EAST GIPPSLAND REGION WATER AUTHORITY

Annual Report 2006-2007 From the coast to the high country and the NSW border East Gippsland Water serves a region covering some 21,000 square kilometres in the far south east corner of Victoria, with a population of 30,560 people. It services 22,054 water customers and 18,468 wastewater customers (calculated on the number of assessments). The Authority’s coverage area extends east from Lindenow and Bairnsdale, through Lakes Entrance to the New South Wales border and as far north as Dinner Plain in the High Country of the Victorian Alps. Ten separate water supply systems serve the communities of Bairnsdale, Bemm River, Bruthen, Buchan, Cann River, Dinner Plain, Eagle Point, Johnsonville, Lakes Entrance, Lake Tyers Aboriginal Trust, Lake Tyers Beach, Lindenow, Lindenow South, Mallacoota, Marlo, Metung, Newlands Arm, Newmerella, Nicholson, Nowa Nowa, Omeo, Orbost, Paynesville, Raymond Island, Sarsfield, Swan Reach and Swifts Creek. As well, ten individual wastewater systems serve Bairnsdale, Bruthen, Cann River, Dinner Plain, Eagle Point, Johnsonville, Lakes Entrance, Lake Tyers Beach, Lindenow, Mallacoota, Marlo, Metung, Newlands Arm, Nicholson, Omeo, Orbost, Paynesville, Raymond Island and Swan Reach.

© State of Victoria, East Gippsland Water Corporation 2007. This publication is copyright. No part may be reproduced by any process except in accordance with the provisions of the Copyright Act 1968. Printed on recycled paper. ATAGLANCE The Authority East Gippsland Region Water Authority was established (on 1 January 1995) under the Water Act 1989, for which the responsible Minister during the reporting period was the Hon John Thwaites MP, the Minister for Water, Environment and Climate Change (previously Minister for Water). The Authority trades as East Gippsland Water and the region it covers embraces an area formerly administered by five Contents Page Water Boards - equating to 10% of the land mass of Victoria. East Gippsland Water’s Region Inside front cover In accordance with the Water Act 1989, the Authority delivers the full range of retail At a Glance 1 water supply functions including water harvesting and storage and urban water supply, and also provides wastewater Drought, Bushfire...and Floods 2 collection, treatment and recycling, as well as trade waste services to Vision, Mission and Objectives 4 industrial and commercial customers. Chairperson’s Report 5 Water 2006/07 Highlights and Achievements 6 Serviced properties - domestic assessments 19,161 Corporate Governance 8 - non domestic assessment 2,893 Volume of water consumed (ML/y) 5,085 Staff in focus 12

Length of water mains (km) 838 Social Sustainability 16 Water treatment plants 4 Education 20 Water disinfection plants 20 Separate water supply systems 10 Environmental Sustainability 21

Wastewater 2006/07 Water Quality 30

Serviced properties Asset Management 37 - domestic assessments 16,582 - non domestic assessments 1,886 Financial Summary 41

Volume of wastewater Other Information 43 collected (ML/y) 2,851 Length of sewer mains (km) 579 Performance Statements 45

Wastewater treatment plants Audit Certificate 52 (secondary) 9 Wastewater treatment plants Financial Report 53 (tertiary) 1 Audit Certificate 79-80 Water re-used % 100% Separate wastewater systems 10 Disclosure Index Inside back cover

East Gippsland Water Annual Report 2006-2007: 1 The 2006/07 financial year was the Meanwhile, ongoing drought saw Stage 2 toughest ever faced by East Gippsland and then Stage 4 restrictions implemented DROUGHT, Water, as the Authority tackled not one, for Omeo and Swifts Creek, with the very but three, extreme weather events. real possibility of Stage 2 also hovering BUSHFIRES... over the community of Cann River for AND FLOODS Drought a short period. A prolonged period of below average The bushfires burned nearly 680,000 rainfall culminated in severe drought in hectares in Gippsland. Of particular concern July 2006. East Gippsland Water, like water was the Mitchell River catchment, where authorities across Victoria, felt the impact much of the burn was especially severe. of record low stream flows in a number of Significant rain events in the early weeks its river systems. of 2007 washed large quantities of clay, Affected was the Mitchell River and East ash and other bushfire debris down the Gippsland Water’s Mitchell River Supply waterways. This resulted in water with System, which serves some 17,000 such high levels of turbidity (sediment levels) customers, including the major townships and colour that it was far too dirty to pump of Bairnsdale, Paynesville and Lakes Entrance. to already depleted storages, such as Butchers Creek, supplying Omeo, was also Woodglen Reservoir. suffering as was the Tambo River serving Independent expert advice and the Swifts Creek. Authority’s experience with the 2003 To help conserve dwindling drinking water Omeo and Buchan bushfires indicated supplies, Voluntary Water Savings requesting that it could take years for the river that customers cut back on water usage catchments to regenerate and for the were introduced across the region from quality of the water to fully recover. the end of October 2006. East Gippsland Water’s engineering, Bushfires technical and support staff, assisted by some 40 other companies and Abnormally dry conditions persisted and the contractors, implemented a multi-pronged months of December through to February attack to address the immediate water brought the devastating Great Divide situation. The anticipated cost was more bushfires. Water resources were stretched than $6 million. to the limit as customers and emergency services in the Mitchell, Nicholson and The first priority was to produce enough Tambo river catchments needed water water to meet customer demand and then supplies to defend properties. to provide additional treated, clean water to top up the depleted storages. East Gippsland Water was forced to introduce progressively tougher restrictions Operating round the clock, staff and to conserve, and ensure security of, supplies contractors installed ten Siltbuster water for the long term. Stage 1 and Stage 2 Water clarifiers and five water settlement dams Restrictions were applied across the Mitchell adjacent to Woodglen Reservoir. The role River System, with water from the region’s of the emergency infrastructure was to Nicholson River used to help supplement thoroughly clean and treat the dirty diminishing Mitchell supplies. Mitchell River water, which would then be transferred to storage and disinfected before supply to customers. Two farm bores were utilised and a number of emergency bores were drilled into a largely untapped aquifer at Woodglen, to provide additional supplies of clean water. To help conserve supplies until sufficient quantities of water could be produced, water restrictions in the Mitchell River Supply System were upgraded during March to Stage 3 and then the highest level, Stage 4. Tireless work was rewarded with a major breakthrough over the Easter weekend in April, when, for the first time in two months, the Authority was able to clean and treat poor quality water from the Mitchell River G Bushfires burn nearly 680,000 hectares to an acceptable standard. in Gippsland.

2 East Gippsland Water Annual Report 2006-2007 DROUGHT, BUSHFIRES...AND FLOODS

Over subsequent weeks the rate of water G Mitchell River floodwaters sweep through Bairnsdale, production increased, to the point where customer the Macleod Morass and on to Paynesville. consumption levels were being met and storages Photo courtesy: East Gippsland Catchment Management Authority. were refilling. Throughout, customer compliance and cooperation with restrictions greatly assisted Flood waters caused a major break in the pipeline these efforts. serving some 550 customers in Lindenow and By the end of June the Authority was able Lindenow South. Approximately 200 metres of to commence a progressive reduction of pipeline buried under the Mitchell River was restrictions, moving down to Stage 3 as water severed and swept aside. It was literally scoured storages climbed from a low point of 28.4% to from the river bed by the sheer force of the some 38% full. It put East Gippsland Water on floodwater and tree debris washing down course to fill its storages in time for the 2007 the river system. summer season. East Gippsland Water’s priority was to minimise disruption to residents and to complete all Floods necessary repair work as quickly as possible. Unfortunately, before the month of June concluded, As June came to a close, drinking water supplies the weather inflicted one final sting on the region, were being trucked-in to the two townships, with major floods. There were in fact two significant permanent repairs programmed for completion in flood events separated by just a few days and the July. These were completed. second, at the very end of the month, proved the worst. Much of the Authority’s infrastructure was placed under tremendous pressure as floodwaters struck the major towns of Bairnsdale, Paynesville and Lakes Entrance, as well as Raymond Island. Staff worked hard to ensure wastewater treatment plants, pumping stations and water treatment plants were protected, and that the supply of high quality drinking water was maintained. East Gippsland Water provided information through the media that drinking water was perfectly safe and unaffected by the floods, to reassure concerned customers. G Testing the level of sediment (turbidity) in Mitchell River water.

East Gippsland Water Annual Report 2006-2007: 3 East Gippsland Water’s Vision VISION, MISSION For East Gippsland Water to be recognised as a premier Authority within the water AND OBJECTIVES industry, responsive to the needs of its community, the protection of the environment and the requirements of Government.

Our Mission

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

Our Objectives

In accordance with the Water Act 1989, East Gippsland Water has the following objectives:

G Governance and Regulation We are committed to meeting the requirements of customers, government and stakeholders.

G Environmental Sustainability We are committed to environmental sustainability in all aspects of water and wastewater service provision.

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

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

4 East Gippsland Water Annual Report 2006-2007 On behalf of the Board of East Gippsland Water I am pleased to report CHAIRPERSON’S that the Authority operated on a sound basis during the 2006/07 year, continuing to be responsive to the social, environmental and REPORT financial requirements of our community and Government. This achievement was all the more commendable given the challenges we faced from no less than three extreme weather events - drought, bushfires and floods. As expressed elsewhere in this document, 2006/07 was the toughest year ever faced by East Gippsland Water. Our priority throughout was to maintain secure, high quality water supplies and wastewater services to all customers and this was achieved, thanks in no small part to the dedication of Authority staff and the efforts of customers to conserve water. Our focus was on ensuring security of water supplies for some 17,000 customers reliant on the Mitchell River Water Supply System, in Bairnsdale, Paynesville and Lakes Entrance districts. This required rapid action by the Authority, with invaluable assistance from others, to construct and install emergency infrastructure. Of necessity, a number of long-term projects were brought forward such as the provision of bores and planning the expansion of Woodglen Reservoir. There was an impact on other projects scheduled for 2006/07. Our commitment to deliver water quality improvements for residents of smaller towns resulted in the construction and opening of a new water treatment plant at Bemm River. However, while three further water treatment plants - at Cann River, Buchan and Swifts Creek - were largely completed, their commissioning was delayed until early in 2007/08. This was because resources needed to be relocated to help address the more urgent situation brought about by fire, floods and drought. A major focus over the past year has been the completion of the Authority’s Water Supply Demand Strategy, designed to ensure all our customers have a secure, safe, high quality drinking water supply for the long term. This strategy has been instrumental in determining the priorities and direction of East Gippsland Water’s 2008-2013 Water Plan. The plan will be finalised during 2007/08 and come into operation the following year. In conclusion, on behalf of the Board, I take this opportunity to thank the management and staff of East Gippsland Water for their extraordinary efforts as we faced the challenges of the past year and their ongoing commitment to the work of the Authority.

Robert Fordham Chairperson, East Gippsland Water

East Gippsland Water Annual Report 2006-2007: 5 Drought, bushfires and floods Customer Satisfaction HIGHLIGHTS AND The 2006/07 year saw East Gippsland Survey results Water successfully tackle the impacts of East Gippsland Water’s 2006 customer ACHIEVEMENTS a severe drought, devastating bushfires satisfaction survey revealed 97% of and floods to maintain high quality customers to be satisfied, or very satisfied, drinking water supplies for all customers. with the overall level of service provided Initially Voluntary Water Savings, requesting by the Authority, compared with 95% the that customers cut back on water usage, previous year. The proportion of customers were introduced across the region from very satisfied remained unchanged at 40%. the end of October 2006, followed by Annual Customer Satisfaction Survey progressively tougher water restrictions, (% of customers satisfied or very satisfied) which ultimately reached Stage 4 in some areas. 2005 2006 The Mitchell River Water Supply System Overall Satisfaction 95 97 was severely impacted by bushfires between December 2006 and February Water Supply 97 96 2007. These left 50% of the Mitchell River Wastewater Services 96 96 catchment severely burnt. Heavy rainfall that followed washed large Customer Accounts 98 98 quantities of soil and bushfire debris down the river, causing significant water quality Small Towns Water issues. The Authority needed to rapidly Quality Improvement construct emergency infrastructure to clean and treat the dirty water, to ensure East Gippsland Water’s commitment to continuity of supply for customers. water quality improvement initiatives for small towns led to the construction and The Authority, with the assistance of staff, commissioning of a new water treatment contractors and companies, was successful plant at Bemm River. in its efforts and was able to ensure that water supplies were maintained. A further three water treatment plants - Customers displayed great community spirit at Cann River, Buchan and Swifts Creek - and restraint, reducing water consumption were constructed during the year. Their significantly in line with water restrictions. commissioning was delayed until early 2007/08, as East Gippsland Water staff There were also two significant flood events and contractor resources were diverted to in June 2007, placing much of the Authority’s help address flood and fire related water infrastructure under tremendous pressure. quality issues with the Mitchell River Water Staff again responded to ensure pumping Supply System. stations, water treatment plants and supplies of high quality drinking water Construction of a pipeline linking the were protected and carried out repairs residents of Nowa Nowa to Toorloo Storage to maintain supply. Basin at Lakes Entrance was completed to provide better quality water than that previously sourced from Boggy Creek. Site works at the associated pump station and disinfection plant were also progressed, though not finished as resources were required to assist with the Mitchell River situation. Water Supply Demand Strategy The Authority’s far reaching Water Supply Demand Strategy (WSDS) was completed and adopted by the Board during 2006/07, providing a detailed analysis of the long term water supply needs of townships serviced by East Gippsland Water. The Strategy is the driver for future Authority strategies and action plans to ensure security. It has been instrumental in G Customer Support Officer Tania Watkinson determining the priorities and direction of compares a heavily discoloured water sample East Gippsland Water’s 2008-2013 Water from the Mitchell River with tap water. Plan, which will become active in 2008/09.

6 East Gippsland Water Annual Report 2006-2007 HIGHLIGHTS AND ACHIEVEMENTS

There is a high level of security of supply for the next 50 years and the Demand Strategy did not reveal any urgent augmentation requirements. The Mitchell River Water Supply System Improvement Strategy This strategy addresses long term risks associated with water quality and growing water demand and complements the WSDS. G The shadecloth cover over Mallacoota Storage basin Under the Mitchell River Water Supply System is 110 metres long and 90 metres wide. Improvement Strategy a program of water The storages also showed a 90% reduction in treatment, water storage and bulk water transfer evaporation. Across all the covered storage basins, improvement works was developed and evaporation decreased from some 29 ML to just commenced during 2006/07. Some long-term 2.9 ML a year. initiatives were brought forward because of bushfire-related water quality issues which The findings have been followed with interest by required urgent action. the water industry and the Authority will continue utilising similar covers. Notable projects included commencement of work to improve the operating efficiency Risk Management and reliability of Glenaladale Pumping Station; East Gippsland Water was rated best of the commencement of a cover over the Lindenow 15 water authorities assessed in the Public water storage; commencement of works to replace Liability Risk Management audit conducted the open storage at Eagle Point with covered tanks; by public liability insurer, Civic Mutual Plus (CMP), the lining and installation of a floating cover at Wy for property risk management. Yung open storage and; preliminary work for the construction of a second water storage and a CMP conducts an annual audit of authorities’ water treatment plant at Woodglen. policies, processes and procedures in managing risk, focusing on public safety issues. It covers seven Leak Detection topics including accountabilities, property and assets, As a result of leak detection and repair work, communication with the public, contracts and some 200 ML of unbilled water (a combination contractor management, client services, major of unaccounted water and accounted water not emergency response and statutory compliance. billed) was saved. This adds to a saving of some East Gippsland Water’s 2007 score for property risk 340 ML already achieved through the program management was 87%, against an average of in the previous year. 69.7% across the water authorities audited. Its Significant unbilled water was identified in the score for public liability risk management was Paynesville, Raymond Island and Eagle point areas, 91.3%, up from 78.75% in 2006. where 58 leaks were detected and tackled, saving approximately 36 ML of potable water annually. Wastewater Reuse Leak detection work completed in Cann River, Lake East Gippsland Water maintained its impressive Tyers and Metung will save some 23 ML of water 100% wastewater reuse record at its ten a year. wastewater treatment plants, and continues be one of the best performing water authorities Shadecloth Covers in Victoria and Australia. East Gippsland Water participated in pioneering Construction of a new 260 ML wastewater winter research to assess the effectiveness of shadecloth storage was completed at the Authority’s Bruces covers installed over water storage basins to Track Farm. This increases the security of treated protect water quality and combat evaporation. water storage over winter, which is also available This concluded during the reporting period and for summer irrigation, and will enable East revealed some dramatic results. Gippsland Water to continue meeting its The $1 million project was conducted jointly with 100% reuse target. the CSIRO, shadecloth specialists Gale Pacific and SuperSpan, who designed and constructed the Water Week shadecloth structures. Storage basins at Omeo, In the lead up to National Water Week 2006, Mallacoota, Swifts Creek and Cann River recorded the Authority attracted a record 660 entries in a dramatic reduction in the incidence of algal the Primary Schools Poster Competition. blooms, demonstrating the value of the covers, Section winners came from Nicholson Primary which also protected water from bacterial and School, St Mary’s Primary School in Bairnsdale, air borne contamination. Lindenow Primary and Bairnsdale Primary School. The winner from Lindenow Primary, Krystina Dimarco went on to finish a runner-up at state level.

East Gippsland Water Annual Report 2006-2007: 7 The Board CORPORATE In accordance with the Water Act 1989, the Board members of East Gippsland Water were appointed by the Hon John Thwaites MP, the Minister for Water, Environment and GOVERNANCE Climate Change (previously Minister for Water). The Board is responsible for the establishment and oversight of the strategies, policies and business objectives of East Gippsland Water and is committed to performing its role in accordance with the highest standards of Corporate Governance. The Board of East Gippsland Water has seven non-executive members.

Robert Fordham - Chairperson Reappointed 1 October 2004 Robert Fordham (B.Comm, Accounting and Economics, and B.A. Political Science) is Chairperson. Robert is a Member of the Standing Committee of the Anglican Church of Australia and Chairperson of Narkoojee Pty Ltd. Originally an accountant, he was a Member of the Parliament of Victoria from 1970 - 1992. He was a Minister and Deputy Premier of Victoria from 1982 - 1989. Robert is Chairperson of East Gippsland Water’s Remuneration Committee. Richard McDowell - Deputy Chairperson Reappointed 1 October 2005 As well as Deputy Chairperson of the Board, Richard McDowell is Chairperson of East Gippsland Water’s Audit Committee. Richard holds a Diploma of Business Studies (Accounting) FCA, FTIA, is a Registered Tax Agent and Registered Company Auditor, and is a Director of Duesburys Accountants. As a Chartered Accountant he advises and assists in financial management, holds Directorships with a number of private companies and is Chairperson/member of five Audit Committees in water and local government organisations. Gail Morley Appointed 1 October 2005 Gail Morley is Managing Director of a consultancy business and has expertise in organisational development, vocational education and business management. She holds a Bachelor of Arts, a Bachelor of Education and a Graduate Diploma in Office Systems. A graduate member of the Australian Institute of Company Directors, Gail brings corporate governance skills to the Board. She is a member of East Gippsland Water’s Remuneration Committee and also serves on the Board of Gippsland Ports.

G Standing (L-R): Robert Supplitt, Eric Sjerp and Jane Rowe. Sitting (L-R): Bernie Smith, Richard McDowell (Deputy Chairperson), Robert Fordham (Chairperson) and Gail Morley.

8 East Gippsland Water Annual Report 2006-2007 CORPORATE GOVERNANCE

Jane Rowe Appointed 1 October 2005 Jane Rowe is serving her second term as a Councillor of East Gippsland Shire Council, of which she has twice been elected Mayor and is currently the Deputy Mayor. She is also Chairperson of the East Gippsland Catchment Management Authority, a member of Gippsland Coastal Board and Director of the Municipal Association of Victoria. Jane is a member of the Audit Committees of East Gippsland Shire Council, East Gippsland Catchment Management Authority and the Municipal Association of Victoria. In addition she has served as Secretary of the Mitchell River Management Board and as Controller of the local State Emergency Service, and was Incident Controller for the Mitchell River Catchment during the widespread 1998 floods. Jane brings particular expertise in local government and corporate governance to the Board and is a member of East Gippsland Water’s Audit Committee. Eric Sjerp Appointed 1 October 2004 Eric Sjerp, an Environmental Scientist with a Bachelor of Science degree (Geology and Geography), is Managing Director and Principal Consultant of Ethos NRM Environmental Planning Consultants. He is also a member of: the Environmental Institute of Australia and New Zealand; the Victorian Planning and Environmental Law Association; the East Gippsland Catchment Management Authority’s Technical and Regional Assessment Panel; and the East Gippsland Regional Landfill Environmental Advisory Panel. Eric has extensive professional experience in the fields of environmental impact assessment, natural resource and conservation management, strategic land use planning and government liaison. He is Chairperson of East Gippsland Water’s Technical Committee. Bernie Smith Appointed 1 October 2005 Bernie Smith is Chairperson of Gippsland Ports and former CEO of the Tasmanian Ports Corporation. Past roles include CEO of Airservices Australia, the Air Traffic Control Corporation, gas companies Kinetik Energy and Westar, and also electricity generation corporation, Hazelwood Power. He was Director of Business Communications for Ericsson Australia, and General Manager of Maintenance and Engineering for Australian Airlines. Bernie has served on a number of boards and is a member of East Gippsland Water’s Technical Committee and Remuneration Committee. Robert Supplitt Appointed 1 October 2004 Robert Supplitt holds a Bachelor of Engineering (Civil) and a Master of Business Administration degree, and has worked extensively in the power supply, mineral resource, engineering consulting and construction industries. His professional experience includes civil engineering design and construction, project management, operational management, information technology, business planning and business process improvement. Robert is a member of East Gippsland Water’s Audit Committee and Technical Committee.

East Gippsland Water Annual Report 2006-2007: 9 CORPORATE GOVERNANCE

Board Meetings G Richard McDowell (Chairperson) G The Board meets monthly, with the Chief Executive Jane Rowe G Officer and invited members of the senior executive Robert Supplitt team. Board meetings are normally held at the G Independent member Ken Jones F.P.N.A., C.P.E. Authority’s head office, but have also been held G Independent member Robert Zagami C.P.A. - at other locations to facilitate inspection of regional resigned 31 December 2006 water and wastewater infrastructure and to better G Independent member Dr. Peter Veenker - consider local needs. For example, the May 2007 appointed 1 January 2007 for three years Board meeting was held at Mallacoota and incorporated the official opening of the Bemm Technical Committee River Water Treatment Plant. The Technical Committee focuses on effective management of technical, operational and Meeting Attendance environmental risks, compliance with laws and regulations and the capital works program. Board Members G Eric Sjerp (Chairperson) Name Attendance G Bernie Smith Robert Fordham G Robert Supplitt (Chairperson) 11 of 12 Remuneration Committee Richard McDowell The Authority’s Remuneration Committee (Deputy Chairperson) 11 of 12 reviews and makes recommendations to the Gail Morley 12 of 12 Board concerning the performance and remuneration of the Chief Executive and Jane Rowe 10 of 12 members of the senior executive team. Eric Sjerp 12 of 12 G Robert Fordham (Chairperson) G Gail Morley Bernie Smith 12 of 12 G Bernie Smith Robert Supplitt 11 of 12 The Mitchell River Water Supply Total Meetings 12 System Ad Hoc Committee During the reporting period no Board members Formed specifically to consider various options retired and no new members were appointed. to improve water supply and treatment, this committee was dissolved in November 2006 Board Committees and its responsibilities transferred to the Technical Committee. The Board has constituted the following committees to assist in meeting its governance Ethical Standards obligations, both statutory and to the community. The Board Members of East Gippsland Region Audit Committee Water Authority acknowledge the need for the highest standards of corporate governance The Board of East Gippsland Water has adopted practices and ethical conduct by all members, a ‘best practice’ Audit Committee Charter. The employees and contractors of the Authority. Audit Committee is chaired by a Board member The Board has adopted the code of conduct other than the Authority chairperson and includes issued by the Australian Institute of Company three members of the Board and two independent Directors. persons with appropriate financial business acumen and experience. The Board has also Declaration of Pecuniary Interests appointed an Internal Auditor who reports directly to the Committee. All Board members and senior executives have completed a declaration of interests for the The Committee determines a systematic internal reporting period. audit program that looks at internal processes and controls with a view to testing these processes for minimisation of system, financial and operational risk, and to promote efficiency and effectiveness.

10 East Gippsland Water Annual Report 2006-2007 ORGANISATION STRUCTURE

During 2006/07 a review of East Gippsland Water’s executive management structure was carried out to evaluate the appropriate distribution of responsibilities and functions. A new structure was implemented in May 2007. Organisation structure as at 30 June 2007:

Chief Executive Officer Les Mathieson East Gippsland Water B. Arts, Dip. Company Directors, Dip Frontline Management Board of Directors AIWA, M. AIM, F. AICD Responsible for G Corporate Management and Development G Strategic Implementation G Public Relations

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

Support Staff Support Staff Support Staff Support Staff G G Revenue and Customer G Manager Business G Asset Development Works Engineer G Support Services Manager Risk & Compliance Engineer Water Supply Engineer G G Corporate Accountant G OH&S Officer G Technical Officer Property Environment and G Finance Support Officers G Information & Connections Wastewater Engineer G G Customer Support Technology Manager G Technical Officer Projects Graduate Environmental Supervisor G IT Administrator G Manager Earth Tech Engineer G G Customer Support Officers G IT Support Officer Engineering Environment Officer G G Records Co-ordinator G Earth Tech Graduate Engineer G G GIS Co-ordinator Engineering Team Water Reclamation Team G G Records Co-ordinator Water Treatment Plant G Communications and Operating Team G Education Officer Water Quality Officer G G Executive Assistant Technical Officers G Field Operations

East Gippsland Water Annual Report 2006-2007: 11 Our Philosophy The Authority also continues to support a range of formal training opportunities STAFF IN FOCUS East Gippsland Water continues to provide and traineeships leading to accredited a safe and respectful working environment qualifications. During 2006-07, almost where the personal and professional all staff completed some form of training development of staff is actively encouraged. with a significant number undertaking This is recognised as important to enhance traineeships or additional training at the operation of the organisation, leading Certificate II/III level or above. to ongoing improvements in service delivery. The Authority actively assists a number The application of safe working practices of employees at graduate (university is a top priority. degree) and post graduate level. Employee Assistance Program In late 2003, at East Gippsland Water’s The Authority provides a counselling and initiative, an alliance was formed with the chaplaincy services to all staff, employing other four Gippsland water authorities to the services of an independent counsellor develop a project so that all Operations and who regularly visits work sites. Maintenance (O&M) staff gained certificate level qualifications within the Water Industry This service enables staff members to discuss training framework. After the initial project and address, in strict confidence, personal was completed in 2006, a Memorandum and work-related issues that may impact of Understanding was signed with on their well being and work capability. Goulburn-Murray Water to continue the If needed, additional support is offered provision of training and assessments at or provided to assist in resolving issues. Certificate II/III in Water Industry Operations The counsellor also provides executive for all new Operations and Maintenance management with an independent overview staff. of organisational health. In addition, the water authorities of Gippsland identified the need for skills Training and Development training to provide field employees with East Gippsland Water’s training effort is additional technical knowledge to enhance focused on safe working practices and skills and also provide improved career staff development. opportunities. A pilot program in Certificate As well as applying considerable resources IV Water Industry Operations, involving the to occupational health and safety training water authorities of Gippsland and Goulburn requirements, the Authority provides Murray Water as the training provider, opportunities for staff to enhance skills and commenced late in the reporting period. personal development through numerous short courses. These include interview Employees undertaking techniques, customer service, team building, Accredited Training 2006/07 leadership development and more technical courses such as computer operation and Water Operations Certificate II 5 water treatment. Water Operations Certificate III 7 Water Operations Certificate IV (pilot) 2 Business Administration Certificate III 1 Business Administration Certificate IV 8 Frontline Management Certificate IV 2 Leadership Program 2 Advanced Diploma ( Accounting) 1 Grad Certificate Business Administration 1 Degree ( Bachelor of Commerce) 1 Masters ( Risk Management) 1 TOTAL 31

G East Gippsland Water’s Executive Manager Corporate Development and Services, John Groom, congratulates Terry Upton on his Information Technology award.

12 East Gippsland Water Annual Report 2006-2007 STAFF IN FOCUS

Community Inclusiveness Occupational Health and Safety Network and continued through 2006-07 to lead the steering Women group. The application of equal opportunity and merit is a strongly held belief and practice of the Authority, East Gippsland Water was also instrumental in supported by appropriate policies and procedures. the formation of a Victorian Water Industry OH&S Staff recruitment and selection processes ensure Network, which receives significant support from that fairness and equity is applied. the Victorian Water Industry Association. This network provides a forum for sharing industry The Board of the Authority is skills-based and two issues and solutions and has proved very active of the seven appointed members are women. and worthwhile since its formation in late 2002. The Authority has an Equal Opportunity Officer East Gippsland Water’s Manager Business Risk and reporting directly to Executive Management. Compliance was elected the inaugural Chair of the Family-friendly benefits are provided through network and held the position for four years until the Certified Agreement where a 19-day month, voluntarily relinquishing the role in October 2006. banked hours and personal leave provisions The importance of the network was recognised provide a high level of flexibility in working hours. officially in 2007 when a Victorian Water Maternity leave entitlements are also in line with Association OH&S Steering Committee was Government policy to provide paid parental leave. created. East Gippsland Water is a member Cultural/Linguistic Diversity of this Committee. East Gippsland Water has a diverse customer Other significant achievements in OH&S for base comprising a mixture of beliefs, cultures the year included: and languages. The Authority is sensitive to the needs of this diverse group and provides appropriate services on a case-by-case basis. G Ongoing certification of East Gippsland Water’s OH&S management system (OHSMS) Indigenous People against AS/NSZ 4801:2001, with successful The Authority respects the rights and culture of completion of two surveillance audits by our East Gippsland’s indigenous people. It has an certification body, NSC International. At the appointed officer to deal with native title claim most recent audit (May 2007) the auditor issues and is continuing to build relationships reported that: “The management system to improve understanding of these issues. is well imbedded into the culture of the Young People organisation now and is reflected by the The Authority actively provides educational system being effectively maintained during opportunities for school-age people through the recent busy time due to the fires at the information sessions on water conservation and end of last year and the long drought.” wastewater management issues. In addition the The auditor further commented that: Authority offers traineeships in field operations “East Gippsland Water should be and business administration, and provides summer commended for their commitment to vacation employment for students undertaking safety at all levels of the organisation.” degree level studies. Of particular note was an unplanned visit East Gippsland Water also participates in a to the Authority’s Woodglen site in May graduate engineering training program, in by the OHSMS auditor, who stated that: partnership with Earth Tech Engineering. “the Woodglen project is being well managed, including induction training, In addition the Authority provides sponsorship contractor management, Personal Protective for youth activities aimed at encouraging active Equipment, site maintenance and signage, lifestyles involving water, such as the East Gippsland supervision, working hours, documentation Region triathlon series (including state such as Safety Plan, traffic control. championship) and the Gippsland region Considering the time lines for the project swimming championships. this is commendable. Well done!” Given the Occupational Health and Safety short timelines and operational focus of the Woodglen project, this is further indicative East Gippsland Water continues to ensure it meets of a robust safety culture. its Occupational Health & Safety obligations. As a minimum requirement, staff acting in supervisory G Continued improvement of East Gippsland roles, and all Occupational Health and Safety Water’s best practice Contractor Safety (OH&S) representatives, have attended five-day Management System. This included OH&S Certificate Courses. There is also a significant significant modifications to a course in emphasis on Statutory OH&S-related training. construction site supervision which was Demonstrating its commitment to OH&S, both then delivered by the Manager Business internally and in the wider community, the Authority Risk and Compliance under the auspices became a founding member of the East Gippsland. of training provider, Goulburn-Murray Water.

East Gippsland Water Annual Report 2006-2007: 13 STAFF IN FOCUS

There was also the development of a set of East Gippsland Water, Civil Construction Safety Guides that have since drawn considerable positive interest from WorkSafe Victoria. A version has been developed and presented to the Victorian Water Industry for endorsement and subsequent distribution to all Victorian water authorities. G The continued use of, and improvements to, extensive OH&S, Audit and Training Plans to address all safety issues. G Lakes Entrance staff carry out repairs to a punctured G Achievements against Key Performance mains pipe. Indicators embedded into the Certified Average Time Lost Agreement, to reflect OH&S commitment and performance. Average Time Lost is the average time lost from work per incident in days. For the purpose of this G Participation in other industry forums indicator 12 months (220 working days) is the in preparation for, and following, the maximum time for any single incident. It is calculated introduction of new legislation or against total incidents recorded, as well as against guidance material. lost time incidents. Note: In 2004/05, a single severe accident resulted in a large amount of lost time. Average Time Lost = Number of Working Days Lost Number of Incidents in the Period Occupational Health Risk Management and Safety Statistics Risk management has been adopted as a standard Number of Incidents/Lost Time Incidents management technique applied in all aspects of Incident reporting, including near misses, reflects East Gippsland Water’s work and is used in the effectiveness of East Gippsland Water’s safety managing issues such as: system. G business operations G Early reporting of incidents allows analysis of issues evaluation and management of new projects, and remedial action to be undertaken, before the and circumstances that gave rise to the incident worsen G stakeholder management and create a more serious risk of injury, illness or A risk management system, based on Australian property damage. Accordingly, reporting of all Standard 4360, continues to be developed and incidents is encouraged. a major enhancement during 2006-07 was the A high number of incidents does not necessarily implementation of an electronic risk management reflect badly on the organisation - it is the type system. of incident, severity of injury and the personal During 2005-06, East Gippsland Water engaged consequences that are important. Lost time Icon Global Link to modify the software used for incidents are those that resulted in a person drinking water quality management risk to meet being absent from work for a full shift or more the needs of the Authority’s overall risk due to a workplace injury. management system.

Incidents 2002/03 2003/04 2004/05 2005/06 2006/07 Total incidents reported 13 25 25 15 13 Lost time incidents 4 3 2 4 3 Medical treatment incidents N/R 11 6 7 1 Working Days Lost 6 9 174 16 21 N/R = not recorded Average Time Lost

Average Time Lost 2002/03 2003/04 2004/05 2005/06 2006/07 Total incidents 0.46 0.36 6.96 1.07 1.62 Lost time incidents 1.5 3.00 87.00 4.00 7.00

14 East Gippsland Water Annual Report 2006-2007 STAFF IN FOCUS

Workforce Data

Total Total Male Female Details 2006 2007 2007 2007 CEO and Executive staff * 3* 5* 5 - Corporate staff 19 20 7 13 Corporate (Staff Part Time & Temp) 2 2 - 2 Technical 10 10 9 1 Technical (Staff Part Time and Temp) 1 1 1 - Operations and Maintenance (Field) 38 38 37 1 Operations and Maintenance (Part Time and Temp) - - - - 73 76 59 17

The resulting Integrated Standards Enforcement * The vacant position of Executive Manager Technical System (ISES) will be used as the management Services was not filled during 2006-07. An executive platform to oversee risk management activity. review and reorganisation in May 2007 resulted in Key systems that currently assist in the the positions of Executive Manager Operations and management of risk are: Executive Manager Assets and Infrastructure G Environment Management System (EMS) Development being filled from within the organisation. G Drinking Water Quality Management Strategy G Occupational Health and Safety Management Membership of these forums ensures that current System (OHSMS), including the Contractor Safety information is maintained to best manage issues Management System relating to liability and insurance. G Emergency Response Plans East Gippsland Water is also a member of the G Capital Works Planning Process Department of Sustainability and Environment G Asset Management System Water Security Continuity Network and regularly G Accounting Manual reviews measures to manage critical infrastructure. G Audit Plan G Financial Management Compliance Framework Industrial Relations East Gippsland Water’s Consultative Committee Public Liability Risk Management continues to provide a means of communication Audit and information flow within the Authority. It has East Gippsland Water’s annual Public Liability Risk a role defined in the Certified Agreement to Management audit was conducted in February monitor the performance and adherence to Key 2007 by public liability insurer, Civic Mutual Plus Performance Indicators, to overview staff training (CMP). and continuous improvement. While the scoring methodology and criteria No time was lost due to industrial action during changed from previous years, the audit remained the reporting period. focused on public safety issues. It covered seven topics including accountabilities, property and Workforce Data assets, communication with the public, contracts Actual numbers employed at June 30 and and contractor management, client services, major comparative figures for the previous year are emergency response and statutory compliance. displayed in the table above. East Gippsland Water was rated the best of the 15 Employment, Merit water authorities audited by CMP for property risk management, scoring 87% against an average of and Equity Principles 69.7% across the water authorities audited. The The Authority’s policies and practices on 2007 score for public liability risk management issues such as equal employment opportunity, was 91.3%, up from 78.75% in 2006. discrimination, harassment and the Code of As a pro-active measure, East Gippsland Water Conduct reflect best practice and meet the representatives regularly attend best practice requirements of various Acts and Regulations. forums held by the public liability and property They are the subject of regular review and insurer. In addition, the Authority is a member of development. the Municipal Association of Victoria Insurance East Gippsland Water’s policies and practices Committee (MAVIC) consultative committee. conform with Public Sector Employment Policies issued by the State Government of Victoria.

East Gippsland Water Annual Report 2006-2007: 15 Management of social through improved water quality. This SOCIAL and economic impacts investment will have a positive impact on local communities, tourism and The Authority employs a triple bottom future development SUSTAINABILITY line approach to its decision making and G The Authority is actively involved strategic planning. This recognises that the with Landcare groups in rehabilitating provision of water and wastewater services wetlands. Revegetation and passive use has a significant social, economic and of East Gippsland Water land for public environmental impact on the community. purposes is another focus, enhancing Social sustainability is considered when environmental and social capital reviewing strategic directions and G Permanent Water Saving Rules were sustainability is taken into account when modified in recognition of a significant meeting the requirements of the Water older population Act with regard to water and wastewater services. WaterSmart Rebates For example: East Gippsland Water supports the Victorian Government’s Water Smart Gardens and G East Gippsland Water is committed Homes Rebate Scheme. During the to a 100% environmentally beneficial, reporting period this has included affordable and sustainable reuse of using media releases and newspaper wastewater advertisements to promote the availability G It is committed to the provision of high of rebates for buying and installing quality potable water to all communities rainwater tanks; and a showerhead G The Small Towns Water Quality exchange program where inefficient Improvement Program provides overall showerheads can be swapped free of benefit to the East Gippsland community charge for a three-star rated water saving model. Water Leaks, Exceptional Circumstances East Gippsland Water policy allows for dispensation on high water usage accounts when customers cannot reasonably have been expected to be aware of a water leak. Each case is considered on merit and an amount of $14,305 was adjusted during the reporting period. To be eligible, customers must have G Local residents welcomed the opening of the engaged a licensed plumber to confirm Bemm River Water Treatment Plant. the leak, the circumstances surrounding it and the repair carried out. WaterSmart Rebates 2006/2007

Applications Applications Applications Rebate Type Approved Received Granted $ Rainwater Tank 34 37 $5,100 Greywater System 2 2 $1,000 Tank to Toilet 1 1 $150 Basket Offer 163 165 $4,910 Dual Flush Toilet 16 16 $650 Shower Rose 4 4 $40 Cleaning Device 1 1 $30 Water Conservation Audit fortop 12 local companies 0 0 $5,640 Not For Profit Organisations 0 0 $0 Large Rainwater Tanks 6 6 $5,300 Totals 226 232 $22,820

16 East Gippsland Water Annual Report 2006-2007 SOCIAL SUSTAINABILITY

Community Service Obligations Value of Community Service Obligation provided 2005/06 2006/07 Concessions to pensioners $817,926 $835,404

Rebates to Not-For G An East Gippsland Water vehicle with striking -Profit Organisations graphics helps publicise water restrictions. under the Water and Sewerage Rebate In preparing the draft, East Gippsland Water Scheme $125,661 $128,374 considered customer feedback from its annual customer satisfaction survey; monthly customer Utility Relief Grant follow-up calls; meetings with community and Scheme payments $6,189 $4,978 interest groups; and, input from groups consulted Water Concessions on particular issues or projects. on Life Support The exposure draft was published and advertised machines - for further public comment early in 2007/08 Haemodialysis $0 $0 before being submitted to the Essential Services Commission (the water industry regulator) for Hardship Relief Grant approval. Scheme (Sewerage Connection Scheme) $31,620 $28,581 Transfer of bulk entitlement East Gippsland Water began the process to Total $981,396 $997,337 transfer its bulk water entitlement from the Nicholson and Tambo Rivers across to the Mitchell Communication and Consultation River. The transfer will allow the Authority to East Gippsland Water employs various consolidate water supply infrastructure around a communication and consultation methods to single, reliable, high quality water supply source. engage with its 22,000 domestic and business As part of the transfer process, the Authority has customers, who are spread across a vast geographic undertaken stakeholder consultation with the area spanning some 21,000 sq kilometres. Department of Sustainability and Environment, The methods used include: East Gippsland Catchment Management Authority, G Media releases, advertorials, advertisements and Southern Rural Water, Gippsland Coastal Board, articles published in local newspapers, on the Mitchell River irrigators and the East Gippsland Authority’s website and broadcast on local TV community. and radio, often inviting public feedback The consultation process has provided the G Publicity in the Authority’s Pipeline newsletter Authority with a wide forum in which to fully explain and On Tap news sheet, again often inviting the proposal to all stakeholders. The communication public comment process will increase the Authority’s understanding G Information brochures covering a wide range of a wide range of water issues of concern to of topics irrigators and water users throughout the region. G The operation of Customer Reference/Advisory Tambo Bluff Estate Committees where appropriate, although no The Authority was requested by East Gippsland committees were required during 2006/07. Shire Council to provide a water and wastewater G Monthly, customer service follow-up calls system for Tambo Bluff Estate, which has 320 G Monthly, Regional Consultative Meetings inviting allotments with little or no infrastructure. customers to discuss East Gippsland Water issues During the reporting period detailed design of the with senior management water and wastewater system was concluded and G An annual, independently conducted customer preliminary arrangements made with the Council satisfaction survey to assess how well Authority to commence infrastructure works at the same services are being delivered. time as construction of roads, drainage and Consultation is conducted on specific issues, electricity infrastructure. proposed projects and draft East Gippsland Water Regional Consultative Meetings strategies and policies, where there is a significant The Authority schedules monthly community potential impact on customers and the community. consultative meetings at towns across the region Water Plan including Omeo, Lakes Entrance, Orbost and Ensuring customers have a secure, high quality Mallacoota. These are advertised in advance in the drinking water supply for the long term is the local press, with customers invited to meet with the number one priority identified by East Gippsland Chief Executive Officer and senior management to Water in its draft Water Plan for 2008-2013. discuss East Gippsland Water issues.

East Gippsland Water Annual Report 2006-2007: 17 SOCIAL SUSTAINABILITY

Customer Service Follow-up At least 10% of customers who report incidents to the Authority are contacted by the Communications & Education Officer to assess their experience with East Gippsland Water. This follow-up is conducted by phone and is invaluable in gauging how efficiently and effectively staff have responded to incidents, the quality of customer service provided and any aspects requiring improvement. Incidents reported include those relating to water supply (mains and meter), sewers and water quality. During the reporting period, 1,440 service-related incidents were recorded (compared with 1,567 during 2005/06). A total of 182 follow-up calls were conducted (174 in 2005/06), with 166 customers complimentary of the Authority (162 in 2005/06), 11 recorded as satisfactory G Customer service is an important element at (ten in 2005/6), three as neutral (two in 2005/06) East Gippsland Water, with the annual customer and two as unsatisfactory (nil in 2005/06). satisfaction survey producing good results.

Customer Satisfaction Survey Water quality was not an issue for the vast majority Annual customer satisfaction surveys commissioned of customers, who live in towns connected to the by East Gippsland Water are a vital way to gauge region’s main water supply system, the Mitchell how well it is delivering services and help pinpoint River system. These rated the quality as satisfactory any areas requiring action and improvement. or higher. For the 2006 survey, a random sample of 500 As in the previous year, there was a degree of customers from across the region were interviewed dissatisfaction with either water taste or smell over the telephone by independent consultant among some smaller communities, notably Bartley Consulting. An increase from 401 in 2005 Nowa Nowa, Buchan and Swifts Creek. was designed to raise customer representation The Authority addressed this during 2006-07 with from larger towns. construction commencing on water treatment The survey revealed 97% of customers to be plants at Buchan, Cann River, Swifts Creek and also satisfied, or very satisfied, with the overall level Bemm River, to provide consistently high quality of service provided by the Authority, compared drinking water supplies. The plant at Bemm River with 95% the previous year. The figure very began operating in May 2007, with the remaining satisfied remained unchanged at 40%. plants constructed, but not operational. They are due to be operating from early in the 2007/08 Also of note: period. G 96% of customers were satisfied, or A pipeline was also completed, linking Nowa very satisfied, with their supply of water Nowa residents to Toorloo Arm Reservoir at Lakes (97% in 2005). Very satisfied increased Entrance and provides much better quality water from 53% to 59% than that previously sourced from Boggy Creek. Site works at the associated pump station and G 96% were satisfied, or very satisfied, with disinfection plant were also progressed, though wastewater services (the same as in 2005). not finished as resources were diverted to help Very satisfied went up from 60% to 67% address a bush fire-related water quality issue G 98% were satisfied, or very satisfied, with with the Mitchell River Water Supply System. the way East Gippsland Water handled Commissioning is expected early in 2007/08. their accounts (the same as in 2005). Of customers surveyed, 43% expressed interest in Very satisfied increased 1% to 64% joining a customer panel for consultation purposes and supplied East Gippsland Water with contact Annual Customer Satisfaction Survey details. These customers have been incorporated (% of customers satisfied or very satisfied) into the Authority’s contacts data base as special interest customers and have become a targeted 2005 2006 group to receive information. The Authority will Overall Satisfaction 95 97 also seek feedback on special issues from this group. Water Supply 97 96 Drought, bushfires...and floods Wastewater Services 96 96 The series of extreme weather events necessitated the implementation of a comprehensive Customer Accounts 98 98 communication program.

18 East Gippsland Water Annual Report 2006-2007 SOCIAL SUSTAINABILITY

The Authority needed to ensure that customers reporting period. More computer users visited to maintained an accurate understanding of the get the latest information on water restrictions impact on drinking water supplies, on water and the Authority’s progress in addressing the restrictions and the importance of conserving water. impact of the bushfires on water supplies. East Gippsland Water’s progress on measures to tackle the events was also well publicised. Sponsorship A number of media releases were issued and East Gippsland Water provides financial, covered by local newpapers, radio and TV stations. merchandise and in-kind sponsorship to a number Initially, a weekly column was published in the of local organisations and community groups. region’s free newspaper - East Gippsland News - Financial support provided during the reporting which developed to full page. The Authority’s period included: Pipeline newsletter, published twice during the year G East Gippsland Water Dragons and posted to selected customers, focused on the (regional swimming championships) - $500 issues, as did the On Tap news sheet, published G East Gippsland Institute of TAFE five times during the year and was sent to account (academic awards night) - $800 holders. G Savewater Alliance (water conservation) - In addition, advertisements were placed in the $1,562.50 local press to publicise changes in water restriction G I-Gain learning (Gippsland Community levels and advisory letters were sent to domestic Leadership Program) - $4000 and business customers. The latter were also invited G Water Week (prizes for schools poster to attend briefing sessions in Bairnsdale and Lakes competition) - $150 Entrance. Regular updates were also published on East Promotional items Gippsland Water’s website. East Gippsland Water promotional items are Newsletters/news sheets selected on the basis that they comply with Two issues of East Gippsland Water’s newsletter the following criteria: Pipeline were published during the reporting G Have a practical application period. This is designed to inform selected G Carry an environmental or water conservation customers - including individuals and key message organisations - of activities and projects involving the Authority. It is mailed out, but is also available Water Trailer on the Authority’s website and over the counter East Gippsland Water’s mobile drinking water trailer at any East Gippsland Water office. creates a highly visible and positive image for the The On Tap news sheet was launched during Authority at community events. Operating under 2006/07 and five issues were published. This is the slogan “Preserving our environment - Naturally”, sent to account holders, with each issue tailored it is available free of charge to community and not to specific geographic areas and mailed out to for profit regional organisations. During 2006/07 customers with their account. the water trailer attracted 20 bookings and was utilised at a variety of events including community Information brochures festivals, major sporting events, weekend markets, East Gippsland Water’s extensive brochure range school functions, agricultural shows and field days. includes customer service and environmental information, as well as covering water conservation, Energy and Water Permanent Water Saving Rules and water restrictions Ombudsman Victoria (EWOV) and information about the Authority’s water and wastewater systems. Customers dissatisfied with any aspect of interaction or service performance from a utility Web Site within Victoria may seek assistance from the Energy East Gippsland Water’s website and Water Ombudsman Victoria (EWOV). This is an www.egwater.vic.gov.au aims to provide customers independent body funded by member utilities. with easy to access information about the Authority Customer contacts made in connection with East and its services. Gippsland Water are detailed in the following table. During 2006/07, work commenced on improving the site’s appearance and usability. This work Type of Contact From EWOV Enquiries continues. Referred to Executive From the home page, customers can link direct management for review 7 to pages covering: how to pay a bill online; tariffs; the customer charter; media releases; and the Of the referrals to environment. There are also direct links to other Executive management, related websites. the number conciliated 4 The number of ‘hits’ registered by the website increased markedly during the latter half of the

East Gippsland Water Annual Report 2006-2007: 19 East Gippsland Water employs a range of strategies to communicate key messages EDUCATION to school-age students and adults, focusing on water conservation and awareness that water is a finite resource. A major message to all groups is the Authority’s focus on environmental benefit and sustainability as a fundamental requirement of every operational aspect involving water, wastewater and reuse. Water Education in Schools The Authority responded to a number of requests for presentations to classes, G tours of infrastructure such as water and A group of plumbing apprentices are taken wastewater treatment plants and the on a tour of Bairnsdale’s Wastewater provision of electronic and hard copy Treatment Plant. teaching resources. Adult Water Education Tours were conducted at Orbost and Omeo water treatment plants and to the East Gippsland responded to numerous wastewater treatment plant at Bairnsdale. requests for infrastructure tours and presentations covering various aspects In addition a group of second year of the water authority’s activities. plumbing apprentices toured Bairnsdale’s wastewater treatment plant. Those to benefit included Mitchell River Rotary Club, the Happy Wanderers, Orbost The Authority is a member of the Victorian and Paynesville Probus Clubs, Lindenow Water Educators’ Network which is and District Progress Association and a invaluable for the sharing of ideas, water specialist academic from Indonesia. strategies and coordination of National Water Week activities. Information Brochures Water Week East Gippsland Water’s extensive information brochure range includes: National Water Week provides a focus for G water sustainable issues at the national, Customer service information: account state and regional level. payment options, advice to those planning to build or subdivide, trade In the lead up to National Water Week waste requirements, water meters, care 2006, East Gippsland Water attracted a of sewers, care of overflow relief gullies record 660 entries in the Primary Schools and planting trees near pipes Poster Competition. Section winners came G Environmental information: Thirty ways from Nicholson Primary school, St Mary’s to save water; East Gippsland Water’s Primary in Bairnsdale, Lindenow Primary reclaimed water re-use at Bruce’s Track and Bairnsdale Primary School. Farm, constructed wetlands at Macleod The winner, Krystina Dimarco, from Morass, and “Being Water Wise” Lindenow Primary School went on to G Separate brochures explaining the become a runner-up at state level. Authority’s water and wastewater systems New brochures published included Permanent Water Saving Rules, and Understanding Permanent Water Saving Rules, Voluntary Water Saving and Water Restrictions. These were distributed extensively from office counters, by mail, in customer information packs and customer show bags to reiterate the need for water conservation and to help ensure compliance with water restrictions. All brochures are available for download from the East Gippsland Water website G Krystina Dimarco is congratulated on her www.egwater.vic.gov.au winning entry by Executive Manager Corporate Development and Services, John Groom (right). Watching on are teacher Lyn Gamble and Principal Stuart Chapman.

20 East Gippsland Water Annual Report 2006-2007 East Gippsland is an environmentally diverse ENVIRONMENTAL part of Victoria and the well-being of the environment, community and economy are SUSTAINABILITY closely linked, particularly in relation to the region’s dominant industries of tourism, forestry, fishing and agriculture. This is reflected in the high priority afforded by East Gippsland Water to sustainability and protecting the environment. Our Water Our Future During 2006/07 the Authority maintained and progressed a number of initiatives from the Victorian Government’s Our Water Our Future policy, which is designed to drive initiatives conserving and securing water supplies for the next 50 years. East Gippsland Water’s achievements during the reporting period included: Wastewater recycling The Authority maintained its impressive 100% wastewater reuse record at all ten of its wastewater treatment plants, retaining its position as one of the best performing G Bairnsdale Racecourse benefits from recycled water authorities in Victoria and Australia. wastewater.

Volume of Wastewater Collected, Released and Reused Volume (Megalitres) 2003/04 2004/05 2005/06 2006/07 Wastewater collected 3,100 3,146 2,954 2,851 Wastewater released 2,805 2,822 2,668 2,429 Wastewater recycled 2,800 2,822 2,668 2,429 Actual wastewater reuse 99.8% 100.0% 100.0% 100.0% Target reuse 100% 100% 100% 100.0%

Volume of Wastewater Reused per town/system - 2006/07 Annual Wastewater Volume Town/System Number Assessments Re-used (Megalitres Bairnsdale 6,150 1,150.1 Cann River* 169 0 Dinner Plain 447 27.9 Lakes Entrance 4,224 588.2 Lindenow 163 20.8 Mallacoota 924 71.5 Metung / Bruthen 1,293 149.6 Omeo 228 22.9 Orbost / Marlo 1,626 197.6 Paynesville 3,244 200.2 Total 18,468 2,429 * Cann River wastewater is being collected and stored in treatment ponds. There is insufficient water for irrigation to pasture at this time.

East Gippsland Water Annual Report 2006-2007: 21 ENVIRONMENTAL SUSTAINABILITY

How 100% Reuse is achieved

Location Reuse purpose Bairnsdale Wetlands Tree plantations Racecourse Lindenow Wetlands Paynesville Golf course Pasture Metung Pasture Lakes Entrance Tree plantations Golf course Pasture Omeo Pasture Dinner Plain Alpine Woodland Orbost Tree plantations Pasture Mallacoota Tree plantations Golf course Pasture

Each of the ten wastewater systems has its own where 58 leaks were detected and tackled, saving Environment Protection Authority (EPA) licence, 36 ML of potable water annually. Leak detection with reuse following EPA irrigation management work completed in Cann River, Lake Tyers and guidelines. Metung, covering more than 70kms of water East Gippsland Water reuses the wastewater on mains and 1500 properties, will save some its own properties, as well as supplying it to third 23 ML of water a year. parties. Golf courses, tree plantations, pasture, A follow-up program is planned for Orbost and alpine woodland and a racecourse benefit from Marlo following preliminary leak detection work reuse of wastewater and it is also used to provide during 2006/07. environmentally beneficial flows to wetlands, Water Meter Replacement particularly the Macleod Morass - an internationally East Gippsland Water has continued its domestic significant, Ramsar-listed wetland - helping to meter replacement initiative. Over the past three protect and improve biodiversity. years 26% of domestic water meters have been Standpipes for reclaimed wastewater were installed replaced. at Bairnsdale and Lakes Entrance Wastewater Replacement of combination type meters in Orbost Treatment Plants during the period of water and Marlo, which measure high and low water restrictions this year. The wastewater was used flows, has brought a significant reduction in instead of potable water for the watering of unbilled water in the Orbost supply system, sports grounds, for example and to assist with accounting for a previously unaccounted 122 ML roadmaking. of water and some 20% in unbilled water. Construction of a new 260 ML wastewater storage In conjunction with this program, the Authority is was completed at East Gippsland Water’s Bruces continuing its bulk water meter testing, verification Track Farm. This increases the security of treated and replacement program to ensure its water water storage over winter, which is then available accounting is accurate. for summer irrigation, and will enable East Gippsland Water to continue meeting its 100% reuse target. Water Conservation East Gippsland Water’s ongoing drive to conserve water supplies and reduce its impact on the environment includes managing water losses, by replacing old meters and checking pipelines and property connections to pinpoint and reduce leaks under its leak detection program. Leak Detection As a result of leak detection and repair work carried out during 2006/07, some 200 ML of unbilled water, a combination of unaccounted water and accounted water not billed, was saved. This equates to a reduction of approximately 3.4% in the total volume of bulk water diverted from all East Gippsland streams and aquifers, and adds to a saving of some 340 ML already achieved through the program in the previous year. Significant unbilled water was identified in the G A contractor uses a leak detection monitor to listen Paynesville, Raymond Island and Eagle Point areas, for water leaks.

22 East Gippsland Water Annual Report 2006-2007 ENVIRONMENTAL SUSTAINABILITY

2007/08, will also place sustainable water use in a framework of local, regional and national policy and identify the funding streams available to the Council. Drought Response Following public consultation, East Gippsland Water implemented its Permanent Water Savings Plan (PWSP) in April 2006. During the reporting period the community endorsed the permanent changes as a commonsense approach to achieve ongoing water savings, with the Authority recording reductions in water consumption across its districts. These results were invaluable during the ongoing severe drought in helping conserve drinking water supplies and worked well in conjunction with Voluntary Water Savings and water restrictions introduced in certain areas. To avoid confusing customers, the Authority placed its adoption of revised rules for the four stages of water restrictions on hold. In the ensuing year it will G The shadecloth cover over Swifts Creek adopt these rules, making for consistency across Storage Basin. the State’s water authorities. Community Education and Awareness Shadecloth Covers East Gippsland Water employs a range of strategies East Gippsland Water participated in pioneering to communicate key messages to school students research to assess the effectiveness of shadecloth and adults to focus on the importance of water covers installed over water storage basins, both conservation. (See Education section, page 20). in protecting water quality and combating Water Supply Demand Strategy evaporation. This concluded during the reporting East Gippsland Water’s Water Supply Demand period and revealed some dramatic results. Strategy (WSDS) was completed during the Open air storage basins at Omeo, Mallacoota, reporting period and adopted by the Board Swifts Creek and Cann River, where covers were in May 2007. erected, showed a notable reduction in the The Strategy provides a detailed analysis of the incidence of algal blooms and demonstrating long-term water supply. It modelled future water the value of the covers, which also protect water demands based on population growth, economic from bacterial and air borne contamination. development and the impacts of climate change to The basins also displayed a 90% reduction in identify the capacity of water supply systems and evaporation. In total, across all the covered storage long term drinking water demands of all townships. basins evaporation was cut from some 29 ML to While the majority of the Authority’s water supply just 2.9 ML a year. districts have adequate bulk water supplies, the The findings have been followed with interest by strategy identifies possible deficiencies in the the water industry and East Gippsland Water will Omeo and Dinner Plain water supply systems. continue utilising similar covers into the future. Both may require some form of bulk water Working with businesses augmentation in future years and further detailed Large water users amongst business customers work is being commenced during 2007/08 to were invited to participate in surveys, financed validate the findings of the strategy and determine by the Authority, to identify water savings. the most suitable action plan. The Water Supply Demand Strategy forms a vital A number will be pursuing water conservation driver for Authority strategies and action plans measures as a result, including Patties Foods and seeking to ensure security. It has been instrumental Bairnsdale Racecourse who were identified as in determining the priorities and direction of East already making valuable water conservation efforts. Gippsland Water’s 2008-2013 Water Plan, which Assisting Local Government become active in 2008/09 following approval The Authority has actively assisted with the from the Essential Services Commission (ESC) development of East Gippsland Shire Council’s during 2007/08. Sustainable Water Use Plan (SWUP). East Gippsland Water actively pursues water The purpose of the plan is to establish the volume conservation as highlighted elsewhere in this of water used annually by each of the Council’s report. The target adopted is a 25% reduction operations, then set water reduction targets and in per capita demand by the year 2015, relative develop action plans to deliver these reductions. to 1990’s demand. The SWUP, which is still being developed during .

East Gippsland Water Annual Report 2006-2007: 23 ENVIRONMENTAL SUSTAINABILITY

Regional Catchment Management Strategy East Gippsland Water provides ongoing assistance with the development and delivery of the Regional Catchment Management Strategy in a number of ways, including: G Working with the East Gippsland Catchment Management Authority (EGCMA) and Department of Sustainability and Environment (DSE) on catchment related projects within the Authority’s water supply districts G As a referral Authority for works that occur in the region’s catchments G Through East Gippsland Water representation on G The Macleod Morass near Bairnsdale. the Catchment Management Authority’s Board Victorian Biodiversity Strategy G Through its membership of the Gippsland Lakes Taskforce, a partnership of organisations The Authority complies with the Victorian including the DSE and EGCMA, established Biodiversity Strategy through implementation of to protect and enhance the health of the the East Gippsland Water Biodiversity Management Gippsland Lakes Plan and Asset Register. These are used to assess G existing Authority assets/sites, along with new By investigating the impact that East Gippsland works, for biodiversity significance and risk. Water infrastructure and operations may have on local river health and using the results to The Authority’s plan is designed to minimise any minimise any impact potential harm to threatened and endangered G Through its ongoing leak detection program species by identifying the locations of any and water conservation measures designed previously recorded sensitive species or vegetation to minimise the volume of bulk water diverted types and comparing these with East Gippsland from the region’s streams and aquifers Water sites and activities. Macleod Morass During the reporting period, training commenced for staff operating around potentially sensitive areas. Under EPA licensing requirements, East Gippsland Water’s Bairnsdale Wastewater Treatment Plant River Health supplies high quality freshwater to the Macleod Morass, near Bairnsdale, via constructed wetlands. The Victorian Government’s Our Water Our Future policy relating to rivers is being addressed by This supply is providing measurable environmental East Gippsland Water through the Victorian River benefits to the deep, freshwater marsh and East Health Strategy, which is designed to manage, Gippsland Water closely monitors the site to protect and restore rivers over the long term. ensure its activities have no adverse impact. The Authority also works actively to ensure Biological monitoring keeps a check on water compliance with river health requirements set quality, frogs, birds, fish, vegetation and macro outinitsStatement of Obligations. invertebrates, as well as pests including European carp. Drinking water is supplied to all East Gippsland Water customers with minimal impact on existing A project to tackle the carp population showed environmental flows from the Mitchell, Brodribb, promising results during the reporting period, Rocky, Betka and Tambo Rivers, and Butchers Creek. with many tonnes of the fish caught and removed, including one catch totalling five tonnes. The Authority has no major on-stream dams, while the future of the small 640 ML Nicholson River Wetland Rehabilitation at Metung dam, used for emergency supply during extreme East Gippsland Water continues to improve drought, is under review. and enhance the environment at its Metung East Gippsland Water actively participates in work Wastewater treatment plant, with cooperation and initiatives to protect and improve wetland and from Tambo Bay Estate residents, Lower Tambo river health including: Landcare Group members and East Gippsland G Through participation in the Gippsland Regional Institute of TAFE Forestech students. The project Water Monitoring Partnership Group, which involves revegetation and rehabilitation of a monitors water quality across Gippsland section of land regarded as unsuitable for streams and estuaries. Its information is crucial farming or irrigation adjacent to Tambo Bay in monitoring catchment health. The Authority on the Gippsland Lakes. contributes funds, officers and other resources When complete the area will become a valuable community wetland asset and provide a buffer against encroaching development.

24 East Gippsland Water Annual Report 2006-2007 ENVIRONMENTAL SUSTAINABILITY

Office Based Environmental Impacts The Authority continued to review its Bairnsdale office-based activities, as part of its commitment to continually improve resource efficiency and reduce its impact on the environment. Energy saving measures implemented included installing efficient light fittings; replacing high energy use computer monitors with low energy LCD versions; including one extra gas fuelled vehicle and one hybrid vehicle in the Authority’s car fleet and; installing rainwater tanks for garden watering. Thanks to these initiatives and an awareness drive amongst staff, East Gippsland Water recorded energy savings in a number of areas, shown in the following chart.

Energy Use

Quantity Quantity Parameter 2005/06 2006/07 Unit Energy Energy used per full time employee 16,987 15,750 Megajoules/FTE

Energy per square metre of office space 503.5 495.9 Megajoules/m2

Total energy usage 607,657 598,510 Megajoules

Greenhouse gas emissions 234.96 231.42 CO2 Tonnes

Waste Production Total units of waste produced 84.5 80.1 Kg/FTE

Total units of waste recycled 2,002 2,000 Kg

Paper Use Units of paper used per employee 14 18 Reams/FTE

Total units of paper used 505 734 Reams

Water Consumption Units of water used per employee 6,596 8,606 Litres per employee

Total units of water consumed 237,470 327,045 Litres

Transport Total energy consumption 438 508 Gigajoules

Total CO2 equivalent 32 37.2 CO2 -e tonnes

Energy consumption per employee 12.16 13.38 GJ/FTE

CO2 equivalent/per employee 0.89 0.98 CO2 - e tonnes/FTE

Kilometres travelled per employee 3,865 4,253 Km/FTE

Total kilometres travelled (not private or commuting) 139,133 161,608 Km

Percentage of employees using public transport, cycle walking to work 5.6% 5.3%

East Gippsland Water Annual Report 2006-2007: 25 ENVIRONMENTAL SUSTAINABILITY

Corporate Water Consumption Total water consumption at East Gippsland Water’s Bairnsdale office rose this year from 237,470 litres to 327,045 litres. This equates to a 2,010 litre increase in consumption per staff member compared with 2005/06, taking it to 8,606 litres per staff member. The major factor contributing to this rise was the installation of a water sensitive garden, which required a higher than normal water usage during its establishment period. However, now established, the garden will have very low ongoing water requirements serviced primarily by a tank-sourced supply. Another factor affecting the reported water consumption figures for 2006/07, was the replacement of a mechanical water meter with a much more accurate digital, ‘Smart’ Meter which records water used over a greater range of flow conditions. G Recycled water from Lakes Entrance Wastewater Greenhouse Gas Emissions Treatment Plant is used on nearby golf courses, pasture and tree plantations. East Gippsland Water has set out to minimise energy use and greenhouse gas emissions as part Total greenhouse gas emissions for the Authority’s of its commitment to reduce the environmental business and activities for 2006/07 were 7,927 impact of its operations. This has the added tonnes - 6% less than for 2005/06. incentive of bringing financial savings. Independent energy and greenhouse gas audits Environmental Improvement. were undertaken of East Gippsland Water’s The Authority has for a number of years applied Bairnsdale office and of the Authority’s larger the practice of planting and sustaining native energy consuming sites - Glenaladale pump vegetation in buffer strips, natural forest areas and station, Bairnsdale Wastewater Treatment Plant marginal land next to water courses associated and Lakes Entrance Wastewater Treatment Plant. with its irrigation sites, treatment plants and farms. The Bairnsdale audit recommended a number of Some 336 hectares of land not used for farming projects to improve lighting and hot water/air purposes is managed to enhance the local conditioning. The larger energy consuming site environment and, in some cases, is irrigated with audit also made recommendations, including treated water. These areas provide an offset for replacement of existing motors with variable carbon emissions. Though not yet included as speed drives and generating electricity from a carbon credit, they do reduce East Gippsland excess methane produced at Bairnsdale Water’s environmental impact. wastewater treatment plant. A further 45 hectares is earmarked for buffer Greenhouse Gas Emissions 2006/07 zone and rehabilitation works.

Electricity Direct Usage Fuel Emission ULP/Diesel LPG

CO2 -e (tonne) CO2 -e (tonne) CO2 -e (tonne) CO2 -e (tonne) Water Treatment and Supply 3,562 69 0 0 Sewage Treatment and Management 2,683 21 1.7 954 Transport 0 387 6.1 0 Other (ie office buildings) 242 0 0 0 Total 6,487 477 7.8 954

Total Greenhouse gas emissions = 7,927 CO2-e tonnes

26 East Gippsland Water Annual Report 2006-2007 ENVIRONMENTAL SUSTAINABILITY

Native Vegetation

Area currently under Native Vegetation (Natural Bush and Plantations) Location Size - Hectares Vegetation Use Bruce’s Track Farm 9.9 Tree lots 10 Re-vegetation (including buffers) 50.5 Natural forest Bruce’s Track (south) 1 Re-vegetation (including buffers) Metung Farm 29.5 Re-vegetation (including buffers) Lindenow 0.5 Re-vegetation (including buffers) Orbost Farm 30 Re-vegetation (including buffers) 130 Natural forest Mallacoota Farm 56 Tree lots 10 Natural forest Bairnsdale Wastewater Treatment Plant 9.5 Tree lots Total area 336.9

affect the balance of normal hormonal function in animals) in wastewater. This project has been undertaken by the Department of Primary Industries (DPI), across a number of wastewater treatment plants in Victoria. The results will show the levels of endocrine disruptors that exist in East Gippsland Water’s wastewater discharges and will hopefully lead to a better understanding of the potential affects of these discharges on the environment. Water Consumption The overall level of water consumption per G Irrigating pasture on the Authority’s Bruces Track property during 2006/07 was almost identical Farm with reclaimed wastewater. to the previous year, 0.2316 ML compared with Environmental Management System 0.232 ML. Notable water savings were achieved through the The Authority gained certification of its implementation of Permanent Water Saving Rules, Environmental Management System (ISO 14001) Voluntary Water Savings and water restrictions, in May 2005 and has successfully retained the all aimed at encouraging customers to conserve certification with a six monthly surveillance audit supplies. In addition, visitor numbers to the region conducted by auditing firm NCS International. were reduced during the financial year as a result The system continues to function well as a tool of bushfires and floods. to reduce risks to the environment. The Authority’s ongoing leak detection program, Biosolids Research targeted at specific townships, brought further reductions in leaks compared with the previous East Gippsland Water contributed to the National year and saved an additional 200 ML of water. Biosolids Research Program, prepared for the Victorian Water Industry and undertaken by Shadecloth covers installed over a number of CSIRO and Department of Primary Industries. East Gippsland Water storage basins as part of This program is investigating the sustainable a $1 million research project, drastically reduced use of biosolids. evaporation levels at these storages from some 29 ML to just 2.9 ML a year. Endocrine disruption study However, the impact of the devastating Great The Authority has participated in a study Divide bushfires, which burned nearly 680,000 of endocrine disruption chemicals (naturally hectares in Gippsland, offset all these gains. Water occurring and synthetic chemicals that can resources were stretched to the limit as customers

East Gippsland Water Annual Report 2006-2007: 27 ENVIRONMENTAL SUSTAINABILITY

Water Consumption Statistics by System 2006/07 L’. Average with the such things iod whose Sourced Accounted Total Non- Residential Total water consumption Bulk Water Non- Annual Non Assessment Numbers from Streams Unaccounted Water Revenue Residential Consumption Consumption (based on Residential Residential Total ML ML ML ML ML ML ML ML System (= Customer Numbers) and Bores Water #1 not Billed Water Consumption #2 #3 last 3 years) as water used for flushing, scouring of tanks and basins, bleeds for disinfection, net evaporation % rainfall, water lost in leaks and breaks Bemm RiverBuchanCann River 89Dinner PlainMallacoota 80 8 150Mitchell 416 31Nowa 64 Nowa 97 813 32Omeo 111 15,577 33.1 214 99Orbost 77 448 2,157 25.6Swifts Creek 59.7 5.4 972 17,734 34.6 16Total 201 2006/07 1.2 3,462.4 6.4 11.67 184.6 1,600 98Total 2005/06 3.1 19,161 247.2 93 72 0.38 22.2 17 383 1.06 2,893 18,839 151.92 3.57 31 27.5 22,054 273 0.84 2,866 1.6 1,983 399.1 12.6 7.5 4,962.2 6.7 1,032.5 21,705 2,776.4 129 4.2 66.5 23 13.2 5.2 572 5,736.6 1,211.9 24 252.7 35.8 22.2 3,988.3 19.1 588.3 0.63 10.7 107.3 21.66 194 17.8 3,950.6 28.7 219.5 10.6 5.7 1.15 43.8 274.3 4.8 24 766 17 52.7 807.8 1.16 316.6 20.2 151.1 3,334.1 28 3,295.6 14.9 20.6 45.7 1,773.4 434.4 1,633.2 153.7 11.8 30.4 5,107.5 31.1 4,928.8 7.8 751 5,007.2 5,028.2 16.4 17.1 22.7 689.8 47.5 8 20.8 51 24.4 26.9 water consumption was equal toVegco were or amongst greater business than customersAuthority 50ML who to per participated develop year. Vegco’s in and consumption East implement was Gippsland water within saving Water the financed measures. range surveys ‘equal in to 2006/07 or to greater identify than water 100ML savings and and less are than working 200M Notes: # 1 Unaccounted water represents the difference between Bulk Water diverted and Total Water Consumption plus Accounted Water not billed. It includes # 2 With reference to section 122 (ZJ) of the Water Act 1989, East Gippsland Water recorded one major non-residential customer during the reporting per # 3 Total water consumption includes non-revenue water. and the emergency services in the Mitchell, Nicholson Drought Response and Tambo river catchments relied on East Gippsland An ongoing severe drought was at its peak this Water supplies to defend properties. year. East Gippsland Water, like water authorities This situation led to East Gippsland Water introducing across Victoria, felt the impact as record low progressively tougher restrictions to conserve, and stream flows were registered in a number of ensure security of, supplies for the long term. its river systems.

28 East Gippsland Water Annual Report 2006-2007 ENVIRONMENTAL SUSTAINABILITY

East Gippsland Water Entitlement Reporting 2006/07

Entitlement Resource Entitlement Total Volume Volume Name Manager Type Entitlement ML/y Diverted ML/y Unused ML/y Bairnsdale* Southern Rural Water Bulk 5,902 2,952 2,950 Lakes Entrance Southern Rural Water Bulk 2,993 327 2,666 Bemm River Southern Rural Water Bulk 100 33 67 Cann River Southern Rural Water Bulk 192 60 132 Mallacoota Southern Rural Water Bulk 330 102 228 Bruthen Southern Rural Water Bulk 313 0 313 Nowa Nowa Southern Rural Water Bulk 118 28 90 Swifts Creek Southern Rural Water Bulk 224 36 188 Buchan Southern Rural Water Bulk 170 26 144 Orbost Southern Rural Water Bulk 2,031 1,032 999 Mallacoota Southern Rural Water Groundwater 80 82** 0 Dinner Plain Goulburn Murray Water Groundwater 60 35 25 Mitchell System Southern Rural water Groundwater 500*** 38 462

Notes: * East Gippsland Water was granted a Temporary Qualification of Rights for the Bairnsdale Bulk Entitlement in December 2006, from the Minister for Water, to ensure adequate water supply to the DSE and CFA to assist with their bushfire fighting efforts. This did not result in any obvious adverse environmental impact on the Mitchell River. ** The Authority exceeded the Mallacoota groundwater licence by 2ML during the year, due to the impact of the severe drought in the region and major flooding. These extreme weather events meant that East Gippsland Water needed to place significant reliance on groundwater bores. Due to the declining availability of bulk water from the Betka River, the Authority has approached Southern Rural Water seeking an increase to the Mallacoota groundwater entitlement, to ensure a continuity of water supply. *** East Gippsland Water gained a temporary water licence to extract 500ML from groundwater, to alleviate water supply shortages following the devastating bush fires during the year. All other conditions of East Gippsland Water’s bulk entitlement were adhered to during 2006/07.

Critically affected was the Mitchell River and East The Great Divide bushfires, between December Gippsland Water’s Mitchell River Supply System, 2006 and February 2007, had a major impact on which provides water to the major townships of water supply systems, particularly in the Mitchell Bairnsdale, Paynesville and Lakes Entrance. River catchment. Approximately 50% of this Butchers Creek, supplying Omeo, was also catchment was severely burned. suffering, as was the Tambo River serving The heavy rainfall that followed brought large Swifts Creek. quantities of clay, ash and other bushfire debris The Authority implemented its Drought Response down the Mitchell River, causing significant water Plan to help conserve depleting drinking water quality issues. The Authority was forced to rapidly supplies and this included applying water construct a large water clarification plant adjacent restrictions. These were advertised in the local to Woodglen Reservoir to clean and treat the dirty newspapers and in East Gippsland Water water, to bring it up to potable quality and ensure newsletters to customers, with roadside signage continuity of water supply for customers. publicising the level of restrictions placed at As a result, water restrictions for customers in the strategic entry points to towns. Mitchell River Water Supply System were increased Voluntary Water Savings requesting that customers in March to Stage 3 and then Stage 4, to help cut back on water usage were introduced across conserve supplies. As the situation eased, so did the region from the end of October 2006, followed restriction levels, with Mitchell River Water Supply by progressively tougher water restrictions in customers moving down to Stage 3 Water certain areas. restrictions on 29 June. Stage 2, and ultimately Stage 4, restrictions were Meanwhile, customers in Omeo and Swifts Creek, implemented for Omeo and Swifts Creek, due to where water supply was not affected by the impact a lack of water in rivers supplying these townships, of bush fires, moved down to Stage 2 Water with the possibility of restrictions also hovering restrictions in May 2007 and were taken off over Cann River for a short period. restrictions on 29 June. Stage 1 and Stage 2 Water Restrictions were Throughout the reporting period, state-wide applied across the Mitchell River System during Permanent Water Saving Rules applied throughout December 2006, with water from the Nicholson East Gippsland. River used to help supplement Mitchell supplies.

East Gippsland Water Annual Report 2006-2007: 29 Drinking Water Quality Policy Bemm River Water Quality Zone: township of Bemm River. WATER QUALITY East Gippsland Water is responsible for Exceedence of Australian Drinking providing drinking water that meets the Water Guidelines (2004) for Chlorite requirements of the Safe Drinking Water Act (2003) and the East Gippsland Water Actions to resolve Customer Charter. declared undertakings The Authority recognises that a fundamental part of its role is the delivery of safe water Nowa Nowa Water Quality Zone to the community. This is achieved by As part of Water Quality Improvement effective management of water quality Works, the township of Nowa Nowa will from catchment to tap, including reliable receive higher quality water sourced from water treatment, risk management and the Mitchell River and piped from Toorloo responsiveness to customer expectations. Storage Basin at Lakes Entrance. The present This commitment includes establishing Boggy Creek water supply will then be and maintaining a Drinking Water Quality decommissioned. Management System. During the reporting period, construction of a pipeline linking Nowa Nowa to Toorloo Water Quality: Safe Storage Basin was completed. Site works Drinking Water Regulations at the associated pump station and Safe Drinking Water Regulations (2005) in disinfection plant were also progressed. conjunction with the Safe Drinking Water However they were not finished as Act (2003) make provision for the supply resources were diverted to help address of safe drinking water and outline a bush fire-related water quality issue with requirements for a risk management plan; the Mitchell River Water Supply System. audits; drinking water quality standards; Commissioning of the new water supply water sampling localities (water quality is expected early in 2007/08. zones); water sampling points; sampling Buchan Water Quality Zone frequency; analysis requirements; and an The catchment for this locality was Annual Water Quality Report. The report adversely affected by the 2003 Bushfires will be available in hard copy format and and a temporary supply and treatment on the Authority’s website facility installed. During significant weather www.egwater.vic.gov.au events, such as heavy rains and floods, Declared Undertakings water quality can deteriorate. As part of Water Quality Improvement Works, Section 30 of the Safe Drinking Water construction commenced on a full water Act 2003 allows for the Secretary of the treatment plant at Buchan and was largely Department of Human Services to accept completed by 30 June 2007. The plant is a written undertaking from a water supplier due to become operational early in the that certain actions will be performed in 2007/08 period and will treat the the event that they are, or are likely to be, township’s variable quality water to in contravention of the Safe Drinking Water Australian Drinking Water Guidelines/Safe Act 2003, or its associated regulations. Drinking Water Regulation standards. During the 2006/2007 period, East Swifts Creek and Bemm River Gippsland Water supplied undertakings Water Quality Zones for the following supplies and water quality parameters: Full water treatment plants capable of treating the variable quality source water Nowa Nowa Water Quality Zone: at Swifts Creek and at Bemm River have township of Nowa Nowa: been constructed to eliminate the use Turbidity non compliance of chlorine dioxide as a disinfectant Nowa Nowa Water Quality Zone: and mitigate the production of chlorite. township of Nowa Nowa: The Bemm River Water Treatment Plant Exceedence of Australian Drinking was commissioned in May 2007. Water Guidelines (2004) for Chlorite Completion and commissioning of the Buchan Water Quality Zone: Swifts Creek Water Treatment Plant was township of Buchan: delayed until early in 2007/08, as East Turbidity Non Compliance Gippsland Water staff were diverted to Swifts Creek Water Quality Zone: help address bush fire-related water township of Swifts Creek: quality issues with the Mitchell River Exceedence of Australian Drinking Water Supply System. Water Guidelines (2004) for Chlorite

30 East Gippsland Water Annual Report 2006-2007 WATER QUALITY

Water Quality Nicholson water is only used under extreme Performance Indicators circumstances, such as occurred due to the impact of drought and bushfires in the reporting period. For detailed water quality results and performance reports, refer to the East Gippsland Water: Water Trihalomethanes (THM) Quality Annual Report 2006/07, available from the Trihalomethanes are present in drinking water as Authority’s Bairnsdale office (133 Macleod Street) a result of chlorine based disinfection. Chlorine can and from its website www.egwater.vic.gov.au react with naturally occurring organic material in the water to produce trihalomethanes. The limit Drinking Water Quality: for THMs in drinking water is ‹ 0.25 mg/L. Safe Drinking Water Act 2003 During 2006/07 there were two exceedances of East Gippsland Water monitors drinking water the THM limit. The first was in the Sarsfield/Bruthen quality in 27 communities, incorporated in 19 Water Quality Zone, due to use of the Nicholson Water Quality Zones. Each Water Quality Zone River Supply (Emergency Drought Supply). The encompasses a source water entry point (after highly coloured water, with high organic content, disinfection) and sampling sites (normally customer reacted with the chlorine based disinfectant to taps). produce the disinfection by-product. In accordance with the Safe Drinking Water Act The second occurred in the Mallacoota Water (2003) and Safe Drinking Water Regulations (2005), Quality Zone. Pipe cleaning of the major supply designated customer taps are sampled at specified main resulted in a small concentration of organic frequencies for seven regulated parameters. A brief matter occurring at the same location as the explanation of each parameter is given below. sampling point. Mallacoota does not have a More detailed explanations can be obtained from history of elevated THMs. the Australian Drinking Water Guidelines (2004) and World Health Organisation Guidelines for Aluminium Drinking Water Quality. Refer to figures 1-7 on Aluminium may be present in water through pages 33-36 for summaries of water quality natural leaching from soil and rock, or from the use performance for the following regulated of aluminium-based coagulants in the treatment of parameters: water. East Gippsland Water uses aluminium-based E.coli coagulants in the treatment of water in Omeo, Orbost and Mallacoota. There is no health based Escherichia coli (E.coli) is a bacteria found in large guideline for aluminium, however this parameter numbers in the faeces of humans and other warm is monitored to ensure that the treatment process blooded animals. It serves as a reliable indicator of is working effectively and efficiently. The limit for recent faecal contamination of water. E.coli should aluminium in drinking water is ‹ 0.2 mg/L. not be detected in drinking water supplies. The recommended limit is therefore no E.coli in 98% During 2006/07 this limit was not exceeded. of samples taken in any 12 month period. Turbidity During 2006/07 there were two detections of Turbidity is caused by the presence in water of fine E.coli in the Nicholson/Swan Reach Water Quality suspended matter such as clay, silt, small particles, Zone. Follow up sampling showed no further plankton, algae and other microscopic organisms. detection of E.coli. High turbidity can result in water having a ‘muddy’ Haloacetic Acids/Chloroacetic Acids or ‘dirty’ appearance. Turbidity is reported in ‘Nephelometric Turbidity Units’ or NTU. Chloroacetic acids are produced in drinking water as by-products of the reaction between chlorine By way of comparison, it would be difficult to see and naturally occurring organic material in water. through a glass of water with a turbidity of more Monitoring for three types of chloroacetic acids than 60 NTU, while ‘crystal clear’ water usually has is undertaken in areas where chlorine based a turbidity of less than 1 NTU. disinfectants are used: The limit for turbidity in drinking water is “the 95% G monochloroacetic acid - limit ≤ 0.15 mg/L upper confidence limit of the mean of samples of G dichloroacetic acid - limit ≤ 0.1 mg/L drinking water collected in any 12 month period G trichloroacetic acid - limit ≤ 0.1 mg/L must be less than or equal to 5.0 NTU.” During 2006/07 the dichloroacetic acid limit was * (refer to Table 1 for an explanation exceeded on one occasion and the trichloroacetic of the statistical analysis) acid limit was exceeded on two occasions. These During 2006/07 this limit was not exceeded. occurred in the Sarsfield/Bruthen Water Quality Zone and were due to use of the Nicholson River Supply (Emergency Drought Supply). The highly ug/l represents microgram per litre, or 1 part per billion coloured water, with high organic content, mg/l represents milligram per litre, or 1 part per million reacted with the chlorine based disinfectant Gram - 1000 grams in a kilogram to produce the disinfection by-products. Milligram is 0.001 of a gram Microgram is 0.000001 of a gram

East Gippsland Water Annual Report 2006-2007: 31 WATER QUALITY

Table 1: Water Quality Reporting Standards

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

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

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

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

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

32 East Gippsland Water Annual Report 2006-2007 WATER QUALITY

Figure 1: E.coli Compliance Number Minimum Maximum % samples Water Quality Zone of Samples (E.coli/100mL) (E.coli/100mL) with zero E.coli Bairnsdale 72 0 0 100% Bemm River 52 0 0 100% Buchan 52 0 0 100% Cann River 52 0 0 100% Dinner Plain 51* 0 0 100% Eagle Point/Paynesville 52 0 0 100% Kalimna 52 0 0 100% Lindenow 52 0 0 100% Lindenow South 52 0 0 100% Mallacoota 52 0 0 100% Merrangbaur 52 0 0 100% Metung 52 0 0 100% Nicholson - Swan Reach 52 0 4 96% Nowa Nowa 52 0 0 100% Omeo 52 0 0 100% Orbost 52 0 0 100% Sarsfield - Bruthen 52 0 0 100% Sunlakes - Toorloo 62 0 0 100% Swifts Creek 52 0 0 100% For explanation of E.coli compliance exceedence refer to Key Water Issues - Water Quality Performance Indicators. * One sampling event was missed because the sample site could not be accessed during the 2006/07 bushfires. Figure 2: Monochloroacetic Acid Compliance Number Minimum Maximum % Water Quality Zone of Samples (mg/L) (mg/L) Compliance Bairnsdale 12 0.005 0.005 100% Buchan 12 0.005 0.005 100% Cann River 12 0.005 0.005 100% Eagle Point/Paynesville 12 0.005 0.005 100% Kalimna 12 0.005 0.005 100% Lindenow 12 0.005 0.005 100% Lindenow South 12 0.005 0.005 100% Mallacoota 12 0.005 0.005 100% Merrangbaur 12 0.005 0.005 100% Metung 12 0.005 0.005 100% Nicholson - Swan Reach 12 0.005 0.005 100% Omeo 12 0.005 0.005 100% Orbost 12 0.005 0.005 100% Sarsfield - Bruthen 12 0.005 0.007 100% Sunlakes - Toorloo 12 0.005 0.005 100%

East Gippsland Water Annual Report 2006-2007: 33 WATER QUALITY

Figure 3: Dichloroacetic Acid Compliance Number Minimum Maximum % Water Quality Zone of Samples (mg/L) (mg/L) Compliance Bairnsdale 12 0.005 0.024 100% Buchan 12 0.005 0.038 100% Cann River 12 0.005 0.048 100% Eagle Point/Paynesville 12 0.005 0.012 100% Kalimna 12 0.005 0.013 100% Lindenow 12 0.010 0.022 100% Lindenow South 12 0.005 0.025 100% Mallacoota 12 0.005 0.022 100% Merrangbaur 12 0.005 0.010 100% Metung 12 0.005 0.010 100% Nicholson - Swan Reach 12 0.005 0.027 100% Omeo 12 0.005 0.017 100% Orbost 12 0.005 0.016 100% Sarsfield - Bruthen 12 0.005 0.140 100% Sunlakes - Toorloo 12 0.005 0.023 100% For explanation of Dichloroacetic Acid compliance exceedence refer to Key Water Issues - Water Quality Performance Indicators.

Figure 4: Trichloroacetic Acid Compliance Number Minimum Maximum % Water Quality Zone of Samples (mg/L) (mg/L) Compliance Bairnsdale 12 0.007 0.040 100% Buchan 12 0.005 0.078 100% Cann River 12 0.005 0.083 100% Eagle Point/Paynesville 12 0.005 0.021 100% Kalimna 12 0.005 0.057 100% Lindenow 12 0.010 0.035 100% Lindenow South 12 0.015 0.050 100% Mallacoota 12 0.005 0.052 100% Merrangbaur 12 0.005 0.100 100% Metung 12 0.005 0.040 100% Nicholson - Swan Reach 12 0.005 0.065 100% Omeo 12 0.010 0.032 100% Orbost 12 0.005 0.033 100% Sarsfield - Bruthen 12 0.005 0.180 75% Sunlakes - Toorloo 12 0.005 0.073 100% For explanation of Trichloroacetic Acid compliance exceedence refer to Key Water Issues - Water Quality Performance Indicators.

34 East Gippsland Water Annual Report 2006-2007 WATER QUALITY

Figure 5: Trihalomethanes Compliance Number Minimum Maximum % Water Quality Zone of Samples (mg/L) (mg/L) Compliance Bairnsdale 12 0.04 0.08 100% Buchan 12 0.03 0.24 100% Cann River 12 0.03 0.11 100% Eagle Point/Paynesville 12 0.02 0.12 100% Kalimna 12 0.03 0.20 100% Lindenow 12 0.04 0.09 100% Lindenow South 12 0.06 0.10 100% Mallacoota 12 0.02 0.27 92% Merrangbaur 12 0.04 0.18 100% Metung 12 0.05 0.18 100% Nicholson - Swan Reach 12 0.04 0.17 100% Omeo 12 0.02 0.04 100% Orbost 12 0.02 0.10 100% Sarsfield - Bruthen 12 0.05 0.36 83% Sunlakes - Toorloo 12 0.01 0.11 100% For explanation of Trihalomethane compliance exceedence refer to Key Water Issues - Water Quality Performance Indicators.

Figure 6 : Aluminium Compliance

(acid soluble) ≤0.2 mg/L: Frequency of sampling = Monthly in relevant Zones Number Minimum Maximum % Water Quality Zone of Samples (mg/L) (mg/L) Compliance Mallacoota 12 0.05 0.05 100% Omeo 12 0.05 0.12 100% Orbost 12 0.05 0.10 100%

East Gippsland Water Annual Report 2006-2007: 35 WATER QUALITY

Figure 7: Turbidity Compliance Number Minimum Maximum Comply Water Quality Zone of Samples (NTU) (NTU) 95% UCL (Yes/No) Bairnsdale 72 0.3 8.5 1.2 Yes Bemm River 52 0.6 2.0 1.2 Yes Buchan 52 0.3 7.0 2.9 Yes Cann River 52 0.4 4.7 1.7 Yes Dinner Plain 51 0.1 0.4 0.2 Yes Eagle Point/Paynesville 52 0.2 2.0 0.8 Yes Kalimna 52 0.2 2.2 1.0 Yes Lindenow 52 0.3 1.5 0.7 Yes Lindenow South 52 0.2 8.8 1.4 Yes Mallacoota 52 0.1 2.3 0.6 Yes Merrangbaur 52 0.1 3.9 1.1 Yes Metung 52 0.1 3.2 0.8 Yes Nicholson - Swan Reach 52 0.2 1.5 0.8 Yes Nowa Nowa 52 1.0 10.0 4.8 Yes Omeo 52 0.1 14.0 1.0 Yes Orbost 52 0.1 1.2 0.4 Yes Sarsfield - Bruthen 52 0.2 2.1 0.9 Yes Sunlakes - Toorloo 62 0.2 8.9 1.4 Yes Swifts Creek 52 0.5 9.2 2.9 Yes

36 East Gippsland Water Annual Report 2006-2007 The delivery of quality water and wastewater Asset Register (NPAR) and Maintenance ASSET services to customers is achieved through Management (Work Order) System, construction, operation and maintenance which is being developed to manage MANAGEMENT of the physical assets provided and the scheduling of work tasks for depot managed by East Gippsland Water. and other staff. Implementation will These assets comprise the water continue over the next reporting period. and sewerage networks and include the pipes, pumps, storages, treatment plants, Geographic Information buildings, plants and equipment. System (GIS) A key component of East Gippsland Water’s The commitments contained in the asset management system for water and Authority’s Asset Management Policy are sewer infrastructure is the Geographic aimed at achieving the safe, reliable and Information System (GIS). effective delivery of services to existing and new customers. Depot staff have laptop computers equipped with GIS map viewer software and dial-up East Gippsland Water is responsible for connections to obtain rapid access to asset ensuring that its services meet legislative, data in the field. stakeholder and corporate objectives and during the reporting period continued work A valuable feature of the GIS is network to ensure that assets were being managed tracing. It enables related infrastructure items effectively and efficiently. and data to be accurately traced; for example identifying all shut-off valves required to Key asset management initiatives identified isolate a section of water main. Also, with in the Authority’s Corporate Plan for action, customer contact details stored in East were progressed during the 2006/07 Gippsland Water’s financial data base and financial year, as outlined below. linked to GIS land parcels, network tracing Asset Management System greatly assists staff to identify customers Development affected by water service disruption. The timely entry of data into the A major review and update of key asset system remains a high priority. Entry management processes and procedures of as-constructed drawings into the GIS was carried out to ensure their rigour and usually occurs within two weeks of receipt. transparency. The on-going tasks of data verification and These processes and procedures are now “cleaning” are commonly based on field contained in a specially developed Asset staff reports following visits to assets. Management Manual (comprising separate GIS, property and subdivision data is updated manuals covering the Authority’s Asset fortnightly following Vicmap changes to land Management System, Capital Works Program, parcel data. The process of integrating East Project Management and Tendering). Gippsland Water’s Conquest and GIS systems A draft land development manual was also is underway. completed and is due to be brought into use during 2007/08. Sewer Risk Assessment An external audit carried out in November The Authority undertakes an ongoing 2006 found the system to be compliant assessment of its sewerage collection overall, but this revision of the Asset systems within a risk management Management System represents a framework. The factors affecting the risk significant advance on previous management for sewer assets include, arrangements. Further enhancements but are not limited to, age, material type were identified and are being progressed, and location. The assets are then managed including: to an appropriate level of operation, G Development of Asset Management Plans preventative maintenance, repair and for key assets/classes of assets renewal. G Full implementation of the asset During the reporting period, criticality management software package called assessments for wastewater assets Conquest (see section below) and were completed for the sewerage combining this with the Geographic collection systems at Mallacoota, Omeo, Information System (GIS) to form an Dinner Plain and Cann River. This means integrated database criticality assessments have been carried out for all the Authority’s sewerage collection Asset Management Software systems, with Paynesville, Bairnsdale, The main software package developed Lakes Entrance, Orbost, and Marlo during the reporting year is called Conquest. assessed in previous years. This incorporates the Authority’s Non-Pipeline

East Gippsland Water Annual Report 2006-2007: 37 ASSET MANAGEMENT

Water Mains Replacement Model Demand Strategy which addresses the next 50 years. A program of water treatment, water storage The Authority’s water main replacement model and bulk water transfer improvement works was provides a risk-based approach to water main developed and commenced during 2006/07, asset management, by identifying a water main with some long term initiatives brought forward replacement profile into the future. Predictive because of bush fire-related water quality issues. methods to improve this model will be considered and may be included over time as required. The Work on major components of this program risk rankings will be incorporated into the asset during the reporting period included: management system. G Glenaladale Pumping Station - commencement of a project to install a new pump and carry out New Assets and Projects an electrical upgrade, to improve the station’s A number of significant projects designed to operating efficiency and reliability improve services to customers, or to ensure G Woodglen storage - a geotechnical report was secure water supplies, were either under way conducted as part of preliminary work for the or completed during the reporting period. construction of a second water storage These included: G Woodglen Water Treatment Plant - a Functional Mitchell River Water Supply System - Design Report (FDR) for the plant and sludge Urgent Bushfire Response Works management options that was advanced during 2006/07 is to be substantially reviewed. This will The 2006/07 bushfires caused severe damage take on board urgent water treatment/supply to the Mitchell River catchment. This resulted in measures initiated during the period to tackle a serious ongoing water quality issue, with water quality and quantity issues as a result of substantial quantities of soil and bushfire debris the bush fires washing down the Mitchell River Water Supply G Land acquisition at Woodglen for the storage System, which serves some 17,000 East Gippsland and treatment plant was progressed Water customers. G Lindenow - a new shadecloth cover over the Due to its poor quality, this water could not be open, lined water storage was underway, with pumped to already depleted storages such as completion expected early in 2007/08 Woodglen Reservoir. G Eagle Point - replacement of the open storage The situation necessitated the installation of with covered tanks commenced specialist infrastructure to clean the water to G Wy Yung - lining of the open storage and drinking quality standard and in large enough construction of a floating cover commenced. quantities to meet customer consumption levels Installation of a filtration plant before the entry and replenish storage supplies. point to Wy Yung basin also commenced The infrastructure included ten ‘Siltbuster’ water In addition planning and design work progressed clarifiers and five water settlement dams, along on proposed new water storages for Sarsfield and with new emergency water bores and existing Sunlakes. farm bores to provide additional water from aquifers, an extensive pipeline network, diesel Small Towns Water Quality Improvement generators and electricity provision. A new water treatment plant was constructed at Bemm River and came into operation during Capital costs incurred for these initiatives during the 2006/07. A further three, at Cann River, Buchan reporting period were approximately $5.2 million. and Swifts Creek, were largely completed during Further works are planned for 2007/08. the reporting period, though their commissioning The substantial undertaking to divert resources to was delayed until early in 2007/08. This was partly carry out these emergency works has delayed East because East Gippsland Water staff and resources Gippsland Water’s overall program of planned were diverted to help address the water quality works for the region. This program will be issue with the Mitchell River Water Supply System. progressed in 2007/08. Construction of a pipeline linking the residents of Mitchell River Water Supply System Nowa Nowa to Toorloo Storage Basin at Lakes Augmentation Program Entrance was completed, to provide higher quality A top priority for the Authority is ensuring water than that previously sourced from Boggy customers have a secure water supply for the Creek. Site works at the associated pump station next 50 years, considering the potential impact and disinfection plant were also progressed, of climate change, extreme weather events though not finished as resources were again (such as severe drought, bushfires and flood) diverted to assist with the Mitchell River Water and population growth in the region. Supply System. The Mitchell River Water Supply System Commissioning of the new water supply is Improvement Strategy addresses long term risks expected early in 2007/08. associated with water quality and growing water demand, in tandem with the Authority’s Supply

38 East Gippsland Water Annual Report 2006-2007 ASSET MANAGEMENT

Irrigation improvement works are also progressing at the Metung Wastewater Treatment Plant. Augmentation of the Metung high level water reticulation system has been completed. Omeo and Eagle Point Alterations to the sludge handling system at Omeo Wastewater Treatment Plant and augmentation of existing sewerage connections with new pump connections at Eagle Point and Omeo have progressed. Outfall Sewers Work on new major sewers in the Bairnsdale and Lakes Entrance areas commenced during 2006/07, while major sewers were completed for Eagle Point and Paynesville. Supervisory Control and Data Acquisition (SCADA) G Specialist infrastructure including Siltbuster water clarifiers help to treat and clean dirty Mitchell River During the reporting period the Authority started water. implementing its SCADA system. This is an initiative using remote monitoring to provide early warning of faults or performance issues at key facilities, Mallacoota minimising operational problems and improving Planning and design work for the refurbishment of equipment reliability, compliance and customer the winter storage at the Mallacoota Wastewater service. Treatment Plant progressed during the reporting period and is expected to be completed in The initial focus has been water quality and the 2007/08. This work is required to ensure the extensive real-time monitoring of water treatment effective containment of treated effluent and facilities, with work concentrating on the design compliance with EPA requirements. An EPA of field monitoring equipment, computer hardware works approval was sought and granted. and software. The volume of the storage will be increased Over the next few years the use of the SCADA to allow for future growth at Mallacoota. system will be expanded to cover other key facilities and assets. Tambo Bluff Estate The Authority was requested by East Gippsland Developer Works and Subdivisions Shire Council to provide a water and wastewater For the reporting period, the level of subdivisional scheme for Tambo Bluff Estate, which includes activity across the region was less than in 2005/06. 320 allotments with little or no infrastructure. Approximately 506 new allotments were created Detailed design of the water and wastewater during 2006/07, compared with 705 previously. system was concluded and preliminary The value of owner-financed works involving water arrangements made with the Council to and wastewater assets was in the order of $1.59 commence infrastructure works at the same time million, down from $3.1 million the previous year. as construction of roads, drainage and electricity infrastructure. Research Development and Bairnsdale Adoption of New Technology The new Balfours Road water booster pump New technology provides opportunities for East station was completed during the reporting period. Gippsland Water to achieve improvements in Construction of the new booster pump station at efficiency, cost-effectiveness and risk management, Murphy Street was underway and is due for along with environmental and/or social benefits. completion early in 2007/08. Examples of recent projects associated with These two projects have been designed to cope adoption of new technology by East Gippsland with the impact of future population growth. Water include: They provide improved water pressure, while G Shadecloth cover research (in consultation with also meeting service standards, during peak water CSIRO and others) demand periods in the Bairnsdale reticulation area. G Preparation of the Water Main Replacement Lakes Entrance and Metung Model and Sewer Asset Criticality Environmental improvement projects under way at G Thermal imagery the Bruces Track irrigation area near Lakes Entrance G ‘Smart’ water meters include a new effluent storage and fixed sprinkler G SCADA strategy irrigation works.

East Gippsland Water Annual Report 2006-2007: 39 ASSET MANAGEMENT

G Risk management - software development G Utilisation of pressure filters and comparison with gravity sand filters for water treatment G Algal management - trials of wind/solar aeration/mixing for destratification of water bodies and nutrient management G Biosolids research - the Authority contributed to the National Biosolids Research Program investigating the sustainable use of biosolids G Endocrine disruption study - the Authority participated in a study of endocrine disruption chemicals (naturally occurring and synthetic chemicals that can affect the balance of normal hormonal function in animals) in wastewater. Asset Maintenance and Renewals During the reporting period almost 30 kilometres of major water mains were scoured, swabbed and flushed as part of improvements to water quality. G Using an underground camera and monitor to Mains swabbing clears the insides of pipes of pinpoint deteriorating pipework. debris, any biofilm growths, tobacco weed and other deposits. These projects were implemented under the Authority’s strategy to continuously improve the Bemm River, Swifts Creek, Buchan and Cann River reliability of water and wastewater services and mains and storage tanks were scoured, in minimise service interruptions faced by customers. preparation for new water treatment plants coming on line, while scouring also occured Total expenditure on asset renewal for the year at Nowa Nowa in preparation for its new water totalled approximately $750,000. supply. Water mains were replaced at Marlo, Metung, Improvements were made to the Mallacoota Water Bruthen and Bairnsdale during the year. Treatment Plant to enable iron and manganese The repair of sewer mains and relining of removal, while the Betka pump station, bore pumps underground pipes was greatly assisted by the and controls were upgraded. use of Close Circuit Television (CCTV) to pinpoint In addition, an upgrade program for sewer pump deterioration due to ageing, tree root intrusion stations including installation of more efficient and other causes. pump controls was commenced. The repair of minor faults in pipes and manholes, East Gippsland Water also continued its ongoing preventing salt water infiltration into the sewer program of works, including the repair and system, also continued to be a focus of works replacement of water and sewer mains, in environmentally sensitive catchments. replacement of pumps and the relining of Maintenance program expenditure involving sewer underground pipes. rehabilitation totalled approximately $500,000.

40 East Gippsland Water Annual Report 2006-2007 FINANCIAL SUMMARY

Operating Revenue and Expenditure: 5 Year Comparative Analysis Last 2 Year 02/03 03/04 04/05 05/06 06/07 Movement Actual Actual Actual Actual Actual Comparisons Details $ m $ m $ m $ m $ m $m Revenue Water Fees and Charges 5.483 6.136 6.578 7.118 7.836 0.718 Sewer Fees and Charges 5.682 5.955 6.667 7.357 8.235 0.878 Government Contributions 0.000 0.000 0.000 0.000 0.105 0.105 Interest Earned 0.355 0.408 0.443 0.397 0.241 -0.156 Other Revenue 1.110 1.130 1.062 1.006 0.821 -0.227 Developer Capital Contributions 1.265 3.248 2.467 3.772 2.666 -1.106 Total Revenue 13.895 16.877 17.218 19.650 19.904 -0.212

Expenditure Operations and Maintenance Expenses 5.340 5.380 6.089 7.266 7.064 -0.202 Administration Expenses 2.931 3.162 3.720 3.639 4.220 0.581 Interest Payments 0.000 0.000 0.000 0.000 0.011 0.011 Other expenses 0.682 0.977 0.805 0.618 0.267 -0.393 Depreciation 4.343 4.444 4.646 4.837 4.953 0.116 Total Expenditure 13.295 13.963 15.259 16.360 16.515 0.113 Surplus before tax for the period 0.600 2.915 1.958 3.290 3.389 -0.099

5 YEAR COMPARATIVE REPORT: REVENUE SOURCE BY CATEGORY Revenue Increased tariffs have 8 resulted in increased revenue from Water 7 and Sewerage Fees 6 and Charges. Major developments within 5 the district have led to 4 increased revenue

$ millions 3 from developer capital contributions. Interest 2 earned on investments 1 decreased, due to the increased capital and 0 recurrent expenditure Water Fees Sewer Fees Government Interest Earned Other Revenue Developer and Charges and Charges Contributions Capital for the period, resulting Contributions in a reduction in the 02/03 03/04 04/05 05/06 06/07 amount of funds invested.

5 YEAR COMPARATIVE REPORT: EXPENDITURE BY CATEGORY Expenditure The Authority experienced increases in operational and maintenence costs, due 7 to the implementation of emergency 6 measures to address water quality issues with the Mitchell River following 5 bushfires. These measures ensured 4 drinking water supplies for customers were maintained. 3 $ millions 2

1

0 Operations and Administration Interest Other Depreciation Maintenance Expenses Payments Expenses Expenses

East Gippsland Water Annual Report 2006-2007: 41 FINANCIAL SUMMARY

Comparative Actual to Budget Report

2006/07 2006/07 Actual Budget Variance $M $M %

Details Revenue Water Fees and Charges 7.84 7.62 2.78% Sewer Fees and Charges 8.24 7.56 8.99% Government Contributions 0.11 0.00 100.00% Interest Earned 0.24 0.10 141.00% Other Revenue 0.82 0.60 36.38% Developer Capital Contributions 2.67 1.37 94.31% Total Revenue 19.90 17.25 15.36% Expenditure Operations and Maintenance Expenses 7.06 5.87 20.42% Administration Expenses 4.22 4.66 -9.38% Interest Payments 0.01 0.40 -97.25% Other expenses 0.27 0.05 434.00% Depreciation 4.95 5.22 -5.02% Total Operating Expenditure 16.52 16.19 2.02% Surplus before tax for the period 3.39 1.07 218.00%

Comments on Variances Exceeding 5% Revenue The performance of actual revenue for the period reveals a result of 12.46% more revenue than budgeted. This increase was a result of greater income from wastewater service fees and charges, increased interest on investments and greater than expected developer income in the form of gifted/donated assets and developer levies - including a parcel of land in Dinner Plain gifted to the Authority. Expenditure Actual Expenditure in relation to Budget varied by 2.02%. This was due mainly to increases in operational and maintenance costs, as the Authority tackled water quality issues in the Mitchell River district following the bushfires to ensure continuation of water supply to customers. Emergency works included 24 hour a day shifts, major chemical use to treat the highly turbid water and increased material/external service provider costs. The Authority disposed of $492,000 of infrastructure assets, which had a written down value of $235,000 in the financial year. These assets were identified as part of the Authority’s move to a full asset management system for both pipeline and non-pipeline assets.

REVENUE EXPENDITURE

A. Water fees and charges 40% A. Operations and Maintenance water B. Interest earned 1% and wastewater 42% C. Other revenue 4% B. Depreciation 30% D. Developer capital contributions 13% C. Other expenses 2% E. Sewer fees and charges 42% D. Administration expenses 26%

42 East Gippsland Water Annual Report 2006-2007 OTHER INFORMATION

Freedom of Information The Freedom of Information Act 1982 allows public access to documents held by government entities, which incudes right of access to documents held by East Gippsland Water. Freedom of Information requests need to be made in writing to: Freedom of Information Officer, East Gippsland Water, PO Box 52, Bairnsdale, Victoria, 3875. The telephone number is (03) 5150 4444. Enquiries can also be e-mailed to [email protected]. The fee for requests was $21.50 during the 2006/07 reporting period (from July 2007 this increased to $22.00). During the reporting period one request for information was made to the Authority. This went to internal review and was responded to during 2006/07. Whistleblowers’ Protection Act 2001 The main objective of the Whistleblowers Protection Act 2001 is to encourage and facilitate the making of disclosures of improper conduct or detrimental action by public officers and public bodies. Further information is available from the Victorian Ombudsman’s website at www.ombudsman.vic.gov.au Within the terms of reference of the Whistleblowers Protection Act, no disclosures were made to East Gippsland Region Water Authority, nor were any disclosures made to the Ombudsman for determination as to whether they were public interest disclosures. No investigation or disclosure of any type was taken over from East Gippsland Water by the Ombudsman. No requests by complainants to have disclosures investigated by the Ombudsman, due to their dissatisfaction with the way East Gippsland Water investigated any matter, were received. The Authority did not decline to investigate any disclosure and no recommendations were received by the Authority from the Ombudsman in relation to any aspect of the Whistleblowers Protection Act. A copy of East Gippsland Water’s Whistleblowers’ policy is enclosed with this Annual Report. Charter of Human Rights and Responsibilities During the reporting period two East Gippsland Water managers completed the Department of Justice sponsored Human Rights Implementation Workshop and are preparing for implementation of the Charter of Human Rights and Responsibilities across the Authority, to meet the required 1 January 2008 legislative deadline. Implementation of the Victorian Industry Participation Policy (VIPP) During 2006/07, the Authority did not commence or complete any contracts which applied to the Financial Reporting Directions (FRD). Compliance with Building Act During the reporting period the Authority complied with the building and maintenance provisions of the Building Act 1993. National Competition Policy East Gippsland Water continues to work with Government to introduce components of water industry reform as outlined under the Council of Australian Governments’ strategic water reform framework. The Authority complies with Victorian Government policies and timetables for National Competition Policy, including Competitive Neutrality. Financial Management Compliance Framework The Financial Management Compliance Framework (FMCF) was implemented on 1 July 2003. Department of Treasury and Finance (DTF) developed the framework in response to the Government’s initiative of promoting responsible financial management in the public sector. The framework provides a vehicle for DTF to monitor and report on the Authority’s financial management obligations. The annual certification for 2005/06 rated the Authority’s compliance at 93%. East Gippsland Water continues to improve risk compliance. Subsequent Events The Hon Tim Holding MP, Minister for Water, became the responsible Minister on 3 August 2007. Under amendments to the Water Act 1989 East Gippsland Water Authority’s name changed to East Gippsland Water Corporation on 1 July 2007. The title of Chief Executive Officer also changed to Managing Director and the Board changed to the Board of Directors. No significant matters arose between the end of the 2006/07 financial year and this Annual Report going to print, which will have a material impact on East Gippsland Water’s financial position. However, with regard to the impact of the 2006/07 bushfires and floods, please refer to the Contingent Liabilities section in the Financial Report, page 72.

East Gippsland Water Annual Report 2006-2007: 43 OTHER INFORMATION

Consultants to the Authority Consultants costing over $100,000 in the 2006/07 financial year Number - 0 Consultants costing below $100,000 in the 2006/07 financial year Number - 12 Total cost of consultants engaged - $400,000 East Gippsland Water engages Earth Tech Engineering Pty Ltd to provide design and project management services and has done so for a number of years. The Authority and Earth Tech Engineering have a contractual arrangement in place for services covering the provision of feasibility studies, detailed design, project management and construction supervision. This arrangement is independently assessed, benchmarked and validated every three years to ensure that East Gippsland Water receives value for money and that the appropriate governance issues are upheld. The agreement is also monitored against ongoing and annual performance indicators. There are provisions in the agreement and the Authority’s policies to ensure conflict of interest issues are avoided and the Board of East Gippsland Water also actively oversees the ongoing arrangement. More than 90 per cent of the work completed by the Earth Tech Engineering Bairnsdale office is on East Gippsland Water projects. The office avoids any conflict of interest by declining work from developers. The value of the design, project management and construction work, spread over some 70 infrastructure projects and activities undertaken by Earth Tech Engineering in the 2006/07 calendar year for the Authority, was $2.5 million. The contractual arrangement is non exclusive and the Authority may also engage other consulting engineers who have expertise in specialist areas; for example, Sinclair Knight Merz (SKM) in the areas of catchment works, drought management and supply/demand strategies, and GHD in the area of water quality management systems. Major Contracts East Gippsland Water did not enter into any contracts greater than $10 million during the reporting period.

44 East Gippsland Water Annual Report 2006-2007 PERFORMANCE STATEMENTS

Financial Performance Indicators

Variance Performance Indicator 2005-06 2006-07 2006-07 (+) Favourable Result Result Target (-) Unfavourable F1 Long Term Profitability Earnings before net interest and tax ÷ Average total assets 1.96% 1.89% 0.80% +136% F2 Owner’s Investment Net profit after tax ÷ average total equity 1.44% 1.42% 0.5% +196% F3 Long Term Financial Viability Total debt (including finance leases) ÷ total assets 0% 1.85% 4.5% -59% F4 Liquidity and Debt Servicing (Interest Cover) Earnings before net interest and tax expense ÷ net interest expense N/A 289 4.5 +284.5 F5 Immediate Liquidity and Debt Servicing (Cash Cover) Cash flow from operations before net interest and tax payments ÷ net interest payments N/A 617 21 +596

Operating Efficiency F6 Water supply Reticulation - costs per Volumetric Measure Operating, Mtc and Admin Costs $3,712,000 $3,520,000 $2,770,000 ML Volume throughput for the year 4,928ML 5,107ML 4,979ML Recurrent Cost $/kl $753 $689 $556 -24% F7 Water supply Treatment - costs per Volumetric Measure Operating, Mtc and Admin Costs $1,969,000 $3,560,000 $2,100,000 ML Volume throughput for the year 4,928ML 5,107ML 4,979ML Recurrent Cost $/kl $400 $697 $422 -65% F8 Wastewater Reticulation - costs per Volumetric Measure Operating, Mtc and Admin Costs $3,207,000 $1,953,000 $2,067,000 ML Volume throughput for the year 2,954ML 2,851ML 3,240ML Recurrent Cost $/kl $1,086 $685 $638 -7% F9 Wastewater Treatment - costs per Volumetric Measure Operating, Mtc and Admin Costs $2,079,000 $1,648,000 $1,641,000 ML Volume throughput for the year 2,954ML 2,851ML 3,240ML Recurrent Cost $/kl $693 $578 $506 -14%

East Gippsland Water Annual Report 2006-2007: 45 PERFORMANCE STATEMENTS

Service and Environmental Performance Indicators

Performance Indicator Variance (Complying with Essential 2005-06 2006-07 2006-07 (+) Favourable Services Commission definitions) Result Result Target (-) Unfavourable Water supply interruptions S1 Number of customers receiving 1 unplanned interruption in the year 1734 2715 No Target N/A S2 Number of customers receiving 2 unplanned interruptions in the year 452 878 No Target N/A S3 Number of customers receiving 3 unplanned interruptions in the year 8 482 No Target N/A S4 Number of customers receiving 4 unplanned interruptions in the year 0 131 No Target N/A S5 Number of customers receiving 5 unplanned interruptions in the year 0 20 No Target N/A S6 Number of customers receiving > 5 unplanned interruptions in the year 0 0 No Target N/A

Interruption time indicators S7 Average duration of unplanned water supply interruptions 152 minutes 122 minutes 92 minutes -32% S8 Average duration of planned water supply interruptions 111 minutes 188 minutes 160 minutes -17%

Restoration of water supply R1 Unplanned water supply interruptions restored within 3 hours 91% 90% No Target N/A R2 Unplanned water supply interruptions restored within 5 hours 97% 98% 99% -1% R3 Unplanned water supply interruptions restored within 12 hours 100% 98% 100% -2%

Reliability of sewerage collection services indicators R4 Sewer spills from reticulation and branch sewers (priority 1 and 2) Nos. 36 60 98 +39% R5 Sewage spilt from emergency relief structures and pumping stations (% of volume transported) 0% 2% 0% -2%

Containment of sewer spillages R6 Sewerage spills contained within 5 hours 100% 86.7 % 100% -13%

46 East Gippsland Water Annual Report 2006-2007 PERFORMANCE STATEMENTS

Service and Environmental Performance Indicators (continued)

Performance Indicator Variance (Complying with Essential 2005-06 2006-07 2006-07 (+) Favourable Services Commission definitions) Result Result Target (-) Unfavourable Customer complaints indicators C1 Water quality complaints per 1000 customers 11.24 2.15 5.6 +62% C2 Water supply reliability complaints per 1000 customers 1.02 0.20 15.8 +78% C3 Sewerage service quality and reliability complaints per 1000 customers 6.58 1.30 5.3 +76% C4 Affordability complaints per 1000 customers 0.15 0.25 3.3 +92% C5 Billing complaints per 1000 customers 0.46 0.90 No target set N/A C6 Pressure complaints per 1000 customers 1.98 0.55 No target set N/A C7 Sewage odours complaints per 1000 customers .57 0.05 No target set N/A C8 Other complaints per 1000 customers 3.71 2.40 4.2 +43%

Total Of All Facilities

E1 Reuse Indicator Effluent reuse (volume) 100% 100% 100% 0% Biosolids reuse (dry mass) 0% 0% 0% 0%

E2 Sewage Treatment Standards Number of analyses complying with licence agreements as % of samples 84% 84% 100% -16%

Bairnsdale Treatment Facility Reuse Indicator Effluent reuse (volume) 100% 100% 100% 0% Biosolids reuse (dry mass) 0% N/A N/A

Sewage Treatment Standards Number of analyses complying with licence agreements as % of samples 100% 98% 100% -2%

Paynesville Treatment Facility Reuse Indicator Effluent reuse (volume) 100% 100% 100% 0% Biosolids reuse (dry mass) 0% N/A N/A

E3 Sewage Treatment Standards Number of analyses complying with licence agreements as % of samples 14% 29% 100% -71%

East Gippsland Water Annual Report 2006-2007: 47 PERFORMANCE STATEMENTS

Service and Environmental Performance Indicators (continued)

Performance Indicator Variance (Complying with Essential 2005-06 2006-07 2006-07 (+) Favourable Services Commission definitions) Result Result Target (-) Unfavourable Lindenow Treatment Facility Reuse Indicator Effluent reuse (volume) 100% 100% 100% 0% Biosolids reuse (dry mass) 0% N/A N/A Sewage Treatment Standards Number of analyses complying with licence agreementsas % of samples 100% 100% 100% 0%

Metung Treatment Facility Reuse Indicator Effluent reuse (volume) 100% 100% 100% 0% Biosolids reuse (dry mass) 0% N/A N/A

E4 Sewage Treatment Standards Number of analyses complying with licence agreements as % of samples 77% 86% 100% -14%

Lakes Entrance Treatment Facility Reuse Indicator Effluent reuse (volume) 100% 100% 100% 0% Biosolids reuse (dry mass) 0% N/A N/A E5 Sewage Treatment Standards Number of analyses complying with licence agreements as % of samples 84% 84% 100% -16%

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

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

48 East Gippsland Water Annual Report 2006-2007 PERFORMANCE STATEMENTS

Service and Environmental Performance Indicators (continued)

Performance Indicator Variance (Complying with Essential 2005-06 2006-07 2006-07 (+) Favourable Services Commission definitions) Result Result Target (-) Unfavourable Omeo Treatment Facility Reuse Indicator Effluent reuse (volume) 100% 100% 100% 0% Biosolids reuse (dry mass) 0% N/A N/A Sewage Treatment Standards Number of analyses complying with licence agreements as % of samples 0% N/A 100% 0%

Dinner Plain Treatment Facility Reuse Indicator Effluent reuse (volume) 100% 100% 100% 0% Biosolids reuse (dry mass) 0% N/A N/A

Sewage Treatment Standards E6 Number of analyses complying with licence agreements as % of samples 84% 75% 100% -25%

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

Performance Report Variances Explained

F1&F2East Gippsland Water received greater than forecast income from water and wastewater services during the period. Developer Income from charges and gifted/donated assets also contributed to the over budget result. Reduced expenditure on borrowing interest charges of only $11K compared to a budget of $400K due to timing differences for capital expenditure payments as well as improvements in IT operational efficiencies led to a higher than forecast profit result for the year. F3, F4, F5 Borrowings were limited to only $3.5 million for the financial year from a target of $8 million. Reduced borrowings were as a result of delays in capital works expenditure and greater income from the debt collection as well as increased income generated from the water and wastewater service tariffs. The $3.5 million was borrowed late in the financial year and consequently interest expense for the year was only $11K compared to a budget of $400K. F6 Greater than forecast water reticulation costs were incurred during the period due to increased efforts to improve water quality. During the period planned works were increased to prevent a repeat of last period’s Bryzoa outbreak. Planned works will continue into the next water plan period as part of the Authority’s preventative maintenance program. The Authority carried out major scouring, swabbing and preventative maintenance work on pipelines that increased water reticulation costs. The drought conditions experienced in East Gippsland also contributed to earth movement and tree root damage to water pipelines and major floods added to the costs of maintaining the reticulation network. Steps were taken to minimise impact to customers by carrying out works at night where possible.

East Gippsland Water Annual Report 2006-2007: 49 PERFORMANCE STATEMENTS

F7 The Authority’s catchments, infrastructure and operations were impacted by fires and floods during the reporting period. The fires damaged almost 50% of the catchment and following a rain event caused contamination of the Authority’s major water supply district, which necessitated major operational and capital expenditure to maintain water supplies to 81% of EGW customers. Higher than forecast expenditures were incurred to treat the highly turbid, coloured and contaminated water source from the Mitchell River as a result of these fires. Costs to treat this poor quality water included chemicals, salaries including overtime, hire of plant and equipment, external service provides, fuel and material costs. F9 Wastewater reticulation costs during the period were significantly lower per ML than last financial year but were still higher than budget forecast. The higher cost per ML is reflective of the decreased amount of sewage collected this year and when fixed costs are divided by this decreased base, the result is a higher than expected cost per kilolitre. S1-S7The average duration of unplanned water supply target was not met during the reporting period due to the several major unplanned interruptions that affected a large number of customers. Unplanned interruptions this year were as a result of the unusual climatic conditions experienced in East Gippsland where drought caused earth movements that lead to major pipeline fractures and interruptions with floods contributing to these unplanned interruptions when a branch from the major pipeline river crossing was washed away. Other influences that caused an increase in the duration of unplanned interruptions were as a result of contractors damaging pipelines during installation of the gas pipeline reticulation in the region. These events were beyond the control of EGW. S8 The greater than targeted average duration of planned interruptions over the reporting period has been as a result of the increased number of planned shutdowns for mains cleaning which have been carried out to improve water quality prior to the commissioning of the four small town water treatment facilities. As reported in F6 greater efforts to improve water quality has meant that customers have been subjected to higher than usual water supply interruptions. It should be noted that most works have been carried out over night to minimise the impact of interruptions on customers. R4 This indicator has come in well under target due to the corporate plan target for number of sewer spills being aligned with the ESC target for the number of sewer blockages. Staff are committed to attending reported blockages promptly and as a result reduce the number of sewer spills. The Authority has also invested in new technology (jetting equipment) to assist in the reducing sewer blockages. R6 Containment of sewer spills within 5 hours was on track to meet target in May 2007 but the floods in the region during June 2007 resulted in this target not being met. This one major flood event (estimated as a one in seventy-five year occurrence) caused 8 sewer spills not being contained within this 5 hour period. C1-C8All complaints recorded major improvements from the previous period and to target over this period. The improved complaints result reflects the work being carried out to improve wastewater and water quality service delivery. E1 The Authority reuses 100% of wastewater collected. E2 Overall results recorded for total compliance results against target. E3 Paynesville: All non conformances were due to electrical conductivity (EC) levels being higher than licence limits. The EC levels are high due to salt water infiltration into sewers under the water table adjacent to the lake coastline. Irrigation of the salt water has been assessed by an agricultural consultant and found to be not detrimental. A new version of the licence is currently with the EPA. Infiltration has been addressed with further relining repairs, and a particularly problematic manhole is due for replacement in early 2007-08. E4 Metung: Electrical conductivity (EC) slightly exceeded licence limits in two samples for the year. There will be no detrimental effect on the environment with irrigation of wastewater at Metung with the salt levels measured. A new licence has been drafted to reflect the EC levels and a range of other sections that require updating. It is planned to investigate possible saline infiltration within the Metung and Swan Reach sewer systems. E5 Lakes Entrance: Most non conformances for Lakes Entrance are due to electrical conductivity being higher than licence limits. This was due to salt water infiltration within sewers under the water table near the Gippsland Lakes. The infiltration was repaired for during 2005-06 but a reduction in salt levels at the final sample point are now only starting to show due to timing of when water that contains low levels of salt eventually affects the large volume of stored water. The only other non conformance was for pH - only slightly above licence limits - the pH is known to vary regularly throughout the day and due to algae activity, and is not considered to be an environmental issue. E6 Dinner Plain: The non compliances have been as a result of BOD (biological oxygen demand) and suspended solids levels being higher than licence limits. The wastewater treatment plant is under investigation to provide a range of options to resolve this issue. Although the licence levels were exceeded there is no irrigation during the winter months, hence the consequences are not detrimental to the environment. Irrigation is carried out during Dinner Plains’ non peak period during the summer when BOD and suspended solids levels have achieved. A new licence is being drafted for EPA approval to remove some obsolete sections and ensure it reflects the operating conditions of Dinner Plains.

50 East Gippsland Water Annual Report 2006-2007 PERFORMANCE STATEMENT CERTIFICATION FOR 2006/07

In our opinion, the accompanying Statement of Performance of East Gippsland Regional Water Authority in respect of the 2006/2007 financial year is presented fairly in accordance with the Financial Management Act 1994. The Statement outlines the relevant performance indicators as determined by the responsible Minister, the actual results achieved for the financial year against pre-determined performance targets for these indicators, and an explanation of any significant variance between the actual results and performance targets. As at the date of signing, we are not aware of any circumstance, which would render any particulars in the Statement to be misleading or inaccurate.

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

3rd September 2007

East Gippsland Water Annual Report 2006-2007: 51 AUDITOR GENERAL’S REPORT

52 East Gippsland Water Annual Report 2006-2007 FINANCIAL REPORT

Financial Report for the year ended 30 June 2007

Table of Contents Operating Statement 54 Balance Sheet 55 Statement of Changes in Equity 56 Cash Flow Statement 57 Notes to the Financial Report Note 1 Summary of Significant Accounting Policies 58-63 Note 2 Operating Statement - Disclosures 64 Note 3 Income Tax Expense 64 Note 4 Cash Assets 65 Note 5 Receivables 65 Note 6 Inventories 65 Note 7 Property, Plant and Equipment 66-70 Note 8 Intangible Assets 70 Note 9 Payables 70 Note 10 Provisions 70 Note 11 Interest Bearing Liabilities 71 Note 12 Deferred Tax Liabilities 71 Note 13 Contingent Liabilities 72 Note 14 Superannuation 72 Note 15 Lease Commitments 72 Note 16 Contributed Capital 72 Note 17 Asset Revaluation Reserve 73 Note 18 Accumulated Surplus 73 Note 19 Reconciliation of Surplus from Ordinary Activities to Cash provided by Operating Activities 73 Note 20 Capital Commitments 73 Note 21 Reconciliation of Cash 74 Note 22 Auditors Remuneration 74 Note 23 Executive Officers Remuneration 74 Note 24 Responsible Persons Related Disclosures 74 Note 25 Financial Instruments 75-76 Note 26 Wholesale and Retail Segments 77 Note 27 Events Subsequent to Balance Date 77 Certification of Financial Report 78 Audit Certificate 79-80

East Gippsland Water Annual Report 2006-2007: 53 FINANCIAL REPORT

East Gippsland Region Water Authority Operating Statement for the reporting period 30 June 2007

Note 2007 2006 $000 $000

Revenue from operating activities 1.2 Service Charges 2(a) 11,689 10,540 Metered Charges 4,329 3,936 Trade Waste Charges 53 44 Government Contributions 2(a) 105 - Developer Contributions 2(a) 2,666 3,772 Other Revenue 2(a) 747 880 Total Revenue from operating activities 19,589 19,172 Revenue from non-operating activities Interest 241 398 Other 2(a) 74 80 Total Revenue from non-operating activities 315 478

Total Revenue 19,904 19,650 Expenses Borrowing Costs 1.3 11 - Depreciation 2(b) 4,808 4,708 Amortisation - Intangible Assets 2(b) 145 129 Employees 4,956 4,687 Environmental Contribution 1.7 590 590 Suppliers and Materials 5,727 6,218 Loss on Assets Disposed 7(b) 278 28 Total Expenses 16,515 16,360 Net result before tax 3,389 3,290 Income Tax Expense 1.5, 3 (1,008) (980) Result for the Reporting Period 18 2,381 2,310

The accompanying notes form part of these financial statements

54 East Gippsland Water Annual Report 2006-2007 FINANCIAL REPORT

East Gippsland Region Water Authority Balance Sheet as at 30 June 2007

Note 2007 2006 $000 $000

Current Assets Cash and cash equivalents 4(a), 21 2,571 5,926 Receivables 5 3,050 3,383 Inventories 1.6, 6 520 616 Total Current Assets 6,141 9,925 Non-Current Assets Receivables 1.8, 5 176 266 Property, Plant and Equipment 7 171,189 153,108 Intangible assets 8 203 348 Capital Work in Progress 7 11,938 6,266 Total Non-Current Assets 183,506 159,988 Total Assets 189,647 169,913 Current Liabilities Payables 9 4,695 2,483 Funds Held in Trust 99 556 Short-term provisions 10(a) 1,110 1,056 Deferred Revenue - Developer Deposits 1.2 1,035 728 Total Current Liabilities 6,939 4,823 Non-Current Liabilities Long-term Provisions 10(b) 85 68 Interest Bearing Liabilities 11 3,500 - Deferred Tax liabilities 12 6,330 2,902 Total Non-Current Liabilities 9,915 2,970 Total Liabilities 16,854 7,793 Net Assets 172,794 162,120 Equity Contributed Capital 16 94,103 92,814 Reserves 17 11,975 4,970 Accumulated Funds 18 66,717 64,336 Total Equity 172,794 162,120

The above Balance Sheet should be read in conjunction with the accompanying notes

East Gippsland Water Annual Report 2006-2007: 55 FINANCIAL REPORT

East Gippsland Region Water Authority Statement of Changes in Equity for the reporting period ended 30 June 2007

Note 2007 2006 $000 $000

Total equity at beginning of financial year 162,120 159,613 Gain/(loss) on property revaluation 7,004 - Net income recognised directly in equity 17 7,004 - Net result for the period 18 2,381 2,310 Total recognised income and expense for the period 9,385 2,310 Transactions with the State in its capacity as owner 16 1,289 197 Total equity at the end of financial year 172,794 162,120

The accompanying notes form part of these financial statements

56 East Gippsland Water Annual Report 2006-2007 FINANCIAL REPORT

East Gippsland Region Water Authority Cash Flow Statement for the year ended 30 June 2007

Note 2007 2006 $000 $000 Inflows/ Inflows/ (outflows) (outflows) Cashflows from Operating Activities Receipts Rates, Tariffs, Fees and Charges 16,465 14,763 Interest 252 416 Other and GST Collected 3,074 2,272 Payments Interest Paid (1) - Employees (4,948) (4,600) Suppliers and Others (inclusive of GST) (7,840) (7,936) Net Cash Inflow from Operating Activities 19 7,002 4,915 Cashflows from Investing Activities Payments for Property, Plant and Equipment (16,276) (6,702) Payments for Intangibles - (400) Contributions for Capital Works 1,442 1,427 Trust Monies Received - 431 Trust Monies Paid (457) (503) Proceeds from Sale of Property, Plant and Equipment 145 295 Net Cash Outflow from Investing Activities (15,146) (5,452) Cashflows from Financing Activities Contributed Capital 16 1,289 150 Proceeds from Borrowings 11 3,500 - Net Cash Inflow from Financing Activities 4,789 150 Net Decrease in Cash (3,355) (387) Cash at beginning of Financial Year 5,926 6,313 Cash at end of Financial Year 4(a), 21 2,571 5,926

The accompanying notes form part of these financial statements

East Gippsland Water Annual Report 2006-2007: 57 FINANCIAL REPORT

East Gippsland Region Water Authority Notes to the Financial Report for the year ended 30 June 2007

Note 1: Summary of Significant Accounting Policies (a) Basis of Accounting General This financial report of East Gippsland Region Water Authority is a general purpose financial report that consists of an Operating Statement, Balance Sheet, Statement of Changes in Equity, Cash Flow Statement and notes to the financial report. The general purpose financial report complies with Australian equivalents to International Financial Reporting Standards (A-IFRS), other authoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues Group Interpretations and the requirements of the Financial Management Act 1994 and applicable Ministerial Directions. This financial report has been prepared on an accrual and going concern basis. Name Change Effective from 1 July 2007 the name of the Authority was changed to the East Gippsland Region Water Corporation pursuant to Section 85(1) of the Water Act 1989, as amended by Section 54 of the Water Governance Act 2006. Accordingly the reporting entity for the financial year 1 July 2006 to 30 June 2007 is the East Gippsland Region Water Authority and these financial statements have been prepared on that basis. Under these revised legislative arrangements the Chief Executive Officer as at the 30 June 2007 became the Managing Director of the Corporation effective 1 July 2007. These financial statements have been certified by the Managing Director in accordance with the accountability requirements that attach to this position at the signing date. East Gippsland Region Water Corporation trades under the name East Gippsland Water. Accounting Policies Unless otherwise stated, all accounting policies applied are consistent with those of the prior year. Where appropriate, comparative figures have been amended to accord with current presentation and disclosure made of material changes to comparatives. Classification between current and non-current In the determination of whether an asset or liability is current or non-current, consideration is given to the time when each asset or liability is expected to be realised or paid. The asset or liability is classified as current if it is expected to be turned over within the next twelve months, being the Authority’s operational cycle. Rounding Unless otherwise stated, amounts shown in the financial statements are expressed to the nearest thousand dollars. 1.1 Historical Cost Convention These financial statements have been prepared under the historical cost convention in conformity with AIFRS, modified by the revaluation of financial assets, certain classes of property, plant and equipment. 1.2 Revenue Recognition Water and Sewerage Charges Rate/tariff and service charges are recognised as revenue when levied or determined. Water usage charges are recognised when the product is provided through metered water volume measure. Wastewater volume measure is based on the metered water volume measure for Dinner Plain. Meter reading is undertaken progressively during the year and an estimation, calculated by multiplying the number of days since the last reading by each customer’s average water volume measure usage, is made at the end of each accounting period in respect of water meters which have not been read at balance date. This amount is included as accrued income for the reporting period. All tariffs for Water and Wastewater include the Environmental Contribution. Developer contributions/Fees paid by developers Fees paid by developers to connect new developments to the Authority’s existing water supply and sewerage systems are recognised as revenue when the construction work and connection to the system has been completed and the contributions are received. In cases where the Authority has entered into conditional agreements with developers to meet outfall and headworks charges, revenue is recognised at the date of agreement. Developer deposits received for construction works are recognised as deferred revenue until works are completed. Assets acquired at no cost to East Gippsland Region Water Authority (developer’s capital contributions) are recognised as revenue upon their acceptance by East Gippsland Region Water Authority for maintenance in perpetuity, and are recorded at their fair value in the financial statements. Grants and contributions for capital works, including those received from the Victorian State Government are treated as operating revenue and disclosed in the operating statement as Income for Capital Purposes when received. The only exception to this rule are grants and contributions received from the Victorian State Government, which the Minister for Finance and the Minister for Water, Environment and Climate Change have determined to be for the intention of capital works, and are accounted for as Equity, in accordance with AASB 1004 Contributions. Interest and rents Interest and rentals are recognised as revenue when earned or the service provided. Lease income from operating leases is recognised in income on a straight-line basis over the lease term.

58 East Gippsland Water Annual Report 2006-2007 FINANCIAL REPORT

East Gippsland Region Water Authority Notes to the Financial Report for the year ended 30 June 2007

1.3 Borrowing Costs Borrowing costs are recognised as expenses in the period in which they are incurred. Borrowing costs include interest on bank overdrafts and short-term and long-term borrowings, amortisation of discounts or premiums relating to borrowings, amortisation of ancillary costs incurred in connection with the arrangement of borrowings and finance lease charges. 1.4 Investments Investments are brought to account at cost with interest revenue recognised in the Operating Statement on a time proportionate basis that takes into account the effective yield in the financial asset. 1.5 Income Tax For the financial year 2001-02, the Authority was subject to the rules applicable under the State Equivalent Tax Regime administered by the Victorian Department of Treasury and Finance. The Authority was notified by the Treasurer, of the Government’s decision to direct Regional Water Authorities to become subject to the National Tax Equivalent Regime (NTER) from 1 July 2002. The NTER is administered by the Australian Taxation Office. The Authority is subject to Australian Accounting Standard AASB 112 - Income Taxes, as part of the requirement to operate under the National Tax Equivalent Regime. The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the national income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses. Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities are settled, based on those tax rates which are enacted or substantially enacted. The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability. No deferred tax asset or liability is recognised in relation to these temporary differences if they arose in a transaction, other than a business combination, that at the time of the transaction did not affect either accounting profit or taxable profit or loss. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in subsidiaries where the parent entity is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future. Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity. Deferred Tax Assets of $376,230 and provision for deferred income tax liabilities of $6,705,836 (net of tax benefit of carry forward income tax losses of $6,201,305) have been included in the accounts. Realisation of those benefits is contingent upon the future ability of the Authority to generate taxable income, continued compliance with the conditions of deductibility imposed by the law and the taxation law itself not changing in a manner which would adversely affect the Authority in realising those benefits. 1.6 Inventories Inventories comprise stores and materials used in the construction of new works and for the repair and maintenance of existing assets. All inventories are valued at the lower of cost and net realisable value. Costs are assigned to inventory quantities on hand at balance date on a weighted average basis. Inventories include goods and other property held either for sale or for distribution at no or nominal cost in the ordinary course of business operations. Inventories held for distribution are measured at the lower of cost and current replacement cost. All other inventories, including land held for sale, are measured at the lower of cost and net realisable value. Where inventories are acquired at no cost, or for nominal consideration, the cost shall be the current replacement cost as at the date of acquisition. Cost for all other inventory is measured on the basis of weighted average cost. Livestock inventory was valued at 30 June 2007 by registered livestock valuer Sharp Fullgrabe and Co Pty Ltd for stock kept at Bruce’s Track Property and by Landmark Kyle and Obst for stock held at the Orbost property. In accounting for the sale of fixed assets, only the net result of the disposal is shown in the Operating Statement as required under A-IFRS. Full details of the gains and losses on disposal of fixed assets are shown separately in Note 7. 1.7 Environmental Contribution The Water Industry (Environmental Contributions) Act 2004 amended the Water Industry Act 1994 to make provision for environmental contributions to be paid by water supply authorities. The Act establishes an obligation for authorities to pay into the consolidated fund annual contributions for the first period from 1 October 2004 to 30 June 2008 in accordance with the pre-established schedule of payments, which sets out the amounts payable by each authority. The purpose for the environmental contribution is set out in the Act, and the funding may be used for the purpose of funding initiatives that seek to promote the sustainable management of water or address water-related initiatives. The environmental contributions are disclosed separately in expenses.

East Gippsland Water Annual Report 2006-2007: 59 FINANCIAL REPORT

East Gippsland Region Water Authority Notes to the Financial Report for the year ended 30 June 2007

In accordance with Action Point 6.3 of the Victorian Governments White Paper titled “Securing our water future together”, East Gippsland Water was required to collect an environmental contribution of $590,000 for the 2006/7 Financial Year. This environmental contribution was collected through Water and Wastewater Service and Water Volume fees levied on all accounts. 1.8 Receivables Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns, trade allowances and duties and taxes paid. Receivables are recognised initially at fair value and subsequently measured at amortised cost, less allowance for doubtful debts. Receivables are due for settlement no more than 28 days from the date of recognition for tariff debtors, and no more than 30 days for other debtors. Recovery of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off. A provision for doubtful receivables is established when there is objective evidence that the Authority will not be able to collect all amounts due according to the original terms of receivables on tenant accounts, as all accounts raised against property owners are collectable on sale of the property and hence have been excluded from any doubtful debt provision, in accordance with A-IFRS requirements. 1.9 Employee Benefits Provision is made for benefits accruing to employees in respect of wages and salaries, annual leave, long service leave, and sick leave when it is probable that settlement will be required and they are capable of being measured reliably. Provisions made in respect of employee benefits expected to be settled within 12 months, are measured at their nominal values, using the remuneration rate expected to apply at the time of settlement. Provisions made in respect of employee benefits which are not expected to be settled within 12 months are measured at their present value of the estimated future cash outflows to be made by the Authority, in respect of services provided by employees up to the reporting date. Employee benefit on-costs, which include superannuation, work cover and payroll tax, are recognised and included in employee benefit liabilities and costs when the employee benefits to which they relate are recognised as liabilities. All employee entitlements that are due to the employee have been recognised as current liabilities. The only portion of employee benefits that have been recognised as non-current liabilities are long service leave provisions for employees who have not reached the entitlement period of seven years of employment, in accordance with AASB 101 Presentation of Financial Statements. Superannuation The purpose of a superannuation scheme is to accumulate assets to meet members’ benefits as they accrue. The Authority contributes in respect of its employees to a number of superannuation schemes administered by the State Superannuation Board and the Local Authorities Superannuation Board. The amounts of these contributions are determined by each scheme’s actuary in accordance with statutory requirements. The amount charged to the operating statement in respect of superannuation represents the contributions made by the Authority to the superannuation plan in respect to the current services of current entity staff. Superannuation contributions are made to the plans based on the relevant rules of each plan. 1.10 Cash and cash equivalents For the purposes of the Cash Flow Statement, cash and cash equivalents include cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. 1.11 Borrowings Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the operating statement over the period of the borrowings, using the effective interest method. Borrowings are classified as current liabilities unless the Authority has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date. 1.12 Property, Plant and Equipment Recognition and Measurement of Assets Acquisition The purchase method of accounting is used for all acquisitions of assets (including business combinations), regardless of whether equity instruments or other assets are acquired. Cost is measured as the fair value of the assets given, shares issued or liabilities incurred or assumed at the date of exchange plus costs directly attributable to the acquisition. Transaction costs arising on the issue of equity instruments are recognised directly in equity. Where assets are constructed by the Authority, the cost at which they are recorded includes an appropriate share of fixed and variable overheads and any associated borrowing cost. Assets acquired at no cost or for nominal consideration by the Authority are recognised at fair value at the date of acquisition.

60 East Gippsland Water Annual Report 2006-2007 FINANCIAL REPORT

East Gippsland Region Water Authority Notes to the Financial Report for the year ended 30 June 2007

Property, plant and equipment represent non-current assets comprising land, buildings, water infrastructure, sewerage and drainage infrastructure, heritage assets, plant, equipment and motor vehicles, used by the Authority in its operations. Items with a cost or value in excess of $500 and a useful life of more than one year are recognised as an asset. All other assets acquired are expensed. Repairs and maintenance Routine maintenance, repair costs and minor renewal costs are expensed as incurred. Where the repair relates to the replacement of a component of an asset and the cost exceeds the capitalisation threshold, the cost is capitalised and depreciated. Infrastructure In accordance with FRD 103 Non-Current Physical Assets, water infrastructure assets are to be measured at cost less any accumulated depreciation and any accumulated impairment losses. Such assets may comprise substructures or underlying systems held by water entities to facilitate the harvesting, storage, treatment and transfer of water to meet customer needs. They also include infrastructure assets that underlie sewage and drainage systems. Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the operating statement. When revalued assets are sold, it is the Authority’s policy to transfer the amounts included in other reserves in respect of those assets to accumulated funds. The Authority previously revalued its Infrastructure Assets in 2001 and the estimated useful lives of assets were reassessed at the time of revaluation, and amended accordingly. The Authority elected to recognise its infrastructure assets at deemed cost from 1 July 2004 on transition to the Australian Equivalent of International Reporting Standards (A-IFRS) as allowed under AASB 1047 First Time Adoption of Australian Equivalent to International Accounting Standards. Assets other than those that are carried at cost are revalued with sufficient regularity to ensure that the carrying amount of each asset does not differ materially from its fair value. This revaluation process normally occurs every three to four years for land and building assets. Revaluation Revaluation increments are credited directly to equity in the revaluation reserve, except that, to the extent that an increment reverses a revaluation decrement in respect of that class of asset previously recognised as expense in determining the net result, the increment is recognised as revenue in determining the net result. Revaluation decrements are recognised immediately as expenses in the net result, except that, to the extent that a credit balance exists in the revaluation reserve in respect of the same class of assets, they are debited to the revaluation reserve. Revaluation increases and revaluation decreases relating to individual assets within a class of property, plant and equipment are offset against one another within that class but are not offset in respect of assets in different classes. Revaluation reserves are not transferred to accumulated funds on derecognition of the relevant asset. Land and Building Assets were revalued in the 2006/7 financial year, with the revaluation being undertaken by P&H Crane Licensed Valuer. All fixed assets excluding land are depreciated on the straight-line basis over the estimated useful lives of the assets to the Authority. Depreciation and Amortisation of Non-current Assets Where assets have separate identifiable components that have distinct useful lives and/or residual values, a separate depreciation rate is determined for each component. Land is not depreciated. Depreciation on other assets is calculated using the straight line method to allocate their cost or revalued amounts, net of their residual values, over their estimated useful lives, commencing from the time the asset is held ready for use. The assets residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. Major depreciation periods used are listed below and are consistent with the prior year, unless otherwise stated: The expected useful lives used for each class of assets are: Class of Fixed Asset Useful Life Buildings 67 years Water Infrastructure 10 - 100 years Wastewater Infrastructure 10 - 80 years Plant and Equipment 3 - 20 years Motor Vehicles 8 years Office Equipment 1 - 10 years Intangible Assets 3 years

East Gippsland Water Annual Report 2006-2007: 61 FINANCIAL REPORT

East Gippsland Region Water Authority Notes to the Financial Report for the year ended 30 June 2007

The cost of assets constructed by the Authority includes all direct labour, materials and administration costs used in construction. Works on existing assets are only capitalised if they substantially increase the useful life of the asset. The cost of capital works projects are accumulated as work in progress until the projects have been commissioned. Costs are then transferred to completed works at the end of each month and depreciation is applied from the following month. 1.13 Impairment of Non Current Assets The carrying amount of East Gippsland Region Water Authority’s non-current assets has been reviewed in accordance with Australian Accounting Standard AASB136 - Impairment of Assets. Impairment of Assets Goodwill and intangible assets with indefinite useful lives are tested annually as to whether their carrying value exceeds their recoverable amount. All other assets are assessed annually for indicators of impairment, except for G inventories; G deferred tax assets; G investment property that is measured at fair value; G non-current assets held for sale. If there is an indication of impairment, the assets concerned are tested as to whether their carrying value exceeds their recoverable amount. Where an asset’s carrying amount exceeds its recoverable amount, the difference is written-off by a charge to the operating statement except to the extent that the write-down can be debited to an asset revaluation reserve amount applicable to that specific asset. The recoverable amount for most assets is measured at the higher of depreciated replacement cost and fair value less costs to sell. Recoverable amount for assets held primarily to generate net cash inflows is measured at the higher of the present value of future cash flows expected to be obtained from the asset and fair value less costs to sell. It is deemed that, in the event of the loss of an asset, the future economic benefits arising from the use of the asset will be replaced unless a specific decision to the contrary has been made. An impairment loss on a revalued asset is recognised directly against any revaluation reserve in respect of the same class of asset to the extent that the impairment loss does not exceed the amount in the revaluation reserve for that same class of asset. A reversal of an impairment loss on a revalued asset is credited directly to equity under the heading revaluation reserve. However, to the extent that an impairment loss on the same class of asset was previously recognised in Operating Statement, a reversal of that impairment loss is also recognised in the Operating Statement. From a review of the future net cash flows, the Authority’s asset values do not exceed their recoverable amount from their continued use and their subsequent disposal and as such, no adjustment to these values was made in the reporting period. If the Authority was deprived of any of its assets, they would be replaced with new assets to maintain the current function of those assets in place. 1.14 Capitalisation of Administration Expenses The Authority undertook significant capital works throughout the year. The current policy in relation to these works does not require the recognition of the administrative overhead contribution to the capital works program and the cost of capital works only includes direct administration expenses. 1.15 Government Dividend An obligation to pay a dividend only arises after consultation with the portfolio Minister and the Treasurer and a formal determination is made by the Treasurer. The Authority does not expect to provide a dividend to be paid out of the results during this period. 1.16 Goods and Services Tax Revenues, expenses and assets are recognised net of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the Australian Taxation Office (ATO). In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of an item of expense. Receivables and payables are stated inclusive of GST. The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the Balance Sheet. Cash flows arising from operating activities are disclosed in the Cash Flow Statement on a gross basis - i.e. inclusive of GST. The GST component of cash flows arising from investing and financing activities which is recoverable or payable to the taxation authority is classified as operating cash flows. 1.17 Segmental Reporting - Wholesale/Retail Function The Authority has no wholesale activities.

62 East Gippsland Water Annual Report 2006-2007 FINANCIAL REPORT

East Gippsland Region Water Authority Notes to the Financial Report for the year ended 30 June 2007

1.18 Intangibles Intangible assets represent identifiable non-monetary assets without physical substance. Intangible assets are recognised at cost. Costs incurred subsequent to initial acquisition are capitalised when it is expected that additional future economic benefits will flow to the Authority. Amortisation is allocated to intangible assets with finite useful lives on a systematic basis over the asset’s useful life. Amortisation begins when the asset is available for use, that is, when it is in the location and condition necessary for it to be capable of operating in the manner intended by management. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each annual reporting period. In addition, an assessment is made at each reporting date to determine whether there are indicators that the intangible asset concerned is impaired. If so, the assets concerned are tested as to whether their carrying value exceeds their recoverable amount. Intangible assets with indefinite useful lives are not amortised. The useful lives of intangible assets that are not being amortised are reviewed each period to determine whether events and circumstances continue to support an indefinite useful life assessment of that asset. In addition, the entity tests all intangible assets with indefinite useful lives for impairment by comparing their recoverable amount with their carrying amount annually and, whenever there is an indication that the intangible assets may be impaired. Any excess of the carrying amount over the recoverable amount is recognised as an impairment loss. In respect of not-for-profit entities, revaluation increases and decreases relating to individual assets within a class of intangible assets shall be offset against one another within that class but shall not be offset in respect of assets in different classes. A summary of the policies applied to the Authority’s intangible assets is as follows: Software Useful Lives Finite Method Used 3 years - straight line Internally Generated/Acquired Internally Generated Impairment Test/Recoverable Amount Testing Amortisation method reviewed at each financial year end

East Gippsland Water Annual Report 2006-2007: 63 FINANCIAL REPORT

East Gippsland Region Water Authority Notes to the Financial Report for the year ended 30 June 2007

Note 2: Operating Statement - Disclosures 2007 2006 $000 $000

(a) Revenue Service Charges Water Charges 3,631 3,275 Wastewater Charges 8,058 7,265 11,689 10,540 Government Contributions Operating 105 - 105 - Developer Contributions Headwork/Outfall Fees 439 383 Landowner Contributions 2,227 3,389 2,666 3,772 Other Revenue Planning Fees 267 289 Farm Operations Income 128 128 Livestock Valuation Increase 5 16 Rental Income 74 80 Miscellaneous 274 374 Legal Fees Recovered 73 73 821 960 (b) Expenses Depreciation and Amortisation: Buildings 54 50 Water Infrastructure 2,015 1,969 Wastewater Infrastructure 2,259 2,214 Amortisation - Intangible Assets 145 129 Plant, Equipment, Office and Motor Vehicles 480 475 4,953 4,837

Note 3: Income Tax Expense The income tax expense for the financial year differs from the amount 2007 2006 calculated on the profit. These differences are reconciled as follows: $000 $000

Profit from ordinary activities before income tax expense 3,389 3,290 Income tax at 30 % 1,016 986 Add/(Deduct) Tax effect of: - Depreciation on Buildings 16 15 - Entertainment 2 2 - Amortisation of Buildings (25) (23) Aggregate Income Tax Expense 1,008 980 Aggregate income tax expense comprises: - Deferred Income Tax Provision 1,008 980

64 East Gippsland Water Annual Report 2006-2007 FINANCIAL REPORT

East Gippsland Region Water Authority Notes to the Financial Report for the year ended 30 June 2007

Note 4: Cash Assets 2007 2006 $000 $000

Current (a) Cash on Hand and Bank Accounts 2,567 2,501 Short Term Investments - 3,000 Developer Bond Accounts 4 425 2,571 5,926

Note 5: Receivables 2007 2006 $000 $000

Current: Trade Debtors 1,650 1,880 Other Debtors 1,242 1,265 Less Provision for Doubtful Debts (30) (30) Prepayments 188 268 3,050 3,383 Non-current: Private Schemes 176 261 Other Debtors - 5 176 266

Amount of debts written off as bad debts during the year totalled $17,637 (2006: $56,663)

Note 6: Inventories 2007 2006 $000 $000

Stores at Cost 444 529 Livestock at Valuation 76 87 520 616

East Gippsland Water Annual Report 2006-2007: 65 FINANCIAL REPORT

East Gippsland Region Water Authority Notes to the Financial Report for the year ended 30 June 2007

Note 7: Property, Plant and Equipment 2007 2006 $000 $000

(a) Classes of Property, Plant and Equipment Land At Fair Value (Crown) 2,850 1,540 At Fair Value (Freehold) 16,249 8,338 At Cost (Freehold) - 525 19,099 10,403 Buildings At Fair Value 4,636 1,900 At Cost - 1,454 Less Accumulated Depreciation - (119) 4,636 3,235 Water Infrastructure At Deemed Cost 65,093 65,454 At Cost 15,472 7,068 Less Accumulated Depreciation (11,456) (9,621) 69,109 62,902 Wastewater Infrastructure At Deemed Cost 66,475 66,610 At Cost 22,494 18,395 Less Accumulated Depreciation (12,522) (10,344) 76,446 74,660 Motor Vehicles At Cost 1,621 1,493 Less Accumulated Depreciation (488) (387) 1,133 1,106 Plant and Equipment At Cost 1,642 1,464 Less Accumulated Depreciation (1,090) (952) 552 512 Office Equipment At Cost 957 925 Less Accumulated Depreciation (743) (635) 214 290 Total Property, Plant and Equipment 171,189 153,108 Capital Works in Progress Water, At Cost 9,960 3,808 Wastewater, At Cost 1,979 2,458

Total Capital Works in Progress 11,938 6,266

66 East Gippsland Water Annual Report 2006-2007 FINANCIAL REPORT

East Gippsland Region Water Authority Notes to the Financial Report for the year ended 30 June 2007

Note 7: Property, Plant and Equipment (continued) Asset Accumulated WDV Proceeds Profit/ Value at Depreciation at Sale from (Loss) on Sale Date on Disposal Date Sale Sale $000 $000 $000 $000 $000

(b) Profit/(Loss) on Sale of Non Current Assets 2007 Motor Vehicles 256 (78) 178 145 (33) Plant and Equipment 4 (4) - - - Office Equipment 89 (79) 10 - (10) Infrastructure Assets 492 (257) 235 - 235) Total 841 (418) 423 145 (278)

(b) Profit/(Loss) on Sale of Non Current Assets 2006 Motor Vehicles 470 (153) 317 264 (53) Plant and Equipment 124 (122) 2 26 24 Office Equipment 48 (45) 3 4 1 Infrastructure Assets - - - - - Total 642 (320) 322 294 (28)

East Gippsland Water Annual Report 2006-2007: 67 FINANCIAL REPORT

East Gippsland Region Water Authority Notes to the Financial Report for the year ended 30 June 2007

Note 7: Property, Plant and Equipment (continued)

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

(c) Movement during financial year 2007 Land At Fair Value (Crown) 1,540 1,310 2,850 At Fair Value (Freehold) 8,338 500 7,411 16,249 At Cost 525 (525) - 10,403 500 - 8,196 - 19,099 Buildings At Fair Value 1,814 2,851 (29) 4,636 At Cost 1,421 226 (1,622) (25) - 3,235 226 - 1,229 (54) 4,636 Water Infrastructure At Deemed Cost 56,239 (181) 56,058 At Cost 6,662 8,404 (2,015) 13,051 62,901 8,404 (181) - (2,015) 69,109 Waste Infrastructure At Deemed Cost 57,237 (54) 57,183 At Cost 17,423 4,098 (2,259) 19,262 74,660 4,098 (54) - (2,259) 76,446 Motor Vehicles At Cost 1,106 384 (178) (179) 1,133 1,106 384 (178) - (179) 1,133 Plant and Equipment At Cost 512 183 (143) 552 512 183 - - (143) 552 Office Furniture and Equipment At Cost 290 92 (10) (158) 214 290 92 (10) - (158) 214 Total 153,108 13,887 (423) 9,425 (4,808) 171,189 At 1 July 2006 Cost/fair value 175,167 Accumulated Depreciation and impairment (22,059) Net Carrying Amount 153,108 At 30 June 2007 Cost/fair value 197,488 Accumulated Depreciation and impairment (26,299) Net Carrying Amount 171,189

68 East Gippsland Water Annual Report 2006-2007 FINANCIAL REPORT

East Gippsland Region Water Authority Notes to the Financial Report for the year ended 30 June 2007

Note 7: Property, Plant and Equipment (continued)

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

(d) Movement during financial year 2006 Land At Fair Value (Crown) 1,540 1,540 At Fair Value (Freehold) 8,338 8,338 At Cost 473 52 525 10,351 52 - - - 10,403

Buildings At Fair Value 1,843 (29) 1,814 At Cost 1,442 (21) 1,421 3,285 - - - (50) 3,235 Water Infrastructure At Deemed Cost 58,034 (1,795) 56,239 At Cost 4,904 1,932 (174) 6,662 62,938 1,932 - - (1,969) 62,901 Waste Infrastructure At Deemed Cost 59,033 (1,796) 57,237 At Cost 11,589 6,252 (418) 17,423 70,622 6,252 - - (2,214) 74,661 Motor Vehicles At Cost 1,080 519 (316) (177) 1,106 1,080 519 (316) - (177) 1,106 Plant and Equipment At Cost 424 222 (2) (132) 512 424 222 (2) - (132) 512 Office Furniture and Equipment At Cost 330 129 (4) (165) 290 330 129 (4) - (165) 290 Total 149,030 9,106 (322) - (4,707) 153,108 At 1 July 2005 Cost/fair value 166,657 Accumulated Depreciation and impairment (17,627) Net Carrying Amount 149,030 At 30 June 2006 Cost/fair value 175,167 Accumulated Depreciation and impairment (22,059) Net Carrying Amount 153,108

East Gippsland Water Annual Report 2006-2007: 69 FINANCIAL REPORT

East Gippsland Region Water Authority Notes to the Financial Report for the year ended 30 June 2007

Note 7: Property, Plant and Equipment (continued) Opening Closing Cost Additions Transfer Cost $000 $000 $000 $000

(e) Capital Works in Progress Water At Cost 3,808 14,782 (8,630) 9,960 Wastewater At Cost 2,458 3,618 (4,098) 1,978 Total 6,266 18,400 (12,728) 11,938

Note 8: Intangible Assets 2007 2006 $000 $000

Cost (gross carrying amount) 618 661 Accumulated Amortisation and Impairment (415) (313)

Net Carrying Amount 203 348

Opening Written Down Value 348 77 Additions - 400 Amortisation (145) (129) Closing Written Down Value 203 348

Note 9: Payables 2007 2006 $000 $000

Trade Creditors and Accruals 4,126 2,199 Contractor Deposits and Retention 569 284 4,695 3,039

Note 10: Provisions 2007 2006 $000 $000

(a) Current: Annual Leave 471 442 Provision for Long Service Leave 639 614 1,110 1,056 (b) Non-Current: Provision for Long Service Leave 85 68 85 68 (c) Employee Statistics Number of Employees 76 73 Number of Effective Full Time Employees 75 72 The present value of employee entitlements that are not expected to be settled within twelve months of balance date have been calculated using the following weighted averages, as advised by the Department of Treasury and Finance. Rostered Days Off were not deemed to be liabilities and no provision was calculated during the reporting period. Assumed rate of increase in wage and salary rates 4.50% Discount Rate 6.27% to 6.46% Settlement Term (years) 7

70 East Gippsland Water Annual Report 2006-2007 FINANCIAL REPORT

East Gippsland Region Water Authority Notes to the Financial Report for the year ended 30 June 2007

Note 11: Interest Bearing Liabilities 2007 2006 $000 $000

Non-Current: Secured TCV Borrowings 3,500 - Total Interest Bearing Liabilities 3,500 - Assets Pledged as security Nil Nil Credit Standby arrangements Bank (TCV) loan facilities Total facilities 16,000 - Used at Balance Date 3,500 - Unused at Balance Date 12,500 - Interest rate risk exposures The following table sets out the Authority’s exposure to interest rate risk, including the contractual repricing dates and the effective weighted average interest rate maturity periods. Exposures arise predominately from liabilities bearing variable interest rates as the Authority intends to hold fixed rates to maturity. Floating Interest Rate TCV Borrowings - (000’s) 3,500 - 3,500 - Weighted average interest rate (%) 6.42% -

Note 12: Deferred Tax Liabilities 2007 2006 $000 $000

The balance comprises temporary differences attributable to: Amounts recognised in Profit or Loss Employee Benefits (358) (337) Doubtful Debts (9) (9) Other (9) (5) Tax Losses (6,201) (5,532) Depreciation 10,277 8,575 3,700 2,692 Amounts recognised directly in Equity Revaluation of property, plant and equipment 2,630 210 2,630 210 Net deferred tax liabilities 6,330 2,902 Movements Opening Balance at 1 July 2,902 1,922 Charged/(credited) to the operating statement 1,008 980 Charged/(credited) to equity 2,420 - Closing balance at 30 June 6,330 2,902

East Gippsland Water Annual Report 2006-2007: 71 FINANCIAL REPORT

East Gippsland Region Water Authority Notes to the Financial Report for the year ended 30 June 2007

Note 13: Contingent Liabilities At balance date, the Authority faces a possible obligation arising from the Great Divide Fires which has resulted in significant fluctuations in water quality for the Mitchell River system. This obligation is dependent on the quality of water flowing down the Mitchell River system that passes the Authorities off take point. Should the water become unsuitable for replenishing the Authorities drinking water supply in the future, a temporary treatment facility will need to be maintained. This will result in significant additional costs to the Authority. Additionally the Authority would need to evaluate the imposition of severe water restrictions to curb demand, which would reduce the operating income of the Authority. In late June 2007 the East Gippsland Region was ravaged by floods. This resulted in increases to both capital and operating expenditure in response to the flood impacts for repairs and maintenance to water and wastewater infrastructure. Due to the occurrence or non occurrence of these events not being wholly within the control of the Authority and the amount of any obligation arising unable to be measured with sufficient reliability, a contingent liability has been disclosed.

Note 14: Superannuation The Authority contributes to the following superannuation schemes in respect of its employees with contribution rates varying from 9% - 9.25% of employee salaries. Contribution by the Authority 2007 2006 during the reporting period are detailed below: $000 $000

AMP Flexible Lifetime Superannuation 1 1 Local Authorities Super - Defined Benefits 103 118 Local Authorities Super - Super Saver 255 212 Victorian State Superannuation Fund 10 11 369 342 Local Authorities Super - Defined Benefits The Local Authorities Super - defined benefit plan is a multiple employer sponsored plan. As the funds assets and liabilities are pooled and are not allocated by employer, the actuary is unable to allocate benefit liabilities, assets and costs between employers. As provided under paragraph 32(b) of AASB 119, the Authority does not use defined benefit accounting for these contributions. The Authority also makes employer contributions to the Local Authorities Superannuation Fund (LASB) defined benefits category of the fund at rates determined by the Fund’s Trustee on the advice of the actuary.

Note 15: Lease Commitments Receivable 2007 2006 $000 $000

Less than One Year 67 64 One to Five Years 188 206 Over Five Years 378 409 633 679

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

Note 16: Contributed Capital 2007 2006 $000 $000

Opening Balance 92,814 92,617 Equity contributions from Victorian Government - Cash 1,289 150 Equity contributions from Victorian Government - Non Cash - 47 Total Contributed Capital 94,103 92,814

72 East Gippsland Water Annual Report 2006-2007 FINANCIAL REPORT

East Gippsland Region Water Authority Notes to the Financial Report for the year ended 30 June 2007

Note 17: Asset Revaluation Reserve 2007 2006 $000 $000

Opening Balance 4,970 4,970 Land Valuation Increment 6,145 - Building Valuation Increment 860 - Movements for year 7,005 - Closing Balance 11,975 4,970

Note 18: Accumulated Funds 2007 2006 $000 $000

Balance July 1 64,336 62,026 Surplus from Ordinary Activities 2,381 2,310 Accumulated Surplus at end of the year 66,717 64,336

Note 19: Reconciliation of Surplus from Ordinary Activities 2007 2006 to Cash Provided by Operating Activities $000 $000

Surplus from Ordinary Activities 2,381 2,310 Loss on Sale of Non-Current Assets 278 28 Depreciation and Amortisation 4,953 4,837 Bad Debts 18 57 Income for Capital Purposes (2,771) (3,772) Movement in Assets and Liabilities (Increase)/Decrease in Receivables 405 340 (Increase)/Decrease in Stock 96 (26) Increase/(Decrease) in Provisions 71 87 Increase/(Decrease) in Accounts Payable 563 75 Increase/(Decrease) in Tax Provisions 1,008 979 Net cash provided by operating activities 7,002 4,915 Non Cash Activities Income for capital purposes - Donated Developer Assets 1,137 2,606

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

Note 20: Capital Commitments 2007 2006 $000 $000

Capital Project Commitments due within 12 months 6,033 7,313

East Gippsland Water Annual Report 2006-2007: 73 FINANCIAL REPORT

East Gippsland Region Water Authority Notes to the Financial Report for the year ended 30 June 2007

Note 21: Reconciliation Of Cash Cash as at the end of the financial as shown in the Statement of Cash Flows is reconciled to the related items in the 2007 2006 Statement of Financial Position as follows: $000 $000

Cash on Hand 1 1 Cash at Bank 2,566 2,500 Short Term Investments - 3,000 Developer bond Accounts 4 425 2,571 5,926

Note 22: Auditor’s Remuneration 2007 2006 $000 $000

Amounts paid/payable to the Victorian Office of the Auditor General (inc. GST) 33 28

Note 23: Executive Officers’ Remuneration The number of Executive Officers including the chief accountable officer, whose annual remuneration Total Remuneration Base Remuneration exceeds $100,000 fall in the bands; 2007 2006 2007 2006 $100,000 - $109,999 1 Nil Nil 2 $110,000 - $119,999 Nil 2 2 Nil $120,000 - $129,999 2 Nil Nil Nil $130,000 - $139,999 Nil 1 Nil Nil $140,000 - $149,999 Nil Nil Nil 1 $160,000 - $169,999 Nil 1 Nil Nil $170,000 - $179,999 Nil Nil 1 Nil $180,000 - $189,999 1 Nil Nil Nil Total Remuneration 534 532 Total Numbers 4 4

Note 24: Responsible Persons’ Related Disclosures The names of persons who were responsible at any time during the financial year were: Ministers: The Hon.John Thwaites MP - Minister for Water, Environment and Climate Change Board Members: Robert Fordham (Chairperson) Richard McDowell Robert Supplitt Eric Sjerp Bernie Smith Jane Rowe Gail Morley Chief Accountable Officer: Les Mathieson The Chief Accountable Officer’s remuneration 2007 2006 is included in the Executive Officer’s Remuneration. $000 $000

The total remuneration paid to Responsible Persons was: 129 109

The number of Responsible Persons whose annual remuneration falls in the band; $0 - $10,000 Nil 6 $10,001 to $20,000 6 3 $20,001 to $30,000 Nil Nil $30,001 to $40,000 1 1 The relevant amount relating to the Minister is reported separately in the Financial Statements of the Department of Premier and Cabinet. Retirement Benefits: The Authority has made superannuation payments of $10,723 (2006: $9,828) on behalf of the Board Members. Transactions between responsible persons and the Authority: There have been no transactions between responsible persons and the Authority other than in the normal capacity as ratepayers and consumers.

74 East Gippsland Water Annual Report 2006-2007 FINANCIAL REPORT

East Gippsland Region Water Authority Notes to the Financial Report for the year ended 30 June 2007

Note 25: Financial Instruments (a) Terms, Conditions and Accounting Policies The Authority’s accounting policies including the terms and conditions of each class of financial asset, financial liability and equity instrument, recognised at balance date, are as follows:

Financial Refer Notes Instruments to Accounts Accounting Policies Terms and Conditions

(i) Financial Assets Receivables - 5 Trade Receivables are carried at Credit is allowed for a 28 day Tariffs and Charges nominal amounts due less any term. Interest of 12.25% is provision for doubtful debts. chargeable on overdue A provision for doubtful debts amounts. is recognised when collection of the full nominal amount is no longer probable. Receivables - 5 Private Scheme receivables are Billing is done every quarter Private Schemes carried at nominal amounts due. and credit is allowed for a 14 day term. Interest at 6.8% is chargeable on outstanding amounts.

Receivables - 5 Developer charges owing are All charges are to be paid on Developer Charges recognised on the issue of a application for a certificate of certificate of compliance and compliance. are payable on application for a certificate of compliance.

Cash Assets4 Investments and cash at bank Bank bills and short term are brought into account at cost, deposits have an average with interest revenue recognised maturity of 90 days and in the operating statement on a effective interest rates of time proportionate basis that between 5.84% and 6.31%. takes into account the effective yield in the financial asset. (ii) Financial Liabilities Payables - 9 Liabilities are recognised for Trade liabilities are settled as Trade Creditors amounts to be paid in the future cash flows permit, or within 30 and Accruals for goods and services received, days payment terms. Cashflows whether or not billed to the are monitored on a daily basis. Authority.

Payables - 9 Contract retentions are held Retentions payable on Retentions at between 5% and 10% of satisfactory completion of 12 contract works and repayable months maintenance period. within 12 months of completion of works. Interest Bearing 1 Interest Bearing Liabilities are Interest Bearing Liabilities are Liabilities brought into account at cost, sourced at call (11am) rate and with interest expense the effective interest rate for the recognised in the operating period of 6.415%. statement on a time proportionate basis that takes into account the effective yield in the financial liability. (iii) Equity Contributed 16 Contributions to the Authority Capital are recognised as contributed capital with the approval of the Minister for Finance.

East Gippsland Water Annual Report 2006-2007: 75 FINANCIAL REPORT

East Gippsland Region Water Authority Notes to the Financial Report for the year ended 30 June 2007

Note 25: Financial Instruments (continued) (b) Interest Rate Risk The Authority’s exposure to interest rate risks and the effective interest rates of financial assets and financial liabilities, both recognised and unrecognised at balance date, are as follows:

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

Financial 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 Instruments $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 % %

(i) Financial Assets Cash 2,567 2,501 - 3,000 5 426 5.66 5.66 Receivables: Trade 2,892 3,145 N/A N/A Investments - - 5.65 5.65 Private Schemes - - 176 261 - - 6.80 6.80 Total Financial Assets 2,567 2,501 - 3,000 176 261 - - 2,897 3,571 (ii) Financial Liabilities Trade Creditors and Accruals 4,794 3,039 0.00 0.00 Borrowings 3,500 6.42 N/A Total Financial Liabilities 3,500 ------4,794 3,039

(c) Net Fair Values The aggregate fair values of financial assets and financial liabilities, both recognised and unrecognised, at the balance date, are as follows: Total Carrying Amount as per Statement of Aggregate Net Financial Position Fair Value 2007 2006 2007 2006 Financial Instruments $000 $000 $000 $000 (i) Financial Assets Cash 2,571 5,926 2,571 5,926 Receivables 2,892 3,146 2,892 3,146 Private Schemes 176 261 176 261 Investments - - - - Total Financial Assets 5,639 9,333 5,639 9,333 (ii) Financial Liabilities Payables - Trade Creditors and Accruals 4,794 3,039 4,794 3,039 Borrowings - TCV 3,500 - 3,500 - Total Financial Liabilities 8,294 3,039 8,294 3,039

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

76 East Gippsland Water Annual Report 2006-2007 FINANCIAL REPORT

East Gippsland Region Water Authority Notes to the Financial Report for the year ended 30 June 2007

Note 26: Wholesale and Retail Segments In accordance with directions issued by the Minister for Water under the Financial Management Act 1994, the Authority is required to provide as part of its financial statements, separate details of the revenue, expenses, assets and liabilities and the results of its wholesale and retail operations. The Authority does not have any wholesale operations. Details of retail operations are as follows: Water Wastewater Total 2007 2006 2007 2006 2007 2006 $000 $000 $000 $000 $000 $000

Revenue Sales - External 7,836 7,119 8,235 7,402 16,071 14,520 Developer Contributions 1,233 1,420 1,433 2,352 2,666 3,772 Government Contributions 105 - - - 105 - Other 520 624 542 734 1,062 1,358 Total Service Revenue 9,694 9,163 10,210 10,488 19,904 19,650 Expenses Borrowing Costs 5 - 6 - 11 - Depreciation 2,282 2,235 2,527 2,474 4,808 4,708 Amortisation 73 65 73 65 145 129 Employees 2,903 2,566 2,053 2,121 4,956 4,687 Environmental Contribution 289 296 301 294 590 590 Suppliers and Materials 3,595 3,032 2,132 3,186 5,727 6,218 Loss on Assets sold 139 14 139 14 278 28 Total Service Expense 9,285 8,207 7,230 8,153 16,515 16,360 Operating Surplus/(Deficit) from Retail Operations 409 956 2,980 2,335 3,389 3,290 Income Tax Expense (121) (305) (887) (675) (1,008) (980) Net Surplus for Reporting Period 288 651 2,093 1,660 2,381 2,310

Note 27: Events Subsequent to the Balance Date The Hon Tim Holding MP, Minister for Water, became the responsible Minister on 3 August 2007. No significant matters arose between the end of the 2006/07 financial year and this financial report going to print, which will have a material impact on East Gippsland Water’s financial position.

East Gippsland Water Annual Report 2006-2007: 77 STATUTORY CERTIFICATION

We certify that the attached financial statements for East Gippsland Region Water Authority have been prepared in accordance with Part 4.2 of the Standing Directions of the Minister for Finance under the Financial Management Act 1994, applicable Financial Reporting Directions, Australian accounting standards and other mandatory professional reporting requirements. We further state that, in our opinion, the information set out in the Operating Statement, Balance Sheet, Statement of Cash Flows, Statement of Changes in Equity and Notes to and forming part of the Financial Statements, presents fairly the financial transactions during the year ended 30 June 2007 and the financial position of the Authority as at 30 June 2007. We are not aware of any circumstance which would render any particulars included in the financial statements to be misleading or inaccurate.

Robert Fordham Les Mathieson Robert Carlesso Chairperson Managing Director Chief Financial Officer Accountable Officer 3rd September 2007 3rd September 2007 3rd September 2007

78 East Gippsland Water Annual Report 2006-2007 AUDITOR GENERAL’S REPORT

East Gippsland Water Annual Report 2006-2007: 79 AUDITOR GENERAL’S REPORT

80 East Gippsland Water Annual Report 2006-2007 DISCLOSURE INDEX The Annual Report of the East Gippsland Region Water Authority is prepared in accordance with all relevant Victorian legislations. This index facilitates identification of the Authority’s compliance with statutory disclosure requirements.

Legislation Disclosure Page

Ministerial Directions Report of Operations Charter and purpose FRD 22B Manner of establishment and the relevant Ministers 1 FRD 22B Objectives, functions, powers and duties 1, 4 FRD 22B Nature and range of services provided Inside front cover, 1 Management and structure FRD 22B Organisational structure 11 Financial and other information FRD 10 Disclosure index Inside back cover FRD 22B Five-year summary of financial results 41 FRD 22B Statement of workforce data, and merit and equity 15 FRD 22B Summary of financial results for the year 42 FRD 22B Significant changes in financial position during the year 42 FRD 22B Operational and budgetary objectives, and performance against objectives 45-49 FRD 22B Major changes or factors affecting performance 49-50 FRD 22B Occupational health and safety 13-14 FRD 22B Subsequent events 43 FRD 22B Application and operation of Freedom of Information Act 1982 43 FRD 22B Application and operation of Whistleblowers Protection Act 2001 43 FRD 22B Building and maintenance provisions of the Building Act 1993 43 FRD 22B Details of consultancies over $100,000 44 FRD 22B Details of consultancies under $100,000 44 FRD 25 Victorian Industry Participation Policy disclosures 43 Financial Report Requirements under Part 7 of the Financial Management Act 1994 SD 4.2(a) Statement of Changes in Equity 56 SD 4.2(b) Operating Statement 54 SD 4.2(b) Balance Sheet 54 SD 4.2(b) Cash Flow Statement 57 SD 4.2(b) Notes to the Financial Report 58-78 SD 4.2(c) Compliance with applicable Australian accounting standards and other authoritative pronouncements 78 SD 4.2(c) Compliance with Ministerial Directions 78 SD 4.2(c) Accountable Officer’s declaration 78 SD 4.2(d) Rounding of amounts 58 Other disclosures in notes to the Financial Report FRD 21A Responsible person-related disclosures 74 FRD 112A Employee superannuation funds 72 Legislation Freedom of Information Act 1982 43 Whistleblowers Protection Act 2001 43 Building Act 1993 43 Victorian Industry Participation Policy Act 2003 43 Financial Management Act 1994 51, 58, 78 Water Act 1989 1, 8, 58 Access to information Information listed in FRD 22B is retained by the Authority’s Accountable Officer and if not disclosed in this report is available to the Minister, Members of parliament and public. It is held at the Authority’s office, 133 Macleod Street, Bairnsdale and is available on request subject to the Freedom of Information Act 1982. DROUGHT, BUSHFIRES ATAGLANCE ...AND FLOODS HIGHLIGHTS AND ACHIEVEMENTS

STAFFINFOCUS SOCIAL SUSTAINABILITY EDUCATION

ENVIRONMENTAL SUSTAINABILITY WATER QUALITY ASSET MANAGEMENT

HEAD OFFICE: 133 Macleod Street Bairnsdale 3875 PO Box 52 Bairnsdale 3875 G Telephone: 1300 720 700 G Facsimile: 03 5150 4477 Email: [email protected] G Website: www.egwater.vic.gov.au BRANCH OFFICES AND DEPOTS BAIRNSDALE: Telephone 03 5152 4012 G Facsimile 03 5152 4197 LAKES ENTRANCE: Telephone 03 5155 1367 G Facsimile 03 5155 4531 MALLACOOTA: Telephone 03 5158 0414 G Facsimile 03 5158 0581 OMEO: Telephone 03 5159 1548 G Facsimile 03 5159 1547 ORBOST: Telephone 03 5154 2205 G Facsimile 03 5154 2510