Melbourne Water Corporation 1999/2000 ANNUAL REPORT Contents

Chairman and Managing Director’s Overview 2 Working to Conserve Water 6 Water Resources for the Future 8 Key Role of Research 10 Working to Ensure Safe Drinking Water 14 Enhancing Service Delivery 17 Informing the Community 19 Partnerships with the Community 21 Partnerships with Government 24 Partnerships with Industry 25 Partnerships with our People 28 A Successful Commercial Business 30 Consultation 33 Corporate Governance 35 Five Year Financial Summary 40 Financial Statements 41 Vision Statement of Corporate Intent 68 To be leaders in urban water cycle management Responsibilities

Melbourne Water is a statutory corporation wholly owned by the Victorian Government. It was established to provide important water, drainage and sewerage services to the community. The responsible Minister is the Hon. Sherryl Garbutt, Minister for Environment and Conservation.

Melbourne Water has an important role in managing the urban water cycle for the benefit of present and future Victorians. How well it does that has a major impact on public health and the environment.

Melbourne Water: * Manages the city’s water supply catchments and supplies bulk water to other water authorities • Removes and treats most of Melbourne’s sewage • Manages waterways and major drainage systems in and around Melbourne

In undertaking these responsibilities Melbourne Water aims to meet the following objectives: Objectives

• Manage Melbourne’s water resources and the environment in a sustainable manner • Protect public health Front cover: • Provide excellent service and maintain the trust and respect of the community The with the Melbourne • Operate as a successful commercial business skyline in the background. 1 Chairman’s and Managing Director’s Overview

L-R Managing Director Brian Bayley and Chairman Graeme Bowker

Melbourne’s water storage fell to 50 per cent of capacity in April 2000. The largest storage reservoir, the Thomson, held 442,191 megalitres that was 41.4 per cent of capacity.

We have pleasure in reporting on Melbourne While the accounting rate of return on our net We worked with the metropolitan retail from the media and we were delighted to see Water's achievements during the year ended assets of 17.6 per cent is very credible, it is water companies to implement our drought from survey results, evidence of increased June 30 2000. based on the actual cost of long life assets built response plan and a drought advisory group community understanding and awareness of many years ago. When the assets are brought to was established. Comprehensive community the drought. During the year, we supplied 501,720 megalitres current day values, the economic rate of return awareness programs were undertaken to ensure of water, treated 326,683 megalitres of sewage is less than 2 per cent. the community understood the situation with Among those severely affected by the drought and invested approximately $105.2 million in Melbourne's water storage and the imperative were Melbourne Water’s customers who divert capital works projects to improve the city's Although Melbourne Water's achievements were of conserving water. water from the Maribyrnong and Yarra water, sewerage and drainage infrastructure. considerable during the year, there was one catchments. We worked cooperatively with area of disappointment. Our performance in The continuing fall in water storage levels led to them to manage the impact of the restrictions Financially we had a strong year recording safety declined with lost time injuries increasing the Minister for Environment and Conservation on their operations and to maintain healthy profit after tax of $196 million. More importantly, to eight from two in 1998/99. Strategies have formally calling for voluntary reductions in river flows. we returned a dividend to our owner, the been implemented to address this issue. water consumption in February 2000. This was Victorian Government, of $126 million, some followed by advertisements being placed in The focus on drought and the need to conserve $20 million more than last year. The results were Water resources metropolitan and suburban newspapers as well water resources for the future was reinforced by driven by a six per cent revenue increase due A major priority for Melbourne Water in as television and radio advertisements. the Minister for Environment and Conservation to contributions from a buoyant development 1999/2000 was managing water supply during when she announced, on World Environment industry, higher than planned bulk water sales the longest drought on record. After four years Water storage and consumption data were Day in June 2000, that Melbourne Water would caused by the continuing dry weather and of below average rainfall, Melbourne's total published weekly on the Internet and water produce a long term Water Resources Strategy savings in general operating costs. water storage fell below 50 per cent of capacity conservation advertising was re-defined to for Melbourne. The announcement marked the at the beginning of April 2000. make it more relevant to autumn and winter. beginning of a significant and stimulating The programs received widespread support challenge for our business. 2 3 Care was taken to preserve stands of river red gums in major developments such as the Lynbrook residential estate at Lyndhurst and the Woodlands Industrial Estate at Braeside.

The Water Resources Strategy will enable us environment groups, the local community and required to filter the city's water supply. The Our people to explore all aspects of water use and will the Surfriders Foundation. The strategy was based research confirmed that the most important Our thanks go to our motivated and skilled provide the opportunity to be innovative and on the findings of a research project undertaken factor in providing safe drinking water, was people, who have again worked with dedication visionary in the preparation of a long-term by the CSIRO to determine the environmental Melbourne's protected forested catchments. throughout the year. They enable us to deliver water supply plan for Melbourne that will not impact of effluent on the marine environment the services necessary to effectively manage the be dependent on major new infrastructure. at Boags Rocks on the Mornington Peninsula. To ensure that we continue to have processes urban water cycle. We are very appreciative of The development of the strategy will involve Melbourne Water also increased its effluent and procedures in place to safeguard the water their efforts and significant contribution. detailed studies on demand management, monitoring program as part of the strategy. supply across the entire harvesting and water conservation and water recycling and distribution system, we upgraded our quality We believe the year ahead offers employees extensive community consultation. Among other key achievements in assurance system for the supply of safe several major, strategic challenges and we environmental performance during the year drinking water during the year. The new have every confidence that these challenges As part of our commitment to the sustainable were the certification of Melbourne Water’s system, Hazard Analysis and Critical Control will be met with a high level of enthusiasm use of Melbourne's water resources, we environmental management system to the Points (HACCP), is endorsed by the World and commitment announced our intention to recycle 20 per cent international standard ISO 14001 and the Health Organisation and is based on risk of sewage effluent over the next ten years. We appointment of the energy utility AGL to build management systems that have been adopted We would also like to record our appreciation will undertake partnerships with industry and a power generation facility at the Western in the food industry. We were one of the first to the retiring Chairman, Christopher Stewart, key stakeholders to ensure we meet this target. Treatment Plant. The facility will use methane water companies in the world to introduce the and Board member Roy Gilbert for their gas, captured under the giant lagoon covers system that was certified through Lloyd's outstanding contributions over five years. Improving the environment installed to reduce odour, to generate electricity. Quality Assurance Register in May 2000. We wish them well and thank them for all A $120 million upgrade of the Western they have done for Melbourne Water. Treatment Plant, which began during the year, Providing safe, high quality Working with our stakeholders will reduce nitrogen discharges to drinking water In 1999/2000, we continued to work with a Bay. This work will also result in an abundant A number of significant projects were wide range of stakeholders who provide supply of high quality effluent being available undertaken to ensure that we continued to feedback and advice in the development of our for irrigation, opening up a range of agricultural supply safe, high quality drinking water. In business strategies and who assist us with and horticultural business opportunities. April 2000, the Monash University's Centre for projects to protect and improve Melbourne's Preventive Medicine released the findings of its waterways. We are very appreciative of the GRAEME BOWKER A study to examine the feasibility of a major Water Quality Study. Government, Melbourne contribution made by our stakeholders. Chairman effluent reuse scheme, using treated effluent Water and the three metropolitan water from the Eastern Treatment Plant at Carrum retailers, through the Water Services Association It is important that information on our activities also was commissioned. of , supported the study. is readily available to the public. In 1999/2000, our Internet site was redesigned to make it more Late in the year, the first stages of a $5 million The study found that people in and around accessible and a range of publications were ammonia reduction trial began at the Eastern Melbourne could be confident that gastro- produced to keep the community up-to-date BRIAN BAYLEY Treatment Plant. The trial was an outcome of the intestinal illness was not attributable to the with our projects and business performance. Managing Director Environment Improvement Strategy developed drinking water. On the basis of the research, in consultation with key stakeholders including it was concluded that there would be no the Environment Protection Authority, health benefit from the significant expenditure

4 5 Water storage and consumption information Working with diverters Working to was updated weekly on the Melbourne Water Diverters who are licensed to take water for Internet site, and water storage information was their businesses, farms and market gardens from published weekly in both Melbourne the Yarra and Maribyrnong Rivers were affected, Conserve Water metropolitan newspapers. in some cases severely, by the drought.

Melbourne Water designated an inaugural Water Almost four years of drought cut flows in Watch Day in January during a spell of hot, dry both river systems and water storages on the weather to focus attention on water consumption Maribyrnong also were very low. This led and the drought. Melbourne Water to limit the amount of water that diverters could take from the Maribyrnong A survey conducted in May 2000 found that 86 to as little as 28.5 per cent of their licensed per cent of people were aware of Melbourne’s allocation for the year. It also led to restrictions water supply situation and three in four knew being placed on Yarra diverters under which that Melbourne was in drought and facing the they were allowed to pump water at limited possibility of restrictions. times on alternate days.

Recycled effluent from the Eastern Treatment Plant is used to keep local golf courses green.

Environment and Conservation Minister, the Hon. Sherryl Garbutt, Longest drought on record Raising awareness of at a function to commemorate Periodic droughts are a natural part of the water conservation World Environment Day on Australian climate. Melbourne and its During the year, Melbourne Water worked 5 June 2000 and to announce catchments generally have reliable rainfall by with the media, community and industry to that Melbourne Water would Australian standards, but they are still affected raise public awareness of water conservation develop a long-term plan for the by severe droughts. and the drought. A winter advertising campaign sustainable management of targeted water use inside the home, which Melbourne’s water resources. Melbourne’s current drought – the longest on helped to maintain the momentum established record – began four years ago. Indicators of its earlier in the year. severity include: • Streamflow into the major harvesting The media showed a high level of interest in reservoirs was the lowest on record for the the drought. Melbourne Water issued regular 45 months to 30 June 2000. news releases on drought and water conservation • In May 2000, the Thomson Reservoir, which during the year and senior managers conducted has a capacity of more than one million interviews for suburban, metropolitan and megalitres, fell to 38 per cent, its lowest level national newspapers, and for radio news since being filled in July 1986. and talkback programs and television news. • The system’s reservoirs were almost full in November 1996, but by May 2000 total storage had fallen to 46.7 per cent. At 30 June 2000, storage had recovered slightly to 50 per cent.

6 7 Water Resources for the Future

The initiative will have a range of other It is expected that the growth in recycled benefits including: effluent will come mainly from the west of • Reducing the need for major capital works Melbourne, because an upgrade at the Western such as a new dam. Treatment Plant will allow recycling on and off • Reducing the amount of effluent discharged to the Werribee plant with a high quality effluent. the environment by about 175 megalitres a day. Other factors driving growth of recycled • Providing increased agribusiness opportunities effluent in the west include the dry climate, by making available reliable supplies of availability of land and proximity to transport. appropriately priced recycled water. Opportunities are also being investigated for The achievement of the commitment means that water recycling schemes using treated effluent A rare sight in 1999/2000 - rain about 70,000 megalitres of effluent a year will from the Eastern Treatment Plant at Carrum. clouds gather during four years be recycled, enough to irrigate 50,000 hectares. of drought for Melbourne. The main challenges for such schemes are the Currently, about 1 per cent of Melbourne Water’s level of infrastructure and investment required effluent is recycled by 35 businesses using to treat the effluent and transport it to the point treated effluent from the Eastern Treatment Plant of use, the operational costs, salt in the effluent on golf courses, vineyards and for horticulture. from the Western Treatment Plant and The Water Resources Strategy A Melbourne Water-based project team will draw community and market acceptance. On World Environment Day, the Minister for on national and international experience to Environment and Conservation announced that gain a comprehensive understanding of water Laying the foundation at Werribee Melbourne Water would be responsible for supply and use. The Water Resources Strategy During the year, initial steps were taken preparing a long-term strategy for the sustainable will be developed with extensive community, towards establishing the infrastructure for an management of Melbourne’s water resources. technical and specialist input, and overseen by effluent recycling scheme using treated effluent an advisory panel, including stakeholders. from the Western Treatment Plant. Works on a The Water Resources Strategy will examine key environmental initiative at the plant, the $9 issues such as water conservation, increased Commitment to increase million Effluent Reuse Delivery System, were effluent recycling, new technologies to capture effluent recycling nearing completion at the end of the year. potable and non-potable water resources, One of the key features of the Water Resources community involvement and education, Strategy is Melbourne Water’s commitment to The system, a key part of the environmental environmental impacts and benefits and increase the amount of recycled effluent from improvement works at Werribee, will pipe alternative resource options such as stormwater its sewage treatment plants to 20 per cent over treated effluent to the top of the plant, from recycling, greywater reuse and rainwater tanks. the next 10 years. This commitment will help where it will be used to irrigate paddocks. This save precious water resources and is especially will provide a point of supply for future off-site Melbourne Water aims to produce a strategy relevant as Melbourne’s longest drought on effluent recycling schemes. that balances environmental, economic and record continues well into its fourth year. social factors and provides a framework for The system, consisting of 3.7 kilometres of future water resources planning. piping, 1.6 kilometres of channels and a pumping station, will initially result in up to 14 per cent of the plant’s effluent being recycled. 8 9 Key Role of Research

Work started on the construction of Strategic research provides the basis a series of wetlands in Melbourne's for Melbourne Water to maximise south-east to protect the long-term the benefit of expenditure on health of Port Phillip Bay. Melbourne environmental and public health Water and the Natural Heritage improvement projects. Trust fund the $7.5 million project.

Landmark study shapes The researchers measured the impact of water During the year, as part of the Environment The basis for these and associated works was future directions on the health of 600 families in Melbourne’s Improvement Program for the plant, the first of the CSIRO Port Phillip Bay Environmental Melbourne Water commissions major research eastern and south-eastern suburbs, and found the lagoon enhancement works began, at a cost Study. The four-year study, completed in 1996, projects to provide a scientific basis for the no evidence of waterborne disease. of $35 million. found that the Bay would benefit from reduced Corporation’s long-term strategic directions and nitrogen loads. Effluent from the Western priorities and to reduce its exposure to public The results confirmed that Melbourne’s This upgrade combines up-to-date nitrogen Treatment Plant and stormwater carried into health and environmental risks. uninhabited catchment areas produce superior removal technology with the plant’s existing the Bay by rivers, creeks and drains were source water. lagoon system, which relies on natural identified as the main sources of nitrogen. In 1999/2000, a landmark study into the health treatment processes. One of 10 interconnected impacts of Melbourne’s drinking water was Protecting the marine environment ponds in the lagoon system is being modified Wetlands improve stormwater quality completed. The three-year Water Quality Study Another highly significant study provided the with the technology. This project is due for During 1999/2000, work continued on an was recognised internationally for its high basis for a major upgrade of treatment systems completion in March 2001. ambitious project that aims to protect the long- degree of scientific rigour. at the Western Treatment Plant at Werribee. The term health of Port Phillip Bay by reducing upgrade, costing a total of $124 million, will The enhancement will reduce nitrogen in the nitrogen loads in stormwater runoff. The study, undertaken by the Department of improve the quality of effluent produced at the final product discharged into Port Phillip Bay Epidemiology and Preventive Medicine at plant, reduce the level of nitrogen discharged by about 10 per cent a year and increase the The project involves a series of 10 wetlands Monash University, concluded that no health and help eliminate odour. lagoon system’s capacity to treat sewage. covering more than 80 hectares in Melbourne’s benefit would be achieved by filtering south-east growth corridor, on waterways that Melbourne’s water supply. drain into the Bay.

10 11 During the year, design of the trial was A 12-month microbiological study began in completed and contracts were let for new February 2000 to measure enterococci – an aeration equipment and the works to convert organism indicating potential for sickness or one of the plant’s six aeration tanks for infection arising from recreational activity, nitrification/denitrification. including surfing, around the pipeline. The study will examine whether enterococci levels are Work is expected to be complete in April 2001, within World Health Organisation guidelines for after which Melbourne Water will conduct a recreational waters and data will be supplied to six-month performance trial. Melbourne Water the Monash Medical School for assessment. The is due to provide an initial assessment report to CSIRO was engaged in January 2000 to design the Environment Protection Authority (EPA) by a long-term monitoring program of the waters July 2001, with a final report by October 2001. around the discharge point in Bass Strait to Depending on the success of the trial, address the issues and gaps identified in the 1999 Melbourne Water will apply to the EPA for a Effluent Management Study report. This program Surfing at Gunnamatta Beach near works approval to undertake the project. will provide baseline data to help identify changes Boags Rocks on the Mornington taking place over the medium and long-term. Peninsula. Melbourne Water and the Environment Protection Authority Monitoring water quality at Boags Rocks announced a program in November Other initiatives that began during the year 1999 to improve the marine included enhanced monitoring of water quality environment at Boags Rocks where around the Eastern Treatment Plant pipeline at effluent from the Eastern Treatment Boags Rocks. Plant is discharged.

The wetlands are designed to act as a natural Upgrading sewage treatment filter, and slow the flow of the water, with In November 1999, Melbourne Water and the more than two million aquatic and semi-aquatic Environment Protection Authority announced a plants removing nitrogen and other pollutants series of initiatives in response to the $1.3 million from the stormwater. CSIRO Effluent Management Study which assessed the impact of effluent disposal in Bass Strait. The $7.5 million project is funded by Melbourne Water and the Federal Government’s Natural Treated effluent from the Eastern Treatment Heritage Trust. Plant at Carrum is transported to the discharge Melbourne Water announced that point in Bass Strait at Boags Rocks, near Cape it would increase water quality Schanck, on the Mornington Peninsula. monitoring at Boags Rocks as part The two-year CSIRO study recommended some of its Eastern Treatment Plant’s sewage treatment improvements, particularly Environment Improvement Program. increased removal of ammonia.

Melbourne Water Project Manager In response, contracts have been let for a David Gregory working on a trial $5 million ammonia reduction trial at Carrum. to reduce ammonia in effluent from The trial involves cultivating organisms which the Eastern Treatment Plant. remove ammonia in the activated sludge treatment system. The process is known as nitrification/denitrification.

12 13 Melbourne Water achieved certification of its Working to Ensure HACCP system in May 2000 through Lloyd’s Register Quality Assurance. Lloyd’s reviewed the risk assessment and HACCP plan and Safe Drinking Water audited drinking water quality systems including operating procedures, monitoring controls and incident management.

Environment management systems certified Melbourne Water also had its environmental management systems certified to the international standard ISO 14001 during the year.

This involved reviewing and where necessary upgrading management systems throughout the Melbourne Water undertook a Corporation to ensure the standards were met. number of measures to increase security at its reservoir sites. This External auditor Lloyd’s Register Quality Assurance included installing new signs with visited all major Melbourne Water sites before after-hours contact details. certifying the systems. Lloyd’s will now make surveillance visits every six months to ensure Melbourne Water keeps its systems up to date.

Safeguarding uninhabited Robust framework for managing It recognises that some risks can be prevented catchment areas water quality from entering the system, but others have to Melbourne Water works hard to safeguard the One of Melbourne Water’s main achievements be managed, and is based on operational natural advantage of its water supply system: during the year was the introduction of a new control backed up by regular auditing and its protected catchments. Melbourne’s water risk management and quality assurance system continual improvement. is collected from some 140,000 hectares of for the supply of safe drinking water. uninhabited forested land, much of which is During the year, Melbourne Water developed reserved for harvesting water. The system, Hazard Analysis and Critical Control a HACCP plan for its part of the water supply Points (HACCP), has been successfully used in system – from the catchments to the retail Most of these areas are closed to the public the food industry for several years, but has only company interfaces. This involved assessing to minimise the risk of human-borne disease recently been introduced in the water industry. risks, identifying critical control points and entering the water supply system. ensuring appropriate monitoring, record HACCP provides a robust framework to manage keeping and corrective procedures were in Melbourne Water is vigilant about protecting water quality, and is based on monitoring and place throughout the system. the catchments against bushfires, which can measuring at critical points throughout the destroy mountain ash trees that cover about water supply system, rather than relying on The major preventive measures and barriers to half the catchment areas, and dramatically end point testing. water contamination in Melbourne are protected reduce water yield for as long as 150 years. catchments, long reservoir storage times, water In addition, soot and ash in the catchments disinfection and a closed distribution system. can be washed into reservoirs.

14 15 Enhancing Service Delivery

Works program improves reliability A new $4.8 million water main was constructed Melbourne Water has an extensive capital under the median strip in St George’s Road, works program, which totalled $105 million Preston, to replace a 70-year-old deteriorated in 1999/2000. The program aims to enhance section and a complex water main project was customer service and deliver environmental and completed at Jolimont. The Jolimont water main public health improvements for the community. is above major railway lines and next to the MCG.

During the year, Melbourne Water completed The Eastern Treatment Plant completed a the first stage of a program in which the $6 million upgrade of its process control Mornington Peninsula community will receive system. By the end of the year, all plant Keeping a watchful eye on a guaranteed supply of high quality drinking operations had been converted to the new Melbourne’s protected catchments. water supplied from protected catchments. system. The upgrade is a key step towards Security officer Neil Ockwell at automation, which will ultimately enable the Maroondah Reservoir. Under the program, a $45 million pipeline is plant to be controlled from a remote location. being constructed from Cardinia Reservoir to Pearcedale. In 1999/2000, a 10-kilometre section A $1.6 million project in East Doncaster, to from Berwick to Cranbourne was constructed replace a pipe drain, was completed during and work began on the remaining two the year, providing flood protection for 57 In 1999/2000, only three minor fires were As part of the review, Melbourne Water sections. The pipeline is due for completion properties. reported in the catchments. The weather, worked with the police and the Department in December 2000. although dry, was less threatening than of Human Services to develop protocols to Community disruption was minimised when previous summers, with fewer instances of deal with unauthorised access within the water The service reservoir at Tyabb was lined and a drain was relined in Lygon Street, Carlton. strong winds or lightning. supply system. covered, to reduce the risk of contamination New pipes were placed inside the old structure and eliminate water quality problems, such as during the $500,000 project. In June 2000, heavy dumps of snow caused Locks and chains on catchment gates and security algae, in open reservoirs. branches and other vegetation to fall across fencing around service reservoirs were upgraded, During the year, the capacity of the gas drum roads in the catchments. This debris will be graffiti-resistant paint was applied to tanks and The embankment at Yan Yean Reservoir was room at Silvan Disinfection Plant was upgraded cleared before summer. signage was enhanced throughout the system. widened to meet the latest engineering standards. to meet increased demand from future growth Under the $5 million project, the reservoir park and back-up generators were installed at eight Security under review These measures were designed to protect has been upgraded and new wetlands built. chlorination plants to ensure continued During the year, Melbourne Water undertook Melbourne’s water supply from the risk of Works to relocate the historic valvehouse are operation through electricity failures. a review of security arrangements throughout unauthorised access to installations. to be completed by the end of 2000. the water supply system. Melbourne Water installed an emergency Steel tanks, each at a cost of $3.5 million, were generator at a major sewage pumping station In 1999/2000, there were 330 incidents of installed at Broadmeadows and Pakenham, at Kew. The $700,000 project will eliminate the unauthorised entry, resulting in 111 people replacing a concrete tank and open reservoir. risk of spills into the Yarra River caused by being apprehended for fishing, walking, power failure. hunting or swimming in the catchments or entering the sites of other assets.

16 17 Informing the Community

Melbourne Water's Phil Biasi with customer Jack Vaux, owner of The Melbourne Water website Olinda Nurseries. Melbourne Water attracts a family’s interest at licences Mr Vaux to divert water Eastern Treatment Plant from for his nursery. Open Day.

A $3.25 million upgrade of the Mordialloc Emergency response Improved data on revamped The game, known as The Waterworks Adventure,is main sewer system near the former Epsom Melbourne Water’s Emergency Response Plan Internet site designed to help students understand that water training track will provide capacity for future was reviewed and further developed during the Melbourne Water upgraded its Internet site is not an infinite resource. Students using the residential development and eliminate most year following an emergency exercise that was during the year to include more relevant and game learn where water comes from and what wet weather spills. simulated to test the organisation’s preparedness. timely information about water storage levels happens to it in servicing an urban environment. and the drought, drinking water quality and Works costing $800,000 were undertaken on External experts observed the exercise and the water supply system. Open days held during the year at the Eastern the sludge drying pans at Eastern Treatment made recommendations that helped refine the and Western Treatment Plants attracted a total Plant as part of a program to restore the capacity Corporation’s emergency planning, and a wide The site, www.melbournewater.com.au, includes of 755 visitors. At other times during the year, to cost-effectively air dry stabilised digested range of employees attended emergency weekly water storage and consumption levels, more than 4000 primary, secondary and tertiary solids at the plant. response training. the latest water quality reports and regularly students toured the plants, along with 73 people updated information on the environmental from seven international delegations, and Year 2000 The Corporation also worked with the retail performance of Melbourne’s waterways and several hundred from bird observing groups. Melbourne Water’s transition to the year 2000 water companies to develop a draft industry drainage and sewerage systems. went smoothly, with no service interruptions. response plan, to ensure a cooperative emergency In addition, a total of 844 visitors went on 18 response in the event of an industry-wide crisis. The website also includes a range of resource tours of Sugarloaf Reservoir and Winneke Water All critical systems continued operating through material for teachers and students, including an Treatment Plant during the year. Of this number, New Year’s eve and New Year’s day and testing interactive game in which secondary school 804 were primary, secondary and tertiary students. of operational and support systems found that students create a water supply, stormwater and Tours of these treatment plants help inform and no remedial action was necessary. sewerage system to serve an imaginary city. educate people about water and sewage treatment.

18 19 Partnerships with the Community

A Melbourne Waterwatch coordinator Paul Puhar and pupils from Manorvale Primary School, Werribee, assess the information gathered from the . Melbourne Waterwatch is a community-based program that helps more than 100 school and Community groups play an community groups learn about important role in protecting and the health of their local waterways. improving Melbourne’s waterways.

Melbourne Water sponsored an Earthwatch Central role of consultation of Devilbend and Bittern reservoirs while meeting Institute seminar on the future of water. Melbourne Water actively seeks a wide range of community and environmental obligations. “Water - The Ultimate Resource” examined ways views and opinions in its decision-making and that water could be better managed in agricultural community involvement, and consultation is With Melbourne Water, the reference group production, industry and urban centres. an essential part of all capital works projects. is reviewing baseline information from environmental, engineering, catchment and In 1999/2000, Melbourne Water produced an When Melbourne Water decided to decommission flora, fauna, heritage and archaeological studies annual report and complementary environment Devilbend and Bittern reservoirs, it began being conducted on the reservoirs and associated and community obligation report that included working with the local community to develop land. This information, as well as a planning information on environment and public health a future-use strategy for the reservoirs and assessment, will help stakeholders understand compliance. Both reports were published on surrounding land. the opportunities and constraints of the site. the Internet. A community reference group was established During the year, draft environment improvement During the year, Melbourne Water continued to during the year as part of extensive and open plans for the Eastern and Western Treatment produce its corporate publication, The Source, consultation with a wide range of stakeholders. Plants were developed with the respective as well as a range of documents and brochures community liaison committees at each plant. on environmental improvement plans, corporate The reservoirs, located on the Mornington strategy, innovation and major capital works Peninsula, are scheduled to be taken out of A community consultation program was projects (see Publications released during service in December 2000 when the Cardinia- announced to involve and inform the community 1999/2000 on Page 75). Pearcedale pipeline project is completed. of the potential use of biosolids from the Ultimately, Melbourne Water wants to divest itself Eastern Treatment Plant to fill an existing borrow pit at Woodlands industrial estate in Braeside. 20 21 Vinny the Platypus is a popular ambassador for Melbourne’s waterways.

Managing property assets The grants were provided to 50 groups for Changes in operational requirements during the materials, equipment, administrative support year provided the opportunity for Melbourne or production of newsletters. Melbourne Water supports several Water to review its land holdings. The Corporation local landcare groups. Mary Downes continually reviews its property portfolio to ensure Melbourne Water also supports rural landholders and Sandy Brock of Arthurs Creek it achieves appropriate returns from these assets. through its Stream Frontage Management District Landcare Group work Program. The program seeks to rehabilitate cooperatively with Melbourne Typically, the Corporation works with the and protect private stream frontages and Water to plant out vegetation on community and the planning authority to ensure encourage landholders to take responsibility riparian strips to improve the quality of water in Arthurs Creek. that surplus land is zoned appropriately before for implementing works, which often involve being sold, to give certainty to future landowners. Landcare groups.

During the year, Melbourne Water sold $8.1 In 1999/2000, Melbourne Water provided million of surplus property. A major initiative was more than $422,000 for works in the Yarra undertaken in Christmas Hills, where extensive and catchments. The program In 1999/2000, the Scout movement adopted Almost three in four of the Melbourne consultation with the community helped provided funds to 146 properties for weed Melbourne Waterwatch monitoring. Scouts respondents said Melbourne Water is doing develop a plan for the sale of surplus land in management, fencing and the propagation must now undertake monitoring to complete a good or very good job of managing the the area. The plan will protect the environmental of appropriate indigenous plants to stabilise their training for an environment badge. catchments and providing high quality values of the area while maintaining Melbourne waterway banks. Overall, 48,600 plants were drinking water. Water’s commercial position. planted and 54.5 kilometres of fencing erected Environment comes first for on priority waterways. young Victorians Melbourne Water commissioned the survey Assisting volunteer groups Melbourne Water and the Australian Conservation to gain access to current attitudes relating to Melbourne Water has established close working Monitoring our streams Foundation commissioned a survey of young environmental management and priorities, relationships with a range of volunteer community Melbourne Waterwatch helps school and Victorians during the year to determine their and to enable the Corporation to continually groups throughout its operating area. community groups use water monitoring attitudes to the environment. improve its operations and the way it equipment and other procedures to assess the communicates with young people. During the year, Melbourne Water established water quality of their local waterways. The survey found that four out of five young an annual grants program in recognition of the Victorians favour protecting the environment efforts of volunteer groups and their limited There are 170 groups monitoring more than even if it means some reduction in economic resources, and distributed a total of $50,000 to 260 sites throughout the Port Phillip and growth, and water pollution is considered one of Landcare, “Friends of” and other community Western Port catchments. More than 4300 the four most important environmental problems. and environment groups involved in protecting people take part in regular monitoring under and improving waterways. The the Melbourne Water program. Management Committee also received $20,000 to assist with its activities.

22 23 Partnerships Partnerships with Government with Industry

During the year Melbourne Water was involved Raising the standard of stormwater with various arms of Government on Melbourne Water has long recognised the infrastructure projects such as the Cardinia damage caused by stormwater pollution in Pearcedale pipeline and in providing feedback waterways and the bays. on major initiatives such as the Essential Melbourne Water aims to work in Services Commission, bulk water entitlements, In 1999/2000, Melbourne Water formed partnership with industry on major the Sunbury Pipeline Working Group and partnerships with a further 11 councils to infrastructure projects and works to drought management. Melbourne Water was develop Stormwater Management Plans, improve the environment. During also involved in providing assistance to rural following the lead of five pilot councils last year. the year an alliance was developed water authorities on issues such as risk between designers and contractors management, community consultation and The plans help councils understand the impact to upgrade the lagoon system at the water conservation communications. of activities within their boundaries, and look at Western Treatment Plant. The ways of reducing stormwater pollution. Initiatives improved system will reduce nitrogen levels in Port Phillip Bay. Improving community knowledge have included changing contract specifications of flooding for service delivery, inclusion at construction Melbourne Water continued to work closely with sites of more stringent litter requirements, and local councils to incorporate flood information building wetlands into new housing estates. into local government planning schemes across Melbourne as special building overlays. In June 2000, the Minister for Environment and Energy project cuts greenhouse gases Working with developers to Conservation announced funding of $22.5 million Melbourne Water formed a partnership with a protect waterways As at 30 June 2000, Melbourne Water had for a major stormwater action program, which major private sector energy utility during the Melbourne Water is continuing to seek supplied the information on potential impacts will help support Stormwater Management Plans. year to generate power at the Western Treatment partnerships with the development industry of overland flows on properties to a total of Plant using methane gas captured from the and local councils to reduce the impact of 17 councils in metropolitan Melbourne. Working to reduce needlestick sewage treatment processes. stormwater on waterways. injury risks During the year, five councils – Greater During the year, Melbourne Water played a Power generation facilities are to be established In recent years, the Corporation has encouraged Dandenong, Maribyrnong, Moonee Valley, significant role on a taskforce set up by the State at the Werribee plant that will use the gas developers of new residential estates to include Nillumbik and Wyndham – joined two others Government to examine ways of reducing the captured under giant lagoon covers to fire engines water-sensitive designs that feature waterways in which the amendment is now in operation. risk of needlestick injuries caused by syringes that will produce a total of about 26,000 and wetlands and in which stormwater is seen Another 10 councils have completed public on beaches. megawatt hours of energy a year. The new as a valuable resource, rather than a nuisance exhibition of the amendment and are awaiting engines will be provided on a build-own- that is piped to the nearest waterway as quickly various stages of approval. The taskforce recommended working to prevent operate basis. as possible. syringes from being improperly discarded. These efforts were recognised when Melbourne It also recommended that councils review and The project, operated by AGL Ltd, will reduce Water won the Victorian section of Emergency improve their beach cleaning practices. greenhouse gas emissions and help the Western Management Australia’s safer community Treatment Plant move towards being a self- awards for this project, and gained The taskforce, which was formed in January 2000, sufficient energy user. commendation in the national section. also included members of local government, Department of Human Services, the Environment Protection Authority and EcoRecycle . 24 25 For example, Melbourne Water worked closely Infrastructure costs currently constrain the use during the year with the Urban Land Corporation of the resource to businesses located on the on the Lynbrook Estate development at Mornington Peninsula near the Eastern Doctoral student Sara Lloyd was Lyndhurst. The innovative approach to drainage Treatment Plant pipeline. appointed by Melbourne Water system design at Lynbrook includes detaining, to monitor and compare the filtering and infiltrating stormwater runoff through During the year, the number of customers alternative stormwater drainage grassed swales, infiltration trenches and ponds. using treated effluent increased by three to 35, system at Lynbrook Estate with and Melbourne Water erected signs alongside the conventional system. Melbourne Water met local council the Mornington Peninsula Freeway near representatives to ensure such designs, which Carrum promoting water recycling and the are not standard practice, were permitted. availability of treated effluent for businesses.

Melbourne Water works closely with the Effluent recycling feasibility study development industry to integrate drainage During the year, Melbourne Water infrastructure into development proposals. In commissioned an experienced consortium of 1999/2000, the Corporation established six Australian businesses to undertake a feasibility new drainage schemes, covering a total of 38 study into a water recycling scheme south-east square kilometres. These schemes identify the of Melbourne, using treated effluent from the pipelines, channels, retarding basins and Eastern Treatment Plant at Carrum. wetlands to be constructed when the land is developed in the future. The scheme proposed by the consortium is based on a 30-kilometre pipeline, which would Growing recycling business transport treated effluent near or through More than 1655 megalitres of treated effluent vegetable-growing areas towards Koo-wee-rup. from the Eastern Treatment Plant was recycled The area also includes the Cranbourne/Berwick in 1999/2000 for a range of irrigation businesses, growth corridor. including vineyards, farms, nurseries and market gardens, as well as golf courses and sports ovals.

26 27 Partnerships with our People

Building the skills of employees Disappointing safety performance In 1999/2000, the Corporation continued to Melbourne Water is renewing its focus on safety improve the rigour of its succession planning after a disappointing year, which undermined by focusing on key management and technical some of the significant progress in improving positions as part of a drive to improve knowledge Occupational Health and Safety performance in management across the organisation. recent years. During 1999/2000, the lost time injury frequency rate increased from 1.8 to 7.4 The Western Treatment Plant and Western and lost time injuries rose from 2 to 8. Chlorine safety audit at Melbourne Sewage Transfer System control rooms were Water’s Winneke Treatment Plant consolidated to create the Western Control Melbourne Water will continue to work to Centre. A new, multi-skilled field operations ensure the Corporation achieves its target of team supports the Brooklyn-based centre. zero lost time injuries. A new safety awareness program will be introduced during 2000/01 to Another initiative was the introduction of a help foster a safety-conscious culture. Additional During the year, Melbourne Water undertook Five forums, which focused on service delivery pilot traineeship scheme in which five school- training based on individual job requirements several initiatives to help improve the and featured guest speakers who presented case leavers were employed under a State will be initiated. Occupational Health and Safety performance studies from within and outside the water Government program. They worked as water of its contractors. These included reporting of industry, were held during the year. More than supply operators, with the aim of learning from The unsatisfactory safety performance occurred the OHS performance of Melbourne Water’s 75 per cent of employees attended the forums, experienced, key technical employees, to in 1999/2000 although all worksites were major contractors to the Board, increased OHS which enabled our people to contribute ideas provide the organisation with fresh ideas and, SafetyMAP accredited by the Victorian compliance requirements for tendering and and actions to help Melbourne Water improve its potentially, to join Melbourne Water after WorkCover Authority, including Werribee contracts and increased audits of contractor approach to delivering service to its customers. completing their traineeships. Agriculture, which is believed to be the first OHS performance. farming company to gain such accreditation. Employee Profile Individual training needs were identified as part Focus on customer service At 30 June 2000, Melbourne Water had 481 of employee development plans. Professional This system, which puts processes in place to During the year, Melbourne Water developed employees, comprising 388 (81 per cent) men development and other training programs were minimise the risk of workplace injuries, is to customer service principles and performance and 93 (19 per cent) women. A year earlier provided during the year to improve and be complemented by regular safety audits of measures for the organisation. This there were 493 employees – 404 (82 per cent) update the knowledge of our people and equip the whole organisation by Lloyd’s Register complemented a project that clarified customer men and 89 (18 per cent) women. them with the skills necessary to deliver the Quality Assurance. needs throughout the business, and set a organisation’s performance management systems. framework for Melbourne Water achieving Equal opportunity excellent customer service. Melbourne Water is an equal opportunity employer. Discrimination, victimisation and harassment of any kind are unacceptable.

28 29 A Successful Commercial Business

Financial Highligts of 1999/2000 Operating Profitability A review of Melbourne Water's capital structure Represents operating profit before abnormal items by the Department of Treasury and Finance & tax/operating revenue. Major reforms were introduced by the State to water and sewerage confirmed that the capital structure proposed for pricing for Melbourne on 1 January 1998. the Corporate Plan for the three-year planning period was appropriate. The proposed capital 600 structure includes a minor reduction in gearing, an 550 500 increase in interest cover and a consistent dividend 450

ratio based on 65 per cent of pre-tax profit. 400

350

300 Debt 250 The total book value of borrowings amounted 200 Melbourne’s Yarra River to $1,242.8 million ($1,267.4 million in 1998/99). 150 The reduction reflects Melbourne Water’s active cash 100 management to minimize debt. 50 0 $M 1997/1998 1998/1999 1999/2000 The gearing percentage at 30 June 2000 improved

to 43.2% compared to 45.9% at 30 June 1999 as Operating Revenue a result of these initiatives. Strong financial performance Plant and $18.4 million spent on the Cardinia- Profit before Abnormal Items & Tax

In 1999/2000, Melbourne Water provided a Pearcedale pipeline project to improve water Gearing dividend to the Victorian Government of $126.2 quality and reliability of supply on the 60 million. This was $20 million (or 19 per cent) Mornington Peninsula. 50 more than the previous year. 40 Despite this growth in capital expenditure and 30 20 Net surplus after tax increased to $196.9 million higher dividend payments, Melbourne Water was 10 based on solid revenue growth, which was able, through active cash management, to reduce Capital Expenditure 1999/00 0 Captal expenditure for the year totalled $105.2 million up 6 per cent to $477.8 million. These results debt by $23.4 million. Gearing (debt to total % As at 30 June 1999 As at 30 June 2000 were driven by contributions from a buoyant assets) reached 43.2 per cent, down from 72 per development industry, higher than planned bulk cent five years ago, and cash from operations is Interest Cover water sales due to the continuing dry conditions now almost four and a half times interest costs. Represents (receipts and payments from operating and savings in general operating costs. The activities + interest expense) / interest expense. reduction in the company tax rate to 30 per cent Operating costs for the year fell $8.6 million 4.5 has given Melbourne Water a once-off gain of (or 4 per cent) and the real reduction in overall 4.4 4.3 almost $50 million under the adjusted provision operating costs since 1995/96 is 33 per cent. 4.2 for deferred tax liabilities. 4.1 Water $40.6m The Water Services Association of Australia 4.0 Waterways and Drainage $31.8m

Capital expenditure increased by 32 per cent to compared Melbourne Water’s operating costs with 3.9 Sewerage $25.6m

$105.2 million, due mainly to $35 million spent major water companies in other States in 1998/99. Times 1998/1999 1999/2000 Corporate $7.2m on a major upgrade of the Western Treatment Melbourne Water had the lowest operating costs for both water and sewerage wholesale services. 30 31 Consultation

Freedom of information Of the 25 applications, 14 related to personal Melbourne Water aims have an open and Eastern Treatment Plant During 1999/2000, Melbourne Water received property developments and seven to WorkCover accountable relationship with the community Eastern Treatment Plant Community 25 requests for access to documents under the or personal employment matters. Other and there is a high level of interest and Liaison Committee Freedom of Information Act 1982. applications related respectively to a burst involvement in the Corporation’s activities. Effluent Management Strategy Consultation water main, the effect upon groundwater of the Melbourne Water has a community relations Group (includes agencies, peak environmental The designated persons for the purpose City Link tunnels and a request for information policy and checklist that are essential to its groups, surfriders and local consultative groups) of the Act are: regarding water storage levels. consultation program. Work does not proceed on any project that may impact on the local or Flood prevention Principal Officer Categories of documents wider community without a community Koo-wee-rup–Longwarry Drainage and Flood Brian Bayley Melbourne Water uses a computerised file consultation plan. Consultation programs are Mitigation Advisory Committee Managing Director management system for management of evaluated to enable continuous improvement State Emergency Prevention Committee Melbourne Water Corporation correspondence and documents. Other on-line and to provide a measure for the community State Flood Policy Committee computer systems are used to manage financial, consultation corporate key performance indicator. Victorian Flood Warning Consultative Committee Authorised Officer human resource and other operational activities Jane Denton and plans relating to its water supply, Consultative arrangements Government Freedom of Information Officer waterways and drainage and sewerage In 1999/2000, Melbourne Water consulted Department of Premier and Cabinet Melbourne Water Corporation functions. Historical archives on Melbourne with and received advice from a large Department of Infrastructure Water’s activities are available through the number of groups regarding the Corporation’s Department of Treasury and Finance Requests under the Act were processed as follows. Public Records Office. activities including: Department of Natural Resources and Environment and Access in full 13 Access to documents Catchment management organisations Department of State and Regional Development Access in part 8 People wanting access to Melbourne Water Dandenong Catchment Implementation Access refused – documents under the Freedom of Information Committee Industry associations Documents not located 1 Act 1982 should write to: Maribyrnong Catchment Implementation Association of Consulting Surveyors Transferred to another agency 1 Committee Association of Land Development Engineers Applicant did not proceed 1 Freedom of Information Officer Port Phillip and Western Port Catchment Australian Industry Group Not finalised 1 Melbourne Water Corporation and Land Protection Board Australian Institute of Building Surveyors PO Box 4342 Werribee Catchment Implementation Committee Australian National Committee on Large Dams These details are published in accordance with Melbourne Vic 3001 Western Port Catchment Implementation Building Designers Association of Victoria Part 2 of the Freedom of Information Act 1982. Committee Engineers Industry Liaison Committee Information on Melbourne Water’s consultative Each application must clearly identify the Yarra Catchment Implementation Committee Housing Industry Association arrangements required under Section 7 of the documents sought and be accompanied by a Institution of Engineers, Australia Act is set out on pages 32-34. Information on $20 application fee. General inquiries Diverters Insurance Council of Australia Melbourne Water’s publications, also required concerning freedom of information can be Keilor Diverters Advisory Group Master Builders Association under Section 7, is set out on page 75. made by telephoning the Freedom of Diverters Consultative Real Estate Institute of Victoria Information Officer on (03) 9235 7100 Committee River Basin Management Society between 8am and 5pm, Monday to Friday. Yarra River Diverters Consultative Committee Royal Australian Institute of Architects

32 33 Royal Australian Planning Institute Lower Coordinating Committee Urban Development Institute of Australia Merri Creek Management Committee Corporate Governance Urban Development Industry Association – Cleanup Project Urban Development Industry Association / Patterson Lakes Advisory Committee Association of Land Development Victorian Economic Chamber of Commerce Western Treatment Plant and Industry Western Treatment Plant Community Liaison Committee The Board of Directors is responsible for Pursuant to the Melbourne Water Corporation Local government Western Treatment Plant Wildlife governance of Melbourne Water and determines Act 1992, the Managing Director is appointed Municipal Association of Victoria Consultative Committee its strategies and policies. The Board operates by the Board, following consultation with the under the provisions of the Melbourne Water Minister, for a period not exceeding five years Research organisations Other community and environment groups Corporation Act 1992. As well as overseeing and is eligible for re-appointment. The Cooperative Research Centre for Australian Conservation Foundation strategic planning and risk management, the performance of the Managing Director is Catchment Hydrology Christmas Hills Working Group Board reviews remuneration and succession reviewed by the Board on a regular basis. Cooperative Research Centre for Devilbend Reference Group planning. This statement sets out the main Freshwater Ecology Eastern Freeway Extension Springvale Road corporate governance practices that were in Directors have the right to seek independent Cooperative Research Centre Real-Time to Ringwood Community Liaison Group operation throughout the financial year. professional advice at Melbourne Water’s Flood Forecast Project Review Committee Friends of the Earth expense in connection with their duties Advisory Committee A number of committees help ensure the Board and responsibilities. The Melbourne Water Stormwater management St Georges Road Liaison Group carries out its functions effectively. The Board Corporation Act 1992 provides for declarations Stormwater Committee Truganina Landcare Group has a Charter pursuant to which it operates and of pecuniary interest by directors. Stormwater Management Working Group Victorian Outdoor Range Zoo Committee this defines the role of the Board and the Woodlands Industrial Estate Wetlands – responsibilities of management. Board meetings are held monthly, excluding Trade waste Technical Working Group January. Regular written reports from Trade Waste Acceptance Advisory Committee Yallock Drainage and River Improvement Rates The Board of Directors comprises a non- management and presentations on corporate Advisory Committee executive Chairman, four non-executive and business activities are provided to Water authorities and retail customers directors, and the Managing Director. Details of directors. Board members also participate in Australian Water Association Blueprint charts waterways and directors’ qualifications and experience can be site visits and receive corporate publications. City West Water drainage course found on page 36. Gippsland Water Melbourne Water took an important step in Statutory reports are provided to the Goulburn Murray Water 1999/2000, producing an Operating Charter The roles of Chairman and Managing Director Government as shareholder. These reports South East Water for Waterways and Drainage. are separated by legislation. Directors, other cover key financial information and the Southern Rural Water than the Managing Director, are appointed by performance of the Corporation against key Victorian Water Industry Association The Charter commits Melbourne Water to deliver the Minister for Environment and Conservation performance indicators established in the Water Industry Dams Working Group 34 specific, output-related services across several for a period not exceeding three years. Board Corporate Business Plan. Water Services Association of Australia areas of activity, and to monitor and report on members are eligible for re-appointment, but Western Water its performance in doing so each year. may not hold office for consecutive periods Yarra Valley Water exceeding nine years. In appointing directors, Melbourne Water prepared the Charter the Minister is required to ensure as far as Waterway management with guidance from an 11-strong external possible that directors have qualifications and Carrum Lowlands Wetlands Management Group reference committee, which included experience relevant to the operations of the Emerald Water Quality Improvement Committee people from environmental groups, local Corporation. The conditions of appointment Hoddles Creek Streamflow Management Plan government, research organisations and the are established by the Minister. Advisory Group development industry. Kananook Creek Association Landcare Consultative Committee

34 35 Melbourne Water's Board of Directors. L-R Anthony A Browne, Brian R Bayley, Carolyn Schultz, Graeme Bowker, Baard Solnordal, Virginia Mansour

BOARD OF DIRECTORS Anthony A Browne BA, LLB (Hons) Board Committees The Committee comprised C Stewart, R Gilbert Director Audit and Corporate Risk Committee and A Browne until December and since then has Graeme Bowker The Audit and Corporate Risk Committee’s comprised G Bowker, A Browne and C Schultz. Chairman Tony Browne is a Senior Partner with Arthur primary objective is to assist the Board in It meets at least twice each year. The Managing Robinson and Hedderwicks, solicitors, and fulfilling its responsibilities on financial Director attends by invitation. Reports are Graeme Bowker is Regional Partner - Global joined the Board on 22 March 1995. He has reporting, accounting and operational control provided to the Board after each Committee Strategic Clients of Deloitte Touche Tohmatsu - extensive experience in corporate and financial practices, risk management and compliance meeting. Further details about directors’ and Australia. Mr Bowker was appointed Chairman law and is a director of Epworth Hospital. with relevant laws. The Committee’s Terms of executives’ remuneration are set out in Notes to the Board on 1 January 2000 and is also a Reference were reviewed this year and include 22 and 23 of the Financial Statements. Director of RFL Australia Limited. He has Virginia Mansour MB, BS (Hons) PhD facilitating communication between the Board, extensive financial and advisory experience Director internal and external auditors, and management. Policies and internal control covering businesses involved in a wide range The Board has overall responsibility for the of industries including utilities, financial Dr Virginia Mansour is a graduate of medicine The Audit and Corporate Risk Committee Corporation’s internal control framework. A Code services and transport. from the University of Melbourne and has a comprises B Solnordal (Chairman), A Browne of Conduct sets out the standards of behaviour PhD from the Department of Medicine at and V Mansour. The Terms of Reference set out expected of all employees. The Code is reviewed Baard Solnordal BEc & Bus. Admin. FCA Monash University. Dr Mansour is a Senior requirements for the Committee’s composition. regularly in consultation with employees and Deputy Chairman Lecturer in the Department of Physiology at The Managing Director, the Chief Finance Officer reissued regularly. All new employees receive Monash University and is also a member of its and representatives from PricewaterhouseCoopers, the Code on joining Melbourne Water. Baard Solnordal was appointed to the Board on Standing Committee on Ethics in Research Melbourne Water’s internal auditor, attend Audit 22 March 1995. He is a former Senior Partner Involving Humans. Dr Mansour was appointed and Corporate Risk Committee meetings by Corporate policies are reviewed regularly and with Ernst and Young, chartered accountants, to the Board on 1 January 2000. invitation. Representatives from the Auditor- are available through Melbourne Water’s and is a commercial accountant with wide General’s Office also regularly attend meetings. Intranet. Major new policies, and amendments experience as a company director, financial Carolyn Schultz BSc (Hons), PhD The Committee’s Terms of Reference provide to existing policies, are approved by the Board adviser and auditor. Director members with unlimited access to auditors and and are then communicated to employees. senior management. Members can seek Brian R Bayley Dr Carolyn Schultz was appointed to the Board independent advice if necessary. The Audit and Risk management Managing Director on 1 January 2000. She has a PhD from New Corporate Risk Committee meets four times a The Board has overall responsibility for the York University and is a Senior Research Fellow year and may meet more frequently if required. Corporation’s risk management and is assisted Brian Bayley was appointed Managing Director and Project Leader for the Cooperative Research Reports are provided to the Board after each in this task by the Audit and Corporate Risk on 28 July 1998. He was appointed Chief Centre for Bioproducts within the School of Committee meeting. Committee. Melbourne Water’s risk management Executive Officer on 1 February 1998. He was Botany, University of Melbourne. Dr Schultz is policy establishes procedures used to manage formerly head of the Corporation’s Water also a member of the Cooperative Research Remuneration Committee risk in a consistent and cost-effective manner. Group. Mr Bayley has extensive water industry Centre Executive Management Committee. The Remuneration Committee makes Risk management is incorporated into existing experience in a broad range of senior recommendations to the Board on remuneration management systems by applying elements of a management positions. arrangements and terms of employment for generic management system in designated risk executives and other employees. Remuneration focus areas. The risk management policy and and other terms of employment are reviewed framework are in accordance with Melbourne annually. Reviews cover employee performance as Water’s goal to continually improve the business well as market and policy factors, as appropriate. and conform to the Risk Management Standard AS/NZS 4360:1999. 36 37 Melbourne Water has developed an automated The Corporation has a comprehensive A heavy dump of snow in system called Risk Control Assessment, which is framework for managing financial risk. Melbourne’s water supply aimed at controlling, monitoring and reporting It includes a Financial Risk Management Policy catchments in June had little major risks for each risk focus area. A set of approved by the Board annually. A Financial impact on storage levels. management questions addressing major risks Risk Management Committee has been are asked on a regular basis and the outcomes established, which is chaired by the Managing and action plans to deal with the issues Director and includes senior executives and an identified are provided to the Audit and external adviser. Melbourne Water’s treasury Corporate Risk Committee every six months. takes an active approach to managing financial risk through procedures outlined in the policy. Regular reports on the operation and condition of the water, sewer and drainage asset networks are Occupational Health and Safety presented to the Board. Physical assets are classified Melbourne Water’s Executive Occupational Executive Team powers affecting members of the public are into risk categories and inspected regularly. Health and Safety (OH&S) Committee comprises Brian Bayley derived from these two Acts. They should be the Managing Director as Chairman, senior Managing Director referred to when detailed information is sought. Regular operating reports are also provided to the management and employee representatives. Ross Young Melbourne Water is empowered to make by- Board by each of the groups within Melbourne The Committee meets monthly and is General Manager Water laws under the Melbourne and Metropolitan Water. The reports include performance against responsible for the development, implementation David Lynch Board of Works Act in relation to its functions. budget and financial and non-financial and auditing of an effective OH&S management General Manager Sewerage Two current by-laws exist, relating to Water performance indicators. Information is also system. The Board is provided with monthly Grant Wilson Supply Protection (1997 No 1) and Waterways provided on significant events and incidents and reports on OH&S performance and initiatives. General Manager Waterways and Drainage Protection (1998 No 2) respectively. their impact on the Corporation. The groups Tony Antoniou The particulars and functions of Melbourne also report on any health and environmental Research Information Technology Water are referred to in this Annual Report. compliance matters. An approval and management process has been Jane Denton established to ensure research is cost effective Corporate Secretary and Legal Counsel Under an agreement with the relevant Minister, Melbourne Water’s business exposes it to and targeted at managing business risks and Christine Gibbs effective as of 30 November 1995, the Minister’s financial risk. This includes interest rate risk, improving productivity. The process encompasses Corporate and Community Relations functions and powers as a Floodplain Management credit risk, liquidity risk and operational risk the identification of business needs, financial Malcolm Haynes Authority under the Water Act 1989 have been associated with treasury activities. aspects, project analysis, risk assessment, project Human Resources delegated to Melbourne Water. Pursuant to this review, post-completion audit and intellectual Gordon McFarlane delegation, Melbourne Water, as an agent of property implications. An annual research Acting Chief Finance Officer the Minister, provides floodplain management report is provided to the Board. Howard Rose services over the Melbourne Water drainage area. Pricing and Strategy Peter Scott The Minister has also delegated powers of Science and Technology management under the Water Act relating to

Managing licensed private water diversions from waterways Director Human Science & Particulars, functions and powers to Melbourne Water effective from 1 July 1999. Resources Technology Melbourne Water is a statutory corporation Sewe roup rage constituted under the Melbourne Water Use of Consultants r G G te ro a up Corporate W Commercial Corporation Act 1992. It derives its operational The total cost of engaging consultants in Secretariat Services powers primarily from The Melbourne and 1999/2000 was $1.4 million for both operating W aterways Group Metropolitan Board of Works Act 1958. and capital activities. Two of the consultancies Corporate & Community Information Melbourne Water’s principal decision-making undertaken were more than $100,000. Relations Technology Pricing & Strategy

38 39 Five Year Financial Summary

2000 1999 1998 1997 1996 $M $M $M $M $M

PROFIT AND LOSS STATEMENT FOR YEAR ENDED 30 JUNE Operating revenue 477.8 449.6 567.0 679.8 686.6 Operating profit before abnormal items and income tax 204.2 166.9 242.5 267.8 208.5 Abnormal items before income tax 0.0 0.0 0.0 4.4 62.0 Operating profit before income tax 204.2 166.9 242.5 263.4 146.5 Income tax attributable to operating profit 7. 3 54.1 81.9 97.0 24.6 Operating profit after income tax 196.9 112.8 160.6 166.4 121.9 Dividend provided for or paid 126.2 106.2 141.1 141.3 80.0

BALANCE SHEET AS AT 30 JUNE Current assets 35.7 27.6 37.4 46.1 48.2 Non current assets 2,816.4 2,728.1 2,684.0 2,668.1 2,682.4 Total assets 2,852.1 2,755.6 2,721.4 2,714.2 2,730.6 Current liabilities 348.2 326.2 308.2 454.6 607.0 Non current liabilities 1,336.9 1,363.1 1,355.4 1,564.9 1,690.1 Total liabilities 1,685.1 1,689.3 1,663.6 2,019.5 2,297.1 Net assets 1167.0 1,066.3 1,057.8 694.7 433.5

Total equity 1167.0 1,066.3 1,057.8 694.7 433.5

The following issue should be considered when reviewing the five year financial summary. • Major reforms were introduced by the State to water and sewerage pricing for Melbourne on 1 January 1998.

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