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Annual Report 2015–16

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OUR VISIONGreat outcomes through smart solutions

OUR MISSIONTo support the health and prosperity of our region by providing sustainable water solutions to our customers and communities

OUR VALUESRespectHonestyTeamworkTrust

ISSN: 1838-1383

Copyright information

© State of Victoria, North East Water 2016.

This publication is copyright. No part may be reproduced by any process except in accordance with the provisions of the Copyright Act 1968.

This document is available from newater.com.au/about-us/all-publications/annual-report

Front page image: Bright Off-River Water Storage, Freeburgh 2016

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Contents

Section 01 Overview 2

Chair and Managing Director’s Report 3

Organisational Profile 4

Strategic Direction 7

Strategic Intent 7

Year in Review 12

Financial Performance 14

Infrastructure and Capital Expenditure 17

Section 02 Customers and Community 19

Water Systems 23

Section 03 Environmental and Social Sustainability 33

Other Statutory Obligations 34

Greenhouse Gas Emissions and Net Energy Consumption 36

The Future 37

Social Sustainability 39

Section 04 People 41

Building our Team 43

Occupational Health and Safety 45

Section 05 Governance 50

Risk Management 57

Internal Audit and Financial Governance 58

Ethical and Responsible Decision Making 59

Compliance Information 61

Section 06 Performance Report 65

Section 07 Financial Statements 73

Section 08 Appendices 131

Appendix 1. Disclosure Index 131

Appendix 2. Services provided by North East Water 133

Appendix 3. Water Consumption by Town 134

Appendix 4. Non-Revenue Water 136

Appendix 5. Publications 136

Appendix 6. Disclosures under the Protected Disclosures Act 2012 137

North East Water Annual Report 2015–16 | 1

Section 01 Overview

About this ReportNorth East Water’s 2015–16 Annual Report is a summary of the Corporation’s performance during the 2015–16 financial year. It includes the operational, social, environmental and financial performance in meeting strategic objectives and obligations.

The report is designed to inform customers, stakeholders and partners about the Corporation’s activities to meet statutory reporting responsibilities under the Financial Management Act 1994 and the directions of the Minister for Finance.

The aim of North East Water’s report is to disclose a balanced and accurate view of the Corporation’s performance to meet the needs of its customers, stakeholders and partners.

The report is structured to reflect the drivers of North East Water’s Strategic Intent and priorities of the 2015–16 Corporate Plan, being:

• the People Strategy

• building public value, and

• the Regional Growth Strategy.

For Further InformationFurther information on North East Water’s economic, social and environmental performance is available from the following current and/or earlier documents:

• annual reports

• corporate plans, including the Corporation’s Strategic Intent and five-year business plan

• Water Plans, pricing submissions to the Essential Services Commission (ESC)

• wastewater treatment plant performance reports, and

• drinking water quality performance reports.

These reports can be accessed on the Corporation’s website: newater.com.au or hard copies are available on request.

Information relevant to Financial Reporting Direction 22G of the Financial Management Act 1994 is available on request from North East Water’s Regional Headquarters located at 83 Thomas Mitchell Drive, Wodonga, or by telephone on 1300 361 633. This information is subject to the Freedom of Information Act 1982.

2 | Section 01 Overview

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Chair and Managing Director’s Report

The past year was an exciting year for the Corporation. We welcomed five new members to the Board who added a wealth of experience from a variety of fields. We thank outgoing Directors, Steve Bird, Denis Flett, Debi Gadd and Rowan O’Hagan for their significant contribution and commitment during their term on the Board.

The Essential Services Commission’s 2014–15 Water Performance Report highlighted that North East Water had the most affordable water bills in Victoria. This is a great outcome for customers and is the result of a 10 per cent reduction to our volumetric charges as well as a major efficiency drive across the Corporation. Affordability of essential services is a real challenge for many customers, so we have been pleased to play a small part in reducing the pressure on household budgets.

A major challenge during the summer of 2015–16 was a blue-green algae outbreak within several areas of our region. Our earlier investments in water treatment plants, combined with the exceptional efforts from our staff, ensured the supply of safe drinking water throughout the period.

Two major capital works projects all but came to a close during the year. On 30 June, the Bright Water Treatment Plant was just weeks from completion and represents the culmination of a $15 million project spanning more than a decade in consultation, planning and construction to secure the water supply for local communities. The project also included the construction of a 520 megalitre water storage and means that the need to extract water from the Ovens River will be reduced in periods of low flow.

On 30 June, construction was also near completion on the Moyhu Wastewater Scheme. This will lead to significant improvements to sewerage services within the town. The project concludes a program of major investments in wastewater services across north east Victoria over recent years.

Another highlight of the year was North East Water’s recognition as an Australian leader in public participation. We were awarded the IAP2 Organisation of the Year (Australasia) which acknowledged our inclusive approach to decision-making with our customers and communities.

We have embedded the IAP2 Core Values across the Corporation and this will be our ongoing approach to consultation in the future.

We would like to take the opportunity to acknowledge the valuable contribution of our Customer and Community Panel. The significant input from the panel helped form the Corporation’s ambitions and commitments to customers. The Panel also assisted with preliminary planning on our collaboration approach with communities heading into the next pricing period.

North East Water is looking forward to the coming year. We are excited to meet any challenges head on and we will continue to work towards improving our levels of customer service, safety performance and efficiency. Our focus will be on building a resilient and agile business that is best-prepared for long-term challenges including climate change and a growing population.

On behalf of the Board, we sincerely thank all North East Water staff for their commitment and professionalism that allows the 24/7 operation of this essential service. The efforts of all staff working at our treatment plants, on our reuse farms and in the office and community are immensely appreciated.

In accordance with the Financial Management Act 1994, we are pleased to present North East Water’s Annual Report for the year ending 30 June 2016.

David McKenzie Craig Heiner Chair Managing Director

North East Water Annual Report 2015–16 Section 01 Overview | 3

Organisational Profile

Who We AreNorth East Water is a public utility with the following responsible Ministers for the 2015–16 reporting period:

• from 1 July 2015 to 22 May 2016, the Hon Lisa Neville MP, Minister for Environment, Climate Change and Water, and

• from 23 May 2016 to 30 June 2016, the Hon Lisa Neville MP, Minister for Water.

North East Water was constituted on 1 July 1997 by Government Order, following application under section 100(2) of the Water Act 1989 by the Ovens Region Water Authority and the Kiewa Murray Water Authority. The Authority became a Corporation on 1 July 2007. Its powers are constituted under the Water Act 1989, which came into operation in September 1991.

Table 1 – Our business at a glance

Aspect 2015–16 Change (%) Impact1 2014–15 2013–14 2012–13 2011–12

Population served (water)2 106,739 -13.7 N 123,691 121,241 118,967 117,105

Population served (sewerage)2 98,053 -14.2 N 114,273 111,689 108,606 106,890

Connected properties (water) 49,576 0.9 F 49,114 48,285 47,499 46,845

Connected properties (sewerage) 44,780 1.8 F 44,006 43,074 41,878 41,249

Water sold (megalitres)3 15,685 9.9 F 14,274 14,263 14,687 12,044

Sewage treatment volumes (megalitres) 9,799 7.7 F 9,101 9,423 8,835 9,992

Employee numbers4 164.8 2.7 F 160.5 154.2 156.9 151.2

Total revenue ($'000)5 65,736 9.5 N 60,010 62,249 63,412 51,686

Net operating result - before tax ($'000)5 6,308 156.3 N 2,461 5,466 7,888 -2,386

Total assets ($'000) 759,191 6.1 N 715,638 724,712 716,987 731,695

Capital expenditure ($'000) 16,345 30.1 N 12,564 26,342 42,709 13,265

Notes:

1. Favourable (F), neutral (N) or unfavourable (UF) impact on the Corporation’s business.

2. Measure is calculated on revised household data from 2011 Census based on a household factor 2.5. Prior years calculated on 2006 Census data using a household factor of 3.4. Impact is neutral given the current year change to the aspect calculation.

3. Includes reclaimed and raw water sales.

4. Measured as full time equivalent employees (FTE) as at 30 June 2016.

5. Measure is Neutral as total revenue and net operating result before tax were favourable compared to the Corporation’s budget.

Our RegionNorth East Water provides water and wastewater services to an estimated population of 106,739 people in 41 localities in North East Victoria across an area of 20,000 square kilometres. The service delivery area is bound by Corryong, Yarrawonga, Benalla and Dartmouth as shown in Figure 1, page 5.

The provision of services is restricted to communities within a designated water and/or sewerage district.


Our ServicesDuring 2015–16, North East Water operated 21 water treatment plants (excluding dosing stations) with a number of disinfection booster facilities, as well as 20 wastewater treatment facilities throughout the region.

WATERNorth East Water operates water treatment facilities servicing most towns across the region. Multiple barriers, including clarifiers, filters and disinfection are in place before water is supplied to local communities.

WASTEWATER AND RECLAIMED WATERThe Corporation’s wastewater treatment plants use a range of processes, from relatively passive lagoon-based facilities through to mechanical biological nutrient reduction plants with tertiary treatment processes providing high-quality reclaimed water. For further information on water and wastewater services, see Appendix 2 on page 133.

The Corporation operated 16 reuse schemes supplying reclaimed water to sites operated both by North East Water and third party customers. These schemes range from pasture and cropping ventures to community-benefit applications such as school grounds and golf courses.

Figure 1 – Area of operations


Our Business RisksMany factors can impact business operations, compromise sustainability and threaten the delivery of North East Water’s Strategic Intent. The Corporation’s business risks relate to:

• engaging customers and communities in decisions that affect them

• employee and contractor safety

• provision of a safe and reliable water and wastewater service

• appropriate infrastructure creation and maintenance

• security of the Corporation’s assets

• environmental damage and the impacts of a changing climate

• appropriate management and recruitment of employees

• stakeholder relationships and Corporation reputation

• governance and organisational resilience, and

• the financial viability of the Corporation.

The Corporation’s commitment to risk management is embedded in the Corporation through the Risk Management Framework, which outlines the strategy for implementing and maintaining an effective risk management program. The Risk Management Framework is based on the Standard AS/NZS ISO 31,000:2009 Risk Management Principles and Guidelines. Further detail on risks and how they are managed is provided on page 57.

Our PeopleNorth East Water employs 164.8 full time equivalent (FTE) staff at centres in Wodonga, Wangaratta, Benalla, Yarrawonga, Corryong, Beechworth, Mount Beauty and Bright.

The Corporation’s Regional Headquarters is located in Wodonga, which houses the administrative functions and Wodonga’s operational depot.

Our InfrastructureInfrastructure management is critical to achieving the Corporation’s business objectives. North East Water’s management activities focus on ensuring the Corporation invests in infrastructure that supports enhanced community outcomes by addressing customer service priorities, security, business continuity, land stewardship and the preservation of biodiversity. North East Water manages diverse infrastructure assets across the region to achieve agreed performance standards developed through consultation with the Corporation’s customers. The current infrastructure has a replacement cost of approximately $1.1 billion.

Major IndustryMajor industrial customers operate across the Corporation’s region at Wodonga, Wangaratta, Benalla, Wahgunyah, Yarrawonga and Myrtleford. North East Water supports these customers through the provision of water and/or through receiving and processing trade waste discharges.

These customers operate across a diverse range of industries including manufacturing, food production, wine-making, pet food, textiles and wood products.

Our Stakeholders and PartnersNorth East Water actively works to build and maintain relationships with key stakeholders and partners. The Corporation’s stakeholders and partners include customers, communities, employees, business partners, suppliers, other water corporations, its bulk water supplier, local government, state government agencies, the State Government and the media.


Strategic Direction

Strategic IntentDuring 2015–16, the Corporation revised its Strategic Intent which focuses on supporting the health and prosperity of the region by providing sustainable water solutions to customers and communities. The Strategic Intent outlines the Corporation’s ambitions around five key themes including People, Environment, Water Services, Assets and Infrastructure, and Customer and Community.

North East Water’s Board and Executive Management Team verify the Corporation’s Strategic Intent annually to ensure the direction remains aligned with stakeholder expectations and is based on sound business principles.

An overview of the Strategic Intent is provided in Figure 2, below. It is also available on the Corporation’s website: newater.com.au.

In determining the Corporation’s 2015–16 strategic priorities, the Board aligned performance to three strategic objectives. Performance against the strategic objectives of Customers and Community, People, and Infrastructure and Business Solutions is summarised in Table 2, pages 8–11.

Figure 2 – Strategic Intent

Strategic IntentNorth East Water’s Strategic Intent is to support the health and prosperity of our region by providing sustainable water solutions to our customers and communities. Our ambitions are:

People

That our people are aligned with our business direction, are proud of their contribution to the business performance and own a culture that is centred on our values of respect, honesty, teamwork and trust.

Environment

To make a positive contribution to the environment, using science and partnerships to build resilience and adapt to climate change.

Water Services

To deliver reliable, predictable and fit for purpose services with zero harm to our people, customers and the environment.

Assets and Infrastructure

To be an innovative industry leader in managing efficient, smart, high performing and integrated water assets that support regional growth and development, liveability and community resilience.

Customer and Community

To be an engaging and collaborative community leader, recognised for creating mutual value through outstanding customer service and extraordinary partnerships.



Report on 2015–16 ObjectivesTable 2 – Summary of Strategic Performance

2015–16 Strategic Objective Achievements during 2015–16 Objective met?

Customers and Community

Customer Service and Community Engagement

The Customer Service Strategy was endorsed by the North East Water Board in December 2014. In 2015–16, core elements of the Strategy will continue to be implemented inclusive of:

• review of a Customer Relationship Management (CRM) system and identification of North East Water’s requirements for such a system

The development of an in-house CRM system commenced and is anticipated for completion by the end of 2016. This system will provide greater internal efficiencies leading to better customer outcomes.

Partially met

• adoption of a policy to address connection to services for discretionary customers

Policy development commenced to address connection to services for discretionary customers.

Partially met

• induction and training program for all Corporation staff to ensure appropriate embedding of North East Water’s Customer Service Principles and the desired level of customer experience, and

An induction and training program embedding North East Water’s Customer Service Principles was completed.

Met

• the major customer framework, working with large industries, in order to support business security and ultimately regional economic growth.

Refining and improving major customer interfaces commenced. Risk-based revisions were made to Trade Waste Agreements for the largest customers and these will continue for remaining customers during 2016–17.

Met

Consistent with the Customer Service Strategy, North East Water will continue to develop its online capacity to interact with customers. In 2015–16:

• the Corporation will implement BPAY View to provide the capability for customers to receive their invoice and pay electronically in the same transaction

BPAY View implemented in 2015–16. Met

• SMS communication will be implemented to alert customers to any unplanned service interruptions that may impact them

System was implemented in 2015–16. Met

• the Corporation’s website will be updated to enable customers to provide details about changes to their customer information electronically, and

Not implemented in 2015–16 and will be completed in 2016–17.

Not met

• customers will also have more user friendly access to information regarding major projects following planned enhancements to project update web pages.

The status of the Corporation’s current, completed and strategic projects was highlighted through its website. Social media channels were also proactively used for dissemination of information.

Met

In line with the Corporation’s Engagement Strategy endorsed by the Board in 2013, North East Water will continue to engage with customers who may be impacted by its decisions.

A diverse range of engagement and communications activities were used to optimise interactions and information to communities. These engagement activities included pop-up kiosks, focus groups, community panels, presentations, communication campaigns and sponsorships.

Met



The Corporation will maintain its education focus on the public awareness campaigns of ‘Never Ever’ (sewer system and environmental protection) and ‘Drink Tap’ (promoting the health, environmental and financial benefits of drinking tap water). These messages will be delivered to the community through school and community presentations, participation in community events and use of social media, the Corporation’s web site and newsletters.

The ‘H2knOw’ public awareness campaign was launched, adding to the successful ‘Never Ever’ and ‘Drink Tap’ campaigns. This was aimed at informing communities about water efficiency as well as the Corporation’s water security measures and the constraints of reticulated water supplies during times of bushfire. Each awareness campaign was heavily promoted and supported at various stages throughout the year.

Met

Drinking Water Quality

Key focus areas in 2015–16 will be:

• adopting an industry-based standardised approach to pathogen risk assessments

A quantified microbial risk assessment system was implemented and embedded in the Drinking Water Quality Management System.

Met

• developing a systematic approach to reticulation management, and

A Reticulation Hygiene Management Plan was developed that sets out the hygienic maintenance requirements, processes and frequency.

Met

• operator skills, training and competency. The Corporation’s Certified Water Treatment Operator program was monitored and reviewed.

Met

Unserviced Areas

During 2014–15, the Corporation completed the installation of sewerage to the township of Glenrowan. The installation of sewerage to the township of Moyhu commenced in 2014–15 and will be completed in 2015–16.

The installation of sewerage to Moyhu was substantially completed with final completion being delayed by wet weather. Completion is now expected in October 2016.

Partially met

During 2014–15 the Corporation and Alpine Shire Council, in consultation with local community representatives, initiated investigations into the impacts that Harrietville is having on the Ovens River with respect to public and environmental health risks, consistent with our current Ecological Risk Assessment processes. These investigations will continue during 2015–16 and will be used to consider options to manage domestic wastewater within Harrietville and for the establishment of potential treatment quality targets and limits.

Environmental risk assessment work was completed in 2015–16. The work did not identify any significant impact on water quality. Alpine Shire Council will be developing a domestic wastewater management plan following this work.

Met



People

Health and Safety

The Corporation’s key health and safety activities during 2015–16 will be:

• finalisation of the current Health and Safety Strategic Plan – Achieving safety through Culture

• development of the subsequent 2016-18 Health and Safety Strategic Plan

• refinement, review and continued improvement of the Corporation’s risk management activities for health and safety including the functional enhancements of the corporate Health and Safety Risk Register

• implementation of Basics Done Brilliantly – a program where ownership of routine tasks are divided into logical staff groupings who then review and identify improvements, efficiencies and new technologies to enhance the task

• development of Health and Safety Management Arrangements to provide a simplified Health and Safety Management System, and

• implementation of the My Health 2.0 program with increased emphasis on mental health wellbeing and promotion of health through movement.

All the key health and safety activities outlined as objectives were implemented or developed during 2015–16.

Met

People and Culture

During 2015–16, the Corporation will focus on:

• implementing the People Strategy

• continuing to build capacity within the organisation through alignment, motivation and resilience, and

• achieving strategic alignment with the people needs of the Corporation through the development of a Workforce Readiness Strategy.

All of the 2015–16 objectives of the People Strategy were implemented.

Met

Infrastructure and Business Solutions

The Environment

Key activities in 2015–16 will be:

• expansion of the Ecological Risk Assessment program as well as site specific risk assessments for wastewater collection and treatment

The Ecological Risk Assessment (ERA) program continued in 2015–16 with wet weather discharges and the Wangaratta Trade Waste Treatment Plant discharge. The Yackandandah ERA was completed and Corryong ERA was submitted to stakeholders for review.

Met

• review and assessment of stormwater management, and

The Corporate environment and wastewater monitoring program review was completed including stormwater management. This review primarily focused on Waste Water Treatment Plants (WWTP) and ensured that systems align with Environmental Protection Authority licence requirements.

Met



• review and assessment of groundwater impacts on Corporation activities.

A review of the groundwater program was completed which prioritised works required for all WWTP sites. A review of high priority sites was undertaken which provided recommendations for improvements to the network coverage and monitoring program. An action plan for these recommendations was implemented.

Met

Technology

A focus for 2015–16 will be implementation of key elements of the ICT Strategy, building on the process efficiencies embedded in work practices and a more resilient network. This period of consolidation will be particularly important in driving further efficiencies in the short-term as well as preparing the Corporation for the next water planning period.

The key elements of the objectives were completed during 2015–16 including:

• successful trials in different mobility technologies to support the implementation of the Asset Information Management System

• the pilot phase of a new corporate intranet platform with implementation scheduled in 2016–17

• improved data management and reporting outcomes, and

• implementation of a Customer Relationship Management platform to streamline processes.

Met

Major Capital Projects

North East Water will complete or commence the following major projects during 2015–16:

• construction of a new Bright Water Treatment Plant and clear water storage tank to supply the townships of Bright, Wandiligong and Porepunkah

The Bright Water Treatment Plant was substantially completed with commissioning commenced in quarter one 2016–17.

Partially met

• development of options for security of supply for Wangaratta water supply system, and

Stakeholder and regulator engagement was undertaken to develop options in 2015–16. Work will commence in quarter one of 2016–17 to determine the sustainability of groundwater yields to augment the Wangaratta supply system.

Partially met

• construction of a new four megalitre clear water storage tank at Beechworth.

A detailed design for Beechworth Clearwater Storage was completed with construction reprioritised to 2016–17.

Partially met

Asset Planning and Maintenance

In 2015–16 the Corporation will implement an Asset Management System based on the new international standard ISO 55001. The system will provide a systemised and structured platform which will underpin continual improvement of asset management practice.

A contract was awarded to develop the Asset Management Information System beginning a two year implementation period.

Partially met


Year in Review

Table 3 – Corporation-wide key performance indicators

Performance indicator 2015–16 Results

2015–16 Target

Target Met?

2014–15 2013–14 2012–13

Restoration of water supply following unplanned interruptions

% interruptions restored within 5 hours2 99 98 Yes 99 99 100

Average unplanned minutes off supply 4.5 6.2 Yes 9.5 12.2 7.2

Drinking Water

% volume of drinking water compliant with quality standards3

100 100 Yes 100 99.9 99.9

Wastewater

% wastewater complying with EPA licence3 89.2 95 No N/A N/A N/A

Sewer blockages (including spills)

Blockages / 100km main3 9.7 12 Yes 8.8 9.7 5.8

Containment of sewer overflows

% spills contained within 5 hours2 100 100 Yes 100 100 100

Customer complaints

No. complaints to EWOV1 per 1,000 water customers2 0.7 0.4 No 0.8 0.7 0.8

Reliability of water supply service

Unplanned interruptions/100km main2 8.2 14.0 Yes 12.1 12.3 14.9

Notes:

1. Energy and Water Ombudsman of Victoria.

2. ESC service standard.

3. Internal Corporation key performance indicator.


Figure 3 – Regional water extractions

Total water extracted in megalitres

Notes: Water extractions increased slightly compared to the previous year. For further details see bulk water extractions page 23.

Figure 4 – Regional water consumption

Total water sold in megalitres (excluding reclaimed water)

Notes: Water consumption increased slightly compared to the previous year. For further details see water consumption page 28.

Figure 5 – Wastewater treatment plant volumes 2011–12 to 2015–16

Total inflow volumes in megalitres

Notes: Wastewater collection has increased compared to the previous year. This is attributed to increased flows from industry and wet weather.

Highlights and AchievementsIn 2015–16, North East Water delivered the following major achievements:

• 14,762 megalitres of drinking water supplied to residents and businesses

• treatment of 9,799 megalitres of sewerage

• 90% of customers and communities were satisfied the Corporation is delivering high quality services

• awarded IAP2 Organisation of the Year 2015 (Australasia)

• substantial completion of the new Bright water treatment plant

• substantial completion of the reticulated sewerage system for the township of Moyhu

• implementation of the Moyhu customer support program

• completion of dam safety works at Commissioners Creek Dam in Yackandandah

• completion of a new weir structure on the Ovens river at Wangaratta

• strategy development to augment Wangaratta’s water supply with ground water

• the Corporation’s management of a regional blue-green algae outbreak

• implementation commenced for a corporation-wide Asset Management Information System, and

• a AA Credit Rating from the Department of Treasury and Finance.

In 2016–17 North East Water will continue to develop infrastructure by implementing major projects including:

• dam safety works at Bakers Gully Dams in Bright

• construction of a major pipeline connecting Goorambat to Yarrawonga’s water supply system

• construction of a new 3.5 million litre clear water storage tank in Beechworth, and

• development of a corporation-wide Asset Management Information System.


Financial Performance

Summary of Financial ResultsIn 2015–16, the Corporation achieved its budgeted financial objectives. North East Water delivered a strong operating result with a surplus before tax of $6.3 million, against a budgeted surplus of $1.2 million. This favourable result is primarily due to an increase in consumption compared to budget and the prior year. Average residential consumption was 209kL per household compared to budget of 200kL and prior year of 189kL per household. Despite the higher consumption North East Water’s average residential bill remains the lowest in Victoria. Additional trade waste flows from major customers and higher than expected proceeds from the sale of temporary water also contributed toward the strong operating result.

Cash generated from operating activities was $23.5 million, and combined with capital investments in infrastructure, property, plant and equipment of $16.1 million allowed for a reduction in borrowings of $6.5 million. This reduction in borrowings places North East Water in a strong financially sustainable position for the future. This financial year also included the revaluation of infrastructure and land and building assets in accordance with the requirement to have a formal revaluation every five years. This resulted in an increase to the Corporation’s infrastructure assets of $42.7 million taking the depreciated replacement value of infrastructure assets to $740 million.

Table 4 on page 15 provides the financial highlights in 2015–16 compared with the previous four years.


Table 4 – Summary of financial results 2011–12 to 2015–16

Financial Results 2015–16 2014–15 2013–14 2012–13 2011–12

$’000 $’000 $’000 $’000 $’000

Core business revenue 57,171 52,342 54,290 54,244 46,809

Government contributions 319 1,390 1,100 0 75

Other revenue 8,246 6,277 6,859 9,168 4,802

Total Revenue 65,736 60,009 62,249 63,412 51,686

Operating expenditure 35,544 33,390 32,176 30,519 31,235

Depreciation expenditure 19,998 19,847 19,838 19,589 19,268

Finance costs 1,768 2,161 2,356 1,793 1,989

Environmental contribution 2,083 2,083 2,083 1,580 1,580

Asset impairment 35 67 330 2,043 0

Total Expenditure 59,428 57,548 56,783 55,524 54,072

Net Result before tax 6,308 2,461 5,466 7,888 -2,386

Current assets 15,541 13,154 15,540 15,238 10,659

Non-current assets 743,650 702,484 709,172 739,827 721,036

Total Assets 759,191 715,638 724,712 755,065 731,695

Current liabilities 12,689 14,027 27,016 17,743 15,371

Non-current liabilities 142,265 131,634 129,275 171,953 156,312

Total Liabilities 154,954 145,661 156,291 189,696 171,683

Net cash flows from operations 23,547 20,879 23,745 21,773 15,817

Payments for property, plant and equipment (including infrastructure)

16,152 13,277 28,586 39,198 14,536

Notes: Comprehensive financial statements can be found at page 73.

Understanding our RevenueIn 2015–16, North East Water’s total revenue increased by 9.5% compared to the previous year, and total revenue exceeded budget by $4.3 million or 7%. Core business revenue increased by $3.6 million or 6% on the prior year due to increases in customer growth, volumetric sales and major customer trade waste flows. Non-operating income was $2.1 million above prior year which was mainly attributable to accounting losses associated with the disposal of assets incurred as part of the capital replacement program in 2014–15. For an indication of the sources of income received by the Corporation, see Figure 6, right.

Figure 6 – 2015–16 Operating revenue


Understanding our ExpensesTotal expenditure for 2015–16, excluding income tax, was $1.8 million or 3% higher than the prior year, however was less than budget by $0.8 million or 1.3%. The Corporation’s general operating expenditure increased by $1.7 million or 9%. This was due to an increase in wastewater costs of $0.8 million, electricity cost of $0.1 million and wages cost of $0.5 million partly attributable to the transfer of operational responsibilities at the end of 2014–15 of the Wangaratta Trade Waste facility. Decommissioning costs associated with the clean-up of the old wastewater treatment facilities at Yarrawonga and desludging of lagoons at Baranduda also resulted in increased expenditure compared to the prior year. Administration expenditure (including financing costs) were consistent with the prior year.

Figure 7, right, provides a breakdown of expenditure type.

Figure 7 – 2015–16 Expenditure

Performance against ObjectivesThe Corporation met its revenue and expenditure target for 2015–16 in accordance with the Corporate Budget. Total expenditure exceeded budget by 1.2% as outlined in Table 5, below.

Table 5 – Total revenue and expenditure vs budget

Actual 30 June 2016 Corporate budget 2015–16 Variance Variance

$’000 $’000 $’000 %

Total Revenue 65,736 61,388 4,348 7.1

Total Expenditure 61,323 60,572 751 1.2


Infrastructure and Capital Expenditure

Infrastructure, Land and Buildings, Property, Plant and EquipmentThe Corporation’s current infrastructure assets (water and wastewater reticulation and above-ground assets), land and buildings, property, plant and equipment have a replacement cost of $1.2 billion as shown in Table 6, below. A revaluation of Infrastructure and Land and Building assets was conducted in 2015–16 which resulted in an increase to the depreciated replacement cost of $42.7 million or 6.3%. The revaluation determined that the Corporation’s infrastructure and buildings are approximately 39% through their service life. This results in a write down of the gross replacement value to reflect that a significant proportion of the asset’s value has been used. This value more accurately reflects the current in-service value of the assets in providing water and wastewater services to the region’s communities.

For information on North East Water’s capital projects and the broader Victorian public sector, please refer to the most recent Budget Paper No.4 State Capital Program (BP34) available on the Department of Treasury and Finance website.

Table 6 – Value of infrastructure, land and buildings, property, plant and equipment assets owned by North East Water as of 30 June 2016

Asset Replacement cost1 Written down value2

$’000 $’000

Land 28,177 28,177

Buildings 11,810 10,315

Water infrastructure 264,493 148,254

Water reticulation 349,781 219,084

Wastewater infrastructure 189,541 101,564

Wastewater reticulation 330,231 213,332

Plant, equipment and motor vehicles 14,587 5,837

Work in progress 13,058 13,058

Total 1,201,678 739,621

Notes:

1. Replacement cost – The cost of replacing an asset including the cost of installation with an asset in a new condition and having similar output or service potential.

2. Written down value – The value of an asset less accumulated depreciation calculated to reflect the already consumed service potential of the asset.


Capital ExpenditureIn 2015–16, North East Water completed the third year of the current regulatory five year period (Water Plan 2013–18) capital expenditure program. In 2015–16, the Corporation:

• made substantial progress towards the completion of a new water treatment plant for the townships of Bright, Porepunkah and Wandiligong

• completed an energy efficiency upgrade at the West Wodonga wastewater treatment plant

• completed a replacement weir structure in the Ovens River at Wangaratta

• completed a dam safety upgrade at Commissioners Creek in Yackandandah

• made substantial progress towards the completion of a sewerage scheme for the township of Moyhu, and

• delivered a substantial investment in below ground asset renewals.

Table 7 – Capital expenditure

2015–16 2014–15 2013–14 2012–13 2011–12

$’000 $’000 $’000 $’000 $’000

Wastewater environmental improvements 1,759 2,681 7,374 20,140 1,838

Renewal of wastewater infrastructure 2,222 652 1,353 1,431 2,142

Water quality and reliability improvements 6,763 5,589 8,170 12,245 5,080

Renewal of water infrastructure 2,975 878 2,431 1,691 1,488

Corporate and fleet management 2,591 2,764 7,014 7,196 2,742

Total 16,310 12,564 26,342 42,703 13,290

Asset Management Information SystemNorth East Water is committed to a whole-of-life management approach to achieve optimal performance and benefits from physical assets. This entails balancing cost, risk and functionality to meet the service needs of present and future customers. A key project to enable the Corporation to drive that outcome is the development and implementation of a comprehensive Asset Management Information System (AMIS).

In the rollout of AMIS, a Solution Design document was developed in 2015–16 to guide the two stages of the project. Stage One tasks defined in the Solution Design document will see the following outputs delivered in 2016–17:

• a single centralised asset register

• customer service interface

• Geographic Information System interface

• mobile platform capability

• renewals modelling, and

• reporting capability.

In Stage Two, the Corporation will build on the elements of Stage One and further expand North East Water’s asset management information system.


Section 02 Customers and Community

North East Water’s mission is to “support the health and prosperity of our region by providing sustainable water solutions to our customers and communities.” In doing so, the Corporation aims to be “an engaging and collaborative community leader, recognised for creating mutual value through outstanding customer service and extraordinary partnerships”.

North East Water enhances its customers’ experience by:

• applying the IAP2 Core Values to interactions with customers and communities, whenever practicable

• informing customers of their rights and obligations and respecting those rights

• treating customers fairly with honesty and respect

• ensuring customer outcomes are assessed on a fair and reasonable basis

• balancing customer and stakeholder needs by considering the needs and aspirations of all groups

• providing consistent pathways for customers ensuring customer certainty

• providing customers with the right information at the right time by providing information that meets customer needs and promised timeframes

• being accountable and committed to resolving customer queries, issues or requests

• speaking with one voice to ensure customers receive the same advice, outcome or service regardless of their entry point into the organisation

• providing viable options for customers and choice in service and product outcomes, and

• providing the community with choices on how it interacts with the Corporation.

Community and Stakeholder EngagementIn 2015–16, North East Water’s efforts to embed community engagement as an integral part of project development and delivery were rewarded through recognition as the IAP2 Organisation of the Year (Australasia).

Key engagement activities during 2015–16 included:

• the Sydney Weir Remediation project and Moyhu Wastewater Project involving a number of community information sessions, door knocks, letter drops and pop-up information kiosks

• Commissioner’s Creek Dam project including a public meeting, Community Values Workshop, pop-up information kiosk and several meetings with individual community members, and

• the Corporation continuing to engage with the Customer and Community Panel through a series of workshops and on-line surveys. The Panel completed its two-year term in April 2016.

In 2015–16, the Corporation reported a 92% satisfaction result in its annual survey of active customer reference groups when asked “the extent to which they believe North East Water considers community interests as part of its decision making.”

A summary of major engagement activities implemented throughout 2015–16 are provided in Table 8, page 20.

North East Water Annual Report 2015–16 Section 02 Customers and Community | 19

Table 8 – Summary of infrastructure project engagement and communications activities

Community Project Communication & Engagement Activities

Moyhu Sewerage scheme Door knocks

Town newsletter articles

Pop-up information kiosks

Community presentation/information session

Community newsletter

Wangaratta Sydney Weir remediation project Door knock

Letter drop

Yackandandah Commissioner’s Creek Dam remediation project

Public meeting

Community workshop

Meetings with individual community members

Pop-up information kiosk

Baranduda Wastewater Treatment Plant desludging project

Letter drop

Tawonga Basin relining project Letter drop

All projects Website updates

Media releases

20 | Section 02 Customers and Community

Community Education and AwarenessThe Corporation’s community awareness campaigns included presentations to a wide range of community groups, tours of operational facilities as well as participation in several large community events.

Public awareness campaigns promoted during the year included:

• ‘Drink Tap’ encouraging the benefits of drinking tap water

• ‘Never Ever’ promoting what should not be put down drains and toilets with a focus on ‘keeping wet wipes out of pipes’, and

• ‘H2knOw’ promoting water efficiency and permanent water saving rules.

North East Water’s education program incorporated a range of classroom-based activities to teach children about the urban water cycle, the region’s water and sewerage systems, water efficiency and the benefits of drinking tap water.

Table 9 – Community awareness and education participation summary

Activity Organisations / events

Number of participants

School visits 51 2,457

Tours 13 215

Community presentations 26 408

Community events 7 Over 300

Customer SurveyNorth East Water conducts an Annual Perception Survey in May of each year to measure and understand customer views of services and products. Specifically, North East Water seeks to understand customer perceptions of performance against attributes that customers value and that influence their view of the Corporation. The survey is structured to provide feedback on the core attributes identified through the Customer Value Research completed in 2014. The feedback received enables the Corporation to identify actions that will support the delivery of improved products and services in future years.

In 2015–16, North East Water surveyed 1,204 customers as part of the annual customer perception survey. Of these customers, 453 were selected based upon a recent service interaction with the Corporation, while the remaining 751 customers surveyed were from across the service region. A regionally proportionate representation across genders and age groups was achieved.

The survey results demonstrate that the Corporation continued to deliver high quality services and products to customers and the community. In 2015–16, 90% of customers were satisfied or very satisfied, which was equivalent to last year.

The survey results reflecting performance against the key customer attributes are summarised in Table 10, below.

Table 10 – Customer Perception Survey Results1

Survey attribute 2015–16 2014–15

North East Water is reliable 88 85

North East Water is responsive 77 73

North East Water provides an affordable product/service

622 563

North East Water is efficient 81 78

North East Water supports the local region

84 78

North East Water encourages sustainability

75 72

Notes:

1. The survey data is the percentage of respondents that agreed or strongly agreed with the attribute.

2. 22% neutral, 16% disagree

3. 26% neutral, 18% disagree

All outcomes represent a statistical increase on last year’s performance results with perceived customer affordability achieving the highest result yet recorded. This reflects the Corporation’s strong financial management over the period without compromising service standards or reducing asset maintenance.


Customer ComplaintsThe number of complaints received in the 2015–16 financial year decreased by 34% to 84 compared with 128 in 2014–15 (see Figure 8, below).

Complaints related to leaking water meters and associated requests for compensation totalled 33% of all complaints. Water quality complaints accounted for 30% of all complaints with colour being the major concern followed by taste and odour. Water supply reliability complaints comprised 20% of total complaints, the majority of which were registered in the last three months of the financial year and related to service main leaks. Billing complaints related to 10% of complaints and were made in the first two months of the financial year. These complaints related to justification of tariff increases. A further 7% of complaints related to wastewater services, the majority relating to odour.

Each complaint was fully investigated in accordance with the Corporation’s customer service principles and customers were informed of the findings in a respectful and timely manner.

Figure 8 – Number of customer complaints 2011–12 to 2015–16

Energy and Water Ombudsman of VictoriaIn 2015–16, 36 cases were referred to the Energy and Water Ombudsman of Victoria (EWOV), this was a significant reduction from the 47 cases in 2014–15.

The majority of cases (33) were resolved at Assisted Referral stage, with only three cases escalating to a Stage 2 investigation (see Figure 9, below).

Undetected leaks and high usage complaints accounted for 58% of the cases actioned by EWOV in 2015–16. In general, these cases were able to be resolved through the Corporation’s timely conciliation and assistance mechanisms which included payment arrangements and rebates. The remainder of cases mainly related to infrastructure and subdivisions (25%) and billing and restriction matters (17%).

North East Water continues to work with EWOV to support appropriate and equitable resolutions for customers and the Corporation.

Figure 9 – Breakdown of the number of referrals to EWOV 2015–16


Water Systems

Bulk Entitlement ReportingIn 2015–16, North East Water extracted a total of 17,683 megalitres of water from surface water and groundwater sources. The Corporation extracted water in accordance with the conditions contained in Bulk Entitlements (BEs) and take and use licences. The Corporation complied with all 19 of the BE and licence conditions. No amendments to BEs were made in 2015–16. North East Water has bulk entitlement metering and environmental programs in place. No changes were made to these programs in 2015–16. A summary of the Corporation’s BE extractions and compliance can be found in Table 11, below.

Table 11 – Bulk water extractions (ML) and bulk entitlement compliance

Bulk Entitlement/Licence Name

Specified Point(s) Entitlement Volume (ML)

Annual amount

taken from specified

point(s)1 (ML)

Temporary transfers1

(ML)

Reporting Requirements in accordance with Bulk Entitlement clause1

Bulk Entitlement (Beechworth) Conversion Order 2001

Beechworth (Nine Mile Creek, Frenchmans Creek)

1,100 457 (12.1 (e)) 0 (12.1 (f)) 12.1 (d) Approval, amendment and implementation of programs and proposals under clauses 9, 10, 11 - Nil

12.1 (g) Any BE or licence transfer – Nil

12.1 (h) Any amendment to BE – Nil

12.1 (i) Any new BE granted – Nil

12.1 (j) Any failure to comply with BE – Nil

12.1 (k) Any difficulties in complying – Nil

Bulk Entitlement (Bright) Conversion Order 2000

Freeburgh (Ovens River)

870 869 (12.1 (e))2 0 (12.1 (f)) 12.1 (d) Approval, amendment and implementation of programs and proposals under clauses 9, 10, 11 - see Note 2






Consolidated Bulk Entitlement (Broken System – Tungamah, Devenish and St James – North East Water) Conversion Order 2004

Benalla (Broken River)

135 0 (11.1 (b)) 0 (11.1 (e)) 11.1 (c) Any credits granted – Nil

11.1 (d) Metering program – Nil

11.1 (f) Degree and period of restriction – Nil

11.1 (g) Any amendment to BE – Nil

11.1 (h) Any new BE granted – Nil

11.1 (i) Any failure to comply with BE – Nil

11.1 (j) Any difficulties in complying – Nil

Please refer to notes on page 27.




Annual amount


point(s)1 (ML)


(ML)


Bulk Entitlement (Chiltern) Conversion Order 2000

Chiltern (Barambogie Creek)

180 0 (13.1 (d)) 0 (13.1 (e)) 13.1 (c) Approval, amendment and implementation of programs and proposals under clauses 9, 11, 12 - Nil

13.1 (f) Any BE or licence transfer – Nil





Bulk Entitlement (Corryong) Conversion Order 2000

Corryong (Nariel Creek)

680 247 (12.1 (c)) 0 (12.1 (d)) 12.1 (b) Approval, amendment and implementation of programs and proposals under clauses 9, 10, 11 - Nil

12.1 (e) Any BE or licence transfer – Nil

12.1 (f) Any amendment to BE – Nil

12.1 (g) Any new BE granted – Nil

12.1 (h) Any failure to comply with BE – Nil

12.1 (i) Any difficulties in complying – Nil

Bulk Entitlement (Cudgewa) Conversion Order 2000

Cudgewa (Cudgewa Creek)







Bulk Entitlement (Dartmouth) Conversion Order 2000

Dartmouth (Mount Tabor Creek, Mitta Mitta River)

60 25 (13.1 (e)) 0 (13.1 (f)) 13.1 (d) Approval, amendment and implementation of programs and proposals under clauses 10, 11, 12 - Nil






Bulk Entitlement (Glenrowan) Conversion Order 1999

Glenrowan (Fifteen Mile Creek)

90 0 (13.1 (d)) -40 (13.1 (f)) 13.1 (c) Approval, amendment and implementation of programs and proposals under clauses 10, 11, 12 - Nil

13.1 (e) Volume added to (0 ML), in (40 ML) and subtracted from (0 ML) carryover account – see Note 3










Annual amount


point(s)1 (ML)


(ML)


Bulk Entitlement (Harrietville) Conversion Order 1999

Harrietville (Ovens River, Simmons Creek)

91 67 (12.1 (e)) 0 (12.1 (f)) 12.1 (d) Approval, amendment and implementation of programs and proposals under clauses 9, 10, 11 - Nil






Bulk Entitlement (Kiewa – Tangambalanga) Conversion Order 1999

Kiewa (Kiewa River) 179 0 (12.1 (e)) 0 (12.1 (f)) 12.1 (d) Approval, amendment and implementation of programs and proposals under clauses 9, 10, 11 - Nil






Bulk Entitlement (Loombah McCall Say) Conversion Order 2001

Benalla (Ryans Creek)

2,324 1,538 (15.1 (e))

0 (15.1 (h)) 15.1 (f) 15.1 (f) Approval, amendment and implementation of programs and proposals under clauses 11, 13, 14 - Nil

15.1 (g) Any credits granted – Nil

15.1 (i) Any BE or licence transfer – Nil

15.1 (j) Any amendment to BE – Nil

15.1 (k) Any new BE granted – Nil

15.1 (l) Any failure to comply with BE – Nil

15.1 (m) Any difficulties in complying – Nil

Bulk Entitlement (Mount Beauty – Tawonga) Conversion Order 1997

West Kiewa River 718 2 (11.1 (e)) 0 (11.1 (h)) 11.1 (d) Seasonal amount of water taken from diversion tunnel - see Note 4

11.1 (e) Seasonal amount of water taken from West Kiewa River - see Note 4

11.1 (f) Seasonal amount of water taken from Simmonds Creek - see Note 4

11.1 (g) Approval, amendment and implementation of programs and proposals under clauses 8, 9, 10 - Nil

Simmonds Creek 0 (11.1 (f)) 11.1 (i) Any BE or licence transfer – Nil

Diversion Tunnel 360 (11.1 (d)) 11.1 (j) Any amendment to BE – Nil

11.1 (k) Any new BE granted – Nil

11.1 (l) Any failure to comply with BE – Nil

Total 462 11.1 (m) Any difficulties in complying – Nil





Annual amount


point(s)1 (ML)


(ML)


Bulk Entitlement (Myrtleford) Conversion Order 2001

Myrtleford (Buffalo Creek)

1,212 567 (12.1 (e)) 0 (12.1 (f)) 12.1 (d) Approval, amendment and implementation of programs and proposals under clauses 8, 10, 11 - Nil

12.1 (e) The annual (567 ML) and two year (1,133 ML) amount of water taken






Consolidated Bulk Entitlement (Ovens System – Moyhu, Oxley and Wangaratta – North East Water) Conversion Order 2004

Wangaratta 7,720 3,398 (12.1 (b))

0 (12.1 (e)) 12.1 (c) Any credits granted – Nil

Oxley 112 65 (12.1 (b)) 0 (12.1 (e)) 12.1 (d) Metering program – Nil

Moyhu 37 (12.1 (b)) 0 (12.1 (e)) 12.1 (f) Degree and period of restriction – Nil




Total 3,500 12.1 (j) Any difficulties in complying – Nil

Consolidated Bulk Entitlement (River Murray – North East Water) Conversion Order 1999

Bellbridge 61 (20.1 (b)) -4,000 (20.1 (f))

20.1 (c) New offtake points – Nil

Bundalong 25 (20.1 (b) 20.1 (d) Volume of water returned – 1,839 ML

Eskdale 13 (20.1 (b)) 20.1 (e) Metering program – Nil

Tallangatta 156 (20.1 (b)) 20.1 (g) Transfer of entitlement or assignment of allocation – see Note 5

Wodonga 6,916 (20.1 (b))


Wahgunyah 804 (20.1 (b)) 20.1 (i) Any new BE granted – Nil

Rutherglen

Yarrawonga 1,562 (20.1 (b))


Total 13,236 9,537 20.1 (k) Any difficulties in complying – Nil

Bulk Entitlement (Springhurst) Conversion Order 1999

Springhurst (Diddah Diddah Creek)











Annual amount


point(s)1 (ML)


(ML)


Bulk Entitlement (Walwa) Conversion Order 2000

Walwa (Murray River)







Bulk Entitlement (Whitfield) Conversion Order 1999

Whitfield (Musk Gully Creek)







Bulk Entitlement (Yackandandah) Conversion Order 2001

Yackandandah (Nine Mile Creek)





11.1 (i) Any failure to comply with BE – see Nil

11.1 (j) Any difficulties in complying – see Nil

Notes:

1. Numbers in brackets refer to the relevant clause of the Bulk Entitlement Order.

2. In accordance with transitional arrangements approved by the Minister for Water, 612 ML was extracted from the Ovens River at Freeburgh and 257 ML was extracted at the Ovens River at Bright.

3. No volume was added to the Glenrowan carryover account in 2015–16. The account currently holds the maximum permitted carryover volume of 40 ML.

4. Seasonal volumes taken at: Mt Beauty, diversion tunnel - 87 ML (Winter), 84 ML (Spring), 114 ML (Summer), 75 ML (Autumn). West Kiewa River - 0 ML (Winter), 1.5 ML (Spring), 0.5 ML (Summer), 0 ML (Autumn). Simmonds Creek - 0 ML taken.

5. In addition to 100% allocation available to the River Murray BE, 1,839 ML of return flow credits was also allocated in 2015–16.


Water ConsumptionIn 2015–16, the Corporation’s residential customers consumed on average 213 kilolitres per connection, which is an increase from 189 kilolitres consumed in 2014–15. North East Water attributes this to a drier summer and autumn than the previous year resulting in increased water consumption during this high use period. The total per capita consumption across the Corporation’s region was 246 litres per person per day in 2015–16. Figure 10 sets out average residential water consumption over the past five years. Appendix 3, page 134 sets out water consumption by town and customer type for 2015–16. Appendix 3, page 134 also shows per capita daily residential water consumption for 2015–16.

Of the 17,683 megalitres of water extracted during 2015–16, 14,762 megalitres of potable water was sold to customers.

Not all water extracted is sold to customers due to losses and other uses in the systems which include:

• treatment facility production (filter backwash/run to waste)

• reservoir/raw water storage losses

• mains flushing

• bursts and leaks in water mains

• commissioning of new water infrastructure

• theft – unmetered connections, and

• fire fighting.

Non-revenue water is the difference between the volume of water delivered to customers from water treatment plants and the volume of water sold to customers. Non-revenue water for 2015–16 was 2,153 megalitres, compared with 2,039 megalitres in 2014–15. This slight increase is comparable to the increase of potable water sold with the percentage of non-revenue water remaining the same as the 2014–15 period.

The Corporation has ongoing water conservation programs in place including leak detection and zoned metering of reticulation systems to reduce non-revenue water losses. A summary of the Corporation’s non-revenue water for 2015–16 can be found in Appendix 4, page 136.

Figure 10 – Residential customer water consumption (kL) 2011–12 to 2015–16

Note: Residential water consumption increased in 2015–16 to slightly above the five year average. This increase is attributed to a dry start to the summer and autumn.

Figure 11 – Regional water extraction – total (ML) 2011–12 to 2015–16

Note: Water extractions were slightly higher compared to the previous year. For further details see bulk water extractions page 23.

Figure 12 – Regional water consumption (ML) 2011–12 to 2015–16

Note: Water consumption was slightly higher compared to the previous year.


Major CustomersANNUAL REPORTING OF MAJOR NON-RESIDENTIAL WATER USERSInformation on the Corporation’s major water customers during 2015–16 is provided in accordance with Section 122ZJ of the Water Act 1989. The previous two financial year’s data is also provided for comparison.

Table 12 – Major customer water consumption by volume range

Number of Customers

Volumetric Range – ML per year 2015–16 2014–15 2013–14

Equal to greater than 200ML and less than 300ML 1 1 1




Equal to greater than 750ML and less than 1,000ML 0 0 0

Greater than 1,000ML 0 0 0

Total number of customers 3 3 2

Industry Water ConservationWhile there were no industry specific water conservation programs managed by North East Water during 2015–16, the Corporation encourages all non-residential customers to implement sustainable water use practices. The Corporation supports customers by providing options as required.

Table 13 – Names of major customers and their participation in water conservation programs

Major Customer Participation

Wodonga Rendering Pty Ltd

Since the Environmental and Resource Efficiency Plan (EREP) became voluntary for Victorian businesses, the Corporation no longer keeps a

record of customers that are participating in the program

Australian Textiles Mills

Vitasoy Australia Products

Mackay Casings Pty Ltd

Mars Australia Pty Ltd

Alpine MDF Industries Pty Ltd

Carter Holt Harvey Wood Products Australia Ltd

Nestle Australia Ltd

Australian Country Spinners


Corporate Water ConsumptionNorth East Water’s Regional Headquarters includes the Corporation’s regional office and operations depot. Water is used at the depot for maintaining hygienic operational equipment and plant.

The Corporation used 575 kilolitres of rain water for irrigation and toilet flushing at the Regional Headquarters during 2015–16.

Figure 13 – Corporate water consumption (kL) per full time employee 2011–12 to 2015–16

Note: Corporate water consumption increased in 2015–16. This increase is attributed to the operational activity associated with the implementation of the Wodonga Depot at the Regional Headquarters site.

Drinking Water QualityNorth East Water is committed to supplying safe, high quality drinking water. The Corporation’s Drinking Water Quality Management System is meeting that obligation through established risk management and continuous improvement frameworks.

Under the requirements of the Safe Drinking Water Act 2003 and Safe Drinking Water Regulations 2015, North East Water maintains a Risk Management Plan which considers all aspects of water quality from catchment-to-tap. This Plan is updated regularly and is subject to independent auditing. The Corporation’s Risk Management Plan successfully passed a regulatory audit in March 2016.

North East Water engages an independent laboratory to conduct all compliance sampling and analyses for bacterial, physical and chemical quality of water supplied to customers. In 2015–16, more than 50,000 water quality tests were conducted across North East Water’s supply systems, with the Corporation achieving 100% compliance against the water quality regulatory standards. The Corporation’s Annual Water Quality Report, which provides a detailed summary of the Corporation’s water quality achievement and performance for 2015–16, can be accessed via newater.com.au from October each year.

Water DistributionNorth East Water maintains 1,738 kilometres of potable water reticulation which supplies 49,114 customer connections. In 2015–16, the Corporation responded to 138 unplanned water supply interruptions compared with 211 unplanned events in 2014–15. This significant improvement is attributed to targeted water mains renewals.

North East Water will continue to invest in water main renewals in accordance with the ongoing water mains replacement program.

Table 14 – Water distribution performance

Water service standards 2015–16 Results

2015–16 Target

Target Met? 5 Year Average

Unplanned supply interruptions No. per 100km water mains1

8.2 14 Yes 12.6

Restoration of water supply following unplanned interruptions % interruptions restored within 5hrs1

98.6 98 Yes 98.2

Restoration of water supply following planned interruptions % interruptions restored within 5hrs1

100 100 Yes 98.6

Average unplanned time off water supply Total customer-minutes off1 2

4.51 6.2 Yes 11.2

Average frequency of unplanned interruptions No. customers affected divided by total number water customers1

0.05 0.08 Yes 0.08

Notes:

1. ESC service standards.

2. A customer-minute is the time that the water supply is off, in minutes, multiplied by the number of customers affected. For example, an interruption that causes loss of supply to 100 customers and lasts for 150 minutes counts as 15,000 customer-minutes off supply.



Wastewater CollectionNorth East Water managed and maintained 1,175 kilometres of sewer reticulation servicing 44,780 connections in 2015–16. The Corporation cleared 114 unplanned sewer blockages compared with 105 sewer blockages in 2014–15.

North East Water will continue to invest in sewer pipe renewals and sewer maintenance programs to ensure ongoing service reliability across wastewater collection networks.

Table 15 – Wastewater collection performance

Wastewater service standards 2015–16 Results

2015–16 Target

Target Met? 5 Year Average

Sewer blockages

No. per 100km sewer mains1 9.7 12 Y 10.4

Containment of sewer overflows

% spills contained within 5hrs1 100 100 Y 99.5

Average time to unblock/repair sewer

Total minutes to unblock sewer/number of sewer blockages (including spills)1

92.5 140 Y 124.0

Notes:

1. ESC service standards.

Drought ResponseA warm, dry spring and the hottest October on record caused concerns that a dry summer would eventuate. Above average temperatures continued into summer with just enough rain to slow the decline of storage levels and stream flows. Autumn began with the hottest March on record and it was not until May that rain delivered the break that began to improve stream flows and replenish reservoirs. The significant climate variability meant that customers displayed an increased need for water for liveability purposes including maintaining gardens and green spaces.

The Corporation did not invoke its Drought Response Plan in 2015–16.

Trade Waste ManagementNorth East Water classifies its trade waste customers as either commercial, deemed or industrial. These definitions reflect the North East Water Trade Waste Customer Charter, which came into effect on 1 July 2012.

The Corporation encouraged all trade waste customers to adopt environmental policies and apply best-available technology to minimise the generation and concentration

of trade waste requiring disposal to sewer. This assists in achieving environmental aims, as well as ensuring that the impact of trade waste on sewer infrastructure is minimised.

COMMERCIAL TRADE WASTECommercial trade waste includes discharges from premises such as food preparation businesses, mechanical workshops, petrol stations and hospitals. These discharges may have an impact on the sewer treatment network if an appropriate pre-treatment device is not installed and maintained. An agreement is required prior to these customers being able to discharge waste to the sewer.

During 2015–16, North East Water provided services to 833 commercial trade waste customers, which had a total of 973 commercial trade waste devices that were required to be cleaned and inspected. All properties were inspected as part of an annual inspection program with 438 non-compliance letters issued to customers.

DEEMED TRADE WASTESome commercial customers discharge waste that meets the definition of trade waste, however, North East Water has determined that the discharge poses little or no risk to the integrity of its system. In such cases, no agreement or treatment device is required to enable the customer to discharge this waste to the sewer.


INDUSTRIAL TRADE WASTEIndustrial trade waste discharges have the capability to damage or impact sewerage infrastructure or treatment processes and as such are closely managed to ensure the integrity of the system.

Industrial trade waste agreements are implemented for all industrial trade waste customers to clearly outline customer and Corporation rights and obligations. North East Water adopts a risk-based methodology that informs the charging and management regime for these customers, as well as considering the capacity of wastewater treatment plants when setting limits for discharge. This methodology supports the customer to understand how their operations affect public infrastructure and enables customer investment to be targeted to the areas of greatest benefit to their operations.

In 2015–16, the Corporation maintained discharge agreements with 27 industrial trade waste customers, although only 22 discharged trade waste to North East Water’s wastewater treatment plants. Customers ranged from small wineries and sawmills through to large manufacturers. Industrial trade waste customers contributed approximately 17% of the total amount of wastewater entering wastewater treatment plants that receive trade waste during the year.

North East Water worked extensively with its largest trade waste customers during the year to ensure that the product and service offering remained relevant to customers to meet their current and future needs. Key negotiations related to the revision of trade waste agreements have occurred throughout this period.

Wastewater QualityIn 2015–16, North East Water achieved 89.2% compliance with its corporate key performance indicator for licence compliance and quality of wastewater from the Corporation’s wastewater treatment plants. This is a new metric for the Corporation based on compliance with wastewater treatment plant licence conditions including wastewater quality parameters. The new metric is strategically aligned with licence compliance failures and provides a better representation of wastewater treatment plant performance. While the result did not meet its target of 95%, the Corporation is committed to achieving compliance across all sites.

Non-compliances with the Corporation’s key performance indicator occurred primarily due to limitations with lagoon processes, particularly due to the limitation of nitrogen removal during cooler months. North East Water continued to investigate opportunities to reduce the impact of wastewater discharges on the environment, as well as achieving EPA licence compliance, including:

• implementing a critical control point philosophy at discharge to water sites including setting limits on key discharge parameters

• wastewater treatment process reviews and optimisation

• understanding the risks and impacts to beneficial uses of receiving waterways through utilising the Ecological Risk Assessment (ERA) process, and

• initiation of capital infrastructure upgrade projects for Bright and Myrtleford wastewater treatment plants.

Environmental PerformanceThe total volume of water discharged for environmental flows and used for agricultural irrigation were comparable to 2014–15, but represent a lower overall percentage due to an increase in inflows. Urban reuse remained consistent with previous years.

Table 16 – Environmental performance indicators

Performance Indicator 2015–16 Results

2014–15 Results

Variance to prior

year

E1 Effluent reuse volume (end use)

26% 28% -2%

E1.1 Urban and industrial

4% 4% 0%

E1.2 Agricultural 22% 24% -2%

E1.3 Environmental flows

56% 59% -3%

E1.4 Other uses – – –

E2 Total net CO2 emissions

43,431 40,719 7%


Section 03 Environmental and Social Sustainability

Sustainable and Resilient Water Service SystemsIn 2015–16, the Corporation worked in partnership with Wodonga City Council, North East Catchment Management Authority and other agencies to complete the development of a whole of water cycle plan for the future servicing of the Leneva growth corridor to support Wodonga City Council’s Growth Plan. Funding for this work was provided under the Local Water Management Fund. The Plan incorporates waterway management, stormwater, water supply and sewerage and alternative water sources.

The Leneva – Baranduda Whole of Water Cycle Management Plan (WWCMP) was completed in March 2016. The Plan provides guidance for future water supply and sewerage servicing, as well as the use of alternative water sources for future city growth. This includes recycled water and stormwater for irrigation of a major sporting and recreational proposal at Baranduda Fields. The Corporation is committed to supporting the City of Wodonga to implement the Plan.

Detailed investigation into the development of additional groundwater resources for Wangaratta was commenced during the year. The development of additional groundwater resources will continue in 2016–17 to provide a resilient water supply for the city.

Further progress was made with industrial customers to put in place sustainable wastewater management arrangements for major customers to ensure long-term sustainable trade waste management outcomes.

North East Water Annual Report 2015–16 Section 03 Environmental and Social Sustainability | 33

Other Statutory Obligations

North East Water worked collaboratively with the North East Catchment Management Authority in 2015–16 to implement the Regional Catchment Strategy (RCS), Regional Waterway Strategy and the Victorian Waterway Management Strategy. The Corporation achieved this through participation in the North East Natural Resource Management Forum, which had representation from state and federal Government agencies and local Councils. Key objectives are improvements to waterway catchments and sustainable native vegetation management through improved land management practices. North East Water continued its strong school and community awareness programs which align with the RCS objectives.

The Corporation acts as a referral authority for developments which are proposed within the North East catchments of Victoria. Collectively with other agencies, risks for proposed developments are assessed prior to an evaluation and decision on whether to accept or object a proposal. North East Water continued the Ecological Risk Assessment process which is recognised within State Environment Protection Policy – Water of Victoria (SEPP WoV). The Ecological Risk Assessment process is a key element in informing business decisions for improvements to wastewater treatment plants and is discussed in further detail on this page.

In 2015–16, the Corporation completed a review of its native vegetation management, which culminated in the registering of a vegetation offset site near Beechworth. This will ensure the Corporation is able to manage its regulatory responsibilities including native vegetation removal and the Victorian Biodiversity Strategy when undertaking its core business activities.

Environmental Management SystemNorth East Water’s commitment to environmentally responsible service provision is achieved through the implementation of an Environmental Management System (EMS), which is externally certified to ISO 14001:2004.

The 2015–16 EMS Objectives and Targets program focussed on:

• improved risk assessment processes for wastewater systems

• delivering informed business decisions via the Ecological Risk Assessment program

• ensuring sustainable reuse and farming operations, and

• a review of native vegetation management.

During March 2016, an external re-certification audit was completed on the EMS to ascertain compliance with the ISO 14001:2004 Standard. Audits are undertaken every year, with recertification scheduled every third year. The recommendation was that certification continues to the ISO 14001:2004 Standard.

Ecological Risk AssessmentsEcological Risk Assessments (ERAs) provide a structured framework for the assessment of potential impacts of wastewater treatment plant discharges on the environmental, economic and social values of waterways. The ERA process is recognised within State Environment Protection Policy – Water of Victoria (SEPP WoV) and is key to informing business decisions.

34 | Section 03 Environmental and Social Sustainability

North East Water has completed ERAs for its seven wastewater treatment systems discharging to water, and these have driven appropriately informed outcomes through engagement with the Environmental Protection Authority (EPA) and other key stakeholders. North East Water has also recently commenced using the ERA process for sites which have repeatedly required wet weather discharges. The outcomes of these wet weather ERAs will assist in informing North East Water about options for managing future wet weather flows in these locations.

During 2015–16, ERAs were initiated for the Corryong, Rutherglen and Wangaratta Trade Waste systems. These ERAs commenced with problem formulation sessions which set the scope for the ERA, and provided an opportunity for relevant stakeholders to provide input into the process. A workshop was conducted to review the findings of the Yackandandah ERA. The outcomes of this workshop provided a clear direction for the future of this site to ensure its ongoing environmental, social and economic sustainability.

Environmental IncidentsEnvironmental incidents are unplanned events which may have a negative impact on the environment and/or public amenity as a result of North East Water activities. All significant environmental incidents are reported to the Environmental Protection Authority (EPA).

During 2015–16, there were nine significant environmental incidents which are summarised in Table 17, below. The most notable incident occurred in Wangaratta on the Ovens River floodplain. A break in the sewer rising main resulted in a major sewer spill which required extensive clean-up and rehabilitation of the affected area. North East Water worked closely with other agencies to ensure this incident was managed effectively to ensure no ongoing risks to the environment or public amenity.

Table 17 – Summary of significant environmental incidents

Where What When Our Action

Beechworth Sewer spills at the Beechworth Wastewater Treatment Plant inlet structure into Spring Creek during an intense rainfall event.

Jul–15 Aug–15 Jun–16

Response and implementation of spill management procedures to minimise risks to environment and public health.

A sewer spill from the reticulation network into Spring Creek occurred due to a blockage caused by tree roots.

Aug–15 Works were conducted to clear the blockage and restore normal operating conditions to the network. An extensive clean-up of the spill site was conducted to minimise the risk to public health and environment. Signage was erected to notify the public of the spill. EPA was notified of the incident.

Tungamah An offsite discharge from the Tungamah wastewater treatment plant occurred due to an overtopping of treatment lagoons.

May–16 Clean-up of the spill site was conducted and actions were implemented to reduce the excess volumes in treatment lagoons. An inspection was conduced to verify asset integrity and ensure there was no ongoing risk to environment. EPA was notified of the incident.

Wangaratta A major spill occurred due to a break in rising main to the Wangaratta wastewater treatment plant.

Oct–15 An extensive monitoring and clean-up program was implemented to ensure site was restored to original condition with no ongoing risk to the public or environment.

A blockage in a sewer main caused by tree roots resulted in a sewer spill into One Mile Creek in Wangaratta.

Dec–15 The sewer main was cleared and a clean-up of the site was conducted. Signage was erected at the spill site and along the One Mile Creek; creek sampling occurred over the following weeks to ensure no longer-term impacts. EPA was notified of the incident.

Walwa An emergency ‘Section 30A’ discharge from the Walwa Wastewater Treatment Plant was required due to the failure of the high-density polyethylene lagoon lining.

Jun–16 Repair works to lagoon lining were conducted to enable routine operating conditions to be restored.

Note: Significant incidents are unplanned, unapproved or repeated.


Greenhouse Gas Emissions and Net Energy Consumption

Greenhouse emissions are produced from Corporation activities which include electricity use for water and wastewater treatment, pumping within water and wastewater distribution networks, emissions from wastewater treatment systems, agricultural emissions from reuse schemes and vehicle use.

In 2015–16, the Corporation increased greenhouse emissions compared to the previous financial year with continued high demand for potable water and subsequent requirements to treat wastewater. Greenhouse gas emissions totalled 43,431 tonnes CO2-e as outlined in Table 18, below.

Table 18 – Greenhouse gas emissions 2011–12 to 2015–16

Greenhouse gas emissions (t CO2-e) 2015–16 2014–15 2013–14 2012–13 2011–12

Water treatment and pumping 9,920 9,032 9,289 9,243 7,796

Wastewater collection and treatment 32,162 30,403 29,270 29,617 28,664

Vehicle fleet 820 825 856 877 854

Depots and offices 530 459 551 286 218

Total 43,431 40,719 39,966 40,023 37,532

Table 19, below, highlights that emissions from wastewater collection and treatment activities have higher energy requirements than potable water treatment activities, which is due to pumping of sewerage in distribution networks and the mechanical aeration of lagoons at the treatment plants.

Table 19 – Energy consumption (electricity) and greenhouse gas emissions by process 2015–16

Energy Consumption by Process Total kWh Tonnes CO2e ML treated KWh/ML Tonnes CO2e/ML

North East Water total 20,019,638 24,224 26,977 742 0.90

Water production and pumping 8,198,148 9,920 17,178 477 0.58

Wastewater collection and treatment 11,383,552 13,774 9,799 1,162 1.41

Energy use (non-fleet) 437,938 530 N/A N/A N/A

Vehicle fleet N/A 820 N/A N/A N/A

Offsets purchase 0 0 0 0 0

Table 20, below, highlights a breakdown of energy consumption for potable water and wastewater collection and treatment activities over the last five years shows a consistent energy usage. Variations are primarily due to changes in volumes treated.

Table 20 – Energy consumption by process comparative years 2011–12 to 2015–16

Energy Consumption by Process 2015–16 2014–15 2013–14 2012–13 2011–12

Water production and pumping KWh/ML 477 474 483 455 508

Wastewater collection and treatment KWh/ML 1,162 1,251 1,161 1,237 1,188


The Future

Regional Growth StrategyDuring 2015–16, the Corporation progressed its regional growth strategy aimed at identifying the infrastructure capacity required to support industrial growth in the region and optimise opportunities to support regional development priorities aligned with government policy. Further investigation of economic, social and environmental drivers has revealed possible focus on tourism, food and fibre as well as residential growth areas. The work completed to date goes beyond identification of available capacity in existing infrastructure to consider land supply and potential servicing requirements into the future. This project will also support more detailed analysis for water supply in the Urban Water Strategy and Price Submission projects.

Urban Water StrategyNorth East Water is required to complete an Urban Water Strategy (UWS) as part of its obligations as a Water Corporation. The UWS is expected to be completed by early 2017 in accordance with the Department of Environment, Land, Water and Planning guidelines. The UWS will develop a baseline for the balance of water supply and demand within North East Water’s systems, setting a clear path forward for future projects, upgrades and operations.

In 2015–16, detailed investigation work was undertaken to develop additional groundwater resources at Wangaratta to increase reliability of supply for Wangaratta and Glenrowan. Bore pump testing will be completed in 2016–17, followed by the implementation of additional groundwater pumping capacity.

Wastewater StrategyDuring 2015–16, a number of planning initiatives were undertaken, including:

• a major review of the capacity of the sewer network to support the future growth of Wodonga, Wangaratta and Yarrawonga. The initial phase of the study involved network flow modelling including wet weather flows. The second phase, involving development of sewer models and analysis of sewer capacity to accommodate existing and future flows, will be completed in 2016–17

• planning work for the establishment of planning controls to protect essential wastewater treatment facilities from inappropriate surrounding land development. A planning control to avoid sensitive uses being located too close to the Benalla Wastewater Treatment Plant, Amendment C 031 to the Benalla Planning Scheme, was formally approved by the Minister for Planning on 3 March 2016. A parcel of land neighbouring the Wangaratta Wastewater treatment facility was purchased to avoid future conflict with land use and reduce risks to surrounding land owners

• the Corporation continued to support the sustainability and liveability of small towns in the region through the investment in sewerage services for Moyhu. The new reticulated sewerage service for Moyhu is substantially completed with connections expected to be available to residents in 2016–17. Investigation work in partnership with Alpine Shire Council, including an environmental risk assessment to determine the need for wastewater management improvements in Harrietville was completed. The Council is expected to consider the recommendations as part of its community building plan for Harrietville


• the Corporation entered into a funding agreement with Department of Environment, Land, Water and Planning for improvement of domestic Wastewater Management. The focus of this project will be on improving wastewater management in partnership with local government, based on priorities identified in domestic wastewater management plans. Priority investment is being considered for Bethanga in partnership with Towong Shire Council

• upgrade of the Corryong wastewater treatment facility including redeveloped land irrigation facilities was completed as the first stage of providing additional capacity to support growth, and

• continuous improvement in relation to Environmental Protection Authority licence compliance for wastewater treatment is an ongoing priority. Where compliance gaps exist, the Corporation utilises a holistic, risk-based approach to develop the most sustainable and effective improvement works. This approach maximises customer value in a way that maintains environmental best practice, and is underpinned by detailed ecological risk assessments undertaken to quantify the effects of environmental discharges. To this end, upgrades at the Myrtleford and Bright Wastewater Treatment Plants are currently being designed for construction in 2017–18, and works at the Benalla, Yackandandah, Corryong and Rutherglen plants are being scoped for consideration in the next pricing submission.


Social Sustainability

Community Service ObligationsNorth East Water acknowledges that there are complex socio-economic factors in its communities and understands that some customers will experience some form of financial hardship from time to time. The Corporation conscientiously works with customers to ensure they feel supported and understood when requesting assistance.

Government rebate programs, concessions to pensioners and people on life support machines, as well as rebates to not-for-profit groups are ways in which North East Water supports the community.

Table 21, below, outlines the number and dollar value of these obligations.

Table 21 – Community service obligations 2011–12 to 2015–16

Provision 2015–16 2014–15 2013–14 2012–13 2011–12

No. $’000 No. $’000 No. $’000 No. $’000 No. $’000

Concession to pensioners 17,398 3,749 17,451 3,621 17,726 3,534 17,118 3,323 16,536 3,217

Rebates paid to not-for-profit organisations under the water and sewerage rebate scheme

839 211 852 212 852 210 841 207 809 203

Utility relief grant scheme 0 0 181 65 173 62 129 52 99 36

Water concessions on life support machines – haemodialysis

14 4 6 2 6 2 4 1 7 2

Hardship relief grant scheme 4 18 11 40 19 8 1 3 0 0


In addition to these programs North East Water’s Customer Assistance Program provided support to the most vulnerable members of the community by offering assistance to customers who were assessed as experiencing financial hardship. The Board recognised the growing need for financial assistance in the region and approved an increase to the budget allocation in 2015–16 to $20,000 from $10,000 in 2014–15. This resulted in 49 customers throughout the region receiving financial support compared to 27 in the previous financial year.

The Customer Assistance and High Consumption/Undetected Leak Rebates program continued in 2015–16 with the number of customers making application remaining consistent with the prior year.

Table 22, below, outlines the contribution made by North East Water to Assistance Programs.

Table 22 – North East Water assistance program 2014–15 to 2015–16

Provision 2015–16 2014–15

No. $’000 No. $’000

Customer assistance rebates 49 28 27 11

High consumption or undetected leaks 190 70 192 71

In further support of the community, North East Water is currently trialling an innovative assistance program for customers connecting to a Small Town Sewer Scheme. This program will assist customers through the development of a plumbing panel, providing competitive quotes for works, as well as by providing a financial contribution from North East Water for those most in need. A partnership approach involving the Department of Health and Human Services from concept through to implementation resulted in joint sessions with the community enabling greater participation and positive outcomes.

Corporate CitizenshipSupport of local communities was a major focus for the Corporation in 2015–16. Support included the following activities:

• providing the community and sporting groups with “Drink Tap” water bottle and mobile bubbler sponsorships

• sponsorship of the AFL North East Border “Water Runners” program

• delivering presentations to community groups regarding North East Water’s services

• co-hosting the Tapping into Partnerships’ networking event

• providing presentations at the La Trobe Water Forum, and

• internal fundraising for local and national charities.


Section 04 People

Our WorkforceNorth East Water’s 2015–16 workforce of 164.8 full time equivalents (FTE) includes all permanent full-time, permanent part-time, temporary and casual staff. This is compared with 160.5 as at 30 June 2015.

Table 23 – Employment type

Employment Type Percentage of total workforce

2015–16 2014–15 Victorian Water Sector

Permanent full-time and part-time (%) 86.1 97.0 91.4

Fixed term temporary (%) 10.0 3.0 7.9

Casual (%) 3.9 0.2 0.6

The total staff turnover for the year was 11% (including temporary employees and casuals) which is above the Victorian Water Sector average, as shown in Figure 14, below.

During 2015–16, North East Water employed 119 male and 64 female staff. The percentage ratio was 64 and 36 respectively, which is a higher female proportion compared to the Victorian Water Sector average as shown in Figure 15.

Figure 14 – Employee turnover compared with Victorian Water Sector 2011–12 to 2015–16Source data for Victorian Water Sector: Report on the 2015 Workforce Data Collection; State Services Authority (Published October 2015)

Note: This graph represents employee initiated separations only. Turnover rates increased in 2015–16 compared with 2014–15. These departures were employee initiated for a variety of reasons, including retirement of long-term employees, employees relocating to other regions, and employees seeking career advancement external to North East Water. The Corporation has a good record of retaining long-term employees and is active in generating internal development opportunities to encourage staff retention.

Figure 15 – Male/female ratio 2011–12 to 2015–16Source data for Victorian Water Sector: Report on the 2015 Workforce Data Collection; State Services Authority (Published October 2015)

North East Water Annual Report 2015–16 Section 04 People | 41

Investing in the FutureIn 2015–16, an in-house leadership program linked to the Corporation’s Leadership Model continued with 27 Coordinators participating in and completing the course. North East Water also developed a new performance management process focused on each individual employee and their career aspirations.

The Leading Teams program continued in 2015–16, and after the success of the inaugural Emerging Leaders program, a second program commenced with 10 participants from across all areas of the business taking part.

In 2015–16, the Corporation invested in a new eLearning platform, which is focused on personal and professional development, health and safety training, drinking water quality training, environmental training, and inductions. In addition to a broad range of internal and external development opportunities, a number of employees were provided educational assistance opportunities at both national university and TAFE institutions.

Valuing ExperienceNorth East Water places great value on attracting the next generation of employees and, developing and retaining existing employees and benefiting from their experience.

In 2015–16, a number of employees were given the opportunity to act in other roles, often in more senior positions, or in secondment positions within other areas of the business. These opportunities acknowledge the experience within the Corporation and have highlighted succession planning opportunities for the future.

The Corporation has provided for employees to spend a portion of their normal working hours working in other areas of the business, which enabled employees to gain an appreciation for other areas and provided an opportunity for knowledge sharing.

North East Water continued to provide work and industry experience for students from local schools, universities and TAFE institutions, including hosting a French international engineering student.

42 | Section 04 People

Building our Team

Strategic FocusA key ‘People’ project of the Strategic Intent is the People Strategy – Achieving Through People, which continued throughout 2015–16. The strategy focuses on four key areas of Align Our People, Attract and Keep Our People, Build Our Capability, and Strengthen Our Culture. The objective of the strategy seeks to build the workforce that North East Water needs for the future. It was developed with the vision to build the capacity within the Corporation through alignment, motivation and resilience to achieve high performance.

Celebrating SuccessIn 2015–16, North East Water had a number of employees who gained their Certificate III in Water Industry Operations. This qualification helps to ensure that Operators are highly skilled and are leading the way in water and wastewater treatment for communities and the environment.

To celebrate the success of the workforce the Managing Director presented staff achievement awards to recognise employees who have shown leadership or who excelled while facing many challenges in their work. The award categories included Outdoor Safety Ambassador, Indoor Safety Ambassador, Customer Service, Living the Values, Other Significant Contributions, and Leadership.

Promoting Health and WellbeingNorth East Water continued its focus on health and wellbeing during 2015–16. The Corporation was presented with its first recognition point of ‘Creating a Healthy Workplace’ under Healthy Together Victoria’s Workplace Achievement Program. The program concentrates on five key health priority areas of mental health, healthy eating, physical activity, quit smoking and responsible drinking. This includes North East Water’s commitment to Health and Wellness within the Corporation’s People and Culture Policy.

The staff led Health and Wellness Committee placed a focus on improving the mental health and resilience of employees at North East Water leading to a number of activities and programs offered to staff. There were also a number of activities and services offered to staff under the remaining four key health priority areas.

North East Water appointed a number of male and female Equal Opportunity Contact Officers as first line contacts for employees who experienced workplace difficulties or other issues. This is based on the concept of an early-intervention assisted staff-help approach. Matters may be referred to the People and Culture team if further assistance is required, or staff can contact the Corporation’s Employee Assistance Program.


Organisational CultureNorth East Water is now alternating yearly between the Alignment and Engagement survey, and the Organisational Cultural Inventory (OCI) survey.

In May 2016, the Corporation conducted the OCI survey, which also included an Organisational Effectiveness Survey (OEI) conducted for the second time. This survey had a response rate of 91%, which is an increase on that conducted in May 2015. During 2015–16, cultural action plans were developed from the OCI results and implemented. The outcome from the completed plans will be assessed against the 2016–17 OCI results.

Although the Corporation did not conduct the Alignment and Engagement survey for 2015–16, informal face-to-face engagement sessions were conducted with all employees separated into groups based on their length of service. These sessions were conducted to ensure that North East Water continues to monitor the engagement levels across the organisation.

Valuing DiversityNorth East Water has a diverse workforce, and all employees are valued equally. The Corporation has made a commitment to providing a workplace free of discrimination and harassment.

To ensure it grows a diverse workplace, North East Water is committed to the fundamentals of Equal Employment Opportunity (EEO) merit based appointments and equity in all recruitment and selection processes. All employees receive training around EEO on an annual basis.

The Corporation’s People and Culture Policy and Health, Safety and Welfare Policy deals specifically with a commitment to, and approach for, dealing with issues including bullying, harassment, discrimination and workplace violence, which are available to all employees through North East Water’s electronic document records management system.


Occupational Health and Safety

Occupational Health and Safety MattersNorth East Water places the utmost emphasis on the health, safety and welfare of all employees, contractors and members of the public with regard to all of the organisations activities and undertakings.

Health and safety is culturally accepted by the staff of North East Water and is embedded into the day-to-day activities of the organisation and seen as a value added process.

The Corporation invests in the safety, health and wellbeing of its staff to continually improve the positive safety culture at North East Water.

Examples include:

• continued use of designated work groups and health and safety representatives to drive improvement through stakeholder ownership of the corporate safety culture

• continued investment in technology and equipment to minimise manual handling including hydro-vac excavation units, smaller excavators and skid steer loaders, as well as the acquisition of an automated valve actuating and servicing trailer

• inclusion of safety specialists at key design and operability meetings during the planning stages of projects to enhance delivery of safe and efficient services

• use of the North East Water Health and Wellness Committee to lead projects including walking, jogging, swimming, table tennis and lawn tennis clubs, building resilience workshops and corporate bicycle use

• continued use of risk assessment, task analysis and hazard identification processes for projected tasks and historic routine tasks to drive safety improvements

• implementation of a combined job safety analysis form to identify hazards and risks

• use of an online incident and hazard reporting tool with minimal staff input required, and

• development of in-house competency-based assessment for non-regulated tasks that complement the induction process.

Occupational Health and Safety ManagementDuring 2015–16, North East Water continued to maintain accreditation to AS/NZS4801 Health and Safety Management Systems. The accreditation was externally audited in November 2015.

Key activities and investments implemented during 2015–16 to enhance the effectiveness, useability and functionality of the Health and Safety Management System included:

• increased use of high risk audit templates to ensure compliance and best practice implementations for tasks that have a higher risk categorisation

• continued application of the three tier Health and Safety Committee process with increased emphasis on the corporate risk registers to develop strategy through the Health and Safety Steering Committee

• development of safety improvement plans at business unit level to support the broader corporate objectives and targets

• improved utilisation of positive performance indicators to enhance and drive cultural change while recognising that lag indicators have a purpose in measurement and verification

• implementation of a satellite technology trial to enhance the safety of employees working in remote locations or working alone

• increased in-house training for safety matters including lock out and tag out, contractor management as well as job safety analysis and risk assessment principles

• increased informal debriefs for minor incidents/close calls to provide a more open and comfortable forum for identifying development areas and opportunities for best practice

• development of user-friendly templates to identify hazards and provide control mechanisms for tasks categorised as high risk, and

• increased emphasis on mental health awareness and training through the Health and Wellness Committee.


Corporate Health and Safety Objectives and TargetsThe Corporate health and safety objectives and targets set every year follows a consultative process that considers the views and feedback of relevant stakeholders to determine the measures and metrics to improve the organisation’s Occupational Health and Safety performance.

Objectives and targets focus heavily on lead performance indicators that drive a positive safety culture and behaviour. Water Services Association of Australia has developed a set of 14 key performance indicators (both lead and lag) for the water industry. These will be adopted by the Corporation in conjunction with the 2016–17 Corporate Health and Safety objectives and targets.

In 2015–16, consultation was undertaken with the three Health and Safety Committee structures, Executive Management and the Senior Management Team prior to the draft objectives and targets being presented to the Board’s People, Performance and Risk Committee.

Corporate objectives and targets were developed giving consideration to, but not being limited to:

• incident trend analysis including reference to the types of occurrence for agency and mechanism of injury

• hazard trend analysis

• results of audits and inspections

• near miss/close call reporting, and

• management review of the health and safety management system.

The objectives and targets were tracked throughout the year with quarterly reporting provided to the Board, Management Teams and Health and Safety Committees as set out in Table 24, below:

Table 24 – Corporate health and safety objectives and targets 2015–16

Risk Area / element

Objective Target(s) – 2015–16 Weighting Status Comments

Positive Health and Safety Culture

Create and maintain a positive culture of health and safety that is valued by all staff

A health and safety engagement score of >80% at year end

5% Achieved Due to the engagement survey moving to a bi-annual format depot roadshows were utilised to provide a measure of cultural engagement

Build a leadership competency to promote a positive health, safety and welfare culture supporting the People and Culture Strategy

100% of senior managers to deliver team safety improvement plans

20% Achieved Safety improvement plans developed and completed by relevant senior managers

100% of senior managers trained in proactive safety leadership

15% Achieved Safety leadership for seniors managers achieved through presentations and discussions within management meetings. Coaching sessions were also held with the Health and Safety Coordinator. Use of industry wide safety alerts and prosecutions also utilised to provide information relating to best practice against real case studies


Risk Area / element

Objective Target(s) – 2015–16 Weighting Status Comments

Reduce Incidents and Injuries

Develop a zero harm philosophy

100% of scheduled inspections completed in allotted timeframes

15% Achieved All scheduled inspections were completed in allotted timeframes

100% of corrective actions implemented in allotted timeframes

10% Achieved All corrective actions to control hazards to both As Low As Reasonably Achievable and As Low As Reasonably Practical were met

Review all activities with risk ratings M4 or greater

10% Achieved Risk registers were comprehensively reviewed throughout the year

100% of supervisory staff trained in close call/near miss identification, reporting and management

10% Achieved Close call management training was delivered to the Coordinator supervisory level of the organisation through face to face interactions during the health and safety roadshow

Develop plans to reduce corporate priority one health and safety risks

10% Achieved The three main priority one risk areas of boats, lone working and Confined Space Entry rescue procedures were addressed with programs implemented and ongoing

Review corporate priority two health and safety risks

5% Achieved Priority two risks were reviewed by the Health and Safety Steering Committee

North East Water is committed to a zero harm philosophy which encourages open and transparent reporting protocols.

Reporting is encouraged for all incidents including near miss/close call incidents. Suitable debriefs are carried out to determine the root cause and contributing factors in order for incidents to eliminate the hazard and/or reduce the risk to as low as is reasonably practicable.

The lost time injury frequency rate shown in Table 25, below, shows a decrease in comparison with the previous year’s result due to one less actual lost-time injury event in 2015–16.

The number of incidents per 100 full time equivalent employees increased slightly due to higher reporting of incidents that had very minor consequence.

Table 25 – Lost time injury frequency rate

Year FTE No. of LTI’s LTI/100 FTE No. of Incidents Incident per 100 FTE

2013–14 154.2 1 0.78 14 9.08

2014–15 160.5 3 2.4 19 11.84

2015–16 164.8 2 1.21 21 12.74


The average cost of claims increased dramatically this reporting year. This was due to one claim which required complicated management with extensive utilisation of external agencies to seek the most efficient and appropriate result.

The average cost of claims is indicative of the actual cost of medical interventions as well as the increased levels of premiums levied against the policy.

Table 26 – Average cost per claim

Year Average cost per claim

2013–14 $10,456

2014–15 $5,574

2015–16 $192,000

Communicating Health and SafetyConsultation and communication of health and safety matters, initiatives and reporting are recognised by North East Water as being fundamental to a culture of safety, health and wellbeing and its drive for continuous improvement.

The Corporation ensures an environment of open safety communication through simple and easily accessible reporting mechanisms designed for stakeholder use.

During 2015–16, North East Water continued to use a three tier Health and Safety Committee structure to represent and ensure effective communication channels at all levels of the business.

Examples of communication included:

• continued consultation and development of the management system through the health and safety committees

• continued use of safety alerts to provide key guidance and information for continuous improvement and support of good practice

• advice and support to the organisation reflecting proposed changes to key health and safety regulations and legislation

• increased Corporation representation at the Albury/Wodonga Safety, Health and Environment group

• the Health and Safety Coordinator and Advisor’s continued membership in the VicWater OHS Network, and

• stakeholder/staff roadshows to provide information, guidance and support for health and safety performance and initiatives.


Occupational Health, Safety and Welfare Policy

Introduction

North East Water is committed to providing and maintaining a work environment that is safe, healthy and free from all forms of bullying and harassment for all workers including contractors and for all customers, visitors and members of the public who may be affected by the activities and undertakings of North East Water.

Occupational Health, Safety and Welfare

North East Water will maintain a structured health and safety management system integrating all other business systems in accordance with the:

• Victorian OHS Act 2004 and associated legislation

• Australian Standard AS/NZ 4801: 2001 Occupational Health and Safety Management Systems

North East Water is committed to providing Return to Work programs for injured employees in strict accordance with:

• Workplace Injury Rehabilitation and Compensation Act 2013

To fulfil this commitment North East Water will:

• comply with relevant Occupational Health and Safety legislation, Regulations, Australian Standards and Codes of Practice appertaining to the activities and undertakings of the business

• provide adequate resources to ensure that the Health and Safety Management System is implemented and maintained and compliant with legislative requirements

• actively identify, eliminate or control, health, safety and welfare hazards

• provide appropriate information, instruction, training and supervision for all workers including contractors and visitors to ensure they are aware of their rights and responsibilities for the health, safety and welfare of themselves and others

• provide and maintain safe plant and equipment

• support the Health and Safety Representatives Committee(s) and ensure there is effective communication with all relevant stakeholders

• provide confidential mechanisms for the management of reports of bullying and/or harassment

• regularly set and review objectives and targets to minimise incidents associated with the activities and undertakings of the business and to continually improve health, safety and welfare performance, and

• provide workers compensation information, training and support for workers in accordance with legislation.

Manager/Coordinator/Supervisor Responsibilities

Ultimate responsibility for providing a safe work environment lies with the Board of North East Water.

All employees with supervisory responsibilities are responsible for the health, safety and welfare of staff working under their control, and for ensuring staff are adequately trained, resourced and supported in undertaking their role.

Worker/Contractor and Others Responsibilities

All persons inclusive of Board Directors, workers (formerly employees), contractors, sub-contractors, visitors, volunteers, and students performing a task for, or on behalf of, North East Water must take reasonable care for their own health, safety and welfare, and that of others who may be affected by their acts or omissions whilst at work. This includes compliance with all safety rules, safe work practices, policies, procedures and instructions. All personnel must not wilfully or recklessly interfere with or misuse equipment provided in the interests of health, safety and welfare.


Section 05 Governance

Corporate GovernanceGovernance is the system of internal controls used to direct and manage operations in a responsible way, and the interaction between the Board, senior management and Corporation stakeholders. The Corporation is committed to good governance to provide transparent, accountable, fair and responsive methods for directing and controlling the organisation.

During 2015–16, North East Water focussed on implementing Stage 2 of the Governance Framework which involved the business undertaking a gap analysis of all corporate documentation to ensure its policies and procedures are documented in accordance with the Corporation’s day to day activities.

The purpose of North East Water’s Governance Framework includes:

• Currency: ensuring that governance at North East Water is sound, fit for purpose and consistent with Victorian Government legislation, practice and policies, good probity practice and principles of good governance.

• Competency: building a culture that embraces governance as an essential part of government business and a useful tool to achieve individual and organisational objectives ensuring necessary principles, information, accountability and messages are communicated across the Corporation.

• Compliance: ensuring that governance at North East Water is adequately documented, supported and understood, and effectively and consistently implemented.

The Governance Framework will be reviewed in 2016–17 to ensure alignment with North East Water’s refined Strategic Intent and Ambition Statements.

The Corporation’s operations are overseen by both the Department of Environment, Land, Water and Planning (DELWP) on behalf of the Minister for Water, and the Department of Treasury and Finance (DTF) on behalf of the Treasurer.

Directors

David McKenzie, ChairMr David McKenzie is a property valuer, specialising in the valuation of agricultural property and water rights. David is regarded as one of the foremost experts in Australia in the analysis of water markets and valuation of water assets, and has addressed several international conferences on topics related to this specialty. He is a Partner and Director of the Opteon Property Group, with several offices across northern Victoria. He is also active in property development in regional Victoria.

David is currently Chair of the Committee for Greater Shepparton, is a member of the Goulburn Valley Employment & Industry Taskforce, and is on the Victorian State Government’s Advisory Board into Regional Economic Development and Services Delivery Review. David has previously served as Vice President of the Victorian Division of the Australian Property Institute (API), and is a former Director of Goulburn Valley Water.

David holds a Bachelor of Business (Property), is a Qualified Valuer, and is a graduate the Australian Institute of Company Directors.

As Chair of the Board, David is also Chair of the Board’s People, Performance and Risk Committee; ex-officio of the Audit and Finance Committee and the Customer and Community Committee.

50 | Section 05 Governance

Rosemary BissettMs Rosemary Bissett is the Head of Sustainability Governance & Risk at National Australia Bank. She is a Director and Chair of the Risk Committee at Sustainable Business Australia, a Director at the Moreland Energy Foundation Ltd, and a member of the Advisory Board at the Melbourne Sustainable Society Institute at University of Melbourne, the United Nations Environment Program Finance Initiative Banking Commission and the Natural Capital Protocol Steering Group.

Rosemary has a Master of Business Administration, Master of Applied Science (Analytical Chemistry), Graduate Diploma in Outdoor Education and Bachelor of Education, as well as being a Graduate of the Australian Institute of Company Directors.

Rosemary is a member of the Board’s Audit and Finance Committee and a member of the People, Performance and Risk Committee.

Cath BottaMs Cath Botta is a consultant in facilitation, soil health and community engagement. Prior to this Cath was a lecturer at Dookie College for the University of Melbourne.

Cath is current Treasurer of the Federal Council of the Australian Society of Soil Science and is a former Deputy Chair of the Benalla Health Board.

She holds a Bachelor of Science in Agriculture, a Master of Science in Agriculture and graduate certificates in soil conservation and mediation and conflict resolution. She also holds a Certificate IV in Training and Assessment and is a Graduate of the Australian Institute of Company Directors.

Cath is Chair of the Board’s Customer and Community Committee and is an ex-officio of the People, Performance and Risk Committee.

Stephen BrownMr Stephen Brown is the General Manager of Risk at Rural Bank and has held senior executive positions in the banking and finance industry with KPMG, ANZ, Bendigo and Adelaide Bank, RSD Chartered Accountants and Rural Finance Corporation.

Stephen is a Chartered Accountant having completed a Bachelor of Business (Accounting), is a registered Company Auditor, a Fellow of the Institute of Chartered Accountants of Australia and is a Graduate of the Australian Institute of Company Directors.

Stephen is a member of the Board’s Audit and Finance Committee and a member of the People, Performance and Risk Committee.

Brendan ForanMr Brendan Foran is the National Chief Executive Officer of Greening Australia Ltd. Previously Brendan worked for a number of years at Alcoa in corporate affairs. He is a former non-executive Director at Gordon Institute of TAFE.

Brendan has a Master of Business Administration, Advanced Diploma of Business Management and is a 2016 Harvard Club of Australia Nonprofit Fellow.

Brendan is a member of the Board’s Customer and Community Committee and a member of the People, Performance and Risk Committee.

Jonathan KoopMr Jonathan Koop owns and manages a 700 hectare grazing/cropping property in North East Victoria (part-time 12 years, full-time since 2010).

Previously Jonathan had a career in senior finance positions with Murdoch Books Pty Ltd (2008–2011) (where he was also Company Secretary), Fairfax Media Ltd (2003–2007) and TNT Express (2001–2003).

He has a Bachelor of Economics, is a Chartered Accountant and is a Graduate of the Australian Institute of Company Directors.

Jonathan is Chair of the Board’s Audit and Finance Committee; and an ex-officio of the People, Performance and Risk Committee.

Gayle LeeMs Gayle Lee is an Accountant and works with businesses to improve their financial management, reporting and strategic planning processes. Gayle owns a farming property and runs an Agricultural Contracting business with her husband.

Previously, Gayle was General Manager of Bruck Textiles at Wangaratta and Commercial Manager of Pacific Marine Group in Townsville.

Gayle has a Financial Administration degree, is a CPA and a Graduate of the Australian Institute of Company Directors.

Gayle is currently an Independent Member of the Audit Committee for the Rural City of Wangaratta and a Trustee of the Benalla Cemetery Trust.

Gayle is a member of the Board’s Customer and Community Committee and a member of the People, Performance and Risk Committee.

North East Water Annual Report 2015–16 Section 05 Governance | 51

Helen Tobin-KingHelen is a Procurement Manager with more than 20 years’ experience in managing and negotiating commercial contracts.

Helen has worked in a broad range of businesses from the airline industry, defence contracting, fast moving consumer goods and heavy industry across diverse portfolios.

Helen has strong links to Northeast Victoria having grown-up on farms around Wodonga and currently lives in Wodonga with her family.

Helen has a keen interest in issues surrounding diversity and the positive outcomes it brings for business, communities, the economy and families.

Helen has a Master of Business Administration and is a Graduate of the Australian Institute of Company Directors.

Helen is a member of the Board’s Audit and Finance Committee and a member of the People, Performance and Risk Committee.

Craig HeinerMr Craig Heiner was appointed as Managing Director in July 2008 and carries responsibility for ensuring the governance and strategic ambitions of the Board are realised. With a broad based background and a passion for the development of staff, he provides a unique perspective on opportunities to strengthen the Corporation and the communities it serves.

Craig holds a Bachelor of Business in Accounting, a Master of Business Administration in Economic Analysis, and a Diploma of Education. He is a Graduate of the Australian Institute of Company Directors and a member of the Institute of Water Administration.

Board CommitteesThe Board assumes overall responsibility for corporate governance of the Corporation. It monitors the performance of the Corporation both directly and through its Board Committees.

At the commencement of the reporting period there were three Board Committees, being:

• Audit and Finance Committee

• Customer and Community Committee, and

• People, Performance and Risk Committee.

COMMITTEES

Audit and Finance Committee

The Audit and Finance Committee assisted the Board in fulfilling its corporate governance responsibilities relating to financial reporting and audit and financial management, including:

• oversight and performance monitoring of the external and internal audit functions

• the integrity of financial reporting

• oversight of the strategic direction and policy on financial sustainability and performance management

• the effectiveness of the internal control frameworks, and

• compliance with applicable laws, regulations, standards and guidelines.

From 1 July 2015 to 30 September 2015, the Audit and Finance Committee consisted of three independent Non-Executive Directors:

• Jonathan Koop (Chair)

• Steve Bird, and

• Rowan O’Hagan.

Following the appointment of new Board Members the Audit and Finance Committee effective 1 October 2015 and as at 30 June 2016 consisted of four independent Non-Executive Directors:

• Jonathan Koop (Chair)

• Rosemary Bissett

• Helen Tobin-King, and

• Stephen Brown.


The Committee’s achievements in 2015–16 included:

• oversight of the Internal Audit Plan including an Organisational Health Check review

• oversight of the following external audits successfully completed:

– Bi-Annual Treasury Audit

– Health and Safety Surveillance Audit

– Safe Drinking Water Act 2003 Audit, and

– Environmental Management System Audit.

• ongoing monitoring of the Corporation’s insurance portfolio, and

• oversight of the Asset Revaluation 2015–2016.

Customer and Community Committee

The Customer and Community Committee assisted the Board in fulfilling its corporate governance responsibilities in regard to customer service, customer and community communications and engagement activities, including:

• seeking opportunities to engage with partners, stakeholders, the Customer and Community Panel and Project Reference Groups

• providing a conduit to the Board for strategic advice and feedback

• oversight of the Corporation’s Customer Service Strategy

• oversight of the Corporation’s Engagement Strategy, and

• oversight of the Corporation’s Marketing Communications Strategy.

From 1 July 2015 to 30 September 2015, the Committee consisted of three Non-Executive Directors:

• Cath Botta (Chair)

• Denis Flett, and

• Debi Gadd

From 1 October 2015 and as at 30 June 2016, the Committee consisted of three Non-Executive Directors:

• Cath Botta (Chair)

• Brendan Foran, and

• Gayle Lee.


• providing oversight of and feedback to the Customer and Community Panel, and active engagement with the Panel throughout the year

• monitoring the implementation of the Customer Service Strategy

• monitoring the implementation of the Engagement Strategy and Manual, via the Quarterly Engagement Scorecard

• providing feedback on the development of the Marketing Communications Strategy, and

• oversight of the development and implementation of the Moyhu Wastewater Scheme Customer Support Program.

People, Performance and Risk Committee

The People, Performance and Risk Committee assisted the Board in fulfilling its corporate governance responsibilities in regard to people, performance monitoring, and risk management, including:

• the Corporation’s People Strategy

• performance monitoring of the Corporation’s key management systems

• performance, development and remuneration of the Managing Director, and

• oversight of risk management through monitoring the internal control system.

From 1 July 2015 to 30 September 2015, the People, Performance and Risk Committee consisted of four independent Non-Executive Directors:

• David McKenzie (Chair)

• Denis Flett

• Rowan O’Hagan, and

• Steve Bird.

Following the appointment of new Board Members the People, Performance and Risk Committee effective 1 October 2015 and as at 30 June 2016 consisted of six independent Non-Executive Directors:

• David McKenzie (Chair)

• Rosemary Bissett

• Stephen Brown

• Brendan Foran

• Gayle Lee, and

• Helen Tobin-King.


• oversight of the staff Organisational Culture Inventory survey process

• approval and monitoring of the Systems Management Plans for Asset Management, Health and Safety, Drinking Water Quality and Environment

• undertaking the Managing Director Performance Review and recommending the Managing Director KPIs to the Board

• recommendation of specific Corporate KPIs to the Board

• oversight of the Corporate Threat Register, and

• monitoring of the Corporation’s Risk Management Framework and Control Plans.


Board Member Attendance at MeetingsTable 27 – Board members meeting attendance 2015–16

Member name Board Meetings Audit and Finance Committee



David McKenzie 8 of 8 3 of 4 3 of 4 3 of 3

Steve Bird 2 of 21 1 of 11 – 1 of 11

Rosemary Bissett 5 of 62 2 of 32 – 2 of 22

Cath Botta 7 of 8 – 4 of 4 3 of 3

Stephen Brown 6 of 62 3 of 32 – 2 of 22

Denis Flett 2 of 21 – 1 of 11 1 of 11

Brendan Foran 5 of 62 – 3 of 32 1 of 22

Debi Gadd 2 of 21 – 1 of 11 1 of 11

Jonathan Koop 7 of 8 4 of 4 – 1 of 3

Gayle Lee 6 of 62 2 of 3 3 of 32 2 of 22

Rowan O’Hagan 2 of 21 1 of 11 – 1 of 11

Helen Tobin-King 6 of 62 3 of 32 – 2 of 22

Craig Heiner 8 of 8 4 of 4 4 of 4 3 of 3

Total number of meetings 8 4 4 3

Notes:

1. Member of Board/Committee until 30 September 2015.

2. Became a member of Board/Committee on 1 October 2015.


Organisational StructureFigure 16 – 2015–16 Organisational structure

Board

Audit and Finance Committee



Craig Heiner

Managing Director

Rebecca Jhonston Manager

People and Culture

Health and Safety

Payroll

Anthony Hernan Executive Manager

Corporate Services

Information Communication Technology• Data Application• Business

Continuity• ICT Infrastructure

Network• Help and Support• End User

Technology• Security

Finance• Financial

Reporting• Accounts Payable• Regulatory

Accounting• Asset Accounting• Treasury

Governance• Corporate

Secretary• Board Function• Records

Management• Freedom of

Information• Information

Privacy• Internal Audit

Risk and Business Sustainability• Risk Management

and Business Continuity

• Emergency Management

Ann Telford Executive Manager

Customer and Community

Customer Engagement and Communications• Community

Engagement• Education and

Awareness• Media and

Communications• Trade Waste

Customer Service• Billing• Connections

John Day Executive Manager

Operations

Assets and Operations (Alpine, Central, South)• Water and

Wastewater Treatment

• Distribution Maintenance

• Operation Maintenance

• Water and Sewer Pump Stations

• Below Ground Assets

• Bio-solids• Farming

and Reuse

Systems Optimisation• Drinking Water

Quality• Environment

Management• Water Resource

Management• Process

Improvement

Operational Control and Maintenance• Administration of

Asset Data and Business Systems

• Maintenance Management

• SCADA and Electrical Services

Kevin Freeman Executive Manager

Planning and Infrastructure

Projects Engineering• Program

Management• Project

Management• Engineering

Infrastructure Planning• Dam Safety Risk

Management• Urban Water

and Wastewater Strategy

• Urban Water and Wastewater Systems Planning

• Planning for Unserviced Communities

• Regional Growth

Growth and Development• Land

Development• Water and Sewer

Development Planning

• Hydraulic Modelling

Asset Management• Asset Data and

Systems• Asset Planning• Asset Services• Renewals Delivery• ISO 55000


Executive Management Team

John DayExecutive Manager Operations

John has more than 25 years of experience in Water and Wastewater operational and asset management roles, both in the water and manufacturing industries.

As Executive Manager Operations, John oversees the critical functions of water and wastewater treatment and delivery. Two other portfolios under his control are asset management and systems optimisation which cover the Environmental and Drinking Water Quality Management Systems. John is the Executive Sponsor of the Board’s Audit and Finance Committee.

Additionally, John is a former Director of the Water Industry Operators Association and is a member of the Institute of Water Administration and Australian Water Association.

Kevin FreemanExecutive Manager Planning and Infrastructure

Kevin began working with the Corporation in 1998 and was first appointed to an Executive role in 2007.

With 20 years of water-related experience, Kevin brings strong technical and management experience in the delivery of water related infrastructure projects.

Leading the Planning and Infrastructure unit, Kevin manages a team responsible for strategic planning, reticulation development and the delivery and project management of North East Water’s capital improvement programs.

His team is also responsible for the management of the Corporation’s dams portfolio and provides technical and engineering functions and support across the Corporation. Kevin is the Executive Sponsor of the Board’s People, Performance and Risk Committee.

Kevin holds a Bachelor of Civil Engineering, a Postgraduate Diploma in Environmental Engineering, and is a member of the Institute of Water Administration and Australian Water Association.

Anthony HernanExecutive Manager Corporate Services

As Executive Manager of Corporate Services, Anthony is responsible for the Finance, Governance, Business Systems and Risk and Sustainability portfolios.

During his 19 year involvement with the Corporation, Anthony has developed water industry management skills and currently participates at state level through the Institute of Water Administration’s Finance Special Interest Group that looks at finance issues across all state water corporations.

He brings to the role a strong internal customer focus and refined financial analysis skills.

Anthony holds a Bachelor of Business in Accounting and is a member of the Institute of Water Administration and the Australian Institute of Company Directors.

Ann TelfordExecutive Manager Customer and Community

Ann joined North East Water in January 2013, bringing extensive senior management experience from both the public and community sectors.

As leader of the Customer and Community portfolio, Ann is responsible for Customer Service, Engagement and Communications functions.

A major focus for Ann is strengthening relationships between North East Water and its customers through engagement on infrastructure projects, strategic issues and matters of public interest. Ann is Executive Sponsor of the Board’s Customer and Community Committee.

Ann is qualified in Mediation, Public Participation, Community Engagement and Project Management. She also holds a Bachelor of Arts and the ANZSOG Executive Master of Public Administration.


Risk Management

The Board is principally responsible and accountable for the actions of the Corporation and is obliged to ensure that North East Water has taken responsible and reasonable measures to identify and control business risks. Through this oversight role the Board establishes the Corporation’s risk appetite and tolerance.

In 2015–16, the Board was supported by the Audit and Finance Committee and the People, Performance and Risk Committee to ensure that an appropriate risk management framework is in place. In carrying out this role the Board oversaw:

• the appropriateness of the risk profile

• the appropriateness of the Risk Management Framework and associated processes

• reporting to the Board on risk management issues, and

• the delivery of appropriate internal audits.

The Corporation risk profile, areas of issue or concern and threats to the organisational objectives are reported to the Board on a quarterly basis. Additionally, Directors are briefed on emerging threats and opportunities as part of the Board meeting calendar. The Executive Management Team is responsible for reviewing and acting on identified risks in the day-to-day management of the Corporation. The majority of operational risks are managed through structured management systems such as those relating to health and safety, the environment, drinking water quality, financial management and asset performance.

Key factors influencing the ongoing improvements in risk management at North East Water in 2015–16 were:

• Review and restatement of the Corporate Risk Appetite. The Board reviewed the Risk Appetite Statement taking into account the changes in the operating environment.

• Review of the Risk Management Framework. The Board conducted its annual review of the Risk Management Framework to ensure comfort with the approach and alignment with the expectations of government.

• State-wide benchmarking of business risk conducted by the Department of Environment, Land, Water and Planning. The statewide benchmarking project continued to inform risk management activities. A significant benefit of the industry wide benchmarking project has been the capacity to compare the strategic risk profiles of corporations of similar size and the relative impact. This has enabled North East Water to conduct a more informed, critical review of its risk profile.

Attestation of Consistency with the Australian Standard AS/NZS ISO 31000:2009 Risk Management – Principles and Guidelines

I, David McKenzie certify that North East Water has complied with the Ministerial Standing Direction 4.5.5 – Risk Management Framework and Processes. North East Water’s People, Performance and Risk Committee verifies this.

David McKenzie (Chair)

18 August 2016


Internal Audit and Financial Governance

The role of internal audit at North East Water is to review the Corporation’s operational and business practices to provide governance assurance to the Board and to identify opportunities for improvements that will benefit the Corporation. Internal audit takes a risk-based approach and operates under the oversight of the Audit and Finance Committee. During 2015–16, the Executive Managers of Operations and Corporate Services were the responsible Executives, accountable for internal audit.

In 2015–16, all internal audits were outsourced to Crowe Horwath and conducted in accordance with the Australian

Standard ASAE 3000 Assurance Engagements other than Auditors or Reviews of Historical Financial Information.

During 2015–16, the internal auditor completed the following three internal audits:

• Health Check Review

• Planning and Project Management Review, and

• Climate Variability Adaptation Review.


Ethical and Responsible Decision Making

Codes of ConductTwo principal codes of conduct, both produced by the Victorian State Services Authority, govern the behaviour of the Board, management and staff:

• Victorian Public Entity Directors’ Code of Conduct 2006 This code is binding on all members of a public entity Board. It expresses the public sector values in terms that are most relevant to the special role and duties of Directors. A copy of this code is provided to all new Directors during their induction, and

• Code of Conduct for Victorian Public Sector Employees 2015 This code promotes the public sector values contained in the Public Administration Act 2004. All employees are informed of the Code of Conduct and the public sector values at the commencement of their employment.

All Directors and staff have a duty to act in accordance with the relevant code of conduct. Awareness training is provided on a periodic basis.

Public Sector Values and Employment PrinciplesThe Corporation is a respondent to the Public Administration Act 2004. Part 2 of this Act establishes a set of public sector values and employment principles to which all public sector entities must comply.

VALUESAll employees of the Corporation must demonstrate:

• responsiveness

• integrity

• impartiality

• accountability

• respect

• leadership, and

• human rights.

These values are detailed in the Code of Conduct for Victorian Public Sector Employees.

EMPLOYMENT PRINCIPLESThe Public Administration Act 2004 requires public sector body heads to establish employment processes that ensure:

• employment decisions are based on merit

• public sector employees are treated fairly and reasonably

• equal employment opportunity is provided

• human rights as set out in the Charter of Human Rights and Responsibilities Act 2006 are upheld, and

• public sector employees have a reasonable avenue of redress against unfair or unreasonable treatment.

North East Water always aims to promote these values and principles in the workplace through a range of policies, procedures and statements adopted by the Corporation. In addition, the Corporation is committed to complying with the following:

• Victorian Equal Opportunity Act 2010

• Commonwealth Sex Discrimination Act 1984

• Commonwealth Disability Discrimination Act 1992

• Commonwealth Racial Discrimination Act 1975

• Commonwealth Human Rights and Equal Opportunity Commission Act 1986

• Commonwealth Affirmative Action (Equal Employment Opportunity for Women) Act 1986, and

• Victorian Racial and Religious Tolerance Act 2001.

The Corporation regularly conducts equal opportunity employee, supervisor and management training to support the rights and obligations of employees and ensure compliance with legislative requirements and internal Corporation standards.


Organisational Diversity and Cultural RecognitionNorth East Water is mindful of the Victorian Government’s policy framework on multicultural and gender issues, and youth and indigenous affairs. The Board and management endeavour to ensure that systems and staff are sensitive to cultural and language diversity of customers and communities.

The following measures are provided to meet the commitment to organisational diversity and cultural recognition:

• telephone interpreter services

• family-friendly benefits, including the provision for parental and carers leave, flexible working hours, rostered time off and 48/52 employment cycles under the Enterprise Agreement

• cultural and ceremonial leave under the Enterprise Agreement

• educational opportunities for school-age children through an education program

• traineeships and vacation employment

• community engagement activities, and

• cultural heritage and native title assessments for capital projects.

Information Privacy ActThe Corporation’s privacy statement, displayed on its website, is consistent with the requirements of the Information Privacy Act 2000. Staff receive advice and information about privacy and its implications when they commence employment at North East Water and at various times throughout the course of their employment.

There were no reports of breaches of privacy during 2015–16.

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

Register of InterestsBoard members and nominated officers fulfilled the pecuniary interest requirements of Section 115 of the Water Act 1989 in 2015–16.

Protected DisclosureThe Protected Disclosure Act 2012 enables people to make disclosures about improper conduct by public officers and public bodies. The Act aims to ensure openness and accountability by encouraging people to make disclosures and protecting them when they do.

A protected disclosure is a complaint of corrupt or improper conduct by a public officer or a public body. North East Water is a “public body” for the purposes of the Act.

Improper or corrupt conduct involves substantial:

• mismanagement of public resources

• risk to public health, safety or environment, or

• corruption.

The conduct must be criminal in nature or a matter for which an officer could be dismissed. The Corporation is not able to receive protected disclosures. A protected disclosure can be made about North East Water or its Board members or staff by contacting the IBAC on the contact details provided below.

• Independent Broad-Based Anti-Corruption Commission (IBAC) Victoria Address: Level 1, North Tower, 459 Collins Street, Melbourne Victoria 3000. Mail: IBAC, GPO Box 24234, Melbourne Victoria 3001 Internet: ibac.vic.gov.au Phone: 1300 735 135

See the IBAC website for the secure email disclosure process, which also provides for anonymous disclosures.

The Corporation has established procedures for the protection of persons from detrimental action in reprisal for making a protected disclosure about North East Water or its staff.


http://ibac.vic.gov.au

Compliance Information

Freedom of InformationNorth East Water is considered a Government Agency under the terms of the Freedom of Information Act 1982. Accordingly, the Corporation is required to comply with the procedures prescribed under the Act whereby members of the public may gain access to information held by agencies. A decision to release information is made by either the Principal Officer or the Authorised Freedom of Information Officer.

In 2015–16, North East Water received one formal request for information which complied with the requirements under the Freedom of Information legislation and a decision was made to release the documents requested.

Requests for access to information held by the Corporation should be made in writing to the Authorised Freedom of Information Officer:

• Jo-Ann Riley Manager Governance North East Water PO Box 863 Wodonga Victoria 3689 Telephone: 02 6022 0586 Email: [email protected]

The following information (to the extent applicable) is available or available in part on request, subject to the Freedom of Information Act 1982:

• statement that declarations of pecuniary interests have been duly completed by all relevant officers

• details of shares held by a senior officer as nominee, or held beneficially in a statutory authority or subsidiary

• details of publications produced by the Corporation

• details of changes in prices, fees, charges, rates and levies charged by the Corporation

• details of any major external reviews carried out on the Corporation

• major research and development activities undertaken by the Corporation

• overseas visits undertaken, including a summary of the objectives and outcomes of each visit

• details of major promotional, public relations and marketing activities undertaken by the Corporation to develop community awareness of the entity and its services

• details of assessments and measures undertaken to improve the occupational health and safety of employees

• a general statement on industrial relations within the agency, and details of time lost through industrial accidents and disputes

• a list of major committees; the purposes of each committee; and the extent to which the purposes have been achieved, and

• details of all consultancies and contractors including consultants/contractors engaged; services provided; and expenditure committed to for each engagement.

Each request attracts a fee to be paid at the time of requesting the information. The applicable fee for 2015–16 was $26.50. In accordance with FOI legislation the Corporation had 45 days to respond to any request received.

Building Act 1993The Corporation ensures that all building and maintenance work it undertakes comply with the relevant sections of the Building Act 1993.


mailto:jriley%40newater.com.au?subject=

Financial Management Compliance FrameworkThe Corporation’s Financial Management Compliance Framework reflects the intentions of the Victorian Government’s initiative to promote responsible financial management. Inherent in this is a process for the Department of Treasury and Finance to monitor and report on the financial management obligations of the Corporation. The Framework came into effect on 1 July 2003.

North East Water has assessed that for 2015–16 the Corporation is compliant with 29 of the 33 applicable Directions in the Framework, with the remaining four Directions considered not applicable.

Consultancies ($10,000 or more)In 2015–16, there were 28 consultancies where the total fees payable to the consultant were $10,000 or greater. The total expenditure incurred during 2015–16 in relation to these consultancies was $805,871 (excluding GST). Details of these consultancies are outlined on the website www.newater.com.au.

Consultancies under $10,000In 2015–16, there were 31 consultancies where the total fees payable to consultants were less than $10,000. The total expenditure incurred during 2015–16 in relation to these consultancies was $116,663 (excluding GST).

Government Grants and Transfer PaymentsThe Victorian Government provided $0.2 million toward the Bright Off-River Storage project during 2015–16.

Victorian Industry Participation PolicyIn October 2003, the Victorian Parliament passed the Victorian Industry Participation Policy Act 2003 which requires public bodies and departments to report on the implementation of the Victorian Industry Participation Policy (VIPP). Departments and public bodies are required to apply VIPP when the Victorian Government’s funding or provision of a grant exceeds $3 million in metropolitan Melbourne and $1 million in regional Victoria.

The Corporation did not receive any such funding during 2015–16 and, hence, was not required to implement the VIPP.

Major ContractsNo new contracts with a value greater than $10 million were executed in 2015–16.

Subsequent EventsThe Corporation is not aware of any events that have occurred after the balance date which materially affect the financial position disclosed at 30 June 2016.

Government Advertising ExpenditureNorth East Water did not reach the threshold of $100,000 on government advertising expenditure during 2015–16.


http://www.newater.com.au

Information and Communication Technology (ICT) ExpenditureFor the 2015–16 reporting period, North East Water had a total ICT expenditure of $2.34 million with details outlined in Table 28, below.

Table 28 – Information and Communication Technology (ICT) Expenditure

Business As Usual (BAU) Total ($) ‘mill

Non-Business As Usual (non-BAU)

Total ($) ‘mill = Operational Expenditure + Capital

Expenditure

Operational Expenditure ($) ‘mill

Capital Expenditure ($) ‘mill

2.34 1.11 0.08 1.03

Definitions

• ICT expenditure: an agency’s costs in providing business enabling ICT services. ICT expenditure consists of the following cost elements:

– operating and capital expenditure (including depreciation);

– ICT services – internally and externally sourced;

– cost in providing ICT services (including personnel & facilities) across the agency, whether funded through a central ICT budget or through other budgets; and

– cost in providing ICT services to other organisations.

For a detailed definition of “ICT expenditure”, please refer to the Glossary in the ICT Reporting Standard.

• Non Business As Usual (Non BAU): non BAU ICT expenditure is a subset of ICT expenditure that relates to extending or enhancing current ICT capabilities and are usually run as projects.

• Business As Usual (BAU): all remaining ICT expenditure is considered BAU ICT expenditure and typically relates to ongoing activities to operate and maintain the current ICT capability.

Total ICT expenditure = ICT BAU expenditure + ICT Non BAU expenditure


Auditors

VICTORIAN AUDITOR-GENERALLevel 24 35 Collins Street Melbourne VIC 3000

Agent: Johnsons MME, Chartered Accountants Level 2, 520 Swift Street PO Box 375 Albury NSW 2640

SAFE DRINKING WATER ACT AUDITORWater Futures Pty Ltd ABN: 97109956961 66 Merrivale Road Pymble NSW 2073

OHS AND ENVIRONMENTAL AUDITORSSAI Global 19–25 Raglan Street Locked Bag 90 South Melbourne VIC 3205

INTERNAL AUDITORCrowe Horwath 491 Smollett St Albury NSW 2640

Advisers and Bankers

LEGAL ADVISORSRussell Kennedy Pty Ltd Level 12 469 La Trobe Street Melbourne VIC 3000

Trivett Keating 1st Floor 9 Stanley Street Wodonga VIC 3690

Meerkin & Apel Lawyers 56 Greville Street PO Box 2207 Prahran VIC 3181

BANKERSANZ Bank Level 1 576 Kiewa St Albury NSW 2640

INSURANCE BROKERSJardine Lloyd Thompson Pty Ltd Level 17 607 Bourke St Melbourne VIC 3008


Section 06 Performance Report

IntroductionOur Performance Report is prepared pursuant to section 51 of the Financial Management Act 1994 under the direction from the Honourable Lisa Neville MP, Minister for Water.

As part of the report of operations, the Performance Report details actual results achieved compared with targets for specified performance indicators and prior year results. Where there is a significant variation between a business plan target, and prior year, and the actual performance, a variation explanation stating the reasons for the difference is included.

Indicator ResultsRef. Indicator 2014–15

Result2015–16

Result2015–16

TargetVariance to

prior yearNotes Variance

to targetNotes

Financial Performance Indicators

F1 Cash interest cover (times) Net operating cash flows before net interest and tax/net interest payments

14.03 18.70 13.71 33.3% 1 36.4% 1

F2 Gearing ratio Total debt (including finance leases)/total assets x 100

4.81% 3.69% 4.88% -23.3% 2 -24.5% 2

F3 Internal financing ratio Net operating cash flow less dividends/net capital expenditure x 100

161.60% 149.97% 104.97% -7.2% 42.9% 3

F4 Current ratio (times) Current assets/current liabilities (excluding long-term employee provisions and revenue in advance)

1.19 1.64 0.79 37.3% 4 106.5% 4

F5 Return on assets Earnings before net interest and tax/average assets x 100

0.56% 1.04% 0.38% 83.5% 5 175.5% 5

F6 Return on equity Net profit after tax/average total equity x 100

0.30% 0.75% 0.14% 149.1% 6 426.4% 6

F7 EBITDA margin Earnings before interest, tax, depreciation and amortisation/total revenue x 100

39.84% 42.04% 39.21% 5.5% 7.2%

North East Water Annual Report 2015–16 Section 06 Performance Report | 65

Indicator NotesThe following notes provide explanations for significant variations from target. For financial performance indicators, a significant variation is defined in terms of materiality in relation to Australian Accounting Standards (AASB 1031 “Materiality”). For financial indicators a significant variation is 10%. For service and environmental indicators, a significant variation is one where the actual result varies from the corporate plan target by more than 5%.

• A red variance indicates a negative result for the Corporation.

• A green variance indicates a positive result for the Corporation.

FINANCIAL PERFORMANCE INDICATORS

Note 1 – Cash Interest Cover

Variance to target and prior year

This significant favourable variance compared to target and the prior year is due to an increase in cash flows from operations including:

• increase in water usage with average household consumption increasing from 189 kL per household in 2014–15 to 209kL per household in 2015–16. Budgeted average residential consumption for 2015–16 was 200kL; and

• developer contributions and other income exceeded budget and prior year by $1.5 and $1.7 million respectively.

Note 2 – Gearing Ratio

Variance to prior year and target

This favourable result compared to target and prior year is due to a reduction in net debt of $6.5 million compared to a budgeted reduction in debt of $1 million. A reduction in the capital delivery program compared to budget and an increase in water sales compared to the prior year and budget allowed for additional debt redemption. Actual borrowings at 30 June 2016 are $27.98 million budgeted borrowings of $35.0 million.

Note 3 – Internal Financing Ratio

Variance to target

This favourable result compared to target was due to a combination of a reduction in the capital expenditure delivery program compared to target (actual capital expenditure of $15.9 million compared to budget of $18.6 million) and an increase in net operating cashflows (cashflows from operations of $23.7 million compared to target of $19.5 million).

Note 4 – Current Ratio

Variance to prior year

The improvement in the actual result compared to the prior year was due to a reduction in current borrowings from $6.6 million in 2014–15 to $4.1 million in 2015–16. Cash on hand also increased by $1.3 million compared to the prior year.

Variance to target

The improvement in the result compared to target was due to a reduction in current borrowings compared to the Corporate Plan. Current borrowings in the Corporate Plan were $10 million compared to actual current borrowings of $4 million. This has been driven by a reduction in capital expenditure compared to target and an increase in cashflows from operations compared to target.

Note 5 – Return on Assets


The improvement in the result compared to the prior year and target was due to an increase in the net result before tax of $6.3 million compared to budget of $1.1 million and prior year of $2.5 million. This result is driven by an increase in water usage revenue including tradewaste charges of $4.1 million compared to the prior year and $2.8 million compared to budget.

Note 6 – Return on Equity


The improvement in the result compared to the prior year and target is due to an increase in the net profit after tax of $4.4 million compared to budget of $0.8 million and prior year of $1.7 million. This result was driven by an increase in water usage revenue including tradewaste charges of $4.1 million compared to the prior year and $2.8 million compared to budget.

66 | Section 06 Performance Report

WATER AND SEWERAGE SERVICE PERFORMANCE INDICATORS

Ref. Indicator 2014–15 Result

2015–16

Result

2015–16 Target


Notes Variance to target

Notes

Water and Sewerage Service Performance Indicators

WS1 Unplanned water supply interruptions Number of customers receiving 2 unplanned interruptions in the year/total number of water (domestic and non-domestic) customers x 100

1.3% 0.5% 0.8% -61.0% 7 -37.5% 7

WS2 Interruption time Average duration of unplanned water supply interruptions (minutes)

105 89 95 -14.9% 8 -6.3% 8

WS3 Restoration of unplanned water supply Unplanned water supply interruptions restored within 5 hours/total unplanned water supply interruptions x 100

98.6% 98.6% 98.0% – 0.6%

SS1 Containment of sewer spills Sewer spills from reticulation and branch sewers contained within 5 hours/total sewer spills from reticulation and branch sewers x 100

100% 100% 100% – –

SS2 Sewer spills interruptions Number of residential sewerage customers affected by sewerage interruptions restored within 5 hours x 100

100% 100% 100% – –

Note 7– Unplanned Water Supply Interruptions


The Corporation experienced a reduction in the number of customers receiving two or more interruptions in the current year. This compares favourably to the prior year and compared to target. Total unplanned interruptions reduced from 629 in 2014–15 to 226 in 2015–16. There were no multiple interruptions in the towns of Beechworth, Benalla, Myrtleford and Wodonga in 2015–16. The water main renewals program continues to target and eliminate water mains with a history of multiple breaks.

Note 8 – Interruption Time


The average duration of unplanned interruptions reduced from 105 minutes in 2014–15 compared to 89 minutes in 2015–16. The actual interruption time was also less than the target of 95 minutes. The Corporation is continuing to invest in training and automotive response equipment to lessen the time customers experience an interrupted service.


CUSTOMER RESPONSIVENESS PERFORMANCE INDICATORS


2015–16

Result

2015–16 Target


Notes Variance to target Notes

Customer Responsiveness Performance Indicators

CR1 Water quality complaints Number of complaints per 100 customers

0.039 0.050 0.134 28.2% 9 -62.7% 9

CR2 Sewerage service quality complaints Number of complaints per 100 customers

0.011 0.004 0.013 -63.6% 10 -69.2% 10

CR3 Sewerage odours complaints Number of complaints per 100 customers

0.018 0.009 0.021 -50.0% 11 -57.1% 11

CR4 Billing complaints Number of complaints per 100 customers

0.065 0.014 0.012 -78.5% 12 16.7% 12

Note 9 – Water Quality Complaints


There has been an increase in water quality complaints compared to the prior year. The number of water quality complaints due to colour increased from 10 in 2014–15 to 13 in 2015–16. The number of water quality complaints due to taste and odour increased from 6 in 2014–15 to 10 in 2015–16. An increase in complaints were noted at Harrietville and Wangaratta due to high usage and low stream flows in the dry summer period. The Corporation continues to work with customers and regulators to improve water quality compliance.

Variance to target

This favourable variance represents a total of 25 actual complaints compared to a target of 67.

Note 10 – Sewerage Service Quality Complaints


Sewerage service quality complaints reduced from 5 in 2014–15 to 2 in 2015–16. This result also compares favourably to the target of 6. An increase in wastewater reticulation and aboveground renewal expenditure in 2015–16 compared to 2014–15 helped to reduce the number of complaints.

Note 11 – Sewerage Odours Complaints


Sewerage odour complaints reduced from 8 in 2014–15 to 4 in 2015–16. This result also compares favourably to the target of 9. Increased customer interaction around odours assisted with the reduction in actual complaints.

Note 12 – Billing Complaints


The number of payment issue complaints dropped from 32 in 2014–15 to 7 in 2015–16. North East Water’s annual price rises continue to increase by less than CPI. This factor together with North East Water’s average residential being the most affordable in Victoria results in a very low number of customer complaints.

Variance to target

The number of payment issue complaints was 7 in 2015–16, and this is 1 complaint above the target which is set at 6. Due to the low number of target complaints, any variance from target will be greater than 10%. North East Water continue to support customers in understanding their rights and obligations and how to reduce consumption to better manage their water account.


ENVIRONMENTAL PERFORMANCE INDICATORS


2015–16

Result

2015–16 Target


Notes Variance to target Notes

Environmental Performance Indicators

E1 Effluent re-use volume (end use) Percentage recycled for each category: urban and industrial, agricultural, environmental flows, other x 100

32.2% 31.7% 25% -1.6% – 26.8% 13

E2 Total net CO2 emissions Net tonnes of CO2 equivalent emissions for the whole of business and its activities

40,719 43,431 38,207 6.7% 14 13.7% 14

Note 13 – Effluent Re-use Volume (end use)

Variance to target

The increase in effluent re-use compared to target was due to an increase in total wastewater discharged to land in 2015–16 compared to target. The irrigation capacity has recently been expanded in Wangaratta which allowed for greater re-use activity on land with the construction of an additional storage capacity. The additional on-land discharge has been used to support an increase in produce sales.

Note 14 – Total net CO2 emissions


The increase in CO2 emissions compared to prior year and target is driven by an increase in wastewater collection and treatment. This is partly due to the transfer of operational responsibilities back to North East Water for the Wangaratta Tradewaste Treatment facility which occurred in May 2015. The Corporation is currently investigating a number of options to reduce its carbon footprint through its involvement with the Intelligent Water Network.


Statutory CertificationWe certify that the accompanying Performance Report of North East Water Corporation in respect of the 2015–16 financial year is presented fairly in accordance with the Financial Management Act 1994.

The Performance Report outlines the relevant performance indicators for the financial year as determined by the Minister for Water and as set out in the 2015–16 Corporate Plan, the actual and comparative results achieved for the financial year against predetermined performance targets and these indicators, and an explanation of any significant variance between the actual results and performance targets and/or between the actual results in the current year and the previous year.

As at the date of signing, we are not aware of any circumstances which would render any particulars in the Performance Report to be misleading or inaccurate.

David McKenzie Chairman

Craig Heiner Managing Director

Anthony Hernan Chief Finance and Accounting Officer

18 August 2016


Section 07 Financial Statements

Table of ContentsFinancial Statements

Operating Statement for the financial year ended 30 June 2016 74Statement of Comprehensive Income for the financial year ended 30 June 2016 75Balance Sheet as at 30 June 2016 76Statement of Changes in Equity for the financial year ended 30 June 2016 77Cash Flow Statement for the financial year ended 30 June 2016 78

Notes Accompanying the Financial Statements

Note 1 – Significant Accounting Policies 79Note 2 – Revenues 96Note 3 – Net Gain/(Loss) on Disposal of Non-Current Assets 96Note 4 – Expenses 97Note 5 – Income Tax 98Note 6 – Cash and Cash Equivalents 99Note 7 – Receivables 99Note 8 – Biological Assets 101Note 9 – Other Assets 101Note 10 – Non-current Assets – Infrastructure, Property, Plant and Equipment 102Note 11 – Intangible Assets 110Note 12 – Payables 111Note 13 – Interest Bearing Liabilities 111Note 14 – Provisions 112Note 15 – Deferred Taxes 113Note 16 – Contributed Capital 114Note 17 – Reserves 115Note 18 – Financial Instruments 116Note 19 – Financial Risk Management Objectives and Policies 118Note 20 – Contingent Liabilities and Contingent Assets 120Note 21 – Cash Flow Statement 121Note 22 – Commitments for Expenditure 121Note 23 – Responsible Persons and Executive Officer Disclosures 123Note 24 – Superannuation 125Note 25 – Remuneration of Auditors 127Note 26 – Events Occurring After Balance Sheet Date 127Note 27 – Exgratia Expenses (i)(ii) 127

Appendices

Statutory Certification 128Auditor-General’s Report 129

North East Water Annual Report 2015–16 Section 07 Financial Statements | 73

Financial Statements

Operating Statement for the financial year ended 30 June 2016

Notes 2016 2015

$’000 $’000

Revenue from operating activities

Service charges 1(c), 2 22,558 21,906

Usage charges 1(c), 2 34,613 30,436

Interest 1(c) 94 114

Developer contributions 1(c), 2 5,201 5,275

62,466 57,731

Revenue from non-operating activities

Net gain/(loss) on disposal of non-financial assets 3 (271) (2,269)

Government grants and contributions 1(c), 2 319 1,390

Other income 3,222 3,157

Total revenue 65,736 60,009

Expenses from operating activities

Depreciation 1(d), 4 19,607 19,444

Amortisation 1(d), 4 391 403

Employee benefits 1(d), 4 16,369 15,249

Environmental contribution 1(d) 2,083 2,083

Asset impairment 1(e) 35 67

Finance Costs 1(d), 4 1,424 1,717

Other 4 19,519 18,585

Total expenses 59,428 57,548

Net result before tax 6,308 2,461

Income tax expense 5 (1,895) (741)

Net result for the period 4,413 1,720

The operating statement should be read in conjunction with the accompanying notes

74 | Section 07 Financial Statements

Statement of Comprehensive Income for the financial year ended 30 June 2016

Notes 2016

$’000

2015

$’000

Net results for the period 4,413 1,720

Other comprehensive income

Items that will not be reclassified to net result

– Net gain on revaluation of land, buildings and infrastructure assets 10 42,758 –

– Income tax relating to revaluation 17 (12,828) –

– Impairment adjustment on previously revalued non-current assets 17 (119) (235)

– Income tax relating to these items 15 36 71

Other comprehensive income for the period, net of tax 29,847 (164)

Total comprehensive result for the year 34,260 1,556

The statement of comprehensive income should be read in conjunction with the accompanying notes.


Balance Sheet as at 30 June 2016Notes 2016 2015

$’000 $’000

ASSETS

Current assets

Cash and cash equivalents 1(e), 6 1,863 602

Receivables 1(e), 7 6,317 5,584

Biological assets 1(e), 8 625 575

Prepayments 1(e) 427 319

Other assets 1(c), 9 6,309 6,074

Total current assets 15,541 13,154

Non-current assets

Receivables 1(e), 7 302 769

Infrastructure, property, plant and equipment 1(e), 10 739,621 698,172

Intangible assets 1(e), 11 3,727 3,544

Total non-current assets 743,650 702,484

TOTAL ASSETS 759,191 715,638

LIABILITIES

Current liabilities

Payables 1(f), 12 5,005 3,945

Interest bearing liabilities 1(f), 13 4,104 6,563

Provisions 1(f), 14 3,580 3,519

Total current liabilities 12,689 14,027

Non-current liabilities

Payables 1(f), 12 297 567

Interest bearing liabilities 1(f), 13 23,880 27,831

Provisions 1(f), 14 494 329

Net deferred tax liabilities 1(j), 15 117,594 102,907

Total non-current liabilities 142,265 131,634

TOTAL LIABILITIES 154,954 145,661

NET ASSETS 604,237 569,977

Equity

Contributed capital 1(g), 16 264,716 264,716

Reserves 1(g), 17 191,925 162,078

Accumulated funds 147,596 143,183

TOTAL EQUITY 604,237 569,977

The balance sheet should be read in conjunction with the accompanying notes.


Statement of Changes in Equity for the financial year ended 30 June 2016

Notes Contributions by owners

$’000

Reserves

$’000

Accumulated funds

$’000

Total

$’000

Balance at 1 July 2014 264,716 162,242 141,463 568,421

Net result for the period – – 1,720 1,720


Impairment adjustment on previously revalued non-current assets.

17 – (164) – (164)

Balance at 30 June 2015 264,716 162,078 143,183 569,977

Net Result for period – – 4,413 4,413


Revaluation of non-current assets 17 – 29,930 – 29,930

Impairment adjustment on previously revalued non-current assets.

17 – (83) – (83)

Balance at 30 June 2016 264,716 191,925 147,596 604,237

The statement of changes in equity should be read in conjunction with the accompanying notes.


Cash Flow Statement for the financial year ended 30 June 2016

Notes 2016 2015

$‘000 $’000

Cash flows from operating activities

Receipts

Service and usage charges 56,298 53,289

Interest received 89 114

GST received from the ATO 3,184 2,961

Other income 3,918 2,541

Developer contributions 2 1,938 1,561

Receipts from Government – other 2 319 1,390

65,746 61,856

Payments

Payments to suppliers and employees (38,159) (36,547)

GST paid to the ATO (169) (144)

Interest and other costs of finance paid (1,788) (2,203)

Environmental contributions (2,083) (2,083)

(42,199) (40,977)

Net cash (outflow)/inflow from operating activities 21 23,547 20,879

Cash flows from investing activities

Payments for infrastructure, property, plant and equipment (15,578) (12,495)

Payments for intangible assets 11 (574) (782)

Proceeds from sale of infrastructure, property, plant & equipment 452 360

Net cash (outflow)/inflow from investing activities (15,700) (12,917)

Cash flows from financing activities

Repayment of borrowings (8,500) (15,750)

Proceeds from borrowings 2,000 5,250

Repayment of finance leases (86) (73)

Net cash (outflow)/inflow from financing activities (6,586) (10,573)

Net increase/(decrease) in cash held 1,261 (2,611)

Cash and cash equivalents at the beginning of the financial year 602 3,213

Cash and cash equivalents at the end of the financial year 6 1,863 602

The cash flow statement should be read in conjunction with the accompanying notes.


Notes Accompanying the Financial Statements

Note 1 – Significant Accounting Policies

(a) Basis of accounting

General

This financial report includes separate financial statements for North East Water Corporation as an individual reporting entity. This financial report is a general purpose financial report that consists of an Operating Statement, Statement of Comprehensive Income, Balance Sheet, Statement of Changes in Equity, Cash Flow Statement and notes accompanying these statements for the period ended 30 June 2016. The general purpose financial report has been prepared in accordance with Australian Accounting Standards (AAS’s), Interpretations and other authoritative pronouncements of the Australian Accounting Standards Board, and the requirements of the Financial Management Act 1994 and applicable Ministerial Directions.

North East Water Corporation is a not for-profit entity for the purpose of preparing the financial statements. Where appropriate, those AAS paragraphs applicable to not-for-profit entities have been applied.

The accrual basis of accounting has been applied in the preparation of this financial report whereby assets, liabilities, equity, income and expenses are recognised in the reporting period to which they relate, regardless of when cash is received or paid.

The annual financial report was authorised for issue by the Board on 18 August 2016.

The principal address is:

North East Region Water Corporation P.O Box 863 Wodonga VIC 3689

Functional and presentation currency

Items included in this financial report are measured using the currency of the primary economic environment in which North East Water Corporation operates (‘the functional currency’). The financial statements are presented in Australian dollars, which is North East Water Corporation’s functional and presentation currency.

Accounting policies

Accounting policies are selected and applied in a manner which ensures that the resulting financial information satisfies the concepts of relevance and reliability, thereby ensuring that the substance of the underlying transactions or other events is reported.

Unless otherwise stated, all accounting policies applied are consistent with those of the prior year. Where appropriate, comparative figures have been amended to align with current presentation and disclosure.

Classification between current and non-current

In the determination of whether an asset or liability is current or non-current, consideration is given to the time when each asset or liability is expected to be realised or paid. The asset or liability is classified as current if it is expected to be turned over within the next twelve months, being the Corporation’s operational cycle – see 1(f) for a variation in relation to employee benefits.


Note 1 – Significant Accounting Policies (continued)

(a) Basis of accounting (continued)

Rounding

All amounts shown in the financial statements are expressed to the nearest thousand dollars.

Historical cost convention

These financial statements have been prepared under the historical cost convention, except for the revaluation of financial assets, biological assets and all classes of infrastructure, property, plant and equipment.

Critical accounting estimates and judgements

The preparation of financial statements in conformity with AAS’s requires the use of certain critical accounting estimates that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. It also requires management to exercise its judgement in the process of applying the entity’s accounting policies.

The most significant accounting estimates undertaken in the preparation of this financial report relate to:

• estimation of useful lives

• the impairment of assets

• recognition of net deferred tax liabilities

• provisions

• contingent assets and liabilities

• fair value of infrastructure, property, plant and equipment

• accrued operating income

Disclosures which became effective for reporting periods beginning on, or after, 1 July 2015.

(b) Changes in accounting policiesSubsequent to the 2014–15 reporting period, the following new and revised Standard has been released in the current period with the financial impact detailed as below:

• AASB 2015-7 Amendments to Australian Accounting Standards – Fair Value Disclosure of Not-for-Profit Public Sector Entities

The Corporation has early adopted AASB 2015–7 in 2015–16. The impact of adopting this new accounting standard is reduced disclosure requirements for assets categorised within Level 3 of the fair value hierarchy, regarding quantitative information about the significant unobservable inputs used in fair value measurement and description of the sensitivity of the fair value measurement in unobservable inputs (refer Note 10).

(c) Revenue

Service and usage charges

Usage and service charges are recognised as revenue when levied or determined.

Trade waste charges are recognised as revenue at the end of the service delivery period. Volume meters are read and appropriate charges levied as per the trade waste agreements. The meters are read and accounts sent on a monthly basis.

Water usage charges by measure are recognised as revenue when the water is provided. Meter reading is undertaken progressively during the year. An estimation, calculated by multiplying the number of days since the last reading by each customer’s average service usage, is made at the end of each accounting period in respect of meters which have not been read at balance date (refer to Note 9).



(c) Revenue (continued)

Developer contributions/fees paid by developers

Water infrastructure assets built by developers in new land subdivisions that on completion are provided to the Corporation or fees paid by developers to connect new developments to the Corporation’s existing water supply and sewerage systems are recognised as revenue when the contributions are received.

Non cash developer contributions are measured at their fair value at the time of transfer to the Corporation.

Government grants and contributions

Government grants and contributions are recognised as operating revenue on receipt or when the entity obtains control of the contribution and meets certain other criteria as outlined by AASB 1004 Contributions, whichever is the sooner, and disclosed in the operating statement as government grants and contributions. Refer Note 2.

However, grants and contributions received from the Victorian State Government, which were originally appropriated by the Parliament as additions to net assets or where the Minister for Finance and the Minister for Water have indicated are in the nature of owners’ contributions, are accounted for as Equity – Contributions by Owners in accordance with Financial Reporting Direction (FRD) 119A Transfers through Contributed Capital.

Interest

Interest income is recognised using the effective interest rate method, in the period in which it is incurred.

(d) Expenses

Interest expenses

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, and finance lease charges.

Depreciation and amortisation of non-current assets

All non-current physical assets that have a limited useful life are depreciated. Where assets have separate identifiable components that have distinct useful lives and/or residual values, a separate depreciation rate is determined for each component.

Depreciation 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.

Intangible assets with finite useful lives are amortised as an expense on a systematic basis (typically straight-line), commencing from the time the asset is available for use. The amortisation periods are reviewed and adjusted if appropriate at each balance date. Intangible assets with indefinite useful lives are not amortised. All intangible assets are assessed for impairment annually as outlined in Note 1(e).



(d) Expenses (continued)

Depreciation and amortisation of non-current assets (continued)

Major depreciation periods used are listed below. Depreciation periods have been revised based on the revaluation conducted for 2016

2016 2015

Buildings

• Buildings 20 – 100 years 20 – 75 years

• Leasehold improvements 5 years 5 years

Infrastructure

Water

• Storages 25 – 350 years 25 – 350 years

• Reticulation network 25 – 100 years 25 – 110 years

• Pump stations 25 – 70 years 25 – 70 years

• Treatment plants 10 – 100 years 10 – 100 years

Wastewater

• Storages 25 – 350 years 25 – 350 years

• Reticulation network 40 – 65 years 50 – 100 years

• Pump stations 25 – 70 years 25 – 70 years

• Treatment plants 20 – 75 years 20 – 75 years

Plant & Equipment

• Equipment 5 – 30 years 5 – 30 years

• Machinery 10 years 10 years

• Furniture & computers 1 – 10 years 1 – 10 years

• Motor vehicles 5 years 5 years

Intangible assets

• Software 3 – 5 years 3 – 5 years

Employee benefits

These expenses include all costs related to employment (other than superannuation which is accounted for separately), wages and salaries, fringe benefits tax, leave entitlements, redundancy payments and WorkCover premiums.

Superannuation

The amount charged to the Operating Statement in respect of superannuation represents contributions made or due by the Corporation to the relevant superannuation plans in respect to the services of Corporation’s staff (both past and present). Superannuation contributions are made to the plans based on the relevant rules of each plan and any relevant compulsory superannuation requirements that the Corporation is required to comply with.

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.



(d) Expenses (continued)

Environmental contributions

The Water Industry (Environmental Contributions) Act 2004 (the Act) 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 corporation. The contribution period has been extended to cover the period 1 July 2016 until 30 June 2020.

The purpose of 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 Corporation has a statutory obligation to pay an environmental contribution to the Department of Environment and Primary Industries. This contribution is recognised as an expense during the reporting period as incurred.

Other expenses

Supplies and services costs which are recognised as an expense in the reporting period in which they are incurred. The carrying amounts of any inventories held for distribution are expensed when distributed.

(e) Assets

Cash and cash equivalents

Cash and deposits recognised on the Balance Sheet comprise cash on hand and cash at bank, deposits at call and those highly liquid investments (with an original maturity of three months or less), which are held for the purpose of meeting short term cash commitments rather than for investment purposes, and readily convertible to known amounts of cash with an insignificant risk of changes in value.

Receivables

Receivables consist of:

• contractual receivables, such as debtors in relation to goods and services, loans to third parties, accrued investment income, and

• statutory receivables, such as amounts owing from the Victorian Government and Goods and Services Tax (GST) input tax credits recoverable.

Contractual receivables are classified as financial instruments and categorised as loans and receivables.

Statutory receivables are recognised and measured similarly to contractual receivables (except for impairment), but are not classified as financial instruments because they do not arise from a contract.

Contractual receivables are recognised initially at fair value and subsequently measured at amortised cost, less an allowance for impaired receivables. Trade receivables are due for settlement no more than 28 days from the date of recognition for water utility debtors, and no more than 28 days for other debtors.

Collectability of contractual receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off. A provision for doubtful debts is established when there is objective evidence that the Corporation will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The amounts credited to the provision are recognised as an expense in the operating statement.

Prepayments

Prepayments represent payments in advance of receipt of goods or services or that part of expenditure made in one accounting period covering a term extending beyond that period.



(e) Assets (continued)

Infrastructure, property, plant and equipment

Recognition and measurement of non-current physical assets

Infrastructure, property, plant and equipment represents non-current physical assets comprising land, buildings, water and sewerage infrastructure, plant, equipment and motor vehicles, used by the Corporation in its operations. Items with a cost or value in excess of $500 and a useful life of more than one year are recognised as an asset. All other assets acquired are expensed.

The purchase method of accounting is used for all acquisitions of assets. Cost is measured as the fair value of the assets given or liabilities incurred or assumed at the date of exchange plus costs directly attributable to the acquisition.

Assets acquired at no cost or for nominal consideration by the Corporation are recognised at fair value at the date of acquisition.

Leasehold improvements

Leasehold improvements are recognised at cost and are amortised over the unexpired period of the lease or the estimated useful life of the improvement, whichever is the shorter. At balance date, leasehold improvements are amortised over a five year period.

Measurement of non-current physical Assets

All non-current physical assets are recognised initially at cost and subsequently revalued at fair value less accumulated depreciation and impairment in accordance with the requirements of FRD 103F Non-current physical assets.

Non-current physical assets

Revaluations are conducted in accordance with FRD 103F. Scheduled revaluations are undertaken every five years with an annual assessment of fair value to determine if it is materially different to the carrying value. If the difference to carrying value is greater than 10%, a management revaluation is undertaken while a movement greater than 40% will normally involve an Approved Valuer (usually the Valuer General Victoria) to perform a detailed assessment of the fair value. If the movement in fair value since the last revaluation is less than or equal to 10% then no change is made to carrying amounts.

Plant, equipment and motor vehicles are measured at fair value.

Water infrastructure assets, at both the entity reporting level and whole of government reporting level, are measured at fair value less accumulated depreciation and impairment in accordance with FRD 103F. These assets comprise substructures or underlying systems held to facilitate harvesting, storage, treatment and transfer of water to meet customer needs. They also include infrastructure assets that underlie sewage and drainage systems.

Revaluation of non-current physical assets

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 de-recognition of the relevant asset.

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:

• deferred tax assets

• financial instrument assets, and

• biological assets.




Impairment of assets

If there is an indicator 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 class of 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.

A reversal of an impairment loss on a re-valued asset is credited directly to equity under the heading revaluation reserve. However, to the extent that an impairment loss on the same class of asset was previously recognised in the operating statement, a reversal of that impairment loss is also recognised in the operating statement.

Intangible assets

Intangible assets represent identifiable non-monetary assets without physical substance. Intangible assets are initially recognised at cost. Subsequently, intangible assets with finite useful lives are carried at cost less accumulated amortisation and accumulated impairment losses. Costs incurred subsequent to initial acquisition are capitalised when it is expected that additional future economic benefits will flow to the Corporation.

IT Software

Costs incurred in acquiring software and licences that will contribute to future period financial benefits are capitalised. Amortisation is calculated on a straight-line basis over their estimated useful lives.

Permanent Water Entitlements

Permanent water entitlements purchased after June 2004 are treated as an intangible asset on the Balance Sheet at cost (in accordance with AASB 138 Intangible Assets and FRD 109 Intangible Assets), and will not be subject to amortisation, as permanent water entitlements have an indefinite life. Permanent entitlements purchased after June 2004 are tested annually for impairment. Bulk water entitlements purchased prior to June 2004 are not recorded on the Balance Sheet as an intangible asset, as they cannot be reliably measured.

Finance leases

Leases of property, plant and equipment where the Corporation has substantially all the risks and rewards incidental to ownership are classified as finance leases. Finance leases are capitalised at the lease’s inception at the lower of the fair value of the leased property and the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in interest bearing liabilities. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The interest element of the finance cost is charged to the operating statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under a finance lease are depreciated over the shorter of the asset’s useful life and the lease term.




Operating leases

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the operating statement on a straight-line basis over the period of the lease, in the periods in which they are incurred, as this represents the pattern of benefits derived from the leased assets.

Biological assets

Biological assets consist of livestock and produce held and grown on the Corporation’s wastewater reuse facilities. All agricultural assets are measured at fair value, less costs to sell based on current market value.

The fair value of a biological asset is based on its present location and condition. If an active market exists for a biological asset in its present location and condition, the quoted price in that market is the appropriate basis for determining the fair value of that asset. Where access exists to different markets then the most relevant market is referenced.

An increase or decrease in the fair value of these biological assets is recognised in the operating statement.

(f) Liabilities

Payables

Payables consist of:

• contractual payables, such as accounts payable, retentions and sundry creditors. Accounts payable represent liabilities for goods and services provided to the Corporation prior to the end of the financial year that are unpaid, and arise when the Corporation becomes obliged to make future payments in respect of the purchase of those goods and services; and

• statutory payables, such as goods and services tax and fringe benefits tax payables.

Contractual payables are classified as financial instruments and categorised as financial liabilities at amortised cost. Statutory payables are recognised and measured similarly to contractual payables, but are not classified as financial instruments and not included in the category of financial liabilities at amortised cost, because they do not arise from a contract.

The amounts are unsecured and are usually paid within 28 days of recognition.

Interest bearing liabilities

Interest bearing liabilities are initially recognised at fair value, net of transaction costs incurred. Interest bearing liabilities are subsequently measured at amortised cost. Any difference between the initial amount recognised (net of transaction costs) and the redemption amount is recognised in the operating statement over the period of the borrowings using the effective interest rate method.

Interest bearing liabilities are classified as current liabilities unless the Corporation has an unconditional right to defer settlement of the liability for at least 12 months after the balance date.



(f) Liabilities (continued)

Provisions

Provisions are recognised when the Corporation has a present obligation, the future sacrifice of economic benefits is probable, and the amount of the provision can be measured reliably.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows, using discount rate that reflects the time value of money and risks specific to the provision.

When some or all of the economic benefits required to settle a provision are expected to be received from a third party, the receivable is recognised as an asset if it is virtually certain that recovery will be received and the amount of the receivable can be measured reliably.

Employee benefits

Provision is made for benefits accruing to employees in respect of wages and salaries, annual leave and long service leave for services rendered to the reporting date.

i. Wages and salaries, annual leave and sick leave

Liabilities for wages and salaries, including nonmonetary benefits and annual leave are all recognised in the provision for employee benefits as ‘current liabilities’, because the Corporation does not have an unconditional right to defer settlements of these liabilities.

Depending on the expectation of the timing of settlement, liabilities for wages and salaries, annual leave is measured at:

– undiscounted value – if the Corporation expects to wholly settle within 12 months; or

– present value – if the Corporation does not expect to wholly settle within 12 months

Non vesting sick leave is not expected to exceed future sick leave entitlements and, accordingly, no liability is recognised for sick leave in these financial statements.

ii. Long service leave

Liability for long service leave (LSL) is recognised in the provision for employee benefits.

Unconditional LSL (representing 7 or more years of continuous service) is disclosed in the notes to the financial statements as a current liability, even where the Corporation does not expect to settle the liability within 12 months because it will not have the unconditional right to defer the settlement of the entitlement should an employee take leave within 12 months.

The components of this current LSL liability are measured at:

– undiscounted value – if the Corporation expects to wholly settle within 12 months, or

– present value – if the Corporation does not expect to wholly settle within 12 months.

Conditional LSL is disclosed as a noncurrent liability. There is an unconditional right to defer the settlement of the entitlement until the employee has completed the requisite years of service. This noncurrent LSL liability is measured at present value.

Any gain or loss following revaluation of the present value of non-current LSL liability is recognised in the ‘net result from transactions’, except to the extent that a gain or loss arises due to changes in bond interest rates for which it is then recognised in the net result.



(f) Liabilities (continued)iii. Termination benefits

Termination benefits are payable when employment is terminated before the normal retirement date, or when an employee decides to accept an offer of benefits in exchange for the termination of employment. The Corporation recognises termination benefits when it is demonstrably committed to either terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal or providing termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after the end of the reporting period are discounted to present value.

On-Costs

Provisions for oncosts such as payroll tax, workers compensation and superannuation are recognised separately from the provision for employee benefits.

Performance Payments

Performance payments for the Corporation’s Executive Officers are based on a percentage of the annual salary package provided under their contract(s) of employment. A liability is recognised and is measured as the aggregate of the amounts accrued under the terms of the contracts to balance date.

(g) Equity

Contributions by owners

Additions to net assets which have been designated as contributions by owners are recognised as contributed capital. Other transfers that are in the nature of contributions or distributions have also been designated as contributions by owners.

Asset revaluation reserve

The asset revaluation reserve is used to record asset revaluation increments and decrements in the value of non-current physical assets.

(h) Financial instruments

Recognition

Financial instruments are initially measured at fair value, plus in the case of a financial asset or financial liability not at fair value through profit and loss, transaction costs that are directly attributable to the acquisition or the issue of the financial asset or liability. Subsequent to initial recognition, the financial instruments are measured as set out below:

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for those with maturities greater than 12 months after the reporting date which are classified as non-current assets. Loans and receivables are included in trade and other receivables in the balance sheet. Loans and receivables are recorded at amortised cost less impairment.

Impairment of financial assets

At each reporting date, the Corporation assesses whether there is objective evidence that a financial instrument has been impaired.



(i) Fair valueConsistent with AASB 13 Fair Value Measurement, the Corporation determines the policies and procedures for both recurring fair value measurements such as infrastructure, property, plant and equipment, biological assets, and financial instruments and for non-recurring fair value measurements such as assets held for sale, in accordance with the requirements of AASB 13 and the relevant Financial Reporting Directions.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

• Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities;

• Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable; and

• Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

For the purpose of fair value disclosures, the Corporation has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.

In addition, the Corporation determines whether transfers have occurred between levels in the hierarchy by reassessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

The Valuer General Victoria (VGV) is the Corporation’s independent valuation agency.

The Corporation, in conjunction with VGV, monitors changes in the fair value of each asset and liability through relevant data sources to determine whether revaluation is required.

(j) TaxationThe Corporation is subject to the National Tax Equivalent Regime (NTER), which is administered by the Australian Taxation Office.

The income tax expense or revenue for the period is the expected tax payable or receivable on the current period’s taxable income based on the national corporate income tax rate of 30%, 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 for 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. The relevant tax rates are applied to the cumulative amounts deductible and taxable temporary differences to measure the deferred tax asset or liability. 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 these temporary differences and losses.

Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

The Corporation’s deferred tax liabilities exceed the level of deferred tax assets and therefore a net deferred tax liability has been disclosed in the balance sheet.

(k) CommitmentsCommitments for future expenditure include operating and capital commitments arising from contracts. These commitments are disclosed by way of a note (refer to Note 22) at their nominal value and inclusive of the goods and services tax (GST) payable. In addition, where it is considered appropriate and provides additional relevant information to users, the net present values of significant individual projects are stated. These future expenditures cease to be disclosed as commitments once the related liabilities are recognised in the balance sheet.



(l) Contingent assets and contingent liabilitiesContingent assets and contingent liabilities are not recognised in the balance sheet, but are disclosed by way of a note (refer to Note 20) and, if quantifiable, are measured at nominal value. Contingent assets and liabilities are presented inclusive of GST receivable or payable respectively.

(m) Dividend policyThe Corporation may be required to pay a dividend in accordance with a determination of the Treasurer of Victoria under the Public Authorities (Dividend) Act 1983, based on a prescribed percentage of the previous years’ adjusted net profit. 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.

There is no expectation of a dividend payment being requested at year end.

(n) Goods and services taxRevenues, 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 cashflows arising from investing and financing activities which is recoverable or payable to the taxation authority is classified as operating cash flows.

(o) Events after the reporting period Assets, liabilities, income or expenses arise from past transactions or other past events. Where the transactions result from an agreement between the Corporation and other parties, the transactions are only recognised when the agreement is irrevocable at or before the end of the reporting period. Adjustments are made to amounts recognised in the financial statements for events which occur between the end of the reporting period and the date when the financial statements are authorised for issue, where those events provide information about conditions which existed at the reporting date. Note disclosure is made about events between the end of the reporting period and the date the financial statements are authorised for issue where the events relate to conditions which arose after the end of the reporting period that are considered to be of material interest.



(p) New accounting standards and interpretations issued that are not yet effectiveCertain new accounting standards and interpretations have been published that are not mandatory for the 30 June 2016 reporting period. As at 30 June 2016, the following applicable standards and interpretations had been issued but were not mandatory for financial year ending 30 June 2016. The Corporation has not and does not intend to adopt these standards early.

Standard/Interpretation

Summary Applicable for annual reporting periods beginning on

Impact on the Corporation’s financial statements

AASB 9 Financial Instruments

The key changes include the simplified requirements for the classification and measurement of financial assets, a new hedging accounting model and a revised impairment loss model to recognise impairment losses earlier, as opposed to the current approach that recognises impairment only when incurred.

1 Jan 2018 The assessment has identified that the financial impact of available for sale (AFS) assets will now be reported through other comprehensive income (OCI) and no longer recycled to the profit and loss.

While the preliminary assessment has not identified any material impact arising from AASB 9, it will continue to be monitored and assessed.

AASB 2014–5 Amendments to Australian Accounting Standards arising from AASB 15

Amends the measurement of trade receivables and the recognition of dividends.

Trade receivables, that do not have a significant financing component, are to be measured at their transaction price, at initial recognition.

Dividends are recognised in the profit and loss only when:

• the entity’s right to receive payment of the dividend is established;

• it is probable that the economic benefits associated with the dividend will flow to the entity; and the amount can be measured reliably.

1 Jan 2017, except amendments to AASB 9 (Dec 2009) and AASB 9 (Dec 2010) apply from 1 Jan 2018

The assessment has indicated that there will be no significant impact for the Corporation.

AASB 2015–8 Amendments to Australian Accounting Standards – Effective Date of AASB 15

This Standard defers the mandatory effective date of AASB 15 from 1 January 2017 to 1 January 2018.

1 Jan 2018 This amending standard will defer the application period of AASB 15 to the 2018–19 reporting period in accordance with the transition requirements.



(p) New accounting standards and interpretations issued that are not yet effective (continued)




AASB 2016–3 Amendments to Australian Accounting Standards – Clarifications to AASB 15

This Standard amends AASB 15 to clarify the requirements on identifying performance obligations, principal versus agent considerations and the timing of recognising revenue from granting a licence. The amendments require:

• A promise to transfer to a customer a good or service that is ‘distinct’ to be recognised as a separate performance obligation; and

• For items purchased online, the entity is a principal if it obtains control of the good or service prior to transferring to the customer.

1 Jan 2018 The assessment has indicated that there will be no significant impact for the public sector, other than the impact identified in AASB 15.

AASB 2014–7 Amendments to Australian Accounting Standards arising from AASB 9

Amends various AASs to incorporate the consequential amendments arising from the issuance of AASB 9.

1 Jan 2018 The assessment has indicated that there will be no significant impact for the public sector.

AASB 15 Revenue from Contracts with Customers

The core principle of AASB 15 requires an entity to recognise revenue when the entity satisfies a performance obligation by transferring a promised good or service to a customer.

1 Jan 2018 While the preliminary assessment has not identified any material impact arising from the standard change, AASB 15 will continue to be monitored and assessed.







AASB 16 Leases The key changes introduced by AASB 16 include the recognition of most operating leases (which are currently not recognised) on balance sheet.

1 Jan 2019 The assessment has indicated that as most operating leases will come on balance sheet, recognition of lease assets and lease liabilities will cause net debt to increase.

Depreciation of lease assets and interest on lease liabilities will be recognised in the income statement with marginal impact on the operating surplus.

The amounts of cash paid for the principal portion of the lease liability will be presented within financing activities and the amounts paid for the interest portion will be presented within operating activities in the cash flow statement.

No change for lessors.

AASB 2014–4 Amendments to Australian Accounting Standards – Clarification of Acceptable Methods of Depreciation and Amortisation [AASB 116 & AASB 138]

Amends AASB 116 Property, Plant and Equipment and AASB 138 Intangible Assets to:

• establish the principle for the basis of depreciation and amortisation as being the expected pattern of consumption of the future economic benefits of an asset;

• prohibit the use of revenue based methods to calculate the depreciation or amortisation of an asset, tangible or intangible, because revenue generally reflects the pattern of economic benefits that are generated from operating the business, rather than the consumption through the use of the asset.

1 Jan 2016 The assessment has indicated that there is no expected impact as the revenue-based method is not used for depreciation and amortisation.







AASB 2015–1 Amendments to Australian Accounting Standards – Annual Improvements to Australian Accounting Standards 2012–2014 Cycle [AASB 1, AASB 2, AASB 3, AASB 5, AASB 7, AASB 11, AASB 110, AASB 119, AASB 121, AASB 133, AASB 134, AASB 137 & AASB 140]

Amends the methods of disposal in AASB 5 Non-current assets held for sale and discontinued operations.

Amends AASB 7 Financial Instruments by including further guidance on servicing contracts.

1 Jan 2016 The assessment has indicated that when an asset (or disposal group) is reclassified from ‘held to sale’ to ‘held for distribution’, or vice versa, the asset does not have to be reinstated in the financial statements.

Entities will be required to disclose all types of continuing involvement the entity still has when transferring a financial asset to a third party under conditions which allow it to derecognise the asset.

AASB 2015–6 Amendments to Australian Accounting Standards – Extending Related Party Disclosures to Not-for-Profit Public Sector Entities [AASB 10, AASB 124 & AASB 1049]

The Amendments extend the scope of AASB 124 Related Party Disclosures to not-for-profit public sector entities. A guidance has been included to assist the application of the Standard by not-for-profit public sector entities.

1 Jan 2016 The amending standard will result in extended disclosures on the entity’s key management personnel (KMP), and the related party transactions.

AASB 2016–4 Amendments to Australian Accounting Standards – Recoverable Amount of Non-Cash-Generating Specialised Assets of Not-for-Profit Entities

The standard amends AASB 136 Impairment of Assets to remove references to using depreciated replacement cost (DRC) as a measure of value in use for not-for-profit entities.

1 Jan 2017 The assessment has indicated that there is minimal impact. Given the specialised nature and restrictions of public sector assets, the existing use is presumed to be the highest and best use (HBU), hence current replacement cost under AASB 13 Fair Value Measurement is the same as the depreciated replacement cost concept under AASB 136.




In addition to the new standards and amendments above, the AASB has issued a list of other amending standards that are not effective for the 2015–16 reporting period (as listed below). In general, these amending standards include editorial and references changes that are expected to have insignificant impacts on public sector reporting.

• AASB 1057 Application of Australian Accounting Standards

• AASB 2015–2 Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 101 [AASB 7, AASB 101, AASB 134 & AASB 1049]

• AASB 2015-9 Amendments to Australian Accounting Standards – Scope and Application Paragraphs [AASB 8, AASB 133 & AASB 1057]

• AASB 2015-10 Amendments to Australian Accounting Standards – Effective Date of Amendments to AASB 10 and AASB 128

• AASB 2016-1 Amendments to Australian Accounting Standards – Recognition of Deferred Tax Assets for Unrealised Losses [AASB 112]

• AASB 2016-2 Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 107


Note 2 – Revenues 2016 2015

$’000 $’000

Service charges

Water service charges 11,537 11,207

Wastewater service charges 11,021 10,699

22,558 21,906

Usage charges

Water volume charges 29,164 26,249

Tradewaste charges 5,449 4,187

34,613 30,436

Developer contributions

Fees paid by developers 1,938 1,561

Assets received from developers 3,263 3,714

5,201 5,275

Government grants and contributions

Non-operating – Bright off-river storage 200 1,300

Non-operating – Leneva Valley Project 119 90

319 1,390

Note 3 – Net Gain/(Loss) on Disposal of Non-Current Assets The surplus/(deficit) from ordinary activities includes the following specific net gains and expenses:

2016 2015

$’000 $’000

Gross proceeds from sale of non-current assets 452 360

Less – carrying value of non-current assets disposed (723) (2,629)

(271) (2,269)


Note 4 – Expenses2016 2015

$’000 $’000

Depreciation

Buildings 226 251

Leasehold improvements 3 3

Water infrastructure 5,293 5,290

Water reticulation 4,088 4,046

Wastewater infrastructure 5,166 5,126

Wastewater reticulation 3,386 3,323

Plant, equipment and motor vehicles 1,445 1,405

19,607 19,444

Amortisation

Software licenses 391 403

391 403

Employee benefits

Salaries and wages 12,615 11,798

Annual leave 948 895

Long service leave 455 362

Payroll tax 799 669

Employer superannuation contributions (Note 24) 1,300 1,200

Other 252 325

16,369 15,249

Other expenses

Electricity 3,389 3,288

Service contracts 129 39

Direct wastewater 4,397 3,510

Direct water 5,279 5,240

Administration 5,935 5,907

Financial accommodation levy 344 444

Bad and doubtful debts 38 104

Rental expense – operating lease 8 53

19,519 18,585

Finance cost

Interest on borrowings 1,419 1,714

Interest on finance leases 5 3

1,424 1,717


Note 5 – Income TaxThe income tax expense for the financial year differs from amounts calculated on the profit. The differences are reconciled as follows:

(a) Components of tax expense

2016 2015

$’000 $’000

Current tax payable – –

Deferred tax relating to temporary differences 1,895 741

Total tax expense/(income) 1,895 741

Deferred income tax (revenue) expense included in income tax expense comprises:

Decrease/ (increase) in deferred tax assets (Note 15) 2,363 (1,250)

(Decrease)/ increase in deferred tax liability (Note 15) (468) 1,991

Total tax expense/(income) 1,895 741

(b) Reconciliation of income tax to prima facie tax payable

2016 2015

$’000 $’000

Net result before income tax expense 6,308 2,461

Tax at the Australian tax rate of 30% (2015:30%) 1,893 738

Expenditure not allowed for income tax purposes 2 3

Income tax as reported in the Operating Statement 1,895 741

(c) Tax expense (income relating to items of other comprehensive income)

2016 2015

$’000 $’000

Impairment adjustment on previously revalued non-current assets 36 71

36 71


Note 6 – Cash and Cash Equivalents 2016 2015

$’000 $’000

Cash on hand 3 3

Cash at bank 610 599

Deposits at Call 1,250 –

1,863 602

(a) Reconciliation to cash at the end of the yearThe above figures represent cash at the end of the financial year as shown in the cash flow statement.

(b) Cash at bank and on handThese are non-interest bearing.

(c) Deposits at callThe deposit is bearing a floating interest rate of 1.7%.

Note 7 – Receivables 2016 2015

$’000 $’000

Current

Contractual

Trade receivables 5,047 4,535

Loans to third parties 454 443

Provision for impaired receivables (83) (83)

5,418 4,895

Other receivables 327 284

5,745 5,179

Statutory

GST Input tax credit receivables 572 405

Total Current Receivables 6,317 5,584

Non-current

Contractual

Loans to third parties 302 769

Total Non-Current Receivables 302 769


Note 7 – Receivables (continued)

(a) Provision for impaired receivablesAs at 30 June 2016, current receivables of the Corporation with a nominal value of $83,245 (2015: $83,245) were impaired. The ageing of these receivables is as follows:

2016 2015

$’000 $’000

1 to 3 months 40 40

Over 3 months 43 43

83 83

Movements in the provision for impaired receivables are as follows:

2016 2015

$’000 $’000

As at 1 July 83 83

Amounts written off during the year (38) (104)

Amounts recovered during the year – –

Increase/(decrease) in allowance recognised in the operating statement 38 104

83 83

The creation and release of the provision for impaired receivables has been included in ‘other expenses’ in the operating statement. Amounts charged to the provision account are generally written-off when there is no expectation of recovering the outstanding receivable.

The other amounts within receivables do not contain impaired assets and are not past due. Based on credit history, it is expected that these amounts will be received when due.

As at 30 June 2016, trade receivables of $1,275,085 (2015: $1,124,807) were past due but not impaired. These relate to a number of independent customers for whom there is no history of default. The ageing analysis of these receivables is as follows:

2016 2015

$’000 $’000

1 to 3 months 592 613

Over 3 months 683 512

1,275 1,125


Note 8 – Biological Assets2016 2015

$’000 $’000

Produce 11 24

Breeding livestock (i) 614 551

625 575

(i) Table 8.1 – Reconciliation of carrying amount

2016

$’000

2015

$’000

Movement in carrying amounts of livestock:

Carrying amount at beginning of period 551 491

Increases due to natural increase 166 168

Increases due to purchases 94 42

Increase/decrease due to fair value adjustment 238 266

Decreases attributable to deaths (24) (18)

Decreases attributable to sales (411) (398)

Carrying amount at end of period 614 551

Biological assets are measured at fair value with any changes recognised in the operating statement. The fair value of a biological asset is based on its present location and condition. If an active market exists for a biological asset in its present location and condition, the quoted price in that market is the appropriate basis for determining the fair value of that asset. Where access exists to different markets then the most relevant market is referenced. Their categorisation in the fair value hierarchy is at Level 2 (2015: Level 2). Refer Note 1(e).

There have been no transfers between levels during the period. There were no changes in valuation techniques throughout the period to 30 June 2016.

LivestockFor livestock, fair value is based on relevant market indicators which include market cattle and sheep prices, and prices received and paid for the Corporations cattle and sheep at the reporting date. Prices for sheep and cattle generally reflect the shorter term spot prices available in the market place and vary depending on the weight, breed and condition of the animal.

Note 9 – Other Assets 2016 2015

$’000 $’000

Accrued operating income 6,309 6,074

6,309 6,074


Note 10 – Non-current Assets – Infrastructure, Property, Plant and Equipment

2016 2015

$’000 $’000

Land

At fair value 28,177 26,097

Buildings


Accumulated depreciation – (3,569)

10,315 10,245

Water infrastructure

At fair value 144,922 262,046

At cost 3,295 –

Accumulated depreciation (33) (115,848)

148,254 146,198

Water reticulation

At fair value 216,240 330,510

At cost 2,865 –


219,084 227,966

Wastewater infrastructure

At fair value 100,344 216,971

At cost 1,252 –


101,564 95,171

Wastewater reticulation

At fair value 210,255 264,946

At cost 3,100 –


213,332 180,566

Plant, equipment and motor vehicles


Accumulated depreciation (8,750) (8,146)

5,837 5,667

Work in progress – at cost 13,058 6,262

Total Infrastructure, Property, Plant & Equipment 739,621 698,172


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Note 10 – Non-current Assets – Infrastructure, Property, Plant and Equipment (continued)

Revaluation methodologyLand and Buildings were independently valued at 30 June 2016 by Valuer General of Victoria (using Egan National Valuers). For Land, the valuation methodology used has been market value adjusted for community service obligations where applicable. Due to their specialised nature Buildings have been valued using depreciated replacement costs.

Infrastructure assets were independently valued at 30 June 2016 by the Valuer General of Victoria (using Jardine Lloyd Thompson Valuers). The valuation methodology used was depreciated replacement costs using a Greenfields approach for assessing costs and only included assets that were constructed before 1 July 2015. Cost models were built based on actual construction information complimented by a variety of information sources including capacity, height, material type, length and depth that could be applied broadly across the range of assets in each category.

Contributed assetsInfrastructure asset contributions made to North East Water by private developers of $3,262,837 (2015: $3,714,252) are disclosed above. In certain circumstances North East Water contributes to these works to meet additional capacity requirements. These contributions are disclosed as additions for water and wastewater reticulation.



Fair value measurement hierarchy for assets as at 30 June 2016

30 June 2016 Carrying amount as at 30 June 2016

Fair value measurement at end of reporting period using:

Level 1(i) Level 2(i) Level 3(i)

Land at fair value

Non-specialised land 2,420 2,420

Specialised land 25,757 25,757

Total of land at fair value 28,177 2,420 25,757

Buildings at fair value

Specialised buildings 10,315 10,315

Total of buildings at fair value 10,315 10,315

Plant, equipment and vehicles at fair value

Vehicles and major plant 3,059 3,059

Equipment and office furniture 2,778 2,778

Total of plant, equipment and vehicles at fair value 5,837 5,837

Water infrastructure and reticulation at fair value

Water infrastructure and reticulation 367,338 367,338

Total of water infrastructure and reticulation at fair value 367,338 367,338

Wastewater infrastructure and reticulation at fair value

Wastewater infrastructure and reticulation at fair value 314,896 314,896

Total of wastewater infrastructure and reticulation at fair value 314,896 314,896

30 June 2015 Carrying amount as at 30 June 2015


Level 1(i) Level 2(i) Level 3(i)

Land at fair value

Non-specialised land 2,200 2,200

Specialised land 23,897 23,897

Total of land at fair value 26,097 2,200 23,897

Buildings at fair value

Specialised buildings 10,245 10,245

Total of buildings at fair value 10,245 10,245

Plant, equipment and vehicles at fair value

Vehicles and major plant 2,688 2,688

Equipment and office furniture 2,979 2,979

Total of plant, equipment and vehicles at fair value 5,667 5,667

Water infrastructure and reticulation at fair value

Water infrastructure and reticulation 374,164 374,164

Total of water infrastructure at fair value 374,164 374,164

Wastewater infrastructure and reticulation at fair value

Wastewater infrastructure and reticulation at fair value 275,737 275,737

Total of wastewater infrastructure and reticulation at fair value 275,737 275,737

Notes:

(i) Classified in accordance with the fair value hierarchy, see Note 1(i)


Note 10 – Non-current Assets – Infrastructure, Property, Plant and Equipment (continued)Non-specialised land

Non-specialised land is valued using the market approach. Under this valuation method the assets are compared to recent comparable sales or sale of comparable assets which are considered to have a nominal or no added improvement value. An independent valuation of the Corporations’ non-specialised land was performed by Egan National Valuers on behalf of the Valuer General Victoria. The valuation was performed using the market approach. To the extent that non-specialised land does not contain significant unobservable adjustments these assets are classified as Level 2 under the market based direct comparison approach. The effective date of the valuation is 30 June 2016.

Specialised land and buildings

The market approach is also used for specialised land, although is adjusted for the community service obligation (CSO) to reflect the specialised nature of the land being valued.

The CSO adjustment is a reflection of the valuer’s assessment of the impact of restrictions associated with an asset to the extent that is also equally applicable to market participants. This approach is in light of the highest and best use consideration required for fair value measurement, and takes into account the use of the asset that is physically possible, legally permissible, and financially feasible. As adjustments of CSO’s are considered as significant unobservable inputs, specialised land would be classified as Level 3 assets.

For the Corporation’s majority of specialised buildings, the depreciated replacement cost method is used, adjusting for the associated depreciation. As depreciation adjustments are considered as significant, unobservable inputs in nature, specialised buildings are classified as Level 3 fair value measurements.

An independent valuation of the Corporations’ specialised land and specialised buildings was performed by Egan National Valuers on behalf of the Valuer General Victoria. The valuation was performed using the market approach adjusted for CSO’s. The effective date of the valuation is 30 June 2016.

Water and wastewater infrastructure and reticulation

Water and wastewater infrastructure and reticulation assets are valued using the depreciated replacement cost method. This cost represents the replacement cost of the component after applying depreciation rates on a useful life basis. Replacement costs relate to costs to replace the current service capacity of the asset. Economic obsolescence has also been factored into the depreciated replacement cost calculation.

Where it has not been possible to examine hidden works such as structural frames and floors, the use of reasonable materials and methods of construction have been assumed bearing in mind the age and nature of the building. The estimated cost of reconstruction including structure services and finishes as applicable.

An independent valuation of the Corporations water and wastewater infrastructure was performed by Jardine Lloyd Thompson on behalf of the Valuer General Victoria. The valuation was performed based on the depreciated replacement cost of the assets. The effective date of the valuation is 30 June 2016.


Note 10 – Non-current Assets – Infrastructure, Property, Plant and Equipment (continued)These assets are classified as level 3 fair value as the lowest level input, the absence of an active market, has a significant impact on the fair value which is unobservable.

Vehicles and major plant

Vehicles and major plant are valued using the depreciated replacement cost method. The Corporation acquires new vehicles and plant and at times disposes of them before the end of their economic life. The process of acquisition, use and disposal in the market is managed by experienced finance staff in the Corporation who set relevant depreciation rates during use to reflect the utilisation of the vehicles and plant. There were no changes in valuation techniques throughout the period to 30 June 2016.

Equipment and office furniture

Equipment and office furniture is held at fair value. When equipment is specialised in use, such that it is rarely sold other than as part of a going concern, fair value is determined using the depreciated replacement cost method. For all assets measured at fair value, the current use is considered the highest and best use. There were no changes in valuation techniques throughout the period to 30 June 2016.

Reconciliation of Level 3 fair value 2016

2016 Specialised land

Specialised buildings

Motor vehicles and major Plant



and reticulation


and reticulation

$’000 $’000 $’000 $’000 $’000 $’000

Opening balance 23,897 10,245 2,688 2,979 374,164 275,737

Purchases/(sales) – – 1,076 539 5,914 4,128

Transfers in/(out) of Level 3 – – – – – –

Gains or losses

recognised in net result

– – – – – –

Depreciation – (228) (705) (740) (9,381) (8,552)

Impairment loss – – – – (153) (2)

Subtotal 23,897 10,017 3,059 2,778 370,544 271,311

Revaluation 1,860 298 – – (3,206) 43,585

Closing balance 25,757 10,315 3,059 2,778 367,338 314,896



Description of significant unobservable inputs to Level 3 valuations

Valuation technique Significant unobservable inputs

Specialised land Market approach Community Service Obligation (CSO) adjustment

Specialised buildings Depreciated replacement cost Direct cost per square metre

Useful life of specialised buildings

Equipment and office furniture Depreciated replacement cost Cost per unit

Useful life of equipment an office furniture

Vehicles and major plant Depreciated replacement cost Cost per unit

Useful life of vehicles

Water Infrastructure

Water mains Depreciated replacement cost Cost per metre

Useful life of the infrastructure

Water treatment plants Depreciated replacement cost Cost per unit


Pump stations Depreciated replacement cost Cost per unit



Tanks Depreciated replacement cost Cost per unit


Storage basins Depreciated replacement cost Cost per unit


Reservoirs Depreciated replacement cost Cost per unit


Wastewater Infrastructure

Wastewater mains Depreciated replacement cost Cost per metre


Wastewater treatment plants Depreciated replacement cost Cost per unit


Sewer pump stations Depreciated replacement cost Cost per unit




Reconciliation of Level 3 fair value 2015

2015 Specialised land

Specialised buildings

Motor vehicles and major Plant



and reticulation


and reticulation

$’000 $’000 $’000 $’000 $’000 $’000

Opening balance 23,743 9,874 2,745 2,978 370,834 272,780

Purchases/(sales) 154 625 652 697 12,962 11,412

Transfers in/(out) of Level 3 – – – – – –

Gains or losses

recognised in net result

– – – – – –

Depreciation – (254) (709) (696) (9,336) (8,449)

Impairment loss – – – – (296) (6)

Subtotal 23,897 10,245 2,688 2,979 374,164 275,737

Revaluation – – – – – –

Closing balance 23,897 10,245 2,688 2,979 374,164 275,737

Description of significant unobservable inputs to Level 3 valuations


Specialised land Market approach Community Service Obligation (CSO) adjustment

Specialised buildings Depreciated replacement cost Direct cost per square metre

Useful life of specialised buildings

Equipment and office furniture Depreciated replacement cost Cost per unit

Useful life of equipment an office furniture

Vehicles and major plant Depreciated replacement cost Cost per unit

Useful life of vehicles


Water mains Depreciated replacement cost Cost per metre


Water treatment plants Depreciated replacement cost Cost per unit


Pump stations Depreciated replacement cost Cost per unit


Tanks Depreciated replacement cost Cost per unit



Storage basins Depreciated replacement cost Cost per unit


Reservoirs Depreciated replacement cost Cost per unit




Description of significant unobservable inputs to Level 3 valuations (continued)



Wastewater mains Depreciated replacement cost Cost per metre


Wastewater treatment Plants Depreciated replacement cost Cost per unit


Sewer pump stations Depreciated replacement cost Cost per unit


Note 11 – Intangible Assets2015–16 Purchased permanent

water entitlementsSoftware Total

$’000 $’000 $’000

Carrying value 1 July 2015 2,930 614 3,544

Additions – 574 574

Amortisation – (391) (391)

Carrying value 30 June 2016 2,930 797 3,727

2014–15 Purchased permanent water entitlements

Software Total

$’000 $’000 $’000

Carrying value 1 July 2014 2,325 840 3,165

Additions 605 177 782

Amortisation – (403) (403)

Carrying value 30 June 2015 2,930 614 3,544


Note 12 – Payables 2016 2015

$’000 $’000

Current – contractual payables

Trade creditors 2,877 2,761

Sundry creditors 5 51

Accrued expenses 1,072 806

Deposits and retentions 1,051 327

5,005 3,945

Non-current – contractual payables

Deposits and retentions 297 567

297 567

The carrying amounts of the Corporation’s payables are denominated in Australian dollars.

Due to the short-term nature of the current payables, their carrying value is assumed to approximate their fair value.

Note 13 – Interest Bearing Liabilities 2016 2015

$’000 $’000

Current

Treasury Corporation Victoria 4,000 6,500

Finance lease liabilities (Note 22) 104 63

4,104 6,563

Non-current

Treasury Corporation Victoria 23,750 27,750

Finance lease liabilities (Note 22) 130 81

23,880 27,831

$2 million of new borrowings from Treasury Corporation Victoria were taken out for the year ended 30 June 2016 (30 June 2015: $5.75 million). Total borrowings of $8.5 million were repaid to the year ended 30 June 2016 (2015: $15.75 million), made in accordance with individual loan agreements. These borrowings are guaranteed by the Victorian Government under the Borrowings and Investment Powers Act 1987.

The Corporation has borrowing approval from the Treasurer of Victoria for borrowings of $4 million to refinance maturing financial accommodation for 2016–17.

Finance leases are secured against the relevant assets subject to lease.


Note 14 – Provisions 2016 2015

$’000 $’000

Current provisions

Employee Benefits – Note 14(a) i

Annual leave – Note 14(a)

Unconditional and expected to settle within 12 months ii 213 206

Unconditional and expected to settle after 12 months iii 935 893

1,148 1,099

Long service leave – Note 14(a)

Unconditional and expected to settle within 12 months iii 41 111

Unconditional and expected to settle after 12 months iii 1,815 1,715

1,856 1,826

Provisions for oncosts – Note 14(a)

Unconditional and expected to settle within 12 months iii 41 76

Unconditional and expected to settle after 12 months iii 437 373

478 449

Other Provisions – Note 14(b) iv 98 145

Total current provisions 3,580 3,519

Noncurrent provisions

Employee Benefits – Note 14(a) i 426 285

Oncosts – Note 14(a) 68 44

Total noncurrent provisions 494 329

Total provisions 4,074 3,848

Notes

i. Employee benefits consist of annual leave and long service leave accrued by employees. Oncosts such as payroll tax and workers’ compensation insurance are not employee benefits and are reflected as a separate provision.

ii. Amounts are measured at nominal values.

iii. Amounts are measured at present values.

iv. Other provisions represent legal fees and settlement of property damage dispute.

(a) Employee benefits and on costs

2016 2015

$’000 $’000

Current employee benefits

Annual leave 1,148 1,099

Long service leave 1,856 1,826

3,004 2,925

Non-current employee benefits

Long service leave 426 285

Total employee benefits 3,430 3,210

Current on-costs 478 449

Non-current on-costs 68 44

Total on-costs 546 493

Total employee benefits and on-costs 3,976 3,703


Note 14 – Provisions and Employee Benefits (continued)

(a) Employee benefits and on costs (continued)The employee benefit provisions reflect 167.9 (2015: 158.97) fulltime equivalent employees at the reporting date.

Current employee benefits are those that the employee has a present entitlement to regardless of when it is anticipated that the leave will be taken. Of the above provision it is anticipated that long service leave with a value of $41,156 (2015: $110,457) will be taken within the next 12 months.

The following assumptions were adopted in measuring the present value of long service leave entitlements:

2016 2015

Weighted average increase in employee costs 4.13% 4.44%

Weighted average discount rates 1.99% 3.03%

Weighted average settlement period 11 years 11 years

(b) Other provisions

2016 2015

$’000 $’000

Legal fees – settlement 98 –

Asset decommissioning costs – 145

98 145

Note 15 – Deferred Taxes 2016 2015

$’000 $’000

Deferred tax assets

The balance comprises temporary differences relating to:

Prior and current tax losses 36,117 38,545

Provisions 1,222 1,155

Trade and other payables 11 13

Trade and other receivables 25 25

37,375 39,738

Movements:

Opening balance 1 July 39,738 38,488

Charged to the operating statement (refer note 5a) (2,363) 1,250

Closing balance 30 June 37,375 39,738


Note 15 – Deferred Taxes (continued)Deferred Tax Asset has been recognised on the basis there are sufficient taxable temporary differences (Deferred Tax Liabilities) which should result in future taxable amounts against which the deferred tax assets can be utilised.

2016 2015

$’000 $’000

Deferred tax liabilities

The balance comprises temporary differences attributable to:

Amounts recognised in the statement of comprehensive income:

Property, plant and equipment 72,747 73,231

Livestock 142 127

72,889 73,358

Amounts recognised in equity:

Revaluation of property, plant and equipment 82,080 69,288

154,969 142,646

Movements:

Opening balance 1 July 142,645 140,725

Charged to the statement of comprehensive income (note 5a) (468) 1,991

Charged to equity 12,792 (71)

Closing balance 30 June 154,969 142,645

Net deferred tax liability 117,594 102,907

Note 16 – Contributed Capital 2016 2015

$’000 $’000

Opening balance at 1 July 264,716 264,716

Capital transactions with the state in its capacity as owner arising from:

Capital contributions – –

Closing balance at 30 June 264,716 264,716


Note 17 – Reserves 2016 2015

$’000 $’000

Asset revaluation reserve

Opening balance at 1 July 162,078 162,242

Revaluation increment / (decrement) on non-current assets 42,758 –

Tax effect on revaluation of non-current assets (12,828) –

Impairment adjustment on previously revalued non-current assets (119) (235)

Tax effect of impairment adjustment 36 71

Closing balance at 30 June 191,925 162,078


Note 18 – Financial Instruments

(a) Interest rate risk exposureNorth East Water’s exposure to interest rate risks and the effective interest rates of financial assets and financial liabilities, both recognised and unrecognised at the balance date, are as follows:

2016 Floating interest rate

Fixed interest maturity dates Non interest bearing

Total

Less than 1 year

1-5 years Over 5 years

$’000 $’000 $’000 $’000 $’000 $’000

Financial assets

Cash and cash equivalents 1,860 – – – 3 1,863

Receivables – debtors – 454 108 194 5,291 6,047

Total financial assets 1,860 454 108 194 5,294 7,910

Weighted average interest rate 1.18% 6.50% 6.50% 6.50%

Financial liabilities

Interest bearing liabilities – 4,000 15,250 8,500 – 27,750

Lease liabilities – 104 130 – – 234

Payables and accruals – – – – 5,302 5,302

Total financial liabilities – 4,104 15,380 8,500 5,302 33,286

Weighted average interest rate – 5.86% 4.66% 4.13% – –

Net financial assets/(liabilities) 1,860 (3,650) (15,272) (8,306) (8) (25,376)

2015 Floating interest rate

Fixed interest maturity dates Non interest bearing

Total

Less than 1 year

1-5 years Over 5 years

$’000 $’000 $’000 $’000 $’000 $’000

Financial assets:

Cash and cash equivalents 599 – – – 3 602

Receivables – debtors – 443 541 227 4,736 5,947

599 443 541 227 4,739 6,549

Weighted average interest rate 0.10% 6.5% 6.5% 6.5% – –


Interest bearing liabilities 2,500 4,000 12,500 15,250 – 34,250

Lease liabilities – 63 81 – – 144

Payables and accruals – – – – 4,512 4,512

Total financial liabilities 2,500 4,063 12,581 15,250 4,512 38,906

Weighted average interest rate 2.17% 3.26% 5.30% 4.10% – –

Net financial assets/(liabilities) (1,901) (3,620) (12,040) (15,023) 227 (32,357)


Note 18 – Financial Instruments (continued)

(b) Fair value off financial instrumentsThe fair value of financial instruments must be estimated for recognition and measurement or for disclosure purposes. Refer to note 1(i) for accounting policy relating to disclosure of fair value measurement hierarchy.

The following tables present the entity’s financial assets and financial liabilities measured and recognised at fair value at 30 June 2016 and 2015. It also shows the comparison between the carrying amount of the asset or liability and its fair value.

2016

Carrying amount as at 30 June 2016


Level 1 Level 2 Level 3

$’000 $’000 $’000 $’000

Financial assets:

Cash and cash equivalents 1,863 613 1,256 –

Receivables – debtors 6,047 6,047 – –

Total financial assets 7,910 6,660 1,256 –


Interest bearing liabilities 27,750 – 30,475 –

Lease liability 234 – 234 –

Payables and accruals 5,302 5,302 – –

Total financial liabilities 33,286 5,302 30,709 –

2015

Carrying amount as at 30 June 2015


Level 1 Level 2 Level 3

$’000 $’000 $’000 $’000

Financial assets:

Cash and cash equivalents 602 602 – –

Receivables – debtors 5,947 5,947 – –

Total financial assets 6,549 6,549 – –


Interest bearing liabilities 34,250 – 36,380 –

Lease liability 144 – 144 –

Payables and accruals 4,512 4,512 – –

Total financial liabilities 38,906 4,512 36,524 –

Statutory receivable/payable balances have been deducted from financial assets and liabilities.


Note 18 – Financial Instruments (continued)

(b) Fair value of financial instruments (continued)There have been no transfers between levels during the period.

The fair value of financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than a forced liquidation sale.

The fair value of financial assets and financial liabilities is based upon market prices, where a market exists or by discounting the expected future cash flows at current interest rates. As such the fair value measurement of interest bearing liabilities are disclosed as level 2 instruments.

Financial assets and liabilities are carried at amortised cost.

The carrying amounts of cash and cash equivalents, non-interest bearing receivables and payables are assumed to approximate their fair values due to their short-term nature. These are disclosed as level 1 instruments.

The carrying amounts of interest bearing receivables approximate their respective fair values. The Corporation intends to allow these receivables to run in accordance with their maturities and, accordingly, has decided not to write them down to their fair values.

The carrying amounts of interest bearing liabilities are more than their respective fair values. The Corporation intends to repay these borrowings in accordance with their maturities and, accordingly, has decided not to write them down to their fair values.

Note 19 – Financial Risk Management Objectives and PoliciesThe Corporation’s activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. This note presents information about the Corporation’s exposure to each of these risks, and the objectives, policies and processes for measuring and managing risk.

The Corporation’s People, Performance, and Risk Committee support the Board in the establishment and oversight of the Corporation’s risk management framework. The Corporation’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Corporation. The Corporation uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate, and ageing analysis for credit risk.

Risk management is carried out by management under policies approved by the Board of Directors. The finance department identifies and evaluates financial risks in close co-operation with the Corporation’s operating units. The Board provides written principles for overall risk management, as well as policies covering specific areas, such as interest rate risk and credit risk.

The main risks the Corporation is exposed to through its financial instruments are as follows:

(a) Market risk Market risk is the risk that changes in market prices will affect the fair value or future cash flows of the Corporation’s financial instruments. Market risk comprises of foreign exchange risk, interest rate risk and other price risk. The Corporation’s exposure to market risk is primarily though interest rate risk, there is no exposure to foreign exchange risk and insignificant exposure to other price risks.


Note 19 – Financial Risk Management Objectives and Policies (continued)Objectives, policies and processes used to manage these risks are disclosed in the paragraphs below:

(i) Interest rate risk

The Corporation minimises its exposure to interest rate changes on its long term borrowings by holding at various times during the financial year a mix of fixed and floating rate debt. Debt is sourced from Treasury Corporation Victoria and is managed within a range of Board approved limits with debt levels and interest rates being monitored regularly.

The Corporation has minimal exposure to interest rate risk through its holding of cash assets, other financial assets, and short and at call borrowings. The Corporation manages its interest rate risk by maintaining a diversified investment portfolio.

Market risk sensitivity analysis

The sensitivity analysis below has taken into consideration past performance, future expectations, economic forecasts and management’s knowledge and experience of the financial markets, the Corporation believes that a movement of 1% in interest rates is reasonable over the next 12 months.

2016 Carrying amount

Interest rate risk

-1% +1%

Result Equity Result Equity

‘000 ‘000 ‘000 ‘000 ‘000

Financial assets

Cash and cash equivalents 1,863 (19) (19) 19 19

Receivables 6,047 (8) (8) 8 8

7,910 (27) (27) 27 27


Payables 5,302 – – – –

Interest bearing liabilities 27,750 – – – –

33,052 – – – –

Total increase/ (decrease) (27) (27) (27) (27)


Note 19 – Financial Risk Management Objectives and Policies (continued)Market risk sensitivity analysis

2015 Carrying

amount

Interest rate risk

-1% +1%

Result Equity Result Equity

‘000 ‘000 ‘000 ‘000 ‘000

Financial assets

Cash and cash equivalents 602 (6) (6) 6 6

Receivables 5,947 (12) (12) 12 12

6,549 (18) (18) 18 18


Payables 4,512 – – – –

Interest bearing liabilities 34,250 (343) (343) 343 343

38,762 (343) (343) 343 343

Total increase/(decrease) (361) (361) 361 361

(b) Credit risk Credit risk is the risk of financial loss to the Corporation as a result of a customer or counterparty to a financial instrument failing to meet its contractual obligations. Credit risk arises principally from the Corporation’s receivables.

The Corporation’s exposure to credit risk is influenced by the individual characteristics of each customer. The receivable balance consists of a large number of residential and business customers, which are spread across a diverse range of industries. Receivable balances are monitored on an on-going basis to ensure that exposure to bad debts is not significant. The Corporation has in place a policy and procedure for the collection of overdue receivables.

An analysis of the ageing of the Corporation’s receivables at reporting date has been provided in Note 7.

(c) Liquidity risk Liquidity Risk is the risk that the Corporation will not be able to meet its financial obligations as they fall due. The Corporation’s policy is to settle financial obligations with 28 days and in the event of dispute make payments within 28 days from the date of resolution.

The Corporation manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities and continuously monitoring forecasts and actual cash flows and matching the maturity profiles of financial assets and financial liabilities.

The Corporation’s financial liability maturities have been disclosed in Note 18.

Note 20 – Contingent Liabilities and Contingent AssetsNorth East Water has no known contingent liabilities or contingent assets (2015: Nil).


Note 21 – Cash Flow StatementReconciliation of net cash provided by operating activities to operating surplus.

2016 2015

$’000 $’000

Net result for the period after income tax 4,413 1,720

Add/(less) non cash flows in the net result:

Depreciation and amortisation 19,998 19,847

Net (profit)/loss on sale of non-current assets 271 2,269

Non cash contributed assets (3,263) (3,714)

Impairment of non-current assets 35 67

Income tax effect of impairment adjustment 36 71

Change in operating assets and liabilities:

Decrease/ (increase) in current assets (1,126) (308)

Decrease/ (increase) in non-current assets 466 263

Increase/ (decrease) in current liabilities 963 (513)

Increase/ (decrease) in non-current liabilities 1,754 1,177

Net cash from operating activities 23,547 20,879

Non-cash investing and financing activities

Acquisition of plant and equipment by means of finance leases 177 134

Note 22 – Commitments for ExpenditureAll commitments are exclusive of GST

Capital commitments

2016 2015

$’000 $’000

Commitments for the acquisition of plant and equipment contracted for at the reporting date but not recognised as liabilities, payable:

– Within one year 6,002 6,377

6,002 6,377


Note 22 – Commitments for Expenditure (continued)

Finance lease commitments

2016 2015

$’000 $’000

At 30 June, the Corporation had the following obligations under finance leases for the lease of equipment (the sum of which is recognised as a liability after deduction of future lease finance charges included in the obligation):

– Within one year 107 67

– Later than one year but not later than five years 133 83

– Later than five years – –

– Minimum lease payments 240 150

– Less: Future finance charges 6 6

– Recognised in the balance sheet as: 234 144

Represented by:

– Current liability (Note 13) 104 63

– Non current liability (Note 13) 130 81

234 144

Other commitments

2016 2015

$’000 $’000

Environmental contribution

– Within one year 2,083 2,083

– Later than one year but not later than five years 7,131 –

9,214 2,083


Note 23 – Responsible Persons and Executive Officer DisclosuresIn accordance with the Ministerial Directions issued by the Minister for Finance under the Financial Management Act 1994, the following disclosures are made regarding responsible persons for the reporting period.

Responsible personsThe names of persons who were responsible persons at any time during the financial year were:

Minister: Minister for Environment, Climate Change and Water, Honourable Lisa Neville MP (1 July 2015 – 22 May 2016) Minister for Water, Honourable Lisa Neville MP (23 May 2016 – 30 June 2016)

Members: David McKenzie (Chair) (1 July 2015 – 30 June 2016) Jonathan Koop (1 July 2015 – 30 June 2016) Catherine Botta (1 July 2015 – 30 June 2016) Stephen Bird (1 July 2015 – 30 September 2015) Rowan O’Hagan (1 July 2015 – 30 September 2015) Deborah Gadd (1 July 2015 – 30 September 2015) Denis Flett (1 July 2015 – 30 September 2015) Brendan Foran (1 October 2015 – 30 June 2016) Stephen Brown (1 October 2015 – 30 June 2016) Rosemary Bissett (1 October 2015 – 30 June 2016) Gayle Lee (1 October 2015 – 30 June 2016) Helen Tobin-King (1 October 2015 – 30 June 2016) Craig Heiner (Managing Director)

Income received, or due and receivable by responsible persons of North East Water.

2016 2015

$’000 $’000

Remuneration 518 493

518 493

The number of Responsible Persons whose remuneration from North East Water was within the specified bands is as follows:

Income Band $ 2016 2015

No. No.

0 – 9,999 5 –

10,000 – 19,999 3 –

20,000 – 29,999 3 5

30,000 – 39,999 – 1

50,000 – 59,999 – 1

60,000 – 69,999 1 –

270,000 – 279,999 – 1

290,000 – 299,999 1 –

The relevant Minister’s remuneration is reported separately in the financial statements of the Department of Premier and Cabinet. There were no transactions between North East Water and responsible persons and their related parties during the financial year.

There were no amounts paid by North East Water in connection with the retirement of responsible persons of North East Water during the financial year.


Note 23 – Responsible Persons and Executive Officer Disclosures (continued)

Remuneration of executivesThe number of executive officers, other than responsible persons, whose total remuneration falls within the specified bands above $150,000, is shown below. The base remuneration of executive officers is shown in the third and fourth columns. Base remuneration is exclusive of bonus payments, long service leave payments, redundancy payments and retirement benefits. The total annualised employee equivalent provides a measure of full time equivalent executive officers over the reporting period.

Total remuneration payable to executives over the year include bonus payments received during the year. These bonus payments depend on the terms of individual employment contracts and provide for an annual bonus payment.

Income Band $ Total Remuneration Base Remuneration

2016 2015 2016 2015

No. No. No. No.

150,000 – 159,999 – – – 2

160,000 – 169,999 – 2 2 1

170,000 – 179,999 3 1 1 1

180,000 – 189,999 – 1 1 –

190,000 – 199,999 1 – – –

Total number of executives 4 4 4 4

Total annualised employee equivalent (AEE) (a) 4 4 4 4

$’000 $’000 $’000 $’000

Total Remuneration 719 676 686 640

Note:

(a) Annualised employee equivalent (AEE) is based on working 38 ordinary hours per week over the reporting period

(b) There were no payments to contractors with significant management responsibility


Note 24 – SuperannuationNorth East Water makes the majority of its employer superannuation contributions in respect of its employees to the Local Authorities Superannuation Fund (the Fund). This Fund has two categories of membership, accumulation and defined benefit, each of which is funded differently. Obligations for contributions to the Fund are recognised as an expense in Operating Statement when they are made or due.

AccumulationThe Fund’s accumulation category, Vision MySuper/Vision Super Saver, receives both employer and employee contributions on a progressive basis. Employer contributions are normally based on a fixed percentage of employee earnings. For the year ended 30 June 2016, this was 9.5% (9.5% in 2014–15) as required under Superannuation Guarantee legislation.

Defined benefitAs provided under Paragraph 34 of AASB 119, North East Water does not use defined benefit accounting for its defined benefit obligations under the Fund’s Defined Benefit category. This is because the Fund’s Defined Benefit category is a pooled multi-employer sponsored plan.

There is no proportional split of the defined benefit liabilities, assets or costs between the participating employers as the defined benefit obligation is a floating obligation between the participating employers and the only time that the aggregate obligation is allocated to specific employers is when a call is made. As a result, the level of participation of North East Water in the Fund cannot be measured as a percentage compared with other participating employers. Therefore, the Actuary is unable to allocate benefit liabilities, assets and costs between employers for the purposes of AASB 119.

Funding arrangements

North East Water makes employer contributions to the defined benefit category of the Fund at rates determined by the Trustee on the advice of the Fund’s Actuary.

As at 30 June 2015, an interim actuarial investigation was held as the Fund provides lifetime pensions in the Defined Benefit category. It was determined that the Vested Benefit Indexed (VBI) of the Defined Benefit category of which North East Water is a contributing employer was 105.8% (103.4% at 30 June 2015).

The Fund’s latest actuarial investigation was held as at 30 June 2015 and it was determined that the vested benefit index (VBI) of the defined benefit category of which North East Water is a contributing employer was 105.8%. To determine the VBI, the fund Actuary used the following long-term assumptions:

Net investment returns 7.0% pa

Salary information 4.25% pa

Price inflation (CPI) 2.5% pa.

Vison Super has advised that the estimated VBI at June 2016 was 102.0%.

The VBI is to be used as the primary funding indicator. Because the VBI was above 100%, the 2015 interim actuarial investigation determined the defined benefit category was in a satisfactory financial position and that no change was necessary to the defined benefit category’s funding arrangements from prior years.


Note 24 – Superannuation (continued)Employer contributions

Regular contributions

On the basis of the results of the 2015 interim actuarial investigation conducted by the Fund Actuary, North East Water makes employer contributions to the Fund’s Defined Benefit category at rates determined by the Fund’s Trustee. For the year ended 30 June 2016, this rate was 9.5% of members’ salaries (9.5% in 2014–15). This rate will increase in line with the SG increases.

In addition, North East Water reimburses the Fund to cover the excess of the benefits paid as a consequence of retrenchment above the funded resignation or retirement benefit.

Funding calls

If the defined benefit category is in an unsatisfactory financial position at actuarial investigation or the defined benefit category‘s VBI is below its shortfall limit at any time other than the date of the actuarial investigation, the defined benefit category has a shortfall for the purposes of SPS 160 and the Fund is required to put a plan in place so that the shortfall is fully funded within three years of the shortfall occurring. The Fund monitors its VBI on a quarterly basis and the Fund has set its shortfall limit at 97%.

In the event that the Fund Actuary determines that there is a shortfall based on the above requirement, the Fund’s participating employers (including North East Water) are required to make an employer contribution to cover the shortfall.

Using the agreed methodology, the shortfall amount is apportioned between the participating employers based on the pre-1 July 1993 and post-30 June 1993 service liabilities of the Fund’s defined benefit category, together with the employer’s payroll at 30 June 1993 and at the date the shortfall has been calculated.

Due to the nature of the contractual obligations between the participating employers and the Fund, and that the Fund includes lifetime pensioners and their reversionary beneficiaries, it is unlikely that the Fund will be wound up.

If there is a surplus in the Fund, the surplus cannot be returned to the participating employers. In the event that a participating employer is wound-up, the defined benefit obligations of that employer will be transferred to that employer’s successor.

2015 interim actuarial investigation surplus amounts

The funds interim actuarial investigation as at the 30 June 2015 identified the following in the Defined Benefit category of which North East Water is a contributing employer:

• A VBI surplus of $130.8 million; and

• A total service liability surplus of $239 million.

The VBI surplus means that the market value of the fund’s assets supporting the defined benefit obligations exceed the vested benefits that the defined benefit members would have been entitled to if they had all exited on 30 June 2015.

The total service liability surplus means that the current value of the assets in the Fund’s defined benefit category plus expected future contributions exceeds the value of expected future benefits and expenses.

North East Water was notified of the 30 June 2015 VBI during August 2015.

Superannuation contributions

Contributions by North East Water (excluding any unfunded liability payments) to the above superannuation plans for the financial year ended 30 June 2016 are detailed below:

Type of Scheme Rate 2016 Rate 2015

% $’000 % $’000

Vision Super Defined Benefits 9.50 174 9.50 197

Vision Super Accumulation 9.50 679 9.50 637

Other various Accumulation 9.50 447 9.50 366

Total contributions to all funds 1,300 1,200

There were no contributions outstanding and no loans issued from or to the above schemes as at 30 June 2016.

The expected contributions to be paid to the defined benefit category of Vision Super for the year ending 30 June 2017 is $134,267.


Note 25 – Remuneration of Auditors2016 2015

$’000 $’000

Auditor-General for audit of financial statements 47 46

Internal audit – Crowe Horwath 48 24

Regulatory Auditors – Moore Stephens – 34

Regulatory Auditors – Cardno 20 –

115 104

Note 26 – Events Occurring After Balance Sheet DateNo matters or circumstances have arisen since the end of the reporting period which significantly affected or may significantly affect the operations of the Corporation, the results of the these operations or state of affairs of the Corporation in future financial years.

Note 27 – Exgratia Expenses (i)(ii) 2016 2015

$’000 $’000

Forgiveness or waiver of debt 65 112

65 112

Notes:

(i) Includes exgratia expenses greater than or equal to $1,000 or those considered material in nature.

(ii) These amounts are included in other expenses in the Operating Statement.


AppendicesStatutory Certification

Accountable officers’ and Chief Finance & Accounting Officer’s declarationThe attached financial report for North East Water Corporation has been prepared in accordance with Standing Directions 4.2 of the Financial Management Act 1994, applicable Financial Reporting Directions, Australian Accounting Standards including Interpretations, and other mandatory professional reporting requirements.

We further state that, in our opinion, the information set out in the operating statement, statement of comprehensive income, balance sheet, statement of changes in equity, cash flow statement and accompanying notes, presents fairly the financial transactions during the year ended 30 June 2016 and the financial position of the Corporation at 30 June 2016.

At the time of signing, we are not aware of any circumstance which would render any particulars included in the financial statements to be misleading or inaccurate.

We authorise the attached financial statements for issue on 18 August 2016.

David McKenzie Chair North East Water

Craig Heiner Managing Director North East Water

Anthony Hernan Chief Finance and Accounting Officer North East Water

18 August 2016


Auditor-General’s Report


Section 08 Appendices

Appendix 1. Disclosure IndexThe Annual Report of North East Water is prepared in accordance with all relevant Victorian legislation and pronouncements. This index has been prepared to facilitate identification of the Corporation’s compliance with statutory disclosure requirements.

Legislation Requirement Page Reference

Charter and purpose

FRD 22G Manner of establishment and the relevant Ministers Page 4

FRD 22G Purpose, functions, powers and duties Page 4

FRD 8D Departmental objectives, indicators and outputs Page 8

FRD 22G Key initiatives and projects Page 13

FRD 22G Nature and range of services provided Page 5

Management and structure

FRD 22G Organisational structure Page 55

Financial and other information

FRD 8D Budget portfolio outcomes Page 16

FRD 10A Disclosure index Page 131

FRD 12A Disclosure of major contracts Page 62

FRD 15C Executive officer disclosures Page 123

FRD 22G Employment and conduct principles Page 59

FRD 22G Occupational health and safety policy Page 49

FRD 22G Summary of the financial results for the year Page 12

FRD 22G Significant changes in financial position during the year Page 12

FRD 22G Major changes or factors affecting performance Page 12

FRD 22G Subsequent events Page 62

FRD 22G Application and operation of Freedom of Information Act 1982 Page 61

FRD 22G Compliance with building and maintenance provisions of Building Act 1993 Page 61

FRD 22G Statement on National Competition Policy Page 60

FRD 22G Application and operation of the Protected Disclosures Act 2001 Page 60

FRD 22G Application and operation of the Carers Recognition Act 2012 N/A

FRD 22G Details of consultancies over $10,000 Page 62

FRD 22G Details of consultancies under $10,000 Page 62

FRD 22G Disclosure of government advertising expenditure Page 62

North East Water Annual Report 2015–16 Section 08 Appendices | 131

Legislation Requirement Page Reference

FRD 22G Disclosure of ICT expenditure Page 63

FRD 22G Statement of availability of other information Page 61

FRD 24C Reporting of office-based environmental impacts Page 30, 36

FRD 25B Victorian Industry Participation Policy disclosures Page 62

FRD 29A Workforce data disclosures Page 41

SD 4.5.5 Attestation for compliance with Ministerial Standing Direction 4.5.5 Page 57

Financial Report

SD 4.2(g) Specific information requirements Page 4

SD 4.2(j) Sign-off requirements Page 3

Financial statements required under Part 7 of the FMA

SD 4.2(a) Statement of changes in equity Page 77

SD 4.2(b) Operating statement Page 74

SD 4.2(b) Balance sheet Page 76

SD 4.2(b) Cash flow statement Page 78

Other requirements under Standing Direction 4.2

SD 4.2(c) Compliance with Australian accounting standards and other authoritative pronouncements

Page 79

SD 4.2(c) Compliance with Ministerial Directions Page 79

SD 4.2(d) Rounding of amounts Page 80

SD 4.2(c) Chief finance officer and accountable officer’s declaration Page 128

Other disclosures as required by FRDs in notes to the financial statements

FRD 11A Disclosure of ex-gratia payments Page 127

FDR 13 Disclosure of parliamentary appropriations N/A

FRD 21B Disclosures of responsible persons, executive officers and other personnel (contractors with significant management responsibilities) in the Financial Report

Page 123

FRD 103F Non-financial physical assets Page 84

FRD 110 Cash flow statement Page 78

FRD 112D Defined benefit superannuation obligations Page 125

Legislation

Freedom of Information Act 1982 Page 61

Building Act 1983 Page 61

Protected Disclosure Act 2012 Page 60

Carers Recognition Act 2012 N/A

Victorian Industry Participation Policy Act 2003 Page 62

Financial Management Act 1994 Page 79

132 | Section 08 Appendices

Appendix 2. Services provided by North East WaterTown Population Household

factor1

Water Treatment Process Sewerage Treatment Process

Baranduda 2,371 3.2 Full treatment (from Wodonga supply) Pumped to Wodonga

Barnawartha 694 2.8 Full treatment Pumped to Wodonga

Beechworth 3,416 2.3 Full treatment Lagoons and phosphorus removal

Bellbridge 481 2.7 Full treatment Lagoons - primary aerated

Benalla 10,647 2.3 Full treatment Lagoons - primary aerated

Bright 3,016 2.2 Full treatment Pumped to Porepunkah

Bundalong 764 2.6 Full treatment (from Yarrawonga supply) Lagoons

Chiltern 1,242 2.3 Full treatment (from Wodonga supply) Lagoons

Corryong 1,373 2.2 Full treatment Lagoons

Cudgewa 121 2.2 Full treatment (from Corryong supply) No service

Dartmouth 221 2.4 Full treatment Lagoons

Devenish 110 2.4 Full treatment (from Yarrawonga supply) No service

Eskdale 127 2.3 Full treatment No service

Glenrowan 340 2.3 Full treatment (from Wangaratta supply) Rotating biological contractor, lagoon

Goorambat 151 2.7 Chlorine disinfection only No service

Harrietville 380 2.1 Full treatment No service

Kiewa 423 2.9 Full treatment (from Wodonga supply) Pumped to Wodonga

Milawa 242 2.3 No service Partly serviced - pumped to Wangaratta

Mount Beauty 1,132 2.0 Full treatment Tertiary treatment

Moyhu 235 2.3 Full treatment No service2

Myrtleford 3,393 2.3 Full treatment Lagoons - primary aerated and phosphorus removal

Oxley 420 2.8 Full treatment Partly serviced - pumped to Wangaratta

Porepunkah 864 2.4 Full treatment (from Bright supply) Lagoons - primary aerated

Rutherglen 2,440 2.3 Full treatment (from Wahgunyah supply) Lagoons - primary aerated

Springhurst 190 2.6 Full treatment (from Wodonga supply) No service

St James 95 2.5 Full treatment (from Yarrawonga supply) No service

Tallangatta 988 2.2 Full treatment Lagoons

Tangambalanga 486 2.6 Full treatment (from Wodonga supply) Pumped to Wodonga

Tawonga 392 2.2 Full treatment (from Mount Beauty supply)

Partly serviced - pumped to Mount Beauty

Tawonga South 1,159 2.2 Full treatment (from Mount Beauty supply) Pumped to Mount Beauty

Tungamah 376 2.1 Full treatment (from Yarrawonga supply) Lagoons

Wahgunyah 1,073 2.4 Full treatment Pumped to Rutherglen

Walwa 107 2.1 Full treatment Septic Tank Effluent Drainage System with lagoons

Wandiligong 393 2.1 Full treatment (from Bright supply) No service

Wangaratta 19,368 2.3 Full treatment Lagoons and phosphorus removal

Whitfield 127 2.4 Full treatment No service

Wodonga3 37,773 2.5 Full treatment Tertiary treatment

Yackandandah 909 2.2 Full treatment Lagoons

Yarrawonga 8,942 2.3 Full treatment Lagoons - primary aerated

Notes:

1. The Household factor represents the average number of persons occupying each domestic dwelling in the town. It is based on ABS 2011 Census data. The population for each town is based on this factor multiplied by the number of residential water connections.

2. Sewerage treatment currently under development.

3. Includes Bandiana, Bonegilla, Ebden, Killara and Logic.


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6. T

otal

wat

er v

olum

e is

the

sum

of

tota

l pot

able

wat

er a

nd t

otal

non

-pot

able

wat

er v

olum

es a

nd d

oes

not

incl

ude

non-

reve

nue

wat

er.

7. A

nnua

l ave

rage

wat

er c

onsu

mpt

ion

is t

he a

vera

ge t

otal

pot

able

wat

er v

olum

e fo

r th

e pe

riod

2011

-12

thro

ugh

2015

–16.

8. T

he t

otal

per

cap

ita c

onsu

mpt

ion

(litr

es p

er p

erso

n pe

r da

y).


Appendix 4. Non-Revenue Water Volume Delivered1

MLRevenue Water Sold to Customers (ML)

Non-Revenue Water2 (ML)

Water Used/Lost Prior to Delivery (ML)

2015–16 Average 2011–16

2015–16 Average 2011–16

2015–16 Average 2011–16

2015–16 Average 2011–16

Whole of Corporation 16,915 15,378 14,762 13,362 2,153 2,016 2,822 2,628

Notes:

1. This is the volume of water delivered to customers after treatment.

2. The definition of non-revenue water used aligns with the ESC definition of volume water delivered to the reticulation less volume of water sold. It includes:

– Water used for cleaning the reticulation (flushing and air scouring)

– Water lost through bursts, leaks and theft.

Appendix 5. PublicationsThe Corporation produces a number of publications for the information of customers and stakeholders, and to comply with the Victorian Government’s reporting regulations.

These include:

• Water Plan 3

• Water Supply-Demand Strategy

• Wastewater Strategy

• Customer Charter

• Land Development Handbook

• Board Meeting Highlights

• Permanent Water Savings Plan

• Annual Reports

• Corporate Plans

• water quality reports

• water security outlooks

• various informational brochures

• media releases

• community information fact sheets, and

• emergency and faults reporting methods.

Publications can be accessed via the Corporation’s website newater.com.au.



Appendix 6. Disclosures under the Protected Disclosures Act 2012The current procedures established by the public body under Part 6 are available upon request.

The number and types of disclosures made to public bodies during the year: 2015–16 number 2014–15 number

Public interest disclosures 0 0

Protected disclosures 0 0

The number of disclosures referred during the year by the public body to the Ombudsman for determination as to whether they are public interest disclosures

0 0

The number and types of disclosed matters referred to the public body during the year by the Ombudsman

0 0

The number and types of disclosed matters referred during the year by the public body to the Ombudsman to investigate

0 0

The number and types of investigations of disclosed matters taken over by the Ombudsman from the public body during the year

0 0

The number of requests made under section 74 during the year to the Ombudsman to investigate disclosed matters

0 0

The number and types of disclosed matters that the public body has declined to investigate during the year

0 0

The number and types of disclosed matters that were substantiated on investigation and the action taken on completion of the investigation

0 0

Any recommendations of the Ombudsman under this Act that relate to the public body

0 0


Contact UsCustomer Contact Centre

8.30am – 5.00pm weekdays Telephone 1300 361 633

Emergencies 24 hours a day, 7 days a week 1300 361 644

Visit or Mail 8.30am – 5.00pm weekdays 83 Thomas Mitchell Drive, Wodonga VIC

PO Box 863, Wodonga VIC 3689 Email: [email protected] Website: newater.com.au SMS: 0407 784 687

Communication AssistanceIf you require access to interpretation or translation services, please call 131 450 and ask to contact 1300 361 633.

If you are deaf, or have a hearing or speech impairment, please contact us through the National Relay Service (www.relayservice.com.au):

• TTY users phone 133 677 then ask for 1300 361 633

• Speak and listen users phone 1300 555 727 then ask for 1300 361 633

• Internet relay users connect to the NRS (www.iprelay.com.au/call/index.aspx) then ask for 1300 361 633

mailto:info%40newater.com.au?subject=


http://www.relayservice.com.au

http://www.iprelay.com.au/call/index.aspx

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