable for a variety of end uses. recycled water in metropolitan Melbourne to reduce the level of salt in recycled water examine options for mitigating the impacts this year. This equates to 23.2% of the The recycled water comes from the Western produced at the Western Treatment Plant. of salinity in recycled water as part of the For the UV disinfection plant to operate Recycled water can be used for irrigating sewage treated in Melbourne, exceeding Treatment Plant via a distribution network Western Irrigation Futures Study, which will properly, the turbidity of the Class C source grazing land and crops, in horticulture, the Government’s water recycling target built by City West Water to supply customers Salt-reduction treatment is at this stage be carried out over the next two years. water must be very low. The supply of Class industrial processes, toilet flushing and of 20% by 2010. Melbourne Water in the Werribee Technology Precinct. prohibitively expensive, so it is important A water also requires low levels of algal cells Melbourne Water will support Southern garden watering in residential dual pipe contributed 61,984 million litres of to actively manage the discharge of salt to ensure water quality standards required Rural Water during the study, which aims to schemes, and to keep sports grounds recycled water to this total, which equates The pumping station is the largest into sewage entering the plant. The retail for irrigation are maintained. and open spaces green. to 21.5 percentage points of the 23.2%. recycled water user in the technology water businesses have made significant develop a long-term strategy for the Werribee precinct, which also includes the efforts to implement cleaner production and Bacchus Marsh irrigation districts. Algal blooms have been an annual problem Melbourne Water and the retail water Demand was slightly higher than last Melbourne University Veterinary School. programs to reduce the salt entering the at the Western Treatment Plant and in late Supplying salt-reduced businesses are working towards the year mainly as a result of the continuing treatment plant in sewage from trade December, blooms developed in both lagoons water to West Werribee Government’s targets of 20% recycling drought and water restrictions, and reduced The precinct will initially use waste customers. Despite these efforts, the at the same time. Blue-green algal cell counts by 2010 and additional substitution of availability of river and groundwater 300 million litres of recycled water salinity of untreated sewage and recycled Melbourne Water is working closely with in 25 West were above the toxicity-based 6200 million litres of recycled water for supplies west of Melbourne. a year for industrial purposes, irrigation water at the Western Treatment Plant has City West Water on the early stages of threshold for Class A recycled water. Green drinking water by 2015, increasing to and commercial washdown. increased over the past three years. its design of a small treatment plant to algal cell counts in 55 East, while not toxic, Melbourne Water also used 15,930 million 10,000 million litres by 2030. supply salt-reduced Class A recycled caused the turbidity threshold of the UV litres of recycled water for conservation Works have begun on a new interface water from the Western Treatment Plant plant to be exceeded. Recycled water could and management of the biodiversity point for the Werribee Tourist Precinct. to residential customers in the West not be supplied for four days, and supplies values of the Ramsar-listed habitat at Melbourne Water currently supplies Werribee dual pipe scheme. were intermittent in the following six days. the Western Treatment Plant. tourist precinct customers directly but they will soon be transferred to Southern Rural Water after the interface point works are completed. Flow monitors at the Major recycling schemes in Melbourne interface point will be solar powered.

Tourist precinct customers include the Werribee Park Golf Club, the National Equestrian Centre, the Werribee Open Range Zoo and Werribee Park and Mansion.

Managing and improving water quality YARRA VALLEY HACCP certification WATER CITY The quality management framework for WEST the supply of Class A recycled water from WATER the Western Treatment Plant introduced in 2006/07 was third party certified under Lloyds Register HACCP (Hazard Analysis WESTERN and Critical Control Point) assessment TREATMENT PLANT EASTERN N criteria following a detailed audit. TREATMENT PLANT SOUTH EAST The HACCP system identifies potential risks PORT PHILLIP BAY WATER to recycled water quality and the critical points in the treatment process at which WESTERN TREATMENT PLANT ONSITE USE these risks must be controlled. It covers all recycled water end uses 2007/08 (%) WERRIBEE IRRIGATION PRECINCT aspects of the sewage and recycled water WERRIBEE TECHNOLOGY PRECINCT WESTERN PORT treatment processes, transparently assessing, WERRIBEE TOURIST PRECINCT agriculture 35.1% monitoring and verifying control points and Bulk recycled water exports 26.6% validating water quality limits. A similar EASTERN TREATMENT PLANT ONSITE USE SOUTH EASTERN OUTFALL Benefi cial allocation eg. env flows 20.4% system was introduced at the Eastern BASS STRAIT EASTERN IRRIGATION SCHEME within process 17.0% Treatment Plant in 2004/05. BOAGS ROCKS urban & Industrial 0.3% RETAIL WATER BUSINESS BOUNDARY

40 Melbourne water sustainability report 2007–2008 41 Management protocols were put in Melbourne Water, City West Water We continued working with the National Standpipes relocated preferred technology for this tertiary Dual pipe schemes place, including targeted sampling and and Southern Rural Water established a Health and Medical Research Council treatment upgrade began during the year. Since December 2006, Class A recycled TopAq supplies South East Water with Class customer notifications. As turbidity recycled water reliability working group to develop the Australian Guidelines for The upgrade will enable the plant to produce water has been supplied to businesses A recycled water for its customers in the and blue-green algae levels continued to prepare supply contingency plans Water Recycling. We are represented on up to 135,000 million litres a year of high and organisations from two temporary Sandhurst Club and the Hunt Club Estate. to improve, uninterrupted supply of for the 2008/09 season, and develop the working group for two of the three quality Class A recycled water suitable for standpipes at the Western Treatment Plant, These are the first residential estates in Class A recycled water was resumed. long-term reliability improvements. new guideline modules. use in new housing estates, irrigation and primarily as a drought relief measure. Victoria to have access to recycled water. industry (see Sewerage, page 22). It is believed the blue-green algal bloom A risk assessment of the recycled water Werribee Irrigation District Under a process managed by City West Class A recycled water supply via a dual was caused by a combination of high system was performed, including an Water, recycled water is transported by Southern Rural Water continues to receive Eastern Irrigation Scheme pipe reticulation system was launched in nutrient loads, warm weather and periods assessment of operational events at tankers and used for open space watering, large volumes of recycled water from the December to about 600 houses in the of stagnation in the lagoon water, and the the Western Treatment Plant that could and dust suppression in road construction. The Eastern Treatment Plant has been Western Treatment Plant for growers in Sandhurst Estate at Skye. Recycled water green algal bloom by high ammonia levels interrupt recycled water supplies, instrumental in providing recycled water to the Werribee Irrigation District. This year, Melbourne Water undertook is used for toilet flushing, garden watering in the lagoon water and warm weather. combined with contingency planning for customers on the Mornington Peninsula. earthworks and roadworks to establish and open space irrigation. summer periods when the demand and More flexible supply arrangements were This has helped assess the extent to which a new filling area with two permanent Melbourne Water and Southern Rural supply risk are both at their highest. established to meet the increased demand recycled water can substitute for other standpipes at the Western Treatment South East Water also continued to supply Water are working on contingency plans of growers, who faced low river water water sources for irrigation, residential Plant. The project will be commissioned Class A recycled water to about 200 houses as part of mitigating the risk of blue-green Expanded monitoring program allocations and groundwater bans due developments and industry in the area. early in 2008/09. at the Hunt Club Estate near Cranbourne. algal blooms including: Monitoring of Class A recycled water to the drought. For the second season The proliferation of golf courses, council at the Western Treatment Plant has been in a row, Melbourne Water supplied A total of 123 million litres of recycled water › Increased monitoring of algae The move was in response to safety risks reserves and agricultural areas south-east expanded to about 240 water quality higher recycled water volumes than are originating from the Eastern Treatment Plant levels to investigate the correlation associated with traffic along the old filling of Melbourne presents a significant parameters. A wide range of metals, contractually required by Southern Rural was supplied to these schemes via TopAq’s between algal growth and other site on Farm Road, deterioration of the opportunity for recycled water schemes. synthetic and natural organic chemical Water, to provide Werribee farmers with treatment plant. water treatment quality parameters adjacent roadway, and the opportunity to contaminants, disinfection by-products drought relief. A total of 12,519 million establish more permanent and advanced One such example is the Eastern Irrigation Victorian Government legislation has › Installation of online ammonia and pharmaceuticals and personal care litres was supplied to Southern Rural Water access to recycled water at the site. Scheme. Under this scheme, Melbourne mandated the supply of recycled water to monitoring to improve products were included in the monitoring for existing and new customers compared Water delivers Class C recycled water from all future residential developments in the treatment process stability program this year. Many of these are not with 10,964 million litres in 2006/07. Tankers supplied 158 million litres of the Eastern Treatment Plant to a private Cranbourne and Pakenham growth corridors. › Field trials of ultrasonic algae control traditionally monitored in recycled water. recycled water from the standpipes sector operator, TopAq, which then carries devices to prevent algal growth. (compared with 88 million litres in out further treatment of the water using The program forms part of a two-year 2006/07), with up to 60 tankers a day ultrafiltration membranes and chlorine to Pipeline customers quantitative risk assessment being using the site at peak summer times. produce Class A recycled water ready for managed by Melbourne Water. Results There are now 42 South East Water supply to customers. customers who take Class C recycled water are being analysed by technical experts Recycling east and will improve our understanding of the from the South Eastern Outfall pipeline, of Melbourne TopAq delivers the Class A recycled water which transports treated effluent from the potential risks associated with the range of to a range of horticultural, recreational and end uses for recycled water in the future. Eastern Treatment Plant to Boags Rocks on A total of 21,136 million litres of recycled residential customers via 50 kilometres of the Mornington Peninsula. water was used at or near the Eastern transfer and distribution pipelines. Treatment Plant during 2007/08. This These customers used 1304 million litres volume included 13,255 million litres that Melbourne Water supplied 6577 million of recycled water for agricultural and was used in operating the plant. If recycled litres of Class C water to TopAq compared horticultural activities, including watering water was not available, Melbourne Water with 8296 million litres in 2006/07. golf courses and sports fields, for root crop would have had to use drinking water for The decline was due to reduced demand irrigation, flower growing and drip irrigation Actual Actual Target OWOF* target these process operations. from TopAq customers. of vineyards. 2006/07 2007/08 2007/08 2010 This year, TopAq began installing additional Western Treatment Plant ML % ML % ML % ML % The Eastern Treatment Plant currently Three new South East Water customers, produces Class C recycled water. The plant membranes to increase the capacity of its recycling an additional 80 million litres Onsite recycling 26,317 9.799 27,831 10.556 37,000 11.5 37,000 11.3 will be upgraded in 2012 to enable all Class A treatment plant. Commissioning is a year, were signed up in 2007/08. Werribee Tourist Precinct 220 0.082 203 0.077 340 0.1 500 0.2 sewage that enters the plant to be treated expected in early 2008/09. Werribee Technology Precinct 0 0 106 0.040 190 0.1 0 0 to Class A quality. Trials to determine the West Werribee Dual Pipe Project 0 0 0 0 470 0.1 0 0 MacKillop College 13 0.005 31 0.012 0 0 0 0 Drought relief tankers 88 0.033 158 0.060 0 0 0 0 Werribee Irrigation District 10,946 4.076 12,519 4.749 3500 1.1 8500 2.6 WTP total 37,584 13.995 40,848 15.494 41,500 12.9 46,000 14.1 Eastern Treatment Plant ML % ML % ML % ML % Onsite recycling 13,054 4.861 13,255 5.028 13,800 4.3 13,800 4.2 Key performance indicators – recycled water Eastern Irrigation Scheme 8296 3.089 6,577 2.495 4,802 1.5 5000 1.5

South Eastern Outfall 2128 0.792 1304 0.494 1,700 0.5 1700 0.5 2006/07 2007/08 ETP total 23,478 8.742 21,136 8.017 20,302 6.7 20,500 6.2 Target Result Target Result Target met Total 61,062 22.737 61,984 23.511* 61,802 19.5 66,500 20.3

Wastewater discharge 268,556mL 263,642ML Contribute 19.6% to the Government’s 18.9 20.9 19.6 21.5 20% water recycling target (%) Environmental flow at WTP 13,856 5.159 15,930 6.042

Victorian Government’s Our Water Our Future program ML = million litres Target exceeded *Figure represents percentage of recycled water supplied from the total volume of sewage treated at WTP and ETP

42 Melbourne water sustainability report 2007–2008 43 Goals related to natural environment › Improve environmental outcomes from all aspects of our business › Meet planned reductions in greenhouse emissions and increased use or export of renewable energy › Maximise resource efficiency › Improve biodiversity › Minimise waste disposal and maximise resource recovery.

› Managing native vegetation Key achievements Challenges and sites of biodiversity › Exceeded our target of a › Considering and minimising significance in dry years 40% reduction in greenhouse greenhouse gas emissions and gas emissions from the energy use in all new projects › Maintaining environmental 2000/01 baseline and activities, particularly flows in dry years major new projects such as › Commissioned the first of six › Investigating beneficial use the Sugarloaf Pipeline and the of biosolids from the Eastern new mini-hydro generators Tarago water treatment plant and began producing power and Western treatment plants and greenhouse gas offsets. › Achieving our targets in an and water treatment residuals environment where energy use from Winneke and Tarago is increasing to deliver services water treatment plants. Disappointments to Melbourne, such as additional › Failing to meet our targets pumping requirements for renewable energy due › Managing existing infrastructure to drought impacts so that it is operated in the › Increased energy consumption most energy-efficient manner due to increased pumping › Finding new ways to maximise requirements associated with the renewable energy potential managing drought conditions of sewage treatment (biogas) and Protecting › The Eastern Green Energy Project water supply distribution (hydro) delivered lower than expected electricity generation due to gas compressor reliability issues, our natural power station engine breakdowns and operational interruptions as environment part of the commissioning process.

44 Melbourne water sustainability report 2007–2008 45 Overview These processes include our community We achieve this through: Greenhouse gas At our Eastern and Western sewage Energy consumption is expected to rise in environment public health assessment emissions treatment plants we create renewable the coming years due to drought recovery, Many complex challenges face checklist to assess and plan for potential › Our environment policy, supported by energy by capturing and using biogas – tertiary treatment at the Eastern Treatment Sustainable Water – A Strategic Framework Melbourne Water in fulfilling its role of impacts of major works, such as Melbourne Water is among the top 15 a by-product of the sewage treatment Plant, energy required for pumping in the protecting the natural environment. infrastructure projects. It ensures we are › An aspects and impacts register energy users in Victoria and among the process – to generate electricity. Sugarloaf Pipeline project and the Tarago managing impacts, identifying solutions, that identifies and ranks all positive top 300 energy users in Australia, and In the water supply network, we harness water treatment plant. In 2007/08 we experienced extended including and informing relevant people and negative environmental produced 284,500 tonnes of greenhouse water flow and pressure to generate drought, shifting rainfall patterns, low To help address these issues and meet and groups, and reviewing capital works, impacts from our activities gas emissions (CO2 equivalent) this year. hydro-electricity. waterway flows, higher temperatures operations and policy. our long-term target of 100% renewable › Meeting legislative and and intense storms. Looking ahead we We use energy primarily for treating and This year we exceeded our target of energy by 2018, we began developing other requirements can expect increases in energy costs, The checklist covers potential impacts pumping sewage and water, and meet a 40% reduction in greenhouse gas a greenhouse emissions reduction and continued population growth and on the natural environment including › Defining environmental our energy needs by buying electricity emissions. We reduced greenhouse renewable energy use strategy. The strategy competing demands for resources. land, water, air, Aboriginal, cultural and improvement programs within our from the grid, using fuels such as natural gas emissions by 50.4% compared is due to be completed in April 2009. archaeological heritage, material use and Corporate Plan and Water Plan gas and diesel, and generating renewable with our baseline year of 2000/01. To protect the natural environment waste management, biodiversity, risk › Developing systems for competence, energy from our own activities. Actions to reduce emissions while continuing to deliver services to management and public safety, and However, we failed to meet our target training and awareness, and regular Since 2000/01, significant reductions Melbourne, we set targets to reduce community and stakeholder issues. In 2007/08, Melbourne Water used of 50% of renewable energy used or monitoring, reporting and audits in our greenhouse gas emissions were greenhouse emissions and increase 1.368 million gigajoules of energy produced, with 41.3% of our energy needs of environmental impacts. achieved from the following: our use or export of renewable energy, Our environmental and public health compared with 1.248 million gigajoules being supplied from renewable sources. and to improve biodiversity. management system guides our management the previous year – an increase of 9.6%. of environment and public health risks Our ability to produce renewable energy Actions (using a Emissions We use formal processes to assess and (except drinking water quality) and helps The increase in energy consumption is due was affected mainly by drought impacts baseline year 2000/01) reduction restricting hydro-electricity generation (tonnes understand the potential impacts of us comply with the International Standard to the additional pumping requirements per year) our actions, projects and activities, for Environmental Management Systems associated with pumping water from the at the Thomson and Cardinia power and work to ensure that appropriate ISO14001. This standard requires us to meet stations (see page 48). Capturing methane at the 225,859 Yarra River at Yering Gorge and treating Western Treatment Plant steps are taken to eliminate or minimise all environmental legislative requirements water at the Winneke water treatment Melbourne Water decided not to buy risks to the natural environment. and achieve continual improvement in our plant to ensure security of water supply. Reduced purchased 83,505 Renewable Energy Certificates to achieve environmental performance. electricity Melbourne Water spent $15.7 million the renewable energy target because we had already exceeded the more critical Reduced diesel use at the 4991 this year on energy (3.9% of operating Eastern Treatment Plant expenditure) compared with $16.2 million greenhouse gas emission reduction target (5% of operating expenditure) last year. and because of financial considerations. Introduction of hybrid cars 147 Total 314,502 We have made significant progress in Protecting our biodiversity reducing greenhouse gas emissions and generating renewable energy since 2000.

MARIBYRNONG

YARRA Forecast Greenhouse Gas Emissions (Excluding Desalination)

WERRIBEE ACTUAL FORECAST

700,000

600,000 DANDENONG N e)

2 500,000

PORT PHILLIP BAY O 400,000 WESTERN PORT BIOSITES OF REGIONAL, STATE, NATIONAL AND INTERNATIONAL SIGNIFICANCE ON OR ADJACENT 300,000 TO MELBOURNE WATER LAND C (TONNE

WESTERN PORT RAMSAR WETLAND 200,000 BIOSITE OR WATERWAYS SITE OF BIODIVERSITY SIGNIFICANCE

PARKS VICTORIA LAND EMISSIONS GAS GREENHOUSE TOTAL 100,000 BASS STRAIT LISTED WETLAND DIRECTORY OF IMPORTANT WETLANDS IN AUSTRALIA 0

BOAGS ROCKS PRIMARY RIVER BASIN CATCHMENT MELBOURNE WATER WATERWAYS AND DRAINAGE BOUNDARY 1995/96 1996/97 1997/98 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20

46 Melbourne water sustainability report 2007–2008 47 Renewable power from biogas Our Eastern Treatment Plant completed the The Cardinia hydro operated all year, Melbourne Water is working with several We develop water management action plans This region is home to a diverse range of Melbourne Water uses biogas produced Eastern Green Energy Project. The project is but at reduced levels, producing companies to develop sources of biomass (waterMAPs), which require major industrial, important ecosystems, comprising extensive during the sewage treatment process expected to produce about 50% of the 11,350 MWh compared with about for conversion to fuels and biogas for use commercial and institutional water-using terrestrial and marine habitats and supporting to fuel electricity generators, reducing plant’s energy needs, reducing electricity 14,000 MWh in a normal year. in existing biogas electricity generators. organisations to assess their water use, more than 1860 species of native plants and greenhouse gas emissions by importing imported from the grid by about 28 gigawatt A promising source of biomass is the identify inefficiencies, prepare an action plan 600 species of native animals. In these Investigating new sources less grid electricity and diesel fuel oil. hours per year, and cut greenhouse gas nutrient-rich water at sewage treatment to implement water conservation activities ecosystems 296 flora species and 128 of green energy The electricity generated is used to help emissions by about 32,000 tonnes a year. plants, which can be used to grow algae, and and report on these activities annually. fauna species are considered threatened. power treatment processes. Melbourne Water has set ambitious targets a pilot project is expected to be established However, the project delivered lower than for 2018 of zero net greenhouse gas at the Western Treatment Plant in 2008/09. We also started to develop Environment and The biodiversity values of the natural assets This year we experienced minor expected electricity generation this year emissions and 100% renewable energy used Resource Efficiency Plans, which include under our control vary widely. BioSites are technical problems affecting biogas due to gas compressor reliability issues, or exported. Sourcing renewable energy We also investigated the feasibility of self-assessments about how to reduce energy, sites of high biodiversity value and include generation facilities at the Eastern power station engine breakdowns, and substitutes for grid-supplied electricity is installing wind turbines, and during 2008/09 water and waste footprints, at three sites. internationally recognised wetlands, pristine and Western treatment plants. operational interruptions required as part the key to achieving these targets. we will conduct more detailed wind resource mountain ash forests in protected water of the commissioning process. studies as a first step in confirming the We are part of the Commonwealth supply catchments, and the upper forested Despite these issues, we maintained our A consultant’s report identified limited suitability of using wind turbines at Government’s Energy Efficient reaches of many waterways. production of renewable energy from Renewable power from hydro options to increase the amount of promising locations. Opportunities program, which requires large biogas, producing a total of 565 gigajoules. Hydro-electricity is playing an renewable energy produced through our energy-using businesses to examine factors Victorian Biodiversity Strategy increasingly important role in providing own resources. These options included: that influence energy use and identify, Operational efficiency initiatives The Victorian Biodiversity Strategy is At the Western Treatment Plant, renewable energy for Melbourne Water, evaluate and report publicly on cost- Energy consumption reviews at our largest an overarching strategy covering a power generation facility run by AGL with six new mini-hydro systems › Producing biogas from crops and effective energy savings opportunities. pumping stations – Hoppers Crossing, objectives related to the conservation in partnership with Melbourne Water expected to be operational by 2009. plants (biomass) grown onsite generates electricity using biogas or imported from offsite Brooklyn, Yering Gorge and inflow pumps and Protecting and and management of biodiversity. aeration blowers at the Eastern Treatment The Regional River Health Strategy, captured in the treatment process. However, power generation from existing › Increased production of biogas at improving biodiversity hydro plants at the Thomson Reservoir Plant – have delivered savings through Melbourne Water’s Biodiversity Strategy The biogas generators produce about 70% sewage treatment plants through optimised operations. These facilities and the Waterways Sites of Biodiversity and the Silvan-Cardinia pipeline was well process improvements With Melbourne entering its 11th year of energy needs at the Western Treatment down this year due to low reservoir levels combined are responsible for more than of drought, and climate change impacts Significance Program provide a strategic Plant, generating more than 50 gigawatt associated with the prolonged drought › Constructing additional mini 60% of our electricity use. being felt in changed rainfall patterns, approach for biodiversity management hours a year of renewable energy. resulting in failure to meet our renewable hydro-electric power stations higher temperatures, and more intense in areas under our management. We are also involved with several energy target. storms, the pressure is increasing on sites Lower sewage flows associated with the › Wind power, if suitable sites Government initiatives aimed at Our Biodiversity Strategy coordinates could be located. of high biodiversity value. drought reduced the amount of biogas The Thomson hydro plant was online for conserving energy, waste and water biodiversity management actions across generated by the covered lagoons, and only two months, producing just 946 across our operations. As a significant landholder and waterways all groups and natural assets, defines replacement of an AGL generator megawatt hours (MWh) of electricity manager within the Port Phillip and biodiversity values on Melbourne Water Our membership of the Commonwealth destroyed by fire in December 2006 was compared with about 15,000 MWh in Westernport region, Melbourne Water properties and sets priorities for Greenhouse Challenge Plus program not brought online until September 2007. a normal year. plays a leading role in managing, protecting management of these values. has enabled us to establish a strong and improving biodiversity. foundation for future reporting under the Commonwealth’s National Greenhouse and Energy Reporting System.

Forecast ENERGY CONSUMPTION

sewage Treatment – ETP (TJ) minor Sites (TJ) sewage Treatment – WTP (TJ) vehicles winneke (TJ) recycle water other (TJ) Other (TJ) sewage transfer (TJ)

ACTUAL FORECAST

2,500

2,000

1,500

1,000 energy by use 2007/08 energy by source 2007/08

500 sewage 81% imported Electricity 81% ENERGY CONSUMPTION (TJ) CONSUMPTION ENERGY water 14% Bi ogas 14% vehicles 4% natural Gas 4% 0 Other 1% vehicle fuels 1% shaft diesel 0% 1995/96 1996/97 1997/98 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20

48 Melbourne water sustainability report 2007–2008 49 Developing a detailed understanding of Green paper on climate change BioSite surveys Drought response, Pipeline works › Biosolids – a by-product of the biodiversity values and collecting additional sewage treatment process Melbourne Water provided a detailed Melbourne Water manages 36 sites with conservation and research Melbourne Water and the Sugarloaf data on natural assets will help Melbourne submission to the Victorian Government’s high biodiversity values through the Sites Drought response planning for 18 Pipeline project team have developed › Grit and screenings – litter, gravel, sand Water demonstrate the extent to which Green Paper, Land and Biodiversity in of Biodiversity Significance Program. wetlands supporting significant biodiversity and adopted bio-security protocols and other non-biodegradable material effective biodiversity management a Time of Climate Change, in June. values continued with the development for protecting the environment and collected by screens and grit-removal contributes to an overall improvement This program protects and improves the of contingency plans for each site, biodiversity values on the project. tanks in a pre-treatment facility. of healthy ecosystems, vegetation The paper will set direction for Victorian regional, state and national biodiversity and installation of depth gauges and A total of 112,990 million litres of treated communities and wildlife habitat. Government policy and investment priorities values of these sites. The protocols were developed in conjunction monitoring to record and assess impacts. effluent was discharged into Bass Strait in natural resource management, land health with the Department of Sustainability and from the Eastern Treatment Plant compared Net Gain guidelines and biodiversity for the next 20 to 50 years. Consistent with the Biodiversity Strategy, A population of the only Victorian wingless Environment to work with landowners, with 108,128 million litres last year, we engaged natural environment consultants stonefly (Riekoperla darlingtoni) living in land managers and others to prevent the Melbourne Water supports the Victorian while 80,868 million litres was discharged to undertake flora and fauna surveys to an ephemeral spring near the summit of transmission of plant and animal diseases as Government’s native vegetation Managing data from the Western Treatment Plant into establish BioSite condition, and provide a Mt Donna Buang has declined drastically a result of works associated with the project. management framework. The framework We continued work on our biodiversity Port Phillip Bay compared with 122,816 baseline for future monitoring. as a result of the drought. Work has begun introduced a ‘net gain’ goal as an outcome condition and heritage system, which is million litres last year. to install a water tank to drip irrigate the Waste assessment for native vegetation, where overall gains are designed to improve the collection, accuracy During 2007 we began a survey of the greater than overall losses and individual bed of the spring and keep it damp – Some 44,400 cubic metres of biosolids were and management of biodiversity condition Cardinia Reservoir BioSite, based on the Waste is produced by our sewage losses are avoided where possible. a condition critical for the survival of generated at the Eastern Treatment Plant, and heritage values of natural assets under high risk of invasion by environmental treatment plants and our water this species. This work is being done in contributing to the 1.19 million cubic metres Melbourne Water management. weeds. The site has been divided into treatment facilities, and collected in During 2007/08 we developed Melbourne collaboration with Parks Victoria. stored onsite, and 5840 tonnes of grit and three stages with the second survey area stormwater litter and sediment traps. Water’s draft Net Gain guidelines, which will Key aspects of the project this year involved screenings were collected and sent to landfill completed in June 2008. Results will The Western Treatment Plant Biodiversity help us deliver a net gain in native determining how best to integrate the for disposal, at a total cost of $494,210. assist planning for weed management. Conservation Program may help protect vegetation on land under our management system into our wider IT Systems, and ways Sewage treatment plant waste the critically endangered orange-bellied through avoiding vegetation clearance, to make information available to external The survey involved a general fauna species The Western Treatment Plant generated 17,000 parrot by improving waterbird habitat and Waste from our treatment plants includes: minimising impacts through design and stakeholders such as government survey, mapping and assessment of native dry tonnes of biosolids (the same as last year), restoring coastal saltmarsh. management, and offsetting any losses. departments, councils, research agencies, vegetation, and mapping of weed invasions. › Treated effluent – sewage that has bringing total biosolids stockpiled at the plant to 1.37 million dry tonnes. We continued to catchment management authorities, Fauna surveys involved trapping, spotlighting, Melbourne Water undertook a fish survey at been treated to a high standard at our These guidelines will play a key role in explore options for using biosolids as a developers and community groups. call playback and active searching during the the Western Treatment Plant’s Lake Borrie. sewage treatment plants and discharged managing impacts of construction of the resource (see Sewerage, page 22). day and night. Mapping and assessment of The survey aims to protect biodiversity into Port Phillip Bay or Bass Strait or Sugarloaf Pipeline, which will connect the This database provides detail on the diverse habitat was also undertaken. values, identify exotic and native fish species, further treated for water recycling Melbourne water supply system with the habitat types, plants and animals found on and determine patterns and relationships to Goulburn River. Melbourne Water property, and will Biodiversity conservation at waterbird health. contribute to the Geographical Information Any loss of vegetation, habitat or the Western Treatment Plant System layers managed by the Department biodiversity values associated with the of Sustainability and Environment. This program oversees conservation actions pipeline construction will be offset through at the Western Treatment Plant to protect purchase and ongoing protection of land Pest animal guidelines the extensive Ramsar-listed wetlands of with high biodiversity value, such as land international importance and other areas adjoining state or national parks. Historical pest animal management of high biodiversity significance. guidelines have been reviewed and updated First BushBroker trade to create two pest animal documents – one Melbourne Water spent $586,000 this year for internal use and the other for contractors on biodiversity conservation at the plant, As a participant in the Victorian undertaking pest animal management including research to better understand the Government’s BushBroker Scheme, activities on behalf of Melbourne Water. complex wetland and intertidal ecosystem, we traded native vegetation ‘credits’ and on-ground management such as weed, Litter/silt removal annual Winneke to help meet the net gain target. These guidelines help reduce the risk of fox and cat control, fencing and water depth sludge discharged water quality issues associated with pest ANNUAL LITTER/SILT COLLECTED Native vegetation credits arise through a manipulation on conservation ponds. animal management, and ensure that these (CUBIC METRES) 20,000 250,000 gain in the extent and quality of a specified management programs are safe, humane, An important management aim is to boost area of native vegetation. This credit can environmentally sound and economically the number of filter-feeding ducks using the 18,000 then be traded with someone who has no feasible. Management actions aim to prevent wetlands. This involved drawing down water choice but to destroy native vegetation. 16,000 200,000 new and emerging pests from having levels in Lake Borrie to allow placement of In August, Melbourne Water sold some of significant impacts on natural and fallen timber to create perches and habitat, 14,000 237,108 productive resources. and encourage vegetation growth to support the native vegetation credits as a test case. 150,000 We had retained these credits with the the birds’ invertebrate prey. 12,000 The guidelines, which were finalised transfer of freehold land around Devilbend in late 2007, address pest animals An audit and review of the program’s Reservoir to the Government. 10,000 such as foxes, rabbits, cats and dogs compliance with the Commonwealth 100,000

in protected catchments, reservoirs Environment Protection and Biodiversity 8,000 157,886 156,350 and land under our management. Conservation Act scored 64 out of a possible 66. 6,000 50,000 4,000 2,000 0 0

Kilolitres 2005/06 2006/07 2007/08 2005/06 2006/07 2007/08

50 Melbourne water sustainability report 2007–2008 51 Water treatment plant waste Stormwater litter and Managing e-waste Waste from our water treatment plants sediment trap waste Melbourne Water recognises the are called water treatment residuals, Litter and sediment are collected environmental problems and loss of valuable or sludges, and are a by-product of the in traps located in the drainage, resources associated with the global increase water treatment process. They generally waterways and wetlands systems. in e-waste – unwanted, metal-rich electrical consist of clay minerals, organic matter, consumer goods, including mobile phones, nutrients, hydroxides of aluminium and In addition to constructed litter and screens and computers. polyelectrolytes. sediment traps, we regularly collect debris from about 5000 sites including We donate useful end-of-life computers In 2007/08, Melbourne Water produced road culverts, drainage grilles and grates, to not-for-profit charities. This year we 237 million litres of water treatment and other known litter ‘hotspots’. engaged a recycling and asset disposal residuals, mostly from Winneke water Debris comprises 75% to 80% organic business to dispose of computing equipment treatment plant, with about 1% produced litter, with the rest rubbish and litter unsuitable for reuse. No equipment was from small local water treatment plants. (usually plastics). disposed to landfill. This compares with 156.4 million litres last year. All debris/litter is taken to standard landfill facilities. Silt is tested for contaminants The increase in water treatment residuals this to determine whether it can be reused as year is due to a return to full operations at clean fill or taken to a contaminated landfill Winneke following temporary reductions in facility. About one-quarter of silt material treatment levels in 2006/07to accommodate is contaminated. a power supply upgrade, cleaning of the Winneke-Preston pipeline and commissioning This year, we collected 7000 cubic metres of a new clarifier and two new filters. of litter from 130 litter traps, and a further 4000 cubic metres of silt from 346 silt traps The Yan Yean water treatment plant in wetlands, with a total disposal cost of also produces water treatment residuals, $1.96 million. Last year, total disposal costs which are stored in drying pans onsite. were $2 million for 13,500 cubic metres of silt and 2500 cubic metres of litter. Water treatment residuals from the Winneke water treatment plant are discharged to sewer under a trade waste agreement with Yarra Valley Water. Melbourne Water is reviewing options for reusing the sludge with the aim of ending disposal to sewer.

Case study: Harnessing the power of water

Melbourne Water commissioned our first new mini Ian Royston, who has been managing the project for hydro-electricity plant near the Preston Reservoir in May. two years, says until now, the energy or ‘hydraulic head’ of water reaching the reservoirs had been reduced with The two-megawatt plant provides enough clean power pressure-reducing valves or energy dissipaters. for 5000 homes and emits no greenhouse gases because it uses the natural energy of water flowing downhill. “The beauty is that we’re capturing energy that’s been there since the dams were built, but until now has simply Five more will be built at Upper Yarra, Silvan, Olinda, been dissipated and wasted,” he says. “This will boost Mount View and Notting Hill reservoirs. Together they will our already significant progress with greenhouse gas produce about 40,000 MWh per year of clean electricity, emissions reductions and renewable energy generation.” which will be fed back into the Victorian electricity grid. Key performance indicators – natural environment Melbourne Water will look at further possible hydro- This will offset up to 52,400 tonnes of carbon dioxide electricity generating sites. We are investigating the emissions each year and is an important step towards possibility of constructing a mini hydro-plant on 2006/07 2007/08 Melbourne Water achieving our renewable energy target of the downstream end of the Sugarloaf Pipeline from 100% renewable energy used and/or generated by 2018. Target Result Target Result Target met the Goulburn River to Sugarloaf Reservoir. The mini-hydros work on a simple principle: harnessing Energy and greenhouse the energy of water, which is gravity-fed from the large dams in the Yarra Ranges to storages around Melbourne. % reduction on 2000/01 greenhouse gas emissions 38 53 40 48

Renewable energy produced as % of total energy used 45 45 50 41* ×

Target met Target exceeded × Target not met * The target was not met because of low generation at Thomson and Cardinia hydro-electric power stations due to drought effects, loss of production of biogas at the Western Treatment Plant due to a fire in the AGL generator, and low electricity generation at the Eastern Treatment Plant due to commissioning problems of the Eastern Green Energy Project.

52 Melbourne water sustainability report 2007–2008 53 Goals related to stakeholder engagement and community relations › Develop enduring partnerships with retail water businesses, developers and other customers through open and transparent communication › Identify and meet customer service expectations › Build cooperation with all levels of government and regulators › Further develop programs to support corporate social responsibility › Preserve and promote our cultural heritage › Develop collaborative relationships with suppliers to gain support for our sustainability principles › Foster the exchange of knowledge with the community › Engage and inform the community to seek support for our projects and priorities

› Managing and communicating Key achievements Disappointments issues associated with major › Continued to work closely with › We did not understand early water supply construction projects the retail water businesses to enough the most effective media including the Sugarloaf Pipeline help improve the quality of communication channels for water supplied to consumers rural communities about issues › Helping the community to concerning the Sugarloaf Pipeline understand the need for flood › Developed services and preparation and awareness relationships with key stakeholders › We were unable to reduce the in a time of drought in our extended areas volume of cases allocated from the Energy and Water Ombudsman’s › Continuing to build understanding › Continued to increase office, underlining the need for of community impacts on community participation through us to continue to focus on our river health, and initiatives education, tours and community customer service delivery. that people can take to reduce engagement programs such stormwater pollution. as Making Connections › Began engagement with Challenges Our Relationships the community and key › Continuing to build stakeholders in relation responsive, informative to our Flood Management and inclusive relationships and Drainage Strategy with our key stakeholders › Completed the Melbourne Water › Communicating the impacts Cultural Heritage Strategy to and effects of operating in an help us manage cultural issues environment characterised by and sites of significance. low inflows and environmental issues associated with prolonged drought and potential climate change impacts

Cherry Lake, Altona

54 Melbourne water sustainability report 2007–2008 55 Overview Where possible and practical, we provide Our metropolitan Major projects that involve community Getting to know Online visitor community members and local stakeholders retail water partners and stakeholder liaison include the communities in our numbers on the rise Melbourne Water builds partnerships and with input into our decision-making Northern Sewerage Project in Melbourne’s extended areas relationships with key stakeholders and processes through consultative committees Melbourne Water works closely with the northern suburbs. One of our priorities is to provide fast, informs and educates the community at our major facilities such as the Eastern retail water businesses – City West Water, easy access to relevant information for Updates are provided regularly to Moreland The Victorian Government extended to help achieve our vision. Our success and Western treatment plants and through South East Water and Yarra Valley Water – all stakeholders, and Melbourne Water’s and Moonee Valley councillors and residents, our waterways and drainage boundary in creating a sustainable water future alliance teams. that supply water to Melbourne homes websites play a key role in providing along with community forums. In addition to by more than 5000 square kilometres depends on our ability to develop strong and industry and collect sewage and trade accessible information to meet diverse We have developed a community a dedicated 24-hour community telephone in November 2005 to cover the whole relationships with others. waste from households and industry. community needs and cater for a engagement plan with regional water line, a Northern Sewerage Project website Port Phillip and Westernport region. growing volume of e-business. Key stakeholders include the Victorian authorities and councils to ensure has been established (www.nsp.net.au). Our relationships include supporting and The new areas include the Upper Government, retail water businesses, local communities are engaged and This year, two large acoustic enclosures jointly funding the Victorian Government’s Maribyrnong and Werribee catchments Traffic to our websites continues to other water corporations, councils and informed during the construction were installed to contain noise at worksites Our Water Our Future program and and the Mornington Peninsula. increase dramatically. In 2007/08 there the land development industry. of the Sugarloaf Pipeline and the at Brearley Reserve in Pascoe Vale, and De working together to improve the quality We continue to develop our knowledge were more than 5.2 million visits to our reconnection of Tarago Reservoir. of water supplied to consumers. Chene Reserve in Coburg. websites compared with about 3.3 million Keeping communities, councils and of these areas through a coordinated program of investigation, research, last year – an increase of more than 57%. industry informed about the planning, Preserving our In July and August, we worked closely with Another critical project is the Melbourne information collection and consultation. scope and likely effects of our operations cultural heritage Yarra Valley Water and the Department Main Sewer replacement project, which In July 2007 we received 773,399 visits – and infrastructure works requires timely involves a new sewer being built from of Human Services to manage community This involves building relationships the highest recorded in a month, and and factual information. the Docklands to Port Melbourne. Our Cultural Heritage Strategy was completed concerns regarding boil water notices with councils, retail water businesses, almost double the previous monthly and approved by our Board in May. issued as a precaution against high record of 365,186 set in May 2007. Where necessary, this information is The project includes a crossing of the communities, landholders, Landcare and turbidity levels in the Upper Yarra Reservoir. farming groups and other stakeholders. translated into community languages, and The strategy, which will be implemented Yarra River upstream of the Charles Grimes The increase in online traffic is driven by a This also helps us understand and meet where possible, we provide community over the next three years, outlines our The problems were caused by heavy Bridge. Construction will be staged, enabling new awareness of water and a search for community expectations by establishing members and organisations with the interaction with indigenous and non- rain impacting on dry catchment areas. two-thirds of the river to remain open at all information, with water storages, rainfall and required service levels. opportunity and means to provide feedback indigenous heritage and the management We worked with Yarra Valley Water to times. Communication with river users will river level data and weekly water update or contact our employees or contractors for seek to minimise the impacts of these works. of numerous sites of significance on construct five mini-filtration plants to This work has played a critical role pages on our main website consistently more information, or raise any concerns. Melbourne Water property. improve water quality delivered to Upper receiving the highest number of visits. As part of this project, Melbourne Water in helping the communities in the Yarra communities (see Water, page 12). extended areas understand our new This year we have seen significant increases A focus group was established to developed in-principle agreements during Most visits were to melbournewater.com.au waterways and drainage charge in community demand for information and guide our approach, and we are working the year with key stakeholders including (3.98 million compared with 2.33 million Keeping the community (see Business efficiency, page 68). participation in relation to water, waterways with indigenous representatives to VicRoads, EPA Victoria, City West Water, last year). People also accessed water and major capital works projects such as develop protocols that will support and stakeholders the City of Melbourne and City of Port conservation information by visiting the $750 million Sugarloaf Pipeline and the completion of key projects while informed Phillip to minimise community disruption Making connections melbournewater.com.au/conservation the reconnection of Tarago Reservoir. respecting the ways of the indigenous through strong working relationships and Strong relationships have also been (403,858 visits compared with 275,980 Early engagement with the community communities in which we work. open and timely communication. built through our Making Connections in 2006/07) and our land development This interest has been driven by increased and other key stakeholders is an important events, which develop new ways of manual, melbournewater.com.au/ldm awareness of possible climate change approach for Melbourne Water on the way As a result of feedback from residents, working with organisations, groups (118,302 visits compared with 85,500 impacts, environmental effects of to establishing constructive relationships the construction site compound at and individuals with an interest in the last year). extended drought conditions and the and raising awareness about our activities. Swallow Street, Port Melbourne, has future protection and management need to continue to conserve water. been reduced to maintain parking for of waterways in specific catchments. We continue to upgrade our websites We liaise closely with residents, businesses, local residents (see Sewerage, page 22). by designing content and structure to community groups, key Government meet user needs. Planning has begun Community engagement is also an integral In April, the second such event was held agencies, public transport authorities, on a major redesign and restructure part of the construction of the Tarago in the Maribyrnong catchment at Sunbury, councils and the retail water businesses. of our main website. water treatment plant, the new St Albans two years after the initial one. Many people water main, and the Sugarloaf Pipeline who attended the first event returned, (see Water, page 12). confirming the strength and durability of the networks and relationships. Melbourne Water is responsible for Case study: Pipeline a high funding and constructing the Sugarloaf The ability to review what had profile and demanding project Pipeline, which will link the Goulburn changed in the intervening time River near Yea to the Sugarloaf Reservoir at Maribyrnong provides a strong in Melbourne’s north-east. foundation for assessing the success of the Making Connections model. The Sugarloaf Pipeline project has been a particularly high-profile Stakeholder briefings, meetings with and controversial one for Melbourne Water during the year, and individual landowners and information for our delivery partners within the Sugarloaf Pipeline alliance. sessions are some of the ways that Melbourne Water has connected with A lot of effort has gone into liaising with landowners along the the community potentially affected by likely route of the pipeline, to explain the potential impacts proposed pipeline routes. Information and negotiate access to their property for survey work. packs and bulletins are distributed We’ve also provided key community members with detailed information regularly throughout the region, along on environmental compliance to help address their concerns. with a regular column in the local press.

As well as being a key part of the Victorian Government’s Our Water Our Future plan, the pipeline is of significant interest to many groups in its own right, and so its delivery will be held to an exceptionally high standard. Our challenge, and our intention, is to meet this standard.

56 Melbourne water sustainability report 2007–2008 57 Educating and The I Love Living Here river health advertising The 1407 visits to the Eastern Treatment Working with Monitoring and protecting platypus Industry participants fund the scheme and campaign uses native wildlife (growling grass Plant included Government and technical populations in our waterways continued its board includes representatives from the informing frog, platypus, blackfish and barking owl) inspections of the new sewage treatment the community through our survey partnership with water, gas and electricity industries as well as Melbourne Water continued to build on to engage the community in understanding and biogas and energy generation Community participation in our Waterwatch the Australian Platypus Conservancy. consumer bodies. Its independent chairman our successful education programs, many that most stormwater pollution comes technology. There were 1094 visitors water monitoring program increased This year four platypus including a is appointed by the Victorian Government, of which are carried out in partnership from suburban streets and impacts river to the Winneke water treatment plant. significantly this year. Waterwatch involves juvenile female were found during a which also appoints the Ombudsman. with the retail water businesses, health and the health of wildlife that live local people and schools in monitoring survey of Cardinia Creek, which indicates We continued our partnership with The Age Melbourne Water has a procedure, initiated community and environment groups. in and around our rivers and creeks. activities associated with river health, the creek is developing a self-sustaining newspaper’s education unit to produce through our Customer Service Centre, to and reinforces community connections population. No platypus had been found Of the 400 people surveyed about the posters on drought, the water cycle and ensure prompt response to all complaints The second Melbourne Water Yarra River with local waterways. in the creek since the Ash Wednesday youth conference was held in June, campaign, 91% viewed the campaign as climate change for the community and bushfires of 1982/83. received from the Ombudsman’s office. repeating and improving on the success important and valuable in the information schools, including a Yarra River super poster A new group, Werribee Plains Waterwatch, Supporting the investigation process, of the inaugural event. The conference it provided, and most said they would be and another titled Our Water Future. was launched during the year, and a total Melbourne Water is conducting two we consider the underlying customer provided an opportunity for young people likely to change their actions as a result of 53,445 people participated in the major community surveys to determine liaison issues relating to the complaint And our association with the Melbourne Zoo and schools across the Port Phillip and of the advertising. program in 2007 (over 13,000 more community perceptions of waterways, and possible improvements in the way and the National Gallery of Victoria, through Westernport region to build networks and than last year). Some 2097 Waterwatch and to discover levels of awareness of we service our customers. Our external magazine, The Source, the Melbourne Water Discovery Program at learn more about the impact our everyday activities were conducted, and 412 sites current water issues. moved online as part of the push towards the Zoo and the gallery’s educational Water Melbourne Water responded to 17 cases activities have on river health, and on the (almost 100 more than last year) were minimising our ecological footprint. The Trail, provided stormwater and river health this year, four more than last year. plants and animals that rely on waterways. monitored for water quality. Energy and Water Source continues to examine issues relating education for schools and the community. Ombudsman (Victoria) Inquiries covered a range of issues including More than 300 students and teachers to the water cycle with a focus on how The popular Melbourne Water Frog Census planning approvals, flood management, Melbourne Water continued to distribute attended from 40 schools, with 17 schools we can ensure a sustainable water future. community education program is being The Energy and Water Ombudsman’s role compliance with the Water Act, building flood education resources such as the making presentations on waterways and revamped to take advantage of new digital is to receive, investigate and facilitate overlays, wetland construction, drainage More than 9409 people, including animated multimedia interactive web-based river health in their area. recording technologies commonly available resolution of complaints and disputes rates and diversion licences. schoolchildren and overseas visitors, took Melbourne Water Floods Explorer and Water in mobile phone and some digital cameras. between Victorian consumers of energy part in tours of the Eastern and Western Water Everywhere, a secondary education One complaint that was ongoing from last A long-term behavioural change campaign It is expected to be relaunched in spring/ and water and providers of these services. sewage treatment plants. Most visits were textbook produced in partnership with the year involved flood levels in a local creek, aimed at encouraging the community to summer 2008/09. The scheme provides consumers with a to the Western Treatment Plant (7682). Geography Teachers Association of Victoria. and this was resolved during the year. At 30 enjoy, value and protect Melbourne’s free, specialised and independent dispute The Eastern Treatment Plant open day June 2008, one complaint, relating to stream waterways was launched in June. resolution process as an alternative to legal was not held this year due to construction frontage works, was still to be resolved. proceedings or other complaint processes. activities associated with the tertiary treatment upgrade program.

Students at the Yarra River Youth Conference

Key performance indicators – our relationships

2006/07 2007/08

Target Result Target Result Target met

Customers

Number of complaints escalated to the 3 13 3 17* × Energy and Water Ombudsman of Victoria

Community

% satisfaction with community 80 83 80 91 committee processes

Effectiveness of education programs (%) 90 93.5 80 91

Target met Target exceeded × Target not met * Target was not achieved due to the occurrence of 17 cases. The figure for last year also relates to the number of complaints (rather than inquiries), so is a useful comparison. Melbourne Water has been discussing this target with the Essential Services Commission, and is seeking to establish a KPI more appropriate to our business as part of our next Water Plan submission in November 2008.

58 Melbourne water sustainability report 2007–2008 59 Goals related to our people, our workplace Our people, › Attract and retain a diverse, motivated, skilled and experienced workforce › Provide a safe and enjoyable work environment which brings out the best in people › Encourage our people to develop and share knowledge gained from each other and stakeholders our workplace › Reward employees’ performance against the delivery of our business objectives › Foster a Melbourne Water culture that encourages sustainable behaviour › Ensure that sustainability principles underpin our workplace policies and practices › Encourage and recognise innovation and ideas for sustainability improvements

Key achievements Disappointments › A second survey of Melbourne › A poor safety performance, with Water’s culture found significant a Melbourne Water employee improvement in constructive and a contractor seriously behaviour in the workplace since injured in separate incidents the first survey in November 2005 › Not meeting our office-based › 36 senior leaders and our sustainability targets for water, leadership team completed our waste and energy consumption. leadership development program to drive further improvements in our preferred culture program Challenges › Completed our first international › Reinvigorating our health secondment exchange, with and safety focus throughout Yorkshire Water, enhancing the Melbourne Water and relationship and providing skill among our contractors development opportunities › Continuing our work towards › Achieved our target of reducing a preferred culture at a time office paper use by 4% (per of increased pressure on our full-time equivalent employee, people dealing with the contractor or other external staff) challenges presented by the drought, climate change and › Developed a safety improvement a large capital works program plan for the next three years that included 65 actions. › Measuring data and achieving corporate targets relating to paper, water, energy and waste at all office sites.

Wes Turnbull (Melbourne Water) and Pat O’Donovan (Tyco), working together on the Sugarloaf Pipeline project

60 Melbourne water sustainability report 2007–2008 61 Overview Health and safety We did not achieve our goal of zero lost Surveillance audit Taking the lead Environmental scholarship time injuries (LTIs) for 2007/08, with two Melbourne Water’s safety management A key aspect of creating a constructive Water supply operator Brian McNeil Melbourne Water faces challenging times LTIs affecting our employees – however, Poor safety performance system, The Safe Way, includes policy, culture has been the development and spent two weeks on the Great Barrier Reef with the drought, climate change, skill this is one less than last year. safety monitoring, management implementation of a leadership program working on a research project as part of shortages, higher costs and a large capital Melbourne Water’s safety performance procedures, performance standards based on the principles of learning, building Melbourne Water’s Ambassadors for the program creating demanding circumstances. in 2007/08 was very disappointing, Of major concern to Melbourne Water with a relatively high number of serious were also serious contractor incidents. and task-based instructions and forms. relationships and experience. Environment scholarship. The talent, expertise, passion and focus of health and safety incidents compared Our contractors had four LTIs – double The system was introduced in 2006/07 The leadership program, developed with the The scholarship, a partnership with the our people determine how well we meet with previous years. the number of last year. These included an and aligns with the Victorian WorkSafe Australian Graduate School of Management, Earthwatch Institute, is designed to those challenges, and whether we deliver incident at Prospect Hill retarding basin, auditing tool, SafetyMAP. Lloyd’s undertook includes components such as driving provide our people with development our business objectives and achieve our The worst incident was at our Brooklyn Narre Warren, where a contractor working a surveillance audit of Melbourne Water efficiency and delivering results; attracting, opportunities, help them continue sustainability vision. pumping station in February when an in a manhole suffered a broken leg. electric arc explosion occurred as one of our in April, and found no non-conformances. developing and retaining people; strategy working towards sustainability and Our Human Resources Strategy is people, system controller George Vagias, In each case, Melbourne Water worked It followed the three-year SafetyMAP development; giving and receiving feedback; demonstrate constructive behaviour. based on developing strong working reinstated a high voltage circuit breaker. closely with the contract company to recertification achieved in June 2007. and, influencing skills. The Queensland Parks and Wildlife research relationships with employees, consultants investigate the incident and instigate The program, launched in June 2007, project involved the Hawksbill turtle, which and contractors. A key is creating a George suffered severe burns to 60% of his required changes. We have included Constructive culture included teams working on business-related is critically endangered due to the harvesting constructive organisational workplace body, some permanent hearing loss as well as systemic improvements in our Health and Melbourne Water is committed to the projects and examines workplace issues of eggs and degradation of nesting and and culture in which everyone is part a broken leg, resulting in hospitalisation for Safety Improvement Plan (see below). employment and conduct principles outlined such as innovation, delegation, risk taking, foraging habitats. Brian’s work included of the solutions, and everyone knows about three months. Upon discharge in May, in the Public Administration Act 2004. knowledge sharing, efficiency, attracting catching, measuring, weighing and tagging that their talents are appreciated and he began a comprehensive rehabilitation Our combined LTI frequency rate (taking We adopt the principles of merit and and retaining people, and supporting people, the turtles and entering data. being put to best use. program including laser treatment of his into account employees and contractors) burns and was still off work at 30 June 2008. increased from 2.8 at the end of June 2007 equity in the appointment and management work groups and project teams. It comprised The strategy aims to continue building Melbourne Water offered him, his family and to 3.6 at the end of June 2008. Operations of our people. These principles are reflected five learning modules over nine days. Graduate program in our focus on continuing to build our Melbourne Water’s reputation as an employer colleagues every possible support and we will were able to continue without significant Melbourne Water’s structured graduate constructive culture where all people This year, 36 senior leaders undertook the of choice, enabling us to attract and retain continue to do so. He is due to return to disruption. program continued to develop, with 22 enjoy respectful collaborative relationships program. In 2008/09, it will be extended to high calibre people, while managing the risks work well before the end of 2008. graduates working in a variety of roles across and are recognised for their contributions. our team leaders. of our activities, especially those relating to Improvement plan the three years of the program. We recruit Investigations into the cause of the incident Our workplace culture, policies and practices health and safety. eight graduates a year. This year we provided included power industry experts, but no A 2008-10 Health and Safety Improvement seek to ensure our workplace is free from Learning and two secondment opportunities – at Sydney explanation had been established at 30 June Plan was developed after a survey of discrimination and ensure that our people development Water and Sinclair Knight Mertz (SKM). 2008. Further detailed investigation employee and management representatives have access to a fair issue resolution process. workshops are scheduled for July 2008. (including our maintenance partners) This year our investment in learning and identified specific areas for improvement. The challenging environment facing development initiatives for our people was Reward and recognition Immediately after the incident, all similar Melbourne Water demands innovative significant. On average, we spent $3000 per Some 313 Melbourne Water people were The survey found that a general Melbourne Water circuit breakers were and positive behaviour in the workplace. person for programs identified in individual recognised through our Great Work, Great improvement was required to reinvigorate examined. We modified our procedures to An analysis of the workplace culture in development plans including learning and People reward and recognition program. our health and safety focus in the face of ensure that all of them are double-isolated 2005 found that Melbourne Water people development planning outcomes, job- The program provides formal and informal significant business challenges over the before they are operated. wanted to work more constructively with specific training, the leadership development methods of recognition for individual, coming years. each other and their stakeholders. program and part-time study support. team and community contributions, and enables employees to nominate their peers. A workshop was held in April involving Workshops were held to discuss the members of all our Health and Safety First international exchange results of this analysis. Then programs Among our people recognised this year Committees and including representatives Melbourne Water participates in secondment were initiated to develop leadership styles, were Kate Wilson, for her sustained work Pat Barba (John Holland) and Matt van der Peet (Melbourne Water), from our major contractors. Some 65 exchanges to develop the skills of our people actions and ideas that drive constructive to develop and document a strategy for part of the Sugarloaf Pipeline Alliance improvement actions were identified. and bring expertise and different perspectives behaviour. In addition, constructive improving the grit and screening area of behaviour has been incorporated in to projects. This year we completed our first These actions, which took into the Eastern Treatment Plant; and KS Tan, performance and development plans, international secondment. account an analysis of the incidents for his initiative and innovation in and the new Enterprise Agreement. in early 2008, included: Melbourne Water land management developing a model to improve assessments of water resource options. A second workplace culture analysis of coordinator Adrian Murphy spent three › Holding people to their health Melbourne Water people was carried months working with Yorkshire Water on and safety accountabilities out in November 2007. The extent of improving water quality in a particular Encouraging › Improving hazard identification the improvement in the perception of catchment. sustainable behaviour assessment and control constructive behaviour in this re-test put “For three weeks, myself and the catchment › Developing additional measures of Melbourne Water in the top five of the LivingSmart many organisations that have participated manager walked pretty much every part of our health and safety performance, the drainage network in the catchment to Melbourne Water’s LivingSmart program is with action plans to address trends in similar programs in Australia and designed to educate and involve our people New Zealand. get a hands-on feel for the area,” he said. “I › Ensuring that our alliance partners feel like my work made a real contribution in living and working sustainably. are able to meet or exceed our own not only to Yorkshire Water, but to the Key focus areas for our people and their A review of the program carried out this year health and safety standards relationship between Yorkshire Water and teams in 2008/09 include improving and found that 89% of employees surveyed said Melbourne Water.” › Providing appropriate maintaining customer service, improving their personal sustainability performance clarity of role and purpose, alignment with information, education and Nicola Richardson, from Yorkshire Water, had improved through Melbourne Water’s training in health and safety Melbourne Water’s results and efficiency education and influence. This figure was improvements. worked with Melbourne Water over the › Increasing positive recognition for people same period, reviewing Melbourne Water’s unchanged from last year. who report incidents and hazards. strategic direction on drinking water quality.

Another secondment exchange with Yorkshire Water is planned for 2009.

62 Melbourne water sustainability report 2007–2008 63 Our people completed EPA Victoria’s Calculations for Full Time Equivalents Transport Incentives for alliances In the past year, we have responded to The report, published in March, highlighted ecological footprint for the third year in June (FTEs) include all our employees plus all This year, our people (excluding contractors Sustainability performance is one of five the challenges of our ageing workforce by: five key areas to help the industry attract 2008. The ecological footprint is a measure of contractors, consultants, trainees, secondees and consultants) used 1.13 million litres of key result areas that Melbourne Water is and retain skilled employees: › Maintaining our commitment to the the resources used by individuals. The average and any other people who utilise resources unleaded, LPG and diesel fuels, equivalent to introducing in an incentive system for our engagement of trainees. We engaged › Remaining at the forefront of ecological footprint was recorded at 5.7 global at a Melbourne Water site. 3,136 tonnes of CO2e. Pipelines Alliance. This performance will be two trainees and since 2000, we developments in science and technology hectares. This compares with 6.3 in June 2007 based on several factors including site Energy have engaged 26 trainees, offering and 6.9 in June 2006. Some 170 of our people Our people travelled a total of 9.62 million condition before and after construction, › Environmental sustainability undertook the survey this year, slightly less We introduced a range of measures kilometres, equivalent to 13,577 kilometres employment to 15 (58%) at and resources used in construction. › Technical skills such as environmental than last year. to reduce our office-based energy per FTE per year. This is a moderate the end of their traineeship engineering and process technology in consumption including automatic reduction from last year when employees The other key result areas are delivery › Identifying people who plan to retire water quality, wastewater and biosolids Office-based initiatives shutdown of computers at 8pm and office travelled a total of 9.67 million kilometres (meeting project specifications), value, and recruiting replacements before lights at 7.30pm, but failed to improve (15,000 kilometres per FTE). stakeholder engagement and culture. › Leadership and people skills This year, our focus was on sustainability their departure. This approach, which on our 2006/07 result of 4.4 megawatt High levels of environmental and safety in the office following the introduction was used for a range of roles across › Strategic thinking, business hours per FTE or meet our target of Melbourne Water has 331 vehicles in performance can also attract bonuses. of corporate targets (key performance the organisation, significantly helps planning and risk management. 4.3 megawatt hours per FTE per year. our fleet, including 30 Toyota Prius indicators) for reducing our consumption of skill and knowledge transfer Our result was 4.6 MWh per FTE per year. fuel-efficient hybrid cars, which are It is intended to introduce the incentive Melbourne Water is taking a variety of paper, water, energy and waste. The paper used mostly in the field. system to all four alliance programs in › Maintaining our strategy of job actions in those areas to attract and retain consumption target was included in our We undertook an energy audit of our 2008/09. rotations within and between teams skilled employees. Our initiatives include employees’ Enterprise Agreement this year. East Melbourne office to look for areas This year we worked on increasing the or groups to promote skill and introducing rotations as part of our graduate Water, energy and waste will be in the of improvement. Recommendations are safety profile of our fleet by encouraging Our workforce knowledge transfer and development development program, providing traineeships Enterprise Agreement from 2008/09 and our being reviewed from this audit and further our people to choose vehicles with a › Making available flexible working to attract people to our operation-based performance in meeting these targets will be audits of other selected Melbourne Water higher safety rating from the Australasian At 30 June 2008, our total workforce was arrangements for people who activities, building capability across the considered when determining salary increases. sites are planned for 2008/09. New Car Assessment Program. 729, which represented a 13% increase in want to continue working but not organisation through our leadership employees in the year since 1 July 2007 necessarily full time. Part-time development program, providing development For information on our corporate water Waste Purchasing (see Recruitment and turnover, page 66). opportunities outside Melbourne Water such consumption, see Water, page 12. work and 48/52 arrangements are We commissioned three waste audits at our We continued our membership of ECO-Buy, among the options available as secondments, and continuing to focus on The proportion of women in the organisation sites this year. Two-thirds of total waste was a Victorian Government-funded organisation sustainability throughout the business. Teams of volunteer employees ran increased from 23% in 2003/04 to 30% in › Continuing our structured recycled compared with 73% last year. established to encourage the purchasing of education campaigns to build awareness 2007/08. A Water Services Association of graduate program However, 92.5% had the potential to be green products, and continued to focus on Length of service and provide leadership in our efforts in Australia report released in March indicates reused or recycled using systems in place at sustainable procurement of products, › Introducing additional flexibility each of these four consumption areas. that the urban water industry average is 27%. The average length of service was 10.6 Melbourne Water. We improved our signage materials and services purchased by for primary carers. Melbourne Water. Members of Melbourne years compared with 11 years in 2006/07. We met our corporate target for paper as one of several measures to improve The average age of Melbourne Water Water’s supply team took part in a training Attraction and retention This is attributed to continued high levels but disappointingly, we didn’t achieve our recycling and reduce waste to landfill. employees at the end of 2007/08 was workshop with ECO-Buy, and a review of our of recruitment and new starters. targets in other areas including water use, 41.2 years, a slight increase from last year A report commissioned by the Water From the audits, about 60.3kg of total waste Sustainable Procurement Policy has begun. despite effective systems being in place. (41 years). The average age of new starters Services Association of Australia has The proportion of our people who have was produced per FTE (55kg last year), and was 33, virtually the same as new starters predicted that the urban water industry worked for less than five years at Melbourne From this year, all greenhouse gas emissions waste to landfill was 19.5kg per FTE per year, We have introduced more sustainable in 2006/07. Throughout the organisation, will face a 44% shortfall of skilled Water has again increased, from 47% to from office energy use and travel were well above our target of 14.4 kg/FTE/year. purchasing and production practices into 13.5% of our employees are aged 55 years employees by 2017. 53%. This figure has risen steadily over offset. Some 7900 tonnes CO2e of offsets our communication and marketing activities, The 2006/07 baseline was calculated as selecting suppliers on their sustainable or more, a decrease from 15% last year. the past few years (from 36% in 2002/03). were purchased in the form of New South Much of this increase is due to the volume Wales Greenhouse Abatement Certificates. a result of a one-day audit in June 2006. practices and selecting only paper and Increased auditing this year has enabled other merchandise products that are highly of recruitment caused by significant growth Paper a more comprehensive assessment of recyclable or made from recycled materials. across the organisation. Total paper consumption was 8893 reams Melbourne Water’s office waste practices, We also ensure there is a business need for (A4 equivalent), a slight increase from the leading to a new and higher baseline for such products before making the decision 8248 reams used last year. But on a full-time 2008/09 and beyond. to produce them. equivalent (FTE) basis, we achieved a result of 10.3 reams of paper/FTE/year compared with 10.7 reams last year.

Workforce distribution Gender distribution Age profile

2005/06 2006/07 2007/08 Male Female Male Female Male Female 2007/08 > 55 EXECUTIVES 39 5 37 4 41 5 2006/07 45 - 54 TECHNICAL AND PROFESSIONAL 261 128 269 137 283 173 2005/06 35 - 44 OPERATIONAL 140 2 145 3 167 6 ADMINISTRATION 8 31 12 38 18 36 2004/05 25 - 34

TOTAL 448 166 463 182 509 220 2003/04 < 25 TOTAL – MALE AND FEMALE 614 645 729 % 10 20 30 40 50 60 70 80 % 5 10 15 20 25 30 35

MALE FEMALE 2006/07 2007/08

64 Melbourne water sustainability report 2007–2008 65 Recruitment and turnover › Extended waterways management Internal communications survey boundaries and new regional In 2007/08, we had a significant amount Melbourne Water people support the team structures of recruitment. Some 233 roles were organisation’s internal communication filled – 120 Melbourne Water people › Increased numbers of part-time staff. processes, according to a survey of 260 were appointed to an advertised position, Staff turnover (excluding redundancies people from across the organisation. with 113 new starters (compared with and managed departures) was 9.1% More than eight out of ten agreed or strongly 81 last year). Of these new employees, compared with 8.6% last year. This is agreed that Melbourne Water encourages women made up 44%. within industry norms (5% to 10%) open and honest communication, and and Melbourne Water’s accepted range. Recruitment activity increased across all two-thirds agreed that Melbourne Water groups but was highest in Waterways and does a good job of keeping them informed Infrastructure due to: Enterprise Agreement about matters that affect them. A new Enterprise Agreement, covering › Increased expenditure and commitments 90% of Melbourne Water employees, Survey results are being used to improve to deliver the capital program was implemented in October following the effectiveness of face-to-face and › Greater business focus on reduction of negotiations between employee and intranet-based communication. expenditure, with work moved in-house union representatives and management. It will operate until June 2010.

Key performance indicators – our people, our workplace

2006/07 2007/08

Target Result Target Result Target met

Our people

Number of Lost Time Injuries: › Melbourne Water people 0 3 0 2* × Case study: Making a positive difference

› Major contractors 0 2 0 4** × Peter O’Bree last worked at Melbourne Water in the old Board “We work more closely together and really help each Maintain Safety MAP accreditation Yes Yes Yes Yes of Works days. Returning recently as Team Leader, Northern other along. For our team, this has meant that we Operations, he is surprised and delighted by the changes he finds. move through tasks more quickly, with high quality Turnover (%) 5-10 9 10 9.1 finished products because they have been developed as “It’s communication, the way people talk to each other,” he a collective group. It has been a great opportunity for Absenteeism (days per person per year) 2.7 2.4 2.7 2.4 says. “Everyone is more cooperative, on a more equal footing. people to get to know each other and feel confident and supported enough to share new and different ideas. Our Workplace “(Managing Director) Rob Skinner, for example, will come out and talk to the water supply operators on an equal level. If someone “It has helped me to develop my leadership skills Implement a sustainability education program across 50 89 80 89 makes a mistake, they feel no need to try and hide it. They can and better understand not only the strengths in my the organisation: % of employees who believe their speak up and work through how to rectify it without reprisal.” personal sustainability performance has improved personality, but also the areas I need to work on.” through Melbourne Water’s education and influence Peter puts this down to an improved workplace culture. Joanne says that the preferred culture program has given her Minimise everyday environmental impacts: 2% decrease 9% increase*** × He describes Melbourne Water as a positive and constructive an opportunity for personal and professional development, and Cumulative reduction in office water consumption place to work. its importance is recognised throughout the organisation. per full-time equivalent (FTE) employee (%) Joanne Hand (pictured), a River Health Program “It is also great to be able to more formally Cumulative reduction in paper use per FTE (%) 4% decrease 4% decrease Leader, has noticed a real difference in the two recognise the development of this culture through years she has worked for Melbourne Water. Cumulative reduction in office 2% decrease 33% × performance and development plans,” she says. waste to landfill per FTE (%) increase**** “I have seen the benefits colleagues can get from behaving Cumulative reduction in office 2% decrease 5% × constructively, both personally and professionally,” she says. energy consumption per FTE (%) increase*****

Target met Target exceeded × Target not met * Target was not achieved due to the occurrence of two Lost Time Injuries for Melbourne Water employees ** Target was not achieved due to the occurrence of four Lost Time Injuries for Melbourne Water contractors *** Target was not achieved because of a leaking cooling tower and an increased proportion of employees taking showers after walking or cycling to work **** Target was not achieved. The 2006/07 baseline was calculated as a result of a one-day audit in June 2006. Increased auditing this year has enabled a more comprehensive assessment of Melbourne Water’s office waste practices over the year, leading to a new and higher baseline for 2008/09 and beyond ***** Target was not achieved despite a range of initiatives. An energy audit will help identify areas for improvement.

66 Melbourne water sustainability report 2007–2008 67 Goals related to business efficiency › Increase business value through innovation and efficiency › Balance investments and levels of service and risk › Maximise resource efficiency › Ensure investment decisions are sustainable › Deliver planned shareholder returns › Provide efficient and effective capital planning processes and maintenance programs › Develop and implement efficient capital investment and operations programs

Key achievements Disappointment › Introduced a system of › Our net profit after tax was halved alliance contracting to deliver to $67.6 million due to higher a significantly increased operating expenditure including capital program employee and borrowing costs to support our significantly increased › Introduced a capital management capital works program, system to monitor and control our depreciation and a writedown of extensive capital works program superannuation assets due to and align it with business plans market conditions and employee › Established a range of information defined benefit obligations. technology upgrades to improve business efficiency Challenges › Performed strongly in › Delivering our significantly sustainability benchmarking increased capital program on time comparing national and and within budget through the international utility leaders’ new alliance contracting system economic, environmental Business and social performance › Delivering cost efficiencies in an environment of increasing costs › Completed preparations to transfer to a new emergency › Continuing to integrate risk management system, which will management systems and efficiency improve alignment with the water triple bottom line assessment industry, emergency services across the business and government agencies. › Working with the retail water businesses to reduce industry costs in shared services › Continuing to maintain rigorous business contingency and emergency response plans.

Kayaking on Patterson’s river

68 Melbourne water sustainability report 2007–2008 69 Overview Solid financial Transforming our Security and emergency Upgrading information Sustainability performance capital delivery management technology benchmark Melbourne Water manages water supply, sewerage and drainage assets valued at This year, we made payments to the Melbourne Water introduced sweeping In 2007/08, water and sewerage services A key element of optimum business Global sustainability benchmark $8.7 billion. Victorian Government of $114.6 million, changes to the way we work with our were declared essential services in relation performance is delivering information results released this year confirm that comprising a dividend of $99.4 million, business partners in the sustainable delivery to the Terrorism (Community Protection) technology systems that improve Melbourne Water ranks among national Water supply and sewage treatment income tax equivalent payments of $6.3 of new infrastructure. Act 2003. As an operator of declared efficiency, manage information and data, and international water industry leaders charges, trade waste charges and drainage million, a financial accommodation levy essential services, Melbourne Water is and provide robust, reliable service. in economic, environmental and social rates generate our annual operating of $5.8 million and local government rate To manage significantly increased required to prepare a risk management plan performance. revenue of more than $500 million. equivalents of $3.1 million. We also made capital expenditure, Melbourne Water for preventing and responding to a terrorist Our Information Technology Strategy established alliance contracts that align includes development of an IT asset The Sustainable Asset Management Group This funds our operations and payments to Government of $26.1 million attack, and prepare and participate in a the values and objectives of project management plan, secure storage through (SAM) manages the Dow Jones Sustainability infrastructure projects including water, in land tax and $2.9 million in payroll tax. training exercise at least once a year to partners and provide commercial data warehouse services, upgraded World Indexes (DJSI), which identify global sewerage and drainage upgrades and test the plan. We are analysing our systems We invested $417.8 million incentives for superior performance. SCADA system capabilities, upgrades to the sustainability leaders on the basis of water recycling schemes, as well as and processes, identifying any gaps and ($226.7 million last year) in capital works. desktop operating environment, electronic financial, environmental and social criteria. works to protect and improve waterways, developing a compliance action plan. Operating revenue was $600.3 million, The contracts, which involve Melbourne document management and an expanded SAM research is also the basis for the wetlands and the bays. which was $27.3 million below plan. Water and our partners working together Melbourne Water completed preparations telecommunications microwave network. Australian SAM Sustainability Index ‘AuSSI’. as a single team, are based on shared We meet the challenges of population to transfer our emergency management Operating expenditure was $405.9 million, responsibility. They help the organisation We completed the first phase of Livelink, The 2006/07 international and national growth, climate change impacts, changing process (PERforM) to a new process called which was $16.8 million below plan. attract a skilled and motivated workforce, an electronic records management system sustainability benchmarking exercise land use patterns and the need to General Emergency Management System Net profit after tax was $67.6 million and retain and develop our people in times project, which has replaced the existing highlighted that Melbourne Water’s score secure new water sources by focusing on from 1 July 2008. compared with $133.5 million last year. of labour shortages in the water sector. paper-based records management system. increased from the previous year from 69% business efficiency, long-term planning This process is based on the Australasian to 71%, while the leading water utility and risk management. Total assets increased from $3979 million The collaborative approach enables us to Inter-agency Incident Management System, Introduction of mobile computing company increased from 70% to 74% – last year to $4436.3 million. Borrowings achieve more with greater efficiency, obtain which is the new standard for the water capabilities has enabled more efficient this placed us a mere 3% behind the leader. increased by $305 million to support our value for money though economies of scope industry. The change will improve our system work practices for key water and increased capital works program. and scale, secure resources and promote alignment and ability to exchange information sewerage operations people, and new data On the Australian Sustainable Asset innovation, new ideas and new technologies. with the water industry, emergency services communications services have been provided Management Sustainability Index for We achieved a return on equity of and government agencies. to Melbourne Water locations including 2006/07, Melbourne Water increased 3.4% compared with our plan of 5.1%. We selected key alliance partners to work Mt Waverley, Warburton and Maroondah. its score from 69% in 2005/06 to 71% in with us on the Sugarloaf Pipeline and Training workshops on the new process 2006/07, while the best scoring Australian At 30 June 2008, the total book value established five-year alliance programs to were conducted in April, May and June utility company rose from 73% in 2005/06 of our interest-bearing liabilities was deliver major works on sewage treatment for Melbourne Water people. It will be to 76% in 2006/07. This placed us only 5% $1629.2 million. Our gearing ratio of and pumping stations, waterways and tested in 2008/09 as part of an behind the leader. 45.1% (41.3% last year) was within stormwater quality, water supply and industry emergency exercise that our target range. pipelines (sewerage and drainage). supports compliance with the Act. These assessments were the most recent as of 30 June 2008. In October, we hosted the Water Services 700 Infrastructure Assurance Advisory Group Operating revenue ($M) Operating Expenditure ($M) Capital Expenditure ($M) meeting in Melbourne. This is a valuable forum for sharing information relating to 600 600 national water industry security, business resilience and emergency management in the water sector. Presentations 500 500 500 covered pandemic planning, emergency and incident management, and security. 400 400 400

300 300 300

200 200 200

100 100 100

0 0 0 2005/06 2006/07 2007/08 2005/06 2006/07 2007/08 2005/06 2006/07 2007/08

WATER SALES DEPRECIATION & AMORTISATION CORPORATE SEWAGE DISPOSAL CHARGES OPERATIONAL DRAINAGE DRAINAGE RATES EMPLOYEE BENEFITS SEWERAGE DEVELOPER CHARGES & CONTRIBUTIONS REPAIRS & MAINTENANCE WATER BIOLOGICAL ASSETS REVENUE ADMINISTRATIVE DRAINAGE BOUNDARY EXPANSION ASSETS FINANCE COSTS OTHER REVENUE OTHER EXPENSES

70 Melbourne water sustainability report 2007–2008 71 Agribusiness at An investigation has begun to review the New waterways charge Key performance indicators – financial the Western strategy and define the onsite recycled water requirements for salinity and soil Melbourne Water has introduced a new Treatment Plant management to stabilise soil degradation waterways and drainage charge. The charge 2006/07 2007/08 and improve biological health for onsite will be applied to about 170,000 properties Melbourne Water invited private sector environmental requirements. The findings in our extended waterways and drainage Target Result Target Result Target met agribusiness organisations to tender from these investigations will be confirmed operating areas, and replaces the drainage expressions of interest and ideas for running when field trials are finalised with input rate that applied to 1.5 million properties Maintain financial viability a mixed primary production enterprise on from the private sector partner. in other parts of the Port Phillip and 5000 hectares of land at the Western Westernport region. BEVA (Business Economic Value Added) margin (%) -0.7 0.5 1.1 -1.8* × Treatment Plant. The potential impacts from the agricultural scenarios under consideration are being The new charge provides funds to support Meet regulated Water Plan operating expenditure ($M) 186.8 178.6 221.1 228.0** × This land is currently managed by discussed with environmental regulators. Melbourne Water as part of a buffer zone river health, stormwater management and water sensitive urban design, urban Earnings before interest and taxes interest cover – actual 2.9 3.0 2.3 1.9*** × that surrounds the sewage treatment Expressions of interest from potential (times) development planning and approvals, and designated conservation areas. operators were assessed in June. A shortlist flood protection, and drainage maintenance will be determined in late 2008. Cash returns to Government (dividend + tax + financial 126.9 117.4 145.0 114.6**** × Following a change to sewage treatment and improvements. accommodation levy + local govt rate equivalent) ($M) processes at the site, we developed The selected organisation will have the In June, the Essential Services Commission and endorsed a land use strategy for capability and capacity to operate an approved the charge, which comes into Gearing (interest-bearing debt/interest-bearing debt + equity) 43.1 41.3 51.2 45.1 the property based on sustainability agriculture enterprise on a concession – actual (%) effect from July 2008 and is collected for principles in 2006. basis. Options for the enterprise and its Melbourne Water by the retail water sustainability benefits could include Return on equity – actual (%) 6.0 7.1 5.1 3.4***** × businesses and other water authorities. Using a triple bottom line assessment, reduced greenhouse gas emissions through the strategy recommends a land use system less livestock and more sequestration Target met Target exceeded × Target not met that maximises sustainability, protects activities, and increased biodiversity * Target was not achieved due to lower than expected operating profit as a result of lower operating revenue and higher operating expenses. conservation values and allows for future across the site through a greater mix ** Target was not achieved following an $18.3 million reduction in surplus relating to Melbourne Water’s defined benefit superannuation fund. agriculture development opportunities. of crops, fodder and agro-forestry. This expense was not included in the plan. If $18.3 million was excluded from the actual result, the KPI would have been achieved. The economic component of the assessment *** Target was not achieved due to lower than expected profit before interest and tax of $44.1 million as a result of lower operating revenue cannot be confirmed until the exact mix ($27.8 million) of which $19.7 million relates to lower water, sewerage and drainage revenue, and higher operating expenses ($10.1 million). of agricultural activities and financial **** Target was not achieved due to the deferral of payment of the interim dividend of $43.6 million in accordance with advice outcomes are confirmed by field trials from the Department of Treasury and Finance. (The target would have been achieved if the interim dividend was paid in April 2008). and market assessment. ***** Target was not achieved due to lower than expected net profit after tax (of $26 million). This was largely as a result of reduced water and sewerage income, and unplanned superannuation adjustment.

Case study: New system streamlines capital management

A major IT development is improving efficiency and It will also: strengthening governance of Melbourne Water’s capital program. › Clarify processes (commensurate with the level of Our new capital management system will enhance control risk), roles and responsibilities, and ensure that the and reporting of capital projects by improving access to delivery process is documented and auditable information, including linking projects back to the Corporate Plan and Water Plan. › Provide a consistent view of all capital projects (commensurate with the level of risk), enabling projects to be consolidated The two-stage capital management system project began into planning and delivery programs, and outcomes by reviewing and redesigning business processes. The reviewed against the Corporate Plan and Water Plan system was developed to support these new business processes and provides a consistent interface (portal) that › Clearly define and automate the project approval process integrates the organisation’s finance system, electronic › Improve accessibility to information and transactions document management system and other systems. to reinforce accountability and collaboration. The capital management system will reduce the time required to track, monitor and report on projects throughout their lifecycle.

72 Melbourne water sustainability report 2007–2008 73 Corporate governance and risk management

Ethics and values Our governance › Re-consideration of the charter The capital prioritisation process uses risk Insurance and Statement of procedures and required frequency of assessment as a key tool for determining incident management Obligations Melbourne Water’s directors and employees meetings of the Environment the need for and relative timing of framework are committed to operating ethically It is Melbourne Water’s policy to adopt and Public Health Committee investments. Operational risks are managed The Statement of Obligations was and in the best interests of the Victorian by the organisation daily and through appropriate corporate governance practices › An increase in preparedness of the To further mitigate the commercial, social issued by the former Minister for Government, customers, employees, specialised management systems. and regularly review them to ensure that Board to challenge the status quo. and environmental impact of risk occurrence, Water, Environment and Climate suppliers and other stakeholders. The Board we are up to date with best practice. Change effective from 28 July 2004, Current initiatives to improve To assist in the strategic management of Melbourne Water has a robust emergency has adopted a Director’s Code of Conduct. and formalises Melbourne Water’s governance arrangements include: risks at an organisational level, Melbourne and incident management framework coupled Initiatives to improve Board and management obligations to government, not generally All directors, managers and employees Water has identified 14 key strategic with a comprehensive insurance portfolio. processes include continued development of prescribed in other legislation or licences. are expected to perform their duties with › Ongoing monitoring and improvement risks (see diagram below) and assessed the Board Extranet so that Board members As part of this framework, Melbourne Water The Statement of Obligations formalises integrity and honesty. This expectation of governance arrangements where each risk based on the current risk level can have fast and convenient access to all has developed comprehensive emergency obligations in the following areas: extends to dealing with each other, alliance agreements have been entered (likelihood + consequence) and our current Board documents and Melbourne Water management and contingency plans, customers, suppliers and the community. into, including the Sugarloaf Pipeline assessment of control effectiveness. information. The Extranet also makes which are regularly tested and reviewed. › Water Plan Melbourne Water employees and alliance and the four program alliances electronic Board and Committee papers In addition to local emergency management › Governance and risk management managers must comply with Melbourne › Continuing work to improve Melbourne Melbourne Water available to leadership team members. arrangements, Melbourne Water has Water’s Code of Conduct. Water’s legislative compliance systems. › Planning and service delivery strategic risk profile assisted in the development of industry Melbourne Water’s internal auditor, response plans and protocols in conjunction › Environmental management Policies and procedures exist for directors Deloitte Touche Tohmatsu, completed Melbourne Water actively manages strategic Risk management with the retail water businesses and and employees in relation to the the third year of its three-year assignment risk with a strong continuous improvement › Waterways and drainage government departments/agencies that identification of actual and potential to assist the Board in assessing its Melbourne Water adopts a balanced focus. Melbourne Water’s risks will continue prescribe roles and responsibilities in the › Reporting conflicts of interest. The Corporate Secretary performance. A number of areas for approach to risk management which to be managed through a robust risk event of a large-scale incident. › Compliance. maintains a register of any gifts or invitations possible improvements were identified considers our commercial, social and management framework comprising major accepted by directors or employees. by Deloitte Touche Tohmatsu including: environmental responsibilities having elements such as: certified management Melbourne Water’s Board monitors regard to short and long-term goals. Risk systems; appropriately skilled people and Audits and risk reviews compliance with the Statement of In maintaining a safe and enjoyable › Strategy direction setting and management is utilised to ensure Melbourne sound operational procedures; a robust Obligations and will report any non- working environment, the Board has Melbourne Water seeks to continually understanding the impact Water understands our business risks and capital works program and sound compliance to the Minister. approved various behavioural and reassess its risk profile through external of Government policy that they are managed in a consistent technological applications such as our workplace policies for specific purposes, reviews by subject matter specialists and The Statement of Obligations was › Seeking opportunities for manner. The effective and efficient SCADA, Asset Management and GIS systems; such as occupational health and safety, a comprehensive risk-based internal audit amended in June 2008 to implement Melbourne Water to gain more management of risk is central to the and close working relationships with the discrimination and harassment, and equal program. In addition to these reviews, the Victorian Government’s August benefit from strategy sessions achievement of our sustainability vision. water industry, government departments, opportunity. These policies are distributed Melbourne Water undertakes a formal 2007 announcement that an interim councils, developers and the community. self-assessment annually to assess the and widely publicised to our employees › Improvement of the depth of We adopt a ‘whole of business’ approach by real price increase of 14.8% would current management of risks and the for their information and assistance. understanding of risk management considering risks in the following focus areas: apply for one year from 1 July 2008. identification of new or emerging risks › Infrastructure and resource management and opportunities. The results of these reviews are presented to the Board via › Stakeholder relations the Audit and Corporate Risk Committee, › People which actively oversees risk management Attestation on Compliance with the › Public health at Melbourne Water. Australian/New Zealand Risk Management Standard › Environment (Minister for Finance Standing Direction 4.5.5 Risk Management Compliance) › Reputation and image Melbourne Water strategic risk profile I, Cheryl Batagol, certify that: › Corporate governance • Melbourne Water has risk management processes in place consistent › Commercial with the Australian/New Zealand Risk Management Standard; and › Information management HIGH CONTINUE TO MONITOR ACTIVELY MANAGE AND REVIEW › Economic regulation. • an internal control system is in place that enables the executive WATER KEY STAKEHOLDER ENVIRONMENTAL WATER to understand, manage and satisfactorily control risk exposures; and To effectively manage risks across SUPPLY & COMMUNITY DAMAGE TO SUPPLY (QUALITY) RELATIONSHIPS WATERWAYS/BAYS (QUANTITY) the organisation, risk assessments are • the risk profile of Melbourne Water has been conducted on a regular basis to identify: critically reviewed within the last 12 months; and FINANCIAL WATER HEALTH, RECYCLED BIOSOLIDS AND VIABILITY & PLAN SAFETY & WATER BY-PRODUCTS › The likelihood or probability GOVERNANCE OBLIGATIONS SECURITY (QUANTITY (QUANTITY & QUALITY) & QUALITY) • the Audit and Corporate Risk Committee verifies this assurance. of a risk occurring FLOODING MAINTAIN › The consequence of a risk occurring (QUANTITY) ASSET CAPITAL RENEWABLE KNOWLEDGE LIFECYCLE DELIVERY & SKILL BASE ENERGY › The effectiveness of mitigating strategies in place to manage risks. CURRENT RISK LEVEL

Cheryl Batagol Chairman Melbourne Water Corporation LOW NO MAJOR CONCERN MAINTAIN WATCHING BRIEF

HIGH CONTROL EFFECTIVENESS LOW

74 Melbourne water sustainability report 2007–2008 75 Board of Directors Melbourne Fund and a director of Tintern Mary Anne Hartley Powers and This statement includes details of approach to the management of economic Schools. Ms Batagol has also been on EPA BA (Hons), LLB (Hons) accountability Melbourne Water’s policy framework, and business risks, reviewing and evaluating From 1 July 2007, Melbourne Water has Victoria’s Environment Council Board and Director which specifies that Board approval is the adequacy and effectiveness of internal, operated under the Water Act 1989. the Board of the Cooperative Research Centre Mary Anne Hartley was appointed to the Until 1 July 2007, the Board operated required for Melbourne Water policies operating, accounting and compliance for Pollution Control and Management. Board on 1 July 2002. A practising barrister, under the provisions of the Melbourne that deal with high-risk issues, including controls and risk management practices, The Minister for Water, in consultation with the Ms Hartley has been a director of several Water Corporation Act 1992 (Vic.). the environment and public health. and ensuring the organisation is operating Treasurer, appoints our directors for terms of Merran Kelsall, government corporations in the maritime within an effective governance framework. up to four years and the Victorian Government B.Com (Hons), FCA, MBA Key features of the Board’s and energy sectors. Before joining the Bar in From 1 July 2007, Melbourne Water sets their remuneration. Directors are eligible Deputy Chairman activities are that: In carrying out its functions for the year, 1997, Ms Hartley was a partner in a national has operated under the Water Act 1989. for reappointment for subsequent terms. Merran Kelsall was appointed to the Melbourne Water has two current the Audit and Corporate Risk Committee law firm where she practised in insurance › It has formal Board meetings In making new appointments to the Board, Board on 1 January 2001. Ms Kelsall, by-laws, Water Supply Protection No 1 has had unrestricted access to appropriate and health law. 11 times a year, undertakes site the Government ensures the Board has the an independent company director and (2006) and Waterways and Drainage internal and external expert advice. visits and participates in business necessary combination of skills and experience. consultant, has considerable experience Terry Larkins Protection No 2 (1998). strategy workshops with Melbourne At 30 June 2008, the committee comprised in financial services, health and utilities. PSM The Managing Director is appointed by Water’s leadership team Merran Kelsall (Chairman), Peter Darvall and She is a former partner of a chartered Director The Minister has delegated powers of the Board, subject to the approval of the Terry Larkins. A report about the activities of accounting firm. management under the Water Act relating › Monthly updates on Board activities Minister in consultation with the Treasurer, Terry Larkins was appointed to the Board on to licensed private water diversions from are made available to all employees the committee in fulfilling its charter is for a term of up to five years. Annual reviews Bruce Cohen 1 January 2004. Mr Larkins was appointed waterways to Melbourne Water, effective prepared annually. › Regular strategy workshops are held are conducted of the performance of the LL.B (Hons), M.Comm (Hons), Chairman of Western Water in 2001. He has 1 July 1999. The Water Act and by-laws with relevant stakeholder groups Board as a whole and of individual members. PhD (Pub Pol) extensive experience in the water industry can be purchased from the Information Human Resources and Professional development opportunities are Director and local government including Secretary of Victoria bookshop, 356 Collins Street, › A structured induction program exists Safety Committee made available for Board members. the former Gisborne Water Board and Chief Melbourne (telephone 1300 366 356). for new Board and committee members This committee assists the Board in fulfilling (Resigned effective from 21 August 2007) Executive of the Shire of Gisborne. He has › Board papers are available to all its responsibilities relating to human resource This year, external expertise was utilised in the During 2007/08, the following Ministers been a member of the VicWater Board since directors seven days before meetings issues, remuneration, and workplace health performance assessment of the Board. Pursuant Bruce Cohen was appointed to the Board were responsible for Melbourne Water. 2005 and chair from 2007/08. He is active in in hard copy or electronically and safety. For details of directors’ and to Melbourne Water’s obligations under the on 1 January 2007. Dr Cohen is a barrister The Honourable John Thwaites was a number of community groups including executives’ remuneration, refer to notes Statement of Obligations issued by the Minister, and a principal in private practice in the Minister for Water, Environment and › Conflicts of interest are declared and health services, conservation and education. 25 and 26 of the Financial Statements. the outcomes of the performance review area of public policy. He is a director of Climate Change until 29 July 2007, the a director does not participate in are reported to the Treasurer and Minister. VicTrack, and was previously a director Carolyn Schultz Honourable John Brumby was Minister decisions where such a conflict exists At 30 June 2008, the committee comprised The Board of Directors currently comprises a of VENCorp and Snowy Hydro Limited. BSc (Hons), PhD for Water, Environment and Climate Change › Directors have the right to Terry Larkins (Chairman), Cheryl Batagol and non-executive Chairman, seven non-executive Director from 30 June 2007 to 2 August 2007, Peter Darvall seek independent professional Merran Kelsall. A report about the activities directors and the Managing Director. and the Honourable Tim Holding was AO, BE (Hons) Melb, MS Ohio State Carolyn Schultz was appointed to the advice, at Melbourne Water’s of the committee in fulfilling its charter is Minister for Water from 3 August 2007. Cheryl Batagol MSE MA PhD Prin. DipEd FIE Aust. Board on 1 January 2000. Dr Schultz is a expense, in connection with their prepared biennially. Chairman FTSE HonLLD researcher and educator in plant-based duties and responsibilities agri-food sciences, based at Adelaide We work with officials in the Department Cheryl Batagol was appointed Chairman Director › Declarations of pecuniary interest Environment and Public University, and a graduate of the Australian of Sustainability and Environment, together on 1 January 2004. Ms Batagol has more with those in the Department of Treasury by directors are made annually, Health Committee Peter Darvall was appointed to the Board Institute of Company Directors. than 30 years’ experience in the waste and Finance. They receive statutory and with procedures for updating that This committee assists the Board in on 1 January 2004. Professor Darvall was management industry, including commercial, other reports covering our performance information between declarations fulfilling its responsibilities relating to previously the Vice-Chancellor and President Peter Vines industrial and trade waste management against objectives and performance environmental sustainability and public of Monash University as well as Vice- Director › There is an annual review and treatment. She is Deputy Chair of indicators in the Corporate Plan. health. The committee encourages continuous President for Research and Development of Board performance. Sustainability Victoria and was previously Peter Vines was appointed to the Board improvement of, and monitors adherence to, and Dean of Engineering at Monash. Chair of EcoRecycle Victoria and a director of on 1 October 2005. He has extensive Melbourne Water’s environmental and public He has served on the boards of many Primary responsibilities Committees City West Water and Southern Rural Water. experience in senior executive positions health policies and procedures at all levels. research organisations, including the Ms Batagol is a member of the Victorian within the energy and infrastructure sector, Melbourne Water’s Board has a charter Cooperative Research Centres for The Board has four sub-committees, each Catchment Management Council, a member holding directorships in various utility that defines its role and responsibilities. At 30 June 2008, the committee Catchment Hydrology, Water Quality comprising at least three non-executive of the Australian Industry Group Victorian companies in Australia and internationally. The Board makes plans to achieve specific comprised Mary Anne Hartley (Chairman), and Treatment, and Freshwater Ecology. directors, who meet periodically to focus on Branch Council, a trustee of the Sustainable objectives, which include: audit and corporate risk, human resources and Cheryl Batagol, Rob Joy (independent Rob Skinner safety, environment and public health, and member) and Carolyn Schultz. A report DipCE, BE (Hons), MSc (Birm) › The establishment of long- capital planning and delivery, respectively. about the activities of the committee in Managing Director term outcomes based on a fulfilling its charter is prepared biennially. Rob Skinner was appointed Managing triple bottom line approach The Managing Director attends meetings Director of Melbourne Water in February › The approval of budgets together of committees by invitation. The Board Capital Planning and 2005. Prior to joining Melbourne Water, with key performance indicators approves each committee’s charter. Delivery Committee he was Chief Executive of Kingston City linked to objectives This committee assists the Board in fulfilling Council for 10 years, and held a number › The approval of annual financial Audit and Corporate its governance responsibilities relating to the of senior positions including Chairman, statements and the monitoring of Risk Committee planning and delivery of capital projects. Southern Rural Water, General Manager performance against objectives and risks The role of the Audit and Corporate Water Services with Melbourne Water, Risk Committee is to assist the Board of At 30 June 2008, the committee comprised Chief Executive of Dandenong Valley › Monitoring of safety, health Directors in fulfilling its responsibilities Peter Darvall (Chairman), Terry Larkins and and Western Port Authority, and Chief and environmental standards relating to risk management, financial Peter Vines. A report about the activities of Executive, Coode Island Review Panel. and management systems. management and operational control the committee in fulfilling its charter is The Board has ratified a Corporate practices, and compliance with relevant prepared annually. Governance Policy and prepared a laws and regulations. Key responsibilities Statement of Corporate Governance include reviewing Melbourne Water’s Melbourne Water’s Board at the De Chene Reserve outlining Melbourne Water’s corporate shaft site for the Northern Sewerage Project. governance framework and arrangements. (L to R) Jane Denton, Terry Larkins, Mary Anne Hartley, Rob Skinner (Managing Director), Carolyn Schultz, Peter Darvall and Cheryl Batagol (Chairman). (Absent: Merran Kelsall and Peter Vines)

76 Melbourne water sustainability report 2007–2008 77 Organisational structure Financial Report On 1 May, Melbourne Water introduced a new organisational structure to ensure strategic planning and efficiency drives our performance and the delivery of our long-term vision.

The structure aims to create a renewed focus on innovation to provide financial and environmental Table of Contents Page sustainability. It is based on the idea that our people and contractors responsible for operating and Five-year financial summary 80 managing assets should have responsibility for maintaining them. Directors’ Report 81 Financial Statements Income Statement 84 The Board of Melbourne Water Balance Sheet 85 Cash Flow Statement 86 Melbourne Water’s leadership team Statement of Changes in Equity 87 Notes to the Financial Report Note 1 summary of significant accounting policies 88 Note 2 financial risk management objectives and policies 94 Managing Director Rob Skinner Note 3 income Statement – Revenue and other income disclosures 95 Note 4 income Statement – Expense disclosures 96 Note 5 income tax 97 General Manager Strategic Responsible for strategies and long-term projects to achieve sustainable Ben Furmage Planning outcomes for the organisation and community including corporate Note 6 Current assets – Cash and cash equivalents 98 (from july 2008) strategy, pricing and regulation and major planning strategies across Note 7 Current assets – Trade and other receivables 98 water and sewerage systems, energy and greenhouse management and the adoption of innovative technologies and scientific research. Note 8 Current assets – Other current assets 99 Note 9 Current assets – Non-current assets classified as held for sale 99 General Manager Asset Responsible for planning for the assets and systems required to meet Note 10 Current assets – Other financial assets 99 Paul Pretto Planning the medium to long-term business objectives and strategies established Note 11 Current and Non-current assets – Biological assets 100 (from May 2008) by Strategic Planning. This includes capital investment prioritisation for the creation of new assets to meet growth, compliance and risk Note 12 nOn-current assets – Property, plant and equipment and Intangible assets 102 management objectives, and the requirements and parameters for Note 13 nOn-current assets – Other receivables 104 managing our existing asset base. Note 14 nOn-current assets – Defined superannuation benefit asset 104 Note 15 Current liabilities – Trade and other payables 104 General Manager capital Responsible for the delivery of our capital works program including David Morse delivery the management of the program alliances to ensure delivery on time, Note 16 Current liabilities – Interest bearing liabilities 104 (from April 2008) on budget and functionality of our capital works. Note 17 Current liabilities – Provisions 104 Note 18 Current liabilities – Other financial liabilities 104 Note 19 Current liabilities – Current tax liability 104 General Manager operations & As the custodian of our existing assets, responsible for the operation and Note 20 nOn-current liabilities – Trade and other payables 104 Tony Antoniou maintenance maintenance of our water, sewerage, waterways and drainage assets in accordance with public health, environmental, safety and regulatory Note 21 nOn-current liabilities – Interest bearing liabilities 105 obligations consistent with community expectations. Note 22 nOn-current liabilities – Provisions 105 Note 23 nOn-current liabilities – Deferred tax liabilities 105 Note 24 Contributed equity 105 General Manager Waterways Responsible for managing stormwater and floodplains to protect the Chris Chesterfield environment and provide a safe level of flood protection for communities; Note 25 reserves 106 planning infrastructure to service urban development; and programs to Note 26 retained profits 106 protect and improve the health of the region’s rivers, creeks and wetlands. Note 27 financial instruments 107 Note 28 segment information 110 General Manager Business Responsible for the support of all areas of Melbourne Water by Note 29 Commitments 112 Malcolm Haynes Services developing, implementing and maintaining strategies, systems, policies and procedures in relation to finance, supply, information technology, Note 30 Contingent assets and liabilities 114 risk and insurance, property, legal services (including Board support) Note 31 dividends 114 and the management of the Werribee Agriculture business. Note 32 events occurring after balance sheet date 114 Note 33 remuneration of auditors 114 General Manager Human Responsible for strategies, policies and procedures in health and safety, Leigh Keath Resources culture and leadership and delivering a great experience for employees. Note 34 provisions 115 (from Dec 2007) Also responsible for payroll, recruitment, training, graduate and traineeship Note 35 employee benefits 115 programs, internal communications, and reward and recognition schemes. Note 36 defined superannuation benefit 116 Note 37 related party transactions 117 General Manager Communications Responsible for developing and implementing communication Note 38 responsible persons related party disclosures 121 Anne Randall & community programs including policy, community education, media relations, Note 39 remuneration of executives 123 (from AUG 2007) relations website development and publications. Note 40 key management personnel compensation 123 Note 41 reconciliation of net cash provided by operating activities to net profit 124 Statement by Directors and Chief Finance Officer 125 Grant Wilson was general Manager, strategy and planning, until March 2008 Eamonn Kelly was General Manager, Infrastructure, Until March 2008 Auditor-General’s report 126

78 Melbourne water sustainability report 2007–2008 79 Five-year financial summary Directors’ Report

Income Statement 2004 2005 2006 2007 2008 For the year ended 30 June $M $M $M $M $M Directors

Revenue and other income 503.8 525.6 592.6 588.3 600.3 The Directors of the Corporation in office, at the date of this report, are:

Profit from continuing operations 179.5 192.7 227.7 177.4 93.5 Cheryl Batagol (Chairman) Terry Larkins before income tax expense Merran Kelsall (Deputy Chairman) Carolyn Schultz Peter Darvall Peter Vines Less: Income tax expense 56.1 61.3 59.0 43.9 25.9 Mary Anne Hartley Robert Skinner (Managing Director)

Particulars of the Directors’ qualifications, experience and special responsibilities are set out on pages 76, 77 and 78 of this report. Net profit 4.0 131.4 168.7 133.5 67.6 Directors’ meetings Dividends paid 95.7 41.3 97.0 86.6 99.4 During the financial period, the Corporation held 11 meetings of Directors. Attendance at meetings of the Board and its Committees were:

Balance Sheet 2004 2005 2006 2007 2008 As at 30 June $M $M $M $M $M Principal Audit & Human Environment Capital Planning Board Corporate Risk Resources & & Public Health & Delivery Current assets 44.3 53.2 51.3 56.3 66.6 Committee Safety Committee Committee Committee Maximum Maximum Maximum Maximum Maximum Non-current assets 3,087.5 3,579.5 3,717.4 3,912.6 4,369.7 Attended Possible Attended Possible Attended Possible Attended Possible Attended Possible Total assets 3,131.8 3,632.7 3,768.7 3,968.9 4,436.3 Cheryl Batagol 10 11 4* 5 2 3 2 2 4* 4 Merran Kelsall 6 11 4 5 2 3 – – 4* 4 Bruce Cohen# 2 2 – – – – – – – – Current liabilities 367.6 302.3 247.2 382.2 542.3 Peter Darvall 11 11 5 5 – – – – 4 4 Non-current liabilities 1,355.0 1,523.1 1,681.4 1,700.6 1,907.1 Mary Anne Hartley 10 11 – – – – 2 2 – – Total liabilities 1,722.6 1,825.4 1,928.6 2,082.8 2,449.4 Terry Larkins 11 11 5 5 3 3 – – 4 4 Carolyn Schultz† 5 11 – – – – 1 2 – – Peter Vines 10 11 – – – – – – 4 4 Net assets 1,409.2 1,807.3 1,840.1 1,886.1 1,986.9 Robert Skinner 9 11 3* 5 3* 3 0* 2 3* 4 Total equity 1,409.2 1,807.3 1,840.1 1,886.1 1,986.9 * Attended by invitation # Resigned as Board Member from 21 August 2007 † Granted leave of absence July to December 2007

Director benefits The following should be considered when reviewing the five-year financial summary: No Director has received or become entitled to receive a benefit (other than a benefit included in notes 38a and 38b to the Following adoption of Australian equivalents to International Financial Reporting Standards (AIFRS), financial information disclosed from financial statements) because of a contract that the Director, a firm of which the Director is a member, or an entity in which the financial year ended 30 June 2005 has been prepared in accordance with AIFRS Accounting Standards. Accordingly, financial information the Director has a substantial financial interest, has made (during the period ended 30 June 2008 or at any other time) with: disclosed prior to the financial year ended 30 June 2005 has been prepared in accordance with Australian Accounting Standards (AGAAP). (a) the Corporation; or

(b) an entity that the Corporation controlled, or a body corporate that was related to the Corporation, when the contract was made or when the director received, or became entitled to receive, the benefit.

Director and officer liability insurance During the financial year, the Corporation paid insurance premiums in respect of director and officer liability insurance.

The policies do not specify a premium for individual directors and officers.

The director and officer liability insurance provides cover against all costs and expenses involved in defending legal actions and any resulting payments arising from a liability to persons (other than the Corporation) incurred in their position as director or officer unless the conduct involves a willful breach of duty or an improper use of information or position to gain advantage.

The terms of the policy of insurance, prohibit the disclosure of the nature of the liabilities insured and the amount of the premium.

Interest in contracts No contracts involving Directors’ interests were entered into since the end of the previous financial year, or existed at the end of the financial year, other than the transactions detailed in Notes 38a and 38b to the Financial Statements.

80 Melbourne water sustainability report 2007–2008 81 Principal activities Implementation of the Victorian Industry Participation Policy (VIPP) The Corporation is owned by the Victorian Government. The Corporation manages Melbourne’s water supply catchments, In accordance with the Victorian Industry Participation Policy Act 2003, the following removes and treats most of Melbourne’s sewage, and manages rivers, creeks and major drainage systems throughout the VIPP contracts commenced or were completed during the financial year: Port Phillip and Westernport region. The Corporation also provides water and sewerage services to Melbourne’s three retail water businesses: City West Water Ltd, South East Water Ltd and Yarra Valley Water Ltd. Contracts commenced to which the VIPP applied: During the financial year 2007/08, the Corporation commenced 22 contracts totalling $611.5 million in value to which VIPP applied. Operating results and dividend The number and value of these relate to 20 Metropolitan contracts and 2 Regional Victoria contracts. The Corporation’s net profit, after providing for income tax, was $67.6 million. The proposed interim and final dividend for 2007/08 The commitments by contractors under VIPP included: is $57.8 million, which is subject to final determination by the Treasurer of Victoria, after consultation with the Corporation’s Board of Directors and the Minister for Water. The proposed dividend has not been booked as a provision as at 30 June 2008. › An overall level of local content of 88 per cent of the total value of the contracts. › 1788 full time equivalent jobs. Review of operations › The benefits to the Victorian economy in terms of skills and technology transfers will be derived from the following: The Directors’ review of the Corporation’s operations during the financial period ended 30 June 2008, – computerised scanning equipment for tank floor corrosion mapping, scanning and data evaluation; and the results of those operations, are set out in the Managing Director’s overview on page 11 of this report. – increase in construction skills of all personnel relating to the unusual harnessing of surplus energy relating to the Mini Hydro project; State of affairs – new skills developed in machine, mobile equipment, crane operating pipe mill electronics and pipe mill maintenance; There were no significant changes in the state of affairs of the Corporation during the financial period ended 30 June 2008. – new skills developed in plant operating pipe laying and use of GPS for the refurbishment of sludge drying pans; – training for personnel on all aspects of infrastructure where new or modified maintenance is required for the odour control program at ETP; Environmental regulation – providing experience in working on new infrastructure water mains in built up areas with heavy traffic flow; The Corporation is subject to significant environmental regulation in respect of managing its sewage treatment plants, – providing knowledge in the use and application of post-tensioned concrete and mobile formwork shuttering; maintaining environmental flow requirements and managing Ramsar wetlands. Information on these topics is included in Melbourne Water’s 2007/08 Sustainability Report. – providing training and knowledge in the use of laser screening and pre-tied steel reinforcement mats; – design of 70km of water transfer system including tunnelling, steep terrain, river and road crossings; Sewage treatment plants – providing training on pipe laying techniques in varying terrains; The Corporation’s compliance with EPA Victoria discharge parameters was 100 per cent at the Eastern Treatment Plant – providing training on specialist welding required to weld pipes; and 100 per cent at the Western Treatment Plant. The other discharge licence requirements were met during the year. – providing training on heavy steel fabrication and large bore pipe work manifolds. The Corporation commenced a 12 month trial of tertiary treatment options in February 2008 under a EPA Victoria Research and Development Approval. A decision on the final treatment process will be made when the trial is completed. The requirement to achieve an annual median Contracts completed to which the VIPP applied: ammonia of less than 5 mg/L was achieved during the year with the successful commissioning of the new ammonia reduction process. During the financial year 2007/08, the Corporation completed 15 contracts totalling $105.2 million in value to which VIPP applied.

Ramsar sites at Western Treatment Plant and Edithvale Seaford Wetlands The number and value of these relate to 15 Metropolitan contracts. There were no Regional Victoria contracts. The Western Treatment Plant is broadly managed within parameters of the Ramsar International Convention’s “wise use” test, which aims to protect wetlands with internationally significant environmental values. The Commonwealth Department of Environment, Water, Heritage The outcomes reported by contractors under VIPP included: and the Arts has approved a detailed Compliance Plan to manage environmental values at the Plant, while works to meet the EPA Victoria › An overall level of local content of 93.7 per cent of the total value of the contracts. discharge licence were implemented. Actions taken during the year complied with the plan. The Plan’s five year audit and review was › 308 full time equivalent jobs. conducted and a revised Plan has been developed. › All committed skills and technology transfer were achieved for these contracts. These skills included training in: The Edithvale-Seaford Wetlands Management Plan was developed in 2000 to ensure that site activities are managed within parameters – introducing subcontractors and electricians to the latest water treatment works technologies; of the Ramsar International Convention’s “wise use” test. Actions required under the Plan were completed during the year and a review of the Plan was started as required. It is expected the review will be completed during 2008. – training Melbourne Water staff in the operation of Mini Hydro technology; – plant operators received competency certificates in the operation of dump trucks, compactors and scrapers; Dandenong Treatment Plant – training in polyfusion welding; The Corporation is rehabilitating the former Dandenong Treatment Plant site for redevelopment in partnership with VicUrban for both – employees and subcontractors received training in plant operation, pipe laying and use of GPS; residential and industrial purposes. An EPA Victoria Works Approval for the proposed Capped and Lined Mound (CALM) was received during the year and works relating to this have commenced. It is expected that the stockpiled contaminated soils and biosolids will be – employees and subcontractors were introduced to the floor replacement process and manway access skills; placed in the CALM and the project completed during 2008/09. – training for staff in working on new infrastructure water mains in built up areas with heavy traffic flows. Environmental flow requirement – bulk entitlements The Corporation has bulk entitlements to water from the Thomson, Maribyrnong and Yarra Rivers. During the year, the Minister for Water qualified the environmental flow requirements due to drought conditions and the qualified requirements were met.

Environmental incidents In August 2007, the Melbourne Magistrates’ Court required Melbourne Water to pay $150,000 to environment projects in Cheryl Batagol Robert Skinner Western Port Bay and the City of Whittlesea after Melbourne Water pleaded guilty to two separate charges of pollution of water Chairman Managing Director under the Environment Protection Act. These charges related to incidents at the Winneke Treatment Plant in 2005 and at Cardinia Treatment Plant in 2006. In light of Melbourne Water’s good environmental management record, no conviction was recorded.

82 Melbourne water sustainability report 2007–2008 83 Income Statement Balance Sheet

2008 2007 2008 2007 For the year ended 30 June 2008 Notes $000 $000 As at 30 June 2008 Notes $000 $000

Revenue from continuing operations 3(a) 589,307 566,076 ASSETS Other Income 3(b) 10,978 22,206 Current assets

Depreciation and amortisation expense 4 (87,497) (77,380) Cash and cash equivalents 6, 27 350 203 Trade and other receivables 7(a), 27 48,906 41,070 Operational expense 4 (112,998) (89,967) Other current assets 8 6,266 5,689 Employee benefits expense 4 (60,858) (50,475) Other financial assets 10 483 511 Repairs and maintenance expense 4 (50,828) (42,868) Current tax assets 5(c) 1,320 – Administrative expense (33,431) (25,851) Biological assets 11 9,162 8,515 Finance costs (100,838) (86,634) 66,487 55,988 Non-current assets classified as held for sale 9 94 275 Other expenses 4 (60,324) (37,685) Total current assets 66,581 56,263 Net result from ordinary activities before tax 93,511 177,422 Non current assets Income tax expense 5 (25,869) (43,913) Biological assets 11 11,467 13,274 Profit for the year 26 67,642 133,509 Property, plant and equipment 12(a) 4,342,672 3,863,694 The above Income Statement should be read in conjunction with the accompanying notes. Intangible assets 12(b) 2,372 4,133 Other receivables 13 37 23 Defined superannuation benefit asset 36 13,169 31,519 Total non-current assets 4,369,717 3,912,643

Total assets 4,436,298 3,968,906

LIABILITIES Current liabilities Trade and other payables 15, 27 187,712 143,522 Interest bearing liabilities 16, 27 315,756 200,655 Provisions 17, 34 38,876 35,919 Other financial liabilities 18, 27 – 34 Current tax liability 5(c) – 2,096 Total current liabilities 542,344 382,226

Non current liabilities Trade and other payables 20, 27 8,530 11,155 Interest bearing liabilities 21, 27 1,313,443 1,126,899 Provisions 22, 34 10,071 24,176 Net Deferred tax liabilities 23 575,031 538,302 Total non-current liabilities 1,907,075 1,700,532

Total liabilities 2,449,419 2,082,758 Net assets 1,986,879 1,886,148

EQUITY Contributed equity 24 591,567 600,147 Reserves 25 164,323 23,827 Retained profits 26 1,230,989 1,262,174 Total equity 1,986,879 1,886,148 The above Balance Sheet should be read in conjunction with the accompanying notes.

84 Melbourne water sustainability report 2007–2008 85 Cash Flow Statement Statement of Changes in Equity

2008 2007 2008 2007 For the year ended 30 June 2008 Notes $000 $000 For the year ended 30 June 2008 Notes $000 $000

Total equity at the beginning of the financial year 24, 25, 26 1,886,148 1,840,112 Cash flows from operating activities Net increment/(decrement) in contributed equity 24 (8,580) (24,632) Receipts from Customers (inclusive of goods and service tax) 568,240 528,651 Asset revaluation reserve Payments to suppliers and employees (inclusive of goods and service tax) (368,760) (259,021) Revaluation increment/(decrement) on non-current assets 4 154,749 27,107 Income tax paid (6,270) (23,745) Revaluation reserves transferred to retained profits on derecognition of asset 4 (573) – Interest received 3(a) 45 44 Deferred tax on revaluation 25 (13,714) (3,315) Interest and other costs of finance paid 4 (97,357) (85,444) Cash flow hedges Other revenue 4 67,719 66,059 Gain/(loss) taken to equity 25 34 (33) Net cash inflow from operating activities 41 163,617 226,544 Net income recognised directly in equity 131,916 (873) Cash flows from investing activities Retained Profits Payment for property, plant, equipment and works in progress (367,799) (213,277) Transfer from asset revaluation reserve 26 573 – Proceeds from sale of property, plant and equipment 2,084 6,187 Profit for the year 26 67,642 133,509 Net cash (outflow) from investing activities (365,715) (207,090) Total recognised income and expense for the year 200,131 132,636

Cash flows from financing activities Dividends paid 26, 31 (99,400) (86,600)

Proceeds from borrowings 841,200 382,687 Total equity at the end of the financial year 1,986,879 1,886,148

Repayments of borrowings (536,200) (311,987) The above Statement of Changes in Equity should be read in conjunction with the accompanying notes. Repayments for outstanding finance lease liability (3,355) (3,617)

Dividends paid 31 (99,400) (86,600)

Net cash inflow / (outflow) from financing activities 202,245 (19,517)

Net increase/(decrease) in cash held 147 (63)

Cash and cash equivalents at the beginning of the financial year 203 266

Cash and cash equivalents at end of the financial year 6 350 203

The above Cash Flow Statement should be read in conjunction with the accompanying notes.

86 Melbourne water sustainability report 2007–2008 87 Notes to the Financial Report

1. Summary of Significant Accounting Policies (d) property, Plant and Equipment All assets are tested for indication of Major depreciation and amortisation periods (i) recognition and impairment on an annual basis. Such used are listed below and are consistent with assets are tested to ascertain whether the the prior year, unless otherwise stated: (vi) Critical accounting estimates (iii) developer charges and contributions Measurement of Assets (a) basis of Accounting carrying amount exceeds their recoverable Property, plant and equipment represent (i) general The preparation of financial statements Developer charges and contributions amounts. At 30 June 2008, no indicators of › Buildings and leasehold in conformity with AIFRS requires the use consist of assets received free of charge non-current assets comprising land, improvements 5 to 80 years This financial report of Melbourne Water impairment were present. of certain critical accounting estimates. or for nominal consideration and are buildings, water, sewerage and drainage Corporation is a general purpose financial › Plant and equipment 3 to 50 years It also requires management to exercise recognised as revenue at fair value on infrastructure, plant and equipment assets (iv) revaluations report that consists of an Income Statement, its judgement in the process of applying completion of works and their acceptance used by the Corporation in its operations. › Infrastructure assets 20 to 150 years Balance Sheet, Statement of Changes in Revaluation increments are credited the Corporation’s accounting policies. by the Corporation. Cash contributions Items with a cost or value in excess of › Intangible assets 3 to 5 years Equity, Cash Flow Statement and Notes directly to equity in the revaluation reserve, Areas involving a high degree of estimates are recognised when received. $500 and a useful life of more than one accompanying these Statements. The general except that, to the extent that an increment and assumptions which can materially year are recognised as an asset. All other purpose financial report complies with reverses a revaluation decrement in respect (f) leased Assets impact the financial statements relate (iv) interest receivable assets acquired are expensed. Australian equivalents to International of the same asset previously recognised as to the actuarial assumptions used to Interest receivable is accrued in (i) finance leases Financial Reporting Standards (AIFRS), (ii) repairs and maintenance an expense in determining the net result, determine the Corporation’s defined accordance with the terms and conditions other authoritative pronouncements of the increment is recognised as revenue in Leases of property, plant and equipment, superannuation benefit asset and employee of the underlying financial instrument Routine maintenance, repair costs and minor the Australian Accounting Standards Board, determining the net result. where the Corporation has substantially benefit provisions. These assumptions and or other contract. renewal costs are expensed as incurred. Urgent Issues Group Interpretations all the risks and rewards incidental to their related carrying amounts are discussed Where the repair relates to the replacement Revaluation decrements are recognised and the requirements of the Financial ownership, are classified as finance leases. in Notes 1(k), 17, 22 and 35. (v) net gain from disposal of property, of a component of an asset and the cost immediately as expenses in the net result, Management Act 1994 and applicable Finance leases are capitalised at the lease’s plant and equipment exceeds the capitalisation threshold, except that, to the extent that a credit Ministerial Directions. inception at the lower of the fair value of the (b) revenue Recognition Property sales are recognised on signing of the cost is capitalised and depreciated. balance exists in the revaluation reserve leased property and the present value of the an unconditional contract of sale. Debtors in respect of the same class of asset, they minimum lease payments. The corresponding This financial report has been prepared (i) water sales and sewage (iii) valuation of non-current are provided with commercial terms and are debited to the revaluation reserve. rental obligations, net of finance charges, are on an accrual and going concern bases. disposal charges physical assets are recognised in the Income Statement included in the Balance Sheet. Each lease (ii) accounting policies Water sales and sewage disposal charges on a net basis of sale proceeds less costs. Land and buildings are shown at fair (v) non-current assets held for sale payment is allocated between the liability consist of a variable metered component value – refer to Note 12(a) for details. Unless otherwise stated, all accounting Non-current assets are classified as held and finance charges so as to achieve a and a fixed fee. The metered usage revenue (vi) government grants and contributions Any accumulated depreciation at the policies applied are consistent with those for sale and stated at the lower of their constant rate on the finance balance is recognised when the service has been date of revaluation is eliminated against of the prior year. Where appropriate, Grants from the Government are carrying amount and fair value less costs outstanding. The interest element of the used with settlement from date of invoice. the gross carrying amount of the asset comparative figures have been amended recognised at their fair value where there to sell, as their carrying amount will be finance cost is charged to the Income The fixed fee is recognised on a monthly and the net amount is restated to the to accord with current presentation and is a reasonable assurance that the grant recovered principally through a sale Statement over the lease period so as to basis with settlement at 14 days. Collateral revalued amount of the asset. disclosure made of material changes to will be received and the Corporation transaction, rather than through continuing produce a constant periodic rate of interest is not obtained for this class of debtor. will comply with all attached conditions. use. The Corporation considers that the sale on the remaining balance of the liability comparatives. The fair value of land and buildings is is highly probable and the asset is available for each period. The property, plant and The Essential Services Commission determined as the amount for which (iii) Classification between Government grants relating to costs for immediate sale in its present condition. equipment acquired under finance lease regulates the prices and service standards an asset could be exchanged between current and non-current are included in non-current liabilities as Non-current assets are not depreciated or is depreciated on a straight line basis over for the provision of water and sewage knowledgeable willing parties in an arm’s deferred income and are recognised in amortised while they are classified as held the estimated useful life of the asset. In the determination of whether an asset services. The Commission’s general the Income Statement over the period length transaction. Crown land is measured for sale and are presented separately from or liability is current or non-current, regulatory powers are set out in: necessary to match them with the costs with regard to the property’s highest other assets in the Balance Sheet. (ii) Operating leases consideration is given to the time when and best use after due consideration that they are intended to compensate. Leases in which a significant portion of each asset or liability is expected to be › the Essential Services is made for any legal or constructive (e) depreciation and Amortisation the risks and rewards of ownership are realised or paid. The asset or liability is Commission Act 2001; Government grants relating to the restrictions imposed on the asset. of Non-Current Assets retained by the lessor are classified as classified as current if it is expected to be › Part 1A of the Water Industry purchase or construction of property, operating leases. Payments made under turned over within the next twelve months, Act 1994; and plant and equipment are included in Infrastructure assets and property, plant Where assets have separate identifiable operating leases (net of any incentives being the Corporation’s operational cycle – non-current liabilities as deferred income and equipment are stated at historical cost components that have distinct useful › a Water Industry Regulatory received from the lessor) are charged to see Note 1(k) for a variation in relation to and are recognised in the Income less depreciation. Historical cost includes lives and/or residual values, a separate Order made under section 4D the Income Statement on a straight-line employee benefits. Statement on a straight line basis over expenditure that is directly attributable to depreciation rate is determined for each of the Water Industry Act. basis over the period of the lease, in the the expected lives of the related assets. the acquisition of the items. Cost may also component. (iv) rounding (ii) drainage rates include transfers from equity of any gains/ periods in which they are incurred, as this Land is not depreciated. Depreciation on represents the pattern of benefits derived Unless otherwise stated, amounts in the Drainage rate revenue is recognised (c) finance Costs losses on qualifying cash flow hedges on other assets is calculated using the straight from the leased assets. report have been rounded to the nearest in the year for which the rate is levied. foreign currency purchases of plant and Finance costs are recognised as expenses line method to allocate their cost or revalued thousand dollars. Rates are levied quarterly, based on equipment. in the period in which they are incurred. amounts, net of their residual values, over (iii) lease incentives property valuations as at 30 June 1990. (v) historical cost convention Finance costs include interest on short- Subsequent costs are included in the their estimated useful lives, commencing In the event that lease incentives are Drainage revenue is collected by various term and long-term borrowings, finance asset’s carrying amount or recognised as a from the time the asset is held ready for use. received to enter into operating leases, These financial statements have retail water businesses on behalf of the lease charges, financial accommodation separate asset, as appropriate, only when The assets residual values and useful lives such incentives are recognised as a liability. been prepared under the historical Corporation. The Corporation engages levy and Treasury Corporation of Victoria it is probable that future economic benefits are reviewed annually, and adjusted if The aggregate benefits of incentives are cost convention, as modified by the the Victorian Auditor-General’s Office administration fee. associated with the item will flow to the appropriate, at each balance sheet date. recognised as a reduction of rental expense revaluation of certain classes of property, to undertakes an annual audit of collection Corporation and the cost of the item can on a basis which reflects the time pattern plant and equipment, biological assets processes and procedures by each of be measured reliably. All other repairs and in which economic benefits from the leased and financial instruments. the retailers to ensure timely billing and maintenance are charged to the Income asset are consumed. collection. A lien is held over each property Statement during the financial period in to ensure that any outstanding amounts which they are incurred. are recovered upon sale of the property.

88 Melbourne water sustainability report 2007–2008 89 Notes to the Financial Report

1. Summary of Significant (j) payables (iii) long service leave (v) termination benefits In accordance with Section 146(5)(a) Segment revenues, expenses, assets and Accounting Policies continued The liability for long service leave is Liabilities for termination benefits are of the Accident Compensation Act 1985, liabilities are those that are directly (i) trade and Other Payables recognised in the provision for employee recognised when a detailed plan for the the Corporation must provide a bank attributable to a segment and the relevant (iv) leasehold improvements Payables are recognised when the benefits and is measured as the present termination has been developed and guarantee to the Victorian WorkCover portion that can be allocated to the segment Leasehold improvements are recognised Corporation becomes obliged to make value of expected future payments to a valid expectation has been raised in Authority as part of its WorkCover self on a reasonable basis. Segment assets at cost less accumulated depreciation and future payments resulting from the be made in respect of services provided those employees affected that the insurance commitments. The value of include all assets used by a segment and accumulated impairment losses and are purchase of goods and services. by employees up to the reporting date. terminations will be carried out. this bank guarantee at 30 June 2008 is consist primarily of receivables, prepayments, amortised over the unexpired period of the Consideration is given to expected future The liabilities for termination benefits $7.7 million ($7.1 million in 2006/07). stores, biological assets, property, plant and lease or the estimated useful life of the (ii) Creditors and accruals salary levels, experience of employee are recognised as payables in the equipment and intangible assets. Segment (ix) workers compensation improvement, whichever is the shorter. These amounts represent liabilities departures and periods of service. provision for employee benefits. liabilities consist primarily of trade and other for goods and services provided to the Expected future cash payments are The Corporation continues to be liable creditors, accruals and provisions. (g) Cash and Cash Equivalents Corporation prior to the end of the discounted using interest rates attached Liabilities for termination benefits for workers compensation claims incurred expected to be settled within 12 months prior to the introduction of WorkCare For the purposes of the Cash Flow financial year, which are unpaid. to national government guaranteed (n) taxation are measured at the amounts expected (now WorkCover) in 1985. Based on Statement, cash and cash equivalents The amounts are unsecured and are securities as at the reporting date with The Corporation is subject to the National to be paid when they are settled. Amounts an independent actuarial assessment, include cash on hand, deposits held at usually paid within 30 days of recognition terms to maturity that closely match the Tax Equivalent Regime (NTER), which is expected to be settled more than 12 months a provision of $0.7 million ($0.5 million call with financial institutions, other or in accordance with contract terms. estimated future long service cash outflows. administered by the Australian Taxation from the reporting date are measured as the in 2006/07) has been made for all short-term, highly liquid investments with Provisions made for unconditional long Office. The essential difference between the (iii) interest payable estimated cash outflows, discounted using outstanding workers compensation original maturities of three months or less service leave are classified as a current NTER and the Commonwealth legislation market yields at the reporting date on claims at 30 June 2008. that are readily convertible to known Interest is accrued in accordance with the liability, where the employee has a present is that the tax liability is to be paid to the national government bonds with terms to amounts of cash and which are subject terms and conditions of the underlying entitlement to the benefit. The non-current State Government and not the maturity that matches as closely as possible, to an insignificant risk of change in value. financial instruments or other contract. liability represents long service leave (l) build, Own and Operate Commonwealth Government. the estimated future cash outflows. Bank overdrafts are shown within interest entitlements accrued for employees with (BOO) Schemes less than 7 years of continuous service. The income tax expense or revenue for the bearing liabilities on the Balance Sheet. (k) employee Benefits (vi) employee benefit on-costs The Corporation entered into contractual arrangements with AGL Ltd in February period is the tax payable on the current (i) salaries and annual leave (iv) superannuation Employee benefit on-costs, including 2000 to build, own and operate a power period’s taxable income based on the (h) receivables Liabilities for salaries, including non- payroll tax and worker’s compensation Defined contribution plans generation plant at the Western Treatment national corporate income tax rate of All receivables are recognised at the monetary benefits expected to be settled are recognised and included in employee Contributions to defined contribution Plant in exchange for a stream of payments. 30%, adjusted by changes in deferred amounts receivable less any allowance for within 12 months of the reporting date, are superannuation plans are expensed benefit liabilities and costs when the tax assets and liabilities attributable to doubtful debts. Collectibility of receivables is recognised in employee benefit liabilities when incurred. employee benefits to which they relate (m) segment Information temporary differences between the tax reviewed on an ongoing basis. Debts which in respect of employees’ services up to the are recognised as liabilities. bases of assets and liabilities and their Defined benefit plans are known to be uncollectible are written- reporting date and are measured at the A business segment is identified for a group carrying amounts in the financial A liability or asset in respect of the (vii) performance payments off. A provision for doubtful debts is amounts expected to be paid when the of assets and operations engaged in statements, and to unused tax losses. established when there is objective evidence liabilities are settled, at their nominal values. Equipsuper defined superannuation benefit Performance payments for the Corporation’s providing services that are subject to risks that the Corporation will not be able to Employee benefits which are not expected plan is recognised in the provision for employees are based on a percentage of and returns that are different to those of Deferred tax assets and liabilities are collect all amounts due according to the to be settled within 12 months are employee benefits and is measured as the the annual salary package provided under other business segments. A geographical recognised for temporary differences at original terms of receivables. The amount measured as the present value of the difference between the present value of their contracts of employment. A liability is segment is identified when services are the tax rate expected to apply when the of the provision is the difference between estimated future cash outflows to be made employees’ accrued benefits at the reporting recognised and is measured as the aggregate provided within a particular economic assets are recovered or liabilities settled, the asset’s carrying amount and the present by the entity, in respect of services rendered date and the net market value of the of the amounts accrued under the term of environment subject to risk and returns based on those tax rates which are value of estimated future cash flows, by employees up to the reporting date. superannuation plan’s assets at that date. the contracts to balance date. that are different from those of segments enacted or substantially enacted. discounted at the effective interest rate. The present value of accrued benefits is operating in other economic environments. The amount of the provision is recognised Regardless of the expected timing of based on expected future payments which (viii) workCover The relevant tax rates are applied to the in the Income Statement. settlements, provisions made in respect of arise from membership of the plans to the The Corporation is registered as a self- Segment information is reported on the cumulative amounts of deductible and employee benefits are classified as a current reporting date. Consideration is given to insurer for workers compensation and is basis of business segments, which is water, taxable temporary differences if they (i) inventories liability, unless there is an unconditional expected future salary levels, experience of liable to the workers or workers’ dependants sewerage, waterways and drainage, as the arose in a transaction, that at the time right to defer the settlement of the liability employee departures and periods of service. to pay compensation under the Accident Corporation’s risks and returns are affected of the transaction did not affect either (i) stores for at least 12 months after the reporting Expected future payments are discounted Compensation Act 1985. Based upon predominately by differences in the services accounting profit or taxable profit or loss. Stores and materials are used in the date, in which case it would be classified using rates of national government bonds an independent actuarial assessment, a provided through those segments, rather Deferred tax assets are recognised for construction of new works and for the as a non-current liability. with terms to maturity that match, as provision of $5.1 million ($4.7 million in than geographical segments as the deductible temporary differences and unused repair and maintenance of existing assets. closely as possible, the estimated future 2006/07) has been made for outstanding Corporation operates solely within the Port tax losses only if it is probable that future All stores are valued at the lower of cost (ii) sick leave cash outflows. claims incurred and not settled, and for Phillip and Westernport catchments. taxable amounts will be available to utilise and net realisable value. Sick leave payments are made in accordance claims incurred but not reported at The amount brought to account in those temporary differences and losses. with relevant awards, determinations and 30 June 2008. Other claims incurred the Income Statement in respect of Corporation policy. No provision is made and settled during the period are superannuation represents the contributions in the financial statements for unused charged to the Income Statement. sick leave entitlements as these are non made to the superannuation plan, adjusted vesting benefits. by the movement in the defined benefit plan liability or surplus.

90 Melbourne water sustainability report 2007–2008 91 Notes to the Financial Report

1. Summary of Significant (r) (i) intangible Assets (s) biological Assets (u) foreign Currency Translation (w) provisions, Contingent Assets (y) new Accounting Standards Accounting Policies continued Intangible assets represent identifiable Livestock, including cattle and sheep (i) functional and presentation currency and Contingent Liabilities and Interpretations non-monetary assets without physical are held in connection with operating Provisions are recognised when the Certain new accounting standards and (o) dividend Policy The functional and presentation currency substance. Intangible assets are recognised the Corporation’s Werribee Agriculture of the Corporation is the Australian dollar. Corporation has a present legal or interpretations have been published that are The Corporation is required to pay a at cost. Costs incurred subsequent to initial Operations. constructive obligation as a result of past not mandatory for 30 June 2008 reporting dividend in accordance with a determination acquisition are capitalised when it is (ii) transactions events, it is probable that an outflow of periods. The Corporation’s assessment of the Determination of net increment / of the Treasurer of Victoria under the expected that additional future economic All foreign currency transactions during resources will be required to settle the impact of these new standards and decrement of fair value less Public Authorities (Dividend) Act 1983, benefits will flow to the Corporation. the financial year are brought to account obligation and the amount has been interpretations is set out below: estimated point-of-sale costs based on a prescribed percentage of the using the exchange rate in effect at the reliably estimated. Provisions are not Amortisation is allocated to intangible assets (i) aasb 8 Operating Segments previous years’ adjusted net profit before Livestock is measured at fair value less date of the transaction. recognised for future operating losses. tax. An obligation to pay a dividend only with finite useful lives on a systematic basis estimated point of sale costs. The fair and AASB 2007-3 Amendments to over the asset’s useful life. Amortisation The amount recognised as a provision is the Australian Accounting Standards arises after consultation with the relevant value of trading livestock is determined (v) Cash Flow Hedges Minister and the Treasurer and a formal begins when the asset is available for use, that with reference to market prices at each best estimate of the consideration required arising from AASB 8. determination is made by the Treasurer. is, when it is in the location and condition balance date. The fair value of non In order to hedge the effect of foreign to settle the present obligation at reporting AASB 8 and AASB 2007-3 are effective necessary for it to be capable of operating trading livestock is determined by exchange rate movements on the fair date, taking into account the risks and for annual reporting periods commencing (p) smart Water Fund in the manner intended by management. independent valuation at balance date. values of assets purchased, the Corporation uncertainties surrounding the obligation. on or after 1 January 2009. The amortisation period and the amortisation occasionally enters into forward foreign Where a provision is measured using the The Smart Water Fund was established by method for an intangible asset with a finite Changes to the fair value of livestock exchange contracts. These hedges are cash flows estimated to settle the present AASB 8 will not result in a significant the Victorian Government and is managed useful life are reviewed at least at the end of assets are recognised as a gain or loss, classified as cash flow hedges with the obligation, its carrying amount is the present change as the Corporation’s current by the Corporation and the three retail each annual reporting period. In addition, an in the Income Statement in the period associated gains or losses recognised directly value of those cash flows. approach to Segment reporting is consistent water businesses for the purpose of assessment is made at each reporting date to in which it arises. in equity. As the hedged firm commitment with the “management approach” to providing grant funding to support the determine whether there are indicators that results in the recognition of an asset, the When some or all of the economic financial reporting. The segments selected development of sustainable water use the intangible asset concerned is impaired. (t) interest Bearing Liabilities associated gains/losses that had previously benefits required to settle a provision are are in line with the categories reported to projects. Each water business has a If so, the assets concerned are tested as to been recognised in equity are included in the expected to be recovered from a third party, regulatory authorities and are the basis All borrowings are required to be transacted 25 per cent interest in the fund. whether their carrying value exceeds their initial measurement of the acquisition cost. the receivable is recognised as an asset for future pricing decisions. through the Treasury Corporation of Victoria recoverable amount. These are accounted for at settlement date. if it is virtually certain that recovery will be Contributions made to the Smart Water whose liabilities are guaranteed by the The gain or loss relating to the ineffective received and the amount of the receivable (ii) revised AASB 123 Borrowing Costs Fund are initially recognised as prepayments Victorian Government. (ii) research and development costs portion is recognised immediately in the can be measured reliably. and AASB 2007-6 Amendments to in the Corporation’s Balance Sheet. Expenses Australian Accounting Standards Expenditure on research activities is The Corporation’s borrowings currently Income Statement. are subsequently recognised by the Contingent assets and contingent liabilities arising from AASB 123 [AASB 1, recognised as an expense in the period comprises of floating rate note (FRN) loans, Corporation when incurred by the Fund. At any point in time, any cumulative gain or are not recognised in the financial AASB 101, AASB 107, AASB 111, in which it is incurred. fixed interest loans and an overnight loan loss on the cash flow hedge is retained in statements but are only disclosed by AASB 116 and AASB 138 and facility. FRN loans are fixed term loans with (q) goods and Services Tax An internally-generated intangible asset equity until the forecast transaction occurs. way of a note, and if quantifiable are Interpretations 1 & 12]. a margin that is reset to a variable interest measured at nominal value. Revenues, expenses and assets are arising from a development project is The revised AASB 123 is applicable to annual rate every ninety days. Generally, these notes If a hedged transaction is no longer recognised net of goods and services recognised only if all of the following reporting periods commencing on or after are issued with maturity terms between expected to occur, the net cumulative gain tax (GST), except where the amount of conditions are met: (x) Contributed Equity 1 January 2009. It has removed the option three and five years. Fixed interest loans are or loss recognised in equity is transferred GST incurred is not recoverable from the Appropriations for additions/reductions to to expense all borrowing costs and, when › an asset is created that can be identified interest only loans with the full face value to net profit or loss for the year. Australian Taxation Office (ATO). In these net assets are designated as contributed adopted, will require the capitalisation of all (such as software and new processes); repaid at maturity or refinanced for a new circumstances, the GST is recognised as term. Most have maturity terms set between capital when approved by the Minister for borrowing costs directly attributable to the part of the cost of acquisition of the asset › it is probable that the asset created will 5 and 10 years. The overnight loan facility Finance. Other transfers that are in the acquisition, construction or production of a or as part of an item of expense. generate future economic benefits; and interest rates are negotiated on a daily basis nature of contributions or distributions have qualifying asset. The Corporation is currently › the development cost of the depending on cash flow needs. also been designated as contributed equity. assessing the impact of the changes. Receivables and payables are stated inclusive asset can be measured reliably. of GST. The net amount of GST recoverable Borrowings are initially recognised at fair from, or payable to, the ATO is included as a Where no internally-generated intangible value, net of transaction costs incurred. current asset or liability in the Balance Sheet. asset can be recognised, development Borrowings are subsequently measured Cash flows arising from operating activities expenditure is recognised as an expense at amortised cost. are disclosed in the Cash Flow Statement on in the period as incurred. a gross basis i.e. inclusive of GST. The GST Borrowings are classified as current component of cash flows arising from liabilities unless the Corporation has an investing and financing activities which is unconditional right to defer settlement recoverable or payable to the taxation of the liability for at least 12 months authority is classified as operating cash flows. after the balance sheet date.

92 Melbourne water sustainability report 2007–2008 93 Notes to the Financial Report

2. Financial risk management objectives and policies The amount of the provision is the difference large number of residential and business (g) liquidity risk between the asset’s carrying amount and customers which are spread across a diverse The Corporation manages liquidity risk the present value of estimated future cash range of industries. Receivable balances are It is the Corporation’s policy to hedge the by maintaining and conducting efficient (a) financial risk management (c) financing arrangements flows, discounted at the effective interest monitored on an on-going basis to ensure effect of foreign currency exchange rate banking practices and account structures, objectives The capacity to borrow funds and manage rate. The amount of the provision is that exposure to bad debts is not movements on the fair values of any assets sound cash management practices and The objectives of the Corporation’s financial the associated risks is subject to the recognised in the Income Statement. significant. The Corporation has in place purchased in excess of AUD$100,000. regular monitoring of the maturity profile risk management programs are to: provisions of the Borrowing and Investment a policy and procedure for the collection The Corporation’s policy requires all hedging of assets and liabilities, together with Powers Act (1987). In accordance with this As Trade Debtors are made up predominantly of overdue receivables. to be undertaken through the Treasury anticipated cash flows. (i) Manage the daily and long term Act, the Treasurer of Victoria issues annual by the metropolitan retail water businesses, liquidity needs of the organisation; Corporation of Victoria in the form of the Corporation’s exposure to credit risk is All financial risk management instruments approval permitting new borrowings and the The Corporation obtains annual approval forward foreign exchange contracts. minimal. These debts are invoiced monthly are transacted with the Treasury Corporation (ii) Optimise cash resources, in such a refinancing of all loan maturities for that from the Treasurer of Victoria for new and paid within seven days. of Victoria, whose liabilities are guaranteed way as to minimise net financing year. All funding is sourced from the Treasury Forward rate agreements are used borrowings, borrowings to refinance by the Victorian Government. The costs and maximise the repayment of Corporation of Victoria. occasionally where it is perceived that maturing and non-maturing loans and The major exposure to credit risk arises Corporation potentially has a concentration debt within acceptable levels of risk; a lower interest rate can be achieved. temporary purpose borrowing facilities. The Corporation’s total maximum borrowing from Other Receivables, which have been of credit risk with the Treasury Corporation The purchase of forward agreements (iii) Ensure that all financial and treasury of $2,010.7 million was not exceeded at any recognised net of any provision for doubtful of Victoria as the central borrowing authority is limited in terms of volume and time, management operational exposures stage throughout 2007/08. debts. The receivable balance consists of a of Victoria. This risk is considered minimal. are fully identified, quantified, and is subject to a maximum term of 18 months forward. planned, approved and managed; (d) Capital Management (iv) Safeguard the financial resources by The Corporation controls its capital in order At 30 June 2008, the Corporation maintaining appropriate resources, to maintain a satisfactory debt to equity does not have any material forward 2008 2007 operational controls (including ratio, to provide adequate returns, maintain exchange contracts. Notes $000 $000 credit guidelines) and infrastructure its current credit rating and to ensure that it (ii) price risk in corporate treasury functions. can fund its operations as a going concern. 3 Income Statement – Revenue and Other Income Disclosures These objectives are consistent with the The Corporation is not exposed to (a) Revenue from continuing operations corporate risk management policy of the There has been no changes to the strategy any material commodity price risk. Corporation, the Treasury Management adopted by the Corporation to control its Sales revenue capital during the year. The current gearing (iii) interest rate risk sensitivity analysis Guidelines issued by the Department of Water sales 175,496 175,417 Treasury and Finance and the Victorian levels are considered appropriate given Exposures arise predominately from Public Sector Debt Management Objectives. Melbourne Water’s current and future liabilities bearing variable interest rates as Sewage disposal charges 187,842 181,387 funding requirements. the Corporation intends to hold fixed rate Drainage rates 147,410 140,054 liabilities to maturity. At 30 June 2008, (b) financial risk management The only externally imposed capital 510,748 496,858 strategy if interest rates had changed by +/- 50 requirements of the Corporation are: basis points from the year end rates with Other revenue The Corporation manages financial risk by all other variables held constant, pre-tax › that financial accommodation Developer charges and contributions 52,569 46,363 maintenance of approved debt portfolio profit would have been $2.3million higher/ does not exceed the approval limits structure and strategic targets. This includes: lower (2007 $1.2million). Interest received / receivable 45 44 set by the Treasurer of Victoria (i) portfolio composition pursuant to the Borrowing and Biological assets 16,002 11,563 (f) Credit risk (i.e. fixed, floating, indexed exposure): Investment Powers Act 1987; and Licence fees received 2,173 2,222 The Corporation’s debt portfolio is Credit risk is the risk of financial loss to › that the Corporation, with the Miscellaneous 7,770 9,026 managed within the bands of: exception of a trading account the Corporation as a result of a customer 78,559 69,218 › Floating interest rate with overdraft facilities, is required or counterparty to a financial instrument borrowings: 10%-40% to borrow exclusively with the failing to meet its contractual obligations. Total revenue 589,307 566,076 The Corporation’s exposure to credit risk is › Fixed interest rate Treasury Corporation of Victoria. influenced by the individual characteristics (b) Other income borrowings: 60%-90% The gearing ratio for 30 June 2008 of each customer. (ii) physical maturity profile: was 45.1% (2007 41.3%). Net gain/(loss) on disposal of property, plant and equipment 41 719 (491) Debt maturity of fixed and floating All receivables are recognised at the Government grants* 3,777 2,112 Gearing is one of a number of commercial interest rate borrowings (excluding amounts receivable less any allowance benchmarks that are considered by the Gains/(loss) arising from changes in fair value less working capital) is not to exceed 20% for doubtful debts. Collectibility of Board when considering the capital structure estimated point of sale costs of biological assets (935) 4,513 of the total debt portfolio in any year. receivables is reviewed on an ongoing basis. and are approved via the Corporate Plan. Debts which are known to be uncollectible Gains/(loss) arising from initial recognition of agricultural produce 7,417 1,337 (iii) interest rate risk profile: are written-off. A provision for doubtful Fixed and floating interest rate Net gain from defined benefit superannuation plan 36 – 14,735 (e) Market risk debts is established when there is objective borrowings to be re-priced within evidence that the Corporation will not be Total other income 10,978 22,206 one year do not exceed 40% (i) foreign exchange risk able to collect all amounts due according of the total debt portfolio. Foreign exchange risk arises when to the original terms of receivables. *Government grants future commercial transactions and Forward rate agreements are used Government grants of $3.8 million (2006/07: $2.1 million) were recognised as Other Income by the Corporation during 2007/08 recognised assets and liabilities are occasionally where it is perceived that for various projects including the $10M Stormwater project, Water Watch program and Water Sensitive Urban Design program. a lower interest rate can be achieved. denominated in a currency that is All conditions attached to Government grants have been satisfied prior to their recognition in the Income Statement. The purchase of forward agreements not the entity’s functional currency. The recognition of Government grants with unfulfilled conditions have been recognised as Deferred Income in the Balance Sheet. is limited in terms of volume and time, and is subject to a maximum term of 18 months forward.

94 Melbourne water sustainability report 2007–2008 95 Notes to the Financial Report

2008 2007 2008 2007 Notes $000 $000 $000 $000 4. Income Statement – Expense disclosures 5. Income tax Depreciation and amortisation expense (a) Components of tax expense Depreciation Current Tax 2,949 15,904 Buildings 12(c) 943 568 Deferred Tax relating to temporary differences 21,956 27,247 Leasehold improvements 12(c) 427 426 Adjustments for current tax of prior periods 964 762 Plant and equipment 12(c) 5,190 3,982 25,869 43,913 Infrastructure assets 12(c) 77,420 68,853 83,980 73,829 (b) Numerical reconciliation of income tax to prima facie tax payable Amortisation Profit before income tax expense 93,511 177,422 Infrastructure assets under finance leases 12(c) 1,621 1,622 Intangible assets 12(c) 1,896 1,929 Tax at the Australian tax rate of 30% 28,053 53,227 Total amortisation 12(c) 3,517 3,551 Tax effect of amounts which are not deductible (taxable) in calculating taxable income: Total depreciation and amortisation expense 87,497 77,380 Adjustment in respect of income tax of previous year 964 762 Non assessable and non deductible for income tax purposes 2,124 449 Operational expense Deductible expenses not booked (2,823) (3,914) Materials, chemicals and laboratory expenses 10,871 7,708 Asset allocation to Government (2,059) (6,161) Energy expenses 15,699 16,174 Research and Development concession (390) (450) Agricultural expenses 26,606 21,277 Income tax as reported in the Income Statement 25,869 43,913 External expenses 3,944 3,614 Transport expenses 6,022 5,702 (c) Income Tax Receivable Grants and contributions expenses 10,656 7,189 Current Tax Receivable/(Payable) 1,320 (2,096) External professional services expenses 12,882 6,216 1,320 (2,096) Other expenses 26,318 22,087 Total operational expense 112,998 89,967

Employee benefits expense Salary expenses 43,340 37,978 Post employment benefits 3,244 2,465 Annual, long service and shift leave expenses 5,999 4,566 Other employee expenses 8,275 5,466 Total employee benefits expense 60,858 50,475

Other expenses Government rates and taxes 24,233 21,160 Rental and lease expenses 4,031 3,205 Bad and doubtful debt expenses 2 4 Decrement arising from asset revaluation 12(c) 272 685 Assets written off / written down 41 11,652 10,623 Defined Benefit Superannuation expense 36 18,350 – Other expenses 1,784 2,008 Total other expenses 60,324 37,685

96 Melbourne water sustainability report 2007–2008 97 Notes to the Financial Report

2008 2007 2008 2007 Notes $000 $000 Notes $000 $000 6. Current assets – Cash and cash equivalents 8. Current assets – Other current assets Cash on hand 16 15 Prepayments 1,836 1,270 Cash at bank 291 178 Stores 4,430 4,419 Cash advances 43 10 Total current assets – other current assets 6,266 5,689 Total current assets – cash and cash equivalents 27 350 203 9. Current assets – Non-current assets classified as held for sale 7. Current assets – Trade and other receivables Property, plant and equipment – held for sale* 94 275 (a) Current assets – Trade and other receivables Total current assets – non-current assets classified as held for sale 94 275 Trade debtors 27 18,357 22,182 * The Corporation currently holds five parcels of surplus land for sale. These lots were auctioned during the 2007/08 financial year Other receivables 27 30,552 18,892 but were passed in. As at 30 June 2008, the land is still on the market and an active program is underway to locate a buyer. Less: provision for impaired receivables (3) (4) 30,549 18,888 10. Current assets – Other financial assets

Total current assets – trade and other receivables 48,906 41,070 Forward foreign exchange contracts 483 511 Total current assets – financial assets 27 483 511 Ageing Analysis of Receivables All receivables are recognised at the amounts receivable less any allowance for impaired receivables. In order to hedge the effect of foreign currency exchange rate movements on the fair values of assets purchased, Collectibility of receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written-off. the Corporation entered into a number of forward exchange agreements to facilitate payments to a supplier in Euro dollars. A provision for impaired receivables is established when there is objective evidence that the Corporation will not be able to These forward contracts are hedging a highly probable forecast purchase. The contracts are timed to mature when collect all amounts due according to the original terms of receivables. The amount of the provision is the difference between payments for assets are scheduled to be made. However, the timing of payment is dependent on delivery of the assets. the asset’s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. At 30 June 2008, only one foreign purchase payment is outstanding as the asset has not been fully delivered. The amount of the provision is recognised in the Income Statement. As at 30 June 2008, payment is forecast as follows: 31 July 2008 (EUR 255,272)

No foreign exchange gain was transferred to the Income Statement and $33,505 (2006/07: $35,259) was recognised in equity during the reporting period. Current Past due but not impaired 0-30 days 31-60 days 61-90 days 91 days + Impaired Total 30 June 2008 Notes $000 $000 $000 $000 $000 $000 Receivables Trade debtors 7(a) 6,360 8,832 3,163 2 – 18,357 Other receivables 7(a), 13 23,839 6,708 36 6 (3) 30,586 Total Receivables 30,199 15,540 3,199 8 (3) 48,943

Current Past Due but not Impaired 0-30 days 31-60 days 61-90 days 91 days + Impaired Total 30 June 2007 Notes $000 $000 $000 $000 $000 $000 Receivables Trade debtors 7(a) 7,618 9,168 5,396 – – 22,182 Other receivables 7(a), 13 18,662 187 31 35 (4) 18,911 Total Receivables 26,280 9,355 5,427 35 (4) 41,093

98 Melbourne water sustainability report 2007–2008 99 Notes to the Financial Report

11. Current and Non-current assets – Biological assets (e) Significant Assumptions (a) Nature of Biological assets Market values for each herd type are determined after assessing a number of key independent market indicators to ensure the values determined are representative of the full herd. The Corporation’s Werribee Agriculture team, operates an agricultural trading operation managing 21,749 cattle (2006/07: 19,686) and 21,119 sheep (2006/07: 77,695) at 30 June 2008. This operation is based principally at Cattle: the Western Treatment Plant with a small number of satellite properties to support its breeding herd. Breeding cattle (b) (i) Reconciliation of fair value of biological assets for 2007/08 Prices for these cattle generally reflect a more stable longer term price and as such are less volatile than movements Cattle Sheep Total in the spot cattle prices evident with trading cattle. These breeders were independently valued at 28 June 2008. Biological Assets $000 $000 $000 Trading cattle Fair value at beginning of period 16,851 4,892 21,743 Prices for these cattle generally reflect the shorter term spot prices available in the market place. Increases due to purchases 7,475 580 8,055 Relevant market indicators include the carcass weight rates published by the Meat and Livestock Australia Ltd (MLA). Gain arising from changes in fair value less estimated Sheep: point of sale costs attributable to physical changes 2,451 11 2,462 Breeding Sheep Gain/(loss) arising from changes in fair value less Prices for these sheep generally reflect a more stable longer term price and as such are less volatile than movements estimated point of sale costs attributable to price changes (447) (592) (1,039) in the spot sheep prices evident with trading sheep. These breeders were independently valued at 28 June 2008. Increases attributable to births 2,319 1,011 3,330 Trading sheep Decreases attributable to sales (10,477) (3,610) (14,087) Prices for these sheep generally reflect the shorter term spot prices available in the market place. Decreases attributable to death (530) (138) (668) Relevant market indicators include the carcass weight rates published by MLA. Fair value at end of period 17,642 2,154 19,796 Herd numbers 2008 2007 2008 2007 (b) (ii) Agricultural produce – wool and hay/crops $000 $000 Cattle Fair value at beginning of period 45 201 Breeding 6,510 7,460 Fair value less estimated point of sale costs of Trading 15,239 12,226 agricultural produce harvested during the period 1,624 1,336 Sheep Gain/(loss) arising from changes in fair value less Breeding 15,052 17,145 point of sale costs attributable to price changes 105 42 Trading 6,067 60,550 Decreases attributable to sales (1,257) (1,534) TOTAL 42,868 97,381 Increases due to purchases 316 – Fair value at end of period 833 45

(c) (i) Reconciliation of fair value of biological assets for 2006/07 Cattle Sheep Total Biological Assets $000 $000 $000 Fair value at beginning of period 13,469 6,126 19,595 Increases due to purchases 6,111 493 6,604 Gain arising from changes in fair value less estimated point of sale costs attributable to physical changes 3,486 625 4,111 Gain/(loss) arising from changes in fair value less estimated point of sale costs attributable to price changes (966) (470) (1,436) Increases attributable to births 728 1,067 1,795 Decreases attributable to sales (5,772) (2,702) (8,474) Decreases attributable to death (204) (247) (451) Fair value at end of period 16,852 4,892 21,744

2008 2007 (d) Representing Biological Assets: $000 $000 Current Biological Assets 9,162 8,515 Non-current Biological Assets 11,467 13,274 Total Biological Assets 20,629 21,789

100 Melbourne water sustainability report 2007–2008 101 Notes to the Financial Report

2008 2007 12. Reconciliation of movement in property, plant and equipment $000 $000 12. Non-current assets – Property, plant and equipment (c) (i) Reconciliation of movement in property, plant and equipment for 2007/08 Infrastructure (a) Classes of property, plant and equipment Freehold Buildings Leasehold Plant and assets under Works in Intangible Land Crown Land land at at fair improvements equipment Infrastructure finance lease progress assets at fair value fair value value at cost at cost assets at cost at cost at cost at cost Total *Crown land at fair value 93,410 80,670 2007/08 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 *Freehold land at fair value 834,857 693,403 Carrying amount at 1 July 2007 80,670 693,403 18,150 1,982 11,323 2,701,041 29,016 328,109 4,133 3,867,827 Total land 928,267 774,073 Additions – 10,052 797 – 6,408 252,556 – – 135 269,948

Disposals (392) (10,269) – – (10) (11,394) – (317) – (22,382) Buildings Depreciation/amortisation – – (943) (427) (5,190) (77,420) (1,621) – (1,896) (87,497) Buildings at fair value 18,947 18,150 Less: accumulated depreciation 943 – Transfers between classes 348 (203) – – (171) 26 – – – – Total buildings 18,004 18,150 Assets classified as held for sale – 181 – – – – – – 181 Revaluation increments 12,785 141,964 – – – – – – – 154,749 Leasehold improvements Revaluation decrements (1) (271) – – – – – – – (272) Leasehold improvements at cost 6,355 6,355 Capital expenditure – – – – – – – 417,809 – 417,809 Less: accumulated depreciation 4,800 4,373 Total leasehold improvements 1,555 1,982 Capitalisation of works in progress – – – – – – – (255,319) – (255,319) Carrying amount at 30 June 2008 93,410 834,857 18,004 1,555 12,360 2,864,809 27,395 490,282 2,372 4,345,044 Plant and equipment Plant and equipment at cost 50,309 44,331 (c) (ii) Reconciliation of movement in property, plant and equipment for 2006/07 Less: accumulated depreciation 37,949 33,008 Infrastructure Total plant and equipment 12,360 11,323 Freehold Buildings Leasehold Plant and assets under Works in Intangible Crown Land land at at fair improvements equipment Infrastructure finance lease progress assets Infrastructure assets at fair value fair value value at cost at cost assets at cost at cost at cost at cost Total 2006/07 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 Infrastructure assets at cost 4,014,464 3,781,404 Carrying amount at 1 July 2006 78,436 648,189 15,302 2,408 7,186 2,631,533 30,638 253,755 3,955 3,671,402 Less: accumulated depreciation 1,149,655 1,080,363 Additions 1,206 54,643 1,470 – 9,284 144,976 – – 1,796 213,375 Sub total infrastructure assets 2,864,809 2,701,041 Disposals (1,241) (32,321) (283) – (702) (6,149) – (2,083) – (42,779)

Infrastructure assets under finance lease 40,105 40,105 Depreciation/amortisation – – (568) (426) (3,982) (68,853) (1,622) – (1,929) (77,380) Less: accumulated amortisation 12,710 11,089 Transfers between classes 12 607 (1) – (463) (466) – – 311 – Sub total infrastructure assets under finance lease 27,395 29,016 Assets classified as held for sale – 350 – – – – – – – 350

Total infrastructure assets 2,892,204 2,730,057 Revaluation increments 2,257 22,556 2,294 – – – – – – 27,107

Capital works in progress at cost 490,282 328,109 Revaluation decrements – (621) (64) – – – – – – (685)

Capital expenditure – – – – – – – 226,707 – 226,707

Total non-current assets – property, plant and equipment 4,342,672 3,863,694 Capitalisation of works in progress – – – – – – – (150,270) – (150,270)

Carrying amount at 30 June 2007 80,670 693,403 18,150 1,982 11,323 2,701,041 29,016 328,109 4,133 3,867,827 * Land and buildings are shown at fair value based on an independent valuation undertaken by the Valuer General Victoria as at 1 July 2004. Subsequent revaluations have been undertaken using an indices based process revaluing assets to 30 June 2008.

(b) Intangible assets Intangible assets at cost 15,468 17,713 Less: accumulated amortisation 13,096 13,580 Total non-current assets – intangible assets 2,372 4,133

102 Melbourne water sustainability report 2007–2008 103 Notes to the Financial Report

2008 2007 2008 2007 Notes $000 $000 Notes $000 $000 13. Non-current assets – Other receivables 21. Non-current liabilities – Interest bearing liabilities Other receivables 37 23 * Lease liabilities 27, 29(d) 8,443 11,899 Total non-current assets – other receivables 27 37 23 * Borrowings 27 1,305,000 1,115,000 Total non-current liabilities – interest bearing liabilities 1,313,443 1,126,899 14. Non-current assets – Defined superannuation benefit asset * Non current interest bearing liabilities are unsecured. Defined superannuation benefit asset 13,169 31,519 Total non-current assets – defined superannuation benefit asset 36 13,169 31,519 22. Non-current liabilities – Provisions Employee benefits 35 6,560 5,556 15. Current liabilities – Trade and other payables Insurance claims 34 323 643 Creditors 27 34,349 47,851 Remediation works 34 3,188 17,977 Interest payable 27 26,056 23,083 Total non-current liabilities – provisions 10,071 24,176 Other accruals 27 25,119 20,730 Capital accruals 27 99,060 49,790 23. Net Deferred tax liabilities Advances 27 3,128 2,068 The balance comprises temporary differences attributable to: Total current liabilities – trade and other payables 187,712 143,522 Amounts recognised in the Income Statement Property, plant and equipment 538,795 508,263 16. Current liabilities – Interest bearing liabilities Employee entitlements (5,298) (4,759) * Lease liabilities 27, 29(d) 3,456 3,355 Developer contributions 22,814 25,481 * Borrowings 27 312,300 197,300 Finance lease 2,394 1,826 Total current liabilities – interest bearing liabilities 315,756 200,655 Defined benefit obligation 3,951 9,456 * Current interest bearing liabilities are unsecured. Provisions (1,901) (1,811) Revenue in advance (2,831) (3,359) 17. Current liabilities – Provisions Other 78 (110) Employee benefits 35 17,160 15,578 558,002 534,987 Insurance claims 34 634 1,123 Amounts recognised directly in equity Remediation works 34 19,065 17,518 Revaluation of property, plant and equipment 17,029 3,315 Other provisions 34 2,017 1,700 Net deferred tax liability 575,031 538,302 Total current liabilities – provisions 38,876 35,919 Movements: Opening balance at 1 July 538,302 510,126 18. Current liabilities – Other financial liabilities (Credited)/debited to the Income Statement 21,956 24,861 Credited/(debited) to equity 13,714 3,315 Financial liabilities 27 – 34 Prior Year Correction 1,059 – Total current liabilities – financial liabilities – 34 Closing balance at 30 June 575,031 538,302 19. Current liabilities – Current tax liability Net Deferred tax liabilities to be recovered after more than 12 months 578,596 543,000 Income tax – 2,096 Net Deferred tax liabilities to be recovered within 12 months (3,565) (4,698) Total current liabilities – current tax liability – 2,096 Total non-current liabilities – Deferred tax liabilities 575,031 538,302

20. Non-current liabilities – Trade and other payables 24. Contributed equity Creditors 27 244 811 Opening balance 600,147 624,779 Advances 27 8,286 10,344 Adjustment relating to the transfer of Crown Land to the Government (8,580) (24,632) Total non-current liabilities – trade and other payables 8,530 11,155 Total contributed equity at the end of year 591,567 600,147

104 Melbourne water sustainability report 2007–2008 105 Notes to the Financial Report

2008 2007 27. Financial instruments Notes $000 $000 (a) Interest rate exposure 25. Reserves At 30 June 2008, the Corporation has no significant interest-bearing assets. As such, the Corporation’s Asset revaluation reserve income and operating cash flows are not materially exposed to changes in market interest rates. Opening balance 23,792 – For 2007/08, the Corporation is exposed to interest rate risk on outstanding interest bearing liabilities. The mix of floating and fixed rate debt is managed strategically within a range of Board approved parameters, Revaluation increment/(decrement) on non-current assets 12(c) 154,749 27,107 in order to minimise exposure to fluctuations in variable rates and to minimise the long-term net cost of funding. Revaluation reserves transferred to retained profits on derecognition of asset (573) – Weighted (Increment)/decrement on deferred tax revaluation 23 (13,714) (3,315) avg. annual Floating Fixed interest Non Closing balance 164,254 23,792 effective interest rate maturing 1 to 5 over 5 interest interest rate rate 1 year or less years years bearing Total The asset revaluation reserve is used to record asset revaluation increments and decrements in the value of non-current physical assets. 30 June 2008 Notes % $000 $000 $000 $000 $000 $000 Cash flow hedge Financial assets Opening balance 35 68 Cash 6 6.81 350 – – – – 350 Gain/(loss) taken to equity 34 (33) Trade debtors 7a – – – – 18,357 18,357 Closing balance 69 35 Derivatives 10 4.22 – 483 – – – 483 The cash flow hedge reserve represents the gain or loss on conversion to Australian dollars of the cash flow hedge. Other receivables 7a, 13 – – – – 30,586 30,586 Total reserves at the end of year 164,323 23,827 Total financial assets 350 483 – – 48,943 49,776

26. Retained profits Financial liabilities Retained profits at the beginning of the year 1,262,174 1,215,265 Creditors, accruals & interest 15, 20 – – – – (184,828) (184,828) Net profit for the year 41 67,642 133,509 payable Transfer from asset revaluation reserve 25 573 – Lease liabilities 16, 21 – – – – (11,899) (11,899) Dividends paid 31 (99,400) (86,600) Derivatives 18 – – – – – – Retained profits at the end of year 1,230,989 1,262,174 Advances 15, 20 – – – – (11,414) (11,414) Borrowings: 11am Cash 16, 21 7.42 (172,300) – – – – (172,300) Floating Rate Notes 16, 21 7.59 (275,000) – – – – (275,000) Fixed Interest 16, 21 6.20 – (100,000) (400,000) (670,000) – (1,170,000) Total financial liabilities (447,300) (100,000) (400,000) (670,000) (208,141) (1,825,441)

Net financial liabilities (446,950) (99,517) (400,000) (670,000) (159,198) (1,775,665)

106 Melbourne water sustainability report 2007–2008 107 Notes to the Financial Report Notes to the Financial Report

27. Financial instruments continued. (b) Fair value The book values and net fair values of financial 2008 2008 2007 2007 Weighted assets and liabilities at balance date are: Book value Net fair value* Book value Net fair value* avg. annual Floating Fixed interest Non $000 $000 $000 $000 effective interest rate maturing 1 to 5 over 5 interest On balance sheet interest rate rate 1 year or less years years bearing Total 30 June 2007 Notes % $000 $000 $000 $000 $000 $000 Financial assets Financial assets Cash 350 350 203 203 Cash 6 6.14 203 – – – – 203 Trade debtors 18,357 18,357 22,182 22,182 Trade debtors 7a – – – – 22,182 22,182 Derivatives 483 482 511 511 Derivatives 10 4.1 – 511 – – – 511 Other receivables 30,586 30,586 18,911 18,911 Other receivables 7a, 13 – – – – 18,911 18,911 Total financial assets 49,776 49,775 41,807 41,807 Total financial assets 203 511 – – 41,093 41,807 Financial liabilities Creditors, accruals & interest payable (184,828) (184,828) (142,265) (142,265) Financial liabilities Lease liabilities (11,899) (11,899) (15,254) (15,254) Creditors, accruals & interest payable 15, 20 – – – – (142,265) (142,265) Derivatives – – (34) (34) Lease liabilities 16, 21 – – – – (15,254) (15,254) Advances (11,414) (11,414) (12,412) (12,412) Derivatives 18 – (34) – – – (34) Borrowings: Advances 15, 20 – – – – (12,412) (12,412) 11am Cash (172,300) (173,084) (37,300) (37,504) Borrowings: Floating Rate Notes (275,000) (277,633) (175,000) (175,476) 11am Cash 16, 21 6.42 (37,300) – – – – (37,300) Fixed Interest (1,170,000) (1,144,433) (1,100,000) (1,087,987) Floating Rate Notes 16, 21 6.32 (175,000) – – – – (175,000) Total financial liabilities (1,825,441) (1,803,291) (1,482,265) (1,470,932) Fixed Interest 16, 21 6.12 – (100,000) (415,000) (585,000) – (1,100,000) * Net book values are capital amounts. The differences between book values and net fair values relate principally to interest rate movements. Total financial liabilities (212,300) (100,034) (415,000) (585,000) (169,931) (1,482,265) Net fair values of financial instruments are determined as follows: Cash, deposit investments, short-term borrowings, cash equivalents and non-interest-bearing financial assets and liabilities (trade debtors and trade creditors) are valued at cost. Net financial liabilities (212,097) (99,523) (415,000) (585,000) (128,838) (1,440,458) Other borrowings are estimated based on the present value of expected future cash flows discounted at current market interest rates quoted for securities issued by the Treasury Corporation of Victoria.

108 Melbourne water sustainability report 2007–2008 109 28. Segment information (a) Description of segments Business segments: (c) Business segment reporting for 2006/07 The Corporation is organised into the following business segments: Waterways The water segment includes the harvesting, storing, treating and transfer of water to the metropolitan retail water businesses for delivery to end users. Water Sewerage & Drainage Consolidated The sewerage segment includes the transfer, treating and disposal of sewage and trade waste collected from the metropolitan retail water businesses. Business segments $000 $000 $000 $000 The waterways and drainage segment includes regional drainage and flood protection services, waterways management for achieving Revenue healthy rivers, creeks and floodplains and stormwater quality protection. External revenue/income 183,593 210,775 193,870 588,238 Geographical segments: Unallocated revenue/income 44 The Corporation operates in one geographical area. Total segment revenue/income 588,282 (b) Business segment reporting for 2007/08 Waterways Results Water Sewerage & Drainage Consolidated Business segments $000 $000 $000 $000 Segment result 89,226 69,402 105,384 264,012 Revenue Unallocated revenue less unallocated expenses (86,590) External revenue/income 178,338 215,364 206,538 600,240 Profit before income tax 177,422 Unallocated revenue/income 45 Income tax expense (43,913) Total segment revenue/income 600,285 Profit for the year 133,509

Waterways Results Water Sewerage & Drainage Consolidated Segment result 59,837 42,298 92,169 194,304 Business segments $000 $000 $000 $000 Unallocated revenue less unallocated expenses (100,793) Assets Profit before income tax 93,511 Segment assets 1,407,063 1,520,064 1,041,576 3,968,703 Income tax expense (25,869) Unallocated assets 203 Profit for the year 67,642 Total assets 3,968,906

Waterways Liabilities Water Sewerage & Drainage Consolidated Segment liabilities 23,548 119,336 48,839 191,723 Business segments $000 $000 $000 $000 Unallocated liabilities 1,891,035 Assets Total liabilities 2,082,758 Segment assets 1,571,974 1,699,897 1,162,757 4,434,628 Unallocated assets 1,670 Waterways Total assets 4,436,298 Water Sewerage & Drainage Consolidated Other segment reporting information $000 $000 $000 $000

Liabilities Depreciation and amortisation 20,377 37,358 19,645 77,380 Segment liabilities 33,910 128,222 57,000 219,132 Acquisition of property, plant and equipment and intangible assets. 50,757 95,938 66,680 213,375 Unallocated liabilities 2,230,287 Total liabilities 2,449,419

Waterways Water Sewerage & Drainage Consolidated Other segment reporting information $000 $000 $000 $000 Depreciation and amortisation 23,208 44,393 19,896 87,497 Acquisition of property, plant and equipment and intangible assets. 63,171 138,113 68,664 269,948

110 Melbourne water sustainability report 2007–2008 111 Notes to the Financial Report

2008 2007 (d) Finance lease commitments $000 $000 The Corporation has finance lease agreements with Yan Yean Water and TopAq Pty Ltd. The agreement with Yan Yean Water 29. Commitments involves the construction of a water treatment plant, commencing on 1 October 1994 for a term of 15 years. The agreement with TopAq Pty Ltd involves the development of a water recycling project that uses effluent (a) Capital commitments sourced from the Corporation’s Eastern Treatment Plant. This effluent is further treated to produce and supply Total capital expenditure contracted for the construction of water, sewerage and waterways Class A Water to customers in the project area, commencing on 29 April 2005 for a term of 25 years. and drainage infrastructure at balance date but not provided for in the accounts: 2008 2007 Property, plant and equipment payable: $000 $000 Within one year 357,367 101,827 The carrying amount of the finance lease is: Later than one year but not later than five years 361,186 23,972 Commitments in relation to finance lease are payable as follows: Total capital commitments 718,553 125,799 Within one year 4,691 4,915 Capital commitments by segment groups: Later than one year but not later than five years 5,753 9,241 Water capital commitments 133,099 25,660 Later than five years 8,217 9,420 Sewerage capital commitments 488,526 93,068 Minimum lease payments 18,661 23,576 Waterways and drainage capital commitments 96,928 7,071 Less: Future finance charges (6,762) (8,322) Total capital commitments by segment groups 718,553 125,799 Total finance lease liability 11,899 15,254 Representing finance lease liability: (b) Operating lease commitments Current (refer to note 16) 3,456 3,355 (i) Melbourne Water as lessee Non-current (refer to note 21) 8,443 11,899 The Corporation’s East Melbourne building is held under a non-cancellable operating lease expiring on 15 June 2012. Total finance lease liability 11,899 15,254 The Corporation also leases five other buildings under non-cancellable operating leases expiring from 31 May 2010. These building lease agreements have varying terms, escalation clauses and renewal rights. (e) Other operating commitments On renewal, the terms of the leases are renegotiated. Total operating expenditure (excluding leases) contracted for at balance date but not provided for in the accounts: The Corporation also leased land, photocopiers and motor vehicles under non-cancellable operating leases. Not later than one year 4,633 2,411 Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as follows: Later than one year but not later than five years 12,229 3,637 Within one year 8,169 6,100 Later than five years 149 159 Later than one year but not later than five years 12,371 12,564 Total other commitments 17,011 6,207 Later than five years 164 265 Total operating lease commitment 20,704 18,929 (f) Build, Own and Operate (BOO) commitments Lease incentives on non-cancellable operating leases included in trade creditors is as follows: 337 430 On 25 February 2000, the Corporation signed a Build, Own and Operate (BOO) contract with Australian Representing operating lease liability: Gas and Light Ltd (AGL) to purchase a minimum of 21.2 GWh of electricity generated from biogas per year for a period of 10 years. AGL has a contractual obligation to supply the minimum amount. Current (part of note 15) 93 93 Under this contract, AGL will build, own and operate the power generation plant which has been constructed Non-current (part of note 20) 244 337 on land owned by the Corporation at Western Treatment Plant. This arrangement became fully operational Total operating lease liability 337 430 on 1 July 2003. On 1 January 2006, this was replaced by a contract with a new term of 15 years. (ii) Melbourne Water as lessor This new agreement requires AGL to expand generation at its plant to approximately Operating leases relate to land owned by the Corporation with lease terms generally for a period of 10 years. 51GWh of electricity generated from biogas per year for the period of the contract. All operating lease contracts contain market review clauses. The lessee does not have an option to purchase The minimum obligation (excluding the effect of inflation) for the term of the arrangement is $31.4 million at 30 June 2008. the land at the expiry of the lease period. Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as follows: This calculation has been based on best estimates of volume throughput, peak and off peak electricity consumption and other relevant variables as detailed in the contract. Within one year 940 1,156 Later than one year but not later than five years 1,720 2,642 Future minimum obligations Later than five years 400 727 Fixed costs, payable within: Total operating lease commitment 3,060 4,525 Not later than one year 2,166 2,098 Later than 1 year but not later than 5 years 9,309 9,047 (c) Smart Water Fund Later than 5 years 19,922 22,350 The Corporation has a commitment to the Victorian Government’s Smart Water Fund in the amount of $2.8 million over the next 3 years (2006/07: $3.6 million, 4 years). The timing of such payments cannot be reliably estimated and as such have not been disclosed in yearly bands. Total value of future minimum obligations 31,397 33,495

(g) Food Bowl Modernisation Commitment The Corporation is contributing $300 million towards Phase 1 of the Government’s $1 billion Food Bowl Modernisation Project, which will modernise irrigation infrastructure across the Goulburn Murray systems. Not later than one year 85,000 – Later than 1 year but not later than 5 years 205,000 – Later than 5 years 10,000 – Total commitment 300,000 –

112 Melbourne water sustainability report 2007–2008 113 Notes to the Financial Report

2008 2007 34. Provisions $000 $000 (i) Insurance Claims 30. Contingent assets and liabilities The amount represents a provision for public liability, motor vehicle and property claims. The amount classified (a) Contingent assets as current is expected to be settled within 12 months. The amount classified as non-current is expected to be settled later than 12 months. The provision amounts are based on an independent assessment of claim costs. As at 30 June 2008, there were no contingent assets recognised. – – (ii) Remediation Works (b) Contingent liabilities The amount represents a provision for remediation works at the Dandenong Treatment Plant. Details and estimates of maximum amounts of contingent liabilities The amount classified as current represents the expected completion of works within the next 12 months. for which no provision is included in the accounts, are as follows: The amount classified as non-current represents works expected to be completed later than 12 months. Claims or possible claims against the Corporation arising out of (iii) Other Provisions various matters connected with the Corporation’s business dealings. 10,659 3,054 The amount represents other provisions that satisfy the recognition requirements of AASB 137 Provisions, Contingent Liabilities and Contingent Assets. The amount is based on legal advice and is expected to be settled within 12 months. 31. Dividends (iv) Movements in Provisions Interim dividend paid (relating to previous financial year) 48,500 38,600 Movements in each class of provision during 2007/08, other than employee benefits, are set out below: Final dividend paid (relating to previous financial year) 50,900 48,000 Insurance Remediation Other Total dividends paid 26 99,400 86,600 Claims Works Provisions Total Notes $000 $000 $000 $000 Carrying amount at start of year 1,766 35,495 1,700 38,961 The proposed interim and final dividend payable in relation to the 2007/08 financial year is $57.8 million. This amount is subject to final determination by the Treasurer after consultation with the Corporation’s Board Additional provisions recognised 71 – 405 476 of Directors and the Minister for Water and consequently has not been booked as a provision as at 30 June 2008. Amounts utilised during the year (880) (13,242) (88) (14,210) Carrying amount at end of year 957 22,253 2,017 25,227 32. Events occurring after balance sheet date No matters or circumstances have arisen since the end of the reporting period which significantly 2008 2007 affected or may significantly affect the operations of the Corporation, the results of those operations, $000 $000 or the state of affairs of the Corporation in future financial years. 35. Employee Benefits Current: Accrued salaries (part of note 15) 1,543 1,081 33. Remuneration of auditors Current: Short-term employee benefits, that fall due within 12 months During the reporting period, the following fees were paid or payable after the end of the period measured at nominal value (part of note 17) 6,345 5,573 for services provided by the Victorian Auditor General’s Office: Current: Long-term employee benefits that do not fall due within 12 months Audit of financial statements 118 109 after the end of the period measured at present value (part of note 17) 10,815 10,005 Annual Drainage Review 25 24 Non-current: Other employee benefits (part of note 22) 4,903 4,392 Total amount paid / payable 143 133 Non-current: Long service leave representing less than 7 years of continuous service measured at present value (part of note 22) 1,657 1,164 Total employee benefits liability 25,263 22,215 The aggregate employee benefit liability includes amounts for annual leave, shift leave, long-service leave, salaries, WorkCover and superannuation. All employees of the Corporation are entitled to superannuation benefits upon retirement, disability or death through membership of the following funds: (see Note 36).

114 Melbourne water sustainability report 2007–2008 115 Notes to the Financial Report

36. Defined superannuation benefit 2008 2007 $000 $000 Defined benefit superannuation The Equipsuper superannuation fund provides lump sum benefits based on length of service and final superannuable Expense Recognised in the Income Statement salary for employees engaged up until 31 December 1993. Employees contribute at rates between 0 to 7.5 per cent of their superannuation salary. The Corporation contributes to the fund based on the Corporation’s commitments Service cost 1,663 1,962 under the Employee Participation Agreement and Contribution Policy with the Trustee of the fund. Interest cost 3,708 3,575 Defined contribution superannuation Expected return on Plan assets (6,788) (6,119) Employees engaged from 1 January 1994 are entitled to benefits under accumulation funds. Actuarial loss/(gain) recognised in year 19,767 (14,153) The majority of these employees are covered by Vision Super Pty Ltd. Employees have the opportunity to make personal contributions to this fund (or other funds) at a self-nominated rate or amount. Total superannuation expense/(income) (Note 4) 18,350 (14,735) The minimum employer contribution to the fund, pursuant to the Superannuation Guarantee Charge was 9.0 per cent in 2007/08 (9.0 per cent in 2006/07). Categories of Plan assets 2008 2007 The percentage invested in each asset class at the balance sheet date was: $000 $000 Australian Equity 35% 37% Employer contributions International Equity 22% 24% Employer contributions to defined contribution funds 3,662 2,889 Fixed Income 13% 15% Employer contributions to employee nominated funds 405 283 Property 14% 13% Total employer contributions 4,067 3,172 Alternatives/Other 8% 4%

Reconciliation of the Present Value of the Defined Benefit Obligation Cash 8% 7% Balance at the beginning of the year 69,185 74,068 Total 100% 100%

Current service cost 1,663 1,962 Fair Value of Plan Assets Interest cost 3,708 3,575 The fair value of Plan assets includes no amounts relating to: Contributions by plan participants 1,060 1,050 a) any of the Corporation’s own financial instruments b) any property occupied by, or other assets used by, the Corporation. Actuarial (gains)/losses 6,040 (5,950) Benefits paid (4,923) (5,307) Expected Rate of Return on Plan Assets Taxes and premiums paid (224) (213) The expected return on Plan assets assumption is determined by weighting the expected long-term return for each asset class by the target allocation of assets to each asset class and allowing for the correlations of the investment Present value of the defined benefit obligation at the end of the year 76,509 69,185 returns between asset classes. The returns used for each asset class are net of investment tax and investment fees. An allowance for administration expenses has also been deducted from the expected return. Reconciliation of the Fair Value of Plan Assets Balance at the beginning of the year 100,704 90,852 Actual return on Plan assets (6,939) 14,322 Expected return on Plan assets 6,788 6,119 Principal Actuarial Assumptions at the Balance Sheet Date Actuarial (gains)/losses (13,727) 8,203 Discount rate (active members) 6.2% pa 5.3% pa Employer contributions – – Discount rate (pensioners) 6.8% pa 6.2% pa Contributions by plan participants 1,060 1,050 Expected return on Plan assets (active members) 7.0% pa 7.0% pa Benefits paid (4,923) (5,307) Expected return on Plan assets (pensioners) 7.5% pa 7.5% pa Taxes and premiums paid (224) (213) Expected salary increase rate 4.0% pa 4.0% pa Fair value of Plan assets at the end of the year 89,678 100,704 Expected pension increase rate 3.0% pa 3.0% pa

Reconciliation of the Assets and Liabilities Recognised in the Balance Sheet Historical Information 2008 2007 2006 2005 Present value of the defined benefit obligation 76,509 69,185 Present value of defined benefit obligation 76,509 69,185 74,068 70,279 Less fair value of plan assets 89,678 100,704 Less fair value of Plan assets 89,678 100,704 90,852 80,625 *Net superannuation liability/(asset) (13,169) (31,519) (Surplus)/deficit in Plan (13,169) (31,519) (16,784) (10,346) * The Corporation has recognised an asset in the Balance Sheet in respect of its defined superannuation benefit arrangements. Experience adjustments (gain)/loss – Plan assets 13,727 (8,203) (6,308) (3,172) If a surplus exists in the Plan, the Corporation may be able to take advantage of it in the form of a reduction in the required Experience adjustments (gain)/loss – Plan liabilities 6,227 (5,455) 3,380 (775) contribution rate, depending on the advice of the Plan’s actuary. The Corporation has elected to do this during 2007/08.

The Corporation may at any time by notice to the Trustee terminate its contributions. The Corporation has a liability Expected Contributions to pay the contributions due prior to the effective date of the notice, but there is no requirement for the Corporation Expected employer contributions for defined benefit members during the financial year ending 30 June 2009 are expected to be nil. to pay any further contributions, irrespective of the financial conditions of the Plan.

116 Melbourne water sustainability report 2007–2008 117 Notes to the Financial Report

37. Related party transactions Environment Protection Authority Victoria Victorian Urban Development Authority 2008 2007 (a) Parent entities The Environment Protection Authority Victorian Urban Development Authority $000 $000 Victoria (EPA) is responsible for (VicUrban) is the Victorian Government’s The Department of Sustainability and environmental regulation. It issues sustainable urban development agency. (d) Transactions with related parties Environment (DSE) leads and directs the licences which set environmental The Corporation is involved with VicUrban Corporation in the implementation of Receipts from related parties discharge standards for the Corporation’s in commercial arrangements associated the framework for achieving the State’s sewerage treatment plants. The standards with the development of land at the Department of Sustainability and Environment 9,306 6,953 responsibilities for sustainability of the cover discharges to water, land and air. Dandenong Treatment Plant and surplus natural and built environment. Other related parties EPA is also responsible for issuing works land at Werribee. City West Water Ltd 127,351 123,262 (b) Entities with significant influence – approvals for capital works that may Sustainability Victoria Department of Treasury and Finance include a public consultation process. South East Water Ltd 181,385 176,452 The Corporation has developed a Sustainability Victoria is a Government The Department of Treasury and Finance Yarra Valley Water Ltd 200,555 195,209 Memorandum of Understanding with owned agency that encourages and supports (DTF) administers the Water Act 1989 EPA which assists in establishing a government, business and communities to Western Water 4,776 4,928 and the Financial Management Act 1994, working relationship in respect of the promote environmental sustainability. Gippsland and Southern Rural Water 1,659 1,370 which the Corporation is required to comply. operations of the sewerage system. DTF is also responsible for protecting the Parks Victoria Victorian Urban Development Authority 4,419 1 shareholder’s interest in respect of corporate Treasury Corporation of Victoria Parks Victoria is a Government owned Sustainability Victoria 101 220 business plans, appointment of directors and The Treasury Corporation of Victoria agency that is the custodian of a diverse capital project approvals above $5 million. Vic Roads 30 3,139 provides financial accommodation estate of significant parks in Victoria and VicWater 16 - (c) Other related parties (loans to the Corporation), executes of the recreational management of Port financial arrangements (derivatives) Phillip Bay, Western Port and the Yarra The following entities have the same and provides / arranges the provision and Maribyrnong rivers. Payments to related parties controlling entities as the Corporation, of financial services to the Corporation. Department of Sustainability and Environment 8,882 3,528 and therefore are considered to be Vic Roads related parties of the Corporation. Department of Treasury and Finance 18,589 32,162 Department of Primary Industries Vic Roads is a Government owned City West Water Ltd, South East Water Ltd, The Department of Primary Industries (DPI) agency that is primarily responsible for Department of Primary Industries 384 646 Yarra Valley Water Ltd, Western Water and promotes the sustainable development of managing the Victorian arterial road Other related parties Gippsland and Southern Rural Water primary industries, including agriculture network and its use as an integral part and energy within Victoria. DPI uses a of the overall transport system. City West Water Ltd 2,819 2,603 City West Water Ltd, South East Water Ltd, collaborative approach to influence South East Water Ltd 3,912 3,081 Yarra Valley Water Ltd, Western Water, improvements in industry performance VicWater Yarra Valley Water Ltd 5,150 4,005 Gippsland and Southern Rural Water are and to encourage the adoption of new VicWater is a Government owned agency Government owned water authorities. technologies and development practices. that contributes to and influences the Western Water 351 13 City West Water Ltd, South East Water Ltd development and implementation of State Revenue Office 28,989 6,501 and Yarra Valley Water Ltd have bulk water State Revenue Office Government policies relating to water and sewerage supply agreements with the The State Revenue Office (SRO) is and wastewater services within Victoria. Environment Protection Authority Victoria 1,743 930 Corporation. Western Water has a bulk water the Victorian Government’s major tax Treasury Corporation of Victoria 89,964 78,870 supply agreement with the Corporation. collection agency. The SRO is a service Victorian Urban Development Authority 409 716 Gippsland and Southern Rural Water has agency of DTF, which falls within the a bulk recycled water supply agreement portfolio responsibilities of the Treasurer Sustainability Victoria 23 19 with the Corporation. These agreements of Victoria. The SRO administers Victoria’s Parks Victoria 345 684 operated on normal terms and conditions taxation legislation and collects a range during the reporting period. of taxes, duties and levies. Vic Roads 1,381 16 VicWater 44 53

Dividend expense Department of Treasury and Finance 99,400 86,600 Equity contributions (transfer of crown land) Department of Sustainability and Environment 8,580 24,632

118 Melbourne water sustainability report 2007–2008 119 Notes to the Financial Report

(e) Outstanding balances arising from sales / purchases of goods and services 38. Responsible persons related party disclosures The following balances are outstanding at the reporting date in relation to transactions with related parties: (a) Responsible persons The names of persons who were responsible persons at anytime during the financial year were: Current receivables › The Hon. John Thwaites MP, Minister for Water, Environment and Climate Change (1 July 2007 to 3 August 2007) Department of Sustainability and Environment 6,448 13 › The Hon. Timothy Holding MP, Minister for Water (3 August 2007 to 30 June 2008) Other related parties › Board Members: City West Water Ltd 5,243 6,267 Chairman Cheryl Batagol 1 July 2007 to 30 June 2008 South East Water Ltd 6,231 7,829 Deputy Chairman Merran Kelsall 1 July 2007 to 30 June 2008 Director Bruce Cohen 1 July 2007 to 21 August 2007 Yarra Valley Water Ltd 7,238 10,757 Director Peter Darvall 1 July 2007 to 30 June 2008 Western Water 376 250 Director Mary Anne Hartley 1 July 2007 to 30 June 2008 Environment Protection Authority Victoria 544 - Director Terry Larkins 1 July 2007 to 30 June 2008 Director Carolyn Schultz 1 July 2007 to 30 June 2008 Victorian Urban Development Authority 170 - Director Peter Vines 1 July 2007 to 30 June 2008 Sustainability Victoria – - Managing Director Rob Skinner 1 July 2007 to 30 June 2008

Current payables Remuneration of responsible persons Department of Sustainability and Environment 910 171 Remuneration paid to the Minister is reported in the Annual Report of the Department of Premier and Cabinet. Department of Treasury and Finance 1,752 1,260 Other relevant interests are declared in the Register of Members’ Interests which each member of the parliament completes. Other related parties Remuneration received, or due and receivable by the Managing Director in connection with the management City West Water Ltd 583 138 of the Corporation during the reporting period was in the range of $370,000 – $379,999. South East Water Ltd 83 82 Remuneration of directors Yarra Valley Water Ltd 210 304 The number of responsible persons whose remuneration from the Corporation was within the specified bands were as follows: Western Water 73 - Total Remuneration State Revenue Office 1,488 10,000 2008 2007 Environment Protection Authority Victoria 17 10 Income Band ($) Number Number Treasury Corporation of Victoria – Borrowings 338,362 220,391 0 – 9,999 1 - Sustainability Victoria – 580 10,000 – 19,999 – 1 20,000 – 29,999 1 - Non current payables 30,000 – 39,999 – - Department of Sustainability and Environment 7,263 9,229 40,000 – 49,999 5 6 Treasury Corporation of Victoria 1,305,000 1,115,000 70,000 – 79,999 – - Other related parties 80,000 – 89,999 1 1 City West Water Ltd 100 100 360,000 – 369,999 – 1 Yarra Valley Water Ltd 25 50 370,000 – 379,999 1 - Environment Protection Authority Victoria 110 111 Total numbers 9 9 Sustainability Victoria 56 63 $000 $000 (f) Terms and conditions Total amount 707 722 Transactions relating to dividends are subject to final determination by the Treasurer after consultation with the Corporation’s Board of Directors and Minister for Water. Transactions relating to equity contributions are determined by the Department of Sustainability and Environment in consultation with the Corporation. Transactions relating to trading activities of the Corporation including sale of bulk water, sale of sewage services and collection of drainage rates are based on normal commercial terms and conditions. Outstanding balances are unsecured and are repayable in cash.

(g) Guarantees There are no guarantees given or received for the current payables, current receivables and borrowings.

120 Melbourne water sustainability report 2007–2008 121 Notes to the Financial Report

38. Responsible persons related party disclosures 39. Remuneration of executives (b) Other related party transactions The numbers of executive officers, other than responsible persons (as defined in FRD 21A Responsible Person and Executive Officer Disclosures in the Financial Report) whose remuneration (total and base) falls within the specified bands above $100,000 are as follows: › There were no amounts paid by the Corporation in connection with the retirement of responsible persons of the Corporation during the financial year. (Base remuneration is exclusive of bonus payments, long-service leave payments, redundancy payments and retirement benefits). › There were no loans in existence by the Corporation to responsible persons or related parties during the financial year. Total Remuneration Base Remuneration › Related party transactions involving Board Members are as follows: 2008 2007 2008 2007 2008 2007 $000 $000 Income Band ($) Number Number Number Number 100,000 – 109,999 – – – 1 (i) The Chairman, Cheryl Batagol, is the Deputy Chairman of Sustainability Victoria, a Government owned agency, which provides services to the Corporation. All dealings 110,000 – 119,999 – 1 – 2 with this agency were on normal terms and conditions during the reporting period. 120,000 – 129,999 – 3 2 4 Total revenue received from Sustainability Victoria was: 101 283 130,000 – 139,999 1 1 6 9 Total payments made to Sustainability Victoria was: 23 10 140,000 – 149,999 4 6 11 7 (ii) A Director, Terry Larkins, is the Chairman of Western Water 150,000 – 159,999 4 8 2 4 and the Victorian Water Industry Association (VicWater). 160,000 – 169,999 5 6 5 – Western Water is a Government owned water authority, which has a bulk water supply agreement with the Corporation that was operative 170,000 – 179,999 6 3 2 2 on normal terms and conditions during the reporting period. 180,000 – 189,999 7 – – 1 VicWater is the peak industry association for water businesses and influences 190,000 – 199,999 – 1 4 1 the development and implementation of Government policies relating to water and wastewater services. All dealings with this agency were on normal terms 200,000 – 209,999 1 1 1 2 and conditions during the reporting period. 210,000 – 219,999 1 2 1 1 Total revenue received from Western Water was: 4,776 4,928 220,000 – 229,999 2 – – – Total payments made to Western Water was: 351 13 230,000 – 239,999 1 2 – 1 Total revenue received from VicWater was: 16 – 240,000 – 249,999 2 1 – – Total payments made to VicWater was: 44 53 260,000 – 269,999 – 1 1 – (iii) A Director, Mary Anne Hartley, is a Director of Port of Melbourne Corporation (PoMC), 300,000 – 309,999 1 – – – a Government owned agency responsible for commercial shipping in the waters of the Port Phillip Bay, Port Melbourne and Williamstown. All dealings with this 310,000 – 319,999 – – – 1 agency were on normal terms and conditions during the reporting period. 330,000 – 339,999 – 1 – – Total revenue received from PoMC was: – – Total numbers 35 37 35 36* Total payments made to PoMC was: – 1 $000 $000 $000 $000 (iv) The Deputy Chairman, Merran Kelsall, is the Chairman of the audit committee Total amount 6,444 6,393 5,612 5,674 of Darebin City Council, which provides local government for a large municipality north of the central business district. All dealings with this agency were on normal terms and conditions during the reporting period. * This total excludes one executive officer with a base remuneration of less than $100,000. Total revenue received from Darebin City Council was: 2 2 Total payments made to Darebin City Council was: 66 48 40. Key management personnel compensation › All other transactions with related party entities were made on normal terms and conditions during the financial year. Key management personnel (as defined in AASB 124 Related Party Disclosures) includes the Managing Director and selected executive officers who have the authority and responsibility for planning, directing and controlling the activities of the Corporation, directly or indirectly, during the financial year. 2008 2007 $000 $000 Short-term employment benefits 1,858 1,773 Post-employment benefits – – Other long-term benefits* 355 492 Termination benefits – – Share-based payment – – Total amount 2,213 2,265 Total numbers 8 7 * Other long-term benefits represents long service leave.

122 Melbourne water sustainability report 2007–2008 123 Notes to the Financial Report Melbourne Water Corporation Statement by Directors and Chief Finance Officer 2008 2007 Notes $000 $000

41. Reconciliation of net cash provided from operating activities to net profit Net profit 26 67,642 133,509 Depreciation 4 87,497 77,380 In the opinion of the Directors of Melbourne Water Corporation:

Provision for impaired receivables 7(a) (1) 4 (a) the accompanying financial statements are drawn up so as to present fairly, Net (gain)/loss on sale of non-current assets 3(b) (719) 491 in all material respects the financial performance of the Corporation for the year ended 30 June 2008 and the financial position of the Corporation as at that date; Assets written off / written down 4 11,652 10,623 Asset revaluation decrements 4 272 685 (b) at the date of this statement there are reasonable grounds to believe that the Corporation will be able to pay its debts as and when they fall due; Defined benefit expense 4 18,350 – Value of works taken over from developers (14,079) (10,151) (c) the accompanying financial statements are founded on a sound system of risk management and internal compliance and control which implements Changes in operating assets and liabilities: the policies adopted by the Board of Directors; and Decrease (increase) in trade receivable and other receivables (8,343) (8,345) (d) the Corporation’s risk management and internal compliance and control Decrease (increase) in other assets 599 (13,570) system is operating efficiently and effectively in all material respects. Decrease (increase) in current tax assets 5 (1,320) – We certify that the financial statements have been prepared in accordance (Decrease) increase in trade creditors and payables (7,704) 31,551 with the requirements of the Financial Management Act 1994, including the (Decrease) increase in provisions 17, 22 (11,148) (15,802) Directions and applicable accounting standards.

(Decrease) increase in current tax liabilities 19 (2,096) (4,693) We are not aware, at the date of this statement, of any circumstance which would (Decrease) increase in deferred tax liabilities 23 23,015 24,862 render any particulars in the financial statements to be misleading or inaccurate.

Net cash provided by operating activities 163,617 226,544 Dated at Melbourne on this 15th day of August 2008.

On behalf of the Board:

Cheryl Batagol Chairman

Robert Skinner Managing Director

Malcolm Haynes Chief Finance Officer

124 Melbourne water sustainability report 2007–2008 125 126 Melbourne water sustainability report 2007–2008 127 Disclosure index

This Sustainability Report is prepared in accordance with all relevant Victorian legislation. This index was prepared to facilitate identification of compliance with statutory disclosure requirements.

Ministerial Directions Disclosure required Page Report of operations Charter and purpose FRD 22B Manner of establishment and the relevant Minister 4,77 FRD 22B Objectives, functions, powers and duties 4-7,74-75 FRD 22B Nature and range of services provided 4,10 Management and structure FRD 22B Organisational structure 78 Financial and other information FRD 10 Disclosure index 128 FRD 22B Statement of workforce data 64-65 FRD 22B Summary of financial results for the year 70 FRD 22B Five-year summary of financial results 80 FRD 22B Significant changes in financial position during the year 70 FRD 22B Operational and budgetary objectives and performance against objectives 12-73 FRD 22B Occupational health and safety 62 FRD 22B Major changes or factors affecting performance 10, 13, 23, 31, 39, 45, 55, 61, 69 FRD 22B Merit and Equity 63 FRD 22B Subsequent events 114 FRD 22B Application and operation of Freedom of Information Act 1982 137 FRD 22B Compliance with building and maintenance provisions of Building Act 1993 140 FRD 22B Statement of National Competition Policy 137 FRD 22B Application and operation of the Whistleblowers Protection Act 2001 140,142 FRD 22B Details of consultancies over $100,000 136 FRD 22B Details of consultancies under $100,000 136 FRD 22B Statement of availability of other information 140 FRD 22B Environmental performance 10, 20, 24-27, 32-36, 40-43, 45-53, 64, 82 FRD 25 Victorian Industry Participation Policy disclosures 83 Financial report Statutory Financial statements required under Part 7 of the Financial Management Act 1994 SD 4.2(a) Statement of changes in equity 87 SD 4.2(b) Income statement 84 SD 4.2(b) Balance sheet 85 information SD 4.2(b) Cash flow statement 86 Other requirements under Standing Directions 4.2 SD 4.2(b) Notes to the financial statements 88-124 SD 4.2(c) Compliance with Australian accounting standards and 88 other mandatory professional reporting requirements SD 4.2(c) Compliance with Ministerial directions 88 SD 4.2(c) Accountable officer’s declaration 125 SD 4.2(d) Rounding of amounts 88 Other disclosures as required by Financial Reporting Directions in notes to the financial statements FRD 03A Accounting for dividends 92, 114 FRD 11 Disclosure of ex-gratia payments N/A FRD 19 Private provision of public infrastructure (BOO/BOOT) 91, 113 FRD 21A Responsible person and executive officer disclosures 121, 122, 123 Legislation Freedom of Information Act 1982 Building Act 1993 Whistleblowers Protection Act 2001 Victorian Industry Participation Policy Act 2003 Financial Management Act 1994

128 Melbourne water sustainability report 2007–2008 129 Statement of Our vision Our values Service responsibilities Who we work with Statutory requirements Corporate Intent Working together to ensure › We recognise that we achieve As manager of the water resources available EPA Victoria and the Department of Human Melbourne Water is committed to a sustainable water future. more by working collaboratively to supply Melbourne, Melbourne Water’s Services regulate the environmental and meeting statutory and environmental About us › We behave with integrity role integrates the management of the public health aspects of our business. and health regulations, including: total water resource across the water cycle, The Essential Services Commission regulates Melbourne Water is owned by the Victorian Our sustainability principles › We attain excellence through including provision of: prices and monitors service performance. › Complying with EPA Victoria discharge Government. We manage Melbourne’s water Our commitment to sustainability creativity and innovation We work across several arms of the Victorian licences issued for the Eastern and supply catchments, remove and treat most will be demonstrated by: › We celebrate our achievements › Water to the three metropolitan Government, including the Department Western treatment plants and other of Melbourne’s sewage, and manage rivers, and learn from our experiences retail water businesses and two of Sustainability and Environment and related agreements or understandings creeks and major drainage systems in the › Protecting and conserving non-metropolitan water authorities the Department of Treasury and Finance. › Achieving drinking water quality and Melbourne region. We are a significant Melbourne’s water resources › We work with openness, (Western Water and Gippsland Water) supply standards specified in the bulk business managing $8.7 billion (written down › Protecting and improving the transparency and accountability. › Sewerage services to the three Our customers include the metropolitan water supply agreements between replacement value) of natural and built assets. environment, including biodiversity Initiatives to support the achievement metropolitan retail water businesses retail water businesses – City West Water, Melbourne Water and City West Water, › Our leadership, scientific research, of our vision are outlined under our South East Water, Yarra Valley Water – other Our people have diverse skills and expertise › Waterway services, including drainage South East Water and Yarra Valley creativity and innovation strategic priority areas: water authorities, councils, land developers and we place a high priority on building management, waterway management Water and other water authorities, and businesses that divert river water. including Southern Rural Water, strong partnerships and relationships with the › Ensuring responsible risk management › Water Resources and water quality protection to community and all our other stakeholders. the Port Phillip and Westernport We work with a wide range of partners Western Water and Gippsland Water › Sharing information and fostering › Public Health catchments. Melbourne Water also including the Port Phillip and Westernport › Complying with the Safe Drinking Water Our customers include the metropolitan retail collaborative working arrangements › Natural Environment administers diversion licences for the Catchment Management Authority, the Act 2003, Health Fluoridation Act 1973 water businesses, other water authorities, › Maintaining long-term financial viability Yarra and Maribyrnong catchments Municipal Association of Victoria, councils and the land development industry. › Financial Viability › Complying with the Occupational Health › Contributing to the health Sustainability Victoria and universities. › Infrastructure › Recycled water services to and Safety Act 1985 and regulations. of the community metropolitan retail water businesses Research organisations, such as the Governance CSIRO and Cooperative Research Centres, › Demonstrating corporate social › Our People, Our Workplace and rural water authorities. Business policies The governance of Melbourne Water is engineering consultants and contractors responsibility ensuring intergenerational › Relationships – Customer, Melbourne Water has policies covering undertaken by an independent Board of who carry out tasks ranging from inspecting equity by considering both short Stakeholder, Community. Scale of activities its key responsibilities and obligations Directors. The Board operates under the and maintaining assets to catchment term and long-term implications Melbourne Water manages water supply, including environment, public health, provisions of Part 6 of the Water Act 1989 surveillance and litter removal, also assist in all decision making sewerage, drainage and recycled water assets community, employees, occupational (Vic) and reports annually to the Minister us to achieve our objectives. that service an area of about 13,000 square health and safety, risk management, and Treasurer. › Providing an environment where employees are encouraged to kilometres. The assets comprise: We are involved with a wide range of accounting, legal and commercial. achieve their full potential. community stakeholders including ‘Friends › 156,756 hectares of protected of’, Landcare, resident and environment water supply catchments groups, advisory bodies, rural landowners › 49 water treatment (disinfection) and the education sector. plants and two major wastewater treatment plants › 46 sewage, water and drainage

View of city from Richmond across Yarra River pumping stations › 1030 kilometres of water distribution mains, more than 200 kilometres of aqueducts and tunnels, and 399 kilometres of sewers › 1500 kilometres of underground drains and 8400 kilometres of waterways.

130 Melbourne water sustainability report 2007–2008 131 Key performance indicators 2008/09 – 2010/11

Indicator 2008/09 2009/10 2010/11 Indicator 2008/09 2009/10 2010/11

Water Waterways

Production/storage Achieve Waterways Operating Charter performance targets 100% 100% 100%

Operate water supply system within 100% 100% 100% Drainage and flood protection environmental requirements – % compliance All new development complies 100% 100% 100% Contribute to the Government’s target of reducing 3.3% 3.7% N/A with flood protection standards per capita water consumption by 15% by 2010 (adjusted for transfer of sustainable water plans to council) Currently known intolerable 0 0 0 flood risks reduced by 10% by 2013 Maintain system losses as a percentage of <1.0%1 <1.0%1 <1.0%1 water supplied to retail water businesses Stormwater quality

Water transfer Cumulative reduction in nitrogen loads in urban 86 tonnes 100 tonnes N/A stormwater run-off in accordance with the Compliance with retail water businesses’ pressure 99.6% 99.6% 99.6% Environment Management Plan for Port Phillip Bay requirements as set out in Bulk Water Service Agreements Achieve Water Plan implementation targets 100% 100% 100% Water quality set out in the Waterways Water Quality Strategy and Regional River Health Strategy Compliance with BWSA water quality requirements: Waterways condition Microbiological standards (E.coli) 100% 100% 100% Achieve Water Plan implementation targets 100% 100% 100% Disinfection by-products 100% 100% 100% assigned to Melbourne Water from the Regional River Health Strategy and Addendum Aesthetics (turbidity) 91.5% 91.5% 91.5% Land development Aesthetics (aluminium) 100% 100% 100% Development and redevelopment services strategies 100% 100% 100% Sewage prepared, implemented and reviewed according to the development planning program Western Treatment Plant treatment/disposal Statutory and agreed industry response 100% 100% 100% EPA Victoria licence compliance times to be achieved for all referrals Compliance with discharge licence requirements 100% 100% 100% Streamflow diversions - Nitrogen load to Port Phillip Bay <3100 tonnes <3100 tonnes <3100 tonnes Diversions to be managed: 100% 100% 100% - Offensive odours beyond the boundary 0 0 0 In accordance with rules specified in stream flow management plans, local management rules or drought response plans - Raw sewage TDS <1250 mg/L <1000 mg/L <1000 mg/L To meet the service requirements in Melbourne Water’s 100% 100% 100% eastern Treatment Plant treatment/disposal Rural Customer Charter (Diversion Services)

EPA Victoria licence compliance Community and stakeholder engagement Compliance with discharge licence requirements 100% 100% 100% Maintain at least 70% total community 70% 70% 70% 2 - Ammonia limit 5 mg/l 5 mg/l 5 mg/l satisfaction with waterways

- Offensive odours beyond the boundary 0 0 0 Recycled Water

- Litter at beach (that results in a licence breach) 0 0 0 Contribute 19.6% to the Government’s 19.6% 19.6% N/A 20% water recycling target by 2010 - Final effluent TDS <500 mg/L <500 mg/L <500 mg/L Contribute 964 million litres of recycled water to 608ML 656ML 736ML Sewerage transfer retail water businesses for potable substitution by 2013

EPA SEPP compliance for sewerage system spills Corporate

System failure – zero spills due to sewerage system failure 0 0 0 Sustainability

Hydraulic deficiency – progressively achieve zero spills 0 0 0 Achieve sustainability performance ranking in the top quartile Top 25% Top 25% Top 25% due to storm events of a severity of up to 1-in-5 years against global water utilities and Australian utilities, using the Dow Jones Sustainability World Indexes (DJSI) Complaints relating to transfer system odour <10 <10 <10 Maintain financial viability Biosolids management Meet regulated Water Plan operating expenditure ($M) 275 297.8 321 Maximise sustainable reuse of biosolids: WTP – equivalent to 100% of biosolids 0 0 0 Interest cover 1.8 1.7 1.9 produced annually by 2011/12 Cash returns to Government ($M) 76.7 119.2 163.4 Trade waste Gearing (debt/debt + equity) 57.6% 63.4% 65.3% Work with retail water businesses 0 0 0 to improve trade waste management: Return on equity 5.1% 5.4% 8.5% Number of high risk non-compliant trade waste discharges to Melbourne Water’s sewerage system

132 Melbourne water sustainability report 2007–2008 133 Key performance indicators 2008/09 – 2010/11 Publications

Consistent with Melbourne Water’s sustainability principles, a significant proportion of our Indicator 2008/09 2009/10 2010/11 newsletters, reports, posters, booklets and flyers were produced this year as online documents.

Corporate Title Date of publication Our people, our workplace Reports Number of lost time injuries: 0 0 0 Diamond Creek Streamflow Management Plan Annual Report 2006/07 September 2007

Melbourne Water people Hoddles Creek Streamflow Management Plan Annual Report 2006/07 September 2007 Maribyrnong Waterwatch – Annual Report, Data Report February 2008, April 2008 Major contractors Making Connections – Outcomes and Future Initiatives April 2008 Maintain SafetyMap accreditation Yes Yes Yes Land Development Manual April 2008 Turnover 5-10% 5-10% 5-10% Strategies and plans Absenteeism (days per person per year) 2.7 2.7 2.7 Port Phillip and Westernport Flood Management and Drainage Strategy November 2007 Implement a sustainability education Olinda Creek Streamflow Management Plan November 2007 program across the organisation: Steels, Pauls and Dixons Creek Streamflow Management Plan November 2007 % employees who believe that their personal Stringybark Creek Streamflow management Plan November 2007 sustainability performance has improved through Melbourne Water’s education and influence 80% 80% 80% Plenty River Streamflow Management Plan November 2007 Minimise everyday environmental impacts: Waterways Water Quality Strategy March 2008 Customer Charter for Diversions Services March 2008 Cumulative reduction in office water consumption per FTE 3% 4% 5% Principles for Provision of Waterway and Drainage Services for Urban Growth June 2008 Cumulative reduction in paper use per FTE 7% 10% 12% Education Cumulative reduction in office waste to landfill per FTE 4% 6% 8% Edstream online newsletter August 2007, October 2007, Cumulative reduction in office energy use per FTE 3% 4% 5% December 2007, February 2008 River health information session flyer October 2007 Offsetting greenhouse gas emissions from office energy use and travel 100% 100% 100% Primary school calendars – Eastern Treatment Plant, December 2007 Western Treatment Plant, Winneke water treatment plant Relationships – customer, community, stakeholder Leadership in Stormwater: seminar series for local government – flyer April 2008 (produced in conjunction with Clearwater, EPA Victoria, Municipal Association Customers of Victoria, Stormwater Industry Association of Victoria) Number of complaints escalated to Glen Iris Wetland Concept Plan – poster May 2008 Energy and Water Ombudsman of Victoria 3 3 3 (produced in conjunction with the City of Boroondara and Stockland) River Health Youth Conference Program – booklet June 2008 Community Community newsletters and bulletins Effectiveness of community committee and community consultation processes 80% 80% 90% Eastern Treatment Plant Community Liaison Committee August 2007

Effectiveness of community education programs 80% 80% 90% Patterson Lakes Advisory Committee September 2007, December 2007, May 2008 Northern Sewerage Project – one to three works bulletins a month, October 2007, April 2008 Natural environment project updates produced in conjunction with Yarra Valley Water Renewable energy and greenhouse Waterwatch – Dandenong region October 2007, April 2008 Waterwatch –Westernport region December 2007, June 2008 Renewable energy used or exported as % of total energy used 54% 58% 61% Melbourne Main Sewer Replacement December 2007 % reduction on 2000/01 greenhouse gas emissions 40% 40% 40% Puddles in the Plains (Werribee Plains newsletter) March 2008 Biodiversity Extended waterways and drainage operating areas – newsletters, reports, fact sheets April 2008 to June 2008 For the 9 DSE-designated sites of high biodiversity Tarago project Regular updates significance (Biosites), the number of Biosites that have: Sugarloaf Pipeline Project Regular updates been surveyed (cumulative) 4 8 9 General had management plans developed (cumulative) 3 4 8 OnTap Monthly internal online newsletter had management plans implemented (cumulative) 0 2 3 The Source Online magazine (10 issues)

1. Reflects accuracy of estimate and annual variation in volume supplied Weekly Update email internal newsletter 2. Performance will be measured every two years

134 Melbourne water sustainability report 2007–2008 135 Consultants National Freedom of Access to documents Competition Information During 2007/08, Melbourne Water engaged 17 consultants at less than $100,000 each to People wanting access to Melbourne Water Policy undertake operational and capital works projects at a total cost of $542,000 (excluding GST). Melbourne Water is subject to the documents under the Freedom of Freedom of Information Act 1982 (Vic.) Information Act 1982 (Vic.) should write to: In addition, Melbourne Water engaged six consultants at more than $100,000 Melbourne Water will submit our and is committed to making documents to undertake the following projects (expenditure excludes GST): 2009 Water Plan for water, sewerage Freedom of Information Officer and information available to the community and recycled water services to the Melbourne Water whenever it can. The designated persons Essential Services Commission (ESC) PO Box 4342 Consultant Project Total fee Expenditure Future for the purpose of the Act are: approved ($) 2007/08 ($) expenditure ($) in November 2008 to enable the ESC Melbourne Victoria 3002 to make a price determination for the Principal officer: Ms C Batagol Australian Water Disinfection by-product study – Stage 1 126,157 108,676 - four-year period commencing 2009/10. Each application must clearly identify the Quality Centre Chairman, Melbourne Water The 2009 Water Plan will set out documents sought and be accompanied Australian Water Disinfection by-product study – Stage 2 91,000 30,000 61,000 performance relative to the expenditures Authorised officer: Ms J Denton by the required application fee, currently Quality Centre and outcomes included in the ESC’s $22.70. General inquiries concerning first determination as well as proposed Freedom of Information can be made by CH2M Hill Australia Review of drinking water quality 113,152 112,911 - Freedom of Information Officer, requirements for desalination outcomes, expenditures and prices for Melbourne Water telephoning the Freedom of Information the second price determination period. Officer on (03) 9235 7184 between 9am Hydro Tasmania Aeration blower efficiency 90,690 48,690 - Requests for and 5pm, Monday to Friday or via email to: In December 2007, Melbourne Water Hydro Tasmania Wind site analysis 162,783 162,783 - [email protected] submitted its 2008 Water Plan for information MWH Australia Blue Circle biosolids technical support 30,000 21,348 - waterways and drainage services, This year we received 20 requests Information on our consultative which enabled the ESC to make a for access to documents under the arrangements, required under Section 7 MWH Australia Drinking water quality risks in Melbourne’s 224,103 195,833 - price determination for these services of the Act, is available on our website, open water supply catchments Freedom of Information legislation. commencing in 2008/09 for a five-year melbournewater.com.au. Information MWH Australia Maroondah Aqueduct 107,088 85,698 21,390 period. These processes are consistent We processed these requests as follows: on our publications, also required under with the pricing and institutional Section 7, is included in this report. Access in full 6 MWH Australia Salt reduction plant and brine disposal 139,940 139,605 - reform objectives of the National Access in part 4 MWH Australia Winneke residuals management 245,000 53791 191,209 Competition Policy. Categories of Access refused 1 Sinclair Knight Merz Victorian Water Plan: water quality 298,000 286,302 - Melbourne Water is corporatised and documents implications for Melbourne Documents not located 7 therefore has an independent Board, with We use a computerised records management Sinclair Knight Merz Review of supply augmentation 10,744 10,080 - independent and objective performance Applicant did not proceed 0 system to manage our correspondence and monitoring. We face equivalent tax Not finalised 2 documents. We use online computer systems Sinclair Knight Merz Winneke upgrade functional design 300,000 131,462 168,538 treatment, borrowing requirements and to manage our financial, human resource and regulations as a private business. As outlined URS Australia Eastern Water Recycling Proposal 200,000 143,841 - The applications received related other operational activities and plans relating released water quality study above, we also operate in an environment to the following issues: to our water supply, waterways, and drainage where the ESC determines cost-based Personal injury 1 and sewerage responsibilities. Historical URS Australia Salt reduction plant 26,599 26,599 - pricing. In this regard, our processes are archives on our activities are available Water quality 4 consistent with the requirements of the through the Public Record Office Victoria. Competitive Neutrality Policy Victoria. Business administration 6 Water supply 6 Pricing

Waterways management 2 Consistent with the Essential Services Property 0 Commission’s 2008 Water Price Review, Flooding 1 Melbourne Water’s water and sewerage prices will increase by an average of 23.5% in real terms (excluding inflation) for Number of 2008/09. As discussed above, Melbourne Year requests Water will submit its 2009 Water Plan for 2003/04 17 water and sewerage services to enable the 2004/05 11 ESC to make a price determination for the four-year period commencing 2009/10. 2005/06 14

2006/07 20 This reflects the ESC’s assessment of the 2007/08 20 efficient cost of delivering customer, government and regulatory requirements Grounds for refusing release of documents: over that period. Further information on bulk internal working documents and/or water and sewerage charges as well as the documents containing sensitive commercial waterways and drainage charges is available information and/or documents affecting at melbournewater.com.au personal privacy and/or Cabinet documents.

136 Melbourne water sustainability report 2007–2008 137 Bulk entitlements Individual entitlement Temporary qualification of rights 6 Temporary Qualification Maribyrnong Basin Bulk entitlement reporting obligations – bulk entitlement (Thomson River of Rights – Yarra River The following table details the annual amendment for The metropolitan retail water businesses Thomson Basin – Environment) 2005 Environmental Entitlement 2006 reporting obligations against the Bulk hold bulk entitlements to the water Rosslynne Reservoir On 23 March 2007, the then Minister On 20 October 2007, the Minister for Water Entitlement (Maribyrnong – Melbourne resources of the Yarra River, Thomson The long-term average 171,800 for Water agreed to relax the operating agreed to reduce the Yarra River environmental Water) Conversion Amendment Order 2000. The combination of dry consecutive years River and Silver/Wallaby Creeks annual bulk entitlement million diversion limit litres tolerance placed on the achievement of entitlement by 10,000 million litres a year The data is based on the entitlement to and the level of releases required from (Goulburn River Basin). The entitlements water in Rosslynne Reservoir, the major 2 minimum environmental flows downstream on average for the period until the earlier of Rosslynne Reservoir to maintain the passing were established as a collective ‘pool’ The 15-year rolling average 144,100 annual diversion taken from million of until Stage 2 water construction of Melbourne’s desalination plant storage in the Maribyrnong Basin. flows in the Maribyrnong River led to the and transferred to the metropolitan retail the Thomson River Basin litres restrictions are lifted in Melbourne. is complete or Melbourne is no longer subject approval by the previous Minister for Water water businesses on 30 October 2006. under this entitlement to restrictions more severe than Stage 2. RELEASES MADE FROM 0 MILLION of temporary amendments to the following Before then, Melbourne Water held the Annual diversion from the 124,500 On 20 December 2007, the Minister for THE RESERVOIR TO LITRES From this time, the environmental flow rules SUPPLY LICENCE HOLDERS bulk entitlements: bulk entitlements. Thomson River Basin for million Water further qualified environmental flows 2007/08 litres in place prior to the granting of the Yarra River on the Thomson River. This qualification SHARE OF STORAGE 25 MILLION › Bulk Entitlement The data below represents the bulk environmental entitlement in October 2006 CAPACITY AT 30 JUNE 2008 LITRES Storage volume in the retail 184,300 reduced the environmental entitlement by (Maribyrnong – Southern Rural Water) entitlement reporting requirements water businesses’ share of million will apply until Stage 2 restrictions are lifted. 10,000 million litres on 31 December 2007 INFLOWS ATTRIBUTED 46 MILLION Conversion Order 2000 for 2007/08. the reservoir at 30/06/08 litres These include the environmental flow rules TO MELBOURNE WATER LITRES and annually thereafter by 8000 million litres. set out in Schedule F7 (Waters of the Yarra Flow into the retail water 139,600 › Bulk Entitlement Reporting obligations common to Yarra Catchment) of the Victorian State Environment TRANSFERS AND OPERATING 0 MILLION businesses’ share of the million Yarra Basin LOSSES WITHIN THE SYSTEM LITRES (Maribyrnong – Melbourne Water) River, Thomson River and Silver/Wallaby reservoir litres Protection Policy. Compliance with revised Conversion Order 2000 MELBOURNE WATER RELEASES 37 MILLION Creek (Goulburn River) entitlements Environmental releases from 38,600 The long-term average 400,000 environmental flows under the qualification annual bulk entitlement million TO MEET ENVIRONMENTAL LITRES › Bulk Entitlement the retail water businesses’ million was achieved. FLOW REQUIREMENTS Total Melbourne Water supply system share of the reservoir litres diversion limit litres (Maribyrnong – Western Water) 7 WATER TAKEN BY LICENCE 2469 The long-term average 555,000 Compliance with No3 The 15-year rolling average 288,5004 On 26 June 2007, the Minister for Water Conversion Order 2000 annual diversion taken from million HOLDERS FROM THE MILLION annual bulk entitlement million recommended approved the temporary transfer of up to MARIBYRNONG RIVER TO LITRES The amendment orders were granted diversion limit litres environmental flow regime the Yarra system under this litres entitlement 500 million litres of water to Goulburn SATISFY ENTITLEMENTS on 26 October 2006 and are set to 1 The 15-year rolling average 438,100 Number of permanent Nil Valley Water. The transfer will cease when TRANSFER OF LICENCES 0 expire on 30 November 2008. annual diversion taken million transfers Annual diversion from the 205,200 a total of 500 million litres has been from the Yarra, Thomson litres Yarra River Basin for 2007/08 million TEMPORARY/PERMANENT Nil and Goulburn Basins for Volume of permanent 0 litres transferred, or Kilmore and Wandong/ TRANSFER OF BULK ENTITLEMENT The amendment to Southern Rural the Melbourne supply system transfers Heathcote Junction are no longer subject Water’s bulk entitlement temporarily Storage volume in the retail 329,600 to Stage 4 restrictions, whichever comes TEMPORARY/PERMANENT Nil replaces the requirement to provide constant Annual diversion from 330,810 Number of temporary Nil water businesses’ share of million TRANSFER OF BULK ENTITLEMENT the Yarra, Thomson and million transfers storages at 30/06/08 litres first. A total of 300 million litres was WHICH MAY ALTER THE FLOW IN minimum passing flows at Sunbury with Goulburn systems for litres transferred to Goulburn Valley Water under THE WATERWAY a requirement to release flushes if water 2007/08 Volume of temporary 0 Flow into the retail water 278,600 transfers businesses’ share of storages million this transfer arrangement in 2007/08. ALTERATION TO VOLUME OF Nil quality drops below defined thresholds. Total annual consumption 381,100 litres Amendment to bulk Nil WATER UNDER LICENCES ISSUED in 2007/08 million Goulburn Basin (Silver and Wallaby Creeks) BY MELBOURNE WATER The Melbourne Water and Western Water litres entitlement Annual volume of water 10,400 supplied to Western Water as million ALTERATION TO SECURITY OF Nil bulk entitlements were amended to ensure 2 Compliance against the bulk entitlement diversion a primary entitlement holder litres The three-year rolling 66,000 SUPPLY OF ENTITLEMENTS 1 Compliance against the bulk entitlement diversion annual total Bulk million consistency with the revised environmental limit has been reported as the 15-year rolling average limit has been reported as the 15-year rolling UNDER LICENCES average annual diversion from the Thomson system. Total environmental 37,200 Entitlement diversion limit litres flow requirements specified under the annual diversion from the combined Yarra, Thomson releases and spills from million and Silver/Wallaby Creek systems. 3 In October 2007 there was a minor non-compliance 8 NEW BULK ENTITLEMENT Nil amended Southern Rural Water entitlement. retail water businesses’ share litres The three-year rolling 5640 GRANTED TO MELBOURNE with minimum flow requirements in the Thomson of storages annual total taken from the million The metropolitan retail water businesses River at Coopers Creek gauging station. The minimum WATER TO SUPPLY ENTITLEMENTS Silver and Wallaby system litres UNDER LICENCES Privacy legislation have established a Management Agreement flow was 214 ML/day compared with a required Compliance with water Yes5 under this entitlement and Management Rules as required by the minimum of 225 ML/day. While this was within the harvesting capacity IMPLEMENTATION OF yes required operational tolerance of 15 ML/day, the Annual diversion from the 1110 Melbourne Water is subject to the 6 METERING PROGRAM bulk entitlement order. operational tolerance requiring the seven-day total Compliance with Yes Silver/Wallaby Creek system million Information Privacy Act (2000) and the recommended (Goulburn Basin) for 2007/08 litres recorded flow to equal the seven-day total minimum FAILURE TO COMPLY Nil Health Records Act (2001) and is committed required flow of 1575 ML was not met. The seven-day environmental flow regime WITH ANY PROVISION totals for 21 and 22 October 2007 were 1559 ML and Compliance with Yes OF BULK ENTITLEMENT to protecting the privacy of all personal and Number of permanent Nil maximum transfer rate 1570 ML respectively. Corrective action was health information it collects and handles. undertaken to reduce the potential for this transfers DIFFICULTY EXPERIENCED Nil non-compliance to recur. Number of Nil IN COMPLYING WITH BULK Melbourne Water collects and handles Volume of permanent 0 permanent transfers transfers ENTITLEMENT AND REMEDIAL personal and health information only to Volume of 0 ACTION TAKEN/PROPOSED carry out our functions and activities. Number of temporary 1 permanent transfers transfers 9 Excludes domestic and stock licences, Number of Nil which are currently unmetered. Melbourne Water is committed to openness Volume of temporary 300 million temporary transfers and transparency and welcomes any queries transfers litres7 Volume of 0 about our approach to privacy. We endeavour Amendment to bulk Nil temporary transfers to resolve any privacy complaints quickly and entitlement Amendment to Nil effectively. People wanting to make a privacy 4 Compliance against the bulk entitlement diversion limit bulk entitlement complaint should write to: has been reported as the 15-year rolling average annual diversion from the Yarra system. 8 Compliance against the bulk entitlement diversion The Privacy Officer – Melbourne Water, limit has been reported as the total harvest from 5 Harvesting was undertaken up to the capacity of the 1 July 2005 to 30 June 2008 from the Silver and PO Box 4342, Melbourne Victoria 3002 infrastructure existing at the time of conversion of the Wallaby system. bulk entitlement order.

138 Melbourne water sustainability report 2007–2008 139 Whistleblowers’ Compliance with › Maroondah StormSmart › Western Port Portfolio Catchment and Waterwatch Steering Committee Coordinating Group Protection and Building Act 1993 land protection › Melbourne Waterwatch Boonerwrung Procedures › Cardinia Municipal Emergency › Operating Charter Review › Board of Port Phillip and Westernport Region Steering Committee Melbourne Water’s major premises are Management Planning Committee Steering Committee Catchment Management Authority › Melbourne Waterwatch compliant with the Building Act 1993. The Whistleblowers Protection Act 2001 › Maribyrnong Municipal Emergency › Water Quality Research Australia › Dandenong Catchment Committee Coordinators’ Committee began operation on 1 January 2002. Melbourne Water is currently reviewing Management Planning Committee – › e-Water CRC It aims to encourage and facilitate › Galada Tamboore Working Group › Melbourne Waterwatch Werribee remote sites to ensure building compliance. Maribyrnong Township sub-committee disclosure of improper conduct by › Knox Regional Pest Plant and Catchment Steering Committee › Flood Management Planning Diversions/flow management public officers and public bodies. The office at requires Animal Management Group Framework Steering Committee (Office › Bulk entitlements committees Emergency response upgrade to achieve compliance and works Melbourne Water is committed to the aims Emergency Services Commissioner) › Maribyrnong Catchment Committee and fire prevention are scheduled to commence in November › Diversion Management and objectives of the Act, has established the › Monbulk Creek Retarding Basin/ › Bureau of Meteorology/ 2008. An assessment has been carried out at › South West Monitoring Partnership – DSE Advisory Committee following procedures and takes the following Birdland Reserve Working Group Victorian State Emergency Service, Devilbend Reservoir and quotes are now › Gippsland Regional Water approach to disclosures of improper conduct: › Gippsland Regional Monitoring Melbourne Water Steering Group being sought for the upgrade works. Monitoring Partnership – DSE Partnership Working Group › Neerim District Landcare Group › A reporting system was established › Port Phillip and Westernport Regional › Emergency Issues Committee Further assessments at Maroondah, Yan Yean › State Hydrographics Technical › Gippsland Research Coordination Group with Protected Disclosure Officers Catchment Strategy Steering Committee › Regional Fire Prevention Committees and Upper Yarra are scheduled to be carried Working Group – DSE reporting to the Protected Disclosure › Gippsland Research, Development out prior to the end of November. › Shire of Nillumbik – Flood › State Water Quality Monitoring › Shire of Yarra Ranges Coordinator, who in turn, reports and Coordination Committee Melbourne Water also has a number of Planning sub-committee and Assessment Committee Municipal Emergency Response to the Managing Director smaller portable and remote offices which › Keilor Diverters Advisory Group Management Committee › City of Kingston – Municipal › State Waterway Managers Forum › Melbourne Water will take all will be assessed prior to 30 June 2009. › Licensing Steering Committee Emergency Management Committee › Shire of Nillumbik Fire reasonable steps to protect the › Tarago Integrated Catchment and associated working groups Prevention Committee identity of a whistleblower and is › Westernport Greenhouse Management Plan Committee Information available › Metropolitan Drought Response committed to the protection of genuine Alliance Reference Group › Truganina Coastal Parklands › Victorian State Emergency on request Plan Coordination Committee Service/Melbourne Water/ whistleblowers against reprisals for › Casey Coastal Strategy Reference Group Coordinating Group making protected disclosures Further information is available on request › Streamflow Management Municipal Association Victoria › Waterways and Drainage about: pecuniary interests of relevant Road construction Plan committees › The principles of natural justice will Advisory Committee › Victorian Emergency be followed in any investigation officers, details of Melbourne Water › Southern and Eastern Integrated › Wandin Yallock Groundwater Supply Management Council › Waterway Rehabilitation Working Group of a public interest disclosure. publications, major external reviews carried Transport Authority – environmental Protection Area Management out on Melbourne Water, research and Plan Working Group Waterway management The following appointments were made to effects statement technical reference › Werribee Catchment Committee development activities, overseas visits, major manage disclosures of improper conduct: group, Frankston By-Pass › Water Market and Irrigation › Bunyip Main Drain Project promotional, public relations and marketing › Westernport Catchment Committee Reforms Steering Committee Coordinating Committee activities, assessments and measures to Special rating arrangements › Yarra Catchment Committee Protected Disclosure Coordinator and associated working groups › ‘Friends of’ groups (various) improve the occupational health and safety › Yarra Valley and Dandenong Ranges Leigh Keath, Manager, Human Resources › Koo Wee Rup and Longwarry Drainage › Yarra River Environmental Water of employees, statement of industrial Environmental Weed Working Group › Kananook Creek Association and Flood Mitigation Advisory Committee Reserve Steering Committee Protected Disclosure Officers relations and details of time lost through › Landcare (various) industrial accidents and disputes, and major › Patterson Lakes Advisory Committee and Advisory Group › Yarra Valley Environmental Kevin Woff sponsorships. Please ring 131 722 (within Best Practice Working Group › Merri Creek Management Committee Judith Palmer › Yallock Drainage and River Improvement Recycled water Victoria) or (03) 9235 7100 (within the rest › Moonee Ponds Creek Linda Duprey Rates Advisory Committee Regional issues of Australia) or visit melbournewater.com.au › Alternative Water Supply Coordination Committee Nicole Latham State/national policy/advisory Working Group › Eastern Freeway Extension Steve Hosking Community Activity Group › Moonee Ponds Creek – Clean-up Project Committees committees or boards › Smart Water Fund › Darebin Creek Coordination Committee Melbourne Water has established written › Australian Water Association › Eastern Treatment Plant Melbourne Water consulted with the › Werribee and Bacchus Marsh procedures, which are contained in this Community Liaison Committee › Merri Creek Coordination Committee following committees in 2007/08: › Board of Water Services Irrigation Districts Customer report, at melbournewater.com.au or by Association of Australia (WSAA) Consultative Committee › Geelong Freeway Extension Liaison Group › Port Phillip and Westernport Regional contacting a Protected Disclosure Officer or River Health Strategy Steering Land development and associated committees › WSAA Water Recycling Network › Monash Freeway – Hallam the Protected Disclosure Coordinator at: Committee and Working Group › Association of Land Development › Index of Stream Condition By-Pass Project Professional organisations Melbourne Water Engineers (ALDE) committees Steering Committee › Northern Suburbs Sewerage 100 Wellington Parade, › Stormwater Industry Association › Development Industry – Water › National Codes Reference Group Strategy Consultation Committee East Melbourne Victoria 3002 (Victorian Committee) Industry Liaison Committee Telephone: 03 9235 7297 › Region 4 Division 2 Emergency › Smart Growth (DSE) – Casey › Melbourne Water/VicRoads Response Planning Committee Wetlands/water Cardinia Growth Corridor There were no whistleblower Liaison Committee › Regulatory Control of Water Meters quality management › Smart Growth (DSE) – Plenty Corridor requests this year. › Urban Development Institute › Shire of Yarra Ranges Municipal › Edithvale-Seaford Wetlands › Werribee West Infrastructure Group of Australia Liaison Committee Community Liaison Committee Emergency Management › Western Treatment Plant Planning Committee Floodplain management › Lillydale Lake Landcare Community Liaison Committee › State Fishway Implementation Consultative Committee › Victorian Floodplain Managers Forum › Western Treatment Plant Wildlife Committee › Consultative Committee › Victorian Flood Warning Consultative › Victorian Stormwater Advisory Advisory Committee Committee (Met Bureau) › Western Treatment Plant/The Spit Forum Committee, Working Group › Yarra Task Team › State Flood Policy Committee and Technical Group › Yarra Glen By-Pass Environmental Effects Consultative Committee › Total Flood Warning System › Victorian Water Industry Association sub-committee › Water Efficient Appliance Group › Victoria State Flood Strategy Revision › Water Environment Federation Technical Steering Committee

140 Melbourne water sustainability report 2007–2008 141 Whistleblowers’ Melbourne Water will take all reasonable 4.3 Detrimental action Protection and steps to protect people who make such The Act makes it an offence for a person to Global Report Initiative – content index disclosures from any detrimental action take detrimental action against a person in Procedures in reprisal for making the disclosure. reprisal for a protected disclosure. It will also afford natural justice to the gri indicator Page 1. Purpose person who is the subject of the disclosure. Detrimental action includes: 1. strategy and analysis These procedures establish a system for › Action causing injury, loss or damage 1.1 Statement from the CEO and Chair 11 reporting disclosures of improper conduct 3. Performance standards › Intimidation or harassment 1.2 Description of key impacts, risks and opportunities 10-11 or detrimental action by Melbourne Water The Whistleblowers Protection Act 2001 began or its people under the Whistleblowers operation on 1 January 2002. The purpose › Discrimination, disadvantage or 2. organisational profile adverse treatment in relation to Protection Act 2001 (the Act). The system of the Act is to encourage and facilitate the 2.1 Name of the reporting organisation Front cover, 3 enables such disclosures to be made to making of disclosures of improper conduct a person’s employment, career, 2.2 Products and/or services 4, 130 the Protected Disclosure Coordinator by public officers and public bodies. The Act profession, trade or business, including or to one of the nominated Protected provides protection to whistleblowers who the taking of disciplinary action. 2.3 Operational structure 4-5, 78, 130 Disclosure Officers. make disclosures in accordance with the Act, 2.4 Location of organisations headquarters Back cover and establishes a system for the matters 5. Legislation/regulations Disclosures may be made by Melbourne 2.5 Number of countries where organisation operates 130-131 disclosed to be investigated and rectifying Whistleblowers Protection Act 2001 Water people or by members of the public. actions to be taken. 2.6 Nature of ownership and legal form 4, 130-131 These procedures are designed to Section 104 details reporting requirements 2.7 Markets served 4, 130-131 4. Definitions complement normal communication 2.8 Scale: number of employees; net revenues; and total assets 4, 130-131 channels between Melbourne Water people. Three key concepts in the reporting system 6. References 2.9 Significant changes during reporting period 70 People are encouraged to continue to raise are improper conduct, corrupt conduct and Melbourne Water Code of Conduct appropriate matters at any time with their detrimental action. Definitions of these 2.10 Awards received in the reporting period (No awards to report) managers/team leaders. As an alternative, terms are set out below. 3. report parameters people may make a disclosure of improper conduct or detrimental action under the 4.1 Improper conduct Report profile Act in accordance with these procedures. Improper conduct means conduct that is 3.1 Reporting period 3 corrupt, a substantial mismanagement 3.2 Date of most recent previous report 3 2. Scope of public resources, or conduct involving 3.3 Reporting cycle 3 Melbourne Water is committed to the aims substantial risk to public health or safety and objectives of the Whistleblowers or to the environment. The conduct must 3.4 Contact point for questions 3, Back cover Protection Act 2001. It does not tolerate be serious enough to constitute, if proved, a criminal offence or reasonable grounds improper conduct by its people, nor the Report scope and boundary taking of reprisals against those who come for dismissal. forward to disclose such conduct. 3.5 Process for defining report content 3 4.2 Corrupt conduct 3.6 Boundary of the report 3 Melbourne Water recognises the value of Corrupt conduct means: 3.7 State any specific limitations on the scope of the report 3 transparency and accountability in its › Conduct of any person (whether or not administrative and management practices, a public official) that adversely affects 3.8 Basis for reporting on joint ventures etc. 64 and supports the making of disclosures the honest performance of a public 3.9 Data measurement techniques and the bases of calculations – that reveal corrupt conduct, conduct officer’s or public body’s functions involving a substantial mismanagement 3.10 Explanation of the nature and effect of any re-statements of information of public resources, or conduct involving › The performance of a public provided in earlier reports, and the reasons for such re-statement (None to report) a substantial risk to public health and officer’s functions dishonestly or 3.11 Significant changes from previous reporting periods in the scope, boundary etc. (None to report) with inappropriate partiality safety or the environment. GRI content index › Conduct of a public officer, former public officer or a public body that 3.12 Table identifying the location of the standard disclosures in the report 143 amounts to a breach of public trust Assurance › Conduct by a public officer, former 3.13 External Assurance 148 public officer or a public body that 4: governance, commitments & engagement amounts to the misuse of information or material acquired in the course of the Governance performance of their official functions 4.1 Governance structure of the organisation 74-78 › A conspiracy or attempt to 4.2 Indicate if the Chair of the highest governance body is also an executive officer 74-78 engage in the above conduct. 4.3 Number of members of the Board that are independent and/or non-executive members 74-78 4.4 Mechanisms for shareholders and employees to provide recommendations or direction (Not applicable to Melbourne Water) 4.5 Linkage between compensation and the organisation’s performance – 4.6 Processes of the highest governance body to ensure conflicts of interest are avoided 74-78 4.7 Process for determining the qualifications and expertise of the Board 74-78 4.8 Internally developed mission and values statements, codes of conduct and principles 6-8, 74-78, 130 4.9 Processes of the Board for overseeing the organisation’s identification and management of economic, environmental and social performance 74-78 4.10 Processes for evaluating the performance of the Board 74-78

142 Melbourne water sustainability report 2007–2008 143 Global Report Initiative – content index gri indicator Page gri indicator Page

Commitments to external initiatives Emissions, effluents and waste 4.11 Explanation of whether and how the precautionary approach or principle is addressed by the organisation – EN16 Total direct and indirect greenhouse gas emissions by weight 47, Social and Environment Data EN17 Other relevant indirect greenhouse gas emissions by weight – 4.12 Externally developed, economic, environmental and social charters, sets of principles, EN18 Initiatives to reduce greenhouse gas emissions and reductions achieved 47 or other initiatives to which the organisation subscribes or which it endorses – EN19 Emissions of ozone-depleting substances – 4.13 Significant memberships in associations and/or national/international advocacy organisations 140-141 EN20 NOx, SOx, and other significant air emissions by type and weight Social and Environment Data Stakeholder engagement EN21 Total water discharge by quality and destination 51, Social and Environment Data 4.14 List of stakeholder groups engaged 56-59, 140-141 EN22 Total weight of waste by type and disposal method 51-52, 64 4.15 Basis for identification and selection of stakeholders 56-59 EN23 Total number and volume of significant spills – 4.16 Approaches to stakeholder engagement 3, 56-59 EN24 Weight of transported, imported, or exported waste deemed ‘hazardous’ 4.17 Key issues and concerns raised and responses from organisation 3, 56-59 under the terms of the Basel Convention Annex I, II, III and VIII – Economic EN25 Water sources and related habitats significantly affected by discharges of water and runoff - EC1 Economic value generated and distributed, including revenues, operating costs, EN26 Initiatives to manage the environmental impacts of employee compensation, donations and other community investments, retained earnings, products and services and extent of impact reduction 46 and payments to capital providers and to governments 70, Financials EN27 Percentage of products sold that is reclaimed at the EC2 Financial implications and other risks and opportunities for the organisations activities due to climate change – end of the products’ useful life by product category 40 EC3 Coverage of the organisation’s defined benefit plan obligations – EN28 Incidents of, and fines or non-monetary sanctions for, EC4 Financial assistance received from government – non-compliance with applicable environmental regulations – EC5 Entry level wage compared to local minimum wage for significant locations of operation – EN29 Significant environmental impacts of transportation used for logistical purposes – EC6 Policy, practices and proportion of spending on locally based suppliers at significant locations of operation – EN30 Total environmental protection expenditure by type – EC7 Procedures for local hiring, and proportion of senior management Labour practices in locations of significant operation from the local community – Employment EC8 Description of infrastructure investment and services supported that provide public benefit – LA1 Breakdown of total workforce by employment type, contract and region 64 EC9 Indirect economic impacts – LA2 Total number and rate of employee turnover broken down by age group and gender 65-66 Environment LA3 Minimum benefits provided to full-time employees, Materials which are not provided to temporary or part-time employees – EN1 Materials used by weight or volume – Labour / management relations EN2 Percentage of materials used that are recycled – LA4 Percentage of employees represented by independent trade union organisations or covered by collective bargaining agreements 66 Energy LA5 Minimum notice period(s) and consultation and negotiation practices EN3 Direct energy consumption broken down by primary energy source 49, Social and Environment Data with employees and/or their representatives regarding operational changes – EN4 Indirect energy consumption broken down by primary source – Occupational health and safety EN5 Total energy saved due to conservation and efficiency improvements 48-49 LA6 Percentage of workforce represented in formal joint management-worker health and EN6 Initiatives to provide energy-efficient products and services 48 safety committees that help monitor and advise on occupational safety programs – EN7 Initiatives to reduce indirect energy consumption – LA7 Rates of injury, occupational diseases, lost day’s and absenteeism and number of work-related fatalities 66 Water LA8 Education, training, counselling, prevention and risk-control programs in place for EN8 Total water withdrawal by source 20 assisting workforce members, their families or community members affected by EN9 Water sources and related habitats significantly affected by withdrawal of water – HIV/AIDS or other serious communicable diseases – EN10 Percentage and total volume of water recycled and reused 40-43 LA9 Health and safety topics covered in formal agreements with trade unions – Biodiversity Training and education EN11 Location and size of land owned, leased, or managed in, or adjacent to, protected areas – LA10 Average hours of training per year per employee broken down by employee category – EN12 Description of significant impacts of activities on protected areas 49-50 LA11 Programs for skills management and lifelong learning that support the continued employability of employees and assist them in managing career endings 63 EN13 Area of habitats protected or restored 49-50 LA12 Percentage of employees receiving regular performance and career development review – EN14 Strategies, current actions and future plans for managing impacts on biodiversity 49-50 Diversity and equal opportunity EN15 Number of IUCN Red List species with habitats in areas affected by operations broken down by level of extinction risk – LA13 Composition of governance bodies and breakdown of employees per category according to gender, age group, minority group membership, and other indicators of diversity 65 LA14 Ratio of average remuneration of men and women broken down by employee category –

144 Melbourne water sustainability report 2007–2008 145 Global Report Initiative – content index gri indicator Page gri indicator Page Marketing communications Human rights PR6 Procedures and programs for adherence to laws, standards and voluntary codes Investment and procurement practices related to marketing communications including advertising, promotion and sponsorship – HR1 Percentage of significant investment agreements that include PR7 Number and types of instances of non-compliance with regulations concerning human rights clauses or that underwent human rights screening – marketing communications including advertising, promotion and sponsorship – HR2 Percentage of major suppliers and contractors that underwent screening on human rights – Customer privacy HR3 Type of employee training on policies and procedures concerning aspects of PR8 Number of substantiated complaints regarding breaches of customer privacy – human rights relevant to operations, including number of employees trained – Compliance Non-discrimination PR9 Monetary value of significant fines for non-compliance with laws and HR4 Incidents of discrimination and actions taken – regulations concerning the provision and use of products and services – Freedom of association and collective bargaining Public agency sector supplement – pilot version 1.0 HR5 Incidents of violations of freedom of association and collective bargaining – PA1 Describe the relationship to other governments or public authorities and the position of the agency within its immediate governmental structures 4, 130-131 Child labour Public policies and implementation measures HR6 Incidents of child labour – PA2 State the definition of sustainable development used by the public agency, and Forced and compulsory labour identify any statements or principles adopted to guide sustainable development polices 8, 130 HR7 Incidents of forced or compulsory labour – PA3 Identify the aspects for which the organisation has established sustainable development policies – Security practices PA4 Identify the specific goals of the organisation for the aspects listed in PA3 – HR8 Percentage of security personnel trained in the organisation’s polices or procedures regarding human rights – PA5 Describe the process by which the aspects and goals in both PA3 and PA4 were set – Indigenous rights PA6 For each goal, provide the following information: implementation measures; HR9 Incidents involving rights of indigenous people – results of assessments of the effectiveness of those measures, targets and key indicators, description of progress, actions and post implementation assessment – Society indicators PA7 Describe the role of and engagement with stakeholders with respect to the items disclosed in PA6 – Community Expenditures SO1 Programs and practices for assessing and managing the impacts of operations on communities, including entering, operating and exiting 36, 56-59 PA8 Gross expenditures broken down by type of payment 70, Financials Corruption PA9 Gross expenditures broken down by financial classification 70, Financials SO2 Percentage and total number of business units analysed for risk related to corruption – PA10 Capital expenditures by financial classification 70, Financials SO3 Percentage of employees who are training in organisations’ anti-corruption policies and procedures – PA11 Describe procurement policy of the public agency as relates to sustainable development 64 SO4 Actions taken in response to instances of corruption – PA12 Describe economic, environmental and social criteria that apply to expenditures and financial commitments – Public policy Procurement SO5 Public policy positions and participation in public policy development and lobbying 15, 24, 33, 49-50 PA13 Describe linkages between the public agency’s procurement practices and its public policy priorities – SO6 Total value of financial and in-kind contributions to political parties or related institutions broken – PA14 Percentage of the total value of goods purchased that were registered with voluntary environmental or social labels and/or certification programmes, broken down by type – Anti-competitive behaviour Administrative efficiency SO7 Instances of legal actions for anti-competitive behaviour, anti-trust, and monopoly practices and their outcomes – PA15 Describe the results of assessments of the efficiency and effectiveness of services provided by the public agency, including the actions taken to achieve improvements in service delivery – Compliance

SO8 Monetary value of significant fines and total number of non-monetary Note: A “–“ in the GRI contents table refers to indicators that are not material to Melbourne Water’s sanctions for non-compliance with laws and regulations – operations or reporting or have not been relevant to report in this reporting period. Product responsibility Customer health and safety PR1 Procedures for improving health and safety across the life cycle of products and services – PR2 Number and type of instances of non-compliance with regulations concerning health and safety effects of products and services – Product and service labelling PR3 Type of product and service information required by procedures, and percentage of significant products and services subject to such information requirements – PR4 Number and type of instances of non-compliance with regulations concerning product and service information and labelling – PR5 Practices related to customer satisfaction, including results of surveys measuring customer satisfaction –

146 Melbourne water sustainability report 2007–2008 147  

                                                                                                                                                        •                      •              •                   •                         •               •                                                                                          

  Melbourne Water 100 Wellington Parade, East Melbourne PO Box 4342 Melbourne Victoria 3001 Telephone 131 722 Facsimile 03 9235 7200 melbournewater.com.au

ISBN 1324-7905

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