Sustainability

Overview 2

Bushfires 9

Water 17

Sewerage 29

Waterways 39

Recycled Water 51

Protecting Our Natural Environment 61 Rod Clifford Clifford Rod Our Relationships 73

Our People and Our Workplace 83

Business Efficiency 93

Corporate Governance and Risk Management 101

Financial Report 110

Statutory Information 166

Global Reporting Initiative – Content Index 186

Rod Clifford thought the Sugarloaf Pipeline would be a fairly straightforward engineering project ■ “At the beginning, we knew this was a high profile project but didn’t anticipate how controversial the project was to become,” the Project Director says, “it’s been quite

a ride.” ■ Rod’s role is to build relationships with the ‘outside world’ including government, environment agencies, landowners,

community groups and through the media ■ The pipeline, which runs from the Goulburn River near Yea to the Sugarloaf

Reservoir, will bring water savings from irrigation upgrades to Melbourne ■ “You look at the graphs and the rapid decline of our

water storages and quickly realise the importance of the project,” he says ■ The Black Saturday bushfires caused delays to an

already tight schedule. Pipeline employees helped save property by fighting fires in Toolangi, around Glenburn and elsewhere■ “Like other organisations, we did whatever we could to help,” Rod says. “Good people do the right thing at times like these,

and a lot of good people work for us.” ■ “I’m especially proud of the way pipeline employees worked with landowners and agricultural specialists to reinstate paddocks, alleviating understandable anxieties. Our people have worked to a consistently high standard and overcome all sorts of uncertainties, difficulties and challenges along the way.” 1 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Overview

Industry structure and regulatory framework

Government Department of Treasury and Finance Essential Services Commission

Department of Sustainability and Environment Environment Protection Authority Victoria

Department of Sustainability and Environment Regulations/Licences/Guidelines

Department of Human Services Statement of Obligations/Legislation/Regulations/Policy

Owner, legislator and policy maker Regulators

About us About this report Stakeholder consultation Melbourne Water is owned by the Victorian Melbourne Water’s Sustainability Report A research project conducted with key Government. We manage water supply 2008/09 describes our annual progress external stakeholders in June found strong catchments, treat and supply drinking and towards achieving our vision and how support for the content and design of last recycled water, remove and treat most of we met our obligations from 1 July 2008 year’s Sustainability Report. Melbourne’s sewage, and manage waterways to 30 June 2009. The stakeholders were impressed with the and major drainage systems in the Port The report reviews our performance against report’s accountability and clear language, Phillip and Westernport region. We are a key performance indicators (KPIs) detailed in diagrams and tables. A key part of the report significant business, managing $9.4 billion1 our Corporate Plan, and against sustainability that was highlighted as a demonstration of natural and built assets. or water industry-based indicators including of transparency and accountability was the We consider social, environmental and the Global Reporting Initiative (GRI): use of ‘key achievements, disappointments financial effects and short-term and Sustainability Report Guidelines. and challenges’. long-term implications in all our business Reporting principles include balance and However, the stakeholders felt more decisions. Our key stakeholders are transparency of outcomes and issues; attention could have been paid to customers, government, regulators, accuracy, reliability, timeliness and our business context and position other water businesses, land developers, comparability of data; sustainability on sustainability. the community and suppliers. These context; and stakeholder inclusiveness. stakeholders and our other strategic The stakeholders comprised a Member of partners, including alliance colleagues Melbourne Water is committed to the Parliament and senior officials of Victorian and research organisations, help us process of assurance and verification, Government agencies and non-government achieve our objectives. and engaged an independent auditor environmental organisations. We have

1 Written down replacement value as at 30 June 2009 to assess this report. The Independent identified these groups as among those Assurance Statement is on page 192. most important to our operations and a key audience for this report.

2

Melbourne Water Metropolitan, rural and regional water authorities Water, sewerage customers Service Agreements Councils Recycled water customers Customer Contracts

Waterways customers Waterways Charter

Energy and Water Ombudsman Victoria

Consumer Utilities Advocacy Centre Customer Contracts

Service providers Customers

The project involved an external consultancy, We used these stakeholder views to add Stakeholder consultation identified SKM, conducting phone or face-to-face context and information to several sections some concerns with the navigation interviews of up to one hour. SKM reported of this year’s Sustainability Report. and accessibility of last year’s a summary of the process, key findings and online report. We recognise these The project has helped us understand issues recommendations to Melbourne Water. shortcomings and will pay increased of importance to stakeholders and ensure attention to this year’s online report. Among the high priority issues these issues are covered transparently. Improvements that will be introduced identified were: Online document include an enhanced search facility, ••Context of controversy and environmental As part of Melbourne Water’s commitment clear page numbering and downloadable issues surrounding some of the major to sustainability, we will print a limited documents for each section. infrastructure projects such as the number of hard copies of this report (with We welcome your feedback, and invite desalination and Sugarloaf Pipeline projects 80 designated for the Victorian Parliament). you to send it via the website. ••Sustainable water supply and use in An online version will be available the context of population growth and Accessibility on the Melbourne Water website, increasing environmental expectations If you do not have internet access and melbournewater.com.au, from which require a CD of this report or if you would ••Melbourne Water’s strategy on readers will be able to access the like to receive sections in large print, please the metropolitan price review information they need, and choose contact Melbourne Water on 131 722 or ••Environmental implications to print particular sections if required. email [email protected]. of reduced river flows ••Energy, greenhouse gas emissions and climate change ••Commercial opportunities to reduce salinity.

3 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Strategic Framework

Dow Jones Sustainability Index Global Water Utility Index Comparison 100% Melbourne Water Average industry score Highest industry score

75%

50%

25%

Total scoreTotal Economic dimension Environmental dimension Social dimension 0% 05/06 06/07 07/08 05/06 06/07 07/08 05/06 06/07 07/08 05/06 06/07 07/08

Water is an essential but scarce resource – The document, first published in 2006, The Strategic Framework outlines Melbourne without it we cannot survive. It is crucial links our work to Victorian Government Water’s goals, key business focus areas for a growing economy, a healthy strategies and policies including Our and how we are meeting the challenge environment and a vibrant community. Water Our Future, Our Environment Our of securing water resources for future Future, the Central Region Sustainable generations and the environment in the Our strategic guide Water Strategy and Melbourne 2030. context of climate change, population Melbourne Water’s Strategic Framework growth and resource scarcity. It also outlines how we are working to become About 500 people, including our employees includes intent statements and success a more sustainable business. It guides and people from our alliances, supplied indicators for each business focus area. our activities, and informs our decisions written comments as part of the review. and activities towards achieving our See relevant chapters for the goals Employee feedback opened in October and vision of ‘working together to ensure of the Strategic Framework. each comment was collected, categorised a sustainable water future’. and considered by a working group. Most Our vision This year, we revised our Strategic comments were incorporated into the Working together to ensure Framework following extensive document, which was launched in April. a sustainable water future consultation with employees and We will ensure a ‘sustainable water future’ Steve Healy, an Operations and Maintenance government, the water industry in which our water supply is secure and team leader, summed up a central aim and community stakeholders. high quality, our waterways and bays of the document: “It provides clear links are healthy, biodiversity is improved We undertook this review to ensure between Melbourne Water’s vision and and stormwater and treated wastewater that our people better understand team goals,” he said. is recycled or beneficially used. our vision and their role in working to achieve it. Service delivery is based on efficient resource use and by 2018 we will achieve zero net greenhouse gas emissions and meet all our energy needs from renewable sources.

We will achieve our vision through continuing to adopt innovative approaches to asset and resource management and working collaboratively with all our stakeholders.

4 Our challenge Our stakeholders Setting sustainability benchmark Our vision is ambitious and our challenge Our key stakeholders are customers, Melbourne Water has taken the lead in is to secure sufficient water resources for government, regulators, other water the third and latest benchmarking of future generations and the environment authorities, land developers, the sustainability performance against global in the context of climate change, population community and suppliers. They and water utilities and Australian utilities. growth and resource scarcity. our other strategic partners, including Our score of 80 on the Dow Jones alliance colleagues and research We have the passion, flexibility and Sustainability World Indexes of organisations, help us achieve expertise to meet this challenge, backed economic, environmental and social our objectives. by a long history of sound management criteria was three more than the best of Melbourne’s water resources. Delivering our vision listed global water utility. To deliver our vision, we have Our business The Sustainable Asset Management identified seven business focus Day to day we manage water supply Group (SAM) manages the Dow Jones areas and established intentions, catchments, treat and supply drinking Sustainability World Indexes (DJSI), SAM goals and success indicators for each. and recycled water, remove and treat research is also the basis of the Australian most of Melbourne’s sewage, and manage The goals and success indicators link SAM Sustainability Index (AuSSI). waterways and major drainage systems with goals and key performance Melbourne Water first participated in in the Port Phillip and Westernport region. indicators in our Corporate Plan the benchmarking study in 2005/06, and Water Plan. They support We consider social, environmental when our score was 69. This increased Victorian Government policies and financial effects and short-term to 71 the next year and in the third and relating to water supply (Our Water and long-term implications in all latest benchmark, our score of 80 placed Our Future), the environment (Our our business decisions. us in front of the best DJSI-listed global Environment Our Future) and urban water corporation at 77. Our culture growth (Melbourne 2030). Sustainability is our cornerstone and In the Australian equivalent, known as Further information constructive behaviours are the foundation AuSSI, our score was 10 points higher Melbourne Water’s Strategic of our work culture. We think independently than the best listed utility. Framework can be viewed online and are encouraged to take on new and at melbournewater.com.au The assessment was undertaken in 2007/08, interesting activities (self-actualising). and is the most recent as at 30 June 2009. We provide support to one another to improve and develop (humanistic- Meeting our sustainability targets encouraging), we set challenging and Melbourne Water met corporate targets realistic goals (achievement), and (key performance indicators) measuring place emphasis on building strong our office-based water, paper and energy and enduring relationships with use and waste to landfill. We reduced our stakeholders (affiliative). office water consumption by 307,000 litres compared with last year (see Water, We operate with integrity and care for page 26; Our People and Our Workplace, the health and wellbeing of our people, page 88). our stakeholders and the community, and value our relationships with them.

5 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M The Year in Review

This was a year of unprecedented challenges Delivering our vision Leading role on energy and greenhouse as we worked towards achieving our vision We commissioned the first of three We completed our Greenhouse and Energy of a sustainable water future. For us, this major projects that will secure our Strategy, which defines how we will meet means securing water resources for future water future when the Tarago treatment our goals for zero net emissions and 100% generations and the environment. plant was commissioned in June, adding renewable energy use or export by 2018. 15 billion litres a year to the water supply. Record low streamflows caused by years A professional adviser at Ernst & Young of drought, population growth and the Significant progress was also made on described it as one of Australia’s most impact of climate change have placed the Sugarloaf Pipeline, planning for the ambitious examples of voluntary leadership increasingly complex demands on the Eastern Treatment Plant upgrade and in reducing greenhouse gas emissions and organisation, our 807 people and our assisting the Victorian Government embracing the use of renewable energy. strategic partners. with the seawater desalination plant. Our results We further developed our workplace Melbourne Water acknowledges that This year, Melbourne Water: culture and our alliances to help us these projects do not enjoy unqualified ••Supplied 371,170 million litres of drinking work constructively and efficiently support and where possible, we worked water to retail water businesses (2.6% less to meet these demands and the with communities to understand and than last year and 16% less than three pressures of resource scarcity. meet their concerns. years ago due to water restrictions and On the firefront The way we work other conservation initiatives) The most urgent challenge was fighting Some 118 team leaders undertook ••Treated 261,392 million litres of sewage the tragic Black Saturday bushfires the leadership development program at our Eastern and Western treatment of February 2009. Our people made to deliver further improvements plants (1.8% less than last year) a significant contribution on the in our workplace culture. ••Increased our use and generation of renewable firefront, protecting communities We completed the establishment energy by 23% and renewable energy met and property, and in planning and of program alliances with people more than half our energy needs managing the response. brought together from multiple ••Together with our project partners, delivered Melbourne Water was able to maintain parent companies and with a range more than $1 billion of capital works water supply to the metropolitan retail of expertise to deliver capital works. ••Together with the metropolitan retail water water businesses throughout the incident Strong governance procedures were businesses, recycled 23% of the total despite 38,000 hectares of our catchments put in place to provide assurance amount of sewage treated in metropolitan being engulfed. We did not incur a lost that capital expenditure achieves Melbourne, exceeding the Government’s time injury even though 120 of our the best result for Melbourne Water. target of 20% by 2010 people fought on the firefront. We worked closely to build strong ••Protected and improved waterways, Strategic pathway and resilient relationships with water quality and drainage infrastructure Melbourne Water’s Strategic Framework stakeholders including our retail to service urban growth, investing guides our work and outlines how we water partners, Government $53.9 million on 158 projects will achieve our vision. departments and agencies and ••Achieved a net profit after tax of the community on infrastructure, This year about 500 of our people and $128 million ($67.6 million last year). education and river health projects. external stakeholders were consulted as part of a review of our Strategic Framework. The new document outlines our goals and business focus areas and links team functions to our vision.

6 Chairman and Managing Director’s Report

Bushfire and unyielding drought made Looking after rivers and creeks takes on Importantly, we met all our office-based the past year one of the most challenging a greater importance in the face of fire and sustainability targets – water, energy, in Melbourne Water’s corporate memory. drought. This year our area of responsibility paper use and waste to landfill. But it also reinforced absolute confidence expanded to 8400 kilometres of waterways. Debate around water issues remained in our people, our path and our ability Perhaps our most important achievement intense this year. Our role is to inform to collectively deliver our goals. has been working in close partnership with this discussion by making information local government and communities to The Black Saturday fires that devastated and analysis more readily available, improve the health of these natural assets. so much of Victoria posed a serious threat especially through our website. We also to Melbourne’s water supply system. Much of what we do in waterways goes continued our work with schools to give About one-third of our total catchment unnoticed by many people. But a highly the next generation the knowledge around area was damaged. But the most important visible project started in April – building the water resources they will inherit. parts were protected by the dedication one of the biggest constructed wetlands While this was an extremely difficult year of people working for Melbourne Water in the southern hemisphere. This single for Melbourne Water, it was ultimately one and other agencies. We remain deeply wetland in Melbourne’s east will contribute of our most successful. By protecting our grateful for these efforts. more than a quarter of our 100-tonne existing assets and delivering $1 billion in nitrogen reduction target for 2010. It will also The fires were another symptom of new capital projects, we are helping to lay provide an important refuge for flora and a climate that has become persistently the foundation of a sustainable water future. fauna, and improve the amenity of one-sided. The period from January to the area for the local community. In accordance with the Financial June was the second driest on record Management Act 1994, we are pleased for the catchments. The impact on As water management becomes more to present the Report of Operations reservoir levels was stark, which complex with the demands of climate for Melbourne Water for the year reached 25.6% of total capacity. change, so does the importance of ending 30 June 2009. managing sewage as a resource – But these levels rose immediately on not as waste. 24 June with the reconnection of Tarago 30 September 2009 Reservoir to Melbourne. The project was We also completed 12 months of delivered by Melbourne Water and its technology trials at our Eastern alliance partners six months early and Treatment Plant ahead of a $380 $3 million under budget – despite million upgrade to be completed bushfires coming within metres of the in 2012. As well as improving new water treatment plant in February. discharges into the marine environment, this upgrade opens Our second project to boost water the door to significantly more supplies is the Sugarloaf Pipeline. water recycling in the future. Cheryl Batagol Progress this year has been outstanding. Chairman At its peak, crews of 1200 have been Unfortunately, Melbourne Water working along the 70 kilometre route suffered one lost time injury (a sprained to lay the pipe at a rate approaching shoulder of a worker) in the last week one kilometre a day. The pipeline remains of the year, although this followed an on budget and ahead of schedule. outstanding 16-month period of zero lost time injuries. Our contractors did not do as well and so we redouble our efforts to support them to improve safety. Robert Skinner Managing Director

7 MELBOURNE WATER SUSTAINABILITY REPORT areas of the Maroondah catchment that hadn’t been touched since 1939,” he says. “But they’ll be looking a lot healthier in 10 years.” in healthier a lot looking be they’ll “But says. 1939,” he since touched been hadn’t that years.” catchment 10 in healthier Maroondah lot a the of looking be areas days February fateful 1939,” says. he since those they’ll of “But touched been hadn’t that reminder catchment a daily are Maroondah the of areas trees burnt, especially catchments the of blackened days February fateful those of reminder daily a are trees unscathed blackened were they the case, and forget, his In never fire. of will he line unscathed were they case, his In fire. of line the in were homes family.” family.” a We’resays like he control,” under get it could we confident was and I months summer the during caper our is firefighting but stuff, serious says he control,” pretty 9onFebruary Highway Maroondah of sides both down tracked it as path its in under get it could we confident and I was months everything summer the during caper our is consuming stuff, firefighting but serious was it pretty knew “I a bushfire February 9 on Highway Maroondah of sides both down corner.” tracked the it as around path just was its in event a major everything that know we consuming did bushfire “Little a says. he witnessed grief,” some us to cause strikes lightning just than more we expect corner.”that could the Saturday around Black was just before event weeks or major a three two only grief,” that we know some says. did us he discussed “Little cause to strikes lightning just than more expect we could that says Saturday he Black before weeks energy,” three two or only discussed us “Alittle of couple forests these of tranquility the says loves energy,”he little a up coordinator Reynolds Keith for backyard huge a like are Healesville around and forests in these of tranquillity catchments the loves water coordinator The Reynolds Keith for backyard huge a like are Healesville around and in catchments water The ■ “It was our turn to be helped by crews from interstate and even overseas, like we’ve helped them in the past. We’rea like past. the in them helped we’ve like overseas, even and interstate from crews by helped be to turn our was “It ■ Keith and many of his colleagues faced the added strain of knowing that their loved ones and nearby homes were in the the in were homes nearby and ones loved their that knowing of strain added the faced colleagues his of many and Keith ■

“It was our turn to be helped by crews from interstate and even overseas, like we’ve helped them in the past. the in them helped we’ve overseas, like even and interstate from crews by helped be to turn our was “It ■ ■

But in late January and early February, Keith knew that the catchments were under threat threat under were catchments the that knew Keith February, early and January late in But Keith and many of his colleagues faced the added strain of knowing that their loved ones and nearby nearby and ones loved their that knowing of strain added the faced colleagues his of many and Keith ■

But in late January and early February, Keith knew that the catchments were under threat threat under were catchments the that knew February,Keith early and January late in But ■ The eerie silence immediately after the fires is something he will never forget, and the the and forget, never will he something is fires the after immediately silence eerie The ■ “It’s my space when I’m out in the bush – somewhere I go to relax or burn up a up burn or relax to I go – somewhere bush the in out I’m when space my “It’s ■

“It’s my space when I’m out in the bush – somewhere I go to relax or burn burn or relax to go I somewhere – bush the in out I’m when space my “It’s ■ ■

The eerie silence immediately after the fires is something something is fires the after immediately silence eerie The “It’s sad to see so much of the catchments burnt, especially burnt, catchments the of much so see to sad “It’s ■ Keith, a night shift fire crew leader, witnessed witnessed leader, crew fire shift a night Keith, ■

Keith, a night shift fire crew leader,crew fire shift Keith, night a ■ ■ The Melbourne Water works works Water Melbourne The

The Melbourne Water works works Water Melbourne The ■

“It’s sad to see so much much so see to sad “It’s ■

“I knew it was was it knew “I ■ “A of couple ■ ■

Keith Reynolds Bushfires

Protecting native fish and platypus populations in bushfire-affected areas Rebuilding our own assets damaged or destroyed in the fires Working with landholders to repair and replace fencing and vegetation to protect waterways With our research partner, extending our knowledge of the bushfire impacts to provide information for the next water supply-demand strategy and regional sustainable water strategy. Disappointments Despite the necessary preparatory a formal work been completed, having documented bushfire recovery plan was not in place at the time of Black placed additional This Saturday. on our people to finalise burden the documented plan Challenges improvements  Identifying and introducing to fire suppression and response with the Department of Sustainability and Environment and AuthorityCountry Fire Monitoring and managing the impacts of the fires on catchment run-off and water yield • • • • • • • • • • • • • •

Protected the water supply system, our other assets, private properties communities and assisted fire-affected Communicated promptly and effectively with a wide range of stakeholders Our people gave $50,000 to the Red Cross Bushfire Appeal, a sum matched by MelbourneWater Key achievementsKey Despite 120 of our people fighting on the injury we did not incur a lost time firefront, Maintained water supply to the metropolitan retail water businesses throughout the incident Put in place rehabilitation measures in the catchments short-term to reduce impacts on water quality • • • • • • • • • • • • Bushfires

MELBOURNE WATER SUSTAINABILITY REPORT Healesville area

Worst fears realised About 400 Melbourne Water people Preparation the key to timely response After more than a decade of drought, were involved in the response, including The key to our incident response was the and with water scarcity and climate about 120 who fought on the firefront preparatory work undertaken before the change here to stay, Victorians have with other emergency response agencies. fire season began, including clearing 126 become accustomed to high fire danger Our efforts included: kilometres of firebreaks around the edge and grim warnings such as those issued ••Protecting the catchments and built assets of the catchments, checking access roads on 5 and 6 February. Those warnings and tracks, firefighter training and testing ••Providing strategic input and fire proved unerringly accurate and the essential firefighting equipment. management expertise in incident rooms community’s worst fears were realised This preparation and incident planning on 7 February 2009, which became ••Providing essential operational and logistical with the Department of Sustainability known as Black Saturday. support in work centres and elsewhere and Environment and the Country Fire ••Donating to the bushfire appeal. In late January and early February, Authority helped us to move quickly Melbourne experienced five days of Despite the severe conditions on several to manage the unfolding incident. temperatures above 40 degrees (well firefronts, we were able to manage the Many of our roads and tracks were used to above the 30-year average of 1.5 days). incident without a lost time injury. establish fire control lines, and the location This record heat together with tinder Fire Operations Manager Frank Lawless, of our work centres, firefighters and equipment dry conditions pushed the fire danger a veteran of Ash Wednesday and numerous near the catchments, as well as a modern index well beyond extreme levels in other fires during his 40 years with Melbourne communications system and up-to-date the catchments. Water, said: “Nothing in our lifetime can maps underpinned our firefighting. On Black Saturday, the temperature compare with Black Saturday – the severity Our emergency management was the result soared to 46.4 degrees in Melbourne, of conditions, the speed and scale of the of years of contingency planning, which and strong northerly winds whipped fires, and their impact. We were doing our included consultation and advice from up hundreds of fires across Victoria. best to protect Melbourne Water resources. water corporations in regions affected by Tragically, 173 people lost their lives and However, when we started to hear about bushfires in recent years such as Canberra, more than 2000 homes were destroyed. the loss of life and property, it put our Gippsland, North East Victoria and Sydney. work into perspective.” Our catchments were not spared, with 38,000 hectares engulfed mainly by the Kilmore East-Murrundindi fire.

11 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Bushfires

2009 Victorian bushfire burnt areas and water supply catchments

Wallaby Creek

Whittlesea Kinglake

Healesville Yarra River North Lilydale Warburton Melbourne Town Yarra River Water supply reservoir Water supply catchment boundary Neerim South Port Phillip Water supply catchment – unburnt area Bushfire affected area

It is also an extension of our normal Bushfire Recovery Plan Maintaining the water supply activities when a total fire ban is declared. Moving from the incident to recovery, To safeguard precious supplies from On these days, we ensure that key people Melbourne Water established a Bushfire the risk of fires in the Upper Yarra and are in place at strategic points in the Recovery Coordination Team to manage Thomson catchments, Melbourne Water water supply system. short-term and long-term recovery issues transferred one billion litres of drinking associated with the water supply system water from Upper Yarra Reservoir to Melbourne Water incident controller and our waterways. The team initiated a Cardinia Reservoir on 9 February. Charmaine Quick attended the daily rapid assessment project of fire damaged Integrated Emergency Coordination We continued to transfer this amount assets to help prioritise recovery works Centre meetings run by the Department of water to Cardinia Reservoir for 20 days and developed the overall strategy to guide of Sustainability and Environment and as a precautionary measure, and we were recovery operations across all of our business. the Country Fire Authority. We set up our able to maintain the water supply to the own incident management team on 8 The Melbourne Water Incident management metropolitan retail water businesses. February. This team, of up to 60, included personnel turned their hand from fire Cardinia is our second biggest storage but people throughout the business. suppression to rehabilitation planning does not have a large catchment, so the and works immediately after the event. impact of a fire in this catchment would Working in conjunction with the DSE, and be less than the major water-yielding Parks Victoria we worked on rehabilitation catchments. Our system of inter-connected of fire tracks, roads and the installation of storages and service reservoirs without sediment control measures. The existing large catchments (such as Cardinia) relationships between these organisations served us well during the incident. was the fundamental ingredient that resulted in a rapid deployment of these measures, reinforcing our vision statement of “working together”.

The outcomes from the whole event and shared learnings between DSE, CFA and Parks Victoria have formed the input to our Bushfire Recovery Plan. This plan is in the process of being finalised prior to next summer’s bushfire season.

12 Healesville area

Assessing the impacts Water quality Water yield Our assets Even before the fires were contained in the The catchment yield impacts in the The Black Saturday bushfires caused catchments, Melbourne Water began putting short-term and medium-term may $5 million damage to Melbourne Water’s in place rehabilitation works to protect include temporary inability to harvest natural and built assets. About one-third short-term water quality. These works water from unfiltered sources and of our catchments were burnt, including include road drainage improvements reduced volumes from treatment plants. all of Armstrong and Wallaby Creek, and and installing silt curtains to prevent Modelling is being used to determine most of O’Shannassy and Maroondah. debris, soot and ash being washed into the extent of medium-term changes the water storages during a downpour. in peak run-off rates and volumes. Four bridges, 12 buildings, 80 kilometres of roads, 42 kilometres of fencing, 30 As a result of these works, the water quality Over the longer term, reductions in yield gates, one weir, two water tanks, seven impacts appear to be manageable but these can be expected from fire-affected areas hydrographic sites, a bulldozer and signs impacts can take months to appear. due to regrowth of trees in catchments, were damaged. Recovery works are due particularly mountain ash-type species. Melbourne Water is monitoring several to be completed by June 2011. parameters including turbidity and As a result of the fires, Melbourne Water The Department of Sustainability and nutrients within some of the major extended our major bushfire research Environment provided us with a grant of waterways in the burnt catchments program with Melbourne University. $3.9 million to assist our bushfire recovery. and downstream of the catchments. New elements are: We have conducted routine sampling ••Developing models to assess possible and have also installed event-based medium-term increases in run-off over automatic samplers. These will provide the next five years in Melbourne Water’s an indication of future water quality fire-affected catchments in our storages. ••Assessing the long-term impact of the fires on water yield fromMelbourne Water catchments using hydrologic models and tools ••Reviewing implications of the fires for long-term system yield and supply-demand balance to provide information for the next water supply-demand strategy and regional sustainable water strategy.

13 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Bushfires

Impact of bushfires on Melbourne Water’s catchments Catchment Fire affected Area burnt estimate Share of total reservoir inflow Reservoirs with catchment Thomson No None 36% Upper Yarra Yes About 2% burnt 19% Maroondah Yes About 75% burnt 12% O’Shannassy Yes About 93% burnt 12% Yan Yean No None 2% (not in supply) Tarago Yes About 50% burnt Nil (not used for Melbourne’s water supply at time of bushfires)

Reservoirs with no catchment Cardinia No N/A (no catchment) Nil Sugarloaf No N/A (no catchment) 12%* Greenvale No N/A (no catchment) Nil Silvan No N/A (no catchment) 7%**

Small catchments Graceburn Creek Yes About 100% burnt Run-off to Maroondah Reservoir Wallaby Creek Yes About 100% burnt Run-off to Yan Yean Reservoir Armstrong Creek Yes About 100% burnt Run-off to Silvan Reservoir Coranderrk Creek Yes Less than 2% burnt Run-off to Silvan Reservoir McMahons Creek No None Run-off to Silvan Reservoir Starvation Creek No None Run-off to Silvan Reservoir

Percentages are calculated from the annual average inflow (run-off) into our reservoirs from 1997-2008. * Sugarloaf inflow is from the Maroondah aqueduct and Yarra River. ** Silvan inflow is from small catchments (see above). This accounts for 7% of our total reservoir inflow.

14 Waterways Our people Our relationships About 920 kilometres of waterways in the Fighting fatigue and fire Keeping the community informed Port Phillip and Westernport region were Melbourne Water people throughout the The Black Saturday bushfires resulted in affected by the bushfires. organisation were involved in fighting intense demands for information from local, the Black Saturday bushfires. state, national and international media. Land and vegetation along 21% of waterways in the Yarra catchment and 11% of those Through Melbourne Water’s employee More than 20 of our people were placed on in the Westernport catchment was burnt, support program, counsellors ensured that seven-day rosters to work with emergency scorched or destroyed. our firefighters had access to the help they services, retail water businesses and other needed. They provided phone and face-to- agencies to deliver up-to-date information This loss of vegetation will lead to increased face counselling, helped to monitor for about catchment and water supply impacts. surface water run-off and reduced natural signs of fatigue and supported people They provided information including media filtering of the run-off, resulting in higher through stressful conditions. releases, media briefings, press conferences peak flows and increased sediment and and catchment damage maps. plant litter flowing into waterways. In places, Despite the long hours required of fire crews, the heat of the fires made soils impervious, we managed to maintain our policy of not Most of our internet home page was turned further increasing peak rainfall run-off. exceeding 16-hour shifts. We reinforced over to bushfire news, maps and quick rostering, ensured that our firefighters links to fire and water quality information. Our response aims to: kept in touch with colleagues, and initiated In February and March, the site received ••Protect key natural values of waterways targeted communications to managers 500,315 visits (an increase of 22% over including native fish and platypus about monitoring the welfare of their the previous two months). ••Support rural landholders in managing teams. We incurred no lost time injuries Collaborating with other agencies fire-affected waterways in the incident. Melbourne Water worked closely with ••Manage built infrastructure, such as bridges, Several Melbourne Water people whose the Department of Sustainability and that may be impacted by changes such as properties were burnt were given paid Environment and Country Fire Authority increased flows and debris loads in waterways. time off or equipment such as laptops to determine and refine the firefighting We reviewed key natural values of fire- and broadband access to help them strategy and manage resources. manage their personal situations. affected waterways and continue to In recovery, we worked with Parks Victoria monitor fire impacts and implement The Red Cross Bushfire Appeal was added to determine rehabilitation requirements on-ground recovery activities. to our workplace giving program, which and weed control works along waterways Fire damaged 211 Stream Frontage enabled our people to make donations and in catchments. We improved support Management Program projects – about from their salary. They gave $50,000, to landowners in collaboration with the 150 kilometres of waterways. In many a sum matched by Melbourne Water. Department of Primary Industry and the Port Phillip and Westernport Catchment cases, this meant the loss of works undertaken Recognising the response Management Authority. by private landholders. We are working with Melbourne Water held a recognition these landholders to replace fencing, control event at Yarra Glen racecourse in May. We are also working with councils and the weeds and revegetate if required. The family event included a barbecue Department of Planning and Community On a positive note, monitoring programs lunch and entertainment activities. Development to speed up the process for planning scheme amendments to accelerate developed to assess the impacts of the Chairman Cheryl Batagol unveiled a plaque the rebuilding of homes next to waterways fires indicate relatively high diversity of commemorating the efforts of Melbourne in fire-affected areas. fish in most of the fire-affected waterways, Water people in supporting the bushfire and platypus have been recorded in Watts response, and Managing Director Rob River and Tarago River. Skinner launched a booklet that captured the efforts and stories of some of our people who fought the fires.

15 MELBOURNE WATER SUSTAINABILITY REPORT Victoria well for 25 years and will continue to do so long after I’m dead and buried,” he says. he buried,” and dead I’m after long so do to continue will and years 25 for well Victoria reservoir largest Melbourne’s of workings inner other and pipelines tunnels, shafts, degrees 19 constant a – pleasant very were chamber the in says he treat,” areal was lights traffic workplace remote its reach to road gravel a on day a kilometres 80 says he imagined,” anyone than better – perfectly together fitted that sets reservoir the from flowing keep to water allow to level embankment the below metres 100 Water Melbourne project at Thomson Reservoir this intricate year Guinea New Papua and Manila towers, light MCG the to displays, Eve Year’s New famous Sydney’s of two for Bridge Harbour the of top the from him taken has hobby be can’t “You says. ready.” and he rough or displays,” slapdash fireworks to applies same the and – projects engineering major in methodical be and detail cuts short taking in believe not does Nicoll Mark pyrotechnics, or engineering it’s Whether ■ Mark is a licensed pyrotechnician, and helps to run as many as 20 fireworks displays a year. His His ayear. displays fireworks 20 as many as run to helps and pyrotechnician, a licensed is Mark ■ And in the height of summer, when everyone else was sweltering, the working conditions conditions working the sweltering, was else everyone when summer, of height the in And ■ Mark, who works with contractor John Holland, was part of a team that completed an an completed that a team of part was Holland, John contractor with works who Mark, ■ Mark says the project gave him a rare opportunity to see the the see to opportunity rare a him gave project the says Mark ■ Two large pumps were put together and installed in a chamber ■ “I love the bush and to drive to and from work with no no with work from and to drive to and bush the love “I ■ The project team made a round trip of more than than more of trip a round made team project The ■ “It’s an ingenious system that has served served has that system ingenious an “It’s ■ ■ “It was like two giant meccano meccano giant two like was “It “You need to pay attention to to attention pay to need “You

Mark Nicoll Water

Invest

■

Increase

■

Secure water supplies for current

which was detected at two detected at two which was ■

E.coli, ProtectMelbourne’s existing water resources Melbourne Water monitoring sites monitoring Water Melbourne Challenges  Delivering the Government’s major water infrastructure projects on time and within budget, working with our alliance partners Maximising the water from traditional sources while continuing to develop opportunities rainfall-independent from or other sources Managing and conserving existing water reserves while the new sources are developed Continuing to monitor climate patterns and to be flexible in meeting Melbourne’s water needs In extreme drought, balancing water supply needs with the environmental needs of waterways Disappointments not met were quality targets Water for

• • • • • • Operate and maintain our assets efficiently, ■ • • • • • •

■

Improveenvironmental outcomes from all aspects ofthe business

■

Listentoand engage the community toseek support for our projects and priorities

Wonthaggi desalination plant to be system supply into the water integrated Installed two large pumpsThomson at in to water to enable access Reservoir potentially low-level conditions for 4-star rating an equivalent Achieved our officewater efficiency and met key use water office for indicators performance whole-of-life costs, risks and service needs in accordance with sustainability principles. achievementsKey treatmentCommissionedTarago plant the in June, adding 15 billion litres a year to the water supply Completed 75% of the Sugarloaf Pipeline on associated and made significant progress full of issues and challenges in a year works Began detailed design of works that will enable water from the Government’s Goals related to Water Providehigh quality and reliable drinking water through sustainable catchment management practices andfuture generations bydeveloping new, alternative and diverse water resources waterresource efficiency ■ prudentlyand efficiently, taking account of environmental, social and financial considerations, • • • • • • • • • • Water

MELBOURNE WATER SUSTAINABILITY REPORT Maroondah Reservoir Outlet Tower

Achieving our vision Managing our water supply system Since 1997, total water in storage has Our traditional sources are no longer Traditionally Melbourne has relied on dropped each year by an average of sufficient to provide water security in drinking water from more than 156,000 almost 100,000 million litres. the face of population growth, persistent hectares of protected catchments in the This year was particularly tough for our drought and climate change. That is why Yarra Ranges east of Melbourne. storages, with spring rainfall in the catchments we need to diversify our water supply Water harvested from these catchments 15% below average and the corresponding and include sources that do not depend flows to the major reservoirs, which have run-off into reservoirs (streamflow) about on rainfall such as desalination. a capacity of 1810.5 billion litres. half the average, during a season when they Consistent with this need, the Government normally recover. This high quality water requires minimal released Our Water Our Future – the Next disinfection at 42 primary and secondary It was a relatively cold start to summer, Stage of the Government’s Water Plan in water treatment plants and is transferred but reservoir levels dropped in the record June 2007. This plan identified $4.9 billion through 994 kilometres of water mains heat of January and February. of major water infrastructure projects that and 214 kilometres of aqueducts and will provide 240 billion litres more water The Thomson Reservoir began the year at tunnels to 64 service reservoirs in the per year by 2012, and complement 18.2% of capacity (194,227 million litres) metropolitan area. The water is then community and industry water savings. and at 30 June 2009, the level had dropped delivered to the retail water businesses, to 16.2% (172,945 million litres). This year, Melbourne Water helped to who distribute it to individual customers. deliver the first of three major projects – Thomson Reservoir, which holds about Water storages at record lows reconnecting Tarago Reservoir – and made 60% of Melbourne’s total system storage At 30 June 2009, the total reservoir storage significant progress on the Sugarloaf capacity, is known as the ‘drought reserve’. level was 26%* or 470,894 million litres Pipeline and the Victorian Government’s The reservoir, which was last full in 1996, (compared with 29.5% or 523,526 million desalination plant. has played a vital role in helping Melbourne litres at 30 June 2008). During 2008/09, get through 13 years of drought. Our work this year towards achieving the total storage level was as low as 25.6% our vision also involved protecting our or 453,227 million litres. This is a record * Reconnection of Tarago Reservoir on 24 June 2009 increased total system capacity from 1,773 GL catchments, meeting system leaks and low since the Thomson Reservoir was to 1,810.5 GL. loss targets, supporting water conservation, commissioned in August 1984 (26.4% replacing ageing infrastructure and or 467,772 million litres). minimising environmental, community and customer impacts caused by asset failures or capacity deficiencies.

19 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Water

Rainfall as measured at the reservoirs for 2008/09 Catchment July 2008 – June 2009 Long Term Ave* Variation Lowest Previous Year Since Thomson 866.7 mm 1,041.7 mm 16.8 % below 2002-03 (712.0 mm) Upper Yarra 861.8 mm 1,046.4 mm 17.6 % below 2007-08 (851.4 mm) O’Shannassy 1,052.2 mm 1,278.5 mm 17.7 % below 2006-07 (901.6 mm) Maroondah 755.0 mm 1,052.8 mm 28.3 % below 1982-83 (749.2 mm) Yan Yean 455.2 mm 644.9 mm 29.4 % below

Streamflow as measured into the reservoirs for 2008/09 Thomson 125,019 ML 203,510 ML 38.6 % below 2006-07 ( 92,774 ML) Upper Yarra 62,885 ML 130,370 ML 51.8 % below 2006-07 ( 30,009 ML) O’Shannassy 50,524 ML 89,560 ML 43.6 % below 2006-07 ( 28,556 ML) Maroondah 52,476 ML 76,820 ML 31.7 % below 2007-08 ( 48,183 ML) Total 290,904 ML 500,260 ML 41.9 % below 2006-07 (180,003 ML)

* Long Term Average (30 year mean 1979 – 2008)

Dry soil soaks up rain As a result, the impact of this rainfall was This year, Melbourne Water and our project This year, rainfall at the major harvesting short-lived. This is consistent with a pattern partners GHD Pty Ltd (design), Baulderstone reservoirs (Thomson, Upper Yarra, O’Shannassy in recent years in which only about half Hornibrook and United Group Joint Venture and Maroondah) was 18.3% below the long- the rain has flowed into the rivers and (construction) and Sinclair Knight Merz term average, and streamflow was 41.9% streams that feed our storages. The rest (contract superintendent) completed: below the long-term average. This was even has been absorbed into the soil or lost ••Detailed design below projections of a 35% reduction in through evaporation. ••Construction of eight buildings including streamflow by 2050 under a severe climate We need steady rain over days and weeks the main plant, chemical storage and change scenario identified in the Melbourne to wet the catchments and generate inflows control buildings Water Climate Change study of 2005. to our storages, which are providing much ••Construction of a 20 million litre treated For the six months ending 30 June 2009, less water than they used to. This decline water storage tanks streamflow into the Thomson Reservoir has accelerated in recent years. ••Mechanical, electrical and instrumentation was the lowest on record. For the same Securing water for the future works including pumps, piping, centrifuges period, total streamflow for the four major Tarago provides a welcome boost and switchboards. harvesting reservoirs was the second lowest The Tarago treatment plant was opened on record (after 2008). The commissioning phase, which began in in June by the Premier, Mr John Brumby, April, included testing of sub-systems and then In 2008/09, about one-third of the rainfall and the Minister for Water, Mr Tim the entire plant process. This was followed in the major harvesting reservoirs occurred Holding. It has added 15 billion litres by proof of performance to ensure the plant in four downpours – in November, December, of drinking water a year to the Melbourne could achieve its water quality targets. March and April. Between these events, there and Westernport supply systems, and is was little follow-up rainfall that would the first of the Government’s three major Melbourne Water delivered the $97 million have wet the catchments and generated water infrastructure projects to be delivered. project within budget and six months ahead significant inflows to the reservoirs. of schedule while performing solidly in the The treatment plant, at Drouin West, is other key result areas of health and safety, needed to ensure high quality, reliable sustainability and environment, stakeholder water supplies. The hilltop treatment engagement and culture. plant is gravity fed from Tarago Reservoir, nine kilometres south near Neerim South, virtually eliminating the need for pumping and greatly reducing energy costs.

20 Water storage data for 2008/09

Capacity 1 July 2008 30 June 2009 Yearly Reservoir (At full supply) Volume (ML) % Full Volume (ML) % Full Difference (%) Thomson 1,068,000 193,988 18.2% 172,945 16.2% -2.0% Upper Yarra 200,000 96,915 48.5% 81,867 40.9% -7.5% O'Shannassy 3,000 2,453 81.8% 1,966 65.5% -16.2% Maroondah 22,000 5,507 25.0% 6,441 29.3% 4.2% Sugarloaf 96,000 15,686 16.3% 14,915 15.5% -0.8% Yan Yean 30,000 4,591 15.3% 5,721 19.1% 3.8% Greenvale 27,000 22,197 82.2% 20,076 74.4% -7.9% Silvan 40,000 35,776 89.4% 35,076 87.7% -1.8% Cardinia 287,000 147,255 51.3% 109,862 38.3% -13.0% Tarago 37,500 22,025 58.7% NA* Total 1,773,000** 524,368 29.6% 1,810,500*** 470,894 26.0% -53,474 ML

* Tarago Reservoir came back into service 24th June 2009 ** Full supply capacity on 1 July 2008 without Tarago Reservoir. *** Full supply capacity on 30 June 2009 with Tarago Reservoir.

The new plant, which can treat up to 70 We also began detailed design of works The alliance is responsible for planning and million litres of water a day, supplies about that will enable the desalinated water to environmental assessments, engineering, 95,000 customers in Westernport and the be integrated into the water supply system. design, community and landowner relations, Mornington Peninsula area. These works include a 2.3 kilometre pipeline including compensation offers and payments and inlet works at Cardinia Reservoir and for easements on affected properties, and Tarago Reservoir, which has a capacity a pump station to transfer water from project management (see Our Relationships, of 37.5 billion litres, will continue to Cardinia Reservoir to Silvan Reservoir. page 76). provide environmental flows (see Our Relationships, page 76). Construction of these works is scheduled The project is within budget and ahead of to begin in early 2010 and to be completed schedule, despite a three-week delay when Advancing the desalination plant before the desalination plant is commissioned alliance employees worked to protect the The Victorian Government is progressing in December 2011. alliance’s Glenburn compound and private a tender for the design, construction and properties from the Black Saturday bushfires. operation of a seawater desalination plant Sugarloaf Pipeline on track on the Bass Coast near Wonthaggi. Construction of the Sugarloaf Pipeline began This year, the Sugarloaf Pipeline Alliance: in September following approvals by the The plant will be capable of drawing ••Completed the outlet to Sugarloaf Reservoir Victorian and Federal Governments. seawater from the ocean and producing ••Completed a cofferdam in the Goulburn up to 150 billion litres of drinking quality By 30 June 2009, more than three-quarters River at Killingworth to enable the inlet water (equivalent to about one-third of the 70 kilometre pipeline from the structure to be built of Melbourne’s annual water supply). Goulburn River near Yea to the Sugarloaf ••Used a 100-tonne remote-controlled Reservoir in Melbourne’s north-east had Melbourne Water’s work this year in support tunnel-boring machine to begin pushing been laid, mostly buried under paddocks of the project included coordinating the segments of pipe through about 830 metres and alongside roads. development of a drinking water quality of a steep section of Toolangi State Forest, specification in accordance with health More than 1200 jobs have been created leaving the area above untouched (see standards and reviewing technical and on the Sugarloaf Pipeline project, which Protecting Our Natural Environment, page 67) operating parameters for the project. is being undertaken by an alliance ••Made significant progress on constructing comprising Melbourne Water, John two pump stations near Yea, including a Holland, Sinclair Knight Merz and GHD. high-lift pump station, which will provide storage and pumping capacity to push water up and over the Great Dividing Range.

21 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Water

Water in storage Melbourne Stage 1 Permanent Stage 1 (new) Tarago Reservoir 01 Nov 02 Restrictions 01 Sep 06 back in service 01 Mar 05

Stage 2 (new) Stage 2 01 Nov 06 100%100 01 Aug 03

Stage 3 (new) 01 Jan 07 80%80

Stage 3A 01 Apr 07 60%60

40%40

20%20

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 09

Up to 75 billion litres of water savings Water will be pumped from Winneke These measures included installing two large will flow to Sugarloaf Reservoir by the to Greenvale Reservoir using the Plenty pumps at Thomson Reservoir in March to middle of 2010 from $1 billion of irrigation pumping station, and a $20 million pumping ensure water could be transferred safely infrastructure improvements across the station is being built at Preston to pump and efficiently to Upper Yarra Reservoir Goulburn and Murray river systems. water from Winneke to the Olinda and (see case study on page 17). The project Melbourne’s water users are investing Mitcham reservoirs. is a risk management measure to ensure $300 million of this amount, and water that water can continue to be accessed The Winneke upgrade and Preston pumping savings will be shared equally between and transferred under extreme drought station will be completed in early 2010, irrigators, Melbourne and the environment. conditions from the Thomson Reservoir several months before the Sugarloaf to the Melbourne supply system. Downstream works pave way for pipeline Pipeline is due to be commissioned. Melbourne Water is upgrading our water Depending on the extent of winter and spring Melbourne Water is also building a hydro treatment and distribution networks to rain, the pumps may be required in 2009/10. generating plant at the downstream end optimise the additional water resulting from They could also be decommissioned and used of the Sugarloaf Pipeline (see Protecting irrigation improvements in northern Victoria. elsewhere in the water supply system after our natural environment, page 66). the Government’s major water infrastructure Water from the Sugarloaf Pipeline will flow Managing existing water supplies projects come on line. to Winneke water treatment plant where Extreme drought measures works began during the year to improve The rehabilitated Swingler Weir, at the intake Pumps installed reliability and increase the production rate point of the reservoir, has been used to divert To ensure existing water supplies are from an average of 157 billion litres a year flows directly from the Thomson River to maximised until the new projects to 170 billion litres a year. The works include Upper Yarra, improving flexibility to balance are commissioned, Melbourne Water installation of two new filters, improvements the storages and manage transfer flow rates. implemented initiatives under our to reservoir aeration, process control and extreme drought contingency plan. An aeration system was installed in the filter backwashing. Upper Yarra Reservoir to ensure water From Winneke, the water will be distributed quality was maintained under potentially to areas including the Greenvale, Olinda and low-level conditions. Mitcham reservoir supply zones, which were previously supplied from Silvan Reservoir. This will help our storages to recover.

22 Annual inflow to Melbourne’s main harvesting reservoirs Historical inflows Inflow to Calendar year long term average storage Calendar year average since 1997

1400000ML

1120000

840000

560000

280000

1913 1917 1921 1925 1929 1933 1937 1941 1945 1949 1953 1957 1961 1965 1969 1973 1977 1981 1985 1989 1993 1997 2001 2005

Environmental flow studies Managing demand Recertification audit In May, Melbourne Water began examining The Government is working with the In August, an external auditor conducted the the possibility of suspending some Melbourne water industry to manage recertification audit of Melbourne Water’s environmental flows from the Yarra demand for water while progressing major drinking water quality management system, River, and the West Gippsland Catchment projects to increase supply. If Melburnians which is certified to the ISO 9001 standard, Management Authority began examining used the same amount of water as in the and HACCP. the possibility of suspending some flows 1990s, the Government would need to A separate audit process directed by the from the Thomson River. find another 110 billion litres from water Department of Human Services was also projects (see Our Relationships, page 77). These studies were undertaken in case conducted for the first time to demonstrate Melbourne continued to experience Supplying safe, high quality water compliance with the Safe Drinking Water extremely low rainfall and inflows into Melbourne Water consistently meets Act and regulations. the major catchments. The Victorian stringent requirements in the distribution The auditors met many of our people at Government has approved the deferral of safe, high quality water. The water a range of sites including representatives of some environmental flows from supply system is managed according from several of our alliance partners and both rivers in recent years as a drought to Hazard Analysis and Critical Control contractor companies. All systems were contingency measure. Point (HACCP) principles, which uses passed as meeting relevant requirements audits and accreditation to ensure Changeover of the Thomson Reservoir and Melbourne Water’s management quality management from collection, high-level tower outlet to the low-level system for drinking water activities treatment and distribution to customers. tower outlet was required to maintain was recertified for a further three years. the Thomson River environmental flow This year we supplied 371,170 million releases and releases to Southern Rural litres of drinking water to the retail water Water irrigators. Similarly, new smaller businesses. This compares with 381,097 pumps were installed at Yering Gorge million litres in 2007/08, and 411,747 on the Yarra River to optimise river million litres in 2006/07 and is 16% extractions within environmental flow less than the amount supplied three obligations (see Waterways, page 45). years ago. This is due to the impact of water restrictions and other conservation initiatives.

23 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Water

Major water projects Goulburn River

Yea-Sugarloaf Pipeline

Toorourrong Reservoir O’Shannassy Reservoir Yan Yean Reservoir Western Water Maroondah Reservoir Greenvale Reservoir Upper Yarra Reservoir Sugarloaf Reservoir

Yarra Valley Water Thomson Reservoir City West Water Melbourne Silvan Reservoir Southern Rural Water

Cardinia Reservoir Tarago Reservoir

Port Phillip Bay Gippsland Water South East Water North Yea-Sugarloaf Pipeline Western Port Water supply pipeline, aqueduct Water supply storage reservoir Bass Strait Water supply catchment area Retail water area boundary

Performance against our targets Algal blooms in reservoirs Working with the retail water businesses Melbourne Water met requirements A blue-green algal bloom in Tarago Reservoir Melbourne Water completed an improvement for water pressure, disinfection was detected in mid-February as a result plan following taste and odour complaints byproducts, microbiological standards, of routine algal monitoring of water from City West Water customers. Additional turbidity and aluminium. samples. It was found to be non-toxic. water quality monitoring and procedural Several species were detected, with the controls were put in place to improve the Targets were not met for E.coli, which combined biomass exceeding reporting management of rechlorination in the system. was detected at two sites during the requirements. Monitoring of the reservoir year (Winneke Treatment Plant clear RMIT University began a research project continued at the increased summer water storage outlet and the Somers/ early in 2009 with Melbourne Water and frequency with the bloom declining Bittern offtake from the Bittern main). the retail water businesses to assess taste over the following weeks. Investigations and re-sampling was complaints. The project is supported by carried out with no operational factors A blue-green algal bloom was detected in Water Quality Research Australia (the contributing to the detections. The sites Yan Yean Reservoir in March. This reservoir former Cooperative Research Centre for and associated reservoirs were inspected is isolated and has not been supplying Water Quality and Treatment). and found to have no breaches. Re-samples water since February 2007. The bloom RMIT is taking samples throughout the and additional monitoring sites had no was monitored and treatment options retail water network, and examining E.coli detected in them, and there were no for the algae considered while the whether chlorinating water to eliminate consequences for the water supply system. storage was offline. taste issues will generate disinfection Our performance target is tighter than byproducts especially in water from that required under the Safe Drinking coaltar-coated pipes. Water Regulations. The target is established in our Bulk Water Supply Agreements with the retail water companies and applies to our bulk water supplied to them. There was no consequent breach of the Safe Drinking Water Regulations.

24 Daily water use Melbourne ML Water supplied to retailers * Based on 8 year winter ave. 1 Jul to 30 Jun 92 – 99 p/day ** Based on 5 year winter ave. 1 Jul 03 to 30 June 08

1440 37.1% Yarra Valley Water 137,829ML

1225 34.9% South East Water 129,405ML 1050

875 0.1% Gippsland Water 297ML

700 25.1% City West Water 93,035ML 525

350 2.9% Western Water 10,604ML

175 Average** for 07/08Average for 08/09Average 1990s* 0 100% Total consumption 371,170ML

Protecting the catchments The impact of deer Renewing our infrastructure Melbourne Water has managed to safeguard Melbourne Water uses a range of controls Melbourne Water invested more than our forested catchments from major bushfires to ensure the water supply system is reliable $45.3 million in renewing water supply since Ash Wednesday in 1983 mainly by and safe. As one of several barriers to assets across the metropolitan area. being prepared and responding quickly. contamination, we monitor animals in the Over the next three years, we plan to catchments to minimise water quality risks. invest a further $175 million. By the beginning of the 2008/09 fire season, our fire crews – comprising permanent, A research project was conducted by The century-old Maroondah Aqueduct Steels accredited firefighters, seasonal firefighters Melbourne University in the Upper Yarra Creek siphons were replaced with a single and others seconded from office-based jobs and O’Shannassy catchments on the 2.3 kilometre pipeline. The siphon, which – had completed further general firefighter environmental and public health impacts enables the aqueduct to pass under Steels training, undertaken fitness and medical of sambar deer in Melbourne’s water Creek, is a vital transfer link between tests and tested essential firefighting supply catchments. It found that: Maroondah and Sugarloaf Reservoirs and equipment. The water-bombing helicopter, ••Deer have significant impact on vegetation also supplies drinking water to Yarra Glen. Helitack 344, was on standby at Olinda. and damage reservoir flats The $10 million project, completed in June, We again worked closely with the Department ••Deer exert significant grazing pressure was carried out by the Sugarloaf Pipeline of Sustainability and Environment and the on local plants Alliance because the siphon is on the Country Fire Authority, clearing 126 kilometres ••The highest density of faecal material from pipeline route. of firebreaks around the perimeter of the deer was on the Upper Yarra Reservoir flats. A 1.4 kilometre section of a century-old major catchments and checking and clearing water main under the Greensborough access roads and tracks. The next phase of the research will determine the effectiveness of a deer culling program, Highway in Macleod was replaced in April, When the Black Saturday bushfires began which began in 2007/08. completing a challenging, six-stage renewal to threaten and spread to the catchments, program. The 117-year-old water main had this preparatory work enabled our network reached the end of its serviceable life and of roads and tracks to be used in several had a recent history of bursts and leaks. locations to establish containment lines.

The location of our work centres, firefighters and equipment near the catchments, together with a good communications system and up-to-date maps, underpinned our fire preparedness (see Bushfires, page 12). 25 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Water

The $6.9 million project included Traffic in the area, including tram services, Office water use abandonment of an additional was severely disrupted for 15 hours as Melbourne Water made considerable progress 1.8 kilometres of the main, which about 35 million litres of drinking water in reducing office water consumption this year. takes water from the Morang Reservoir flowed into the stormwater system and We commissioned an external audit of our to Rosanna. The 10 kilometre main has eventually local waterways. East Melbourne office to identify water been upgraded progressively since 2003. The incident caused some low pressure efficiency improvements and improve our A 600-metre section of water main was issues and turbid water reports, but understanding of office water consumption. replaced in North Coburg in the first of an no properties lost service. The retail The audit found that the building was rated eight-stage renewal project of the ageing water businesses received 70 water four-star for water efficiency because of Preston to North Essendon main. The $2.5 quality complaints. initiatives already implemented such as million project, completed in April, included The burst is believed to have been caused waterless urinals, low-flow showers, dual- a crossing of Merri Creek. by earth movement due to dry conditions flush toilets and water-efficient dishwashers. The second stage of the two-year, $60 million combined with an inherent weakness in We used the results from further auditing project to replace 10.5 kilometres of water the cast iron valve. to make operational adjustments to our mains between Essendon Airport and Preston Detecting and repairing leaks cooling towers and replace remaining Reservoir is due to begin in 2009/10. It will Melbourne Water invested almost $1.6 million dishwashers and tap fittings with water- upgrade 2.6 kilometres of mains from the in works to detect and repair leaks this year. efficient devices. We also reprogrammed Pascoe Vale railway station. the operating times for the boiled water We lined 1.6 kilometres of the Maroondah Detailed design for the realignment of and chilled water units in kitchens to save Aqueduct (bringing the total to 5.7 kilometres a 560-metre section of Northcote-Punt water and energy. over the past three years), and 200 metres Road water main was completed this year. of the Upper Yarra Aqueduct. These and These efficiencies were complemented This section passes underneath a house other upgrades and maintenance works by education and awareness programs in Holden Street in North Fitzroy, posing on our aqueducts will save about 730 led by volunteer employees (see Our an unacceptable risk. The $6.4 million million litres of water a year. people and our workplace, page 88). project, to be undertaken in 2009/10, includes construction of a bicycle and Our pipe repair crews, based at Olinda Melbourne Water achieved our office pedestrian bridge on top of the pipe and Healesville, fixed 120 leaks in our water consumption target, recording bridge across the Merri Creek at the water mains. water consumption of 7300 litres per bottom of St Georges Road, Northcote full time equivalent (FTE) per year. Melbourne Water bought flow-measuring (see Our Relationships, page 77). Our target was 7700 litres/FTE/year. equipment at a cost of $20,000 to help This was a significant reduction from We also invested $1.1 million on corrosion pinpoint large leaks and improve our last year when we recorded 8600 protection and monitoring deterioration understanding of leakage in aqueducts. litres/FTE/year. of water mains. In consultation with the retail water businesses, we continue to trial technologies FTEs include all our employees plus Burst water main causes disruption such as sound correlators to detect leaks all contractors, consultants, trainees In January, a small leak in a water main in water mains, as well as a new membrane and any other people using a in St George’s Road in Northcote system to line aqueducts. Melbourne Water site. developed into a significant incident when a valve fitting failed, causing Melbourne Water’s leak and loss rate target Overall, Melbourne Water reduced a section of the main to rupture. is that measurable transfer losses are less office water consumption by 307,000 than 1% of total water delivered. We met litres compared with last year. A complex shutdown was necessary to this target for 2008/09. protect supply to thousands of homes These results relate to our East Melbourne and businesses. It involved inspecting office only. Investigations found that and operating about 40 valves mainly office water use at some sites can be associated with offtakes to the retail difficult to quantify because consumption water network. figures include operational water use. However, efficiency improvements will be implemented progressively at our other major sites.

26 Key performance indicators – Water 2007/08 2008/09 Target met Target Result Target Annual Production/storage Operate water supply system within environmental 100 100 100 100 √ requirements – % compliance Contribute to the State Govt’s water conservation 2.9 4.2 3.3 3.7 √ target of reducing per capita water consumption by 15% by 2010*

Maintain system losses as a % of water supplied to <100% 0.98 <1.0% 0.96% √ retail water businesses % Water transfer Compliance with retail water businesses’ pressure 99.6 99.6 99.6 100 √ requirements as set out in BWSAs % Water quality Compliance with BWSA water quality requirements: 99.9 99.75 100 100 √ Aesthetics – Aluminium Compliance with BWSA water quality requirements: 100 100 100 100 √ Disinfection by-products Compliance with BWSA water quality requirements: 99.9 100 100 98.84 ×1 Microbiological standards – E.coli Compliance with BWSA water quality requirements: 86.8 79.4 ≥ 91.5 94.5 √ Aesthetics – turbidity

1 The annual compliance was not met as there were two sites where E.Coli were detected during the year. Investigations and resampling were carried out with no operational factors contributing to the detections. The sites and associated reservoirs were inspected and found to have no breaches.

27 MELBOURNE WATER SUSTAINABILITY REPORT Sewerage Anne Martin

As a resourceful and resilient young child living on the outskirts of London, Anne Martin survived wartime rationing and food shortages by finding new uses for everything ■ “I was born in 1937, about half a mile from the London sewerage works, and as a child I quickly learnt that there is no such thing as waste,” she says ■ “The sewerage works grew the best tomatoes in Europe and kept the local community in un-rationed eggs from wild ducks.” ■ Throughout her 72 years, Anne has continued to apply these valuable reuse and recycling lessons, and today, as an active member of the Eastern Treatment Plant Community Liaison

Committee, she is a strong advocate for water recycling ■ Anne fought developers to preserve Yarra bushland in Warrandyte and was elected to the then Doncaster and Templestowe Council in 1980 to champion environmental issues ■ She obtained a Master of Environmental Science at Monash University, set up the Carrum Residents Action Group, and established a community nursery specialising in native plants and flowers of the Carrum area■ Anne sees great potential in the same reuse and recycling principles of her childhood being applied at the Eastern Treatment Plant ■ “The innovative use of resources produced at the plant should be highly applauded and encouraged – it’s a progressive example for all industry to follow,” she says ■ “Methane gas reused as an energy source, sludge reused as soil fill, water processed for irrigation and now upgraded treatment processes■ “It’s brilliant – the discharge of treated effluent into the marine environment at Boags Rocks will be replaced by cleaner water and reduced over time, as the improved water quality becomes Victoria’s greatest asset in the dry climate of the future.”

Listen to

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Operate and

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Conserveimproveand

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Improve the health and amenity

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Ponds Creek following heavy rain Challenges Managing impacts of lower than average flows and higher salinity levels as a result of drought and water conservation Identifying beneficial uses of biosolids stored at the EasternWestern and treatment plants Balancing the need to reduce nitrogen reliance Port with the to Phillip Bay flows of intertidal ecosystems on nutrients in treated wastewater Managing the impacts of higher future expansion associated with urban peak flows and likely higher intensity storms Disappointments Received 11 odour complaints associated with the sewerage transfer system Highly diluted sewage spilled into Moonee • • • • • • • • • • • • Minimise waste disposal and maximise resource

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Investprudently efficiently,and taking environmental,accountof

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Metropolitan Sewerage Improve environmental outcomes from all aspects of the business

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with the retail water businesses Strategy maintain our assets efficiently, in accordance with sustainability principles. achievementsKey tertiary completed Successfully technology trials at the EasternTreatment Plant on major sewage progress Made excellent transfer projects Finalising the Reduced odour through new odour control facilities in Box Hill and at the EasternTreatment Plant Goals related to Sewerage Deliver safe sewage transfer, treatment and disposal of waterways and marine environments efficiency engagecommunityandthe seeksupportto projectsourfor prioritiesand biodiversityecosystemsand social and financial considerations, whole-of-life costs, risks and service needs • • • • • • • • Sewerage

MELBOURNE WATER SUSTAINABILITY REPORT Achieving our vision Managing our sewerage system Eastern Treatment Plant Sewage is an important resource and Melbourne Water’s sewerage system consists The Eastern Treatment Plant treats about a key part of a sustainable water future. of 391 kilometres of sewers, nine sewage 41% of Melbourne’s sewage and services Melbourne Water’s sewerage system pumping stations, and two treatments about 1.5 million people in Melbourne’s is at the centre of our work to protect plants: the Eastern Treatment Plant at south-eastern and eastern suburbs. public health, meet the demands of Bangholme and the Western Treatment Plant In 2008/09, the Eastern Treatment Plant population growth, adapt to climate at Werribee. Most sewage in Melbourne treated an average of 295 million litres of change, increase water recycling and flows to these plants for treatment. sewage per day (312 million litres last year). improve water quality in waterways In 2008/09, Melbourne Water treated a total and the marine environment. Some treated wastewater is recycled of 261,392 million litres of sewage at these and the rest flows via the 57 kilometre Melbourne Water and the retail water plants, down 1.8% compared with last year South Eastern Outfall pipeline to the businesses are finalising theMetropolitan due to water restrictions and conservation Mornington Peninsula where it is Sewerage Strategy, which sets out the measures such as greywater recycling. discharged into Bass Strait at Boags future management of Melbourne’s Sewage includes water and waste from Rocks under an EPA Victoria licence. sewage. It covers uncertainties such toilets, sinks and bathroom drains, and as climate change, population, urban A sustainable approach trade waste from businesses. The retail growth and living standards, and uses to environmental compliance water businesses collect sewage, which of sewage, such as reuse or disposal. Melbourne Water has been working since is sent for treatment at Bangholme or the mid-1990s to reduce the marine The strategy, which will be prepared Werribee. They also manage agreements discharge impacts at the Boags Rocks by September 2009, states principles, that govern the nature and volumes of outfall by reducing ammonia levels in the describes necessary tools such as trade waste discharged to sewer. effluent and planning a tertiary treatment hydraulic models, energy and treatment The sewage is treated to environmental upgrade of the Eastern Treatment Plant. performance models and asset condition standards set by EPA Victoria to ensure models, and specifies near-term actions The upgrade of the six existing aeration the effluent is safe to be discharged into to improve knowledge and participate in tanks has been a major contributor to the environment. A small amount of water supply-demand planning processes. a reduction of more than 85% in the Melbourne’s sewage is treated at local annual ammonia load to the environment. Melbourne Water’s sewage treatment treatment plants owned by the retail Construction of an additional four tanks plants provide high quality treated water businesses. will be completed in 2010 and will further wastewater to replace drinking water Integrated risk management reduce ammonia levels as well as providing in agriculture and horticulture, and Melbourne Water, in conjunction with the for future load growth. in some residential and commercial retail water businesses, has implemented developments. This year our Eastern The tertiary treatment upgrade was an integrated risk management system for Treatment Plant moved a step closer announced by the Victorian Government sewage quality. The system is independently to tertiary treatment with the in October 2006. A tertiary technology certified to ISO 22000, and uses a best completion of technology trials. trials facility was constructed in 2007, practice framework, giving increased with trials conducted in 2008/09. We also continued to construct the confidence in sewage quality management Northern Sewerage Project (a 12.5 km to government and regulators, end product The key objective was to explore the most long pipeline which will better link users and other stakeholders. efficient way of achieving an effluent quality areas from South Morang through to that addresses marine discharge impacts The process incorporates findings from inner western suburbs and on to the and supports sustainable resource utilisation. Melbourne Water’s quantitative risk Western Treatment Plant) and replace assessment, which was developed to The trials have successfully demonstrated the Melbourne Main Sewer (a connection assess chemical risks associated with water that an advanced tertiary process can be which is more than 100 years old and recycling and environmental discharge. implemented as part of the upgrade and which passes under the Yarra River near will better address residual impacts of the Docklands) to cater for population The hazard identification and risk assessment effluent discharge and support increased growth and minimise community and will be extended to include broader objectives recycling in a broader range of applications. environmental impacts and risks. such as protection of treatment processes and worker safety. The tertiary upgrade is planned for completion in late 2012.

31 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Sewerage

Melbourne Water’s sewerage system

City West Water Yarra Valley Water

Western Treatment Plant Eastern Treatment Plant

Port Phillip Bay South East Water

North Western Port Retail water business boundary French Island Sewerage system outlet

Bass Strait Boags Phillip Island Melbourne Water sewerage pump station Rocks Melbourne Water sewerage pipeline

Environmental monitoring Sludge drying pans Odour control Monitoring around the ocean outfall at The Eastern Treatment Plant uses sludge drying The Eastern Treatment Plant is working Boags Rocks commissioned by Melbourne pans to dry digested sludge – a byproduct to meet a licence odour performance Water assesses the environmental impacts of the sewage treatment process. The drying target that specifies that by 2012, the of the discharge from the plant and likely pans provide a cost-effective method to odours measured at the boundary must impacts of upgraded treatment and other convert sludge to biosolids for stockpiling be less than five odour units for 99.5% effluent management options. and future reuse. of the time. EPA Victoria measures odour strengths based on the principle that one The long-term monitoring program, requested This year we relined pans with compacted unit is the level of odour that can just be by EPA Victoria, began in 1999. Outcomes clay, followed by a wearing layer of recycled detected by the average human nose. of the monitoring, together with the tertiary crushed concrete. Construction began in treatment trials, are helping to guide future December and the $9 million project was This year a new odour control facility was management options. completed by the end of June. constructed at the plant and commissioning began in May. The facility is the first of a This year monitoring studies included This project maintains the drying performance three-stage strategy designed to achieve routine direct toxicity assessment, effluent of the pans and ensures that pan liner integrity significant odour reductions. monitoring, beach water sampling, near- meets EPA Victoria requirements. shore nutrient analysis, testing for metals The new facility uses biofilters to treat foul Blue-green algae and selected toxicants, intertidal platform air from the incoming sewer, inlet works In March, two basins at the Eastern Treatment mapping and algal surveys, subtidal reef and primary sludge thickeners. Previously Plant were found to have blue-green algae surveys, routine beach inspections for this foul air was transferred to extraction in the water, possibly due to warm weather aesthetic parameters, and recreational fans and vented without treatment. and low flows. bathing water health risk assessment. The biofilters are able to reduce levels of The basins were isolated and aerated, and In January, an increase in brown algae hydrogen sulphide – the ‘rotten egg’ smell – cold weather over winter controlled the was observed at Fingals Beach, suggesting from 24 parts per million to just 0.1 parts algae naturally. When the algae count has potential for recolonisation of the area per million, exceeding the 99.5% target. reduced sufficiently, the contents of the with the progressive reduction in basins will be fed back to the head of ammonia levels. the plant and treated again.

32 Northern Sewerage Project – launch chamber for tunnel boring machine

Western Treatment Plant Wet weather upgrade Mixing zone study The Western Treatment Plant treats about As Melbourne grows, wet weather Analysing the influence of the discharge 52% of Melbourne’s sewage and services capacity upgrade works proposed The Western Treatment Plant and surrounding about 1.6 million people in the central, for the Western Treatment Plant will coastal areas have high environmental values northern and western suburbs. ensure larger peak flows during heavy supporting a variety of terrestrial and marine rain can be contained and treated. flora and fauna. In 2008/09, the Western Treatment Plant treated 421 million litres per day (415 The wet weather capacity upgrade allows To help preserve these environmental values, million litres last year). Treated wastewater for the transfer of high sewage flows an $810,000 Western Treatment Plant is discharged to Port Phillip Bay under arising from a one in five-year storm. Effluent Monitoring Study is determining an EPA Victoria licence and a significant the extent and impact of the ‘mixing zone’ Design work began this year to increase portion is recycled. for the Western Treatment Plant discharges capacity in the Main Southern Carrier to Port Phillip Bay. The Western Treatment Plant includes that transports sewage to the 55 East internationally listed wetlands, and and 25 West lagoon systems for treatment, The study, which forms part of Melbourne provides significant high biodiversity including increasing the capacity of the Water’s EPA Victoria licence requirements, value wetland and foreshore habitat lagoon channel entry points. An options is measuring weather, wave and tide data, for birds and other wildlife. study for the Main Southern Carrier current strength and direction, salinity, upgrade was completed and a duplicate water quality, selected metals and toxicants, Total nitrogen discharge to the bay has channel will be constructed. and organic carbon around the outlets. an upper limit of 3100 tonnes a year to minimise the risk of algal blooms in Port Design works to increase capacity in A pilot program will assess the zone of Phillip Bay. However, nitrogen also plays the 15 East drain outlet to Port Phillip influence of the discharge plume within an important role in providing nutrients Bay also began in 2008/09. The upgraded the bay and collection of marine fauna to sustain habitat for birdlife in the outlet will handle increased flows treated around the outfalls will help determine immediate vicinity of the outfalls, so a in the major lagoon systems, as well as the extent to which food sources are careful balance needs to be maintained. surface water drainage. On-ground works derived from effluent. Total nitrogen discharged to the bay was to upgrade the wet weather capacity 1619 tonnes (1239 tonnes last year). at the Western Treatment Plant are scheduled to begin in September 2009.

33 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Sewerage

The study will develop a hydrodynamic An additional 1MW generator (the 10th Subsequent proposals for full-scale model of the treatment plant discharges at the site) is planned to be commissioned undercover sludge removal were to Port Phillip Bay including the four by June 2012. This is expected to allow assessed, with Conhur Pty Ltd discharge points. The model will help net export of electricity from the plant. awarded a service contract in demonstrate compliance with State Exported renewable electricity will be September to design, construct Environment Protection Policies and used at other Melbourne Water sites. and operate a desludging system optimise treatment plant operations for the 25 West lagoon. Managing blue-green algae while protecting the environment. Melbourne Water is trialling SolarBee – Conhur is scheduled to begin full-scale Fieldwork was largely completed this a floating, solar-powered reservoir desludging of the 25 West reactor year and modelling has begun. A final circulator – to combat blue-green in September 2009 using a remote- report will be released in late 2009. algae at the Western Treatment Plant. controlled submersible dredge, and then transfer sludge to the sludge Risk assessment Blue-green algae can release toxins that drying pans. Additional studies are being performed affect liver function and blooms in shallow, by Melbourne Water to better understand nutrient-rich treatment lagoons can interrupt Replacing lagoon cover the food pathways and nutrient levels recycled water supplies. During hot weather, Planning and procedures for cover removal supporting the significant Ramsar and when blue-green algae are most likely to and replacement at the 55 East lagoon migratory shorebird values of the Western bloom in still water, the SolarBee discourages were developed this year, and works Treatment Plant. their growth by mixing the water body. are expected to begin in 2009/10.

These and other studies will inform Solar panels and a battery keep the SolarBee The cover will be removed and replaced an environmental risk assessment in running 24 hours a day, and reduce equivalent in sections, minimising odour and loss accordance with EPA Victoria guidelines. carbon emissions (from a similar power- of biogas used in onsite power generation. This risk assessment began in June and generated option) by 150 tonnes a year. The lagoon will be desludged using will lead to the development of an action conventional techniques during the The simple water circulation method plan to reduce the mixing zone, and cover replacement program. eliminates the need for costly and potentially redefine it. environmentally hazardous chemicals. Protecting wildlife Creating our own gas exports The SolarBee is being trialled in a pond habitat and biodiversity Melbourne Water captures biogas in at the Western Treatment Plant, next to a The Western Treatment Plant contains covered treatment lagoons to generate control pond, to measure its effectiveness. wetland and foreshore areas of high power and minimise odour. Biogas, biodiversity value, including Ramsar-listed Undercover desludging mainly methane, is a byproduct of wetlands, and provides a key refuge for Sludge that builds up under the lagoon sewage treatment. migratory birds and other wildlife. covers at the Western Treatment Plant In the past year, biogas production has can affect the efficiency of associated This year Melbourne Water continued exceeded forecasts. Melbourne Water anaerobic process in processing sewage extensive habitat improvement works at and AGL, our electricity generation service and reduce the amount of biogas produced the Western Treatment Plant to support provider at the Western Treatment Plant, for renewable energy generation. and enhance these biodiversity values. are investing $1 million to establish links Odour, loss of opportunity to generate Preliminary works began on a major new including fibre-optic cables from the plant’s renewable energy and safety concerns project designed to rehabilitate more connection points to enable safe export do not allow periodic removal of the than two kilometres of coastal saltmarsh of power to the electricity grid. Melbourne covers to desludge the lagoons. at a decommissioned sewage treatment Water also plans for AGL to install two new lagoon. This project will rehabilitate coastal 1 MW generators by December 2010. Undercover sludge removal trials saltmarsh and Gahnia sedgeland, which demonstrated the feasibility of These changes will increase renewable is habitat for endangered species such proposed desludging concepts in electricity generation at the plant by about as the orange-bellied parrot and Altona such a unique operating environment. 15,000 MWh per year. The new links and skipper butterfly. equipment were installed in April and the plant will be able to intermittently export to the grid by late 2009.

34 Monitoring of key threatened species A new facility to control unpleasant Melbourne Main Sewer at the Western Treatment Plant, such as odours in Foch Street Box Hill South was Replacement Project migratory shorebirds, spiny rice-flower commissioned in June and is delivering Work also continued on the $220 million and the growling grass frog, shows that excellent performance. The $470,000 air Melbourne Main Sewer Replacement Project, numbers are stable or increasing. treatment facility controls odours from which replaces a 2.3 kilometre section of the sewer system in the area. Performance the original brick-lined Melbourne Main The Western Treatment Plant is supporting readings show more than 99% of odour Sewer built in the 1890s. about 70% of Victoria’s waterfowl, according removal, which is below the level that can to the 2008 Summer Waterfowl Count. This The new Melbourne Main Sewer will travel normally be detected by human smell. indicates that the Western Treatment Plant from Docklands, cross the Yarra River is becoming more important as a waterfowl Northern Sewerage Project upstream of the Charles Grimes Bridge, refuge in recent years (see also Changing Work continued on the $650 million and into Port Melbourne. Construction land use at treatment plants, Business Northern Sewerage Project, which began in August and the project is due Efficiency, page 97). increases the capacity of the sewerage to be completed in 2012. system in Melbourne’s growing northern Sewerage transfer When complete, the Melbourne Main suburbs, and protects the Merri and Sewage spills Sewer will improve water quality in the Moonee Ponds Creeks by virtually Heavy rainfall experienced across parts of Yarra River and Port Phillip Bay by preventing eliminating sewage overflows that metropolitan Melbourne in March and April sewage spills, and improve the quality of can occur after heavy rain. caused spills of highly diluted sewage into recycled water produced at the Western Moonee Ponds Creek from emergency relief The project involves construction of Treatment Plant by reducing saltwater structures, which are valves designed to relieve 12.5 kilometres of sewers using three infiltration to the sewer system. pressure during extremely high flows. This tunnel-boring machines operating at Melbourne Water contractor John Holland concrete-lined waterway also had elevated depths of 15 to 65 metres underground. is using an innovative construction method flows, further diluting the sewage spill. The sewers are located along the Merri involving commercial divers and a three- Creek Valley from Coburg to Reservoir and The March spill was an estimated 160,000 stage ‘wet cofferdam’ to build the new sewer the Moonee Ponds Creek at Pascoe Vale. litres, and the April spill was about 5000 litres. underwater and through the silty bed of the The Northern Suburbs Sewerage Strategy Stage 1 of Northern Sewerage Project lower Yarra River. The cofferdam will isolate defines a program of upgrades, including is being delivered by Melbourne Water, sections of the Yarra to enable work to the Northern Sewerage Project, which will with Yarra Valley Water delivering Stage proceed while keeping two-thirds of it open eliminate sewage spills in these areas and 2. Principal construction contractor John for river traffic and environmental flows. cater for long-term growth. Holland began work on both stages in During 2008/09, excavation of the main 2007 and the project is on track for Follow-up inspections ensured surrounding construction shaft at Fennell Reserve completion by mid-2012. areas were clean of debris and that correct in Port Melbourne was completed, and seals on emergency relief structures Construction sites have been established at access shafts on both sides of the river prevented odours. eight shaft sites and tunnelling is underway were installed. Sheet piling operations across Stage 1 and 2 with Brearley Reserve, for the Yarra River crossing section are Managing odour De Chene Reserve and Newlands Road shaft progressing and the southern section Melbourne Water received 11 complaints sites operating throughout six days a week. of the cofferdam is on schedule. related to the sewerage transfer system this year (eight last year). The odour complaints The first Stage 1 tunnel excavation – The Northern Sewerage Project and the were mainly related to development or a 1.6 kilometre section from De Chene Melbourne Main Sewer Replacement activity in the proximity of the sewer vents. Reserve to Carr Street in Coburg – was Project involve significant levels of There were also a few instances of failed completed in December. Installation community consultation to help manage manhole cover seals and a blocked drop-pipe. of the sewer began in June. impacts associated with noise, traffic and disruption (see Our Relationships, page 76). A prioritised capital works program is In March, two tunnel-boring machines addressing high odour risk vent sites with began excavating from the Brearley a history of odour complaints. The program Reserve shaft towards Vanberg Road involves the installation of small-scale in Essendon and towards Bass Street odour treatment facilities. in Pascoe Vale. Both machines are due to reach their destinations in October 2010.

35 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Sewerage

Western Treatment Plant

Werribee Aqueduct Managing biosolids The unexpected combustion of a biosolids The Werribee Aqueduct crosses the Werribee Biosolids are the dried, stabilised matter stockpile at the Eastern Treatment Plant River and is part of the system that transfers that remains at the end of the sewage in May was caused by high temperatures about 52% of Melbourne’s sewage to the treatment process, and comprise organic inside the stockpile due to exothermic Western Treatment Plant at Werribee. and inorganic compounds. reactions associated with the composting process. Smouldering continued for 12 hours The current concrete aqueduct has reached Melbourne Water’s biosolids strategy seeks but no flames were generated. the end of its life and is being replaced. new, sustainable uses for this renewable In January, work began on construction resource. Depending on characteristics, For volumes of biosolids generated and of a new aqueduct spanning 70 metres the biosolids may be reused to utilise stockpiled at our sewage treatment plants, across the Werribee River which is designed nutrient, energy or geotechnical properties. see Protecting Our Natural Environment, to improve amenity for pedestrians and page 69. This year Melbourne Water began a cyclists. The existing concrete aqueduct biosolids energy recovery trial using will be removed while the original biosolids from the Western Treatment heritage-listed, red brick aqueduct Plant in collaboration with a private built in the 1890s will be protected sector business and Federal Government and retained. funding assistance. Temporary diversion of the Federation Trail Melbourne Water has worked with and Werribee River Trail will be in place until EPA Victoria to develop guidelines for the project is completed in 2010 to ensure environmental management of projects cyclists can ride safely between Melbourne, using biosolids as a geotechnical fill. EPA Geelong and Werribee. Victoria finalised the guidelines in June.

36 Key performance indicators – Sewerage 2007/08 2008/09 Target Result Target Result Target met Western Treatment Plant WTP: Compliance with EPA Victoria 100 100 Pass Pass √ treatment/disposal discharge licence requirements WTP: Compliance with EPA Victoria discharge licence <3100 1239 <3100.0 1619.4 √ requirements – Nitrogen load to Port Phillip Bay (tonnes) WTP: Compliance with EPA Victoria discharge licence 0 0 0 0 √ requirements – Offensive odours beyond the boundary WTP: Compliance with EPA Victoria discharge 1250 1000 √ licence requirements – Raw sewage TDS (mg/L)* Eastern Treatment Plant ETP: Compliance with EPA Victoria 100 100 Pass Pass √ treatment/disposal discharge licence requirements ETP: Compliance with EPA Victoria discharge 5 2.4 ≤ 5.0 2.9 √ licence requirements - Ammonia limit (mg/L) ETP: Compliance with EPA Victoria discharge licence 0 0 0 0 √ requirements – Offensive odours beyond the boundary [that results in a licence breach]

ETP: Compliance with EPA Victoria discharge 0 0 Pass Pass √ licence requirements – Litter at beach [that results in a licence breach]

ETP: Final effluent Total Dissolved Solids* <500.0 520.0 ×1 Sewerage transfer EPA Victoria SEPP System failure – 0 1 0 0 √ zero spills due sewerage system failure Hydraulic deficiency – progressively achieve zero spills 0 0 0 4 ×2 due to storm events of a severity of up to 1-in-5 years Complaints relating to transfer system odour 11 8 ≤ 10 11 ×3 Biosolids management Maximise sustainable re-use of biosolids - 100 0 100 0 ×4 ETP- biosolids reuse of 90,000 cubic metres for construction fill by 2013

Maximise sustainable re-use of 33 0 33 0 ×5 biosolids -WTP- biosolids reuse Trade waste Work with Water Retail businesses to improve 0 0 0 0 √ trade waste management: number of high risk non-compliant trade waste discharges to Melbourne water’s sewerage system [discharges]

* KPIs for ETP and WTP related to Total Dissolved Solids are new in 2008/09 1 Increases in TDS concentrations have occurred due to drought conditions resulting in lower inflows to ETP, whilst the TDS load has remained relatively constant. This has resulted in the non compliance of the final effluent TDS KPI. This result does not impact upon Melbourne Water’s licence obligations and TDS is not a treatable parameter at ETP. 2 This target was not achieved due to heavy rainfall that was experienced across parts of metropolitan Melbourne during April and March 2009. This resulted in the hydraulic overload of the sewerage system in the Moonee Ponds catchment. Despite optimal operation of the system, one ERS site located on the Pascoe Vale Main Sewer spilled approximately 0.005 ML of highly diluted sewage into the Moonee Ponds Creek over a period of approximately 35 minutes. The implementation of the Northern Suburbs Sewerage Strategy has commenced which will define a program of upgrades to eliminate sewerage spills in these areas and provide for long term growth. The site was attended to ensure it was free of debris. 3 The odour complaints received were attributable to 3 main causes: Three deadplates under diamond cover manholes requiring re-sealing; one blocked drop-pipe; and seven others mainly related to development or activity in the proximity of the sewer vents. 4 There has been no suitable reuse of biosolids from ETP or WTP due to contamination and it is unlikely that this will change until the use of biosolids as a fuel is achieved for WTP biosolids. A project is shortly due to commence which assesses the viability of the use of biosolids as a fuel (in a particular industry application). 5 With respect to ETP biosolids, no re-use has occurred due to lack of finalisation of EPAV biosolids as structural fill guidelines. We will continue to explore reuse of clay rich biosolids where cost effective including assessing the risk and viability of ongoing production of biosolids for land applications. The target will be reset in current water planning process for cubic metres used over Water Plan period. 37 MELBOURNE WATER SUSTAINABILITY REPORT Waterways Ian Garsed

Ian Garsed loves life on the land and working outdoors. He has years of experience, having worked on his family’s 650 hectare

sheep farm near Castlemaine since he was 16 ■ The 27-year-old’s hands-on farming knowledge has helped him build trust and

understanding with farmers and landowners in his role as a Melbourne Water river health officer in the Werribee catchment■ “What

I really enjoy about working for Melbourne Water is the opportunity to put my background to use with other farmers,” he says ■ “When they realise you know about farming, they’re much more open to what you have to say about managing their local rivers and

creeks.” ■ Helping landowners plant or replace vegetation to protect these waterways is very satisfying for him ■ “A lot of the river

frontages are privately owned, so the relationship we have with landowners is essential for river health,” Ian says ■ “It’s best coming

back the second year when you know the seedlings have survived the first dry season and you can see they’ve taken root.”■ One

such revegetation project has improved a beautiful, meandering section of the upper Werribee River in Ballan ■ Under Melbourne Water’s Stream Frontage Management Program, Ian and his colleagues worked with a local farmer to clear weeds, plant 6000

seedlings, and construct 600 metres of fencing to revegetate a broad river loop and floodplain area■ Ian plans to return to managing the family farm and will apply his knowledge of river health to improve the Loddon River tributaries that flow through his property.

Manageflood risk

■

Listenandengagetheto

■

Conserveand improve biodiversity

■

Monitoring the impacts of drought stress and bushfires meet minimum environmental standards for stormwater management Did not complete our first round of flood management plans with councils Did not meet our service standard for diverters Challenges waterways for targets Meeting performance and drainage services in an environment population growth, of higher than expected and the effects impacts of drought ongoing bushfires of recent health the maintain to strategies Developing meeting a variety while River Yarra of the resources of demands on limited water Balancing the competing demands on water resources for drinking, irrigation and other human uses with the need to preserve environmental flows inwaterways Developing more effective partnerships businesses water retail and councils with stormwater urban sustainable more deliver to as and use of stormwater management resource water an alternative Disappointments missedWe our deadline for submitting the Better Waterways BaysPlan and to the Federal Government by six months Made little progress encouraging changes to planning and building regulations that would require all new development to • • • • • • • • • • • • • • • • • •

Invest prudently and efficiently, taking account of environmental, social

■

Improveenvironmental outcomes fromallaspects thebusiness of

community grants programs Reviewed our monitoring and investigations program, aligning research activities with clearly defined ecological outcomes Delivered waterways and drainage services in extended areas Helped to facilitate sustainable urban growth in areas north-west and south-east of Melbourne with more than $53 million of new works Key achievementsKey  EstablishedAllianceWaterways the to deliver a $70 million program of major river to improve capital works quality in our health and water and bays waterways Better Bays a five-year Completed Waterways water andquality improvement plan for the Port PhillipWesternport and region Delivered the largest ever number Frontage the Stream under of projects Management Program and other Goals related to Waterways Improvethe health and amenity ofwaterways and marine environments ■ communitytoseek support for our projects and priorities and ecosystems and financial considerations, whole-of-life costs, risks and service needs. • • • • • • • • • • • • Waterways

MELBOURNE WATER SUSTAINABILITY REPORT Achieving our vision Managing waterways Key plans and strategies Melbourne Water works to ensure our Melbourne Water is the caretaker of river We refer to several key strategies and plans rivers, creeks and wetlands are healthy health in the Port Philip and Westernport to guide long-term management of waterways. with increased numbers of native fish, region. Our role is to improve the health These include Melbourne Water’s Corporate platypus and plant life. We aim for more and amenity of our waterways, manage Plan, 2008 Waterways Water Plan, Regional than half of rivers and creeks to be in environmental flows and protect water River Health Strategy, Better Bays and good or excellent condition by 2015. quality to achieve a balance between Waterways Plan, Waterways Water Quality social, economic and environmental Strategy, Flood Management and Drainage We are facing many challenges in managing outcomes. We also provide a safe level Strategy and the Port Phillip and Westernport waterways. Prolonged drought is placing of flood protection, support sustainable Regional Catchment Management Strategy. severe environmental pressures on them. development and engage with the The loss of base flows is causing some Our Waterways Operating Charter (see community and other stakeholders. tributaries of the Yarra and the Maribyrnong page 43) translates strategic and policy Rivers to become intermittent waterways, Melbourne Water manages five major objectives into actions, and outlines which is affecting populations of native catchments within the Port Phillip and our responsibilities, goals and targets fish and animals, including platypus. Westernport region – the Werribee, for the next five years. Maribyrnong, Yarra, Dandenong and Climate change means we have to be able Flood management Westernport catchments. to respond to altered rainfall patterns, further Assessing the risks reduced flows, more intense storms with The 12,800-square kilometre Port Phillip The Port Phillip and Westernport region associated flood risks and bushfires. and Westernport region is home to about is known to have more than 40,000 3.9 million people, and land uses range properties that contain buildings or The February bushfires affected catchments from highly urbanised communities to dwellings at risk of above-floor flooding. and waterways under Melbourne Water’s farmland and forested regions. control, and caused extensive damage to This year, Melbourne Water developed a fencing and revegetation programs designed Melbourne Water manages 8400 kilometres flood risk assessment framework, as part to protect waterways (see Bushfires, page 15). of rivers and creeks, and drainage and of implementing the Flood Management waterway assets including 1452 kilometres and Drainage Strategy. The framework gives Urban growth leads to increased nutrients, of drains, 289 constructed waterway priority to extreme or ‘intolerable’ flood risks. heavy metals, litter and other pollution treatment systems and wetlands, 277 As it is impossible to prevent all flooding, in our waterways, and land practices in monitoring stations on waterways and high or ‘tolerable’ flood risk may be managed rural areas lead to contaminants flowing drains and 74 urban lakes. through other means, such as community into waterways. awareness and education. Our partners The initiatives Melbourne Water We work with many people who are looking The framework was developed with councils undertook this year included: after our rivers and the plants and animals and government agencies and with input ••Delivering over $34 million of river health that depend on a healthy river environment. from community members, including some and stormwater quality works to protect These include councils, landowners, community at risk of flooding. It guides decisions and and improve waterways and bays groups, developers, farmers, government helps set priorities for managing areas at ••Beginning the $20 million Dandenong Creek agencies and research institutions. risk of flooding. wetland – which will be Melbourne’s largest Our Waterways Stakeholder Engagement The Sandgate Avenue and Lee Street drainage constructed wetland – as part of our nitrogen and Communications Framework builds catchment in Frankston is the first area to reduction program to protect Port Phillip Bay on existing programs and describes new benefit from the use of the new framework. ••Providing $6 million to councils for stormwater ways to engage and involve the community The catchment, which was assessed as having management, which protect and improve and other stakeholders through community an ‘extreme’ flood risk, was given priority for water quality in waterways. events, education, communications and flood mitigation works. partnership/sponsorship projects (see Our As part of a multi-stage catchment solution, Relationships, page 77). we are designing a 2.5-metre drainage tunnel beneath Frankston that discharges into Kananook Creek, with construction expected to begin in 2009/10.

41 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Waterways

Waterways and drainage

Maribyrnong Catchment

Werribee River Yarra River Catchment Maribyrnong Yarra River River

Dandenong Catchment North Port Phillip Bay Tarago River Retarding basin Wetlands Western Port Catchment Channel (modified waterway) Western Port Underground drain Natural waterway Bass Strait Primary river basin catchment Extended waterways and drainage boundary

Increasing awareness Two pilot plans were 60% complete this Bay, river and catchment health The benefits of increased community year and will be finalised in 2009/10, Over five years a program of more than awareness of flooding, even in times of together with four new plans. A total of $150 million of capital works will be drought, were highlighted in the Flood 38 municipal flood management plans delivered throughout the Port Phillip Management and Drainage Strategy. will be developed by 2013. and Westernport catchment to improve river health and the health of the bays. Melbourne Water signed an agreement in Melbourne Water worked with the May to provide the Victoria State Emergency Department of Sustainability and Over the year, we worked on Service with funding of $2.4 million over Environment and the Department of more than 300 capital projects four years to support the implementation Planning and Community Development delivering river health and stormwater of the FloodSafe and StormSafe community to develop responses to the Victorian quality improvement such as woody education and awareness programs in the Coastal Strategy. The strategy examines weed control, revegetation, bank Port Phillip and Westernport region. the planning impacts of likely sea level stabilisation and wetland rises as a result of climate change. construction, with expenditure We also worked with the State Emergency for the year of over $34 million. Service and the Manningham and Darebin Floodplain mapping completed included councils to develop pilot municipal flood 238 kilometres of the Bass River system, We aim to have more than half of rivers management plans, which coordinate flood 218 kilometres of waterways in Moorabool, and creeks in good or excellent condition management activities between councils, and 19 kilometres of Merri Creek to by 2015, and achieved excellent progress emergency services and Melbourne Water. complete coverage of the floodplain in the first year of five-year targets for up to Wallan. improving river health, set out in the We did not complete our first round of flood Regional River Health Strategy. management plans with councils. For example, we revegetated 170 kilometres The deadline to complete the pilot plans by of streamside land (five-year target of June 2009 was extended to reflect structural 1026 kilometres), undertook bed and changes to participating agencies. bank stabilisation at 30 sites across the catchment (55 sites) and achieved 580 hectares of streamside land under management agreements (1000 hectares).

42 Yarra River, Kew

Waterways Operating Charter Managing stormwater Some 56 Mt Evelyn property owners will The 2008–13 Waterways Operating Charter Melbourne Water’s Living Rivers program install raingardens and rainwater tanks sets out Melbourne Water’s responsibilities, is helping councils develop the skills and to harvest stormwater from more than long-term aims and 10-year goals for the expertise necessary to incorporate stormwater 14,000 square metres of impervious surfaces, management of waterways, floodplains management into everyday business. retaining about 5.8 million litres of excess and regional drainage. It also defines the stormwater a year to restore the health of This year our stormwater programs provided works and services required to achieve Little Stringybark Creek. $6 million in grants and assistance to the 38 the charter’s 10-year goals. councils in the Port Phillip and Westernport The Lower Yarra Litter Strategy involves the Of the 39 targets this year, 20 are new, region for activities such as construction cities of Melbourne, Yarra, Stonnington and 13 are modified and updated, and 6 are of raingardens and wetlands, strategic Boroondara, EPA Victoria and Sustainability unchanged. New and updated goals stormwater policy development and Victoria and focuses on litter prevention reflect our increased knowledge of natural research projects. through on-ground works and community systems, and reflect likely outcomes for education and awareness programs. For example, the City of Hume has received future changes associated with population $575,000 across a range of projects through The strategy provided $185,000 to growth and climate change. Living Rivers funding to incorporate water support council litter prevention activities Examples of revised targets include the sensitive urban design. These projects and projects, such as the Chapel Street expansion of actions to manage river will reduce pollutants from road surfaces, raingardens in Windsor that help raise health, flood management and urban roofs, and car parks through treatment awareness of litter and prevent litter growth, planning for detailed studies by raingardens and swales. entering the Yarra River. of Western Port, and research into the We also began an innovative program aimed Stormwater programs also support councils social impacts of flooding. at targeted works in threatened catchments. and developers to implement changes to the An example is the Little Stringybark Creek Victoria Planning Provisions, which require stormwater tender project, involving councils to ensure that stormwater is Melbourne University, Monash University, treated onsite to best practice standards Shire of Yarra Ranges and Yarra Valley Water. for subdivisions of two or more lots.

43 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Waterways

However, we made little progress Water sensitive design and roads Big year for community grants encouraging further changes to planning Melbourne Water worked with councils This was Melbourne Water’s biggest year and building regulations that would require to develop and integrate water sensitive for our river health incentives program, all new development to meet minimum design concepts into infrastructure and which provides funds and support for environmental standards for stormwater streetscapes, and held discussions with landowners and managers to improve management. Melbourne Water will retail water businesses and developers to the health of land adjoining waterways. continue advocating such changes to explore stormwater harvesting, recycling The Stream Frontage Management Program councils and Government agencies as and decentralised water saving measures. provided $1.9 million to support a record a key part of our work to improve This year we entered into formal arrangements 606 projects on private property, constructing stormwater management. with VicUrban for the residential development 153 kilometres of fencing along waterways Removing nitrogen of Riverwalk Estate in Wyndham. The project to keep out livestock, and planting more Constructed wetlands play a key role will incorporate dual pipe water recycling, than 231,000 native seedlings. in managing stormwater and reducing water sensitive urban design and waste This includes more than $425,000 stormwater pollution impacts on minimisation strategies. in Department of Sustainability and waterways and bays. These initiatives help to reduce flooding Environment funding for 52 Stream Melbourne Water has built 43 wetlands and minimise hydrological shock in rivers Frontage Management Program fire in the Port Phillip catchment as part of and creeks, while wetlands in estates create recovery projects (see Bushfires, page 15). our program to reduce nitrogen loads in attractive, functional recreation areas for Melbourne Water also worked with the waterways draining into the bay by 100 residents as well as helping to improve Port Phillip and Westernport Catchment tonnes per year by 2010. water quality and waterway health. Management Authority to fund 182 projects This program responds to the CSIRO Port We worked with VicRoads to include water totalling $601,045, and 98 Corridors of Phillip Bay Study, which found that reducing sensitive road design principles into major Green projects totalling almost $950,500. nitrogen inputs to the bay was essential to projects including the $1.4 billion Monash- A total of 885 river health incentive program preserve marine environment health. CityLink-West Gate upgrade. As part of bridge grants valued at almost $3.5 million were pier footings and foundation works, Gardiners This year five constructed wetland projects funded. This compares with 865 grants Creek in Hawthorn is being significantly – Yarram Creek, Eumemmerring Creek, valued at close to $3 million last year. modified. One section of the creek that had Dandenong floodplain, Boggy Creek and previously been lined with concrete is being Better Bays and Waterways Scoresby Township wetlands – recorded partly reinstated with rockwork to ‘soften’ We worked with councils, catchment a combined annual nitrogen reduction past and current construction impacts. management groups, and state and of 13.2 tonnes. This brings the cumulative federal agencies to finalise the five-year annual nitrogen reduction total to 69.2 Water sensitive road design was also used Better Bays and Waterways Water Quality tonnes against the 100-tonne target. on the 9.3 kilometre Deer Park Bypass. The Improvement Plan. bypass, which links the Western Ring Road With works beginning this year on Melbourne’s at Sunshine West to the Western Highway We missed our deadline for submitting the most extensive constructed wetland, the $15 at Caroline Springs, crosses Upper Laverton plan to the Federal Government by six months. million Dandenong Creek wetland in Scoresby, Creek, Kayes Drain and Cherry’s Drain. This was caused by a multi-agency approval and the $3.7 million Brushy Creek wetland, process that took longer than expected. Melbourne Water expects to exceed the 2010 Biofiltration trenches, sedimentation ponds target by almost 10 tonnes. and grass swales established in ephemeral Jointly funded by Melbourne Water, the waterways in the area are improving Federal Government and EPA Victoria, The 48 hectare Dandenong Creek wetland stormwater quality from road surfaces. the plan sets out improvement actions will be completed in June 2010, remove Major drainage works were also carried including urban stormwater guidelines, up to 28 tonnes of nitrogen each year, out to meet hydraulic and floodplain rural catchment improvement projects, and improve the health of Dandenong management requirements. long-term bushfire impact studies, Creek and Port Phillip Bay. monitoring and community engagement. Earthworks began in February on the Brushy For example, Melbourne Water’s $4 million Creek wetland, which is designed to remove Rural Land Management Program will 13.1 tonnes of nitrogen each year. encourage agricultural best management practices that improve the water quality of farm run-off.

44 Managing weeds Services provided included the Stream The contingency plan requires real-time Managing weeds is a key element of improving Frontage Management Program, Corridors monitoring of dissolved oxygen levels and the health of waterways. Melbourne Water of Green and Community Grants, river other key water quality parameters. Three new continued weed mapping to guide future health works such as woody weed removal real-time monitoring sites were installed in weed management programs. and erosion controls, flood mitigation the Yarra River: at the Chandler Highway in works, and building council capacity Fairfield, Fitzsimons Lane in Templestowe, and Mapping of all threatening weeds along the 28 for water sensitive urban design. Yering Gorge downstream of the pump station. kilometres of Little Yarra River from Learmonth to the confluence with the Yarra River was Works constructed included raingardens Similar conditions are affecting the completed, while mapping of reed sweet grass at Church Street in Cowes, a council- Maribyrnong River, where we have was carried out in the Mornington Peninsula, delivered road upgrade on Phillip Island upgraded two water quality monitoring Bunyip and Cardinia catchments to eradicate and a wetland and retarding basin at sites and installed a new one. this weed before it becomes established. Tanti Creek in Mornington. Woody weeds Low dissolved oxygen readings in Jacksons were also removed in the upper Werribee The estuaries of the Bass River, Bunyip Creek in May triggered the release of catchment (see case study, page 39). River, Cardinia Creek and Moody’s Inlet 40 million litres of water from Rosslynne are being invaded by a weed called spartina. The Stream Frontage Management Program Reservoir at a rate of nine million litres A working group has been established provided $657,000 for 213 projects in per day to protect habitat and flush involving Parks Victoria, West Gippsland these areas. This funding was used to stagnant pools. Catchment Management Authority, Thiess fence 47 kilometres of waterway and Developing agreements Services and Melbourne Water, and a control plant more than 82,000 native seedlings. In the Tarago catchment, Melbourne Water program is being implemented involving Environmental flows gained approval for five Bulk Entitlement spraying by helicopter and ground crews. Contingency planning Agreements and one Environmental Willows and other woody weeds were As Melbourne Water continued to experience Entitlement Agreement for the Tarago removed and replaced with about 4000 record low inflows to reservoirs and extended River (see Bulk entitlements, page 176). native plants as part of the restoration drought conditions throughout 2008/09, Melbourne Water worked with the retail and revegetation of Jacksons Creek along the pressure on maintaining environmental water businesses, Southern Rural Water, the Holden Flora and Fauna Reserve in flows in waterways increased. Gippsland Water and the Department Sunbury. Created in 1977, the reserve A key focus has been monitoring water of Sustainability and Environment to has about five kilometres of Jacksons quality in waterways where environmental develop the agreements. The Environmental Creek frontage and is an important flows have been impacted by Emergency Entitlement Agreement sets aside three wildlife corridor. Drought Contingency Plans, and adjusting billion litres for environmental flows, Works in extended areas bulk entitlement flows to preserve minimum as identified in the Central Regional Waterways, farmers and communities passing flow requirements in waterways. Sustainable Water Strategy. in our extended operating areas have The Yarra River minimum passing flow In May, the Victorian Government asked enjoyed the first 12 months of the full requirements – 245 million litres per day Melbourne Water to investigate the range of Melbourne Water’s waterways at Yering Gorge – has been reduced to 200 potential impacts of further reducing and drainage services. These new areas million with the difference in water flow Yarra environmental flows if drought include the Upper Maribyrnong and rates being pumped to Sugarloaf Reservoir. conditions continue and water storage Werribee catchments and the levels continue to decline. Mornington Peninsula. The changed flow conditions are part of the Yarra Qualification of Rights. This qualification Meetings in previous years with landholders, required that an Emergency Contingency community groups and councils to build Plan be developed to manage the increased knowledge of waterways issues in these environmental risk. areas helped to identify priority works.

45 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Waterways

Patterson River, Carrum

Another tough year for diverters Service standards Monitoring and investigations Melbourne Water manages about 1900 Melbourne Water did not meet the service Melbourne Water undertakes monitoring, licensed water diverters who extract standard as set out in our customer charter investigations and research into a broad water from the Yarra River, Maribyrnong for diversion services. The prolonged drought range of areas including biodiversity, River, Stony Creek, Kororoit Creek, has resulted in increased applications from water quality, streamflow, threatened Laverton Creek and Skeleton Creek diverters and requests from the community and flagship species, weeds, sediments, catchments. Water is used mainly to carry out compliance investigations. litter and physical stream condition. for agricultural, industrial, commercial These, along with some temporary employee Monitoring provides data about the and domestic and stock purposes. shortages that have been remedied, placed condition of waterways and other greater demands on our diverter team. Diverters faced another tough year with natural assets and we have an extensive continued low flows due to drought Our automatic meter reading and datalogger network of monitoring sites across the resulting in pumping bans or restrictions project continued. Dataloggers have been Port Phillip and Westernport region. being in place for most waterways and installed on 140 diversion meters, and Strategic research programs and targeted for most of the year. provide daily transmission of water use investigations increase our knowledge and data, eliminating the need for meter reading With minimal water held in Rosslynne understanding of waterway values and in the field and providing much greater Reservoir, the Maribyrnong catchment management, and help ensure that on-ground detail around usage demands and patterns. allocations were again zero for the works such as waterway rehabilitation are entire year. Melbourne Water provides diverters delivering desired results. who have these dataloggers installed There was an increase in water trading For example, the threatened giant Gippsland with internet access to their own data, during the year as landowners, unable earthworm and streamside revegetation to assist with water use planning and to fill their catchment dams from study surveyed nine properties in the Lang farm management. run-off, sought access to river water Lang River catchment in Westernport to to meet their needs. Melbourne Water began legal action assess the impact of revegetation works in relation to several cases involving on soil hydrology. The study recommended illegal diversion of water. These actions that sites containing populations of the are on ongoing, with no prosecutions earthworm be fenced off and remain finalised in 2008/09. unplanted pending further investigation.

46 We also research the impacts of climate In February, Melbourne Water established a Other examples of monitoring, investigations change and urbanisation on stream ecology, panel to provide strategic advice and direction and research include an assessment of methods of urban stormwater treatment, to our waterway management planning and the effectiveness of alligator weed control and links between the catchment and delivery approaches. Associate Professor Tim measures and acoustic tracking of the estuarine and marine receiving waters. Fletcher from Monash University chairs the nationally threatened Australian grayling nine-member panel, and members come from using tiny transmitters that trigger tollway- Water quality monitoring review research institutions, government agencies style receivers along the Bunyip River. In December, we engaged water quality and industry. The panel, which met in April and specialists to review our waterway water Platypus surveys June and will meet four times a year, advised quality monitoring program. Melbourne Melbourne University’s Centre for Melbourne Water to place greater emphasis on Water has 136 monitoring sites across Environmental Stress and Adaptation evaluation of our activities to enable continual our region. Each site is monitored monthly Research undertakes platypus population improvement. As a result, we have established and results are reported to EPA Victoria surveys for Melbourne Water, based on a river health knowledge team to provide and the community. The review recommended our research and monitoring priorities. more focus on this area. the program should focus more clearly on This work supports research into platypus ecosystem health and better identify key Frogs and mussels genetics, ecology and behaviour being goals and management actions. This and As part of our investigations to better undertaken by Melbourne University other outcomes of the review are being understand waterway management issues as part of the Melbourne Water Urban considered and will inform the establishment in our extended areas, we completed an Platypus Program. of a new waterway water quality monitoring overview of frog species, conservation program in 2009/10. significance, biology and priorities for Platypus surveys were conducted at waterway management in the Bass River, 86 sites, compared to 61 sites in 2007/08, Phillip Island and French Island catchments. across the Yarra, Tarago, Werribee, Maribyrnong and Westernport We also began an investigation into the effect catchments, locating 90 platypus of intensive agriculture on the ecological (49 male and 41 female). state of waterways in the Woori Yallock catchment. This study presents an excellent Results show platypus distribution opportunity to look at the direct effect is patchy, and a decline in numbers of possible pollution on aquatic organisms in the past few years. The drought such as mussels. appears to be the strongest factor influencing their distribution.

47 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Waterways

Theft threatens stonefly Sustainable urban growth Developers generated an additional A water tank that Melbourne Water Melbourne’s urban areas continue to $13.4 million of Melbourne Water placed at Mt Donna Buang in February expand and consolidate consistent with assets, bringing the total asset value 2008 to provide water to the last known projected growth estimates of a population for the year to $67.3 million. population of the Victorian wingless increase of one million by 2030. We approved and implemented 16 new stonefly was stolen in November. Melbourne Water plays a key role in managing development services schemes and eight Numbers of the stonefly, which had the development of new urban areas, and new development services strategies to been living in an ephemeral spring near redevelopment of existing urban areas. guide urban development and planning the summit, had declined dramatically in urban growth areas to the north, west We work with councils and developers as a result of the drought. and south-east of Melbourne. Thirteen of to provide infrastructure in new growth these schemes and all of these strategies Water from the tank kept the spring bed areas that can protect water quality were in the extended areas. damp – a condition critical for the survival and the environment, and achieve of this species. An inspection in May appropriate flood protection. Planning approvals showed that stonefly nymphs are still Melbourne Water is a referral authority Working with developers in the spring but in very low numbers. for planning permit applications for many This year continued the trend away from types of development, including subdivision Dights Falls study hard-engineered drainage solutions, such as of land. This year we processed 10,006 Melbourne Water began planning a project pipes and channels, to more environmentally statutory applications (planning permit to replace the Dights Falls weir, an important sensitive open waterways and wetlands referrals from councils) compared with historical, cultural and recreational site on projects. While these provide a more 9907 last year. the Yarra River in inner Melbourne. acceptable solution, they are also more expensive because they take up land We assess applications to develop flood- Dights Falls is nearing the end of its life, and and include planting and landscaping. prone land against established management previous studies on the Yarra have identified principles contained in our Guidelines for the weir as having adverse impacts on the We received $41.3 million in contributions Development in Flood-prone Areas (2007). function and condition of the river and as from developers ($38.7 million last year). a barrier to fish passage. This needs to be In April, we began a review of the guidelines These contributions are paid to Melbourne balanced with recreational issues and the to manage emerging planning issues, Water to fund infrastructure and water weir’s heritage values. including impacts of urban consolidation, quality offset projects such as the $3.6 predicted climate change and sea level Investigations began into the best replacement million Glen Iris wetlands, which will treat rise, and protection of river health values. solution that recognises heritage, ecological and store stormwater from a 90 hectare and social values along with costs and urban catchment before being discharged The review, which is expected to be timelines. The solution is expected to to Gardiners Creek. Water from the wetland completed in December 2009, involves preserve existing upstream water levels will also be treated and used to irrigate detailed consultation with the 38 councils and include a fishway to allow movement a neighbouring council sports ground. in the region and other stakeholders. of key fish species such as Australian Despite the global financial crisis, 2008/09 grayling and Macquarie perch. proved to be the largest year for capital expenditure in developer works, with $53.9 million spent on 158 construction projects. This compares with $32 million for 200 projects last year.

48 Key performance indicators – Waterways Melbourne Water commenced working under a new Operating Charter in 2008/09 (the 2008–13 Waterways Operating Charter). The new Waterways Operating Charter includes many new KPIs, and hence there is no data for the 2007/08 year as a comparison for some of the KPIs listed below.

2007/08 2008/09 Target Result Target Result Target met Operating Charter Achieve Waterways and Drainage 100 100 100 97.5 ×1 Operating Charter performance targets Drainage & All new development complies with 100 100 Pass Pass √ flood protection flood protection standards Currently known intolerable flood risks NA NA Pass Pass √ reduced by 10% by 2013 Stormwater quality Cumulative reduction in nitrogen loads in urban 56 56.1 86 69.2 ×2 stormwater run-off in accordance with the Environment Management Plan for Port Phillip Bay

Achieve water plan implementation targets set Pass Pass √ out in the Waterways Water Quality Strategy and Regional River Health Strategy

Waterways condition Achieve Water Plan implementation targets 100 100 Pass Pass √ assigned to Melbourne Water from the Regional River Health Strategy and Addendum

Land development Development and redevelopment services schemes Pass Pass Pass Pass √ prepared, implemented and reviewed according to the development planning program

Statutory and agreed industry response times Pass Pass Pass Pass √ to be achieved for all development referrals Community Maintain 70% total community 70 NA -3 & stakeholder satisfaction with waterways engagement

Streamflow Diversions to be managed – in accordance with rules NA NA Pass Pass √ diversions specified in stream flow management plans, local management rules or drought responses plans

Diversions to be managed – to meet the service NA NA Pass Fail ×4 requirements in Melbourne Water’s Customer Charter [Diversion services]

1 Failed 3 out of the 39 targets in the Operating Charter. This is a 5 year plan and Melbourne Water are confident that we will meet this KPI over that period. 2 While this KPI has failed we are on track to meet 100 tonne target in 2009/10 and on track to meet 106 tonne target in 2013. Two major wetlands are currently under construction which will exceed the 100 tonne target. 3 This is a bi-annual measurement and was not measured in 2008-09. 4 Did not meet service standard as set out in Customer Charter for Diversion Services. Advised that initial staff shortage in this area has now been remedied. It is accepted that targets set in the first year may need refinement.

49 MELBOURNE WATER SUSTAINABILITY REPORT Recycled Water Recycled Liz Roder

Whether it’s supplying recycled water to farmers, or raising funds for ‘toilets and taps’ in small villages in developing countries,

Liz Roder has a passion for water ■ “My whole life revolves around water,” she says. “I volunteer for WaterAid Australia, swim for fitness and relaxation, and I’ve just started to learn to sail – my dad calls me his water daughter.”■ Originally from one of Australia’s driest cities, Adelaide, Liz began her career there, working for United Water on water filtration research, environmental management, wastewater treatment and biosolids drying techniques ■ After moving to Melbourne three years ago – “I absolutely love living here” – Liz has worked for Melbourne Water in water recycling project management, strategy and planning. She is now team leader for water recycling planning ■ “I’m committed to helping the water industry use the water resources available to Melbourne in the best possible way,” she says ■ “Until recently we have used water that is good enough to drink for everything. My ambition is to increase the amount of water recycled in Melbourne, and incorporate recycling into integrated water resource planning.” ■ Her work for WaterAid Australia this year included organising the Victorian WaterAid Ball, which raised more than $220,000. WaterAid is an international charity supported by Melbourne Water that helps some of the world’s poorest people gain access to safe water, sanitation and hygiene education ■ “These basic human rights are the first essential steps in overcoming poverty,” she says.

Listento

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Minimisewaste

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of algal blooms and other water quality blooms and other water of algal challenges, such as elevated ammonia to Plant, Treatment Western the at levels of the impact on the reliability reduce the plant supplied from water recycled water to recycled increases Managing conservation of water salinity as a result salt loads despite reducing efforts, system to the sewerage discharged extremely hot days High ammonia levels in sewage caused interruptions to Class C recycled water supply for onsite useWestern at the Treatment Plant Challenges recycled and demand for  Balancing supply Plant Treatment Western the from water plants to treatment inflows as sewage water alternative demand for decrease, and traditional increases, sources water such as river sources water less accessible are and groundwater drought of the ongoing as a result recycled Meeting customer demand for quantity and reliability, quality, water periods peak summer during especially Identifying a viable long-term alternative in recycled salinity levels reducing for Plant Treatment Western the from water water drinking to replace Continuing Water in Melbourne water with recycled quality drinking where uses for operations is not required water and management the prevention Improving Disappointments AClass recycled water supply from the Treatment PlantWestern was interrupted due to power supply problems on several • • • • • • • • • • • • • • • • Understand,manage and meet or exceed customer

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Supplyfit-for-purpose and reliable recycled water

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Workcollaboratively with stakeholders and strengthen relationships

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of-life costs, risks and service needs expectations and engage the community to seek support for our projects and priorities and efficiently, taking account of environmental, social and financial considerations, whole- to manage algal bloomsWestern at the Treatment Plant proved effective and helped ensure high reliability of supply Completed works for moresafer, efficient access to standpipes for recycled water tankersTreatment PlantWestern at the Key achievementsKey In partnership with the retail water businesses, we recycled 23.0% of the total amount of sewage treated exceeding Melbourne, in metropolitan Victorianthe Government’s target of 20% by 2010 Delivered highly reliable recycled water from our sewage treatment plants to customers for a range of end uses Operational measures implemented Goals related to Recycled Water Secure water supplies for current and future generations by developing new, alternative and diversewater resources disposaland maximise resource efficiency • • • • • • • •

Water Recycled

MELBOURNE WATER SUSTAINABILITY REPORT Achieving our vision Recycled water supplied this year Additionally, there has been an increase Recycled water is a valuable resource. In conjunction with the retail water in the number of requests received, via Increasing the use of treated wastewater businesses, we supplied 65,587 million retail water businesses, for information from our sewage treatment plants for litres of recycled water in metropolitan relating to potential sewer mining and non-drinking water applications helps Melbourne during 2008/09. stormwater harvesting projects. to conserve drinking water and improves This represents 23.0% of the treated Melbourne Water is working with water quality in the marine environment wastewater produced at treatment plants the Department of Sustainability by minimising the discharge. in Melbourne, exceeding the Government’s and Environment and the retail Supporting new ways to supply and use water recycling target of 20% by 2010. water businesses to develop recycled water is essential for a sustainable This compares with 23.2% in 2007/08 consistent industry guidelines for water future especially in the context (excluding recycled water for environmental sewer mining in greater Melbourne. of increasing demand for water caused flow purposes at the Western Treatment Recycling west of Melbourne by population growth, drought and Plant’s Ramsar-listed wetlands). The Western Treatment Plant supplied climate change. Melbourne Water contributed 60,285 38,023 million litres of recycled water Recycled water can be used for irrigating of the 65,587 million litres of recycled to customers (40,848 million litres last grazing land and crops, horticulture, water, which equates to 21.1% of treated year). This comprises 23,910 million industrial processes, toilet flushing wastewater produced. The pie chart on litres of Class C recycled water supplied and garden watering in residential dual page 55 shows where our water was used. onsite, predominantly to the Werribee pipe schemes, and to keep sports grounds Agricultural Group for pasture irrigation Due to the continuing drought, water in active use and open spaces green. and salinity management, and 14,113 restrictions, and reduced availability million litres of Class A recycled water We are working with City West Water, of river and groundwater supplies, supplied to offsite customers. Southern Rural Water and South East demand from most recycled water Water and others to provide farmers customers was higher than the previous The reduction in volumes compared and other businesses with a secure year, with the exception of Western with last year is due to restrictions to source of high quality recycled water. Treatment Plant onsite uses. the supply of Class C recycled water Many of these businesses have been for onsite uses during spring, caused In addition to our target recycling affected by water bans and reduced by high ammonia levels in the 55 requirements, some 16,825 million water allocations. East lagoon system. litres of recycled water was supplied Managing recycled water for the conservation and management Due to the continuing drought, water During 2008/09, we continued to address of the Ramsar-listed wetlands at the restrictions, and reduced availability the many challenges we face in providing Western Treatment Plant. of river and groundwater supplies, a secure and reliable source of recycled supply to most recycled water customers Melbourne Water and the retail water water supply for our customers. These was higher than the previous year. businesses continue to work together challenges include balancing the supply to achieve the potable substitution Problems with power supply caused and demand of recycled water, reliability target set by the Government. by extreme heat in the electricity of supply, salinity levels in the west supply network beginning in late of Melbourne, customer willingness The aim is to supply 6200 million litres January resulted in recycled water to pay, supply infrastructure, and a year of recycled water by 2015 for supply interruptions totalling 14 hours available storage. non-drinking uses that are currently over five days. Recycled water delivery supplied by drinking water, but do not A critical requirement for any recycled to customers was restricted during require drinking water quality, increasing water supply system is to provide a this time, with additional volumes to 10,000 million litres a year by 2030. consistent standard of water that is fit made available between and after for its intended use. For Class A recycled The retail water businesses are developing the interruptions. water, this requires high levels of treatment projects to deliver the potable substitution Significant efforts by Melbourne Water and delivery via dedicated infrastructure. targets, such as dual pipe schemes in new and Southern Rural Water people enabled residential developments, with Melbourne all growers in the Werribee Irrigation Water to provide much of the bulk recycled District to receive supply on their scheduled water supply. delivery day or the following day, which avoided any potential impacts on crops.

53 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Recycled Water

Major recycling schemes in Melbourne

City West Water Yarra Valley Water

Western Treatment Plant Eastern Treatment Plant North Retail Water business boundary Port Phillip Bay South East Water Werribee Irrigation District Werribee Tourist Precinct Western Treatment Plant on-site use Western Port Eastern Treatment Plant on-site use Bass Strait Boags South Eastern Outfall Rocks Eastern Irrigation Scheme

Managing salinity A range of process issues can affect We improved the management of algal The salinity of sewage inflows, and the quality of recycled water and blooms by installing online ammonia therefore, recycled water at the Western interrupt supply. analysers in the treatment lagoons to Treatment Plant has slowly increased provide real-time data on ammonia For example, peak inflow events at over the past three years. concentration drifts, enabling appropriate treatment plants can result in elevated changes to treatment settings during Water restrictions and water conservation pathogen levels, loss of process control process challenges. The ability to control measures have reduced the volumes can cause high ammonia levels, strong ammonia levels reduces the likelihood of of sewage entering our treatment winds or green algae can increase algal blooms by limiting nutrient sources. plants, resulting in higher concentrations turbidity, and low flows and high of contaminants such as salt, increasing temperatures can lead to blue-green Other initiatives undertaken the salinity of recycled water. algal blooms in treatment ponds. in 2008/09 included:

Works to improve the integrity of the A planned upgrade of the onsite sewage ••Installation of online turbidity monitors sewerage system will reduce saltwater distribution system at the Western Treatment ••Reconfiguring lagoon flow patterns infiltration in future (see Sewerage, Plant will increase carrying capacity and to improve mixing and flow dynamics page 33), and investigations are provide additional transfer flexibility to ••Trialling ultrasonic algae controllers continuing into ways to reduce and treatment lagoons (see Sewerage, page 33). in operational lagoons manage the salinity of recycled water This will also provide additional protection ••Introducing process improvements for from the Western Treatment Plant. of recycled water supply systems during isolating and reinstating lagoons based periods of high inflows. Managing water quality on monitoring results and reliability of supply Algal blooms ••Using field test-kits that provide rapid Melbourne Water is required to deliver Algal blooms occur in treatment lagoons indication of blue-green algae toxin recycled water that consistently meets at the Western Treatment Plant during levels in Class A recycled water supplied specific quality requirements. Recycled summer when increased sunlight, to customers. water quality has been maintained at higher temperatures and high the Eastern Treatment Plant and the nutrient concentrations coincide. The presence of a blue-green algal bloom Western Treatment Plant through in the 25 West lagoon affected the supply Quality Management Systems and of water for onsite use intermittently during Frameworks for Supply of Recycled the 2008/09 summer. However, there were Water in accordance with EPA no algae-related interruptions to supply Victoria guidelines. for offsite uses during the year.

54 Use of Melbourne Water’s recycled water

31% Agriculture 24070ML

29% Bulk recycled water exports 22119ML

0.1% Urban and industrial 259ML

18% Within process 14019ML

22% Beneficial allocation 16825ML

We also trialled a new solar-powered Expanded monitoring program Standpipes relocated lagoon mixer, designed to prevent Extensive monitoring of Class A recycled After two years of supply through conditions which can encourage water at the Western Treatment Plant temporary standpipes at the Western blue-green algae (see Sewerage, covers licence requirements and numerous Treatment Plant, a permanent facility page 32). additional water quality parameters. was commissioned in July. This includes metals, synthetic and Power supply interruptions The new facility features more efficient natural organic chemical contaminants, and alternatives to interruptions access, improved filling connections and disinfection byproducts, pharmaceuticals In response to the power supply issues safer traffic arrangements, with capacity for and personal care products. experienced during summer, alternate more than 100 tanker movements a day. power supply from off-site and on-site Routine and specific intensive sampling Tankers supplied 240 million litres of sources is being investigated to minimise forms part of a quantitative risk assessment recycled water from the standpipes future impacts, including increased use being managed by Melbourne Water, (158 million litres last year). On peak of on-site renewable energy. with results due in 2009/10. summer days, the number of tankers Improvement options Results and analysis will improve our using the facility was close to capacity. Melbourne Water, City West Water understanding of the range of potential Werribee Irrigation District and Southern Rural Water established risks from the use of recycled water, Southern Rural Water receives a working group that evaluated options and further refine the recycled water large volumes of Class A recycled for long-term reliability improvements, sampling program used at the Western water from the Western Treatment and will investigate potential upgrades Treatment Plant. Plant for growers in the Werribee and augmentations to the plant. We continued working with the National Irrigation District. Work began on a long-term reliability Health and Medical Research Council Irrigators in this district faced low improvement strategy, which is to to develop the Australian Guidelines riverwater allocations and groundwater be completed in 2009/10. Potential for Water Recycling. We are represented bans during the year as a result of the improvement options may include on the working group for two of the drought. Additionally, greater volumes construction of a recycled water storage three new guideline modules. of recycled water are needed to help basin to provide security of supply. flush the salt load through the soil.

55 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Recycled Water

Crops irrigated with bore water

Greater reliance on recycled water has Western Irrigation Futures Study Werribee Employment Precinct significantly increased the need for a high Southern Rural Water is managing Class A recycled water is supplied from the reliability of supply and an increase in the Western Irrigation Futures Study, Western Treatment Plant for distribution by recycled water volumes supplied from aimed at developing a long-term strategy City West Water to commercial customers the Western Treatment Plant to irrigators. for the sustainable future of the Werribee for washdown, industrial processes and open Irrigation District and Bacchus Marsh space irrigation in this precinct (previously Significant maintenance activities were Irrigation District. known as the Werribee Technology Precinct). scheduled during the winter low supply period to ensure the disinfection plant Melbourne Water provided technical During the year, 131 million litres was is well prepared for the summer peak. support to Southern Rural Water at supplied to the Werribee Employment stakeholder workshops this year. Precinct (106 million litres last year). System modelling and control optimisation One of our key contributions to City West Water plans to increase this enabled an increase in recycled water the study was a review of options volume further as more customers connect delivery capacity for the Werribee Irrigation for the supply of salt-reduced to the supply, and as Stage 2 of the scheme District in excess of the typical 60 million recycled water to the Werribee is developed in coming years. litres a day on peak summer demand days. Irrigation District. A range of supply Werribee Tourist Precinct More flexible times were introduced, options was considered and further On 30 June, Melbourne Water stopped with recycled water supply now available investigation is planned for 2009/10. providing direct supply of recycled water six and half days a week for Werribee West Werribee dual pipe scheme to two customers in the Werribee Tourist Irrigation District growers. City West Water is proposing to supply Precinct. From 1 July, these customers Southern Rural Water was again Melbourne up to 19,200 homes in the West Werribee were transferred to Southern Rural Water’s largest Class A recycled water dual pipe scheme with salt-reduced Class Water following the finalisation of customer in 2008/09, with a total of 13,474 A recycled water for garden watering and works on a new, solar powered, million litres supplied for growers in the toilet flushing. Water will also be supplied metered supply pipeline interface district (12,519 million litres last year). for open space irrigation in the area. point with Southern Rural Water for the Werribee Tourist Precinct. The proposal involves construction of a small reverse osmosis treatment Other recycled water customers facility at the Western Treatment Plant in this precinct are already supplied to reduce the salinity of Class A recycled by Southern Rural Water. water supplied from the plant.

56 Werribee Tourist Precinct customers are In June, the Minister for Water announced Eastern Irrigation Scheme the Werribee Park Golf Club, the National that business cases into two large Eastern The Eastern Irrigation Scheme operates Equestrian Centre, the Werribee Open Range Treatment Plant recycled water projects under the brand TopAq, a wholly owned Zoo and Werribee Park and Mansion. had determined that they were too subsidiary of Water Infrastructure Group. expensive to proceed. Melbourne Water supplied 236 million The TopAq treatment plant uses ultrafiltration litres of Class A recycled water to the These projects were the Latrobe Valley membranes and chlorine to treat Class C Werribee Tourist Precinct for irrigating option, to substitute recycled water to recycled water supplied from the Eastern public open spaces. cool power stations, and the Yarra River Treatment Plant to Class A standard, option, to substitute river flows with which it then distributes to more than Recycling east of Melbourne recycled water. 80 customers for horticulture, open space The Eastern Treatment Plant at Bangholme irrigation, industrial processes and dual produces Class C recycled water. This year The Victorian Government and Melbourne pipe schemes in residential developments. some 22,262 million litres of recycled water water businesses will instead focus on a (21,126 million litres last year) was used number of local, more cost-effective projects. This year, TopAq commissioned additional at or near the Eastern Treatment Plant. membranes to improve reliability and These include numerous schemes already This volume included 14,019 million litres increase the capacity of its Class A planned for development by South East used onsite (13,255 million litres last year). recycled water supply. Water from 2012, plus investigation into The Eastern Treatment Plant will be additional potential projects to use up During 2008/09, Melbourne Water supplied upgraded to tertiary treatment by the to 40 billion litres for development over 6665 million litres of Class C water to end of 2012 to meet environmental the next 30 years. TopAq for treatment to Class A recycled discharge requirements. This will enable water (6577 million litres last year). all sewage entering the plant to be treated to high quality recycled water. Trials to determine the preferred technology for this tertiary treatment upgrade were completed during the year (see Sewerage, page 31).

57 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Recycled Water

Irrigation at Werribee South

Dual pipe schemes Pipeline customers TopAq supplies South East Water with The South Eastern Outfall pipeline transports Class A recycled water for use in residential Class C treated wastewater from the Eastern schemes via dual pipe reticulation systems. Treatment Plant and some South East Water Recycled water is used for toilet flushing, treatment plants to Boags Rocks on the garden watering, streetscape and open Mornington Peninsula. space irrigation. There are now 44 South East Water This year, more than 1600 homes were customers (42 last year) who use recycled connected and supplied with Class A water taken from the outfall pipeline for recycled water in the Sandhurst and agricultural and horticultural activities, Cranbourne areas (including residential including watering golf courses and sports estates such as Hunt Club Estate, Sandhurst grounds, root crop irrigation, flower growing Club, Cascades on Clyde, Blue Hills Rise, and drip irrigation of vineyards. Marriott Waters and Collison Road precinct). These customers used 1578 million litres of About 185 million litres of recycled water recycled water (1304 million litres last year). (123 million litres last year) was supplied to these schemes via TopAq’s treatment plant.

Future residential developments in the Cranbourne and Pakenham growth corridors are required by council and South East Water to be supplied with recycled water.

58 Key performance indicators – Recycled Water 2007/08 2008/09 Target Result Target Result Target met Contribute 19.6% to the Government’s 20% water recycling target by 2010 19.5 23.5 ≥19.6 21.2 √ Contribute 964ML of recycled water to retail water NA NA 608 1334 √ businesses for potable substitution by 2013

Recycled water volumes at Western Treatment Plant and Eastern Treatment Plant Actual 2007/08 Actual 2008/09 Target 2008/09 OWOF* target 2010 ML %* ML %* ML %* ML %* Western Treatment Plant Onsite recycling 27,831 10.6 23910 9.2 30,000 11.3 37,000 11.3 Werribee Tourist Precinct 203 0.1 236 0.1 250 0.1 500 0.2 Werribee Technology Precinct 106 0.0 131 0.1 315 0.1 0 0 West Werribee Dual Pipe Project 0 0.0 0 0.0 0 0.1 0 0 MacKillop College 31 0.0 32 0.0 35 0.1 0 0 Drought relief tankers 158 0.1 240 0.1 150 0.1 0 0 Werribee Irrigation District 12,519 4.7 13474 5.2 13,000 4.9 8500 2.6 WTP total 40,848 15.5 38023 14.6 43,750 16.5 46,000 14.1

Eastern Treatment Plant Onsite recycling 13,255 5.0 14019 5.4 13,800 5.2 13,800 4.2 Eastern Irrigation Scheme 6,577 2.5 6665 2.6 5,000 1.9 5000 1.5 South Eastern Outfall 1304 0.5 1578 0.6 1,600 0.6 1700 0.5 ETP total 21,136 8.0 22262 8.5 20,400 7.7 20,500 6.2 Total 61,984 23.5 60285 23.1 64,150 24.2 66,500 20.3

Wastewater discharge 263,642 260632 260632 Environmental flow at WTP 15,930 6.0 16825 6.5 24,000

Victorian Government’s Our Water Our Future program ML = million litres

* Refers to percentage of treated wastewater produced at Melbourne Water’s treatment plants.

59 MELBOURNE WATER SUSTAINABILITY REPORT Protecting Our Natural Environment Ken Baxter

Ken Baxter is always looking for better ways to work ■ The Melbourne Water Energy Manager believes in thinking about things as they could be, not as they are – and then bringing his ideas to fruition ■ For him, the opportunity of developing Melbourne

Water’s Greenhouse and Renewable Energy Strategy was too good to miss ■ The strategy outlines the path to achieving the 2018 targets of zero greenhouse emissions and 100% renewable energy use ■ Ken has no doubt that climate change is real, and that it is occurring sooner and with greater severity than expected ■ “I am convinced that climate change is affecting our business, and it’s exciting and rewarding to be doing something about it,” he says ■ The multi-layered strategy is taking him to the edge of technology. For example, he works with the renewable energy industry, testing and trialling technologies in search of the

‘gem’ that will get Melbourne Water in on the ground floor■ “The organisation has given us licence to innovate, provided our ideas are practical and financially robust,” he says. “I have always enjoyed such licence at Melbourne Water.” ■ He describes himself as a systems person, and his work for Melbourne Water has ranged from computer programming to sewer modelling and electronic data management ■ He used his organisational skills to run workshops with Melbourne Water people that resulted in 51 diverse actions. These will be used to achieve the greenhouse and energy targets ■ “We are lucky at Melbourne Water in that we have land, water pressure, treatment processes and a huge depth of knowledge to create our own energy and emissions future,” he says.

Minimise

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Respondtoclimate change

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Adjust to the new methodology as introduced introduced as methodology new the to  Adjust under the National Greenhouse and Energy accounting for System Reporting greenhouse gasfor emissions gas greenhouse and minimising Considering projects use in all new emissions and energy supply including major water and activities, projects system infrastructure and sewerage Operating equipment and facilities in the most energy-efficient manner Investigating and developing opportunities to maximise the renewable energy potential renewable other and hydroelectricity biogas, of energy sources on impacts of drought Managing operationsinfrastructure, and sites of significant biodiversity Finding ways to maximise the potential resource benefits of biosolids Disappointments at our hydroelectricity generation energy Low plants required the purchase of 11,900 renewable energy certificates to ensure we met our renewable energy target of used or exported energy 54% of renewable as a percentage of total energy used Challenges • • • • • • • Improvethe health and amenity ofwaterways • • • • • • •

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Greenhouse and Energy which defines pathways to meeting meeting to pathways defines which waste disposal and maximise resource efficiency. electricity back into the grid Finalised the Net Gain guidelines, providing a consistent approach for managing activities affecting native vegetation at our sites Strategy goals for zero net emissions and 100% renewable energy use or export by 2018 environmental our for recertification Gained performance our and system, management in environmental reporting and work in biodiversity management was described as exceptional of generation and use our Increased energy by 23% renewable Completed planning for increased generation of biogasWestern at the Treatment Plant, including feeding Goals related to Protecting Our Natural Environment Improveenvironmental outcomes from all aspects ofour business throughmitigation and adaptation measures and marine environments achievementsKey Completed the • • • • • • • • • •

Environment Our Natural Natural Our Protecting Protecting

MELBOURNE WATER SUSTAINABILITY REPORT Tree planting – native vegetation protection

Responding to climate change A Climate Change Management Framework 14001 recertification Melbourne Water’s ability to protect and Program will be developed in 2009/10 Melbourne Water has an Environmental our natural environment hinges on our to guide Melbourne Water’s response to Management System certified to the responses to the significant challenges the challenge of climate change through international Standard ISO 14001, which presented by climate change. mitigation and adaptation programs. sets management requirements to help organisations protect the environment, The impacts of climate change, which is Our generation of renewable energy at prevent pollution and improve driven by higher levels of greenhouses gases the Eastern and Western treatment plants environmental performance. in the atmosphere, include greatly reduced and through mini-hydro generation plants rainfall, more frequent storms, an increased in the water supply system continues to In August, this system was checked and frequency of bushfires in Melbourne’s water increase, and we continue to review and recertified by BSI Management Systems.BSI supply catchments, and a rise in sea levels. investigate other technologies and options described Melbourne Water’s performance It is of critical importance for our water, for renewable energy. in environmental reporting and our work in sewerage, waterways and drainage assets. biodiversity management as exceptional. Managing the natural environment Our response to these challenges has been Melbourne Water’s Strategic Framework A commendation was also received for ambitious, strategic, and based on the latest is the overarching document that identifies improvements at the Western Treatment research. We are taking steps to reduce our our vision for ‘working together to ensure a Plant, with the report stating that due net greenhouse gas emissions to zero and sustainable water future’ and spells out the to “much investment over the previous to increase the use or export of renewable organisation’s commitment to sustainability 10 years ... the environmental performance energy to 100% of total energy used by (see Strategic Framework, page 4). of the site has improved substantially. 2018, and have set a clear direction towards The effort put into managing the biodiversity The goals in the Strategic Framework for the becoming one of corporate Australia’s first of the site is very impressive.” natural environment underpin the five-year zero emission organisations. Water Plan and annual Corporate Plan. Checks, balances and guidelines This strategic direction is translated into Our Community, Environment and Public Melbourne Water’s Environment Policy action in a comprehensive Greenhouse Health Assessment checklist helps project specifies actions and outcomes from and Renewable Energy Strategy completed managers assess and plan for potential impacts these plans to achieve maximum net in 2008/09, which identified how these from Melbourne Water’s activities. This process environmental benefits to society 2018 targets can be met most efficiently identifies and mitigates environmental and and to promote sustainable resource (see case study, page 61). social impacts, and involves stakeholders management and use. in the decision-making process.

63 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Protecting Our Natural Environment

Forecast energy consumption 2008/09 TJ

Vehicles GJ

Electricity other GJ 2000 Water other GJ Winneke Treatment Plant and pump stations GJ Sewage other GJ Western Treatment Plant GJ 1500 ETP GJ

1000

500

99/00 03/04 07/08 11/12 15/16 19/20

The checklist requires project managers We recognise that by using as much renewable We are working with the retail water to identify potential risks associated with energy as possible with our own resources, we businesses to include them in the purchase land, water, air, Aboriginal, cultural and can avoid increased costs likely to be passed of renewable electricity. Between 2010 archaeological heritage, material use on by generators using fossil fuel-based energy. and 2018, potentially higher costs may and waste management, biodiversity, be able to be partly offset through the Under the proposed Carbon Pollution risk management/public safety, and sale of renewable energy certificates. Reduction Scheme, Melbourne Water would community and stakeholder issues. Stable costs and increased renewable have to pay significant amounts to buy capability will provide financial certainty Melbourne Water has developed and emission permits for fugitive greenhouse and help us meet environmental and implemented triple bottom line guidelines gases emitted at the Eastern and Western social needs. to balance benefits to the community and treatment plants. effects on the environment, while meeting In 2008/09, we held workshops with a cross- Electricity is already our fourth largest efficiency requirements for public spending. section of our people, internal and external expense and our main source of greenhouse The guidelines usually apply to projects with experts to identify and assess options to gas emissions. Our future energy demands significant environmental and social effects. avoid greenhouse gas emissions and energy will increase due to pumping water from the use, and generate renewable energy. Waste and biodiversity management are Goulburn River, tertiary treatment of sewage also integrated into all our works, and are at the Eastern Treatment Plant and greater These options included waste to energy important parts of our role in managing requirements to pump drinking water to initiatives at the Eastern Treatment Plant, the natural environment. where it is most needed. using heat from sewage treatment processes, increased use of biogas at the Western Energy management Greenhouse and Energy Strategy Treatment Plant, and the use of wind Preparing for a low-carbon future Melbourne Water finalised our Greenhouse power, for which aviation and bird A key element of Melbourne Water’s work and Energy Strategy this year. The strategy studies were undertaken. to reduce greenhouse gas emissions and comprises a process to procure renewable increase our use of renewable energy is electricity and other actions needed to As a result of this work, we developed preparing for the Federal Government’s achieve our 2018 targets for greenhouse an expression of interest process for proposed Carbon Pollution Reduction emissions and renewable energy. the procurement of renewable energy, Scheme. This also includes complying which was completed in November. These targets, a commitment to power the with the National Greenhouse and Eight organisations were selected to Sugarloaf Pipeline with renewable energy Energy Reporting System. tender, and we expect to choose our and the expiry of our existing contract with new provider by September 2009. our electricity provider in June 2010 have driven the development of the strategy. 64 Greenhouse gas emissions (both methodologies) Greenhouse gas emissions 2008/09 Total NGERS methodology emissions (Tonnes CO e) Target 2

800,000

600,000

450,000

300,000

150,000

00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09

Investigations into strategy actions Energy and greenhouse gas National Greenhouse and Melbourne Water conducted preliminary emissions performance Energy Reporting System investigations into opportunities to reduce In 2008/09, we used 1.368 million gigajoules This was the first year of the National greenhouse gas emissions or to increase of energy, the same amount as last year. Greenhouse and Energy Reporting System renewable energy generation to support This reflected comparable operating (NGERS) and the methodologies used to the Greenhouse and Energy Strategy. conditions, with continued additional estimate fugitive emissions from sewage These included: requirements related to pumping water treatment differ from methods used previously. from the Yarra River at Yering Gorge ••Providing biosolids samples to an international The NGERS methodology will require and treating water at the Winneke company to deploy a super critical waste Melbourne Water to reconfigure our approach water treatment plant. oxidising process, which reduces the biosolids to reporting on emissions. The change also to stable solids, while recovering energy Melbourne Water spent $17 million this year affects our commitments to reducing our ••Establishing a relationship with a private on energy (5% of operating expenditure) emissions as stated in our current key company to explore opportunities to compared with $15.7 million (3.1% of performance indicators. In 2009/10 we will convert algae to biodiesel at the Western operating expenditure) in 2007/08. be investigating the options to adapt our Treatment Plant key performance indicators to incorporate During the year our greenhouse gas emissions the NGERS methodology, and note that ••Conducting bird, bat and aviation studies using the methodology the performance this will affect the interim results as we at Melbourne Water’s four most promising indicator was based on were about 237,800 wind sites move towards our 2018 goals. tonnes CO2 equivalent. Interim emissions ••Exploring opportunities to establish using the new National Greenhouse and The Commonwealth requires us to report our small-scale wind generation at Energy Reporting System methodology were emissions using the NGERS methodology in

Melbourne Water sites. about 478, 800 tonnes CO2 equivalent (see late 2009 for the 2008/09 period. the following section on the new system). Discussions are being held with the Our key performance indicators for energy Department of Climate Change through and greenhouse gas emission reductions will the Water Services Association of Australia be revised in 2009/10 to adapt to changes to try to ensure emission estimation under the National Greenhouse and Energy methodologies are current and appropriate Reporting System and the Commonwealth to our sewage treatment technologies. Government’s proposed Carbon Pollution Reduction Scheme.

65 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Protecting Our Natural Environment

Energy by use

76% Sewerage 1085680.7 GJ

15% Water 209122.7 GJ

4% Minor plant fuels 59976.6 GJ

3% Vehicle fuels 39660.3 GJ

2% Other 21281.2 GJ

Renewable energy performance Energy efficiency studies Protecting and improving biodiversity Our use and generation of renewable energy Melbourne Water made our first public report As a significant landholder and waterways was 696,000 gigajoules compared with under the Federal Government’s Energy manager within the Port Phillip and 565,000 gigajoules last year. The amount Efficiency Opportunities Program, which Westernport region, Melbourne Water of renewable energy we used and generated requires large energy-using businesses to plays a leading role in managing, as a proportion of total energy used, conduct energy efficiency studies at key sites. protecting and improving biodiversity. increased from 41% to 51%. The report, which looked at opportunities at Specific commitments to biodiversity were However, we had to buy 11,900 renewable the Western Treatment Plant, was completed included in Melbourne Water’s updated energy certificates to achieve our target of in December and identified flow rates and Strategic Framework with the intent to 54% of renewable energy used or exported pressure control in the operational processes protect, conserve and improve natural as a percentage of total energy used. This was for recycled water pumps as a key opportunity assets and use natural resources sustainably. due to a lack of water available for our mini- to save more than 640 MWh per year. These commitments include more than hydro generators caused by the drought. half of our rivers and creeks are in good Environmental Resource Efficiency Plans or excellent condition and biodiversity Mini-hydro generators Melbourne Water has three sites required to is monitored, conserved and improved. Melbourne Water is building a mini-hydro participate in EPA Victoria’s Environmental generating plant at the downstream end Resource Efficiency Plans program – Winneke We have developed and reviewed strategies of the Sugarloaf Pipeline. The plant will water treatment plant, and the Eastern and and completed projects that have supported recover about 40% of the energy needed Western sewage treatment plants. biodiversity, in compliance with the goals to power two pumping stations near Yea for the management of biodiversity under Plans were developed identifying actions to that are required to move water over the the Victorian Biodiversity Strategy. While reduce energy and water use and production Great Dividing Range to Sugarloaf Reservoir. there has been no formal collection of data of waste, with a better than three-year The Sugarloaf hydro plant is the ninth that would show any change to recorded payback period. The plans were submitted installed in Melbourne Water’s water supply threatened species, Melbourne Water to EPA Victoria in December and actions system. In total, these plants will create up believes that our activities have not are being implemented. to 51,000 MWh a year of electricity (about caused any detrimental impact. one-quarter of Melbourne Water’s energy Hoppers Crossing Pumping Station was needs). The Sugarloaf hydro plant will be granted an exemption from the program completed in 2010, after commissioning because recycled water has largely replaced of the new Sugarloaf Pipeline. Additional the use of drinking water for pump cooling. smaller Mini-Hydro sites at existing service reservoirs are currently being investigating. 66 Energy by source

1% Hydro recovered generated 33% Bio gas

14% Generated electricity 3% Vehicle fuels

1% Hydro renewable generated 1% Minor plant fuels

5% Natural gas 42% Imported electricity

0% Shaft diesel

Biodiversity Strategy Managing pests and weeds Sugarloaf Pipeline environmental offset Melbourne Water’s Biodiversity Strategy A draft Pest Animal Strategy is being In November, Melbourne Water bought an coordinates biodiversity management actions developed to identify pest animal 826 hectare property for nature conservation across all natural assets, defines biodiversity management priorities and actions on in the Victorian Alps to offset disturbance values on Melbourne Water properties, land managed by Melbourne Water. associated with an 11 kilometre section and sets priorities for management of of the Sugarloaf Pipeline project in Toolangi Draft weed management guidelines are also these values consistent with the Victorian State Forest. being developed to help Melbourne Water Biodiversity Strategy. maintain indigenous biodiversity, control The ‘net gain’ benefits amount to protecting Developing a detailed understanding of high priority weeds and respond to fire an area of high-value bushland almost 15 biodiversity values and collecting additional impacts on weed management. times larger than the area cleared in the data on natural assets will help Melbourne Toolangi State Forest, and six times larger Net Gain Guidelines Water demonstrate the extent to which than was required under Victoria’s Native Native vegetation protection is currently effective biodiversity management Vegetation Management Framework. achieved through various means that aim contributes to an overall improvement to improve native vegetation quality and Sections of the Toolangi State Forest are of healthy ecosystems, vegetation extent throughout the landscape. In return particularly sensitive and great care has communities and wildlife habitat. for any cleared native vegetation, a ‘surplus’ been taken in designing this section of A review of the Biodiversity Strategy began of native vegetation needs to be achieved. the pipeline to minimise the amount and in April and is due for completion in 2009. This surplus is called ‘net gain’. quality of vegetation that was removed. The review redefines priority actions for The Net Gain Guidelines were finalised The offset area has been purchased with biodiversity management and aligns the in November and outline how Melbourne the intention of being added to the strategy with Strategic Framework goals Water operates under Victoria’s Native neighbouring Alpine National Park. for the natural environment. Vegetation Management Framework Melbourne Water will also manage more in relation to ‘net gain’ obligations. than 100 hectares of habitat as an offset The guidelines provide a consistent for grassy woodlands habitat on a property approach for managing activities called Sheoak, south of Yea, where the impacting on native vegetation Sugarloaf Pipeline’s high lift pump station throughout Melbourne Water sites. will be located. Since the release of the guidelines, more than 100 Melbourne Water employees and business partners have undergone training in the management of net gain. 67 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Protecting Our Natural Environment

Hydro power stations and the water supply system

Sugarloaf Upper Yarra Preston Olinda

Thomson Mt. View Silvan Notting Hill Cardinia

Port Phillip Bay North Water retail area Water supply pipeline, aqueduct

Western Port Hydro electric power station Water supply catchment area Bass Strait Water supply storage reservoir

Sites of biodiversity significance Existing plans were reviewed for Winton Ramsar management planning Melbourne Water has two programs that wetlands and Tirhatuan wetlands along the Melbourne Water has several significant aim to improve biodiversity at significant Dandenong Creek floodplain and Galada wetlands under management that are sites. Sites of biodiversity significance Tamboore along the Merri Creek. These protected by the Ramsar convention. are areas of land or water containing management plans are developed with key This international convention provides rare or threatened flora, fauna or external stakeholders such as councils and the framework for national action and vegetation communities. community groups. cooperation for the conservation and wise use of wetlands and their resources. We survey these sites and develop Works undertaken on waterways sites management plans to protect and of biodiversity significance included weed The Edithvale-Seaford Wetlands Ramsar enhance each significant area. control, revegetation, controlled burning Management Plan, first completed in to regenerate grassland areas, signage, 2001, was reviewed and updated this year. The BioSite program (sites of biological and installation of depth gauges in The plan provides strategic direction for significance) aims to survey, develop and significant natural wetlands. These Melbourne Water’s management of this implement management plans for nine gauges assess dry season water levels key site as well as guiding the activities BioSites identified by the Department of and determine management approaches of key stakeholders, including the Friends Sustainability and Environment on land to ensure the survival of significant of Edithvale-Seaford Wetlands. owned and managed by Melbourne Water. animal and plant species. The Ramsar Management Plan for the Two sites at Cardinia Reservoir and Key flora and fauna values at the waterways Western Treatment Plant is being reviewed Sugarloaf Reservoir were surveyed sites of biodiversity significance were by specialist ecological consultants and under this program during 2008/09. monitored to verify management approaches considers significant changes in treatment Fives sites have yet to be surveyed. designed to protect and expand biodiversity, processes and management approaches Melbourne Water also manages 38 including dwarf galaxias within the Dandenong at the Western Treatment Plant that waterways sites of biodiversity significance. Creek floodplain, grassland plants at the have occurred over the past seven years. Management plans for these sites were Western Treatment Plant, swamp skink at the completed or updated during 2008/09. Tamarisk Waterway Reserve and flora and fauna surveys at Boggy Creek Retarding Basin. New plans were completed for Dunnets Road Swamp on the Plenty River, and The Inlets, next to Western Port.

68 Biodiversity

Maribyrnong Catchment

Yarra Valley Water

Werribee Catchment

Dandenong Catchment Port Phillip Bay North Western Port Catchment Melbourne Water waterways and drainage boundary Western Port Parks Victoria land Western Treatment Plant on-site use Bass Strait Biosite or waterways site of biodiversity significance Primary river basin catchment

Regional biodiversity planning Waste management The volume of biosolids harvested at the Melbourne Water worked with councils and Melbourne Water generates and collects Eastern Treatment Plant was 27,152 cubic Parks Victoria to develop a regional biodiversity waste at our sewage treatment plants metres (44,452 cubic metres last year). opportunities plan for the Boggy Creek and water treatment facilities, in The reduction this year is due to improved waterway catchment. The plan examines stormwater litter and sediment traps, sludge harvest methods and refurbishment biodiversity values across in the catchment and as part of construction projects of sludge drying pans. The volume of biosolids and considers how public land managers and office-based activities. stockpiled is 1.28 million cubic metres. can retain and improve these values. In 2008/09 we began developing a Waste The Western Treatment Plant generated This is part of a strategic approach to Management Review, which will identify 26,000 dry tonnes of biosolids (17,000 dry management of regionally and State- gaps in knowledge and practices, and tonnes last year), bringing biosolids stockpiled significant flora and fauna values in the provide recommendations for improved to 1.57 million dry tonnes. We continue region, including Melbourne Water sites waste management and resource recovery to explore options for using biosolids as such as Seaford Wetlands and Boggy in the future. a resource (see Sewerage, page 36). Creek Retarding Basin. Sewage treatment plants At the Eastern Treatment Plant, we collected Responding to biodiversity debate Waste from our sewage treatment plants 3744 tonnes of grit and screenings (5840 Melbourne Water responds and contributes includes treated wastewater, biosolids tonnes last year), which was disposed to to public debate about biodiversity issues and grit and screenings. landfill at a cost of $443,924 ($494,210 and participates in development of long- last year). This year 106,522 million litres of treated term biodiversity policies and strategies. wastewater was discharged into Bass Strait Water treatment plants This year we provided a response to from the Eastern Treatment Plant (112,990 Waste from our water treatment plants the Victorian Government’s Land and million litres last year). At the Western are called water treatment residuals, Biodiversity at a Time of Climate Change Treatment Plant, 83,817 million litres of or sludges, and are a byproduct of the Green Paper, the Victorian Competition treated wastewater was discharged into Port water treatment process. They generally and Efficiency Commission inquiry into Phillip Bay (80,868 million litres last year). consist of clay minerals, organic matter, environmental regulation, and the Victorian nutrients, hydroxides of aluminium Environmental Assessment Council’s and polyelectrolytes. Remnant Native Vegetation Investigation.

69 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Protecting Our Natural Environment

Litter/Silt removal m3 Melbourne Water renewable energy KPI 2008/09 Non-renewable used Renewable energy KPI target Renewable exported Renewable energy KPI 22,500

20,000 50% 80,000

17,500

40% 60,000 15,000

12,500 30% 40,000 10,000

7,500 20% 20,000

5,000

2,500 10% 0

05/06 06/07 07/08 08/09 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun -15,000

In 2008/09, Melbourne Water produced 207 Stormwater litter and sediment traps Construction waste million litres of water treatment residuals, Litter and sediment are collected in traps Melbourne Water does not collect mostly from Winneke water treatment plant, located in the drainage, waterways and waste figures for construction and with about 1% produced from small local wetlands systems. We managed 289 routine maintenance activities. water treatment plants. This compares with constructed waterway treatment systems Wherever possible, products are 237 million litres last year. The reduction including wetlands, litter traps and silt traps. disposed of responsibly, including is due to reduced plant operations due to oil and lubricants from general We also collect debris from about 5000 works associated with the Sugarloaf Pipeline maintenance, which are treated additional sites including road culverts, and hydro plant projects. and reused by an external contractor. drainage grilles and grates, and other Water treatment residuals from the Winneke known litter ‘hotspots’. Debris comprises water treatment plant are discharged to 75% to 80% organic litter, with the rest sewer under a trade waste agreement with rubbish and litter (usually plastics). Yarra Valley Water. Costs for disposal were All debris/litter is taken to standard landfill $668,000, compared with $754,000 last facilities. Silt is tested for contaminants year. Melbourne Water is reviewing options to determine whether it can be reused for reusing the sludge with the aim of as clean fill or taken to a contaminated ending disposal to sewer. landfill facility. About one-quarter of silt Planning began for a waste sludge dewatering material is contaminated. project at Winneke. The project will involve This year, we collected 5500 cubic metres a centrifuge to remove about 70% of water, of debris and litter, and a further 11,500 which can be returned to the plant for filtering. cubic metres of silt, with a total disposal The Yan Yean water treatment plant also cost of $2.7 million. Last year, 7000 cubic produces water treatment residuals, metres of debris and 4000 cubic metres which are stored in drying pans onsite. of silt were collected, with a total disposal cost of $1.96 million.

70 Key performance indicators – Protecting Our Natural Environment 2007/08 2008/09 Target Result Target Result Target met % reduction on 2000/01 greenhouse gas emissions [%] 40 48 ≥ 40 53.8 √ Renewable energy used or exported as % of total energy used [%] 50 41 ≥ 54 54 √ For the nine DSE designated sites of high biodiversity significance [BioSites], 2 2 4 4 √ the number of BioSites that have been surveyed [cumulative] For the nine DSE designated sites of high biodiversity significance [BioSites], the 0 0 0 0 √ number of BioSites that have had management plans implemented [cumulative] For the nine DSE designated sites of high biodiversity significance [BioSites], the 1 1 3 3 √ number of BioSites that have had management plans developed [cumulative]

71 MELBOURNE WATER SUSTAINABILITY REPORT Our Relationships Dale ArcherDale

Dale Archer enjoys the solitude and independence of living and working high on the spine of the Great Dividing Range ■ He and his young family live in the hamlet of Toongabbie, and wouldn’t swap country life for anything ■ “Working up in the catchments we’re a long way from the nearest town, so if you need something you can’t just nick down to the shop,” he says. “You need to be independent and resourceful, and you have to make do with what you’ve got.” ■ Dale, the Thomson Reservoir works coordinator, was literally a larger than life character this year after being pictured on giant billboards around Melbourne ■ He was part of the

Target 155 Water for Winter advertising campaign, which highlighted the need to save water all year round ■ Over the past five years, Dale has watched the steady decline in Thomson Reservoir water levels from 60% to just 16% ■ “When you see the levels going down like that, it’s a daily reminder of the need to save water, and not just when it’s hot,” he says ■ A fitter and turner by trade, his experience includes working with Southern Rural Water as a water bailiff, looking after channels and irrigation ■

Dale’s current role includes organising work crews and maintenance in the Thomson and Tarago Reservoirs and catchments ■ One of the most important tasks is balancing water supply needs with the release of water into the Thomson and Tarago Rivers.

Listen to and engage

■

Ensure our suppliers and

■

Managing and communicating controversial issues associated with major infrastructure projects Helping the community understand and adopt year-round water conservation measures Communicating steps being taken to ensure security of water supply inflows low of continued times during Disappointments wereWe unable to reduce the volume of cases allocated Water fromand the Energy Ombudsman’s office Challenges Continuing to build strong relationships, opposed groups community with especially to controversial projects • • • • • • • • • • Supportculturea ofinformation and knowledge

■

Preserve and promote cultural heritage

■

people about river health through Moomba at activities and tours displays, Established and supported effective community information campaigns for major projects Made major improvements to our education website which attracted almost 114,000 visits Helped to save about 10 billion litres of drinking water through our support 155 advertisingofTarget the campaign Goals related to Our Relationships Work collaboratively with stakeholders and strengthen relationships the community to seek support for our projects and priorities partnersapply sustainable business practices sharing achievementsKey Informed and educated about 140,000 • • • • • • • •

Relationships Our Our

MELBOURNE WATER SUSTAINABILITY REPORT Melbourne Water Moomba activities

Achieving our vision This year stakeholder engagement and The strength and resilience of our relationships Working together with customers, sustainability and environment were and partnerships proved effective in managing community and environment groups, the introduced as key result areas for our new demands and challenges including the water industry, Government departments program alliance partners. These key Black Saturday bushfires in February when and other key stakeholders is an integral result areas will drive the way projects there was intense media and community part of Melbourne Water’s business. are delivered. interest in damage to the catchments and possible impacts on water supply (see We build relationships, partnerships and Managing our relationships Bushfires, page 15). trust with our stakeholders because we Melbourne Water’s public profile and know we can achieve better results and community interaction increased With Melbourne Water’s increasing profile become a more sustainable business by significantly this year due to large-scale through our capital works and associated working collaboratively with others. water supply and sewerage infrastructure community engagement activities, we projects including the Sugarloaf Pipeline, reviewed and updated the Melbourne Engagement and consultation provides Tarago water treatment plant, Northern Water brand and visual identity. opportunities to advance projects by sharing Sewerage Project and the Melbourne resources, skills and information with Our community engagement this Main Sewer Replacement Project. residents, community groups, other agencies, year included: research organisations and businesses. We work to manage community issues ••Consulting residents and other stakeholders and interest in these and other projects by Melbourne Water delivers information to inform them about major works and communicating with residents, businesses on water supply, treatment, conservation minimise community disruption and other stakeholders through community and environmental protection to improve ••Educating young people and the broader meetings, face-to-face contact, websites, community knowledge and understanding community to increase knowledge and newsletters, traffic updates and toll-free of water and bring about behaviour change understanding of river health, water information lines. especially in young people. conservation and other water issues through programs including a youth conference, We also recognise our responsibility to displays, open days and tours, school and manage sites of significance as part of garden campaigns and an enhanced website our projects and works, and this year launched our Cultural Heritage Strategy. ••Worked with the community to monitor and protect rivers and creeks ••Worked with stakeholders to preserve cultural heritage.

75 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Our Relationships

Keeping community ••A $5 million regional grants program to Other community engagement activities this and stakeholders informed provide long-term benefits to communities year included field days, courses, information Helping to inform the community about along the Sugarloaf Pipeline. About 70 sessions, website updates, newsletters and water issues is a key part of our role, community groups applied for grants one-on-one visits with landholders. whether through our website, consultation of up to $500,000 to restore buildings, Northern Sewerage Project or the media. construct playgrounds or upgrade The $650 million Northern Sewerage Project volunteer emergency services equipment. As record low inflows and drought conditions involves the construction of 12.5 kilometres At 30 June 2009, applications were being continued, interest in our water storages was of new sewer from Reservoir to Pascoe Vale assessed by an independent regional again high, particularly in response to rain (see Sewerage, page 35). The project began benefits advisory committee. or extreme heat. Of the 5.1 million visitors in August 2007. to our website in 2008/09, more than Notwithstanding the steps described above, A variety of communication activities ensure 80% wanted to know about water storage, there has been some continued community the community and stakeholders are informed rainfall and river levels. opposition to the project with action taken about the project and key stages of work. by pipeline opponents directly against our We continued to manage strong sentiment employees and contractors. In June, the Melbourne Water and John Holland, our from a small number of landowners affected Seymour Magistrates Court ruled in favour primary construction partner for the project, by the Sugarloaf Pipeline project, and there of Melbourne Water in a case against a held seven community forums this year. was continued interest in our major projects landowner who obstructed Melbourne Water and our work around waterways. In January, the design and location of a contractors as they carried out works on her new air treatment facility in Pascoe Vale Major projects Yea property in September. The landowner was approved following a community Sugarloaf Pipeline was charged on a summary offence and consultation program, and a revised project The Sugarloaf Pipeline project generated high found guilty. No conviction was recorded website was launched in February. levels of public scrutiny and debate about and Melbourne Water did not seek costs. access to water resources, compensation In June, the first round of funding under Reconnecting Tarago and access to land required for the project, the Northern Sewerage Project’s $4 million Melbourne Water has been working with impact on biodiversity and farmland, Community Benefits Program was released. Landcare, Gippsland Water, Baw Baw and urban population access to water This program provides funds for local Shire Council, the Department of Primary supplies traditionally associated with community benefits to the three councils Industries, Department of Sustainability rural communities. through which the new sewer passes. and Environment, EPA Victoria and other Extensions to a skate park and new shelter The pipeline will be capable of transferring agencies to develop a comprehensive plan facilities at Harmony Park in Coburg were up to 75 billion litres of water a year for long-term management of the Tarago among the projects funded. from the Goulburn River to the Sugarloaf Reservoir catchment and its waterways. Reservoir (see Water, page 21), subject The Northern Sewerage Project community The Tarago Catchment Management Plan to water savings being achieved by relations team consists of representatives aims to protect water quality for current the Foodbowl Modernization Project. from Melbourne Water, Yarra Valley Water and future human consumption, conserve and John Holland. Regular newsletters, The Sugarloaf Pipeline Alliance communicated soils in the catchment and ensure sustainable works and traffic updates, and special event closely with communities, farmers farming practices. bulletins are delivered along the tunnel and landowners affected by the works. The plan and the Melbourne Water-funded route and at all shaft sites. A 24-hour toll- Community support activities undertaken Tarago Catchment Sustainable Farms free hotline enables rapid response to any by the alliance include: Project were developed to prepare for community concerns about the project. ••About $1 million in compensation for the reconnection of Tarago Reservoir Melbourne Main Sewer Replacement farmers and other landowners whose to the Melbourne system in June Construction of the new $220 Melbourne land is required for the pipeline easement (see Water, page 20). or is affected by construction Main Sewer began in late August, and will More than 250 people attended an open replace a 2.3 kilometre section of the ••Biodiversity offsets including the purchase day to involve and inform the community original brick-lined Melbourne Main Sewer of 826 hectares of high value bushland about the Tarago project in April. The open built in the 1890s (see Sewerage, page 35). to create a conservation zone in the day was held at the Tarago water treatment Victorian Alps (see Protecting our The new sewer travels from Docklands, crosses plant at Drouin West. natural environment, page 67). the Yarra River upstream of the Charles Grimes Bridge, and into Port Melbourne.

76 Community engagement has centred on Working with stakeholders Melbourne Water worked with the explaining the need for the works, steps Stakeholder Engagement Strategy Department of Sustainability and being taken to protect the environment, A Stakeholder Engagement Strategy is being Environment and the metropolitan and efforts to minimise disruption. developed that describes the principles retail water businesses on Target 155, Melbourne Water applies to engagement which aims to reduce the city’s average Since the design phase, community and relationship building and the actions residential consumption to less than information sessions have been held to that will ensure strong relationships. 155 litres per person per day. provide an opportunity for residents and businesses to learn about the schedule The strategy has been prepared in This year we contributed more than $2.4 and possible changes resulting from works, conjunction with a Melbourne Water million to support the campaign and other and to ask questions and raise concerns. Stakeholder Engagement Reference Our Water Our Future initiatives. Group. This group provides business-wide A schools program provides teachers and Target 155, combined with Stage 3a water advice on stakeholder engagement. students with information about construction restrictions, refers to the amount of average work taking place in their area. Students have The strategy, expected to be released by water use per person necessary to achieve painted murals to offset the visual impact the end of 2009, defines our stakeholder similar savings to Stage 4 water restrictions, of worksite fencing. A competition to name management philosophy, what stakeholder while offering the community greater the tunnel-boring machine was also held engagement means, who our stakeholders flexibility on how to achieve the target. for local students. are, how we engage with them, and how Target 155 is promoted via community we measure successful outcomes. Other community consultation activities advertising and promotional activities, and Actions are also included to drive included the development of a website, targeted behaviour-change programs focusing continuous improvement. letters to residents and businesses, on schools and the gardening sector. face-to-face visits, a toll-free phone Our retail water partners By the end of June, average per person per line, community forums, traffic and Melbourne Water maintains close relations day water use had reduced to 159 litres project updates, bulletins and newsletters. with retail water businesses City West since the campaign began in December. Water, South East Water, Yarra Valley Water Renewing water mains This compares with daily average and Western Water and other regional water Managing traffic and access issues and consumption of 169 litres per day over businesses such as Southern Rural Water, keeping residents informed were critical the same period the previous year. Gippsland Water and Barwon Water. aspects of water main replacement projects In the second week of June, the figure in Greensborough, Fitzroy North, Northcote, This year we continued working with reached a record low of 129 litres per Coburg, Pascoe Vale and Strathmore. the retail water businesses on demand day. The Target 155 rolling average since management through Target 155 and These projects are part of Melbourne Water’s campaign inception was achieved in water education programs (see page 78), program to supply drinking water to homes July 2009, representing overall savings urban planning activities (see Waterways, and businesses, and help conserve precious of about 11.8 billion litres of water. page 48), incident control (see Bushfires, water resources. page 15) and the Metropolitan Sewerage A Target 155 Water in Winter advertising Works are replacing the water main under Strategy (see Sewerage, page 30). campaign, featuring people from home Greensborough Highway (Yallambie Road and industry talking about the need to Target 155 to Drysdale Street), the Northcote-Punt save water all year round, was launched Target 155 is the latest advertising campaign Road water main, and the Preston-North in June (see case study, page 73). as part of the Victorian Government’s Essendon water main (see Water, page 26). Our Water Our Future behaviour change Water – Learn it! Live it! Melbourne Water is updating residents program, which aims to increase water Water – Learn it! Live it! is a water education and advising them of disruption through savings in households. Our Water Our and accreditation program run by the briefings, information sessions, doorknocks Future, which has been running since 2003, metropolitan retail water businesses as and communication bulletins. incorporates advertising, promotions and part of Our Water Our Future. targeted garden and schools programs. The program helps schools implement water conservation and water education across the curriculum, with the aim of increasing knowledge and changing attitudes and behaviour towards water.

77 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Our Relationships

Water use for Melbourne under T155 campaign (Litres per person, per day) Weekly average of daily consumption (L/p/d) L/p/d Target 155 consumption (L/p/d)

250

200

150

100

50

04 Dec 08 01 Jan 09 12 Feb 09 12 Mar 09 09 Apr 09 07 May 09 04 Jun 09 02 Jul 09

Water – Learn It! Live It! is available to all Educating and informing Melbourne Water’s river health precinct primary and secondary schools in metropolitan Melbourne Water Youth Conference featured wildlife displays, children’s Melbourne. In the year to June, 191 primary The third annual Melbourne Water Youth activities, music and dance performances, schools, 45 secondary schools and three other Conference was held in June. Its theme art workshops, indigenous culture, history schools had adopted the program. was “creating water-smart cities”. and river tours.

Preserving cultural heritage More than 400 students from Years 5 to 11 Post-event surveys estimated one in five As one of the largest landholders in the Port throughout the Port Phillip and Westernport visitors to Moomba passed through the Phillip and Westernport region, Melbourne region attended. They explored issues Melbourne Water river health precinct – Water manages a wide variety of indigenous such as drought, water recycling, water about 140,000 people. and non-indigenous sites of significance. conservation, stormwater use, population Three-quarters of people surveyed were growth and planning and design of cities In recognition of this responsibility, Melbourne positive or very positive about their experience in the future. Water developed and launched our Cultural in the Melbourne Water precinct, and people Heritage Strategy in November. Schools from bushfire-affected communities generally participated in at least three were invited, with Melbourne Water activities, which were also viewed as The strategy outlines actions that build sponsoring conference costs. Whittlesea having strong family appeal. relationships and improve our interaction Secondary College and Kinglake Primary and outcomes with indigenous and non- Tours and open days School attended. indigenous cultures. More than 500 visitors attended the Moomba Western Treatment Plant open days It provides a systematic basis for determining Moomba – Australia’s largest free community in March. An open day at the Eastern whether significant heritage values might be festival – attracted more than 700,000 Treatment Plant was deferred due to affected by projects or works, and explains visitors to events celebrating Melbourne construction works. how we adopt consistent approaches to and the Yarra River in March. managing indigenous and non-indigenous A total of 9842 people, including overseas cultural heritage matters. As a principal sponsor, Melbourne Water visitors and school students, went on tours took the opportunity to engage and of the Western Treatment Plant (7456), A focus group was established to guide communicate with the community Eastern Treatment Plant (1188) and the Melbourne Water’s approach to preserving throughout the three-day festival. Winneke Water Treatment Plant (1198). and promoting cultural heritage, and This compares with 10,183 visitors last year. information sessions for Melbourne Water people were held in June.

78 L/p/d

Melbourne Water’s Youth Conference 2009

Equitana Overall visitor numbers remained relatively Working with the community A Melbourne Water display stand at Equitana stable at 5.1 million, compared with 5.2 Waterwatch 2008 during November at the Melbourne million last year. Melbourne Water is the regional sponsor Showgrounds educated landowners and horse of Waterwatch, a hands-on river health Melbourne Water began its internet and riders on ways to keep horses healthy and education program that helps community new media presence during the year to protect waterways at the same time. members, schools and businesses become incorporate emerging technology and involved in monitoring and protecting the Tips on maintaining good pasture, trends, as well as survey findings. health of our rivers and creeks. managing manure and controlling weeds This will continue during 2009/10. were accompanied by information about Waterwatch provides support and expertise The Melbourne Water education website Melbourne Water’s Stream Frontage to help students and other community was redeveloped to make it easier for Management Program, which provides members understand river health, learn students and teachers to access information funds and support to landowners for how to monitor, collect and understand about water. Visits to the education website river health improvements (see Waterways, data from their local waterways, and get numbered just less than 114,000. page 44). involved in activities to improve river health. Dedicated websites were launched for Internet a key source In 2008/09, a total of 52,764 people the Sugarloaf Pipeline and the Melbourne The importance of the internet as a key participated in Waterwatch events and Main Sewer Replacement projects. These source of information on water issues activities, which included 1313 school group sites provide community information was demonstrated throughout the year, sessions, 370 school visits, 55 community about works, expected impacts, updates, especially following the Black Saturday information sessions, 57 community festivals bulletins and newsletters, and opportunities bushfires (see Bushfires, page 15). and 238 monitoring groups. This compares for feedback. with 53,445 participants in 2007. Daily storage updates remained the primary Water trail driver for visits to the Melbourne Water Melbourne Water continued to support site. More than 80% of visitors wanted the Water Trail at the National Gallery information on water storage, rainfall of Victoria. and river levels. The trail, which consists of 11 pieces of artwork with a water theme, helps visitors understand the value and importance of water throughout history and across cultures.

79 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Our Relationships

Observations from Waterwatch participants Community surveys Energy and Water Ombudsman about the health of waterways helped Melbourne Water conducts two independent The Energy and Water Ombudsman (Victoria) Melbourne Water assess the impacts surveys of Melbourne residents in June each investigates and resolves disputes between of bushfires on waterways, and assisted year. These surveys assess attitudes to a Victorians and their energy and water with efforts to protect the health broad range of water issues and waterways. service providers. of waterways with emergency Results provide Melbourne Water with Melbourne Water is one of 22 Victorian environmental flow releases. long-term tracking of attitudes as the basis water businesses that are members of For example, Waterwatch reports resulted for strategic direction in communication the scheme, which has been dealing in thousands of litres of water released and program development activities. with water complaints since April 2001. into Balcombe Creek and Tuerong Creek For example, 84% of people in the 2008 Melbourne Water received 27 customer on the Mornington Peninsula to top up survey rated the quality of drinking water cases this year (compared with 17 last year). valuable fish habitat pool levels. as very good or good. Work by Melbourne All of these cases were resolved. We are Frog Census Water to highlight the natural and protected working hard to try and reduce occurrences In partnership with Waterwatch, we deliver the nature of our drinking water catchments of cases directed to Melbourne Water. Melbourne Water Frog Census, a volunteer- was reinforced in 2008/09, and 91% of Cases involve issues such as land management, based program that monitors the calls of frogs people rated the quality of drinking water waterways and drainage charges, clearing of in the Port Phillip and Westernport region. as very good or good 12 months later. land over easement, grass cutting, fencing, The 2008 Frog Census annual launch Other project-specific surveys included Sugarloaf Pipeline and land tender processes. was held at Werribee Open Range Zoo reviews of Melbourne Water’s Moomba Supporting communities in September. The census monitors frog participation, an evaluation of the in developing nations populations as a way to gauge river health, Waterways advertising campaign, Melbourne Water was the lead organiser to raise community awareness of wildlife and interviews with licensed irrigators of the Victorian WaterAid Ball held at the that depend on our waterways, and help in the upper Yarra region. Melbourne Park Function Centre in October. people to get to know their local waterways. Survey results are used to guide a variety Co-hosted by Yarra Valley Water and South This year Frog Census participants were of our engagement programs, and assess East Water, the event raised more than encouraged to submit digital frog call the effectiveness of Melbourne Water $220,000 for projects that provide clean recordings at any time of year. Participants promoting water issues in this period drinking water and sanitation to some of the used digital voice recorders, MP3 players, of drought and future climate change. world’s poorest communities in countries cameras and mobile phones to record frog Making Connections such as East Timor and Papua New Guinea. calls at their local waterways. The Making Connections event-based More than 700 people from the Victorian More than 340 frog call recordings were program continued to build relationships, water industry attended the black tie event. received this year. Recorded frog calls are strengthen understanding and connections analysed and call locations plotted to map between people and explore opportunities the distribution of frogs across the region. for working together to protect river health.

Melbourne Water sends census results A Making Connections event was held to the Department of Sustainability and for the Yarra catchment at Kalorama in Environment’s Victorian Wildlife Atlas, August, bringing together representatives which is used to make decisions about from community and environment groups, the status of species including councils, schools, universities, private threatened species nominations. industry, rural landholders and retail water businesses. Since Melbourne Water began the Frog Census in 2001, our volunteers have The focus of Making Connections is recorded 14 species of frogs across broadening to include topics such as the region and sent in more than drought, water recycling, stormwater, 3000 recordings. water quality and climate change. The program will continue to provide opportunities for community involvement in our programs and works.

80 Key performance indicators – Our Relationships 2007/08 2008/09 Target Result Target Result Target met Number of Melbourne Water complaints investigated by the EWOV [complaints] 3 17 ≤3 27 ×1 Effectiveness of Community Committee and Community Consultation processes 80 91 80 88 √ Effectiveness of Community Education Programs 80 91 80 93.3 √

1 Melbourne Water received 27 customer cases this year (compared with 17 last year). All of these cases were resolved. We are working hard to try and reduce occurrences of cases directed to Melbourne Water and this KPI will change in future years.

81 MELBOURNE WATER SUSTAINABILITY REPORT Our people andWorkplace Our Jacinta Burns

Jacinta Burns is a creative communicator. For her, it’s important to find innovative ways to help people■ She is part of the team that makes maps mainly of Melbourne Water assets and operating areas. These maps are used by people throughout Melbourne

Water and by other organisations for everything from presentations and displays to planning projects and fire control■ “Rather than assuming you know the answer, you need to talk to people to get the best result,” she said ■ Maps are anything but boring to Jacinta and her colleagues from the asset information team. She uses her GIS (Geographic Information Systems) skills, colour and detail to find the most compelling way of generating maps, while working within corporate guidelines ■ Jacinta enjoys working on projects of environmental significance such as the bushfires and has been instrumental in reducing her team’s environmental impact by cutting paper use. This has been challenging because many people especially in the field still need printouts of detailed and large format maps, plans and images ■ This year, she and her colleagues began a trial using recycled paper on one of two large format printers. The trial was overwhelming supported by her clients and the recycled stock that is now being used is only one-quarter the price per metre of the heavyweight alternative ■ “It’s pretty impressive when there are financial and environmental benefits and our people are happier, too,” Jacinta said.

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Attract and retain a diverse,

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was suspended for more than two months than two more for suspended was until safety improvements were made Challenges Delivering further improvements in health and safety performance by implementing initiatives that drive behavioural and cultural attitudes to safety throughout our alliances and with Water, Melbourne our contractors Continuing to positively influence and develop our constructive culture to help achieve outstanding results in the face of drought, climate change and a vast capital works program Working with the water industry to increase understanding of the range of careers the industry provides and its vital community service role Continuing to improve our sustainability performance and behaviours in the workplace Disappointments MelbourneWater people recorded one lost time injury, failing to meet our zero target, after a 16-month period free of lost time injuries Our contractors suffered five lost time injuries including one in which a project • • • • • • • • • • • •

Promoteculturea that encourages constructive behaviours

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Sustainability Victoria Waste Waste Victoria Sustainability Wise program Our People and Safety team was a finalist Australianin the Human Resources InstituteAwards, in recognition of its business impact Key achievementsKey A total of 118 team leaders undertook the leadership development program to deliver further improvements in our workplace culture Received a culture transformation award from Human Synergistics in recognition of the change that has occurred from 2005 to 2007 Met key performance indicators paper and energy for officewater, consumption and waste to landfill certificate a silver in the Awarded Goals related to Our People and Our Workplace Provide a safe, healthy and enjoyable working environment motivatedand skilled workforce inall our activities work practices and behaviours. a learninga organisation with focusa on innovation and knowledge sharing • • • • • • • • • •

Workplace and Our Our and Our People People Our

MELBOURNE WATER SUSTAINABILITY REPORT Annmarie Tracey, Eastern Treatment Plant

Achieving our vision Health and safety We suspended work on a significant Melbourne Water faces a complex A mixed performance project at the Eastern Treatment Plant environment. The future effects of Everyone working at Melbourne Water in October following several incidents, climate change add a new dimension has a responsibility to ensure the safety culminating in a worker suffering a severe to the challenges posed by the of themselves and their colleagues, and foot injury. Works resumed after more long-running drought and a vastly we have set the objective of ‘zero harm’. than two months but only when we were increased capital works program. satisfied that site safety and behavioural We failed to achieve our goal of zero improvements had been made and that We understand that we must work lost time injuries (LTIs) for our employees the resumption would not harm people. cooperatively and constructively – in 2008/09, with one LTI (compared with with one another, our project partners two last year and three in 2006/07). In April, an operator seriously injured in an and other stakeholders – to meet An employee suffered an injury – electric arc explosion at Brooklyn Pumping these challenges, and that collaboration, a sprained shoulder – in June, ending Station in February 2008, received clearance innovation and a commitment to a 16-month period without an LTI. to resume normal duties after progressing excellence will enable us to achieve This had been an outstanding performance through a comprehensive return-to-work outstanding results. given that approximately 120 Melbourne plan and rehabilitation program over the Water people fought the Black Saturday previous six months. The basis of our culture program is a bushfires (see Bushfires, page 15). generosity of spirit in which our people Clarifying roles and responsibilities want to help each other find the best However, our contractors had six LTIs We recognised that we could do more to raise solutions. We believe that we all can (compared with four last year and two the safety profile throughout Melbourne and will make a difference and that in 2006/07). In each case, Melbourne Water and with our contractors. So we we will challenge everything to Water and the contract company designated October ‘Health and Safety achieve better results. investigated the incident and Month’ with the aim of our people being addressed problems with safety clear about their roles and responsibilities These constructive behaviours and systems and behaviours. in ensuring a safe workplace. attitudes guide our decisions and dominate our culture – that is how we will work to achieve our vision of a sustainable water future.

85 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Our People and Our Workplace

A special health and safety edition of our Surveillance audit Leading by example internal newsletter, OnTap, was published (see Lloyd’s Register conducted a SafetyMAP Our leadership development program Internal communications, below), and safety surveillance audit of Melbourne Water in is a key aspect of creating a constructive messages were displayed in foyers, washrooms November, and found no non-conformances. culture. This program is based on education, and noticeboards, and communicated via relationships and experience. SafetyMAP is an audit tool applied to health weekly updates, team meetings and by the and safety management systems, such as Senior leaders undertook the program in leadership team. Health and safety training Melbourne Water’s The Safe Way. Melbourne its first year in 2007/08 – this year it was included incident investigation for team Water is accredited to SafetyMAP initial level extended to 118 team leaders. leaders and SunSmart seminars, which until July 2010. This followed recertification were attended by 170 people. The program, designed in partnership achieved in June 2007. with the Melbourne Business School, Melbourne Water also hosted a seminar Culture and leadership is based on the themes of strategic for more than 100 of our contractors and Fostering constructive behaviour agility, collaboration and influence, alliance partners at the Western Treatment Our culture change program was introduced building performance excellence, Plant to reinforce our safety standards and in 2005 to foster innovative and positive and personal courage and resilience. expectations. Under the theme of ‘real behaviour in the workplace to help achieve people, real impacts’, speakers emphasised It includes nine days of formal learning our vision of a sustainable water future. the potentially severe and long-lasting and nine months of working together consequences of not prioritising health The culture program is an integral part of with colleagues on specific projects and safety. our workplace and is the means by which in ‘action learning groups’. we achieve outstanding results, working A senior health and safety adviser position Our workforce constructively together and with our was created to work across all capital Attraction, retention and recruitment project partners and other stakeholders. projects to align safety information Melbourne Water assists skill and knowledge Constructive behaviours are part of and auditing, and health and safety transfer and brings fresh talent into the employees’ performance and development was incorporated as a key result area organisation through a variety of measures. plans and the Enterprise Agreement. in the program alliances. These include identifying people who plan Master classes were held for 50 senior Other preventative initiatives introduced to retire and recruiting replacements early people this year on topics such as during the year included: so that they can work with the prospective coaching and decision-making, with retiree, engaging graduates and trainees, job ••‘Take 4’ in which our people were asked future sessions to be held on work/life rotations within and between groups and to stop, reassess, discuss and complete balance and thinking for the future. activities as part of task risk assessments teams, encouraging people to explore new (hazard identification, risk assessment A total of 490 of our people attended opportunities within the organisation, and and control) culture sessions focusing on achievement flexible working arrangements. and self-actualisation, and 550 employees ••A safety behaviour program highlighting This year, we also supported water industry attended workshops on the culture simple and practical ways for our people efforts to attract and retain people as part program including new starters as part to think about safety initiatives of an employment project managed by the of their induction. Our people continued Australian Water Association. We worked ••Incentives for identifying hazards to suggest ways to positively influence on a reference group representing 29 water in the workplace the workplace culture. organisations to help develop a brand, ••Restructure of health and safety committees In September, Melbourne Water received “H Oz – careers in water”. to better reflect the collaborative approach 2 a culture transformation award from to capital delivery through alliancing. Human Synergistics in recognition of At 30 June 2009, our combined LTI frequency the change that has occurred from rate (employees and major maintenance 2005 to 2007. The awards recognise contractors) was 3.0 compared with 3.6 organisations that have created and at 30 June 2008. sustained constructive work cultures and demonstrated a dramatic change in their culture over a relatively short time.

86 The brand campaign revolves around Providing opportunities for Internal communications the theme: “It’s great to work in water”. graduates and students Melbourne Water strives to ensure that It focuses on how the industry: Our three-year graduate program continued our people hear about the progress and ••Provides varied career opportunities with 23 participants working in roles across challenges of the organisation in a way throughout Australia and overseas Melbourne Water. We again recruited eight that best meets their information needs. graduates: three chemical engineers, two ••Provides an essential service This year we continued to distribute mechanical engineers, an electrical engineer, our weekly update and internal monthly ••Contributes to the sustainable an environmental engineer and a public newsletter, OnTap, to keep employees future of Australia relations graduate. regularly informed of our achievements Works to protect our environment. We provided secondment opportunities, and upcoming events and activities. A website, due to be launched as part with a graduate from Melbourne Water We advised, guided and supported of National Water Week in October, working at City West Water and a graduate people across the organisation to will include a job recruitment platform for from Sydney Water joining Melbourne develop communication plans and water corporations throughout Australia. Water for six months each. In addition, activities that support our business two graduates returned to Melbourne Melbourne Water continued to recruit new objectives, for example to assist Water after completing secondments with starters and our people especially to deliver Melbourne Water’s bushfire response Sinclair Knight Merz (SKM) and Sydney our capital delivery and waterways programs and Health and Safety month in October. (see By the numbers, page 90). Water, in which they were (respectively) involved in mechanical design work and An information presentation was Reward, recognition and innovation monitoring ecological impacts. developed to welcome and educate Among the 340 teams and people recognised new starters about Melbourne Water. Melbourne Water also engaged three this year (313 last year) under our Great Sessions were delivered monthly. We also trainees who gained on-the-job training Work, Great People program was Senior coordinated an event in May to celebrate and experience, and an opportunity to Asset Manager Russell Riding. Russell’s the service milestones of 80 people. quick and decisive action and innovative complete a Certificate III qualification. Each year, Melbourne Water sponsors events thinking in the wake of the Black Saturday Sixteen vacation students joined the and activities for our people to encourage bushfires ensured that water supply from organisation over summer. During their community participation and networking. the fire-damagedCreswell Treatment 12-week placement, the students worked This year we sponsored 10 activities including Plant near Healesville was uninterrupted. as part of a team and learned about the Good Shepherd breakfast club, in which Melbourne Water. After their placement, Russell worked many extra hours with we prepare breakfast for disadvantaged 10 of the students took up Melbourne maintenance crews to safely install a children, dragonboat racing, a corporate Water’s offer of part-time work while large generator to provide back-up power triathlon and a bushwalking club. to the entire plant. This proved vital when continuing their studies. Team gains recognition the electricity supply authority decided Supporting diversity Our People and Safety team was a finalist that the plant needed to be taken offline Melbourne Water established a new diversity in the Australian Human Resources Institute because of burnt mains cabling. committee to build on the work of the 2007 Awards, in recognition of its business impact. Melbourne Water also ran workshops in committee and support the varying interests February to help our people understand and differences among our people. The award, announced in September, acknowledged the team for helping how innovation has driven the organisation. The committee has the following focus Melbourne Water to meet business More than 100 examples – from historic areas: age diversity, cultural diversity, needs in a challenging and changing achievements such as the closed catchments work/life balance, work/family balance, environment while supporting the to recent initiatives such as using biogas equal employment opportunity and development of colleagues and to generate our own renewable energy – discrimination, and disability action plan. were cited to help generate innovation recognising their achievements. for the future. The committee meets regularly and is developing actions and ideas to support diversity across the organisation. Committee members are trained contact officers, enabling them to support Melbourne Water people who want to discuss diversity issues.

87 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Our People and Our Workplace

Chris McMennemin, Brooklyn Pumping Station

Encouraging sustainable behaviour Melbourne Water has been tracking the Facilities upgrades implemented this year Melbourne Water’s office sustainability awareness of sustainability among our followed water, waste and energy audits. program encourages employees to think and people, asking them whether their personal Efficiency improvements were introduced act sustainably at work and, by extension, sustainability performance has improved for lighting, air conditioning, drinking water, to consider adopting similar leadership in through our education and leadership. paper use, and computer equipment and their personal lives. The program promotes This year, 81.5% of employees (89% last services available to our people. sustainability through facilities upgrades of year) reported their sustainability had been For information on our corporate water offices (Sustainable Sites) and behaviour enhanced due to our education programs. consumption, see Water, page 26. change by employees (OfficeSmart). Many respondents who said their personal Paper We have established key performance level of sustainability commitment and action Total paper consumption was 9922 reams indicators to measure office-based had not changed felt that their lifestyle and (A4 equivalent), which was 12% higher sustainability performance based on behaviours were already sustainable. than last year. targets for water, paper, energy and Office-based initiatives waste to landfill. However, on a full-time equivalent (FTE) Some 27 volunteer employees at our East basis, we achieved a result of 9.0 reams/ The LivingSmart program, which was Melbourne office conducted education FTE/year, compared with 10.3 reams/FTE/ launched in 2006, was rebranded as activities to raise awareness and provide year in 2007/08. This year’s result was also OfficeSmart in August 2008 to reflect our leadership in developing more sustainable 16% below our baseline of 10.7 reams/FTE/ emphasis on office-based sustainability. workplaces. We held competitions for year in 2006/07. innovative water, paper, energy and waste As part of the annual performance planning reductions, and fictitious characters were FTEs include all our employees plus all process, employees can now nominate 5% developed for each of these consumption contractors, consultants, trainees and of their performance assessment towards areas to convey educational messages, any other people utilising a Melbourne sustainability initiatives. Participation encourage discussion and take a more Water site. in OfficeSmart was one way employees unusual, fun approach to environmental chose to implement this commitment. Melbourne Water achieved this result by education and achieving behavioural change. increasing the number of multifunction devices available for printing, scanning and faxing at our sites. These devices enable electronic functions to replace hard copy printing, and scanning allows documents to be electronically stored and transmitted.

88 Gender distribution Male Age profile 2006/07 Female 2007/08 2008/09

90% 30%

60% 20%

30% 10%

0% 0%

Chris McMennemin, Brooklyn Pumping Station 04/05 05/06 06/07 07/08 08/09 >25 25-34 35-44 45-54 >55

We continue to review the use of hard Measures undertaken as a result of these Waste to landfill copy documentation throughout the audits, included: Minimising waste to landfill is a priority business and our people have embraced ••Removing light fittings that were surplus for Melbourne Water to reduce our direct “Permanent Paper Saving Rules” to our requirements and indirect use of resources and protect (for example, double-sided printing). the environment. ••Replacing some of these fittings with This year we introduced recycled paper energy-efficient (quad-phosphor) Office waste includes paper, plastic packaging, in a very large printer used extensively lighting tubes paper towel, food scraps, coffee cups, for mapping and other large-scale printing ••Adjusting hot water unit settings, including newspapers, milk cartons, aluminium (see case study, page 83). temperature and running times, to reduce cans and magazines. Energy water and energy use out of hours This year, we generated waste to landfill Reducing office energy consumption has ••Introducing automatic shutdown of air equivalent to 18.2 kg/FTE/year, below our been a challenge for Melbourne Water conditioning at 5.30pm and floor lights target of 19.2 kg/FTE/year. The equivalent and we have worked hard to achieve at 7pm. This was in addition to automatic figure for 2007/08 was 19.5 kg/FTE/year. significant reductions. shutdown of computers at 8pm, which The ‘avoid-reduce-reuse-recycle-dispose was introduced last year. Melbourne Water reduced total energy thoughtfully’ hierarchy is central to consumption by 87 megawatt hours (MWh) Melbourne Water also delivered improvements our waste management strategies. at our East Melbourne offices, meaning in the energy use of our data centre and We maintain a ‘no desk-bin’ policy we met our target of 4.2 MWh/FTE/year equipment to maximise operational efficiency. and recycle consumables such as (consumption) compared with 4.6 MWh/ batteries, mobile phones and toner FTE/year in 2007/08. cartridges. This complements our existing policy of providing paper, An important initiative was the extension organics, co-mingled recycling and of our office energy audits to several of our landfill waste streams for our people, major sites. The recommendations from an where these facilities are available. external auditor helped guide our work to improve energy efficiency of our offices.

89 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Our People and Our Workplace

Workforce distribution 2006/07 2007/08 2008/09 Male Female Male Female Male Female Execs 37 4 41 5 43 8 Tech/professional 269 137 283 173 343 184 Operational 145 3 167 6 150 3 Administration 12 38 18 36 21 55 Total 463 182 509 220 557 250 Total Male and Female 645 729 807

This year, Melbourne Water introduced We introduced several measures to improve As part of our review of our Sustainable ceramic mugs to replace disposable cups the sustainability of our fleet. These included: Procurement Policy, we examined our at the café in our East Melbourne office ••Introducing the fuel-efficient and safety- expenditure on stationery in 2008/09. and the café cart at the Eastern Treatment enhanced 1.5 litre Toyota Yaris. There are The aim of this project was to develop Plant. Employees elect to use a ceramic now five in the fleet and the vehicle is and trial robust criteria for assessing the mug each time they buy coffee, allowing available for employees. It is anticipated sustainability of this expenditure, which us to reduce the amount of disposable that it will be adopted as a fit-for-purpose could soon be used as a model for cups sent to landfill. Feedback from our operational vehicle. purchases of other goods and services. café operator suggests reductions of about ••Mandating the use of diesel commercial The project also investigated measures 35% (or about 100 disposable cups per vehicles. This has led to the replacement that Melbourne Water could use to assess week) have been achieved. of unleaded models, and reduced the and improve our purchasing. Data from We donate useful end-of-life computers number of less sustainable 4WD vehicles. the project showed Melbourne Water had to not-for-profit charities. No computing ••Relying on more efficient utilisation of the already made good progress into sustainable equipment was disposed to landfill. fleet rather than replacing several vehicles. purchasing for stationery.

Our work to minimise office waste sent to Our people completed the Transport By the numbers landfill was recognised in February when we Management Association’s TravelSmart At 30 June 2009: were awarded silver certification under the survey in May. The survey, which aims to ••Our total workforce was 807 (compared Sustainability Victoria Waste Wise program. determine future improvements in city traffic with 729 at 30 June 2008) The Waste Wise program helps Victorian and transport, asked our employees about •• The proportion of women in our workforce was businesses to minimise waste generation their travel habits in one particular week. 31% (compared with 30% at 30 June 2008) and adopt more sustainable resource use. It found that 51% of respondents travelled ••The average age of Melbourne Water to or from work using public transport, 28% Transport employees was 41.1 years (compared with drove a car or used a motorcycle, and 13% For the third consecutive year, Melbourne 41.2 at 30 June 2008) Water reduced the amount of unleaded, walked or cycled. Our people identified LPG and diesel fuels used. Our people used concern for the environment and saving In 2008/09: 1.02 million litres of these fuels, or 2494 time and money as important reasons ••The average age of new starters was 33.2 for their commuting choices. tonnes of CO2e. This was a reduction of years (compared with 33 at 30 June 2008) about 20% from last year’s 1.13 million Purchasing ••219 roles were filled – 111 by new starters litres (3136 tonnes of CO2e). Melbourne Water continued our membership and 108 by Melbourne Water people (233 Our people also reduced their travel by of ECO-Buy, the Victorian Government- last year consisting of 113 new starters and about 6% to 9.02 million kilometres funded organisation established to encourage 120 by our people) (9.62 million kilometres last year). the purchasing of green products. ••Turnover excluding redundancies and We took advantage of the networking and managed departures was 5.7% (9.1%). training opportunities provided by ECO-Buy to This is at the lower end of Melbourne improve the sustainability of our supply chain. Water’s accepted range.

90 Workforce distribution Key performance indicators – Our People and Our Workplace 2006/07 2007/08 2008/09 2007/08 2008/09 Male Female Male Female Male Female Target Result Target Result Target met Execs 37 4 41 5 43 8 Our people Number of lost time injuries: 0 2 0 1 ×1 Tech/professional 269 137 283 173 343 184 Melbourne Water people [injuries] Operational 145 3 167 6 150 3 Number of lost time injuries: major contractors [injuries] 0 4 0 6 ×2 Administration 12 38 18 36 21 55 Maintain SafetyMap accreditation Yes Yes Pass Pass √ Total 463 182 509 220 557 250 Turnover [%] 10 9.1 5-10% 5.9 √ Total Male and Female 645 729 807 Absenteeism – sick leave days per person per year [days] 2.7 2.4 ≤ 2.7 2.4 √ Our workplace Implement a sustainability education program across 80 89 80 81.5 √ the organisation – % employees who believe their personal sustainability performance has improved through Melbourne Water’s education and influence

Minimise everyday environmental impacts: – % reduction 2% 9% 3% 8.3% √ on 2006/07 office water consumption per FTE decrease increase decrease decrease Minimise everyday environmental impacts: – % reduction 4% 4% 7% 16.2% √ on 2006/07 paper use per FTE decrease decrease decrease decrease Minimise everyday environmental impacts: – % reduction 2% 33% 4% 9.2% √ on 2006/07 office waste to landfill per FTE decrease increase decrease decrease Minimise everyday environmental impacts: – % reduction 2% 5% 3% 3.9% √ on 2006/07 office energy per FTE decrease increase decrease decrease Sustainability Achieve sustainability performance ranking in the top Pass Pass Top 25% Top 25% √ quartile against global water utilities and Australian utilities, using the Dow Jones Sustainability World Indexes

1 An employee suffered an injury – a sprained shoulder – in June, ending a 16-month period without an LTI. 2 Our contractors had six LTIs (compared with four last year and two in 2006/07). In each case, Melbourne Water and the contract company investigated the incident and addressed problems with safety systems and behaviours.

91 MELBOURNE WATER SUSTAINABILITY REPORT Business Efficiency Stuart Smith

Stuart Smith doesn’t understand thinking inside a box, and thrives on change and new challenges ■ Stuart, who is an industrial chemist by training, is also an inventor, home builder, runner and motorcyclist ■ In his role as a senior asset manager at Melbourne

Water, he readily admits to taking ideas from everywhere and adapting them to meet his needs ■ That’s why he is so excited by a new approach to delivering capital works in which skilled and experienced people from Melbourne Water and design and construction companies are working together in alliances ■ “We have new problems to solve and our traditional requirements and comfortable relationships are being challenged,” Stuart says ■ So when he was asked to review the thickness of water tank floor plates as part of the Sugarloaf Pipeline project, he approached the task with an open mind, accepting that it might be possible to find alternatives to Melbourne Water’s standard specifications■ He and his colleagues compared corrosion, safety and other risks as well as the future costs of replacing standard 10-millimetre floor plates with 6.5-millimetre floor plates used elsewhere ■ Stuart found that it would be possible to inspect the tanks for corrosion each year during system shutdowns. This convinced him that the risks could be managed and were outweighed by the 35% reduction in the amount of steel used on the floor plate, and a $300,000 saving■ Stuart, who invented a turbidity reduction device for water pipes when working for

Yarra Valley Water, is building his own home in Eltham on weekends ■ “I don’t sit still very often – not if I can help it,” he says.

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alliances for the delivery of capital works A review of the selection process of our alliances found that the debrief stage could be improved exceededWe the planned regulated $17.1 million by expenditure operating Challenges over $3 billion of capital works  Delivering five years on time and within budget Demonstrating to Government and ensuring that the delivery of the capital plan provides value for money Working with the retail water businesses to identify opportunities to achieve further efficiencies across the metropolitan water industry Continuing to maintain rigorous business contingency and emergency response plans Disappointments under-estimatedWe the complexity and time required to mobilise our program Maximise resource efficiency by embracing • • • • • • •

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investment decisions are sustainable prudentlyand efficiently, taking account of environmental, social and financial considerations, whole-of-life costs, risks and service needs Western Treatment PlantWestern A review of the selection process of our alliances found that the best available team was chosen and that the best commercial deliver it would outcomes for MelbourneWater Began quantifying intangible benefits by placing a dollar value on non-financial stakeholder such areas as safety, result key relations, sustainability and environment, and culture Reformed our waterways and drainage charge to better reflect service levels, increase transparency and reduce administration costs Finalised an expressions of interest process to select an agribusiness to operate a mixed primary production enterprise on 5000 hectares at the returnon assets tofund operations and investments and topay shareholder dividends achievementsKey Fully established program alliances with people brought together from multiple parent companies, with a range of procedures and cultures Established strong project and program governance to provide assurance that capital expenditure achieves the best result for Melbourne Water Goals related to Business Efficiency Increasebusiness value through capital and operating efficiency and effective risk management ■ innovation and collaborating with key stakeholders and strategic partners maintainour assets efficiently, in accordance with sustainability principles • • • • • • • • • • • •

Efficiency Business Business

MELBOURNE WATER SUSTAINABILITY REPORT Achieving our vision This year, Melbourne Water introduced At 30 June 2009, the total book value of our Melbourne Water increases business value a more transparent Waterways charge, interest-bearing liabilities (borrowings) was through effective and efficient financial, which also cuts administration costs. $2357.6 million ($1629.2 million last year), risk and asset management and innovative an increase of $728 million. We also revised our emergency capital delivery. management system to improve We achieved a return on equity of 6.4% We are in a sound position to manage our ability to exchange information compared with 3.4% last year. Our gearing through the impacts of the global financial with emergency services, government ratio of 54.1% (45.1% last year) was within crisis. All our borrowings are transacted agencies and the water industry. our target range. with the Treasury Corporation of Victoria Strong financial performance Water Plan operating expenditure whose liabilities are guaranteed by the This year, we made payments to the Victorian Melbourne Water exceeded the regulated Victorian Government. Government of $115.5 million (compared operating expenditure by $17.1 million which A significant impact on our financial results with $136.2 million last year). This consisted was due to the uncontrollable write down was a non-cash writedown of $23.1 million of a $72 million dividend, government of the Defined Benefits Superannuation Fund of the defined benefits superannuation rates and taxes of $24.7 million including ($23.1M) following reductions to the value scheme due to the decline in the global land tax, local government rate equivalents of global share markets. Without this write sharemarket. This was offset by cash and payroll tax, income tax equivalent down we would have met the target for savings in borrowing charges due to payments of $7.9 million and a financial regulating operating expenditure. reduced interest costs and rephasing of accommodation levy of $10.9 million. Collaboration drives capital delivery capital expenditure throughout the year. Operating revenue was $732.2 million Skilled and experienced people from This year, we fully established program ($600.3 million last year), which was Melbourne Water and some of Australia’s alliances to help deliver a vast capital $16.1 million above plan. The key driver leading design and construction companies works program. This alliance model was increased water, sewerage and drainage are combining their knowledge to deliver is based on shared responsibility and revenue resulting from higher prices (partly more than $3 billion of infrastructure collaboration with our strategic partners, offset by reduced water and sewerage flows projects and programs over five years flexibility to resource projects, and due to water conservation). The increased through alliance contracts. access to a deeper pool of expertise. revenue is being used to fund our capital These contracts align values and objectives works such as the Sugarloaf Pipeline. Innovative partnerships are now also of the parties involved and provide incorporated into our asset management. Operating expenditure was $558.5 million commercial incentives for superior As part of our land use strategy for ($506.8 million last year). This was driven performance relating to cost the Western Treatment Plant, we are by increased depreciation and amortisation and timing, and social and implementing plans for a diversified expense as a result of the increase in environmental outcomes. agribusiness on 5000 hectares that the capital program, defined benefit This year, our infrastructure was will protect and improve biodiversity superannuation actuarial loss (due to delivered through: and conservation values while enhancing the global financial crisis) and increased long-term commercial returns. finance costs due to borrowings to fund ••Project teams working on the Sugarloaf our capital works program. However, Pipeline Alliance and Tarago treatment Managing business efficiency operating expenditure was $22 million plant (see Water, page 21), Melbourne Melbourne Water identifies efficiency below plan mainly due to reduced Main Sewer replacement, Northern improvements by monitoring best practice interest rates. Sewerage Project and Eastern Treatment and innovation within and outside the water Plant upgrade (see Sewerage, page 35) industry, and by participating in national Net profit after tax was $128 million ••Bundled projects through program alliances and international benchmarking studies. compared with $67.6 million last year. This is the result of revenue increasing ••Minor works through maintenance Our financial viability is underpinned at a higher rate than operating costs service partners by water supply, sewage treatment, trade as explained above. ••Other traditional project arrangements. waste and waterways charges which generate operating revenue of about Total assets increased to $5427 million $700 million a year. This revenue funds from $4435 million last year, driven water, sewerage and drainage works by an investment of $1089.6 million to protect and improve waterways, ($417.8 million last year) in capital works. wetlands and the bays.

95 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Business Efficiency

Capital expenditure

Corporate 2008/09 Drainage Sewerage 2007/08 Water

2006/07

$M 200 400 600 800 1000

Operating expenditure

Depreciation and amortisation 2008/09 Operational Employee benefits 2007/08 Repairs and maintenance Administrative 2006/07 Finance costs Other expenses $M 200 400 600 800 1000

Program alliances Governance measures Shared service savings Melbourne Water fully established four Melbourne Water established a capital In July, the Victorian Government released program alliances: sewage treatment governance team to ensure that capital the final report of the Victorian Competition and pumping stations, waterways, works are being delivered efficiently and Efficiency Commission (VCEC) into reform water supply and pipelines. and effectively, and to demonstrate of the metropolitan retail water sector, along the value of projects delivered through with the Government’s response. A total of 518 people work in these alliances alliances compared with traditional including designers, project managers, The VCEC report recommended that non-alliance models. engineers and technical and administrative the industry structure be maintained support teams. This year, they began 152 The team established a program of and recommended changes to governance projects valued at $145 million. independent validation of project cost and regulatory arrangements to enhance estimates; managed an audit program the efficiency and management of the Measuring performance to ensure compliance with policy, water sector. Melbourne Water has defined key result procedures and agreed commercial terms; areas that drive the way projects are to The Government’s response to the report administered a continual improvement be delivered. The key result areas – health required the metropolitan water sector program and performance reporting. and safety, value, delivery, sustainability (including Melbourne Water) to examine and environment, stakeholder engagement A review of the selection process of two opportunities for shared services and and culture – are consistent with Melbourne (Sugarloaf and Tarago) project teams and procurement savings. Melbourne Water Water’s goals. four program alliances found that the best and the retail water businesses are working available team was selected and that it would together to identify opportunities to achieve Melbourne Water began quantifying deliver the best commercial outcomes for shared service efficiencies such as supply intangible benefits on non-financial Melbourne Water. The review, conducted in contracts and purchase of renewable energy key result areas, many of which have February, also found that the debrief stage across the metropolitan water industry. not been assessed previously in capital could be improved. projects. Examples include value associated The Essential Services Commission has with community confidence in Melbourne incorporated these prospective savings Water and the Government to deliver major into its pricing decision for the period critical infrastructure projects. 2009/10 to 2012/13.

96 Capital revenue

2008/09 Water sales 2008/09 Sewerage disposal charges 2007/08 Drainage rates 2007/08 Developer charges and contributions 2006/07 2006/07 Biological assets revenue Drainage boundary expansion $M 200 400 600 Other revenue

Changing land use at treatment plants At the Western Treatment Plant, a preferred Reform of waterways charges Melbourne Water is spending $50 million agribusiness will be selected early in 2009/10 Melbourne Water commenced implementing to rehabilitate the former Dandenong to operate a mixed primary production reforms to the waterways and drainage Treatment Plant. The site, which was enterprise on 5000 hectares. The land became charges this year. The basis of the reforms decommissioned in 1996, is being available following a change to sewage will see charges move from property values redeveloped in partnership with VicUrban. treatment processes at the site and the to pricing that better reflects service development of a land use strategy in 2006. levels, increases transparency and reduces Remediation works include a containment administration costs. The new charges cell for the storage of contaminated soils. In 2008/09, an expression of interest process will be phased in progressively and apply The containment cell, which is due to be led to a shortlist of suitable organisations to all residential and rural properties by completed late in 2009, is about 14 metres and requests for proposals. We selected 2013. Further investigations are planned above ground level at its highest point two proponents in May and then began to develop more appropriate charging and covers nine hectares. commercial negotiations. arrangements for non-residential properties. Remediation works have been completed Melbourne Water will submit a proposal The new pricing consists of a fixed waterways on industrial land fronting Ordish Road to the Commonwealth Department of and drainage charge for urban residential and residential land fronting Kirkham Road Environment Water, Heritage and the Arts properties and a lower fixed waterways in Dandenong South. Environmental audit in early 2009/10 seeking approval for the charge for rural properties. This reflects that has been achieved for these land parcels. proposed change from predominantly rural areas benefit mainly from waterway livestock operations to a mixture of Works for the first stage of the residential services and some flood protection, but not agricultural activities at the site. development were completed and 63 the drainage infrastructure predominantly lots sold; the total development will be found in urban areas. 270 lots. Development works have begun These reforms have avoided a one-off on the industrial land, which will be sold cost of about $13 million to update progressively to meet market demand. property values, and a further $12 million every five years to align property values with price determinations.

97 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Business Efficiency

Benjamin Pratt and Gary Flynn, Western Treatment Plant

Security and emergency management A smaller emergency exercise, involving Flexible and efficient way of working Training Melbourne Water and the Country Fire Melbourne Water is replacing traditional In July, we introduced a revised emergency Authority, simulated an acid spill from desktop computers with laptops, backed management system known as the Melbourne a delivery truck at the Winneke water by high-speed remote access to corporate Water General Emergency Management treatment plant. The exercise tested systems and data. System (GEMS), which is the new standard emergency procedures and The staged transition began this year with for the water industry. It improves our communication with the CFA. 170 laptops installed, and the program ability to exchange information with Swine flu is expected to be completed by 2011. emergency services, government agencies After the outbreak of human swine flu and the water industry. The initiative, the first in Melbourne Water’s in April, Melbourne Water conducted Sustainable IT Plan, is expected to reduce Detailed training on the emergency workshops with other metropolitan water power consumption by about 63% due management system for incident businesses to review our pandemic plans, to significantly lower power demands controllers and other senior incident which were established in 2005 in response of modern laptop systems. managers was conducted this year, to bird flu, and set up an incident team. complementing the initial round Once the project is fully implemented, Contingency planning identified people of training in 2007/08. annual power costs will be cut by $33,000. and activities essential to the business Greenhouse gas emissions will be reduced A major emergency exercise conducted in preparation for isolation measures by about 50%, saving 796 tonnes of CO in November focused on the metropolitan and antiviral and vaccine distribution. 2 per year (equivalent to taking 192 cars water industry’s capacity to respond to We reviewed the capacity for remote off the road). a significant terrorist event. The exercise working arrangements, increased successfully tested the new GEMS communication about workplace Laptops also deliver cost reductions, of more procedures and helped achieve Melbourne hygiene and developed contingency than 90%, when people relocate because Water’s compliance with the Terrorism plans for key suppliers. desktops do not need to be moved. (Community Protection) Act 2003. In June, we had two confirmed cases This year, we moved 165 of a total of 275 Improvement actions identified after of swine flu. The incident had no impact telemetry sites to Internet Protocol (IP) the exercise related mainly to clarification on the business. based services. IP services are less costly, and implementation of inter-agency faster and more secure than telemetry responsibilities, and communication or telecommunication field services. of roles and responsibilities under GEMS within Melbourne Water.

98 Key performance indicators – Business Efficiency 2007/08 2008/09 Target Result Target Result Target met Maintain Meet regulated water plan operating 221.1 228 275 292.1 ×1 financial viability expenditure $M Interest cover – EBIT 2.3 1.9 ≥ 1.8 2.4 √ Cash returns to government $M 145 114.6 76.7 92.3 √ Gearing – debt/debt + equity 51.2 45.1 ≤ 57.6 54.1 √ Return on equity % 5.1 3.4 5.1 6.1 √

1 Melbourne Water exceeded the operating expenditure by $17.1 million. This unfavourable variance includes $5.2M of expenditure that was fully funded by Grants. The adjusted unfavourable variance ($11.9M) was due to the uncontrollable write down of the Defined Benefits Fund ($23.1M) as a result of the impacts of the Global Financial Crisis. Had there been no adjustment to the DBF and allowance made for grant income received, Melbourne Water would not have failed this target of $275M.

Benjamin Pratt and Gary Flynn, Western Treatment Plant

99 MELBOURNE WATER SUSTAINABILITY REPORT Corporate Governance and Risk Management

When bushfires raced towards Steve Hosking’s brick home near Yarra Glen on Black Saturday, his 24 years’ experience at Melbourne

Water proved vital ■ “I suppose I went into incident response mode and did what needed to be done,” he says ■ Steve had cleared flammable items from the 1.2 hectare property, placed guards on the gutters, wet the roof and filled baths and sinks inside the Steve Hosking house ■ But when the raging northerlies shifted late in the afternoon, he knew that he, wife Debbie and their 17-year-old son, Aaron, would be in the line of the Kilmore East-Murrundindi fire■ They ensured the windows were shut, drew the curtains and shielded themselves in the middle of the house. The smoke detectors were blaring as thick grey and white smoke surrounded the house ■ The fire roared through the property, burning within metres of the back door before heading north■ The Hoskings and their neighbours spent the next 10 hours extinguishing trees and cleaning up the blackened property. The ground sparked and sizzled like a hot plate and melted the soles of Steve’s boots. A water tank at the top of the property burst and melted, and compost bins were reduced to plastic blobs ■ Steve, who is Diversions Manager, works with rural customers such as farmers who extract water from rivers and creeks. Most of these people have been hit hard by drought and a number face further hardship because of the fires■ “It was a harrowing time, and we are certainly scarred by it,” he says. “But we were lucky compared with the damage and loss others suffered.”

made by the Water Industry The emphasis of the review will Statement of Obligations electronic Board and Committee papers papers and Committee Board electronic team members. to leadership available This a year, fresh approach has been adopted in undertaking review the annual of Board performance that Melbourne Water is required to undertake pursuant to a MinisterWater under for the Act 1994. be on working relationships within the Board and interaction with management and stakeholders.This approach will help of strategy the achievement to facilitate objectives across the organisation. Our governance procedures It is MelbourneWater’s policy to adopt practices governance corporate appropriate and regularly review them to ensure that we are up to date with best practice. management and Board improve to Initiatives of development continued include processes members so that Board Extranet the Board access to all and convenient fast can have Water documents and Melbourne Board also makes Extranet The information.

Increasebusiness value through capital and operating efficiency

■

Code of Conduct. Code

The Corporate Secretary maintains a register maintains a register Secretary Corporate The directors accepted by or invitations of gifts or employees. In maintaining a safe and enjoyable working environment, the Board has approved various behavioural and workplace policies for specific purposes, such as occupational health and safety, and equal and harassment, discrimination distributed policies are These opportunity. and widely publicised to our employees for their information and assistance. and other stakeholders. The Board has Board The and other stakeholders. adopted a Director’s All directors, managers and employees their duties with to perform expected are integrityThis and expectation honesty. extends to dealing with each other, customers, suppliers and the community. and managers employees Water Melbourne must comply with Melbourne Water’s Code of Conduct. directors for exist and procedures Policies identification the to relation in employees and of actual and potential conflicts of interest. Goals related to Corporate Governance and Risk Management Maintainsound governance and effective risk management Ethics and values and employees directors Water’s Melbourne are committed to operating ethically and in the best interestsVictorian of the suppliers employees, customers, Government,

Management and Risk Risk and Governance Governance Corporate Corporate

MELBOURNE WATER SUSTAINABILITY REPORT The following improvements have been Risk management Melbourne Water actively manages strategic made to Board processes this year: Melbourne Water adopts a balanced risk with a strong continuous improvement ••Issues arising from the Board strategy approach to risk management that focus. Melbourne Water’s risks will continue sessions have been followed up to considers our commercial, social to be managed through a robust risk ensure maximum benefit is obtained and environmental responsibilities management framework comprising major from these sessions having regard to short-term and elements such as: certified management long-term goals. systems; appropriately skilled people and ••Additional information has been provided sound operational procedures; a robust to Board members to improve their Risk management is utilised to capital works program and sound technological understanding of risk management ensure Melbourne Water understands applications such as our SCADA, Asset within Melbourne Water our business risks and that they Management and GIS systems; and are managed in a consistent manner. ••The Board charter has been updated close working relationships with the The effective and efficient management to include specific reference to water industry, government departments, of risk is central to the achievement Melbourne Water’s obligations councils, developers and the community. pursuant to the Public Administration of our sustainability vision. Insurance and incident Act 2004 and the Charter of Human Melbourne Water adopts a ‘whole of management framework Rights and Responsibilities Act 2006 business’ approach by considering risks To further mitigate the commercial, social ••Monitoring of governance and on a group, team and project basis. and environmental impact of risk occurrence, performance of capital works Trends and commonalities are also Melbourne Water has a robust emergency and projects and program alliances identified across these areas. incident management framework coupled with within Melbourne Water has To effectively manage risks across the a comprehensive insurance portfolio. been further developed organisation, risk assessments are As part of this framework, Melbourne Water ••A project to improve Melbourne conducted on a regular basis to identify: Water’s legislative compliance has developed comprehensive emergency ••The likelihood or probability reporting has begun and is to be management and contingency plans, which of a risk occurring completed before the end of 2009. are regularly tested and reviewed. ••The consequence of a risk occurring Attestation on Compliance with In addition to local emergency management ••The effectiveness of mitigating the Australian/New Zealand Risk arrangements, Melbourne Water has assisted strategies in place to manage risks. Management Standard in the development of industry response (Minister for Finance Standing Direction The capital prioritisation process uses risk plans and protocols in conjunction with 4.5.5 Risk Management Compliance) assessment as a key tool for determining the the retail water businesses and government need for and relative timing of investments. departments/agencies that prescribe I, Cheryl Batagol, certify that: Operational risks are managed by the roles and responsibilities in the event Melbourne Water has risk management organisation daily and through specialised of a large-scale incident. processes in place consistent with the management systems. Audits and risk reviews Australian/New Zealand Risk Management Melbourne Water seeks to continually Standard; and an internal control system Melbourne Water strategic risk profile reassess its risk profile through external is in place that enables the executive To assist in the strategic management of reviews by subject matter specialists to understand, manage and satisfactorily risks at an organisational level, Melbourne and a comprehensive risk-based control risk exposures; and the risk profile Water has identified 14 key strategic risks internal audit program. of Melbourne Water has been critically (see diagram, page 105) and assessed reviewed within the last 12 months; each risk based on the current risk level In addition to these reviews, Melbourne and the Audit and Corporate Risk (likelihood + consequence) and our current Water undertakes a formal self-assessment Committee verifies this assurance. assessment of control effectiveness. annually to assess the current management of risks and the identification of new or emerging risks and opportunities. The results of these reviews are presented to the Board via the Audit and Corporate Risk Committee, which actively oversees risk management at Melbourne Water. Cheryl Batagol Chairman Melbourne Water Corporation 103 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Corporate Governance and Risk Management

Statements of Obligations Powers and accountability The Board has ratified aCorporate Governance These documents, issued by the Minister Since 1 July 2007, Melbourne Water has Policy and prepared a Statement of Corporate for Water pursuant to Section 4I of the Water operated under the Water Act 1989. Governance outlining Melbourne Water’s Industry Act 1994, formalise Melbourne corporate governance framework and Melbourne Water has two current Water’s obligations to government not arrangements. This statement includes by-laws: Water Supply Protection No 1 prescribed in other legislation or licences. details of Melbourne Water’s policy (2006) and Waterways, Land and Works framework, which specifies that Board Two Statements of Obligations are applicable Protection and Management (2009). approval is required for Melbourne Water to Melbourne Water. These are: The Minister for Water has delegated policies that deal with high-risk issues, 1 The Statement of Obligations applicable powers of management under the Water including the environment and public health. from July 2004 (which has been amended Act relating to licensed private water Key features of the Board’s activities are that: several times) formalises Melbourne Water’s diversions from waterways to Melbourne obligations in relation to the performance Water, effective as of 1 July 1999. ••It has formal Board meetings 11 times a of its functions and exercise of its powers The Water Act and by-laws can be year, undertakes site visits and participates including in the areas of: purchased from the Information in business strategy workshops with Melbourne Water’s leadership team ••The Water Plan Victoria bookshop, 356 Collins Street, ••Governance and risk management Melbourne (telephone 1300 366 356). ••Monthly updates on Board activities are made available to all employees ••Planning and service delivery During 2008/09, the Honourable Tim ••Environmental management Holding, Minister for Water, was the ••Regular strategy workshops are held ••Waterways and drainage Minister responsible for Melbourne Water. with relevant stakeholder groups ••Reporting Melbourne Water works with officials in ••A structured induction program exists ••Compliance. the Department of Sustainability and for new Board and committee members This Statement of Obligations was last Environment, together with those in the ••Development opportunities are made amended in October 2008 to implement Department of Treasury and Finance. available for Board members on an the Victorian Government’s August 2007 Statutory and other reports are provided ongoing basis covering Melbourne Water’s performance announcement that an interim real price ••Board papers are available to all directors against the objectives and performance increase of 14.8% would apply for one seven days before meetings in hard copy indicators in the Corporate Plan. year from 1 July 2008. or electronically 2 The other Statement of Obligations was Primary responsibilities ••Conflicts of interest are declared and a made and issued by the Minister for Melbourne Water’s Board has adopted director does not participate in decisions Water on 26 June 2008 and applicable a charter that defines its role and where such a conflict exists responsibilities within the legislative from 1 July 2009: ••Directors have the right to seek independent framework provided by the Water Act a imposes obligations on Melbourne Water professional advice, at Melbourne Water’s 1989 and other applicable legislation specifically in relation to its water supply expense, in connection with their duties including the Public Administration function established under section 171B and responsibilities Act 2004. The Board makes plans to of the Water Act 1989, and the exercise achieve specific objectives, which include: ••Declarations of pecuniary interest of its powers by directors are made annually, ••The achievement of long-term outcomes b clarifies Melbourne Water’s role as with procedures for updating that based on a triple bottom line approach manager of the Melbourne headworks information between declarations ••The approval of budgets together with key system in relation to the obligations of ••There is an annual review performance indicators linked to objectives the metropolitan retail water businesses of Board performance. as holders of certain water entitlements. ••The approval of annual financial statements Melbourne Water’s Board monitors and the monitoring of performance against compliance with these Statements of objectives and risks Obligations and reports any significant ••Monitoring of safety, health and environmental non-compliance to the Minister. standards and management systems.

104 Melbourne Water strategic risk profile

S3 Water (Quantity) Continue to monitor Actively manage and review High S1 Water (Quality) S3 S2 Environmental damage S6 Health, safety and security S2 S1 S6 S16 Biosolids and byproducts (quality and quantity) S17 2018 greenhouse and renewable energy targets S12 S14 S16 S12 Recycled water (quantity and quality) S7 Key stakeholders and community relationships S15 S17 S5 Financial viability and governance S14 Capital delivery Current risk level S13 S8 S4 S5 S7 S15 Water plan obligations S4 Flood impact knowledge No major concern Maintain watching brief S8 Employee knowledge and skill base S13 Asset lifecycle Low

High Control effectiveness Low

Committees In carrying out its functions for the year, Environment and Public Health Committee The Board has four sub-committees, each the Audit and Corporate Risk Committee This committee assists the Board in comprising at least three non-executive has had unrestricted access to appropriate fulfilling its responsibilities relating to directors, who meet periodically to focus internal and external expert advice. environmental sustainability and public on audit and corporate risk, people and health. The committee encourages continuous At 30 June 2009, the committee comprised safety, environment and public health, and improvement of, and monitors adherence to, Peter Vines (Chairman since October 2008), capital planning and delivery, respectively. Melbourne Water’s environmental and public Merran Kelsall (Chairman prior to October health policies and procedures at all levels. The Managing Director attends meetings 2008), Peter Darvall and Warren Hodgson. of committees by invitation. The Board A report about the activities of the committee At 30 June 2009, the committee comprised approves each committee’s charter. in fulfilling its charter is prepared annually. Bruce Cohen (Chairman since October 2008), Mary Anne Hartley (Chairman until Audit and Corporate Risk Committee People and Safety Committee (previously October 2008), Cheryl Batagol and Rob Joy The role of the Audit and Corporate Human Resources and Safety Committee) (independent member). A report about the Risk Committee is to assist the Board of The name of this committee was changed activities of the committee in fulfilling its Directors in fulfilling its responsibilities in April 2009 to better reflect its role in charter is prepared biennially. relating to risk management, financial implementation of the strategic framework. management and operational control This committee assists the Board in fulfilling Capital Planning and Delivery Committee practices, and compliance with relevant its responsibilities relating to human resources This committee assists the Board in fulfilling laws and regulations. Key responsibilities issues, remuneration, and workplace health its governance responsibilities relating include reviewing Melbourne Water’s and safety. For details of directors’ and to the planning and delivery of capital approach to the management of economic executives’ remuneration, refer to notes projects. At 30 June 2009, the committee and business risks, reviewing and evaluating 38 and 39 of the Financial Report. comprised Terry Larkins (Chairman since the adequacy and effectiveness of internal, October 2008), Peter Darvall (Chairman At 30 June 2009, the committee comprised operating, accounting and compliance until October 2008), Peter Vines and Warren Hodgson (Chairman since October controls and risk management practices, Bruce Cohen. A report about the activities 2008), Terry Larkins (Chairman until October and ensuring the organisation is operating of the committee in fulfilling its charter 2008), Cheryl Batagol and Merran Kelsall. within an effective governance framework. is prepared annually. A report about the activities of the committee in fulfilling its charter is prepared biennially.

105

Merran Kelsall B.Com (Hons), FCA, MBA Deputy Chairman Merran Kelsall was appointed to the Board independent an Kelsall, Ms 2001. January 1 on company director and consultant, has in financial services, experience considerable partner She is a former health and utilities. of a chartered accounting firm. Bruce Cohen PhD (Pub Pol) (Hons), M.Comm LL.B (Hons), Director Bruce Cohen was reappointed to the Board on 1 October 2008. Dr Cohen was previously a Board member from JanuaryAugust to 2007. Dr Cohen is a barrister and a principal in private practice in the area of public policy. He is aand director VicTrack, of was previously a directorVENCorp of and Snowy Hydro Limited.

Melbourne Fund and a directorTintern of Schools. Ms Batagol has also been on Victoria’s Environment EPA Council Board and the Board of the Cooperative Research Centre for Pollution Control and Management. Cheryl Batagol was appointed Chairman on 1 January 2004. Ms Batagol has more than management waste the in experience years’ 30 and industrial including commercial, industry, trade waste management and treatment. Victoria She is Deputy Chair of Sustainability and was previously Chair of EcoRecycle Victoria and a Water director West of City and SouthernMs BatagolWater. Rural is a memberVictorian of the Catchment Management Council, a member of the Australian IndustryVictorian Group Branch Council, a trustee of the Sustainable Cheryl Batagol Chairman

Statement of issued by the Minister, directors and the Managing Director. andThe BoardMinister. of Directors currently comprises a non-executive Chairman, seven non-executive Board. Pursuant to a Obligations the outcomes of the performance review are reported toTreasurer the are made available for Board members. This external year, expertise was utilised in the performance assessment of the conducted of the performance of the Board Board the of performance the of conducted and of individual members. as a whole Professional development opportunities Board, subject to the approval of the Minister Minister the of approval the to subject Board, term a for Treasurer, the with consultation in are reviews Annual years. of up to five In making new appointments to the Board, appointments to the Board, In making new has the the Board ensures the Government experience. and skills of combination necessary the is appointed by Director Managing The Directors are eligible for reappointment for subsequent terms. The inMinister consultationWater, for with appointsTreasurer, the our directors for Victorian and the years terms of up to four Government sets their remuneration. 106 Board of Directors of Board

MELBOURNE WATER SUSTAINABILITY REPORT Left to right: Warren Hodgson Peter Vines Cheryl Batagol Peter Darvall Rob Skinner Merran Kelsall Bruce Cohen Mary Anne Hartley

Peter Darvall Warren Hodgson Peter Vines AO, BE (Hons) Melb, MS Ohio State Director Director MSE MA PhD Prin. DipEd FIE Aust. Warren Hodgson was appointed to the Board Peter Vines was appointed to the Board FTSE HonLLD on 1 July 2008. Mr Hodgson was previously in October 2005. Mr Vines has extensive Director Secretary, Department of Innovation, experience in chief executive and executive Peter Darvall was appointed to the Board Industry and Regional Development, and management positions within the energy on 1 January 2004. Professor Darvall was before that, Under Secretary, Department and infrastructure sector, including previously the Vice-Chancellor and of Treasury and Finance. Mr Hodgson has a directorships in various utility companies President of Monash University as well background in the manufacturing industry, in Australia and internationally. He is as Vice-President for Research and qualifications in science and engineering, currently a non-executive director Development and Dean of Engineering and is a graduate of the Australian Institute of Northern Utility Power and Water at Monash. He has served on the boards of Company Directors. Corporation and JackGreen Limited. of many research organisations, including Terry Larkins Rob Skinner the Cooperative Research Centres for PSM DipCE, BE (Hons), MSc (Birm) Catchment Hydrology, Water Quality Director Managing Director and Treatment, and Freshwater Ecology. Terry Larkins was appointed to the Board Rob Skinner was appointed Managing Mary Anne Hartley on 1 January 2004. Mr Larkins was appointed Director of Melbourne Water in February BA (Hons), LLB (Hons) Chairman of Western Water in 2001. He has 2005. Before joining Melbourne Water, Director extensive experience in the water industry he was Chief Executive of Kingston City Mary Anne Hartley was appointed to the and local government including Secretary of Council for 10 years, and held a number Board on 1 July 2002. A practising barrister, the former Gisborne Water Board and Chief of senior positions including Chairman Ms Hartley has been a director of several Executive of the Shire of Gisborne. He has of Southern Rural Water, General government corporations in the maritime been a member of the VicWater Board since Manager Water Services with Melbourne and energy sectors. Before joining the 2005 and chair from 2007/08. He is active Water, Chief Executive of Dandenong Bar in 1997, Ms Hartley was a partner in a number of community groups including Valley and Western Port Authority, in a national law firm where she health services, conservation and education. and Chief Executive of the Coode practised insurance and health law. Island Review Panel.

107 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Organisational Structure

The organisational structure introduced Managing Director General Manager Asset Planning in May 2008 has assisted in ensuring Rob Skinner Paul Pretto that strategic planning and efficiency Responsible for planning for the assets General Manager Strategic Planning drives our performance and the delivery and systems required to meet the medium Ben Furmage of our long-term vision. to long-term business objectives and Responsible for strategies and long-term strategies established by Strategic The structure aims to facilitate a renewed projects to achieve sustainable outcomes Planning. This includes capital investment focus on innovation to provide financial for the organisation and community prioritisation for the creation of new and environmental sustainability. It is based including corporate strategy, pricing assets to meet growth, compliance on the idea that our people and contractors and regulation and major planning and risk management objectives, responsible for operating and managing strategies across water and sewerage and the requirements and parameters assets should have responsibility for systems, energy and greenhouse for managing our existing asset base. maintaining them. management and the adoption of innovative technologies and General Manager Capital Delivery scientific research. David Morse Responsible for the delivery of our capital works program including the management of the program alliances to ensure delivery on time, on budget and functionality of our capital works.

108 Far left: Rob Skinner Top, left to right: Ben Furmage Paul Pretto David Morse Tony Antoniou Bottom, left to right: Chris Chesterfield Malcolm Haynes Leigh Keath Anne Randall

General Manager General Manager Business Services General Manager Communications Operations & Maintenance Malcolm Haynes & Community Relations Tony Antoniou Responsible for the support of all areas of Anne Randall As the custodian of our existing assets, Melbourne Water by developing, implementing Responsible for developing and implementing responsible for the operation and and maintaining strategies, systems, policies communication programs including policy, maintenance of our water, sewerage, and procedures in relation to finance, supply, community education, media relations, waterways and drainage assets information technology, risk and insurance, website development and publications. in accordance with public health, property, legal services (including Board environmental, safety and regulatory support) and the management of the obligations consistent with Werribee Agriculture business. community expectations. General Manager Human Resources General Manager Waterways Leigh Keath Chris Chesterfield Responsible for health and safety, culture Responsible for managing stormwater and leadership programs and delivering and floodplains to protect the environment a great experience for employees. Also and provide a safe level of flood protection responsible for payroll, recruitment, for communities; planning infrastructure training, graduate and traineeship to service urban development; and programs programs, internal communications, to protect and improve the health of the and reward and recognition schemes. region’s rivers, creeks and wetlands.

109

Notes to the Financial Report Statement by Directors and Chief Finance Officer Auditor-General’s Report Five Year Financial Year SummaryFive Directors’ Report Financial Statements Income Statement Balance Sheet Cash Flow Statement Statement of Changes in Equity

119 115 116 117 118 163 164 111 112

Report Financial

MELBOURNE WATER SUSTAINABILITY REPORT Five Year Financial Summary

Income Statement 2009 2008 2007 2006 2005 for the year ended 30 June $M $M $M $M $M

Revenue and other income 732.2 600.3 588.3 592.6 525.6 Profit from continuing operations before income tax expense 173.8 93.5 177.4 227.7 192.7 Less: Income tax expense 45.8 25.9 43.9 59.0 61.3 Net profit 128.0 67.6 133.5 168.7 131.4 Dividends paid 72.0 99.4 86.6 97.0 41.3

Balance Sheet as at 30 June Current assets 108.7 65.8 56.3 51.3 53.2 Non-current assets 5,318.6 4,369.7 3,912.6 3,717.4 3,579.5 Total assets 5,427.3 4,435.5 3,968.9 3,768.7 3,632.7

Current liabilities 862.3 541.5 382.2 247.2 302.3 Non-current liabilities 2,557.0 1,907.1 1,700.6 1,681.4 1,523.1 Total liabilities 3,419.3 2,448.6 2,082.8 1,928.6 1,825.4

Net assets 2,008.0 1,986.9 1,886.1 1,840.1 1,807.3 Total equity 2,008.0 1,986.9 1,886.1 1,840.1 1,807.3

111 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Directors’ Report

Directors The Directors of the Corporation in office, at the date of this report, are:

Cheryl Batagol Warren Hodgson Bruce Cohen (Chairman) (appointed 1 July 2008) (re-appointed on 1 October 2008)*** Merran Kelsall Mary Anne Hartley Robert Skinner (Deputy Chairman) Terry Larkins (Managing Director) Peter Darvall Carolyn Schultz (resigned in September 2008) Peter Vines

Particulars of the Directors’ qualifications, experience and special responsibilities are set out on pages 106–107 of this report.

Directors’ meetings During the financial period, the Corporation held 11 meetings of Directors.

Attendance at meetings of the Board and its Committees were:

Principal Board Audit & Corporate People & Safety Environment & Public Capital Planning & Risk Committee Committee Health Committee Delivery Committee

Attended Maximum Attended Maximum Attended Maximum Attended Maximum Attended Maximum Possible Possible Possible Possible Possible

Cheryl Batagol 11 11 5* 5 2 3 4 4 3* 3 Merran Kelsall 11 11 5 5 2 3 - - 2* 3 Bruce Cohen*** 7 8 - - - - 2 2 2 2 Peter Darvall 11 11 5 5 - - - - 3 3 Mary Anne Hartley 11 11 - - - - 4 4 - - Warren Hodgson^^ 11 11 2 3 1 1 - - - - Terry Larkins 10 11 2** 2 3 3 - - 3 3 Carolyn Schultz^ 3 3 - - - - 1 1 - - Peter Vines 11 11 4 5 - - - - 3 3 Robert Skinner 10 11 3* 5 3* 3 4* 4 1* 3

* Attended by invitation ** Replaced on the Committee by Warren Hodgson after August 2008 *** Re-appointed as Board Member and a Committee Member (People & Safety and Environment & Public Health) from 1 October 2008; previously appointed as Board member until 21 August 2007 ^ Did not renew her appointment to the Board (and accordingly Committees) when it ended in September 2008 ^^ Appointed to the Board on 1 July 2008

112 Director benefits Principal activities Sewage treatment plants No Director has received or become entitled The Corporation is owned by the Victorian The Corporation’s compliance with EPA to receive a benefit (other than a benefit Government. The Corporation manages Victoria discharge parameters was 100 included in Notes 38a and 38b to the Melbourne’s water supply catchments, per cent at the Eastern Treatment Plant financial statements) because of a contract removes and treats most of Melbourne’s and 100 per cent at the Western Treatment that the Director, a firm of which the Director sewage, and manages rivers, creeks and Plant. The other discharge licence is a member, or an entity in which the major drainage systems throughout the requirements were met during the year. Director has a substantial financial interest, Port Phillip and Westernport region. The Corporation commenced a 12 month has made (during the period ended 30 June The Corporation also provides water trial of tertiary treatment options in 2009 or at any other time) with: and sewerage services to Melbourne’s February 2008 under a EPA Victoria three retail water businesses: City West a the Corporation; or Research and Development Approval. Water Ltd, South East Water Ltd and b an entity that the Corporation controlled, This was completed and information to Yarra Valley Water Ltd. or a body corporate that was related to the support the Works Approval application Corporation, when the contract was made Operating results and dividend to upgrade to tertiary treatment at the or when the director received, or became The Corporation’s net profit, after providing Eastern Treatment Plant was prepared entitled to receive, the benefit. for income tax, was $128 million (2007/08: during the year. This will be provided $67.6 million). The proposed interim and to The Corporation is subject to significant Director and officer liability insurance final dividend in relation to the 2008/09 environmental regulation in respect of During the financial year, the Corporation financial year is $79.9 million, of which managing its sewage treatment plants, paid insurance premiums in respect of $14.2 million has been already paid EPA Victoria in 2009/10 for independent director and officer liability insurance. in the current financial year, leaving review and finalising the application. The policy does not specify a premium $65.7 million final payable (2007/08: for individual directors and officers. Ramsar sites at Western Treatment $57.8 million interim and final payable). Plant and Edithvale Seaford Wetlands The director and officer liability insurance This final amount payable is subject to Melbourne Water has two sites that are policy provides cover against all costs final determination by the Treasurer after listed under the Ramsar International and expenses involved in defending legal consultation with the Corporation’s Board Convention and these are broadly managed actions and any resulting payments arising of Directors and the Minister for Water within the parameters of the Convention’s from a liability to persons (other than and consequently has not been booked “wise use” test, which aims to protect the Corporation) incurred in their position as a provision as at 30 June 2009. wetlands with internationally significant as director or officer unless the conduct Review of operations environmental values. involves a wilful breach of duty or an The Directors’ review of the Corporation’s improper use of information or position The Commonwealth Department of operations during the financial period to gain advantage. Environment, Water, Heritage and the Arts ended 30 June 2009, and the results has approved a detailed Compliance Plan The terms of the insurance policy prohibit of those operations are set out in the to manage environmental values at the the disclosure of the nature of the liabilities Managing Director’s overview on page 7 Western Treatment Plant. This Compliance insured and the amount of the premium. of this report. Plan was audited last year and a revised Interest in contracts State of affairs Plan developed. Actions taken during No contracts involving Directors’ interests There were no significant changes in the the current year complied with the were entered into since the end of the state of affairs of the Corporation during revised Plan and the annual report previous financial year, or existed at the the financial period ended 30 June 2009. on the Plan was completed in June. end of the financial year, other than the Environmental regulation transactions detailed in Notes 38a and The Corporation is subject to significant 38b to the Financial Statements. environmental regulation in respect of managing its sewage treatment plants, maintaining environmental flow requirements and managing Ramsar wetlands. Information on these topics is included in Melbourne Water’s 2008/09 Sustainability Report.

113 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Directors’ Report

The Edithvale-Seaford Wetlands Management Contracts commenced to which The outcomes reported by contractors Plan was developed in 2000 to ensure that the VIPP applied: under VIPP included: site activities are managed within parameters During the financial year 2008/09, ••An overall level of local content of 97.5 of the Ramsar International Convention’s the Corporation commenced 25 per cent of the total value of the contracts. “wise use” test. The Plan was revised and contracts totalling $432.2 million ••1144 full time equivalent jobs. updated during 2008/09 to meet Department in value to which VIPP applied. of Environment, Water, Heritage and the Arts The number and value of these ••All committed skills and technology guidelines. This included developing an relate to 9 Metropolitan contracts transfer were achieved for these contracts. Ecological Character Description for the and 2 Regional Victoria contracts. These skills included training in: site. Actions required under the updated --Operation and maintenance of the mini The commitments by contractors Plan are being implemented. hydro technology for Melbourne Water under VIPP included: operations staff; Dandenong Treatment Plant ••An overall level of local content --Mini hydro installation and commissioning The Corporation is rehabilitating the of 90.3 per cent of the total value tasks for Melbourne Water engineering staff; former Dandenong Treatment Plant site of the contracts. for redevelopment in partnership with --GPS use and development, plant operation ••1170 full time equivalent jobs. VicUrban for both residential and industrial and laser use; ••A number of benefits to the Victorian purposes. Remediation works to stockpile --The mixing of biofilter media to meet economy in terms of skills and contaminated soils and biosolids, which specifications and casting of the corrosion technology transfers were committed was required under a Works Approval from liner directly into the precast panels; EPA Victoria continued and this will be by contractors including: --Brownfield lift and relay skills, pipe completed in the 2009/10 financial year. --Skills relating to welding and pipelaying boring and trenchless technology. techniques, hydraulic operations and Environmental flow requirement – repairs, wastewater treatment process bulk entitlements and hydrographic services; The Corporation has bulk entitlements to water from the Thomson, Maribyrnong --Training opportunities identified for GPS and Yarra Rivers. During the 2007/08 use, plant operation, mini hydro technology, year, the Minister for Water qualified assembly process for gravity belt thickeners the environmental flow requirements and tunnel boring machine operation. due to drought conditions. During Contracts completed to which Cheryl Batagol 2008/09 the qualified requirements the VIPP applied: Chairman continued to be met. During the financial year 2008/09, Environmental incidents the Corporation completed 11 There were no environmental incidents contracts totalling $72.2 million to report during the financial period in value to which VIPP applied. ended 30 June 2009. The number and value of these relate to 9 Metropolitan contracts and 2 Implementation of the Victorian Robert Skinner Regional Victoria contracts. Industry Participation Policy (VIPP) Managing Director In accordance with the Victorian Industry Participation Policy Act 2003, the following VIPP contracts commenced or were completed during the financial year:

114 Income Statement

For the year ended 30 June 2009 Notes 2009 2008 $000 $000

Revenue 3a 716,107 589,307 Other Income 3b 16,132 10,978

Depreciation and amortisation expenses 4 (105,783) (87,497) Operational expenses 4 (110,436) (112,998) Employee benefits expenses 4 (65,356) (60,858) Repairs and maintenance expenses 4 (57,587) (50,828) Administrative expenses 4 (35,648) (33,431) Finance costs 4 (122,027) (100,838) Other expenses 4 (61,620) (60,324) Net result from ordinary activities before tax 173,782 93,511

Income tax expense 5 (45,796) (25,869) Profit for the year 26 127,986 67,642 The above Income Statement should be read in conjunction with the accompanying notes.

115 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Balance Sheet

As at 30 June 2009 Notes 2009 2008 $000 $000

Assets Current assets Cash and cash equivalents 6, 27 166 350 Trade and other receivables 7a, 27 85,381 48,097 Other current assets 8 16,951 6,266 Other financial assets 10, 27 253 483 Current tax assets 5c - 1,320 Biological assets 11 5,380 9,162 108,131 65,678 Non-current assets classified as held for sale 9 614 94 Total current assets 108,745 65,772

Non-current assets Biological assets 11 7,877 11,467 Property, plant and equipment 12a 5,295,045 4,342,672 Intangible assets 12b 9,072 2,372 Other receivables 13, 27 5,236 37 Other non-current assets 14 1,353 - Defined superannuation benefit asset 15, 36 - 13,169 Total non-current assets 5,318,583 4,369,717 Total assets 5,427,328 4,435,489

Liabilities Current liabilities Trade and other payables 16, 27 314,587 186,903 Interest bearing liabilities 17, 27 455,446 315,756 Provisions 18, 34, 35 36,434 38,876 Current tax liability 5c 55,800 - Total current liabilities 862,267 541,535

Non-current liabilities Trade and other payables 19, 27 81,360 8,530 Interest bearing liabilities 20, 27 1,902,197 1,313,443 Provisions 21, 34, 35 7,692 10,071 Net deferred tax liabilities 22 555,825 575,031 Defined superannuation benefit liability 23,36 9,931 - Total non current liabilities 2,557,005 1,907,075 Total liabilities 3,419,272 2,448,610 Net assets 2,008,056 1,986,879

Equity Contributed equity 24 556,865 591,567 Reserves 25 162,410 164,323 Retained profits 26 1,288,781 1,230,989 Total equity 2,008,056 1,986,879 The above Balance Sheet should be read in conjunction with the accompanying notes. 116 Cash Flow Statement

For the year ended 30 June 2009 Notes 2009 2008 $000 $000

Cash flows from operating activities Receipts from customers (inclusive of goods and service tax) 741,598 568,240 Payments to suppliers and employees (inclusive of goods and service tax) (387,539) (368,760) Income tax paid (7,882) (6,270) Interest received 3a 74 45 Interest and other costs of finance paid (123,493) (97,357) Other revenue 56,049 67,719 Net cash inflow from operating activities 41 278,807 163,617

Cash flows from investing activities Payment for property, plant, equipment and works in progress (939,213) (367,799) Proceeds from sale of property, plant and equipment 3,778 2,084 Net cash (outflow) from investing activities (935,435) (365,715)

Cash flows from financing activities Proceeds from borrowings 1t, 2 1,555,375 841,200 Repayments of borrowings 1t, 2 (823,475) (536,200) Repayments for outstanding finance lease liability (3,456) (3,355) Dividends paid 31 (72,000) (99,400) Net cash inflow from financing activities 656,444 202,245

Net (decrease)/increase in cash held (184) 147 Cash and cash equivalents at the beginning of the financial year 350 203 Cash and cash equivalents at the end of the financial year 6 166 350 The above Cash Flow Statement should be read in conjunction with the accompanying notes.

117 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Statement of Changes in Equity

For the year ended 30 June 2009 Notes 2009 2008 $000 $000

Total equity at the beginning of the financial year 24, 25, 26 1,986,879 1,886,148 Net (decrement)/increment in contributed equity 24 (34,702) (8,580)

Reserves Asset revaluation reserve Revaluation increment/(decrement) on non-current assets 25 - 154,749 Revaluation reserves transferred to retained profits on derecognition of asset 25 (1,806) (573) Deferred tax on revaluation 25 - (13,714)

Cash flow hedge reserve (Loss)/gain taken to equity 25 (107) 34 Net (expense)/income recognised directly in equity (36,615) 131,916

Retained Profits Transfer from asset revaluation reserve 26 1,806 573 Profit for the year 26 127,986 67,642 Total recognised income and expense for the year 93,177 200,131

Dividends paid 26, 31 (72,000) (99,400) Total equity at the end of the financial year 2,008,056 1,986,879 The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.

118 Notes to the Financial Report

1 Summary of Significant v Historical cost convention ii Drainage rates Accounting Policies These financial statements have Drainage rate revenue is recognised in the a Basis of Accounting been prepared under the historical year for which the rate is levied. Rates are i General cost convention, as modified by the levied either quarterly or annually, based This financial report of Melbourne Water revaluation of certain classes of property, on the net annual value or site value of Corporation is a general purpose financial plant and equipment, biological assets the property as at 30 June 1990. Drainage report that consists of an Income Statement, and financial instruments. revenue is collected by various retail water Balance Sheet, Statement of Changes in businesses on behalf of the Corporation. vi Critical accounting estimates Equity, Cash Flow Statement and Notes The Corporation engages the Victorian The preparation of financial statements accompanying these Statements. This Auditor-General’s Office to undertake in conformity with AIFRS requires the use general purpose financial report complies an annual audit of collection processes of certain critical accounting estimates. with Australian equivalents to International and procedures by each of the retailers It also requires management to exercise Financial Reporting Standards (AIFRS), to ensure timely billing and collection. its judgement in the process of applying other authoritative pronouncements of A lien is held over each property to the Corporation’s accounting policies. the Australian Accounting Standards Board, ensure that any outstanding amounts Areas involving a high degree of estimates Urgent Issues Group Interpretations and the are recovered upon sale of the property. and assumptions which can materially requirements of the Financial Management impact the financial statements relate iii Developer charges and contributions Act 1994 and applicable Ministerial to the actuarial assumptions used to Developer charges and contributions consist Directions. This financial report has determine the Corporation’s defined of assets received free of charge or for nominal been prepared on accrual and going superannuation benefit asset and consideration and are recognised as revenue concern bases. The financial statements employee benefit provisions. These at fair value on completion of works and were authorised for issue by the Directors assumptions and their related carrying their acceptance by the Corporation. Cash on the 21st day of August 2009. amounts are discussed in Notes 1k, contributions are recognised when received. ii Accounting policies 18, 21, 34, 35 and 36. iv Interest receivable Unless otherwise stated, all accounting b Revenue Recognition Interest receivable is accrued in accordance policies applied are consistent with those i Water sales and sewage disposal charges with the terms and conditions of the of the prior year. Where appropriate, Water sales and sewage disposal charges underlying financial instrument or comparative figures have been amended consist of a variable metered component other contract. to accord with current presentation and a fixed fee. The metered usage revenue and disclosure made of material changes v Net gain from disposal of property, is recognised when the service has been to comparatives. plant and equipment used with settlement from date of invoice. Property sales are recognised on signing iii Classification between current The fixed fee is recognised on a monthly of an unconditional contract of sale. and non-current basis with settlement at 14 days. Collateral Debtors are provided with commercial In the determination of whether an asset is not obtained for this class of debtor. terms and are recognised in the Income or liability is current or non-current, Water sales and sewage disposal charges Statement on a net basis of sale consideration is given to the time when revenue is collected from the various proceeds less costs. each asset or liability is expected to retail water businesses. be realised or paid. The asset or liability vi Government grants and contributions The Essential Services Commission is classified as current if it is expected Grants from the Government are regulates the prices and service standards to be turned over within the next twelve recognised at their fair value where for the provision of water and sewage months, being the Corporation’s operational there is a reasonable assurance that services. The Commission’s general cycle – see Note 1k for a variation in the grant will be received and the regulatory powers are set out in: relation to employee benefits, and Note Corporation will comply with all 1t for a variation in relation to borrowings. ••the Essential Services Commission Act 2001; attached conditions. ••Part 1A of the Water Industry Act 1994; and iv Rounding Government grants relating to costs Unless otherwise stated, amounts in the ••a Water Industry Regulatory Order made are included in non-current liabilities report have been rounded to the nearest under section 4D of the Water Industry Act. as deferred income and are recognised thousand dollars. in the Income Statement over the period necessary to match them with the costs that they are intended to compensate.

119 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Notes to the Financial Report

Government grants relating to the purchase Cost includes such expenditure that is iv Impairment or construction of property, plant and directly attributable to the acquisition All assets are assessed for indicators of equipment are included in non-current of the items. The definition of directly impairment on an annual basis. Such assets liabilities as deferred income and are attributable in regard to labour and are tested to ascertain whether the carrying recognised in the Income Statement overhead costs has been revised in amount exceeds their recoverable amounts. on a straight line basis over the expected the current year as per 1z. Cost may At 30 June 2009, no indicators of impairment lives of the related assets. also include transfers from equity of were present. any gains/losses on qualifying cash c Finance Costs v Revaluations flow hedges on foreign currency Finance costs are recognised as expenses Revaluation increments are credited directly purchases of plant and equipment. in the period in which they are incurred. to equity in the revaluation reserve, except Finance costs include interest on short- Subsequent costs are included in the that, to the extent that an increment reverses term and long-term borrowings, finance asset’s carrying amount or recognised a revaluation decrement in respect of the lease charges, financial accommodation as a separate asset, as appropriate, only same asset previously recognised as an levy and Treasury Corporation of Victoria when it is probable that future economic expense in determining the net result, administration fee. benefits associated with the item will the increment is recognised as revenue flow to the Corporation and the cost in determining the net result. d Property, Plant and Equipment of the item can be measured reliably. i Recognition and Measurement of Assets Revaluation decrements are recognised All other subsequent costs are charged Property, plant and equipment represent immediately as expenses in the net result, to the Income Statement during non-current assets comprising land, buildings, except that, to the extent that a credit the financial period in which they water, sewerage and drainage infrastructure, balance exists in the revaluation reserve are incurred. plant and equipment assets used by the in respect of the same class of asset, they Corporation in its operations. Items with The fair value of land and buildings is are debited to the revaluation reserve. a cost or value in excess of $500 and determined as the amount for which vi Non-current assets held for sale a useful life of more than one year are an asset could be exchanged between Non-current assets that are classified as recognised as an asset. All other assets knowledgeable willing parties in an arm’s held for sale are stated at the lower of acquired are expensed. length transaction. Crown land is measured their carrying amount and fair value less with regard to the property’s highest and ii Repairs and maintenance costs to sell, as their carrying amount best use after due consideration is made Routine maintenance, repair costs and minor will be recovered principally through for any legal or constructive restrictions renewal costs are expensed as incurred. a sale transaction, rather than through imposed on the asset. Where the repair relates to the replacement continuing use. The Corporation considers of a component of an asset and the cost Infrastructure assets are measured at that the sale of these assets are highly exceeds the capitalisation threshold, the cost less any accumulated depreciation probable and the assets are available for cost is capitalised and depreciated. and any accumulated impairment losses. immediate sale in their present condition. These assets are not depreciated or iii Valuation of non-current physical assets The fair value of the remaining plant amortised while classified as held for All non-current physical assets except and equipment (consisting of plant sale and are presented separately from infrastructure assets are recognised initially and equipment, leasehold improvements other assets in the Balance Sheet. at cost and subsequently revalued at fair and works in progress) is determined value less accumulated depreciation based on cost less any accumulated e Depreciation and Amortisation and impairment in accordance with depreciation and any accumulated of Non-Current Assets the requirements of FRD103D. impairment losses. This is deemed the Where assets have separate identifiable most appropriate basis to approximate components that have distinct useful Revaluations are conducted using fair value given: lives and/or residual values, a separate management expertise and are depreciation rate is determined for classified as a managerial revaluation. ••there is no evidence that a reliable market each component. Any accumulated depreciation at the based fair value or other relevant fair value date of revaluation is eliminated against indicators for these assets exists; and the gross carrying amount of the asset ••these assets are acquired and disposed of and the net amount is restated to the frequently, typically have short depreciable revalued amount of the asset. lives, and these assets are relatively low in value (with the exception of works in progress) compared to land and buildings and infrastructure assets. 120 Land is not depreciated. Depreciation ii Operating leases h Receivables on other assets is calculated using the Leases in which a significant portion of the All receivables are recognised at the amounts straight line method to allocate their risks and rewards of ownership are retained receivable less any allowance for doubtful cost or revalued amounts, net of their by the lessor are classified as operating leases. debts. Collectibility of receivables is reviewed residual values, over their estimated Payments made under operating leases on an ongoing basis. Debts which are known useful lives, commencing from the (net of any incentives received from the to be uncollectible are written-off. A provision time the asset is held ready for use. lessor) are charged to the Income Statement for doubtful debts is established when there The assets residual values and useful on a straight-line basis over the period of is objective evidence that the Corporation lives are reviewed annually, and the lease, in the periods in which they are will not be able to collect all amounts due adjusted if appropriate, at each incurred, as this represents the pattern of according to the original terms of receivables. Balance Sheet date. benefits derived from the leased assets. The amount of the provision is the difference between the asset’s carrying amount and the Major depreciation and amortisation iii Lease incentives present value of estimated future cash flows, periods used are listed below and are In the event that lease incentives are discounted at the effective interest rate. consistent with the prior year, unless received to enter into operating leases, The amount of the provision is recognised otherwise stated: such incentives are recognised as a liability. in the Income Statement. Buildings and leasehold improvements The aggregate benefits of incentives are 5 to 80 years recognised as a reduction of rental expense i Inventories on a basis which reflects the time pattern Stores Plant and equipment in which economic benefits from the leased Stores and materials are used in the 3 to 50 years asset are consumed. construction of new works and for the Infrastructure assets repair and maintenance of existing assets. iv Leasehold improvements 20 to 150 years All stores are valued at the lower of cost Leasehold improvements are recognised Intangible assets and net realisable value. at cost less accumulated depreciation 3 to 5 years and accumulated impairment losses j Payables f Leased Assets and are amortised over the unexpired i Trade and Other Payables i Finance leases period of the lease or the estimated Payables are recognised when the Leases of property, plant and equipment, useful life of the improvement, Corporation becomes obliged to make where the Corporation has substantially whichever is the shorter. future payments resulting from the all the risks and rewards incidental to purchase of goods and services. g Cash and Cash Equivalents ownership, are classified as finance leases. For the purposes of the Cash Flow Statement, ii Creditors and accruals Finance leases are capitalised at the lease’s cash and cash equivalents include cash on These amounts represent liabilities for goods inception at the lower of the fair value hand, deposits held at call with financial and services provided to the Corporation of the leased property and the present institutions, other short-term, highly liquid prior to the end of the financial year, which value of the minimum lease payments. investments with original maturities of three are unpaid. The amounts are unsecured and The corresponding rental obligations, months or less that are readily convertible are usually paid within 30 days of recognition net of finance charges, are included in to known amounts of cash and which are or in accordance with contract terms. the Balance Sheet. Each lease payment subject to an insignificant risk of change is allocated between the liability and iii Interest payable in value. Bank overdrafts (if applicable) finance charges so as to achieve a constant Interest is accrued in accordance with the are shown within interest bearing liabilities rate on the finance balance outstanding. terms and conditions of the underlying on the Balance Sheet. The interest element of the finance cost financial instruments or other contract. is charged to the Income Statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under finance lease is amortised on a straight line basis over the estimated useful life of the asset.

121 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Notes to the Financial Report

k Employee Benefits iii Long service leave The amount brought to account in i Salaries and annual leave The liability for long service leave is recognised the Income Statement in respect Liabilities for salaries, including non-monetary in the provision for employee benefits and is of superannuation represents the benefits expected to be settled within 12 measured as the present value of expected contributions made to the months of the reporting date, are recognised future payments to be made in respect of superannuation plan, adjusted in employee benefit liabilities in respect of services provided by employees up to the by the movement in the defined employees’ services up to the reporting date reporting date. Consideration is given to benefit plan liability or asset. and are measured at the amounts expected expected future salary levels, experience v Termination benefits to be paid when the liabilities are settled, of employee departures and periods of Liabilities for termination benefits at their nominal values. Employee benefits service. Expected future cash payments are recognised when a detailed plan which are not expected to be settled within are discounted using interest rates for the termination has been developed 12 months are measured as the present attached to national government and a valid expectation has been raised value of the estimated future cash outflows guaranteed securities as at the reporting in those employees affected that the to be made by the entity, in respect of date with terms to maturity that closely terminations will be carried out. services rendered by employees up to the match the estimated future cash outflows. The liabilities for termination benefits reporting date. Regardless of the expected Provisions made for unconditional long are recognised as payables in the timing of settlements, provisions made in service leave (where the employee has provision for employee benefits. respect of employee benefits are classified a present entitlement to the benefit) are as a current liability, unless there is an classified as a current liability. The non- Liabilities for termination benefits expected unconditional right to defer the settlement current liability represents long service to be settled within 12 months are measured of the liability for at least 12 months after leave entitlements accrued for employees at the amounts expected to be paid when the reporting date, in which case it would with less than 7 years of continuous service. they are settled. Amounts expected to be classified as a non-current liability. Amounts expected to be paid within be settled more than 12 months from 12 months are measured at nominal the reporting date are measured as the ii Sick leave value. Amounts expected to be paid beyond estimated cash outflows, discounted using Sick leave payments are made in accordance 12 months are measured at present value. market yields at the reporting date on with relevant awards, determinations and national government bonds with terms to Corporation policy. No provision is made iv Superannuation maturity that matches as closely as possible, in the financial statements for unused Defined contribution plans the estimated future cash outflows. sick leave entitlements as these are non Contributions to defined contribution vesting benefits. superannuation plans are expensed vi Employee benefit on-costs when incurred. Employee benefit on-costs, including payroll tax and workers compensation Defined benefit plans are recognised and included in employee A liability or asset in respect of the benefit liabilities and costs when the Corporation’s Equipsuper defined employee benefits to which they relate superannuation benefit Plan is recognised are recognised as liabilities. in the Balance Sheet and is measured as the difference between the present value vii Performance payments of employees’ accrued benefits at the Performance payments for the Corporation’s reporting date and the net market value employees are based on a percentage of of the superannuation plan’s assets at the annual salary package provided under that date. The present value of accrued their contracts of employment. A liability benefits is based on expected future is recognised and is measured as the payments which arise from membership aggregate of the amounts accrued under of the plans to the reporting date. the term of the contracts to balance date. Consideration is given to expected future salary levels, experience of employee departures and periods of service. Expected future payments are discounted using rates of national government bonds with terms to maturity that match, as closely as possible, the estimated future cash outflows.

122 viii WorkCover m Segment Information The income tax expense or revenue for The Corporation is registered as a A business segment is identified for a the period is the tax payable on the current self-insurer for workers compensation group of assets and operations engaged period’s taxable income based on the and is liable to the workers or workers’ in providing services that are subject national corporate income tax rate dependants to pay compensation under to risks and returns that are different of 30%, adjusted by changes in deferred the Accident Compensation Act 1985. to those of other business segments. tax assets and liabilities attributable Based upon an independent actuarial A geographical segment is identified to temporary differences between the assessment, a provision of $5.143 million when services are provided within a tax bases of assets and liabilities and (2007/08: $5.105 million) has been made particular economic environment subject their carrying amounts in the financial for outstanding claims incurred and not to risk and returns that are different statements, and to unused tax losses. settled, and for claims incurred but not from those of segments operating Deferred tax assets and liabilities are reported at 30 June 2009. Other claims in other economic environments. recognised for temporary differences incurred and settled during the period Segment information is reported on the at the tax rate expected to apply when are charged to the Income Statement. basis of business segments, which is water, the assets are recovered or liabilities In accordance with Section 146(5)(a) sewerage, waterways and drainage, as settled, based on those tax rates which of the Accident Compensation Act 1985, the Corporation’s risks and returns are are enacted or substantially enacted. the Corporation must provide a bank affected predominately by differences The relevant tax rates are applied to guarantee to the Victorian WorkCover in the services provided through those the cumulative amounts of deductible Authority as part of its WorkCover self segments, rather than geographical and taxable temporary differences if they insurance commitments. The value of segments as the Corporation operates arose in a transaction, that at the time this bank guarantee at 30 June 2009 is solely within the Port Phillip and of the transaction did not affect either $7.715 million (2007/08: $7.657 million). Westernport catchments. accounting profit or taxable profit or loss. Deferred tax assets are recognised ix Workers compensation Segment revenues, expenses, assets for deductible temporary differences The Corporation continues to be liable and liabilities are those that are directly and unused tax losses only if it is for workers compensation claims incurred attributable to a segment and the probable that future taxable amounts prior to the introduction of WorkCare relevant portion that can be allocated will be available to utilise those (now WorkCover) in 1985. Based on to the segment on a reasonable basis. temporary differences and losses. an independent actuarial assessment, Segment assets include all assets used a provision of $1.6 million ($0.7 million by a segment and consist primarily of o Dividend Policy in 2007/08) has been made for all receivables, prepayments, stores, biological The Corporation is required to pay outstanding workers compensation assets, property, plant and equipment a dividend in accordance with claims at 30 June 2009. and intangible assets. Segment liabilities a determination of the Treasurer consist primarily of trade and other of Victoria under the Public Authorities l Build, Own and Operate (BOO) Schemes creditors, accruals and provisions. (Dividend) Act 1983, based on a The Corporation entered into contractual prescribed percentage of the previous arrangements with AGL Ltd in February n Taxation year’s adjusted net profit before tax. 2000 to build, own and operate a power The Corporation is subject to the National An obligation to pay a dividend only generation plant at the Western Treatment Tax Equivalent Regime (NTER), which is arises after consultation with the Plant in exchange for a stream of payments. administered by the Australian Taxation relevant Minister and the Treasurer Office (ATO). The essential difference and a formal determination is made between the NTER and the Commonwealth by the Treasurer. legislation is that the tax liability is to be paid to the State Government and p Smart Water Fund not the Commonwealth Government. The Smart Water Fund was established by the Victorian Government and is managed by the Corporation and the three retail water businesses for the purpose of providing grant funding to support the development of sustainable water use projects. Each water business has a 25 per cent interest in the fund.

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Contributions made to the Smart Water Amortisation is allocated to intangible Determination of net increment/ Fund are initially recognised as prepayments assets with finite useful lives on a decrement of fair value less in the Corporation’s Balance Sheet. Expenses systematic basis over the asset’s useful estimated point-of-sale costs are subsequently recognised by the life. Amortisation begins when the asset Livestock is measured at fair value less Corporation when incurred by the Fund. is available for use, that is, when it is in estimated point of sale costs. The fair the location and condition necessary for value of trading livestock is determined q Goods and Services Tax it to be capable of operating in the manner with reference to market prices at each Revenues, expenses and assets are intended by management. The amortisation balance date. The fair value of non-trading recognised net of goods and services period and the amortisation method for livestock is determined by independent tax (GST), except where the amount an intangible asset with a finite useful valuation at balance date. of GST incurred is not recoverable life are reviewed at least at the end of from the ATO. In these circumstances, Changes to the fair value of livestock each annual reporting period. In addition, the GST is recognised as part of the assets are recognised as a gain or loss an assessment is made at each reporting cost of acquisition of the asset or in the Income Statement in the period date to determine whether there are as part of an item of expense. in which it arises. indicators that the intangible asset Receivables and payables (including concerned is impaired. If so, the assets t Interest Bearing Liabilities commitments) are stated inclusive of concerned are tested as to whether All borrowings are required to be transacted GST. The net amount of GST recoverable their carrying value exceeds their through the Treasury Corporation of Victoria from, or payable to, the ATO is included recoverable amount. whose liabilities are guaranteed by the as a current asset or liability in the Balance Victorian Government. ii Research and development costs Sheet. Cash flows arising from operating Expenditure on research activities is The Corporation’s borrowings currently activities are disclosed in the Cash Flow recognised as an expense in the period comprises of floating rate note (FRN) Statement on a gross basis (i.e. inclusive in which it is incurred. loans, fixed interest loans and an overnight of GST). The GST component of cash loan facility. FRN loans are fixed term loans flows arising from investing and financing An internally-generated intangible asset with a margin that is reset to a variable activities which is recoverable or payable arising from a development project is interest rate every ninety days. Generally, to the ATO is classified as operating recognised only if all of the following these notes are issued with maturity terms cash flows. conditions are met: between three and five years. Fixed interest r Intangible Assets and Research ••an asset is created that can be identified loans are interest only loans with the full & Development Costs (such as software and new processes); face value repaid at maturity or refinanced i Intangible Assets ••it is probable that the asset created will for a new term. Most have maturity terms Intangible assets (primarily consisting generate future economic benefits; and set between 2 and 12 years (2007/08: 5 of IT software) represent identifiable ••the development cost of the asset can and 10 years). The overnight loan facility non-monetary assets without physical be measured reliably. interest rates are negotiated on a daily substance. Intangible assets are basis depending on cash flow needs. recognised at cost. Costs incurred Where no internally-generated intangible Borrowings are initially recognised at fair subsequent to initial acquisition are asset can be recognised, development value, net of transaction costs incurred. capitalised when it is expected that expenditure is recognised as an expense Borrowings are subsequently measured additional future economic benefits in the period as incurred. at amortised cost. will flow to the Corporation. s Biological Assets Livestock, including cattle and sheep, are held in connection with operating the Corporation’s Werribee Agriculture Operations.

124 Where the Corporation has an unconditional w Provisions, Contingent Assets y New Accounting Standards right to defer settlement of the liability for and Contingent Liabilities and Interpretations at least 12 months after the Balance Sheet Provisions are recognised when the Certain new accounting standards and date, borrowings are classified as non current Corporation has a present legal or interpretations have been published liabilities. Otherwise borrowings are classified constructive obligation as a result that are not mandatory for 30 June as current liabilities. See Note 2 for further of past events, it is probable that 2009 reporting periods. The Corporation details on financing arrangements and an outflow of resources will be has not and does not intend to adopt risk management. required to settle the obligation these standards early. The Corporation’s and the amount has been reliably assessment of the impact of these u Foreign Currency Translation estimated. Provisions are not new standards and interpretations i Functional and presentation currency recognised for future operating losses. is set out below: The functional and presentation currency of the Corporation is the Australian dollar. The amount recognised as a provision i AASB 8 Operating Segments and AASB is the best estimate of the consideration 2007-3 Amendments to Australian ii Transactions required to settle the present obligation Accounting Standards arising from AASB 8 All foreign currency transactions during at reporting date, taking into account AASB 8 and AASB 2007-3 are effective the financial year are brought to account the risks and uncertainties surrounding for annual reporting periods commencing using the exchange rate in effect at the the obligation. Where a provision is measured on or after 1 January 2009. AASB 8 will date of the transaction. using the cash flows estimated to settle not result in a significant change as v Cash Flow Hedges the present obligation, its carrying amount the Corporation’s current approach to In order to hedge the effect of foreign is the present value of those cash flows. segment reporting is consistent with exchange rate movements on the fair the “management approach” to financial When some or all of the economic benefits values of assets purchased, the Corporation reporting. The segments selected are required to settle a provision are expected occasionally enters into forward foreign in line with the categories reported to be recovered from a third party, the exchange contracts. These hedges are to regulatory authorities and are the receivable is recognised as an asset if it classified as cash flow hedges with the basis for future pricing decisions. is virtually certain that recovery will be associated gains or losses recognised received and the amount of the receivable ii Revised AASB 123 Borrowing Costs and directly in equity. As the hedged firm can be measured reliably. AASB 2007-6 Amendments to Australian commitment results in the recognition Accounting Standards arising from AASB of an asset, the associated gains/losses Contingent assets and contingent liabilities 123 [AASB 1, AASB 101, AASB 107, AASB that had previously been recognised are not recognised in the financial statements 111, AASB 116 and AASB 138 and in equity are included in the initial but are only disclosed by way of a note, and Interpretations 1 & 12] measurement of the acquisition cost. if quantifiable are measured at nominal value. The revised AASB 123 is applicable to annual These are accounted for at settlement x Contributed Equity reporting periods commencing on or after date. The gain or loss relating to Appropriations for additions/disposals to net 1 January 2009. It has removed the option the ineffective portion is recognised assets are designated as contributed capital to expense all borrowing costs and, when immediately in the Income Statement. when approved by the Minister for Finance. adopted, will require the capitalisation of At any point in time, any cumulative Other transfers that are in the nature of all borrowing costs directly attributable to gain or loss on the cash flow hedge contributions or distributions have also the acquisition, construction or production is retained in equity until the forecast been designated as contributed equity. of a qualifying asset. The Corporation is transaction occurs. currently assessing the impact and expects that borrowing costs will continue to be If a hedged transaction is no longer expensed for all qualifying assets on the expected to occur, the net cumulative assumption that AASB 123 does not apply gain or loss recognised in equity is to assets at fair value and all qualifying transferred to the Income Statement. assets will be measured at fair value in accordance with FRD 103D Non-Current Physical Assets.

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iii Revised AASB 101 Presentation of vi AASB 2008-9 Amendments to AASB 1049 viii AASB Interpretation 18 Transfers Financial Statements and AASB 2007-8 for consistency with AASB 101 of Assets from Customers Amendments to Australian Accounting AASB 2008-9 is applicable to annual AASB Interpretation 18 is applicable to Standards arising from AASB 101 reporting periods commencing on or after annual reporting periods commencing The revised AASB 101 and AASB 2007-8 1 January 2009. Amendments have been on or after 1 July 2009. This interpretation is applicable to annual reporting periods made to AASB 1049 for consistency with addresses the accounting for transfers commencing on or after 1 January 2009. AASB 101 (September 2007) version. of items of property, plant and equipment It requires the presentation of a statement These amendments are not applicable or transfers of cash from customers. When of comprehensive income and makes to public sector entities, except for certain applied, this interpretation supersedes changes to the Statement of Changes presentation formats. The Corporation AASB 1017 Developer and Customer in Equity, but will not affect any of the is currently assessing the impact, which Contributions for Connection to a Price amounts recognised in the financial is not expected to be material. Regulated Network. This interpretation statements. If the Corporation makes is relevant to Developer Contributions vii AASB Interpretation 17 Distribution a prior period adjustment or reclassifies and Contributed Assets for the Corporation. of Non-cash Assets to Owners and any of the items in the financial The Corporation has assessed the impact AASB 2008-13 Amendments to statements, it will need to disclose and no material change is expected given Australian Accounting Standards a third Balance Sheet as at the that the service is deemed complete at arising from AASB Interpretation 17 beginning of the comparative period. the point of the transfer and revenue AASB Interpretation 17 is applicable The Corporation will apply the revised recognition is immediate in line with to annual reporting periods commencing standard as applicable if any prior period current practice. on or after 1 July 2009. This interpretation adjustments or reclassifications arise. applies to situations where the Corporation z Change in Accounting Estimates iv AASB 2008-5 Amendments to Australian pays dividends by distributing non-cash During the 2008/09 financial year a revision Accounting Standards arising from the assets to its shareholders. These distributions was made to the accounting policy for Annual Improvements Project will need to be measured at fair value and capitalisation of labour and associated AASB 2008-5 is applicable to annual reporting the entity will need to recognise the overhead costs. The revised policy aims periods commencing on or after 1 January difference between the fair value and to ensure that where any staff (internal 2009. It consists of a suite of amendments the carrying amount of the distributed or external) are involved in the acquisition, to existing standards following issuance assets in the Income Statement on construction or development of an asset, of IASB Standard Improvements to IFRSs distribution. The Corporation does not the relevant labour cost and overheads in May 2008. Some amendments result expect any impact from application of of that staff member are included in the in accounting changes for presentation, this interpretation as it does not make cost of the asset provided those costs recognition and measurement purposes. any such non-cash distributions. meet specific eligibility criteria in The Corporation is currently assessing accordance with AASB 116 (Property, the impacts, which are not expected Plant and Equipment). The net effect to be material. of the revision for the current financial year is a reduction in operating expenditure v AASB 2008-8 Amendment to IAS 139 of $5.7 million (2007/08: only relevant Financial Instruments: Recognition labour costs (not overheads) were and Measurement capitalised) and a corresponding increase AASB 2008-8 is applicable to annual reporting in capital expenditure. This revision has periods commencing on or after 1 July 2009. been recognised prospectively. The amendment to AASB 139 makes two significant changes. It prohibits designating inflation as a hedgeable component of a fixed rate debt. It also prohibits including time value in the one-sided hedged risk when designating options as hedges. The Corporation does not expect any material impact from this amendment.

126 2 Financial risk management iii Interest rate risk profile: The gearing ratio for 30 June 2009 was objectives and policies Fixed and floating interest rate borrowings 54.1% (2007/08: 45.1%). a Financial risk management objectives to be re-priced within one year do not Gearing is one of a number of commercial The objectives of the Corporation’s financial exceed 40% of the total debt portfolio. benchmarks that are considered by the risk management programs are to: Forward rate agreements are used Board when considering the capital structure i Manage the daily and long term liquidity occasionally where it is perceived that and are approved via the Corporate Plan. needs of the organisation; a lower interest rate can be achieved. e Market risk ii Optimise cash resources, in such a way The purchase of forward agreements Market risk is the risk that changes in market as to minimise net financing costs and is limited in terms of volume and time, prices will affect the fair value or future maximise the repayment of debt within and is subject to a maximum term of cash flows of the Corporations financial acceptable levels of risk; 18 months forward. instruments. Market risk comprises of c Financing arrangements iii Ensure that all financial and treasury foreign exchange risk, price risk and interest The capacity to borrow funds and manage management operational exposures rate risk. The Corporation’s exposure to the associated risks is subject to the provisions are fully identified, quantified, planned, Market risk is primarily through interest of the Borrowing and Investment Powers approved and managed; rate risk, there is no significant exposure Act (1987). In accordance with this Act, iv Safeguard the financial resources to foreign exchange risk and insignificant the Treasurer of Victoria issues annual by maintaining appropriate resources, exposure to other price risks. approval permitting new borrowings operational controls (including credit and the refinancing of all loan maturities Objectives, policies and processes used to guidelines) and infrastructure in for that year. All funding is sourced from manage these risks are disclosed below: corporate treasury functions. the Treasury Corporation of Victoria. i Foreign exchange risk These objectives are consistent with The Corporation’s total maximum Foreign exchange risk arises when future the risk management policies of the borrowing of $2,732.9 million (2007/08: commercial transactions and recognised Corporation including the Financial Risk $2,010.7 million) was not exceeded at assets and liabilities are denominated Management guidelines, the Treasury any stage throughout 2008/09. in a currency that is not the entity’s Management Guidelines issued by the functional currency. Department of Treasury and Finance d Capital Management and the Victorian Public Sector Debt The Corporation controls its capital in order It is the Corporation’s policy to hedge Management Objectives. to maintain a satisfactory gearing ratio, the effect of foreign currency exchange rate movements on the fair values of any b Financial risk management strategy to provide adequate returns, maintain its assets purchased in excess of AUD$100,000. The Corporation manages financial risk by current credit rating and to ensure that it The Corporation’s policy requires all hedging maintenance of approved debt portfolio can fund its operations as a going concern. to be undertaken through the Treasury structure and strategic targets. This includes: There have been no changes to the strategy Corporation of Victoria in the form of i Portfolio composition adopted by the Corporation to control its forward foreign exchange contracts. (i.e. fixed, floating, indexed exposure): capital during the year. The current gearing The Corporation’s debt portfolio is levels are considered appropriate given Forward rate agreements are used occasionally managed within the bands of: Melbourne Water’s current and future where it is perceived that a lower interest rate can be achieved. The purchase of Floating interest rate borrowings 10-40% funding requirements. forward agreements is limited in terms Fixed interest rate borrowings 60-90% The only externally imposed capital of volume and time, and is subject to a ii Physical maturity profile requirements of the Corporation are that: maximum term of 18 months forward. Debt maturity of fixed and floating interest ••financial accommodation does not exceed rate borrowings (excluding working capital) At 30 June 2009, the Corporation the approval limits set by the Treasurer of is not to exceed 20% of the total debt does not have any material forward Victoria pursuant to the Borrowing and portfolio in any year. exchange contracts. Investment Powers Act 1987; and

••the Corporation, with the exception of a trading account with overdraft facilities, is required to borrow exclusively with the Treasury Corporation of Victoria.

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ii Price risk As Trade Debtors are made up predominantly g Liquidity risk The Corporation is not exposed to any by the metropolitan retail water businesses, The Corporation manages liquidity risk material commodity price risk. the Corporation’s exposure to credit risk is by maintaining and conducting efficient minimal. These debts are invoiced monthly banking practices and account structures, iii Interest rate risk sensitivity analysis and paid within seven days. sound cash management practices and Exposures arise predominately from regular monitoring of the maturity profile liabilities bearing variable interest rates The major exposure to credit risk arises of assets and liabilities, together with as the Corporation intends to hold fixed from Other Receivables, which have been anticipated cash flows. rate liabilities to maturity. At 30 June recognised net of any provision for doubtful 2009, if interest rates had changed by debts. The receivable balance consists of The Corporation obtains annual approval +/- 50 basis points from the year end a large number of residential and business from the Treasurer of Victoria for new rates with all other variables held customers which are spread across a diverse borrowings, borrowings to refinance maturing constant, pre-tax profit would have range of industries. Receivable balances are and non-maturing loans and temporary been $2.9 million higher/lower monitored on an on-going basis to ensure purpose borrowing facilities. (2007/08: $2.3 million). that exposure to bad debts is not significant. The Corporation’s financial risk management The Corporation has in place a policy f Credit risk policies are driven towards optimal utilisation and procedure for the collection of Credit risk is the risk of financial loss of cash with all funds invested back in overdue receivables. to the Corporation as a result of a borrowings. This results in a working capital customer or counterparty to a financial All financial risk management instruments deficiency of $753.5 million (2007/08: instrument failing to meet its contractual are transacted with the Treasury Corporation $475.8 million) at year-end. The deficiency obligations. The Corporation’s exposure of Victoria, whose liabilities are guaranteed occurs at a point in time only due to timing to credit risk is influenced by the individual by the Victorian Government. The Corporation of revenue receipt and does not reflect the characteristics of each customer. potentially has a concentration of credit risk permanent situation of the Corporation. with the Treasury Corporation of Victoria as This deficiency is funded by the financing All receivables are recognised at the the central borrowing authority of Victoria. arrangement with TCV and there is no amounts receivable less any allowance This risk is considered minimal. reason to indicate that the Corporation can for doubtful debts. Collectibility of not pay its debts as and when they fall due. receivables is reviewed on an ongoing basis. Debts which are known to be The Corporation’s financial liability maturities uncollectible are written-off. A provision have been disclosed in Note 27. for doubtful debts is established when there is objective evidence that the Corporation will not be able to collect all amounts due according to the original terms of receivables.

The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. The amount of the provision is recognised in the Income Statement.

128 Notes 2009 2008 $000 $000

3 Income Statement – Revenue and other income disclosures a Revenue Sales revenue Water sales 227,265 175,496 Sewage disposal charges 240,422 187,842 Drainage rates 170,439 147,410 638,126 510,748 Other revenue Developer charges and contributions 54,804 52,569 Interest revenue 74 45 Biological assets 15,800 16,002 Licence fees received 2,306 2,173 Miscellaneous 4,997 7,770 77,981 78,559 Total revenue 716,107 589,307 b Other income Net gain/(loss) on disposal of property, plant and equipment 41 1,358 719 Government grants* 9,710 3,777 (Loss)/gain arising from changes in fair value less estimated point of sale costs of biological assets (855) (935) Gain/(loss) arising from initial recognition of agricultural produce 5,919 7,417 Total other income 16,132 10,978 Total revenue and other income 732,239 600,285 * Government grants Government grants of $9.7 million (2007/08: $3.8 million) were recognised as other income by the Corporation during 2008/09 for various projects including the $10M stormwater project, Water Watch program and bushfire relief funding from the Department of Sustainability and Environment.

All conditions attached to Government grants have been satisfied prior to their recognition in the Income Statement. The recognition of Government grants with unfulfilled conditions have been recognised as deferred income in the Balance Sheet.

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Notes 2009 2008 $000 $000

4 Income Statement – Expense disclosures Depreciation and amortisation expenses Depreciation Buildings 12c 905 943 Leasehold improvements 12c 553 427 Plant and equipment 12c 5,451 5,190 Infrastructure assets 12c 92,489 77,420 Total depreciation 99,398 83,980

Amortisation Infrastructure assets under finance leases 12c 1,621 1,621 Intangible assets 12c 4,764 1,896 Total amortisation 6,385 3,517 Total depreciation and amortisation expenses 12c 105,783 87,497

Operational expenses Materials, chemicals and laboratory expenses 10,431 10,871 Energy expenses 16,132 15,641 Renewable energy expenses 893 58 Agricultural expenses 24,946 26,606 External expenses 3,317 3,944 Transport expenses 6,522 6,022 Grants and contributions expenses 13,169 10,656 External professional services expenses 11,001 12,882 Contract works 20,527 20,101 Other expenses 3,498 6,217 Total operational expenses 110,436 112,998

Employee benefits expenses Salary expenses 47,015 43,340 Post employment benefits 4,851 3,244 Annual, long service and shift leave expenses 6,102 5,999 Other employee expenses 7,388 8,275 Total employee benefits expenses 65,356 60,858

Repairs and maintenance expenses Repairs and maintenance 55,602 49,232 Information technology maintenance 1,985 1,596 Total repairs and maintenance expenses 57,587 50,828

130 Notes 2009 2008 $000 $000

4 Income Statement – Expense disclosures continued Administrative expenses Drainage billings and collection function 8,724 7,683 Information technology & telecommunication expenses 13,170 12,438 Legal expenses 5,540 2,142 Education and training expenses 3,590 3,080 Advertising expenses 637 1,862 Other expenses 3,987 6,226 Total administrative expenses 35,648 33,431

Finance costs Interest expense 111,028 94,416 TCV fees 67 80 Financial accommodation levy 10,932 6,342 Total finance costs 122,027 100,838

Other expenses Government rates and taxes (including land tax, FBT and other) 24,719 24,233 Rental and lease expenses 3,904 4,031 Bad and doubtful debt expenses 10 2 Decrement arising from asset revaluation 12c - 272 Assets written off/written down 41 7,949 11,652 Defined benefit superannuation expense 36e 24,062 18,350 Other expenses 976 1,784 Total other expenses 61,620 60,324 Total expenditure 558,457 506,774

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Notes 2009 2008 $000 $000

5 Income tax a Components of tax expense Current tax 65,612 2,949 Deferred tax relating to temporary differences (19,108) 21,956 Adjustments for current tax of prior periods (708) 964 45,796 25,869 b Numerical reconciliation of income tax to prima facie tax payable Profit before income tax expense 173,782 93,511 Tax at the Australian tax rate of 30% (2007/08: 30%) 52,135 28,053

Tax effect of amounts which are not deductible (taxable) in calculating taxable income: Adjustment in respect of income tax of previous year (708) 964 Non assessable and non deductible for income tax purposes (407) 2,124 Deductible expenses not booked (816) (2,823) Asset allocation to Government (4,003) (2,059) Research and development concession (405) (390) Income tax as reported in the Income Statement 45,796 25,869 c Income tax (payable)/receivable Current tax (payable)/receivable (55,800) 1,320 Total income tax (payable)/receivable (55,800) 1,320

6 Current assets – Cash and cash equivalents Cash on hand 18 16 Cash at bank 137 291 Cash advances 11 43 Total current assets – cash and cash equivalents 27 166 350

7 Current assets – Trade and other receivables a Current assets – Trade and other receivables Trade debtors 27 26,007 18,357

Other receivables Other receivables 45,526 22,289 Net GST receivable from the Australian Tax Office 13,859 7,454 Less: provision for impaired other receivables (11) (3) 27 59,374 29,740 Total current assets – trade and other receivables 85,381 48,097

132 7 Current assets – Trade and other receivables continued b Ageing Analysis of Receivables All receivables are recognised at the amounts receivable less any allowance for impaired receivables. Collectibility of receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written-off.

A provision for impaired receivables is established when there is objective evidence that the Corporation will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. The amount of the provision is recognised in the Income Statement.

Current Past Due but not Impaired 30 June 2009 Notes 0-30 days 31-60 days 61-90 days 91 days + Impaired Total $000 $000 $000 $000 $000 $000 Receivables Trade debtors 7a 8,007 15,157 2,831 12 - 26,007 Other receivables 7a, 13 59,124 179 42 5,276 (11) 64,610 Total Receivables 67,131 15,336 2,873 5,288 (11) 90,617

30 June 2008 Receivables Trade debtors 7a 6,360 8,832 3,163 2 - 18,357 Other receivables 7a, 13 22,993 6,708 36 43 (3) 29,777 Total Receivables 29,353 15,540 3,199 45 (3) 48,134

Notes 2009 2008 $000 $000

8 Current assets – Other current assets Prepayments 11,795 1,836 Stores 5,156 4,430 Total current assets – other current assets 16,951 6,266

9 Current assets – Non-current assets classified as held for sale Property, plant and equipment – held for sale* 614 94 Total current assets – non-current assets classified as held for sale 614 94 * The Corporation currently holds 40 lots of land for sale as part of the Dandenong Treatment Plant development. These lots were being marketed for private sale by VicUrban during the 2008/09 financial year. At 30 June 2009 these lots were still on the market and an active program is underway to locate buyers. The five parcels of surplus land recorded as held for sale at 30 June 2008 have been sold in the 2008/09 financial year and are no longer recorded within held for sale assets.

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Notes 2009 2008 $000 $000

10 Current assets – Other financial assets Forward foreign exchange contracts 253 483 Total current assets – financial assets 27 253 483 In order to hedge the effect of foreign currency exchange rate movements on the fair values of assets purchased, the Corporation entered into a number of forward exchange agreements to facilitate payments to suppliers in US and Euro dollars.

These forward contracts are hedging highly probable forecast purchases. The contracts are timed to mature when payments for assets are scheduled to be made. However, the timing of payment is dependent on delivery of the assets. At 30 June 2009, three foreign purchase payments are outstanding as the assets have not been fully delivered (2007/08: one payment outstanding).

At 30 June 2009, total payment is forecast as follows: 10 July 2009 (USD $205,243)

No foreign exchange gain or loss was transferred to the Income Statement and a loss of $107k (2007/08: gain of $34k) was recognised in equity during the reporting period.

11 Current and Non-current assets – Biological assets a Nature of Biological assets The Corporation's Werribee Agriculture team operates an agricultural trading operation managing 13,475 cattle (2007/08: 21,749) and 17,823 sheep (2007/08: 21,119) at 30 June 2009. This operation is based principally at the Western Treatment Plant with a small number of satellite properties to support its breeding herd.

Cattle Sheep Total $000 $000 $000

b i Reconciliation of fair value of livestock biological assets for 2008/09 Biological Assets Fair value at beginning of period 17,642 2,154 19,796 Increases due to purchases 3,015 139 3,154 Gain arising from changes in fair value less estimated 2,297 397 2,694 point of sale costs attributable to physical changes Gain/(loss) arising from changes in fair value less estimated (855) 78 (777) point of sale costs attributable to price changes Increases attributable to births 1,249 1,029 2,278 Decreases attributable to sales (12,034) (2,069) (14,103) Decreases attributable to death (378) (90) (468) Fair value at end of period 10,936 1,638 12,574

134 Cattle Sheep Total $000 $000 $000

11 Current and Non-current assets – Biological assets continued b ii Reconciliation of fair value of livestock biological assets for 2007/08 Biological Assets Fair value at beginning of period 16,851 4,892 21,743 Increases due to purchases 7,475 580 8,055 Gain arising from changes in fair value less estimated 2,451 11 2,462 point of sale costs attributable to physical changes Gain/(loss) arising from changes in fair value less estimated (447) (592) (1,039) point of sale costs attributable to price changes Increases attributable to births 2,319 1,011 3,330 Decreases attributable to sales (10,477) (3,610) (14,087) Decreases attributable to death (530) (138) (668) Fair value at end of period 17,642 2,154 19,796

2009 2008 $000 $000

c Reconciliation of fair value of wool and hay/crops biological assets Fair value at beginning of period 833 45 Fair value less estimated point of sale costs of agricultural produce harvested during the period 947 1,624 Gain/(loss) arising from changes in fair value less point of sale costs attributable to price changes (77) 105 Decreases attributable to sales (1,626) (1,257) Increases due to purchases 606 316 Fair value at end of period 683 833

d Representing Biological Assets Current biological assets 5,380 9,162 Non-current biological assets 7,877 11,467 Total Biological Assets 13,257 20,629

135 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Notes to the Financial Report

11 Current and Non-current assets – Biological assets continued e Significant Assumptions 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.

Cattle: Breeding cattle Prices for these cattle generally reflect a more stable longer term price and as such are less volatile than movements in the spot cattle prices evident with trading cattle. These breeders were independently valued at 24 June 2009.

Trading cattle Prices for these cattle generally reflect the shorter term spot prices available in the market place. Relevant market indicators include the carcass weight rates published by the Meat and Livestock Australia Ltd (MLA).

Sheep: Breeding Sheep Prices for these sheep generally reflect a more stable longer term price and as such are less volatile than movements in the spot sheep prices evident with trading sheep. These breeders were independently valued at 24 June 2009.

Trading sheep Prices for these sheep generally reflect the shorter term spot prices available in the market place. Relevant market indicators include the carcass weight rates published by MLA.

Herd Numbers 2009 2008

Cattle Breeding 5,345 6,510 Trading 8,130 15,239

Sheep Breeding 9,435 15,052 Trading 8,388 6,067 Total 31,298 42,868

136 2009 2008 $000 $000

12 Non-current assets – Property, plant and equipment and Intangible assets a Classes of property, plant and equipment Land * Crown land at fair value 88,293 93,410 * Freehold land at fair value 842,462 834,857 Total land 930,755 928,267

Buildings * Buildings at fair value 18,878 18,947 Less: accumulated depreciation (1,843) (943) Total buildings 17,035 18,004

Leasehold improvements Leasehold improvements at fair value 7,054 6,355 Less: accumulated depreciation (5,679) (4,800) Total leasehold improvements 1,375 1,555

Plant and equipment Plant and equipment at fair value 55,951 50,309 Less: accumulated depreciation (42,065) (37,949) Total plant and equipment 13,886 12,360

Infrastructure assets Infrastructure assets at cost 4,273,677 4,014,464 Less: accumulated depreciation (1,234,618) (1,149,655) Sub total infrastructure assets 3,039,059 2,864,809

Infrastructure assets under finance lease 40,105 40,105 Less: accumulated amortisation (14,331) (12,710) Sub total infrastructure assets under finance lease 25,774 27,395 Total infrastructure assets 3,064,833 2,892,204 Capital works in progress at fair value 1,267,161 490,282

Total non-current assets – property, plant and equipment 5,295,045 4,342,672 * 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 2009 (where required) in accordance with FRD103D. Property, plant and equipment is assessed for indicators of impairment on an annual basis. At 30 June 2009, no indicators of impairment were identified (30 June 2008: Nil).

b Intangible assets Intangible assets at cost 24,252 15,468 Less: accumulated amortisation (15,180) (13,096) Total non-current assets – intangible assets 9,072 2,372

137 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Notes to the Financial Report

Infrastructure Leasehold Plant and assets under Works in Intangible Crown Land Freehold land Buildings at improvements equipment Infrastructure finance lease progress at assets at fair value at fair value fair value at fair value at fair value assets at cost at cost fair value at cost Total 2008/09 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 12 Non-current assets – Property, plant and equipment and Intangible assets continued c i Reconciliation of movement in property, plant and equipment for 2008/09 Carrying amount at 1 July 2008 93,410 834,857 18,004 1,555 12,360 2,864,809 27,395 490,282 2,372 4,345,044 Additions 374 23,255 - - 8,106 301,102 - - 11,464 344,301 Disposals (5,491) (15,131) (64) - (210) (34,909) - (1) - (55,806) Depreciation/amortisation - - (905) (553) (5,451) (92,489) (1,621) - (4,764) (105,783) Transfers between classes - - - 373 (919) 546 - - - - Assets classified as held for sale - (519) ------(519) Revaluation increments ------Revaluation decrements ------Capital expenditure ------1,089,603 - 1,089,603 Capitalisation of works in progress ------(312,723) - (312,723) Carrying amount at 30 June 2009 88,293 842,462 17,035 1,375 13,886 3,039,059 25,774 1,267,161 9,072 5,304,117

Infrastructure Leasehold Plant and assets under Works in Intangible Crown Land Freehold land Buildings at improvements equipment Infrastructure finance lease progress assets at at fair value at fair value fair value at cost at cost assets at cost at cost at cost cost Total 2007/08 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 c ii Reconciliation of movement in property, plant and equipment for 2007/08 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 Additions - 10,052 797 - 6,408 252,556 - - 135 269,948 Disposals (392) (10,269) - - (10) (11,394) - (317) - (22,382) Depreciation/amortisation - - (943) (427) (5,190) (77,420) (1,621) - (1,896) (87,497) Transfers between classes 348 (203) - - (171) 26 - - - - Assets classified as held for sale - 181 ------181 Revaluation increments 12,785 141,964 ------154,749 Revaluation decrements (1) (271) ------(272) Capital expenditure ------417,809 - 417,809 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

Notes 2009 2008 $000 $000

13 Non-current assets – Other receivables Other receivables 60 37 Sugarloaf pipeline security deposit 13a 5,176 - Total non-current assets – other receivables 27 5,236 37

a The Corporation was required to deposit $5 million with the Treasury Corporation of Victoria (TCV) on 4 September 2008 as an environmental security deposit in relation to the Sugarloaf Pipeline project. This deposit is classified as non current as the security is fixed and cannot be withdrawn by the Corporation until completion of the project and satisfaction that conditions have been fulfilled. Interest is received at a floating rate.

138 Notes 2009 2008 $000 $000

14 Non-current assets – Other non-current assets Prepayments 1,353 - Total non-current assets – other non-current assets 1,353 -

15 Non-current assets – Defined superannuation benefit asset Defined superannuation benefit asset - 13,169 Total non-current assets – defined superannuation benefit asset 36 - 13,169

16 Current liabilities – Trade and other payables Creditors 65,567 33,540 Interest payable 32,667 26,056 Other accruals 30,472 25,119 Capital accruals 178,551 99,060 Advances 7,330 3,128 Total current liabilities – trade and other payables 27 314,587 186,903

17 Current liabilities – Interest bearing liabilities * Lease liabilities 29d 1,246 3,456 * Borrowings 454,200 312,300 Total current liabilities – interest bearing liabilities 27 455,446 315,756 * Current interest bearing liabilities are unsecured.

18 Current liabilities – Provisions Employee benefits 35 18,887 17,160 Insurance claims 34 650 634 Remediation works 34 14,623 19,065 Other provisions 34 2,274 2,017 Total current liabilities – provisions 36,434 38,876

19 Non-current liabilities – Trade and other payables Creditors 148 244 Advances 2,802 8,286 Capital accruals 78,410 - Total non-current liabilities – trade and other payables 27 81,360 8,530

139 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Notes to the Financial Report

Notes 2009 2008 $000 $000

20 Non-current liabilities – Interest bearing liabilities * Lease liabilities 29d 7,197 8,443 * Borrowings 1,895,000 1,305,000 Total non-current liabilities – interest bearing liabilities 27 1,902,197 1,313,443 * Non-current interest bearing liabilities are unsecured.

21 Non-current liabilities – Provisions Employee benefits 35 7,338 6,560 Insurance claims 34 354 323 Remediation works 34 - 3,188 Total non-current liabilities – provisions 7,692 10,071

22 Non-current liabilities – net deferred tax liabilities The balance comprises temporary differences attributable to: Amounts recognised in the Income Statement Property, plant and equipment 528,761 538,795 Employee entitlements (5,787) (5,298) Developer contributions 19,967 22,814 Finance lease 2,993 2,394 Defined benefit obligation (2,979) 3,951 Provisions (2,175) (1,901) Revenue in advance (2,051) (2,831) Other 67 78 538,796 558,002

Amounts recognised directly in equity Revaluation of property, plant and equipment 17,029 17,029 Net deferred tax liability 555,825 575,031

Movements Opening balance at 1 July 575,031 538,302 (Credited)/debited to the Income Statement (19,108) 21,956 Credited/(debited) to equity - 13,714 Prior year correction (98) 1,059 Closing balance at 30 June 555,825 575,031

Net Deferred tax liabilities to be recovered after more than 12 months 561,567 578,596 Net Deferred tax liabilities to be recovered within 12 months (5,742) (3,565) Total non-current liabilities – Deferred tax liabilities 555,825 575,031

140 Notes 2009 2008 $000 $000

23 Non-current liabilities – Defined superannuation benefit liability Defined superannuation benefit liability 36 9,931 - Total non-current liabilities – defined superannuation benefit liability 9,931 -

24 Contributed equity Opening balance 591,567 600,147 Capital transactions with the State in its capacity as owner arising from: Adjustments relating to the transfers of Crown assets to the Government (34,702) (8,580) Total contributed equity at the end of the year 556,865 591,567

25 Reserves Asset revaluation reserve Opening balance 164,254 23,792 Revaluation increment/(decrement) on non-current assets 12c - 154,749 Revaluation reserves transferred to retained profits on derecognition of asset (1,806) (573) (Increment)/decrement on deferred tax revaluation 22 - (13,714) Closing balance 162,448 164,254 The asset revaluation reserve is used to record asset revaluation increments and decrements in the value of non-current physical assets.

Cash flow hedge reserve Opening balance 69 35 Gain/(loss) taken to equity 10 (107) 34 Closing balance (38) 69 The cash flow hedge reserve represents the gain or loss on conversion to Australian dollars of the cash flow hedge.

Total reserves at the end of the year 162,410 164,323

26 Retained profits Retained profits at the beginning of the year 1,230,989 1,262,174 Net profit for the year 41 127,986 67,642 Transfer from asset revaluation reserve 25 1,806 573 Dividends paid 31 (72,000) (99,400) Retained profits at the end of the year 1,288,781 1,230,989

27 Financial instruments a Interest rate exposure At 30 June 2009, the Corporation has no significant interest-bearing assets. As such, the Corporation’s income and operating cash flows are not materially exposed to changes in market interest rates.

For 2008/09, 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, in order to minimise exposure to fluctuations in variable rates and to minimise the long-term net cost of funding.

141 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Notes to the Financial Report

30 June 2009 Weighted avg. Interest Rate Exposure Notes annual effective Floating Fixed Non interest Total Carrying interest rate interest rate interest rate bearing Amount % $000 $000 $000 $000 27 Financial instruments continued Financial assets Cash 6 4.80 166 - - 166 Trade debtors 7a - - 26,007 26,007 Derivatives 10 0.39 - 253 - 253 Other receivables 7a, 13 4.27 5,176 - 59,434 64,610 Total financial assets 5,342 253 85,441 91,036

Financial liabilities Creditors, accruals & interest payable 16, 19 - - (385,815) (385,815) Lease liabilities 17, 20 - - (8,443) (8,443) Advances 16, 19 - - (10,132) (10,132)

Borrowings 11am Cash 17, 20 3.17 (354,200) - - (354,200) Floating rate notes 17, 20 3.05 (235,000) - - (235,000) Fixed interest 17, 20 5.98 - (1,760,000) - (1,760,000) Total financial liabilities (589,200) (1,760,000) (404,390) (2,753,590) Net financial liabilities (583,858) (1,759,747) (318,949) (2,662,554)

30 June 2008

Financial assets Cash 6 6.81 350 - - 350 Trade debtors 7a - - 18,357 18,357 Derivatives 10 4.22 - 483 - 483 Other receivables 7a, 13 - - 29,777 29,777 Total financial assets 350 483 48,134 48,967

Financial liabilities Creditors, accruals & interest payable 16, 19 - - (184,019) (184,019) Lease liabilities 17, 20 - - (11,899) (11,899) Advances 16, 19 - - (11,414) (11,414)

Borrowings - 11am Cash 17, 20 7.42 (172,300) - - (172,300) Floating rate notes 17, 20 7.59 (275,000) - - (275,000) Fixed interest 17, 20 6.20 - (1,170,000) - (1,170,000) Total financial liabilities (447,300) (1,170,000) (207,332) (1,824,632) Net financial liabilities (446,950) (1,169,517) (159,198) (1,775,665)

142 2009 2008 Book value Net fair value* Book value Net fair value $000 $000 $000 $000*

27 Financial instruments continued b Fair value The book values and net fair values of financial assets and liabilities at balance date are: Financial assets Cash 166 166 350 350 Trade debtors 26,007 26,007 18,357 18,357 Derivatives 253 252 483 482 Other receivables 64,610 64,610 29,777 29,777 Total financial assets 91,036 91,035 48,967 48,966

Financial liabilities Creditors, accruals & interest payable (385,815) (385,815) (184,019) (184,019) Lease liabilities (8,443) (8,443) (11,899) (11,899) Advances (10,132) (10,132) (11,414) (11,414) Borrowings: 11am Cash (354,200) (354,971) (172,300) (173,084) Floating rate notes (235,000) (232,230) (275,000) (277,633) Fixed interest (1,760,000) (1,804,420) (1,170,000) (1,144,433) Total financial liabilities (2,753,590) (2,796,011) (1,824,632) (1,802,482) * Net book values are capital amounts. The differences between book values and net fair values relate principally to interest rate movements.

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.

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.

143 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Notes to the Financial Report

27 Financial instruments continued c Maturity Analysis of Financial Liabilities The following table discloses the contractual maturity analysis for the Corporation’s financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flows.

30 June 2009 Total Carrying Total Contractual Amount Cashflows 1 year or less 1 to 5 years Over 5 years $000 $000 $000 $000 $000 Financial liabilities Non-interest bearing (404,390) (404,390) (315,832) (88,558) - Variable rate (589,200) (630,435) (365,410) (265,025) - Fixed rate (1,760,000) (2,471,036) (105,983) (1,059,793) (1,305,260) Total financial liabilities (2,753,590) (3,505,861) (787,225) (1,413,376) (1,305,260)

30 June 2008 Financial liabilities Non-interest bearing (207,332) (208,141) (191,168) (16,973) - Variable rate (447,300) (542,969) (228,111) (314,858) - Fixed rate (1,170,000) (1,576,522) (106,204) (508,888) (961,430) Total financial liabilities (1,824,632) (2,327,632) (525,483) (840,719) (961,430)

28 Segment information a Description of segments Business segments The Corporation is organised into the following business segments:

The water segment includes the harvesting, storing, treating and transfer of water to the metropolitan retail water businesses for delivery to end users. The sewerage segment includes the transfer, treating and disposal of sewage and trade waste collected from the metropolitan retail water businesses. The waterways and drainage segment includes regional drainage and flood protection services, waterways management for achieving healthy rivers, creeks and floodplains and stormwater quality protection.

Geographical segments The Corporation operates in one geographical area.

Unallocated Unallocated revenue and expenses consist of interest revenue and finance costs. Unallocated assets consist of cash and tax receivable. Unallocated liabilities consist of tax payable, deferred tax liabilities, interest bearing liabilities and interest payable.

144 Waterways Water Sewerage & Drainage Consolidated Business segments $000 $000 $000 $000 28 Segment information continued b Business segment reporting for 2008/09 Revenue External revenue/income 231,529 274,960 225,676 732,165 Unallocated revenue/income 74 Total segment revenue/income 732,239

Results Segment result 105,181 91,669 98,885 295,735 Unallocated revenue less unallocated expenses (121,953) Profit before income tax 173,782 Income tax expense (45,796) Profit for the year 127,986

Assets Segment assets 2,137,573 2,023,228 1,266,361 5,427,162 Unallocated assets 166 Total assets 5,427,328

Liabilities Segment liabilities 200,262 161,272 55,803 417,337 Unallocated liabilities 3,001,935 Total liabilities 3,419,272

Other segment reporting information Depreciation and amortisation 28,919 52,015 24,849 105,783 Acquisition of property, plant and equipment and intangible assets. 148,267 106,309 89,725 344,301

145 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Notes to the Financial Report

Waterways Water Sewerage & Drainage Consolidated Business segments $000 $000 $000 $000 28 Segment information continued c Business segment reporting for 2007/08 Revenue External revenue/income 178,338 215,364 206,538 600,240 Unallocated revenue/income 45 Total segment revenue/income 600,285

Results Segment result 59,837 42,298 92,169 194,304 Unallocated revenue less unallocated expenses (100,793) Profit before income tax 93,511 Income tax expense (25,869) Profit for the year 67,642

Assets Segment assets 1,571,687 1,699,587 1,162,545 4,433,819 Unallocated assets 1,670 Total assets 4,435,489

Liabilities Segment liabilities 33,623 127,912 56,788 218,323 Unallocated liabilities 2,230,287 Total liabilities 2,448,610

Other segment reporting information 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

146 2009 2008 $000 $000

29 Commitments a Capital commitments Total capital expenditure contracted for the construction of water, sewerage and waterways and drainage infrastructure at balance date but not provided for in the accounts: Property, plant and equipment payable: Within one year 900,130 357,367 Later than one year but not later than five years 344,072 361,186 Total capital commitments 1,244,202 718,553

Capital commitments by segment groups: Water capital commitments 667,092 133,099 Sewerage capital commitments 498,905 488,526 Waterways and drainage capital commitments 78,205 96,928 Total capital commitments by segment groups 1,244,202 718,553 Significant projects forming the capital commitments balance above include; Sugarloaf Interconnector, Northern Sewerage, Melbourne Main Sewer Replacement, ETP Tertiary Upgrade, and contribution to DSE towards eventual acquisition of the Wonthaggi desalination plant and inlet/outlet pipelines.

b Operating lease commitments i Melbourne Water as lessee The Corporation's East Melbourne building is held under a non-cancellable operating lease expiring on 15 June 2012. 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. On renewal, the terms of the leases are renegotiated.

The Corporation also leased land, photocopiers and motor vehicles under non-cancellable operating leases.

Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as follows: Within one year 9,062 8,169 Later than one year but not later than five years 10,118 12,371 Later than five years 86 164 Total operating lease commitment 19,266 20,704

Lease incentives on non-cancellable operating leases included in trade creditors is as follows: 236 337 Representing operating lease liability: Current (part of note 16) 88 93 Non-current (part of note 19) 148 244 Total operating lease liability 236 337

ii Melbourne Water as lessor Operating leases relate to land owned by the Corporation with lease terms generally for a period of 10 years. All operating lease contracts contain market review clauses. The lessee does not have an option to purchase the land at the expiry of the lease period.

Commitments for minimum lease payments in relation to non-cancellable operating leases are receivable as follows: Within one year 1,600 940 Later than one year but not later than five years 2,872 1,720 Later than five years 350 400 Total operating lease commitment 4,822 3,060

147 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Notes to the Financial Report

2009 2008 $000 $000

29 Commitments continued c Smart Water Fund The Corporation has a commitment to the Victorian Government's Smart Water Fund in the amount of $4.0 million over the next 4 years (2007/08: $2.8 million, 3 years). The timing of such payments cannot be reliably estimated and as such have not been disclosed in yearly bands.

d Finance lease commitments The Corporation has finance lease agreements with Yan Yean Water and TopAq Pty Ltd. The agreement with Yan Yean Water involves the construction of a water treatment plant. The agreement commenced on 1 October 1994 and expires on 30 June 2010. The agreement with TopAq Pty Ltd involves the development of a water recycling project that uses effluent sourced from the Corporation's Eastern Treatment Plant and treats this effluent to produce and supply Class A Water to customers in the project area. This agreement commenced on 29 April 2005 and expires on 30 April 2020.

The carrying amount of the finance lease is: Commitments in relation to finance lease are payable as follows: Within one year 2,145 4,691 Later than one year but not later than five years 4,810 5,753 Later than five years 7,015 8,217 Minimum lease payments 13,970 18,661 Less: Future finance charges (5,527) (6,762) Total finance lease liability 8,443 11,899

Representing finance lease liability: Current (refer to note 17) 1,246 3,456 Non-current (refer to note 20) 7,197 8,443 Total finance lease liability 8,443 11,899

e Other operating commitments Total operating expenditure (excluding leases) contracted for at balance date but not provided for in the accounts is payable as follows: Not later than one year 14,172 4,633 Later than one year but not later than five years 17,092 12,229 Later than five years 2,205 149 Total other operating commitments 33,469 17,011

f Build, Own and Operate (BOO) commitments On 25 February 2000, the Corporation signed a Build, Own and Operate (BOO) contract with Australian 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.

Under this contract, AGL will build, own and operate the power generation plant which has been constructed on land owned by the Corporation at Western Treatment Plant. This arrangement became fully operational on 1 July 2003. On 1 January 2006, this was replaced by a contract with a new term of 15 years.

This new agreement requires AGL to expand generation at its plant to approximately 51GWh of electricity generated from biogas per year for the period of the contract.

The minimum obligation (excluding the effect of inflation) for the term of the arrangement is $29.2 million at 30 June 2009.

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.

148 2009 2008 $000 $000

29 Commitments continued Future minimum obligations Fixed costs, payable within: Not later than one year 2,228 2,166 Later than 1 year but not later than 5 years 9,579 9,309 Later than 5 years 17,424 19,922 Total value of future minimum obligations 29,231 31,397

g Food Bowl Modernisation Commitment Stage 1 of the Northern Victoria Irrigation Renewal Project (NVIRP) has planned total expenditure of $1.004 billion. The estimated long term annual water savings of 225GL are to be shared equally between irrigators, the environment and Melbourne via the Sugarloaf pipeline. Melbourne’s share of the water savings will be defined as bulk water entitlements (BWE’s) and will be held jointly by the three metropolitan retail water companies (retailers). It is anticipated that the BWE’s will be finalised, approved and issued by the State Government in November or December 2009.

The Victorian Government has mandated that the Corporation will contribute $300 million (excluding GST) towards the total investment in the project, and an agreement has been reached for the three metropolitan water retailers to make direct payments to the Corporation to finance this contribution.

At 30 June 2009 the first $45 million due in 2008/09 has been invoiced by DSE to the Corporation, and accordingly the Corporation has invoiced $45 million to the retailers. Of this $45 million the entire balance has been paid to DSE and reimbursed by the retailers on 24 June 2009. The associated income and expense flows have been offset in the Income Statement and the Balance Sheet to reflect the substance of the transaction being that the Corporation is merely a “pass through” agent.

The remaining commitment payable to DSE and correspondingly receivable from the retailers is as follows: Not later than one year 125,000 85,000 Later than 1 year but not later than 5 years 130,000 205,000 Later than 5 years - 10,000 Total commitment 255,000 300,000

30 Contingent assets and liabilities a Contingent assets As at 30 June 2009, there were no contingent assets recognised. - -

b Contingent liabilities Details and estimates of maximum amounts of contingent liabilities for which no provision is included in the accounts, are as follows: Claims or possible claims against the Corporation arising out of various matters 100 10,659 connected with the Corporation's business dealings.

149 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Notes to the Financial Report

Notes 2009 2008 $000 $000

31 Dividends Interim dividend paid (relating to previous financial year) 43,600 48,500 Final dividend paid (relating to previous financial year) 14,200 50,900 Interim dividend paid (relating to current financial year) 14,200 - Total dividends paid 26 72,000 99,400 The proposed interim and final dividend in relation to the 2008/09 financial year is $79.9 million, of which $14.2 million has been already paid in the current financial year, leaving $65.7 million final payable (2007/08: $57.8 million interim and final payable). This final amount payable is subject to final determination by the Treasurer after consultation with the Corporation’s Board of Directors and the Minister for Water and consequently has not been booked as a provision as at 30 June 2009.

32 Events occurring after balance sheet date No matters or circumstances have arisen since the end of the reporting period which significantly affected or may significantly affect the operations of the Corporation, the results of those operations, or the state of affairs of the Corporation in future financial years.

33 Remuneration of auditors During the reporting period, the following fees were paid or payable for services provided by the Victorian Auditor General’s Office: Audit of financial statements 130 118 Audit of drainage revenue billings and collections 32 25 Total amount paid/payable 162 143

34 Provisions i Insurance Claims The amount represents a provision for public liability, motor vehicle and property claims. The amount classified 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.

ii Remediation Works The amount represents a provision for remediation works at the Dandenong Treatment Plant, and a provision for remediation works at the Riverwalk Estate at Werribee (added in 2008/09). The amount classified as current represents the expected completion of works within the next 12 months. The amount classified as non-current represents works expected to be completed later than 12 months.

iii Other provisions 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.

150 Insurance Claims Remediation Works Other Provisions Total $000 $000 $000 $000

34 Provisions continued iv Movements in Provisions Movements in each class of provision during 2008/09, other than employee benefits, are set out below: Carrying amount at start of year 957 22,253 2,017 25,227 Additional provisions recognised 1,083 8,854 361 10,298 Amounts utilised during the year (1,036) (16,484) (104) (17,624) Carrying amount at end of year 17, 22 1,004 14,623 2,274 17,901

2009 2008 $000 $000

35 Employee Benefits Current: Accrued salaries (part of note 16) 1,946 1,543 Current: Employee benefits expected to be settled within 12 months after the end of the period measured at 7,346 6,345 nominal value (part of note 18) Current: Employee benefits expected to be settled after 12 months, measured at present value (part of note 18) 11,541 10,815 Non-current: Other employee benefits (part of note 21) 5,818 4,903 Non-current: Long service leave representing less than 7 years of continuous service measured at present value 1,520 1,657 (part of note 21) Total employee benefits liability 28,171 25,263 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 funds disclosed in Note 36.

36 Defined superannuation benefit Defined benefit superannuation The Equipsuper superannuation fund provides lump sum benefits based on length of service and final superannuable 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 under the Employee Participation Agreement and Contribution Policy with the Trustee of the fund.

Defined contribution superannuation Employees engaged from 1 January 1994 are entitled to benefits under accumulation funds. 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. The minimum employer contribution to the fund, pursuant to the Superannuation Guarantee Charge was 9.0 per cent in 2008/09 (2007/08: 9.0 per cent).

151 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Notes to the Financial Report

2009 2008 $000 $000

36 Defined superannuation benefitcontinued a Employer contributions Employer contributions to defined contribution funds 5,050 3,662 Employer contributions to employee nominated funds 568 405 Total employer contributions 5,618 4,067

b Reconciliation of the Present Value of the Defined Benefit Obligation Balance at the beginning of the year 76,509 69,185 Current service cost 1,838 1,663 Interest cost 4,570 3,708 Contributions by Plan participants 1,186 1,060 Actuarial (gains)/losses 10,491 6,040 Benefits paid (2,920) (4,923) Taxes and premiums paid (347) (224) Present value of the defined benefit obligation at the end of the year 91,327 76,509

c Reconciliation of the Fair Value of Plan Assets Balance at the beginning of the year 89,678 100,704 Expected return on Plan assets 5,970 6,788 Actuarial (gains)/losses (13,133) (13,727) Employer contributions 962 - Contributions by Plan participants 1,186 1,060 Benefits paid (2,920) (4,923) Taxes and premiums paid (347) (224) Fair value of Plan assets at the end of the year 81,396 89,678

d Reconciliation of the Assets and Liabilities Recognised in the Balance Sheet Present value of the defined benefit obligation 91,327 76,509 Less: fair value of Plan assets (81,396) (89,678) * Net superannuation liability/(asset) 9,931 (13,169) * The Corporation has recognised a liability in the Balance Sheet in respect of its defined superannuation benefit arrangements at 30 June 2009 (2007/08: asset). 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 contribution rate, depending on the advice of the Plan's actuary. If a deficit exists in the Plan, the Corporation may be required to increase the required contribution rate, depending on the advice of the Plan's actuary consistent with the Plan's deed. The Corporation has elected to do this during 2008/09 with an increase in the contributions made. The Corporation may at any time by notice to the Trustee terminate its contributions. The Corporation has a liability to pay the contributions due prior to the effective date of the notice, but there is no requirement for the Corporation to pay any further contributions, irrespective of the financial conditions of the Plan.

152 2009 2008 $000 $000

36 Defined superannuation benefitcontinued e Expense Recognised in the Income Statement Service cost 1,838 1,663 Interest cost 4,570 3,708 Expected return on Plan assets (5,970) (6,788) Actuarial loss/(gain) recognised in year 23,624 19,767 Total superannuation expense/(income) (Note 4) 24,062 18,350

f Categories of Plan assets The percentage invested in each asset class at the Balance Sheet date was: Australian Equity 36% 35% International Equity 25% 22% Fixed Income 12% 13% Property 11% 14% Alternatives/Other 10% 8% Cash 6% 8% Total 100% 100%

g Fair Value of Plan Assets The fair value of Plan assets includes no amounts relating to: a any of the Corporation's own financial instruments; b any property occupied by, or other assets used by, the Corporation.

h Expected Rate of Return on Plan Assets 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 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.

i Actual return on Plan assets (7,163) (6,939)

j Principal Actuarial Assumptions at the Balance Sheet Date Discount rate (active members) 5.4% pa 6.2% pa Discount rate (pensioners) 5.9% pa 6.8% pa Expected return on Plan assets (active members) 7.0% pa 7.0% pa Expected return on Plan assets (pensioners) 7.5% pa 7.5% pa Expected salary increase rate 5.0% pa 4.0% pa Expected pension increase rate 3.0% pa 3.0% pa

153 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Notes to the Financial Report

2009 2008 2007 2006 $000 $000 $000 $000

36 Defined superannuation benefitcontinued k Historical Information Present value of defined benefit obligation 91,327 76,509 69,185 74,068 Less: fair value of Plan assets (81,396) (89,678) (100,704) (90,852) (Surplus)/deficit in Plan 9,931 (13,169) (31,519) (16,784)

Experience adjustments (gain)/loss – Plan assets 13,133 13,727 (8,203) (6,308) Experience adjustments (gain)/loss – Plan liabilities 5,124 6,227 (5,455) 3,380

l Expected Contributions Expected employer contributions for defined benefit members during the financial year ending 30 June 2010 are expected to be $3.971 million.

37 Related party transactions a Parent entities The Department of Sustainability and Environment (DSE) leads and directs the Corporation in the implementation of the framework for achieving the Victorian Government's responsibilities for sustainability of the natural and built environment.

b Entities with significant influence – Department of Treasury and Finance The Department of Treasury and Finance (DTF) administers the Water Act 1989 and the Financial Management Act 1994, with which the Corporation is required to comply. DTF is also responsible for protecting the shareholder's interest in respect of corporate business plans, appointment of directors and capital project approvals above $50 million (2007/08: $5 million).

154 37 Related party transactions continued c Other related parties The following entities have the same controlling entities as the Corporation, and therefore are considered to be related parties of the Corporation.

City West Water Ltd, South East Water Ltd, Yarra Valley Water Ltd, Western Water, Gippsland Water and Southern Rural Water.

City West Water Ltd, South East Water Ltd, Yarra Valley Water Ltd, Western Water and Gippsland Water and Southern Rural Water are Government owned water authorities. City West Water Ltd, South East Water Ltd and Yarra Valley Water Ltd have bulk water and sewerage supply agreements with the Corporation. Western Water has a bulk water supply agreement with the Corporation. Gippsland Water and Southern Rural Water has a bulk recycled water supply agreement with the Corporation. These agreements operated on normal terms and conditions during the reporting period.

Environment Protection Authority Victoria The Environment Protection Authority Victoria (EPAV) is responsible for environmental regulation. It issues licences which set environmental discharge standards for the Corporation’s sewerage treatment plants. The standards cover discharges to water, land and air. EPAV is also responsible for issuing works approvals for capital works that may include a public consultation process. The Corporation has developed a Memorandum of Understanding with EPAV which assists in establishing a working relationship in respect of the operations of the sewerage system.

Treasury Corporation of Victoria The Treasury Corporation of Victoria provides financial accommodation (loans to the Corporation), executes financial arrangements (derivatives) and provides/arranges the provision of financial services to the Corporation.

Department of Primary Industries The Department of Primary Industries (DPI) promotes the sustainable development of primary industries, including agriculture and energy within Victoria. DPI uses a collaborative approach to influence improvements in industry performance and to encourage the adoption of new technologies and development practices. State Revenue Office The State Revenue Office (SRO) is the Victorian Government’s major tax collection agency. The SRO is a service agency of DTF, which falls within the portfolio responsibilities of the Treasurer of Victoria. The SRO administers Victoria’s taxation legislation and collects a range of taxes, duties and levies.

Victorian Urban Development Authority Victorian Urban Development Authority (VicUrban) is the Victorian Government’s sustainable urban development agency. The Corporation is involved with VicUrban in commercial arrangements associated with the development of land at the Dandenong Treatment Plant and surplus land at Werribee Treatment Plant.

Sustainability Victoria Sustainability Victoria is a Government owned agency that encourages and supports government, business and communities to promote environmental sustainability.

Parks Victoria Parks Victoria is a Government owned agency that is the custodian of a diverse estate of significant parks in Victoria and of the recreational management of Port Phillip Bay, Western Port and the Yarra and Maribyrnong rivers.

Vic Roads Vic Roads is a Government owned agency that is primarily responsible for managing the Victorian arterial road network and its use as an integral part of the overall transport system.

VicWater VicWater is a Government owned agency that contributes to and influences the development and implementation of Government policies relating to water and wastewater services within Victoria.

155 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Notes to the Financial Report

Notes 2009 2008 $000 $000

37 Related party transactions continued d Transactions with related parties Receipts from related parties Department of Sustainability and Environment 4,683 9,306 Other related parties City West Water Ltd 176,240 127,351 South East Water Ltd 239,965 181,385 Yarra Valley Water Ltd 258,738 200,555 Western Water 5,932 4,776 Southern Rural Water 1,737 1,641 Gippsland Water 17 18 Environment Protection Authority Victoria 182 - Victorian Urban Development Authority 591 4,419 Sustainability Victoria - 101 Vic Roads 904 30 VicWater - 16

Payments to related parties Department of Sustainability and Environment 178,664 8,882 Department of Treasury and Finance 23,261 18,589 Department of Primary Industries 382 384 Other related parties City West Water Ltd 3,568 2,819 South East Water Ltd 3,552 3,912 Yarra Valley Water Ltd 4,518 5,150 Western Water 244 351 State Revenue Office 10,927 28,989 Environment Protection Authority Victoria 424 1,743 Treasury Corporation of Victoria 103,249 89,964 Victorian Urban Development Authority 1,486 409 Sustainability Victoria 23 23 Parks Victoria 450 345 Vic Roads 744 1,381 VicWater 41 44

Dividend expense Department of Treasury and Finance 26, 31 72,000 99,400

Equity contributions (transfer of crown land) Department of Sustainability and Environment 24 34,702 8,580

156 Notes 2009 2008 $000 $000

37 Related party transactions continued e Outstanding balances arising from sales/purchases of goods and services The following balances are outstanding at the reporting date in relation to transactions with related parties: Current receivables Department of Sustainability and Environment 4,107 6,448 Other related parties City West Water Ltd 7,989 5,243 South East Water Ltd 8,571 6,231 Yarra Valley Water Ltd 9,531 7,238 Western Water 705 376 Gippsland Water 2 23 Southern Rural Water 4 1 Environment Protection Authority Victoria 29 55 Treasury Corporation of Victoria 5,176 - Victorian Urban Development Authority - 170

Current payables Department of Sustainability and Environment 44,178 910 Department of Treasury and Finance 3,381 1,752 Department of Primary Industry 160 - Other related parties City West Water Ltd 129 583 South East Water Ltd 389 83 Yarra Valley Water Ltd 438 210 Western Water 11 73 State Revenue Office 8,204 1,488 Environment Protection Authority Victoria 79 17 Treasury Corporation of Victoria 16, 17 486,867 338,362 Southern Rural Water 18 - Parks Victoria 14 - Sustainability Victoria 9 -

Non current payables Department of Sustainability and Environment 87,655 7,263 Treasury Corporation of Victoria 20 1,895,000 1,305,000 Other related parties City West Water Ltd - 100 Yarra Valley Water Ltd - 25 Environment Protection Authority Victoria - 110 Sustainability Victoria - 56

157 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Notes to the Financial Report

Notes 2009 2008 $000 $000

37 Related party transactions continued f Terms and conditions Transactions relating to dividends are subject to final determination by the Treasurer after consultation with the Corporation’s Board of Directors and the 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 and non-current payables, current receivables and borrowings.

38 Responsible persons related party disclosures a Responsible persons The names of persons who were responsible persons at anytime during the financial year were: • The Hon. Timothy Holding MP, Minister for Water (1 July 2008 to 30 June 2009) • Board Members: Chairman Cheryl Batagol 1 July 2008 to 30 June 2009 Deputy Chairman Merran Kelsall 1 July 2008 to 30 June 2009 Director Bruce Cohen 1 October 2008 to 30 June 2009 Director Peter Darvall 1 July 2008 to 30 June 2009 Director Mary Anne Hartley 1 July 2008 to 30 June 2009 Director Warren Hodgson 1 July 2008 to 30 June 2009 Director Terry Larkins 1 July 2008 to 30 June 2009 Director Carolyn Schultz 1 July 2008 to 30 September 2008 Director Peter Vines 1 July 2008 to 30 June 2009 Managing Director Rob Skinner 1 July 2008 to 30 June 2009

158 38 Responsible persons related party disclosures continued Remuneration of responsible persons Remuneration paid to the Minister is reported in the Annual Report of the Department of Premier and Cabinet. Other relevant interests are declared in the Register of Members’ Interests which each Member of Parliament completes.

Remuneration received, or due and receivable by the Managing Director in connection with the management of the Corporation during the reporting period was in the range of $390,000 - $399,999.

Remuneration of directors The number of responsible persons whose remuneration from the Corporation was within the specified bands were as follows:

Income Band ($) Total Remuneration

2009 Number 2008 Number 0 – 9,999 - 1 10,000 – 19,999 1 - 20,000 – 29,999 - 1 30,000 – 39,999 1 - 40,000 – 49,999 6 5 80,000 – 89,999 - 1 90,000 – 99,999 1 - 370,000 – 379,999 - 1 390,000 – 399,999 1 - Total numbers 10 9

$000 $000 Total amount 829 707

b Other related party transactions • There were no amounts paid by the Corporation in connection with the retirement of responsible persons of the Corporation during the financial year. • There were no loans in existence by the Corporation to responsible persons or related parties during the financial year. • Related party transactions involving Board Members are as follows:

2009 2008 $000 $000

i The Chairman, Cheryl Batagol, is the Deputy Chairman of Sustainability Victoria, a Government owned agency, which provides services to the Corporation. All dealings with this agency were on normal terms and conditions during the reporting period. Total revenue received from Sustainability Victoria was: - 101 Total payments made to Sustainability Victoria were: 23 23

159 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Notes to the Financial Report

2009 2008 $000 $000

38 Responsible persons related party disclosures continued ii A Director, Terry Larkins, is the Chairman of Western Water and the Victorian Water Industry Association (VicWater).

Western Water is a Government owned water authority, which has a bulk water supply agreement with the Corporation that was operative on normal terms and conditions during the reporting period.

VicWater is the peak industry association for water businesses and influences the development and implementation of Government policies relating to water and wastewater services. All dealings with this agency were on normal terms and conditions during the reporting period.

Total revenue received from Western Water was: 5,932 4,776 Total payments made to Western Water were: 244 351

Total revenue received from VicWater was: - 16 Total payments made to VicWater were: 41 44

iii A Director, Mary Anne Hartley, was a Director of Port of Melbourne Corporation (PoMC) until 30 June 2008, a Government owned agency responsible for commercial shipping in the waters of the Port Phillip Bay, Port Melbourne and Williamstown. All dealings with this agency were on normal terms and conditions during the 2007/08 reporting period (not applicable for 2008/09 as relationship no longer exists).

iv The Deputy Chairman, Merran Kelsall, is the Chairman of the audit committee 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.

Total revenue received from Darebin City Council was: 2 2 Total payments made to Darebin City Council were: 75 66

Merran Kelsall is also a member of the audit committee of the Department of Innovation, Industry and Regional Development (DIIRD). DIIRD is the Victorian Government’s lead agency for economic and regional development. All dealings with this agency were on normal terms and conditions during the reporting period. There was no revenue received from DIIRD or payments made to DIIRD in the 2008/09 reporting period or in the 2007/08 reporting period.

v A Director, Bruce Cohen, is a Director of Victorian Rail Track (VicTrack). VicTrack is a government rail agency whose charter is to operate commercially in adding value to the state’s public transport (primarily rail) assets and to support the delivery of public transport services. All dealings with this agency were on normal terms and conditions during the reporting period.

Total revenue received from VicTrack was: - - Total payments made to VicTrack were: 122 -

• All other transactions with related party entities were made on normal terms and conditions during the financial year.

160 39 Remuneration of executives 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:

(Total remuneration is inclusive of bonus payments, long-service leave payments, redundancy payments and retirement benefits. Base remuneration excludes these components).

Income Band ($) Total Remuneration Base Remuneration

2009 Number 2008 Number 2009 Number 2008 Number 100,000 – 109,999 - - - - 110,000 – 119,999 2 - 1 - 120,000 – 129,999 1 - 3 2 130,000 – 139,999 - 1 4 6 140,000 – 149,999 2 4 8 11 150,000 – 159,999 6 4 6 2 160,000 – 169,999 3 5 4 5 170,000 – 179,999 9 6 2 2 180,000 – 189,999 3 7 1 - 190,000 – 199,999 3 - 2 4 200,000 – 209,999 - 1 - 1 210,000 – 219,999 2 1 2 1 220,000 – 229,999 1 2 2 - 230,000 – 239,999 1 1 2 - 240,000 – 249,999 1 2 - - 250,000 – 259,999 2 - - - 260,000 – 269,999 1 - 1 1 270,000 – 279,999 1 - - - 300,000 – 309,999 1 1 - - Total numbers 39 35 38 35

$000 $000 $000 $000 Total amount 7,280 6,444 6,315 5,612

161 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Notes to the Financial Report

2009 2008 $000 $000

40 Key management personnel compensation 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. Short-term employment benefits 2,468 1,858 Post-employment benefits - - Other long-term benefits* 465 355 Termination benefits - - Share-based payment - - Total amount 2,933 2,213

Total numbers 9 8 * Other long-term benefits represents long service leave.

41 Reconciliation of net cash provided from operating activities to net profit Net profit 26 127,986 67,642

Plus/(less) non cash items: Depreciation 4 105,783 87,497 Net (gain)/loss on sale of non-current assets 3b (1,358) (719) Assets written off / written down 4 7,949 11,652 Asset revaluation decrements 4 - 272 Value of works taken over from developers (13,440) (14,079)

Changes in operating assets and liabilities: Decrease (increase) in trade receivable and other receivables 7 (42,491) (8,343) Decrease (increase) in other assets (4,436) 599 Decrease (increase) in current tax assets 5 1,320 (1,320) (Decrease) increase in provision for impaired receivables 7a 8 (1) (Decrease) increase in trade creditors and payables 16, 19 42,613 (7,704) (Decrease) increase in provisions 18, 21 (4,821) (11,148) (Decrease) increase in current tax liabilities 5 55,800 (2,096) Net movement in defined benefit asset / liability 36 23,100 18,350 (Decrease) increase in deferred tax liabilities 22 (19,206) 23,015 Net cash provided by operating activities 278,807 163,617

162 Statement by Directors and Chief Finance Officer

In the opinion of the Directors of Melbourne We certify that the financial statements On behalf of the Board: Water Corporation: have been prepared in accordance with the requirements of the Financial a the accompanying financial statements Management Act 1994, including are drawn up so as to present fairly, in all the Directions and applicable material respects the financial performance accounting standards. of the Corporation for the year ended 30 June 2009 and the financial position We are not aware, at the date of this of the Corporation as at that date; statement, of any circumstance which Cheryl Batagol would render any particulars in the b at the date of this statement there are Chairman financial statements to be misleading reasonable grounds to believe that the or inaccurate. Corporation will be able to pay its debts as and when they fall due; Dated at Melbourne on this 21st day of August 2009. c the accompanying financial statements are founded on a sound system of risk management and internal compliance

and control which implements the policies Robert Skinner adopted by the Board of Directors; and Managing Director

d the Corporation’s risk management and internal compliance and control system is operating efficiently and effectively in all material respects.

Malcolm Haynes Chief Finance Officer

163 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M

164 165

Disclosure Index The Annual Report of Melbourne Water is prepared in accordance with all relevant Victorian legislation.This index has been prepared tofacilitate identification of compliance with statutory disclosure requirements.

Information Statutory Statutory

MELBOURNE WATER SUSTAINABILITY REPORT Disclosure Index Legislation Disclosure Required Page Ministerial Directions

Report of Operations Charter and purpose FRD 22B Manner of establishment and the relevant Minister 2, 104 FRD 22B Objectives, functions, powers and duties 2–5, 102–105 FRD 22B Nature and range of services provided 2, 6 Management and structure FRD 22B Organisational structure 108–109 Financial and other information FRD 10 Disclosure index 167–168 FRD 22B Statement of workforce data 86–91 FRD 22B Summary of the financial results for the year 95 FRD 22B Five year summary of financial results 111 FRD 22B Significant changes in financial position during the year 95 FRD 22B Operational and budgetary objectives and performance against objectives 8–99 FRD 22B Occupational health and safety 85–86 FRD 22B Major changes or factors affecting performance 6, 11, 18, 30, 40, 52, 62, 74, 84, 94 FRD 22B Subsequent events 150 FRD 22B Application and operation of Freedom of Information Act 1982 175 FRD 22B Compliance with building and maintenance provisions of Building Act 1993 183 FRD 22B Statement of National Competition Policy 175 FRD 22B Application and operation of the Whistleblowers Protections Act 2001 177 FRD 22B Details of consultancies over $100,000 174 FRD 22B Details of consultancies under $100,000 174 FRD 22B Statement of availability of other information 175 FRD 22B Environmental performance 6, 10–15, 27, 30–71, 88–91, 114 FRD 25 Victorian Industry Participation Policy disclosures 114 SD 4.5.5 Risk management compliance attestation 103

Financial Report Financial statements required under Part 7 of the Financial Management Act 1994 SD 4.2(a) Statement of Changes in Equity 118 SD 4.2(b) Income Statement 115 SD 4.2(b) Balance Sheet 116 SD 4.2(b) Cash flow Statement 117 Other requirements under Standing Directions 4.2 SD 4.2(b) Notes to the financial statements 119–162 SD 4.2(c) Compliance with Australian accounting standards and other 119 mandatory professional reporting requirements SD 4.2(c) Compliance with Ministerial Directions 119 SD 4.2(c) Accountable officer’s declaration 163 SD 4.2(d) Rounding of amounts 119

167 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Statutory Information

Disclosure Index continued Legislation Disclosure Required Page Other disclosures as required by FRDs in notes to the financial statements FRD 03A Accounting for dividends 123, 150 FRD 11 Disclosure of ex-gratia payments N/A FRD 19 Private provision of public infrastructure (BOO/BOOT) 123–148 FRD 21A Responsible person and executive officer disclosures 158–162 FRD 103D Non-current physical assets 120–121, 137–138 FRD 121 Infrastructure assets 120–121, 137–138 FRD 104 Foreign currency 120–121, 137–138 FRD 106 Impairment of assets 120–121, 137–138 FRD 109 Intangible assets 121, 124, 137–138 FRD 110 Cash flow statements 117, 121, 162 FRD 112B Defined Benefit Superannuation Obligations 122, 139, 141, 152–154 FRD 114A Financial Instruments – General Government Entities and Public Non-Financial Corporations 119, 126, 142–145 FRD 119 Contributions by Owners 125, 141

Legislation Freedom of Information Act 1982 Building Act 1993 Whistleblowers Protections Act 2001 Victorian Industry Participation Policy Act 2003 Financial Management Act 1994

Statement of Corporate Intent Governance Our challenge About us The governance of Melbourne Water Our vision is ambitious and our challenge Day to day we manage water supply is undertaken by an independent Board is to secure sufficient water resources for catchments, treat and supply drinking of Directors. The Board operates under future generations and the environment in and recycled water, remove and treat the provisions of Part 6 of the Water Act the context of climate change, population most of Melbourne’s sewage, and manage 1989 (Vic) and reports annually to the growth and resource scarcity. waterways and major drainage systems Minister for Water and the Treasurer. We have the passion, flexibility and in the Port Phillip and Westernport region. Our vision expertise to meet this challenge, backed We are a significant business managing We will ensure a ‘sustainable water future’ by a long history of sound management $9.4 billion (written down replacement in which our water supply is secure and of Melbourne’s water resources. value as at 30 June 2009) of natural high quality, our waterways and bays and built assets. Our culture are healthy, biodiversity is improved Sustainability is our cornerstone and We consider social, environmental and stormwater and treated wastewater constructive behaviours are the foundation and financial effects and short-term is recycled or beneficially used. of our work culture. We think independently and long-term implications in all our Service delivery is based on efficient resource and are encouraged to take on new and business decisions. Our key stakeholders use and by 2018 we will achieve zero net interesting activities (self-actualising). are customers, government, regulators, greenhouse gas emissions and meet all our We provide support to one another other water businesses, land developers, energy needs from renewable sources. to improve and develop (humanistic- the community and suppliers. They and encouraging), we set challenging and our other strategic partners, including We will achieve our vision through continuing realistic goals (achievement), and place alliance colleagues and research to adopt innovative approaches to asset emphasis on building strong and organisations, help us achieve and resource management and working enduring relationships with our our objectives. collaboratively with all our stakeholders. stakeholders (affiliative).

168 Disclosure Index continued We operate with integrity and care for Scale of activities: We have established major project and the health and wellbeing of our people, services provided in 2008/09 alliance program partnerships to deliver Legislation Disclosure Required Page our stakeholders and the community, Melbourne Water capital works. Other disclosures as required by FRDs in notes to the financial statements and value our relationships with them. ••Water Other partners include the Port Phillip Supplied 371,170 million litres FRD 03A Accounting for dividends 123, 150 Service responsibilities and Westernport Catchment Management of drinking water FRD 11 Disclosure of ex-gratia payments N/A Melbourne Water’s role encompasses Authority, the Municipal Association FRD 19 Private provision of public infrastructure (BOO/BOOT) 123–148 integrated management of water resources ••Sewerage of Victoria, Sustainability Victoria and Treated 261,392 million litres of sewage FRD 21A Responsible person and executive officer disclosures 158–162 throughout the water cycle, providing: universities. Research organisations, such FRD 103D Non-current physical assets 120–121, 137–138 ••Water to the three metropolitan retail ••Waterways as the CSIRO and Cooperative Research Population receiving services (million): 3.9 Centres, engineering consultants, and FRD 121 Infrastructure assets 120–121, 137–138 water businesses and two non-metropolitan water authorities (Western Water and ••Recycled water contractors who carry out tasks ranging FRD 104 Foreign currency 120–121, 137–138 Gippsland Water) 60,466 million litres* from inspecting and maintaining assets to FRD 106 Impairment of assets 120–121, 137–138 catchment surveillance and litter removal, ••Sewerage services to the three metropolitan Percentage of water recycled: 21.2* FRD 109 Intangible assets 121, 124, 137–138 also assist us to achieve our objectives. retail water businesses * Excludes recycled water supplied as environmental flows FRD 110 Cash flow statements 117, 121, 162 ••Waterways services including waterway Melbourne Water revenue (2008/09, $M) We work with community stakeholders FRD 112B Defined Benefit Superannuation Obligations 122, 139, 141, 152–154 and drainage management and water Service including ‘Friends of’, Landcare, resident FRD 114A Financial Instruments – General Government Entities and Public Non-Financial Corporations 119, 126, 142–145 quality protection in the Port Phillip and ••Water 227.3 and environment groups, advisory bodies, rural landowners and the education sector. FRD 119 Contributions by Owners 125, 141 Westernport catchments, and diversion ••Sewage disposal 240.4 licence administration in the Yarra and ••Drainage rates 170.4* Melbourne Water is committed to Legislation Maribyrnong catchments meeting statutory and environmental ••Developer charges and contributions 54.8 Freedom of Information Act 1982 ••Recycled water services to the and health regulations, including: ••River diversion licences 0.4 Building Act 1993 metropolitan retail water businesses, ••Complying with EPA Victoria discharge Southern Rural Water and a private ••Recycled water 2.5 Whistleblowers Protections Act 2001 licences issued for the Eastern and sector recycled water supplier. ••Other 36.4 Western treatment plants and other Victorian Industry Participation Policy Act 2003 ••Total revenue and other income: 732.2 related agreements or understandings Financial Management Act 1994 Scale of activities Melbourne Water manages about $9.4 billion * Refers to the Waterways Charge ••Achieving drinking water quality and (written down replacement value as at 30 June supply standards specified in the bulk 2009) in water supply, sewerage, drainage and Who we work with water supply agreements between recycled water assets that service an area of Melbourne Water is owned by the Victorian Melbourne Water and City West Water, 12,800 square kilometres. The assets comprise: Government. In managing water resources, South East Water and Yarra Valley Water Melbourne Water complies with a wide range ••More than 156,000 hectares of protected and other water businesses, including of legislative and regulatory requirements and water supply catchments Southern Rural Water, Western Water customer service obligations. EPA Victoria and and Gippsland Water ••10 major reservoirs with a total capacity of the Department of Human Services regulate ••Complying with the Safe Drinking Water 1810 billion litres and 64 service reservoirs the environmental and public health aspects Act 2003, Health Fluoridation Act 1973 ••42 primary and secondary water treatment of our business. plants and two major sewage treatment plants ••Complying with the Occupational Health The Essential Services Commission regulates and Safety Act 1985 and regulations. ••47 sewage, water and drainage prices and monitors service performance. pumping stations We work across several arms of the Victorian Business policies ••994 kilometres of water mains, 11 kilometres Government, including the Department Melbourne Water has policies covering of recycled water mains, 214 kilometres of of Sustainability and Environment and its key responsibilities and obligations aqueducts and tunnels, and 391 kilometres the Department of Treasury and Finance. including environment, public health, of sewers community, employees, occupational Our customers include the metropolitan health and safety, risk management, ••1452 kilometres of underground drains, retail water businesses – City West Water, accounting, legal and commercial. 289 waterways treatment systems and South East Water, Yarra Valley Water – other 8400 kilometres of waterways. water businesses, councils, land developers and businesses that divert river water.

169 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Statutory Information

Key performance indicators 2009/10 – 2011/12 Indicator 2009/10 2010/11 2011/12 Water Production and storage Operate water supply system within environmental requirements - % compliance 100% 100% 100% Contribute to the State Government’s water conservation target of reducing per capita water 3.7% N/A N/A consumption by 15% by 2010 (of the 15%, Melbourne Water’s component is 3.7% by 2010) Maintain system losses as a percentage of water supplied to retail water businesses <1.0%1 <1.0%1 <1.0%1 Water transfer Compliance with retail water businesses’ pressure requirements as set out in BWSAs 99.6% 99.6% 99.6% Water quality Compliance with BWSA water quality requirements: Microbiological standards (E.coli) 100% 100% 100% Disinfection by-products 100% 100% 100% Aesthetics (turbidity) 91.5% 91.5% 91.5% Aesthetics (aluminium) 100% 100% 100% Sewerage WTP EPA Victoria licence compliance Compliance with EPA Victoria discharge licence requirements 100% 100% 100% <3100 <3100 <3100 Nitrogen load to Port Phillip Bay tonnes tonnes tonnes Offensive odours beyond the boundary 0 0 0 Raw sewage TDS <1000 mg/L <1000 mg/L <1000 mg/L ETP EPA Victoria licence compliance Compliance with EPA Victoria discharge licence requirements 100% 100% 100% Ammonia limit <5 mg/L <5 mg/L <5 mg/L Offensive odours beyond the boundary 0 0 0 Litter at beach (that results in a licence breach) 0 0 0 Final effluent TDS <500 mg/L <500 mg/L <500 mg/L Sewerage Transfer EPA Victoria SEPP compliance for sewerage system spills System failure – zero spills due sewerage system failure 0 0 0 Hydraulic deficiency – progressively achieve zero spills due 0 0 0 to storm events of a severity of up to 1-in-5 years Complaints relating to transfer system odour <10 <10 <10 Work with retail water businesses to improve sewage quality management: Number of high risk non-compliant trade waste discharges to Melbourne Water’s sewerage system 0 0 0 Biosolids Maximise sustainable reuse of biosolids: ETP – Biosolids reuse of 90,000 cubic metres for construction fill by 2013 0 0 45,000m3 WTP – Biosolids reuse 0 0 0

1 Reflects accuracy of estimate and annual variation in volume supplied

170 Key performance indicators 2009/10 – 2011/12 Key performance indicators 2009/10 – 2011/12 continued Indicator 2009/10 2010/11 2011/12 Indicator 2009/10 2010/11 2011/12 Water Waterways Production and storage Achieve Waterways Operating Charter performance targets 100% 100% 100% Operate water supply system within environmental requirements - % compliance 100% 100% 100% Drainage and flood protection Contribute to the State Government’s water conservation target of reducing per capita water All new development complies with flood protection standards 100% 100% 100% 3.7% N/A N/A consumption by 15% by 2010 (of the 15%, Melbourne Water’s component is 3.7% by 2010) Currently known intolerable flood risks reduced by 10% by 2013 0 0 0 Maintain system losses as a percentage of water supplied to retail water businesses <1.0%1 <1.0%1 <1.0%1 Stormwater quality Water transfer Contribute to reducing the waterway nitrogen load to Port Phillip Bay through targeted 100 tonnes 102 tonnes 104 tonnes Compliance with retail water businesses’ pressure requirements as set out in BWSAs 99.6% 99.6% 99.6% stormwater action as set out in the Waterways Water Quality Strategy Water quality Achieve Water Plan implementation targets set out in the Waterways Water Quality Strategy 100% 100% 100% Compliance with BWSA water quality requirements: and Regional River Health Strategy for water quality programs and works Microbiological standards (E.coli) 100% 100% 100% Waterways condition Disinfection by-products 100% 100% 100% Achieve Water Plan implementation targets and regional priorities assigned to Melbourne 100% 100% 100% Aesthetics (turbidity) 91.5% 91.5% 91.5% Water from the Regional River Health Strategy and Addendum Aesthetics (aluminium) 100% 100% 100% Land development Sewerage Development and redevelopment services schemes prepared, implemented 100% 100% 100% WTP and reviewed according to the development planning program EPA Victoria licence compliance Statutory and agreed industry response times to be achieved for all development referrals 100% 100% 100% Compliance with EPA Victoria discharge licence requirements 100% 100% 100% Streamflow diversions <3100 <3100 <3100 Diversions to be managed: Nitrogen load to Port Phillip Bay tonnes tonnes tonnes In accordance with rules specified in streamflow management plans, 100% 100% 100% Offensive odours beyond the boundary 0 0 0 local management rules or drought response plans Raw sewage TDS <1000 mg/L <1000 mg/L <1000 mg/L To meet the service requirements in Melbourne Water’s Customer Charter (Diversion Services) 100% 100% 100% ETP Community and stakeholder engagement EPA Victoria licence compliance Maintain 70% total community satisfaction with waterways2 70% 70% 70% Compliance with EPA Victoria discharge licence requirements 100% 100% 100% Ammonia limit <5 mg/L <5 mg/L <5 mg/L Recycled Water Offensive odours beyond the boundary 0 0 0 Contribute 19.6% to the Government’s 20% water recycling target by 2010 19.6% N/A N/A Litter at beach (that results in a licence breach) 0 0 0 Capacity to supply recycled water of specified reliability and quality from ETP and WTP to >700ML >900ML >1300ML Final effluent TDS <500 mg/L <500 mg/L <500 mg/L enable retail water businesses to meet their targets for potable water substitution Sewerage Transfer EPA Victoria SEPP compliance for sewerage system spills Corporate System failure – zero spills due sewerage system failure 0 0 0 Sustainability Hydraulic deficiency – progressively achieve zero spills due Achieve sustainability performance score within 20% of the best score by global water utilities within 20% within 20% within 20% of 0 0 0 to storm events of a severity of up to 1-in-5 years and Australian utilities, using the Dow Jones Sustainability World Indices (DJSI)2 of best score of best score best score Complaints relating to transfer system odour <10 <10 <10 Maintain financial viability3 Work with retail water businesses to improve sewage quality management: Meet Regulated Water Plan Operating Expenditure ($M) 292.8 309.5 538.6 Number of high risk non-compliant trade waste discharges to Melbourne Water’s sewerage system 0 0 0 Interest Cover (EBIT) 2.2 2.0 1.7 Biosolids Interest Cover (Cash) 3.0 2.7 2.3 Maximise sustainable reuse of biosolids: Cash Returns to Government ($M) 175.5 195.7 196.0 ETP – Biosolids reuse of 90,000 cubic metres for construction fill by 2013 0 0 45,000m3 Gearing (Debt/Debt + Equity) 59.7% 62.7% 63.9% WTP – Biosolids reuse 0 0 0 Return on Equity 6.7% 7.5% 6.2%

2 Performance will be measured every two years 3 Financial indicators are forecast outcomes, not targets

171 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Statutory Information

Key performance indicators 2009/10 – 2011/12 continued Indicator 2009/10 2010/11 2011/12 Natural environment Renewable energy and greenhouse Renewable energy used or exported as % of total energy used 58% 61% 61% % reduction on 2000/01 greenhouse gas emissions4 42% 42% 42% Biodiversity For the 9 DSE-designated sites of high biodiversity significance (BioSites), the number of BioSites that have: been surveyed (cumulative) 8 9 9 had management plans developed (cumulative) 4 8 9 had management plans implemented (cumulative) 2 3 8 Our people and our workplace Number of lost time injuries: 0 0 0 Melbourne Water people Contractors Maintain SafetyMap accreditation Yes Yes Yes Turnover 5–10% 5–10% 5–10% Absenteeism (days per person per year) 2.7 2.7 2.7 Minimise everyday environmental impacts: % reduction on 2006/07 office water consumption per FTE 3.5% 3.5% 3.5% % reduction on 2006/07 office paper use per FTE 10% 12% 14% % reduction on 2006/07 office waste to landfill per FTE 6% 8% 10% % reduction on 2006/07 office energy use per FTE 3.5% 4.0% 4.5% Offsetting greenhouse gas emissions from office energy use and travel 100% 100% 100% Relationships – customer, community, stakeholder Customers Complaints referred to EWOV responded to within EWOV established time 100% 100% 100% Community Effectiveness of community committee and community consultation processes5 80% 85% 85% Effectiveness of community education programs5 80% 85% 85%

4 This target has changed from 40% reduction greenhouse gas emissions based on old Australian Greenhouse Office methods, to 42% under the Commonwealth Government’s new greenhouse gas accounting scheme, the National Greenhouse and Energy Reporting System (NGERS) 5 Performance will be measured every two years

172 Key performance indicators 2009/10 – 2011/12 continued Publications Indicator 2009/10 2010/11 2011/12 Title Date of Publication Type Natural environment Edstream online newsletter Quarterly Education Renewable energy and greenhouse Primary school calendars – Dec 2009 Education Renewable energy used or exported as % of total energy used 58% 61% 61% Eastern Treatment Plant, Western Treatment Plant, Winneke water treatment plant % reduction on 2000/01 greenhouse gas emissions4 42% 42% 42% Buildover Guide – Version 2 Jun 2009 Guidelines Biodiversity Constructed Waterways in Urban Developments Guidelines May 2009 Guidelines For the 9 DSE-designated sites of high biodiversity Planting Guide – Version 2 Jun 2009 Guidelines significance (BioSites), the number of BioSites that have: Shared Pathway Guidelines Jan 2009 Guidelines been surveyed (cumulative) 8 9 9 Utility Installation Guide – Version 2 Jun 2009 Guidelines had management plans developed (cumulative) 4 8 9 Water Sensitive Urban Design Guidelines Jan 2009 Guidelines had management plans implemented (cumulative) 2 3 8 Bass Coast – Melbourne Water update Aug 2008 Newsletters Our people and our workplace Melbourne Main Sewer Replacement Bi-annually Newsletters Number of lost time injuries: 0 0 0 Northern Sewerage Project Quarterly Newsletters Melbourne Water people OnTap Monthly internal online newsletter Monthly Newsletters Contractors Patterson Lakes Advisory Committee Quarterly Newsletters Maintain SafetyMap accreditation Yes Yes Yes Puddles in the Plains (Werribee Plains newsletter) Jul 2009 Newsletters Turnover 5–10% 5–10% 5–10% Sugarloaf Pipeline Project Regular updates Monthly Newsletters Absenteeism (days per person per year) 2.7 2.7 2.7 Tarago Project Regular updates Monthly Newsletters Minimise everyday environmental impacts: “Loving the Yarra” Melbourne Water’s Birrarung Celebration Mar 2009 Report % reduction on 2006/07 office water consumption per FTE 3.5% 3.5% 3.5% Development Planning Annual Report 2007/08 May 2009 Report % reduction on 2006/07 office paper use per FTE 10% 12% 14% Melbourne Water Youth Conference Program Jun 2009 Report % reduction on 2006/07 office waste to landfill per FTE 6% 8% 10% Melbourne Water Youth Conference Report Aug 2009 Report % reduction on 2006/07 office energy use per FTE 3.5% 4.0% 4.5% Western Treatment Plant Annual performance report to EPA. Sep 2009 Report Offsetting greenhouse gas emissions from office energy use and travel 100% 100% 100% Western Treatment Plant recycled water quality report. Monthly Report Relationships – customer, community, stakeholder Western Treatment Plant report to Community Liaison Committee. Quarterly Report Customers Building our water future together Jan 2009 Strategy Complaints referred to EWOV responded to within EWOV established time 100% 100% 100% Cultural Heritage Strategy 2008 – 2011 Sep 2008 Strategy Community Melbourne Water Strategic Framework Mar 2009 Strategy Effectiveness of community committee and community consultation processes5 80% 85% 85% Melbourne Water’s Operating Charter for waterway management Jun 2009 Strategy Effectiveness of community education programs5 80% 85% 85% in the Port Phillip & Westernport region 2008/09 to 2012/13

173 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Statutory Information

Consultants During 2008/09, Melbourne Water engaged 31 consultants at less than $100,000 each to undertake operational and capital works projects at a total cost of $798,089 (exclusive of GST).

In addition, Melbourne Water engaged three consultants (see table below) at over $100,000 to undertake the following projects (expenditure excludes GST):

Consultants Consultant Project Total fee approved Expenditure 2008/09 Future expenditure MWH Australia MWH Soft Model Conversion $3,500 $3,500 - MWH Australia Model Validation – Silvan, Winneke & Greenvale $57,602 $30,864 $26,738 MWH Australia Water Quality – Maroondah Aqueduct Catchment $55,592 $55,592 - MWH Australia Melbourne Water’s Greenhouse And Energy Strategy $15,764 $15,764 - MWH Australia Biosolids – Energy Recovery $90,000 $60,473 $29,527 Total for MWH Australia $222,458 $166,193 $56,265

Determination of Best Practice Monitoring Halcrow Pacific $187,734 $161,262 $16,010 and Operation of Pumping Stations Total for Halcrow Pacific $187,734 $161,262 $16,010

GHD ETP Tracer Study $60,000 $59,984 - GHD Investigation of contingency options for Thomson Reservoir $36,674 $25,103 $11,571 GHD Biosequestration & Native Vegetation Offsets $66,000 $41,327 $24,673 Total for GHD $162,674 $126,414 $36,244

174 National Competition Policy Authorised officer: Mr M Facciolo Access to documents Melbourne Water has submitted our 2009 Freedom of Information Officer, People wanting access to Melbourne Water Water Plan for water, sewerage and recycled Melbourne Water documents under the Freedom of Information water services to the Essential Services Act 1982 (Vic.) should write to: Requests for information Commission (ESC) in November 2008 to Freedom of Information Officer This year we received 35 requests for access enable the ESC to make a price determination Melbourne Water to documents under the Freedom of for the four-year period commencing PO Box 4342 Information legislation. We processed 2009/10. The 2009 Water Plan will set out Melbourne Victoria 3002 these requests as follows: performance relative to the expenditures Each application must clearly identify the and outcomes included in the ESC’s first Access in full 9 documents sought and be accompanied determination as well as proposed Access in part 12 by the required application fee, currently outcomes, expenditures and prices for Access refused 4 $23.40. General inquiries concerning the second price determination period. Documents not located 5 Withdrawn 4 Freedom of Information can be made by In December 2007, Melbourne Water Applicant did not proceed 1 telephoning the Freedom of Information submitted its 2008 Water Plan for Not finalised 0 Officer on (03) 9235 1540 between 9am waterways and drainage services, and 5pm, Monday to Friday or via email to: which enabled the ESC to make a The applications received related [email protected] price determination for these services to the following issues: Information on our consultative arrangements, commencing in 2008/09 for a five-year Personal injury 0 required under Section 7 of the Act, is available period. These processes are consistent Water quality 1 on our website, melbournewater.com.au. with the pricing and institutional Business administration 14 Information on our publications, also required reform objectives of the National Water supply 6 under Section 7, is included in this report. Competition Policy. Waterways management 2 Property 10 Categories of documents Melbourne Water is corporatised and Flooding 0 We use a computerised records management therefore has an independent Board, with Other 3 system to manage our correspondence and independent and objective performance documents. We use online computer systems monitoring. We face equivalent tax Year Number of requests to manage our financial, human resource and treatment, borrowing requirements 2003/04 17 other operational activities and plans relating and regulations as a private business. 2004/05 11 to our water supply, waterways, and drainage As outlined above, we also operate 2005/06 14 and sewerage responsibilities. Historical in an environment where the ESC 2006/07 20 archives on our activities are available determines cost-based pricing. 2007/08 20 through the Public Record Office Victoria. In this regard, our processes are 2008/09 35 consistent with the requirements Pricing of the Competitive Neutrality Grounds for refusing release of documents: Consistent with the Essential Services Policy Victoria. internal working documents and/or documents Commission’s Final Determination in the containing sensitive commercial information 2008 Water Price Review, Melbourne Water’s Freedom of information and/or documents affecting personal privacy water and sewerage prices increased by an Melbourne Water is subject to the and/or Cabinet documents. average of 23.5% in real terms (excluding Freedom of Information Act 1982 (Vic.) inflation) in 2008/09. In addition, Melbourne and is committed to making documents Water’s waterways and drainage charges and information available to the community increased by an average of 1.8% in real whenever it can. The designated persons terms in 2008/09. for the purpose of the Act are:

Principal officer: Ms C Batagol Chairman, Melbourne Water

175 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Statutory Information

Bulk entitlements ••Any new bulk entitlement of water granted On 20 December 2007, the Minister for Melbourne Water, as the Storage Operator to the Authority; Water qualified environmental flows in the of the Melbourne headworks system, must ••Any failures to comply with any provision Thomson River. This qualification reduced provide reporting in accordance with the of the bulk entitlement; the environmental entitlement by 10,000 bulk entitlements. This is completed via ML on 31 December 2007 and annually ••Any difficulties experienced or anticipated Melbourne Water’s Sustainability Report thereafter by 8,000 ML. Compliance with in complying with the bulk entitlement on an annual basis to demonstrate how revised environmental flows under both and any remedial action taken or proposed. the obligations in the bulk entitlements qualifications was achieved. are met. It covers the Yarra River, Thomson Data relevant to the above reporting The table on page 178 details the annual River, Silver/Wallaby Creeks (Goulburn requirements have been prepared by reporting obligations against the Bulk River Basin), Tarago Bunyip Rivers, and Melbourne Water on behalf of the three Entitlement (Thomson River – Melbourne Maribyrnong River. retail water businesses. Water Corporation) Conversion Order This report includes the annual diversion Please note that because all data in this 2001. The data is based on the entitlement amounts and compliance with diversion report has been subject to final verification, to water in Thomson Basin. limits, and any amendments and transfer it may vary slightly to the data previously Reporting obligations for the of entitlements. provided in monthly reports to the Bulk Yarra River entitlements Entitlement Management Committee New bulk entitlement Temporary Qualification of Rights – Yarra during 2008/09. As of the 1st May 2009, the Tarago and River Environmental Entitlement 2006 Bunyip River Bulk Entitlements for the Reporting obligations for the combined On 20 October 2007, the Minister for Water Metropolitan Retailers (South East Water, diversion limit in the Thomson River, Yarra agreed to reduce the Yarra River Environmental Yarra Valley Water, City West Water), River, Silver and Wallaby Creeks systems Entitlement by 10,000 ML/year on average for Southern Rural Water, Gippsland Water The following table details the compliance the period until the earlier of construction of and the Environment came into effect. with the combined diversion limit for the Melbourne’s desalination plant is complete or following bulk entitlements: Melbourne is no longer subject to restrictions Reporting requirements more severe than Stage 2. From this time, The Bulk Entitlement (BE) Orders set out ••Bulk Entitlement (Thomson River – Melbourne the environmental flow rules in place prior to a number of obligations including the Water Corporation) Conversion Order 2001 the granting of the Yarra River Environmental requirement for the Storage Operator ••Bulk Entitlement (Yarra River – Melbourne Entitlement in October 2006 will apply until to report against various aspects relating Water) Conversion Order 2006 Stage 2 restrictions are lifted. These include to the status of bulk entitlements and ••Bulk Entitlement (Silver and Wallaby Creeks the environmental flow rules set out in compliance with the any provisions set – Melbourne Water) Conversion Order 2006 Schedule F7 (Waters of the Yarra Catchment) out under the entitlements. Reporting obligations for of the Victorian State environment protection Melbourne Water is required to report the Thomson River entitlements policy (SEPPs). Compliance with revised against the following requirements on Temporary Qualification environmental flows under the qualification an annual basis: of Rights – Bulk Entitlement was achieved. ••The status of the bulk entitlement to water (Thomson River – Environment) 2005 The table on page 179 details the annual in the headworks system including the On 23 March 2007 the Minister for Water reporting obligations against the Bulk 6 amount of water taken by the Authority agreed to relax the operating tolerance Entitlement (Yarra River – Melbourne Water) from the waterways; placed on the achievement of minimum Conversion Order 2006. The data is based ••Compliance with the diversion limit; environmental flows downstream of on the entitlement to water in Yarra Basin. Thomson Dam until Stage 2 water ••Any temporary or permanent transfer restrictions are lifted in Melbourne. Reporting obligations for the Silver of all or part of the bulk entitlement; and Wallaby Creeks entitlements ••Any temporary or permanent transfer The table on page 180 details the annual of a bulk entitlement or other entitlement reporting obligations against the Bulk under the Water Act 1989 to the Authority, Entitlement (Silver and Wallaby Creeks – which does or may alter the flow of water Melbourne Water) Conversion Order 2006. in the waterway; The data is based on the entitlement to ••Any amendment to the bulk entitlement; water in Silver and Wallaby Creeks.

6 Authority refers to the three Retail Water Businesses

176 Reporting obligations for the Tarago On expiration of the amendment orders, a Whistleblowers’ Protection and Procedures and Bunyip Rivers entitlements Temporary Qualification of Rights to Water The Whistleblowers Protection Act 2001 As of the 1st May 2009, the Tarago and in the Maribyrnong River came into effect. began operation on 1 January 2002. Bunyip River Bulk Entitlements for the This qualification will remain in force until It aims to encourage and facilitate Metropolitan Retailers (South East Water, the Declaration of Water Shortage in the disclosure of improper conduct by Yarra Valley Water, City West Water), Maribyrnong (Rosslynne) Water Supply public officers and public bodies. Southern Rural Water, Gippsland Water System 2008 is lifted. The Qualification and the Environment came into effect. removes the provision of minimum flows Melbourne Water is committed to the aims in Jackson’s Creek, as specified in the Bulk and objectives of the Act, has established Under the entitlements for the metropolitan Entitlement (Maribyrnong – Southern the following procedures and takes the retailers, Melbourne Water is entitled to Rural Water) Conversion Order 2000 following approach to disclosures of harvest (over any consecutive five year and establishes the capacity for the improper conduct: period) on the Retailers behalf: Environmental Water Reserve manager ••A reporting system was established with ••24, 950 ML/year from the Tarago River to provide a flushing flow release to Protected Disclosure Officers reporting to Catchment at Tarago Reservoir prevent any emergency as described the Protected Disclosure Coordinator, who ••5,560 ML/year from the Bunyip River in the Environmental Emergency in turn, reports to the Managing Director Catchment at Bunyip Weir Contingency Plan. ••Melbourne Water will take all reasonable steps Within this cap Melbourne Water must The table on page 182 details the annual to protect the identity of a whistleblower and supply minimum passing flows at Tarago reporting obligations against the Bulk is committed to the protection of genuine Weir, Tarago Reservoir and Bunyip Weir, Entitlement (Maribyrnong – Melbourne whistleblowers against reprisals for making and primary entitlements to Gippsland Water) Conversion Amendment Order protected disclosures Water and Southern Rural Water. 2000. The data is based on the entitlement The principles of natural justice will be to water in Rosslynne Reservoir, the major Reporting obligations for the followed in any investigation of a public storage in the Maribyrnong Basin. Maribyrnong River entitlements interest disclosure. Bulk entitlement amendment for Privacy legislation The following appointments were made to Rosslynne Reservoir Melbourne Water is subject to the Information manage disclosures of improper conduct: The combination of consecutive dry Privacy Act (2000) and the Health Records Act Protected Disclosure Coordinator years and the level of releases required (2001) and is committed to protecting the Leigh Keath, Manager, People and Safety from Rosslynne Reservoir to maintain privacy of all personal and health information the passing flows in the Maribyrnong it collects and handles. Melbourne Water Protected Disclosure Officers River led to the approval by the Minister collects and handles personal and health ••Kevin Woff for Water of temporary amendments information only to carry out our functions ••Judith Palmer to the following bulk entitlements: and activities. ••Linda Duprey Bulk Entitlement (Maribyrnong – Southern Melbourne Water is committed to openness ••Marg Burge Rural Water) Conversion Order 2000 and transparency and welcomes any queries about our approach to privacy. We endeavour ••Steve Hosking Bulk Entitlement (Maribyrnong – to resolve any privacy complaints quickly Melbourne Water) Conversion Order 2000 Melbourne Water has established written and effectively. procedures, which are contained in this Bulk Entitlement (Maribyrnong – People wanting to make a privacy complaint report, at melbournewater.com.au or by Western Water) Conversion Order 2000 should write to: contacting a Protected Disclosure Officer or the Protected Disclosure Coordinator at: The amendment orders were granted The Privacy Officer – Melbourne Water, on 26 October 2006 and expired on PO Box 4342, Melbourne Victoria 3002. Melbourne Water 30 November 2008. 100 Wellington Parade, East Melbourne Victoria 3002 Telephone: 03 9235 7297

There were no whistleblower requests this year.

177 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Statutory Information

Table 1 Data for annual reporting against the combined diversion limit for the Thomson River, Yarra River, Silver and Wallaby Creeks systems Reporting Obligation Volume / Compliance Comments a Annual total of water taken by Melbourne retail authorities from 289,600 ML None the Thomson, Yarra and Silver and Wallaby Creeks for the Melbourne supply system in 2008/09 b The combined long term average annual 555,000 ML None i bulk entitlement diversion limit ii The 15-year rolling average annual diversion taken from 425,100 ML Compliance against the bulk entitlement diversion the Thomson River, Yarra River, Silver and Wallaby Creeks limit has been reported as the 15-year rolling under all these entitlements average annual diversion from the Thomson, Yarra, Silver and Wallaby Creeks systems. iii Compliance with the diversion limit Yes None

Table 2 Data for annual reporting against the bulk entitlements in the Thomson System Reporting Obligation Volume / Compliance Comments a Annual total of water taken by Melbourne retail 93,800 ML None i authorities from the Thomson river basin in 2008/09 ii Retail authorities’ share of flow into the reservoir 68,000 ML None iii Retail authorities’ share of storage volume 157,200 ML Water in the retail authorities’ share of storage in the reservoir at 30/06/09 including water for passing flow releases. iv Compliance with environmental flows Yes None b The long term average annual bulk entitlement diversion limit 171,800 ML None i ii The 15-year rolling average annual diversion taken 142,600 ML Compliance against the bulk entitlement diversion from the Thomson River basin under this entitlement limit has been reported as the 15-year rolling average annual diversion from the Thomson system. iii Compliance with the diversion limit Yes None c Temporary/permanent transfer of bulk entitlement NIL None d Temporary/permanent transfer of bulk entitlement NIL None which may alter the flow in the waterway e Amendment to this bulk entitlement NIL None f New bulk entitlement granted to Melbourne retail authorities NIL None g Failure to comply with any provision of bulk entitlement NIL None h Difficulty experienced in complying with bulk NIL None entitlement and remedial action taken/proposed

178 Table 3 Data for annual reporting against the bulk entitlements in the Yarra System Reporting Obligation Volume / Compliance Comments a Annual total of water taken by Melbourne retail 194,700 ML None i authorities from the Yarra River basin in 2008/09 ii Retail authorities’ share of flow into the reservoirs 209,000 ML Reservoirs include Upper Yarra Reservoir, Maroondah Reservoir, O’Shannassy Reservoir, Sugarloaf Reservoir, Silvan Reservoir, Cardinia Reservoir, Yan Yean Reservoir and Greenvale Reservoir.

iii Retail authorities’ share of storage 275,900 ML Water in the retail authorities’ share of storage volume in the reservoir at 30/06/09 including water for passing flow releases.

iv Compliance with environmental flows Yes None b The long term average annual bulk entitlement diversion limit 400,000 ML None i Table 2 Data for annual reporting against the bulk entitlements in the Thomson System ii The 15-year rolling average annual diversion taken 277,300 ML Compliance against the bulk entitlement diversion Reporting Obligation Volume / Compliance Comments from the Yarra River basin under this entitlement limit has been reported as the 15-year rolling a Annual total of water taken by Melbourne retail 93,800 ML None average annual diversion from the Yarra system. i authorities from the Thomson river basin in 2008/09 iii Compliance with the diversion limit Yes None ii Retail authorities’ share of flow into the reservoir 68,000 ML None c Temporary/permanent transfer of bulk entitlement Yes On 26 June 2007, the Minister for Water iii Retail authorities’ share of storage volume 157,200 ML Water in the retail authorities’ share of storage approved the temporary transfer of up to 500 ML in the reservoir at 30/06/09 including water for passing flow releases. of water to Goulburn Valley Water. The transfer will cease when a total of 500 ML has been iv Compliance with environmental flows Yes None transferred, or Kilmore and Wandong/Heathcote b The long term average annual bulk entitlement diversion limit 171,800 ML None Junction are no longer subject to Stage 4 i restrictions, whichever comes first. During this ii The 15-year rolling average annual diversion taken 142,600 ML Compliance against the bulk entitlement diversion financial year 2008/09, a total of 164 ML was from the Thomson River basin under this entitlement limit has been reported as the 15-year rolling transferred. The cumulative amount was 464 ML average annual diversion from the Thomson system. transferred over the period from August 2007 to December 2008 under this transfer agreement. iii Compliance with the diversion limit Yes None This temporary water trade of water to Goulburn c Temporary/permanent transfer of bulk entitlement NIL None Valley Water was ceased on 30 December 2008. d Temporary/permanent transfer of bulk entitlement NIL None which may alter the flow in the waterway d Temporary/permanent transfer of bulk entitlement NIL None e Amendment to this bulk entitlement NIL None which may alter the flow in the waterway f New bulk entitlement granted to Melbourne retail authorities NIL None e Amendment to this bulk entitlement NIL None g Failure to comply with any provision of bulk entitlement NIL None f New bulk entitlement granted to Melbourne retail authorities NIL None h Difficulty experienced in complying with bulk NIL None g Failure to comply with any provision of bulk entitlement NIL None entitlement and remedial action taken/proposed h Difficulty experienced in complying with bulk NIL None entitlement and remedial action taken/proposed

179 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Statutory Information

Table 4 Data for annual reporting against the bulk entitlements in the Silver and Wallaby System Reporting Obligations Volume / Compliance Comments a Annual total of water taken by Melbourne retail 1,070 ML Bushfire damaged the majority of the i authorities from the waterways in 2008/09 infrastructure within the catchment, resulting in no harvesting opportunities since February 2009. ii Compliance with environmental flows Yes None b The three-year rolling annual total bulk 66,000 ML None i entitlement diversion limit ii The three-year rolling annual total of water taken from 3,380 ML Total annual harvest from 1 July 2006 the silver and wallaby system under this entitlement to 30 June 2009. iii Compliance with the diversion limit Yes The three-year rolling annual total of water taken from the system is less than the diversion limit. c Temporary/permanent transfer of bulk entitlement NIL None d Temporary/permanent transfer of bulk entitlement NIL None which may alter the flow in the waterway e Amendment to this bulk entitlement NIL None f New bulk entitlement granted to Melbourne retail authorities NIL None g Failure to comply with any provision of bulk entitlement NIL None h Difficulty experienced in complying with bulk NIL None entitlement and remedial action taken/proposed

180 Table 4 Data for annual reporting against the bulk entitlements in the Silver and Wallaby System Table 5 Data for annual reporting against the bulk entitlements in the Tarago and Bunyip systems Reporting Obligations Volume / Compliance Comments Reporting Obligations Volume / Compliance Comments a Annual total of water taken by Melbourne retail 1,070 ML Bushfire damaged the majority of the a Annual total of water* taken by Melbourne retail 740 ML As the bulk entitlement came into effect from 1 i authorities from the waterways in 2008/09 infrastructure within the catchment, resulting in i authorities from the Tarago Reservoir in 2008/09 May 2009, data from this date has been used to no harvesting opportunities since February 2009. calculate the annual volume. One contributing piece of data to this calculation is the volume ii Compliance with environmental flows Yes None supplied via the Tarago-Westernport Pipeline, b The three-year rolling annual total bulk 66,000 ML None which has only been included from the date of i entitlement diversion limit the reconnection of the Tarago treatment plant ii The three-year rolling annual total of water taken from 3,380 ML Total annual harvest from 1 July 2006 on 24 June 2009. the silver and wallaby system under this entitlement to 30 June 2009. ii Annual total of water taken by Melbourne retail 270 ML Data has not been collected at this site for a iii Compliance with the diversion limit Yes The three-year rolling annual total of water taken authorities from the Bunyip Weir in 2008/09 number of years. Melbourne Water is installing from the system is less than the diversion limit. telemetry at this site by early 2010. GHD has used estimated data to run a REALM model for c Temporary/permanent transfer of bulk entitlement NIL None the Tarago and Bunyip catchment. These data d Temporary/permanent transfer of bulk entitlement NIL None are the best available estimates for reporting which may alter the flow in the waterway the amount of water diverted from the Bunyip e Amendment to this bulk entitlement NIL None Weir to supply South East Water’s customers. f New bulk entitlement granted to Melbourne retail authorities NIL None These estimates were aggregated from 1st May g Failure to comply with any provision of bulk entitlement NIL None to 30th June 2009 to cover the period the bulk entitlement applies. h Difficulty experienced in complying with bulk NIL None entitlement and remedial action taken/proposed b The five-year rolling annual average bulk entitlement 24,950 ML Limit from the bulk entitlement i diversion limit* for the Tarago Reservoir ii The 5-year rolling annual average of water* taken 14,730 ML The 5-year rolling annual average is calculated from the Tarago Reservoir under this entitlement based on data from 1st July 2004, except for the volume supplied to Gippsland Water, which only includes data from the 1st July 2005 as data prior to this date is not available.

iii Compliance with the Tarago diversion limit in i) Yes None iv The 5-year rolling annual average bulk entitlement 5,560 ML Limit from the bulk entitlement diversion limit for the Bunyip Weir v The 5-year rolling annual average of water taken 1,440 ML Data has not been collected at this site for a from the Bunyip Weir under this entitlement number of years. Melbourne Water is installing telemetry at this site by early 2010. GHD has used estimated data to run a REALM model for the Tarago and Bunyip catchment. These data are the best available estimates for reporting the amount of water diverted from the Bunyip Weir to supply South East Water’s customers. vi Compliance with the diversion limit in iv) Yes None c Temporary/permanent transfer of bulk entitlement NIL None d Temporary/permanent transfer of bulk entitlement NIL None which may alter the flow in the waterway e Amendment to this bulk entitlement NIL None f New bulk entitlement granted to Melbourne retail authorities NIL None g Failure to comply with any provision of bulk entitlement NIL None h Difficulty experienced in complying with bulk entitlement NIL None and remedial action taken/proposed

* Of the total volume of water taken by the Melbourne retail authorities, a portion was supplied to Gippsland Water under a separate delivery bulk entitlement. 181 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Statutory Information

Table 6 Data for annual reporting against the bulk entitlements in the Maribyrnong System Reporting Obligation Volume / Compliance Comments a Releases made from the reservoir to supply licence holders 0 ML None i ii Share of storage capacity at 30 June 2008 20 ML None iii Inflows attributed to Melbourne Water 10.6 ML None iv Transfers and operating losses within the system 0 ML None v Melbourne Water releases to meet environmental flow 16.1 ML None requirements b Water taken by licence holders from the Maribyrnong River 178.8 ML Excludes domestic and stock licences, which are to satisfy entitlements currently un-metered. c Temporary/permanent transfer of bulk entitlement NIL None d Temporary/permanent transfer of bulk entitlement NIL None which may alter the flow in the waterway e Alteration to volume of water under licences issued NIL None i by Melbourne Water ii Alteration to security of supply of entitlements under licences NIL None f Transfer of licences (number, amount and places Yes Two transfer of licences occurred through sale or origin and destination) of land and change of ownership. No transfers occurred between properties. g Amendment to this bulk entitlement NIL None h New bulk entitlement granted to Melbourne Water NIL None to supply entitlements under licences i Implementation of metering program Yes The development of a metering program was a requirement to be met within 12 months of the Maribyrnong Bulk Entitlement coming into place in 2000. Because Melbourne Water had an appropriate metering program in place before the Bulk Entitlement was gazetted, it was agreed with Department of Sustainability and Environment that Melbourne Water did not need to propose a new program. All active licences on the Maribyrnong used for irrigation are presently metered (28 of the 46 licences). Domestic and stock use is not metered and naturally inactive irrigation licences are not. This is consistent with the overall metering requirements put in place across Melbourne Water’s other catchments and the State and was agreed with Department of Sustainability and Environment under the Metering Memorandum of Understanding.

j Failure to comply with any provision of bulk entitlement NIL None k Difficulty experienced in complying with bulk entitlement and NIL None remedial action taken/proposed

182 Compliance with Building Act 1993. Sewerage ••Ruffey Lake Park Advisory Committee “Melbourne Water’s major premises are ••Eastern Treatment Plant Community ••SES Flood Education and Planning compliant with the Building Act 1993. Liaison Committee* Steering Committee* Melbourne Water has a program to ••Northern Suburbs Sewerage ••Shire of Nillumbik – refurbish our remote sites to ensure Strategy Consultation Committee Flood Planning sub-committee compliance to BCA. ••Western Treatment Plant ••South West Monitoring Partnership – DSE In the last 12 months our Silvan Reservoir Community Liaison Committee* ••State Fishway Implementation Committee and Devilbend offices have been refurbished Waterways ••State Flood Policy Committee and meet requirements. Essential Safety ••Association of Land Development Measures (ESM) audits are being conducted ••State Hydrographics Technical Engineers (ALDE) committees on all our remote office sites and will Working Group – DSE be completed by December 2009. ••Bulk Entitlements Management Committees ••State Water Quality Monitoring ESM compliance at our major treatment ••Bunyip Main Drain Project and Assessment Committee sites will be completed by June 2010.” Coordinating Committee ••State Waterway Managers Forum Information available on request ••Centre for Agriculture and ••Stormwater Industry Association Further information is available on request Business Yarra Valley Inc (Victorian Committee) about: pecuniary interests of relevant ••Development Industry – ••Stormwater Pollution and officers, details of Melbourne Water Drainage Scheme Review group* Trade Waste committee* publications, major external reviews ••Diversion Management ••Total Flood Warning System Sub-committee carried out on Melbourne Water, Advisory Committee* research and development activities, ••Urban Development Institute of Australia ••Flood Management Planning Framework overseas visits, major promotional, Liaison Committee Steering Committee (Office Emergency public relations and marketing activities, ••Victoria State Flood Strategy Revision Services Commissioner) assessments and measures to improve Technical Steering Committee ••Gippsland Regional Monitoring the occupational health and safety ••Victorian Flood Warning Consultative Partnership Working Group of employees, statement of industrial Committee (Met Bureau) relations and details of time lost through ••Gippsland Regional Water ••Victorian Floodplain Managers Forum industrial accidents and disputes, and Monitoring Partnership – DSE ••Victorian Stormwater Advisory Committee, major sponsorships. Please ring 131 722 ••Index of Stream Condition Working and Technical Group (within Victoria) or (03) 9235 7100 Steering Committee (within the rest of Australia) or visit ••Vision for Werribee Plains ••Kananook Creek Liaison Committee melbournewater.com.au ••Wandin Yallock Groundwater Supply ••Keilor Diverters Advisory Group* Committees Protection Area Management Plan ••Koo Wee Rup and Longwarry Drainage and Melbourne Water participated in the Working Group Flood Mitigation Advisory Committee* following committees in 2008/09. ••Water Market and Irrigation Reforms Committees where Melbourne Water ••Licensing Steering Committee and Steering Committee and associated is the chair are marked with a “*”. associated working groups working groups ••Little Yarra and Don Streamflow Water ••Water Quality Research Australia Management Plan Consultative Committee* ••Australian Water Association ••Water Register Coordinating Committee ••Lower Yarra Litter Strategy ••Tarago Integrated Catchment ••Waterwatch East Regional Steering Committee* Management Plan Committee Steering Committee* ••Maroondah StormSmart ••Tarago Treatment Plant Agency ••Waterway Rehabilitation Working Group and Steering Committee Reference Group* ••Waterways Advisory Committee* ••Patterson Lakes Advisory Committee* ••Water Efficient Appliance Group ••Werribee Plains Waterwatch and Maribyrnong •• Port Phillip and Westernport Regional Waterwatch Steering Committee* Catchments Strategy Steering Committee ••Regulatory Control of Water Meters

183 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Statutory Information

••Western Port Catchment Committee ••Westernport Greenhouse Alliance Corporate governance ••Willow Sawfly Research Steering Committee Reference Group and risk management ••Region 4 Division 2 Emergency ••Woori Yallock Streamflow Management Plan Other Response Planning Committee Consultative Committee* ••Board of Centre for Agriculture ••Regional Fire Prevention Committees* ••Yarra Coordinating Committee* and Business – Yarra Valley ••Yarra Valley and Dandenong Ranges ••Board of Water Services Association of Whistleblowers’ Protection Environmental Weed Working Group Australia (WSAA) and associated committees and Procedures ••Emergency Issues Committee 1 Purpose Recycled water These procedures establish a system for ••e-Water CRC Participants Forum ••Metropolitan Water Recycling Group reporting disclosures of improper conduct ••Smart Water Fund ••Galada Tamboore Working Group or detrimental action by Melbourne Water ••Water Reuse Association (Australia) ••Geelong Freeway Extension Liaison or its people under the Whistleblowers Group By-Pass Project Protection Act 2001 (the Act). The system ••Werribee and Bacchus Marsh Irrigation enables such disclosures to be made to Districts Customer Consultative Committee ••Gippsland Research Coordination Group the Protected Disclosure Coordinator ••Gippsland Research, Development ••WSAA Water Recycling Network or to one of the nominated Protected and Coordination Committee Protecting our natural environment Disclosure Officers. ••Bureau of Meteorology/ Victorian State ••Knox Central Partnership Disclosures may be made by Melbourne Emergency Service, Melbourne Water ••Maribyrnong Municipal Emergency Water people or by members of the public. Steering Group Management Planning Committee – ••Business and the Environment Maribyrnong Township Sub- Committee These procedures are designed to (BATE) Committee ••Melbourne Water/VicRoads complement normal communication channels between Melbourne Water ••Cardinia Municipal Emergency Liaison Committee* people. People are encouraged to continue Management Planning Committee ••Melbourne WaterAid Australia Committee to raise appropriate matters at any time •• Casey Coastal Strategy Reference Group ••National Codes Reference Group with their managers/team leaders. As an ••Casey Municipal Emergency ••ResourceSmart AuSSI Vic Advisory Group alternative, people may make a disclosure Management Planning Committee ••Smart Growth (DSE) – of improper conduct or detrimental ••City of Kingston – Municipal Casey Cardinia Growth Corridor action under the Act in accordance with these procedures Emergency Management Committee ••Smart Growth (DSE) – Plenty Corridor ••Edithvale-Seaford Wetlands ••Southern and Eastern Integrated Transport 2 Scope Community Liaison Committee* Authority – Environmental Effects statement Melbourne Water is committed to the ••Knox Regional Pest Plant Technical Reference Group, Frankston By -pass aims and objectives of the Whistleblowers Protection Act 2001. It does not tolerate and Animal Management Group ••Stamford Community Reference Group improper conduct by its people, nor the ••Metropolitan Drought Response ••Swinburne University Civil Engineering taking of reprisals against those who Plan Coordination Committee Course Advisory Committee come forward to disclose such conduct. ••Monbulk Creek Retarding Basin/ ••Victorian Emergency Management Council Birdland Reserve Working Group Melbourne Water recognises the value ••Victorian State Emergency Service / of transparency and accountability in its ••Shire of Nillumbik Fire Melbourne Water Municipal administrative and management practices, Prevention Committee Association Victoria and supports the making of disclosures ••Shire of Yarra Ranges Municipal Emergency ••Victorian Water Educators Task Group that reveal corrupt conduct, conduct Response Management Committee ••Victorian Water Industry Association involving a substantial mismanagement ••VICWater Sustainability Task Group of public resources, or conduct involving ••Water – Learn it! Live it! ••Water Environment Federation Western a substantial risk to public health and ••Werribee West Infrastructure Group Port Portfolio Coordinating Group safety or the environment. ••Yarra Glen By-Pass Environmental ••Western Treatment Plant Biodiversity Effects Consultative Committee Conservation Advisory Committee (BCAC)* ••Westernport Catchments Committee

184 Melbourne Water will take all reasonable b Corrupt conduct steps to protect people who make such Corrupt conduct means: disclosures from any detrimental action ••Conduct of any person (whether or not in reprisal for making the disclosure. It will a public official) that adversely affects also afford natural justice to the person the honest performance of a public who is the subject of the disclosure. officer’s or public body’s functions 3 Performance Standards ••The performance of a public officer’s The Whistleblowers Protection Act 2001 functions dishonestly or with began operation on 1 January 2002. inappropriate partiality The purpose of the Act is to encourage ••Conduct of a public officer, former and facilitate the making of disclosures public officer or a public body that of improper conduct by public officers amounts to a breach of public trust and public bodies. The Act provides ••Conduct by a public officer, former protection to whistleblowers who public officer or a public body that make disclosures in accordance with amounts to the misuse of information the Act, and establishes a system for or material acquired in the course of the the matters disclosed to be investigated performance of their official functions and rectifying actions to be taken. ••A conspiracy or attempt to engage 4 Definitions in the above conduct. Three key concepts in the reporting system are improper conduct, corrupt conduct c Detrimental action and detrimental action. Definitions of The Act makes it an offence for a these terms are set out below. person to take detrimental action against a person in reprisal for a Improper conduct a protected disclosure. Improper conduct means conduct that is corrupt, a substantial mismanagement d Detrimental action includes: of public resources, or conduct involving ••Action causing injury, loss or damage substantial risk to public health or safety ••Intimidation or harassment or to the environment. The conduct must ••Discrimination, disadvantage or adverse be serious enough to constitute, if proved, treatment in relation to a person’s a criminal offence or reasonable grounds employment, career, profession, trade for dismissal. or business, including the taking of disciplinary action. 5 Legislation/Regulations Whistleblowers Protection Act 2001 Section 104 details reporting requirements

6 References Melbourne Water Code of Conduct

185 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M Global Reporting Initiative – Content Index

Global Reporting Initiative – Content Index GRI Indicator Page* Strategy and analysis 1.1 Statement from the CEO and Chair 7 1.2 Description of Key Impacts, Risks and Opportunities 6, 170–172

Organisational profile 2.1 Name of the reporting organisation Front cover, 2 2.2 Products and/or services 2, 168–169 2.3 Operational structure 2, 108–109, 168–169

2.4 Location of organisations headquarters Inside back cover 2.5 Number of countries where organisation operates 2, 168–169 2.6 Nature of ownership and legal form 2, 168–169 2.7 Markets served 2, 168–169 2.8 Scale: number of employees; net revenues; and total assets 2, 168–169 2.9 Significant changes during reporting period None to report 2.10 Awards received in the reporting period 86, 87, 90

Report parameters Report profile 3.1 Reporting period Front cover, 2 3.2 Date of most recent previous report 2 3.3 Reporting cycle 2 3.4 Contact point for questions Inside back cover Report scope and boundary 3.5 Process for defining report content 2 3.6 Boundary of the report 2 3.7 State any specific limitations on the scope of the report None to report 3.8 Basis for reporting on joint ventures etc. 96 3.9 Data measurement techniques and the bases of calculations – 3.10 Explanation of the nature and effect of any re-statements of information None to report provided in earlier reports, and the reasons for such re-statement 3.11 Significant changes from previous reporting periods in the scope, boundary etc. None to report GRI Content Index 3.12 Table identifying the location of the standard disclosures in the report 186–191 Assurance 3.13 External Assurance 192 Governance 4.1 Governance structure of the organisation 102–109 4.2 Indicate if the Chair of the highest governance body is also an executive officer 102–109 4.3 Number of members of the Board that are independent and/or non-executive members 102–109

186 Global Reporting Initiative – Content Index Global Reporting Initiative – Content Index continued GRI Indicator Page* GRI Indicator Page* Strategy and analysis Governance, commitments and engagement 1.1 Statement from the CEO and Chair 7 4.5 Linkage between compensation and the organisation’s performance – 1.2 Description of Key Impacts, Risks and Opportunities 6, 170–172 4.6 Processes of the highest governance body to ensure conflicts of interest are avoided 102–109 4.7 Process for determining the qualifications and expertise of the Board 102–109 Organisational profile 4.8 Internally developed mission and values statements, codes of conduct, and principles 4–5, 102–109, 2.1 Name of the reporting organisation Front cover, 2 168–169 2.2 Products and/or services 2, 168–169 4.9 Processes of the Board for overseeing the organisation’s identification 102–109 2.3 Operational structure 2, 108–109, 168–169 and management of economic, environmental, and social performance 4.10 Processes for evaluating the performance of the Board 102–109 2.4 Location of organisations headquarters Inside back cover Commitments to external Initiatives 2.5 Number of countries where organisation operates 2, 168–169 4.11 Explanation of whether and how the precautionary approach or principle is addressed by the organisation – 2.6 Nature of ownership and legal form 2, 168–169 4.12 Externally developed, economic, environmental, and social charters, sets of principles, – 2.7 Markets served 2, 168–169 or other initiatives to which the organisation subscribes or which it endorses 2.8 Scale: number of employees; net revenues; and total assets 2, 168–169 4.13 Significant memberships in associations and/or national/international advocacy organisations 183–184 2.9 Significant changes during reporting period None to report Stakeholder engagement 2.10 Awards received in the reporting period 86, 87, 90 4.14 List of stakeholder groups engaged 2–3 4.15 Basis for identification and selection of stakeholders 2–3 Report parameters 4.16 Approaches to stakeholder engagement 2–3 Report profile 4.17 Key issues and concerns raised and responses from organisation 2–3 3.1 Reporting period Front cover, 2 3.2 Date of most recent previous report 2 Economic 3.3 Reporting cycle 2 EC1 Economic value generated and distributed, including revenues, operating 95–97, 169, 3.4 Contact point for questions Inside back cover costs, employee compensation, donations and other community investments, Financials Report scope and boundary retained earnings, and payments to capital providers and to governments 3.5 Process for defining report content 2 EC2 Financial implications and other risks and opportunities for the organisations activities due to climate change 63 3.6 Boundary of the report 2 EC3 Coverage of the organisation’s defined benefit plan obligations – 3.7 State any specific limitations on the scope of the report None to report EC4 Financial assistance received from government – 3.8 Basis for reporting on joint ventures etc. 96 EC5 Entry level wage compared to local minimum wage for significant locations of operation – 3.9 Data measurement techniques and the bases of calculations – EC6 Policy, practices and proportion of spending on locally based suppliers at significant locations of operation – 3.10 Explanation of the nature and effect of any re-statements of information None to report EC7 Procedures for local hiring, and proportion of senior management – provided in earlier reports, and the reasons for such re-statement in locations of significant operation from the local community 3.11 Significant changes from previous reporting periods in the scope, boundary etc. None to report EC8 Description of infrastructure investment and services supported that provide public benefit – GRI Content Index EC9 Indirect economic impacts – 3.12 Table identifying the location of the standard disclosures in the report 186–191 Materials – Assurance EN1 Materials used by weight or volume – 3.13 External Assurance 192 EN2 Percentage of materials used that are recycled Governance Energy 4.1 Governance structure of the organisation 102–109 EN3 Direct energy consumption broken down by primary energy source 64–67, Social and 4.2 Indicate if the Chair of the highest governance body is also an executive officer 102–109 Environment Data 4.3 Number of members of the Board that are independent and/or non-executive members 102–109 EN4 Indirect energy consumption broken down by primary source – EN5 Total energy saved due to conservation and efficiency improvements 64–66 EN6 Initiatives to provide energy-efficient products and services 64–66 EN7 Initiatives to reduce indirect energy consumption –

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Global Reporting Initiative – Content Index continued GRI Indicator Page* Environment Water EN8 Total water withdrawal by source 26 EN9 Water sources and related habitats significantly affected by withdrawal of water – EN10 Percentage and total volume of water recycled and reused 53–58 Biodiversity EN11 Location and size of land owned, leased, or managed in, or adjacent to, protected areas 69 EN12 Description of significant impacts of activities on protected areas 66–69 EN13 Area of habitats protected or restored 66–69 EN14 Strategies, current actions and future plans for managing impacts on biodiversity 66–69 EN15 Number of IUCN Red List species with habitats in areas affected – by operations broken down by level of extinction risk Emissions, effluents and waste EN16 Total direct and indirect greenhouse gas emissions by weight 65, Social and Environment Data EN17 Other relevant indirect greenhouse gas emissions by weight – EN18 Initiatives to reduce greenhouse gas emissions and reductions achieved 64–65 EN19 Emissions of ozone-depleting substances – EN20 NOx, SOx, and other significant air emissions by type and weight Social and Environment Data EN21 Total water discharge by quality and destination 69–70, Social and Environment Data EN22 Total weight of waste by type and disposal method 69–70, 89–90 EN23 Total number and volume of significant spills 35 EN24 Weight of transported, imported, or exported waste deemed ‘hazardous’ – under the terms of the Basel Convention Annex I, II, III and VIII EN25 Water sources and related habitats significantly affected by discharges of water and runoff – EN26 Initiatives to manage the environmental impacts of products and services and extent of impact reduction 34–35, 42–45, 63–70 EN27 Percentage of products sold that is reclaimed at the end of the products’ useful life by product category 53–55 EN28 Incidents of, and fines or non-monetary sanctions for, – non-compliance with applicable environmental regulations EN29 Significant environmental impacts of transportation used for logistical purposes – EN30 Total environmental protection expenditure by type – Employment LA1 Breakdown of total workforce by employment type, contract and region 90 LA2 Total number and rate of employee turnover broken down by age group and gender 90 Minimum benefits provided to full-time employees, which are – LA3 not provided to temporary or part-time employees Labour / management relations Percentage of employees represented by independent trade union – LA4 organisations or covered by collective bargaining agreements Minimum notice period(s) and consultation and negotiation practices – LA5 with employees and/or their representatives regarding operational changes

188 Global Reporting Initiative – Content Index continued Global Reporting Initiative – Content Index continued GRI Indicator Page* GRI Indicator Page* Environment Labour practices Water Occupational health and safety EN8 Total water withdrawal by source 26 Percentage of workforce represented in formal joint management-worker health – LA6 EN9 Water sources and related habitats significantly affected by withdrawal of water – and safety committees that help monitor and advise on occupational safety programs EN10 Percentage and total volume of water recycled and reused 53–58 LA7 Rates of injury, occupational diseases, lost day’s and absenteeism and number of work-related fatalities 85 Biodiversity Education, training, counselling, prevention and risk-control programs in place for assisting workforce members, – LA8 EN11 Location and size of land owned, leased, or managed in, or adjacent to, protected areas 69 their families or community members affected by HIV/AIDS or other serious communicable diseases EN12 Description of significant impacts of activities on protected areas 66–69 LA9 Health and safety topics covered in formal agreements with trade unions – EN13 Area of habitats protected or restored 66–69 Training and education EN14 Strategies, current actions and future plans for managing impacts on biodiversity 66–69 LA10 Average hours of training per year per employee broken down by employee category – EN15 Number of IUCN Red List species with habitats in areas affected – Programs for skills management and lifelong learning that support the continued 86–87 LA11 by operations broken down by level of extinction risk employability of employees and assist them in managing career endings Emissions, effluents and waste LA12 Percentage of employees receiving regular performance and career development review – EN16 Total direct and indirect greenhouse gas emissions by weight 65, Social and Diversity and equal opportunity Environment Data Composition of governance bodies and breakdown of employees per category according 89–90 LA13 EN17 Other relevant indirect greenhouse gas emissions by weight – to gender, age group, minority group membership, and other indicators of diversity EN18 Initiatives to reduce greenhouse gas emissions and reductions achieved 64–65 LA14 Ratio of average remuneration of men and women broken down by employee category – EN19 Emissions of ozone-depleting substances – EN20 NOx, SOx, and other significant air emissions by type and weight Social and Human rights Environment Data Investment and procurement practices EN21 Total water discharge by quality and destination 69–70, Social and Percentage of significant investment agreements that include human rights – HR1 Environment Data clauses or that underwent human rights screening EN22 Total weight of waste by type and disposal method 69–70, 89–90 HR2 Percentage of major suppliers and contractors that underwent screening on human rights – EN23 Total number and volume of significant spills 35 Type of employee training on policies and procedures concerning aspects of human rights – HR3 EN24 Weight of transported, imported, or exported waste deemed ‘hazardous’ – relevant to operations, including number of employees trained under the terms of the Basel Convention Annex I, II, III and VIII Non-discrimination EN25 Water sources and related habitats significantly affected by discharges of water and runoff – HR4 Incidents of discrimination and actions taken – EN26 Initiatives to manage the environmental impacts of products and services and extent of impact reduction 34–35, 42–45, 63–70 Freedom of association and collective bargaining EN27 Percentage of products sold that is reclaimed at the end of the products’ useful life by product category 53–55 HR5 Incidents of violations of freedom of association and collective bargaining – EN28 Incidents of, and fines or non-monetary sanctions for, – Child labour non-compliance with applicable environmental regulations HR6 Incidents of child labour – EN29 Significant environmental impacts of transportation used for logistical purposes – Forced and compulsory labour EN30 Total environmental protection expenditure by type – HR7 Incidents of forced or compulsory labour – Employment Security practices LA1 Breakdown of total workforce by employment type, contract and region 90 HR8 Percentage of security personnel trained in the organization’s polices or procedures regarding human rights – LA2 Total number and rate of employee turnover broken down by age group and gender 90 Indigenous rights Minimum benefits provided to full-time employees, which are – HR9 Incidents involving rights of indigenous people – LA3 not provided to temporary or part-time employees Labour / management relations Society indicators Percentage of employees represented by independent trade union – Community LA4 organisations or covered by collective bargaining agreements Programs and practices for assessing and managing the impacts 42–45, 75–80 SO1 Minimum notice period(s) and consultation and negotiation practices – of operations on communities, including entering, operating and exiting LA5 with employees and/or their representatives regarding operational changes

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Global Reporting Initiative – Content Index continued GRI Indicator Page*

Corruption SO2 Percentage and total number of business units analysed for risk related to corruption 103 SO3 Percentage of employees who are trained in organisations anti-corruption policies and procedures – SO4 Actions taken in response to instances of corruption – Public policy SO5 Public policy positions and participation in public policy development and lobbying 42, 44, 69, 77 SO6 Total value of financial and in-kind contributions to political parties or related institutions broken – Anti-competitive behaviour Instances of legal actions for anti-competitive behaviour, anti-trust, – SO7 and monopoly practices and their outcomes Compliance Monetary value of significant fines and total number of non-monetary – SO8 sanctions for non-compliance with laws and regulations

Product responsibility Customer health and safety PR1 Procedures for improving health and safety across the life cycle of products and services – Number and type of instances of non-compliance with regulations – PR2 concerning health and safety effects of products and services Product and service labelling Type of product and service information required by procedures, and percentage – PR3 of significant products and services subject to such information requirements Number and type of instances of non-compliance with regulations concerning – PR4 product and service information and labelling PR5 Practices related to customer satisfaction, including results of surveys measuring customer satisfaction 80 Marketing communications Procedures and programs for adherence to laws, standards and voluntary codes related to marketing – PR6 communications including advertising, promotion and sponsorship Number and types of instances of non-compliance with regulations concerning marketing – PR7 communications including advertising, promotion and sponsorship Customer privacy PR8 Number of substantiated complaints regarding breaches of customer privacy – Compliance Monetary value of significant fines for non-compliance with laws and regulations concerning the – PR9 provision and use of products and services Public Agency Sector Supplement – pilot version 1.0 PA1 Describe the relationship to other governments or public authorities and the position of the agency 4, 168–169 within its immediate governmental structures. Public policies and implementation measures PA2 State the definition of sustainable development used by the public agency, and identify any 4–5, 168–169 statements or principles adopted to guide sustainable development polices. PA3 Identify the aspects for which the organisation has established sustainable development policies. 4–5

190 Global Reporting Initiative – Content Index continued Global Reporting Initiative – Content Index continued GRI Indicator Page* GRI Indicator Page*

Corruption PA4 Identify the specific goals of the organisation for the each aspects listed in PA3. 18, 30, 40, 52, 62, 74, SO2 Percentage and total number of business units analysed for risk related to corruption 103 84, 94, 102 SO3 Percentage of employees who are trained in organisations anti-corruption policies and procedures – PA5 Describe the process by which the aspects and goals in both PA3 and PA4 were set. 4–5 SO4 Actions taken in response to instances of corruption – PA6 For each goal, provide the following information: implementation measures; results of assessments The success indicators Public policy of the effectiveness of those measures, targets and key indicators, description of progress, actions for each of the goals and post implementation assessment. are listed in the SO5 Public policy positions and participation in public policy development and lobbying 42, 44, 69, 77 Strategic Framework SO6 Total value of financial and in-kind contributions to political parties or related institutions broken – [see melbournewater. Anti-competitive behaviour com.au]. We are Instances of legal actions for anti-competitive behaviour, anti-trust, – currently working SO7 and monopoly practices and their outcomes through the process Compliance of developing new key performance Monetary value of significant fines and total number of non-monetary – SO8 indicators, work sanctions for non-compliance with laws and regulations practices and strategies to support Product responsibility these success Customer health and safety indicators. PR1 Procedures for improving health and safety across the life cycle of products and services – PA7 Describe the role of and engagement with stakeholders with respect to the items disclosed in PA6. 4 Number and type of instances of non-compliance with regulations – Expenditures PR2 concerning health and safety effects of products and services PA8 Gross expenditures broken down by type of payment. 95–97, Financials Product and service labelling PA9 Gross expenditures broken down by financial classification. 95–97, Financials Type of product and service information required by procedures, and percentage – PA10 Capital expenditures by financial classification. 96, Financials PR3 of significant products and services subject to such information requirements PA11 Describe procurement policy of the public agency as relates to sustainable development. 90 Number and type of instances of non-compliance with regulations concerning – PA12 Describe economic, environmental, and social criteria that apply to expenditures and financial commitments. 65 PR4 product and service information and labelling Procurement PR5 Practices related to customer satisfaction, including results of surveys measuring customer satisfaction 80 PA13 Describe linkages between the public agency’s procurement practices and its public policy priorities. – Marketing communications PA14 Percentage of the total value of goods purchased that were registered with voluntary environmental – Procedures and programs for adherence to laws, standards and voluntary codes related to marketing – or social labels and/or certification programmes, broken down by type. PR6 communications including advertising, promotion and sponsorship Administrative efficiency Number and types of instances of non-compliance with regulations concerning marketing – PA15 Describe the results of assessments of the efficiency and effectiveness of services provided by the PR7 communications including advertising, promotion and sponsorship public agency, including the actions taken to achieve improvements in service delivery. Customer privacy PR8 Number of substantiated complaints regarding breaches of customer privacy – Compliance Monetary value of significant fines for non-compliance with laws and regulations concerning the – PR9 provision and use of products and services  Public Agency Sector Supplement – pilot version 1.0 PA1 Describe the relationship to other governments or public authorities and the position of the agency 4, 168–169 within its immediate governmental structures. Public policies and implementation measures PA2 State the definition of sustainable development used by the public agency, and identify any 4–5, 168–169 statements or principles adopted to guide sustainable development polices. PA3 Identify the aspects for which the organisation has established sustainable development policies. 4–5

191 T R O P E R Y T I L I B A N I A T S U S R E T A W E N R U O B L E M

INDEPENDENT ASSURANCE STATEMENT To the Board and stakeholders of Melbourne Water Corporation Melbourne Water Corporation (Melbourne Water) commissioned Net Balance Management Group (Net Balance) to provide independent assurance of its Sustainability Report 2008/09 (the ‘Report’). The Report was prepared by Melbourne Water. The responsibility of Net Balance is to the Management of Melbourne Water alone. Net Balance has provided Melbourne Water with a full assurance statement which is available on the Melbourne Water website at (www.melbournewater.com.au).

Assurance Standard, Scope and Type The AA1000 Assurance Standard (AA1000AS 2008) and its Principles of Inclusivity, Materiality and Responsiveness were used for the assurance. A detailed description of the Principles can be found in our full assurance statement. Net Balance provided Type 2 assurance in accordance with the AA1000AS (2008).

Assurance Objective and Process The objective of the assurance is to provide stakeholders of Melbourne Water with an independent opinion on its sustainability reporting performance. This is confirmed through assurance of the claims made, and a review of the organisation’s underlying systems, processes and competencies in sustainability reporting with respect to the Principles of Inclusivity, Materiality and Responsiveness.

Assurance Level and Limitations The level of assurance provided is moderate as defined by the assurance objective and process. The assurance covered the whole Report with some exceptions that are detailed in our full assurance statement.

Our Independence and Competency Net Balance’s independence in performing the assurance role was not compromised. The assurance engagement was carried out by an experienced team led by a Lead Sustainability Assurance Practitioner (Lead CSAP), accredited by the International Register of Certified Auditors UK (IRCA UK).

Our Findings and Conclusion •• The findings of the assurance engagement provide confidence in the information contained within the Report. The level of data accuracy was found to be within acceptable limits. Some improvements to data management are recommended. Data trails selected were easily identifiable and traceable, and the personnel responsible were able to reliably demonstrate the origin(s) and interpretation of data. •• The statements made in the Report appropriately reflect environmental and social performance achieved during the period. •• Regarding the Principle of Inclusivity, Melbourne Water has effective systems in place for communicating with and allowing stakeholders to participate in the development of the organisation’s response to sustainability issues. •• In terms of the Principle of Materiality, Melbourne Water has appropriately addressed the material environmental, social and broader economic aspects of their sustainability performance. •• Melbourne Water was found to adhere to the Principle of Responsiveness by adequately responding to their stakeholders’ concerns and expectations.

The Way Forward In order to continuously improve Melbourne Water’s reporting performance, Net Balance recommends a system diagnostic audit to assist Melbourne Water to adopt and maintain best practice in reporting. Such a system would help reduce the potential for aggregation and transcription errors.

On behalf of the assurance team 16 September 2009, Melbourne, Australia

Terence Jeyaretnam Director, Net Balance & Lead CSAP (IRCA UK)

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