ANNUAL REPORT 2012 -13

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2012-13

ANNUAL REPORT2012 -13

North East WaterLevel 1, 104-106 Hovell Street, Wodonga VIC 3690

T: 1300 361 622E: [email protected]

W: www.newater.com.au

CONTENTS

Overview 1

Customers and Community 14

Environmental and Social Sustainability 28

People 36

Governance 44

Performance Report 56

Annual Financial Statements 63

Appendices 98

OUR VISIONGreat outcomes through smart solutions

OUR MISSIONTo provide sustainable water services to our customers and community

Front page imageWater Refill Station, Howitt Park, Bright.June 2013.

ISSN: 1838-1383© State of Victoria, North East Water 2013. This publication is coypright. No part may be reproduced by any process except in accordance with the provisions of the Copyright Act 1968.

OVERVIEWABOUT THIS REPORT

North East Water’s 2012-13 Annual Report is a summary of the Corporation's corporate performance during the 2012-13 financial year.

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

North East Water is committed to a full disclosure approach with the Corporation's report aiming to provide accurate information to meet the needs of all customers and stakeholders.

The report is structured to reflect the drivers of North East Water's Strategic Intent to 2018 and 2012-13 Corporate Plan:

• customer and community communications

• adapting to a changing environment

• asset performance

• One Resource

• business sustainability, and

• achieving through people.

FOR FURTHER INFORMATION

Information relevant to Financial Reporting Direction 22C of the Financial Management Act 1994 is held at the Corporation's head office and is available on request. The office is located at Level 1, 104-106 Hovell St, Wodonga, telephone 1300 361 622. This information is subject to the Freedom of Information Act 1982.

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

• annual reports

• environment reports

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

• Water Plans, the 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: www.newater.com.au. Hard copies are available on request from North East Water's head office.

North East Water Annual Report 2012-131

The 2012-13 financial year has seen the completion of the Water Plan 2 regulatory cycle, and North East Water’s biggest ever 5 year investment period, delivering major projects and great customer service outcomes. The Corporation has delivered in excess of $105 million in capital investments throughout the North East Victorian region over the past five years.

In particular, during 2012-13 we have seen the conclusion of several major projects to improve water quality for our customers, including new water treatment plants in Whitfield and Corryong and the installation of an innovative dual water supply system for the township of Bundalong. Further, North East Water has addressed a number of small town wastewater issues with projects being finalised in Tungamah, Milawa, and Oxley and now underway in Glenrowan.

Construction of our new Regional Headquarters began during the year, and once completed will improve our customer service levels by consolidating services and functions in one location.

Once again, our annual Customer Survey results have demonstrated that North East Water performed strongly in the provision of water supply, sewerage services and sustainability, affirming a consistent high level of overall satisfaction.

North East Water has again shown excellence in crisis management with staff responding to the consequences of this year’s Harrietville bushfires. It is pleasing to see that we possess the skills and experience within our workforce to manage the challenges of unplanned emergency events whilst ensuring the successful day-to-day running of a water corporation.

Our Board welcomed three new directors during the year: Cath Botta, Debi Gadd and Denis Flett. They bring a wealth of experience to North East Water and join Directors Jonathan Koop, Rowan O’Hagan, Steve Bird and Managing Director Craig Heiner, in a team which aspires to ensure that North East Water delivers sustainable, reliable, quality water services to our customers and community.

This will be my last Annual Report as the Chair of North East Water, and I would like to thank all staff for their support and effort during my years on the Board. Their ongoing dedication to the job stands the Corporation in good stead for the future.

There is much to look forward to in the coming year as we continue to invest in our customers and community in delivering high quality drinking water and wastewater projects. I am proud of our people who deliver such high quality water and sewerage services and I am proud that we continue to help our communities grow and prosper.

Joanne Anderson, Chair27 August 2013

CHAIR’S REPORTJOANNE ANDERSON


In accordance with the Financial Management Act 1994, I am pleased to present North East Water’s Annual Report for the year ending 30 June 2013. I attest that this report is compliant with all statutory reporting requirements.

Following two wet summers, the 2012-13 year saw the return of a more traditional season with the region experiencing a hot dry summer. Understandably customers water needs increased in response to the dry conditions seeing water consumption of 210 kilolitres per connection. While these levels of consumption represent a 20 per cent increase on the previous year they remain well below historical levels confirming our customer’s ongoing commitment to water conservation.

We achieved strong performance against our service targets for the year, with highlights including the reliability of our sewer networks resulting in very few blockages or spills and our response times to water network failures minimising the duration of outages to our customers.

Our continued investment in capital upgrades peaked at a record level of $43 million with significant investments in water quality and reliability and extending sanitation services to a number of our vibrant regional communities. These investments are an important part of supporting the region’s future prosperity.

I would like to take the opportunity to acknowledge the valuable contributions of the Water Plan 3 Reference Group. The significant input from the members of this group was invaluable in informing the Board of the community’s and stakeholders’ views during the development of the Corporation’s strategic planning for the 2013-2018 period. The final pricing determination from the Essential Services Commission for the Water Plan 3 period has resulted in a great outcome for our customers with price increases of less than CPI for the 5 year term. Our challenge in this context is to manage our asset renewals to minimise the risk of network reliability reducing as our assets approach the end of their service life.

In closing, I would like to thank the staff of North East Water for another year of excellent work. In the coming year the Corporation will continue to fine tune our service provision in our endeavor to continually better serve our customers.

Craig Heiner, Managing Director27 August 2013

MANAGING DIRECTOR’S REPORTCRAIG HEINER


ORGANISATIONAL PROFILEWHO WE ARE

North East Water is a public utility responsible, since 2 December 2010, to the Minister for Water, the Honourable Peter Walsh, MLA. It was constituted on 1July 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 2012-13 Change(%)

Impact1 2011-12 2010-11 2009-10 2008-09

Population served (water) 118,967 1.6% F 117,105 115,131 113,072 102,472

Population served (sewerage) 108,606 1.6% F 106,890 105,565 102,980 92,531

Connected properties (water) 47,499 1.4% F 46,845 46,159 45,468 44,686

Connected properties (sewerage) 41,878 1.5% F 41,249 40,602 39,864 38,980

Water sold (megalitres)2 14,687 13% N 12,044 11,249 13,603 14,130

Sewage treatment volumes (megalitres) 8,835 -12% N 9,992 10,721 8,440 8,004

Employee numbers3 155 2.5% N 151.2 149.34 142.0 140.7

Number of employee days lost to injury4 69 77% UF 39 88.53 1564 31

Total revenue ($'000) 63,412 23% F 51,686 48,221 47,049 43,376

Net operating result - before tax ($'000) 7,888 231% F (2,386) 398 1,756 (-1,510)

Total assets ($'000)5 755,065 3.2% F 731,695 731,066 486,753 476,702

Capital expenditure ($'000) 42,709 222% F 13,265 17,107 16,717 17,408

Notes:1. Favourable (F), neutral (N) or unfavourable (UF) impact on the Corporation’s business.2. Includes reclaimed water sales.3. Measured as full time equivalent employees (FTE).4. Includes 8 days lost from an injury incurred in 2012-13, and 61 days lost from an injury incurred in 2010-11.5. Includes current and non-current assets.

OUR REGION

We provide water and wastewater services to an estimated population of 118,967 people in 37 localities in North East Victoria. Our region covers 20,000 square kilometres, and is bound by Corryong, Yarrawonga, Benalla and Harrietville.

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

OUR SERVICES

During 2012-13, North East Water operated 21 primary water treatment plants, with a number of disinfection booster facilities as well as 18 wastewater treatment facilities throughout the region.

WaterThere are two distinct types of water treatment facilities that North East Water operates:

1. Full treatment - Full water treatment means multiple barriers, including clarifiers, filters and disinfection, are applied before water is supplied to the community. Full treatment is available at most

towns and our aim is to upgrade all supplies to full treatment.

2. Disinfection only – Disinfection only supplies have historically received such high-quality raw water that introduction of filtration has been delayed. Goorambat supply, which is sourced from groundwater, is our only disinfection only supply.

WastewaterThe 18 wastewater treatment plants utilise 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 our water and wastewater services, see Appendix 2 on page 100.

Reclaimed WaterThe Corporation supplied reclaimed water to 23 sites in the region during the reporting period. These schemes range from pasture and cropping ventures to community-benefit applications such as school grounds and golf courses. For further details on our schemes, see Reclaimed water on page 26.


OUR BUSINESS RISKS

Many factors can impact on business operations, potentially compromising our sustainability and the delivery of the Corporation's Strategic Intent 2018. The strategic business risks relate to:

• consultation with customers and communities in decisions that affect them

• employee, contractor and public 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 Risk Management Framework documents North East Water's commitment to risk management. It outlines the risk policy and strategy for implementing and maintaining an effective risk management program. It continues to be the foundation on which the Corporation assesses both strategic and operational risks for decision making, and is based on the Australian Standard AS/NZS ISO 31000:2009 Risk Management Principles and Guidelines. Further detail on the Corporation's risks and how they are managed is provided on page 50.

OUR PEOPLE

North East Water employs 155 full-time equivalent staff (FTEs) at the Wodonga offices and operational centres in Wodonga, Wangaratta, Benalla, Yarrawonga, Rutherglen, Beechworth, Corryong, Myrtleford, Mt Beauty and Bright.

North East Water's main office is located in Wodonga which houses our administrative functions including Customer & Community and Corporate Services.

A second office, also in Wodonga, houses the Planning & Infrastructure functions, including the planning and delivery of our capital investment projects.

The Corporation's field staff perform water and wastewater treatment, infrastructure maintenance, electrical services and farm management.

OUR INFRASTRUCTURE

Infrastructure management is critical to achieving the Corporation's business objectives. North East Water’s management activities focus on ensuring the Corporation delivers required customer service levels, as well as addressing broader issues such as 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, relevant legislation, and the Corporation’s Customer Charter. North East Water's current infrastructure has a replacement cost of approximately $1.1 billion – see page 12.

Figure 1 - Area of operations


Figure 2 - Strategic Intent 2018

STRATEGIC DIRECTIONSTRATEGIC INTENT 2018

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

The 2012-13 Corporate Plan outlined the Corporation’s strategic objectives and is designed around the three key themes of the Strategic Intent 2018, i.e. Customers & Community, Infrastructure & Business Solutions and People.

An overview of the Strategic Intent 2018 is provided in Figure 2, below. It is also available on the Corporation’s website: www.newater.com.au.

In determining the 2012-13 strategic priorities for the Corporation, the Board aligned performance to six strategic objectives. Performance against these six strategic objectives is summarised in Table 2, pages 7-8.

MAJOR INDUSTRY

Major industrial customers operate in the larger towns of Wodonga, Wangaratta and Benalla, as well as in Wahgunyah,Yarrawonga and Myrtleford. These customers are involved in manufacturing, producing food, pet food, textiles and wood products. Approximately 90% of our customers are residential, with the remainder being commercial and industrial.

BUSINESS PARTNERSHIPS

In 2012-13 the Corporation was involved in two significant business partnerships delivering wastewater services:

• Environmental Group Limited (EGL) ceased operating the West Wodonga wastewater treatment plant in August 2012, with North East Water bringing the site back under its control, and

• Cleanaway, which operates our Wangaratta trade waste treatment plant.

OUR STAKEHOLDERS

We value our relationships with our stakeholders, which include: customers, communities, our workforce and their families, our regulators, the environment, our business partners, suppliers, other water corporations,our bulk water supplier, local government and the media.


REPORT ON 2012-13 STRATEGIC OBJECTIVES

Performance against the Corporation’s strategic objectives for 2012-13 is summarised in Table 2 below.

Table 2 - Summary of Strategic Performance

Provide customers and communities with choice in how they interact with us.

2012-13 Strategic Objective Achievements Objective met?

We will implement new and emerging methods of enhancing our communications and further explore new technologies and marketing opportunities.

During 2012-13, the Corporation;• Developed a comprehensive communication plan to support the

transition of staff and services to the new Regional Headquarters.• Developed a broad-based communication strategy that

encompasses marketing communications, customer service and community engagement.

✗

Promote future water solutions that are fit for purpose and meet the challenges of a changing climate.


We will incorporate the impacts of a changing climate in business planning and operations and remain agile and flexible to adapt to a changing climate.

During 2012-13, the Corporation;• Reviewed the Policy and Business Landscape in which we

operate to identify key impacts to our business arising from a dynamic and changing climate.

• Completed Vulnerability and Resilience assessments against three key climate variability hazards (Bushfire, Flooding and Storm). These assessments considered key infrastructure from catchment-to-tap and treatment-to-catchment across all our service locations, with a prioritisation ‘heat-map’ generated as an output.

• Introduced consideration of climate variability within our Project Framework to ensure that the infrastructure decisions we make are informed and effective in supporting future growth.

✓

Enable business efficiency and provision of services through technology and innovation.


We will manage our infrastructure to maximise efficiencies while ensuring we meet customer expectations for the supply of high quality water and wastewater services and recognising the necessary trade-offs between the level of investment.

During 2012-13, the Corporation:• Benchmarked (AQUAMARK) our asset management approach

against industry performance indicators.• Determined key business needs for an enterprise-wide asset

management system. • Developed a strategy for asset performance for 2013-18.

✓

Promote future water solutions that are fit-for-purpose.


We will further embed a One Resource approach in the development of infrastructure, the products we supply, and the choices we provide to customers in the delivery of fit-for-purpose water services.

During 2012-13, the Corporation;• Enhanced its understanding of the feasibility and viability of

Managed Aquifer Recharge (MAR) as a means of securing small town water services.

• Partnered with Local Government to develop an understanding of the whole-of-water cycle options, including urban reuse, to support the development and growth of both new and infrastructure constrained communities.

• Played a leadership role in the development of a broader understanding of the whole-of-water cycle opportunities for development of livable, resilient urban environments (Water Smart Cities workshop supported by CRC Water Smart Cities, Local Government, the Victorian Water industry and Office of Living Victoria).

✓


Table 3 - Corporation-wide key performance

Performance Indicator 2012-13Result

2012-13Target

TargetMet?

2011-12 2010-11 2009-10 2008-09

Restoration of water supply following unplanned interruption% interruptions restored within 5 hours1

Average unplanned minutes off supply

100

7.15

98

7.70

✓

✓

98

22.661

99

5.39

98

7.69

96

5.80Drinking water% volume of drinking water compliant with quality standards2

99.9 99.5 ✓ 99.9 99.4 99.3 99

Wastewater% wastewater complying with EPA discharge licence2,4

95.7 95.0 ✓ 97 94 87 98

Sewer blockages (including spills)Blockages / 100km main2 5.81 9.00 ✓ 9.21 10.95 12.43 12.42

Containment of sewer overflows% spills contained within 5 hours1 100 99 ✓ 100 100 100 100

Customer complaintsNo. complaints to EWOV3 per 1,000 water customers1

0.8 0.4 ✗ 0.04 0.06 0.35 0.5

Reliability of water supply serviceUnplanned interruptions/100km main1

14.9 13.7 ✗ 15.02 11.26 12.5 12.2

Notes:1. ESC service standard. For further information on reliability of water service please refer to page 242. Internal Corporation key performance indicator3. Energy and Water Ombudsman of Victoria. For further information on the number of complaints to EWOV please refer to page 174. This indicator represents the volume of treated effluent 100% compliant with the limits imposed in the EPA Corporate License for the treatment plants

that discharge to waterways. It is limited to the periods that the wastewater treatment plants (WWTP) are capable of meeting the Corporate License requirements.

YEAR IN REVIEW

Strengthen financial viability to enable improved levels of service for current and future customers.


We will focus on further developing our long-term business response/mitigation strategies to meet the range of challenges facing our business, and to enable sustainable levels of service for both current and future customers and stakeholders.

During 2012-13, the Corporation:• Embedded an agreed suite of financial sustainability indicators in

management and Board reporting. • Developed a sustainability framework comprising six sustainability

principles to inform strategy development over the next decade. • Enhanced our understanding of the opportunities to recognise

water security as a key regional attribute in partnership with local government through the economic development strategy process.

✓

Build our organisation through a highly skilled and motivated team.


We enhance our workplace culture through recognition of leadership, workforce planning and improving our capacity to support our strategic initiatives and the changing needs and expectations of our customers.

During 2012-13, the Corporation:• Introduced a staff engagement survey tool to recognise staff

engagement and alignment with Corporation goals and prioritise future activities.

✓

We will also enhance our employer ‘value proposition’ in accordance with our refreshed brand and imminent Regional Headquarters facility so we are better placed to retain and attract the right people.

During 2012-13, the Corporation:• Reviewed and renewed its corporate values. • Implemented a change management program to support staff

in the management of change in the workplace. A key focus for the program has been to support staff in the preparation for the unique opportunity of moving to a new office location.

✓


Figure 3 - Regional water extractionsTotal water extracted in megalitres

Figure 5 - Wastewater treatment plant volumesTotal inflow volumes in megalitres

Figure 6 - Annual regional average rainfallAnnual rainfall in millimetres

Notes:Water extractions increased notably. For further details see water extractions page 19.

Notes:With rainfall returning to a long term average wastewater inflows decreased in 2012-13 to 8,840 megalitres.

Notes:This information has been sourced from the Australian Bureau ofMeteorology and is an average from across the North East Water’s region. In contrast to the previous two wet years in 2012-13 the annual average has fallen below the long term average for the region (769 mm).

Figure 4 - Regional water consumptionTotal water sold in megalitres (excluding reclaimed water)

Notes:Water consumption increased notably. For further details see water consumption page 22.


FINANCIAL PERFORMANCESUMMARY OF FINANCIAL RESULTS

In 2012-13 we achieved our budgeted financial objectives.

The Murray River System bulk water allocations reached the 100% level for the fourth year enabling us to trade surplus temporary water on the open market generating additional revenue for the Corporation.

The Corporation generated $21.7 million from operating activities which, combined with our increase in borrowings of $15 million enabled capital investments in infrastructure of $39.19 million, setting the highest one year capital spend in the Corporation’s history with total capital expenditure for the five year Water Plan 2 period totaling $105.1 million.

Overall, there were no significant changes in the Corporation’s sound financial position during 2012-13.

The Essential Services Commission have recently handed down its pricing decision for the five year period commencing 1 July 2013 which will see customers’ bills increase by less than inflation for this period.

The challenge continues to be in meeting the expected levels of service for customers in an operating environment where we are experiencing real price reductions and changes in both climate and customer behavior.

Table 4, below provides the financial highlights in 2012-13 compared with the previous four years.

Table 4 - Summary of financial results

Financial Result 2012-13$'000

2011-12$'000

2010-11$'000

2009-10$'000

2008-09$'000

Core Business Revenue 54,244 46,809 41,824 40,207 34,715

Government Contributions - 75 50 1,736 470

Other Revenue 9,168 4,802 6,347 5,106 8,191

Total Revenue 63,412 51,686 48,221 47,049 43,376

Operating Expenditure 30,519 31,235 29,713 27,361 27,242

Depreciation Expenditure 19,589 19,268 14,648 14,276 13,908

Finance Costs 1,793 1,989 1,882 1,717 1,053

Environmental Contribution 1,580 1,580 1,580 1,580 1,580

Asset Impairment 2,043 - - 359 1,103

Total Expenditure 55,524 54,072 47,823 45,293 44,886

Net Result before tax 7,888 (2,386) 398 1,756 (1,510)

Current Assets 15,238 10,659 9,651 10,819 8,170

Non Current Assets 739,827 721,036 721,415 475,934 468,532

Total Assets 755,065 731,695 731,066 486,753 476,702

Current Liabilites 17,743 15,371 18,236 7,300 16,205

Non Current Liabilites 171,953 156,312 151,794 85,372 69,450

Total Liabilities 189,696 171,683 170,030 92,672 85,655

Net Cash Flows from Operations 21,773 15,817 11,110 13,359 7,137

Payments for property, plant and equipment (including infrastructure) 39,198 14,536 16,453 16,866 19,408

Notes:Comprehensive financial statements can be found at page 63.


UNDERSTANDING OUR REVENUE

In 2012-13, North East Water’s total revenue increased by 23% over the previous financial year. Revenue from water volumetric sales increased by $6.7 million which represented a 25% increase in sales compared to the prior year. This followed a return to a hotter and drier summer compared to the preceding two year period.

Other income increased by $2.6 million compared with 2011-12 reflecting the recognition of new scheme contributions and temporary water sales.

For an indication of the sources of income received by the Corporation, see Figure 7, right.

UNDERSTANDING OUR EXPENSES

Total expenditure for 2012-13 excluding income tax was $55.5 million or 2.7% over the prior year. Included in the current year expenditure is $2.04 million of asset impairment expenditure which relates to the write down of infrastructure assets no longer in use due to upgrades or replacements carried out as part of our capital expenditure program. Employee costs (excluding the defined benefit funding shortfall in 2012) increased by 7%. This increase is a result of the Corporation’s Enterprise Bargaining Agreement commitments and a minimal increase in total employee numbers relating to the transfer of operational responsibilities back to North East Water in relation to the West Wodonga Wastewater Treatment Plant.

Figure 8, right, provides a breakdown of expenditure by type.

PERFORMANCE AGAINST OBJECTIVES

The Corporation met its revenue and expenditure targets for 2012-13 in accordance with its Corporate Budget as outlined in Table 5 below.

Figure 7 - 2012-13 Operating Revenue

Figure 8 - 2012-13 Expenditure

Table 5 - Total revenue and expenditure vs budget

Actual 30 June 2013$'000

Corporate budget2012-13

Variance$'000

Variance%

Total Revenue 63,412 53,993 9,419 17.4

Total Expenditure 57,893 58,757 (864) (1.4)


INFRASTRUCTURE AND CAPITAL EXPENDITURE

INFRASTRUCTURE, PROPERTY,PLANT & EQUIPMENT

The Corporation’s current infrastructure assets (water and wastewater reticulation and above-ground assets) property, plant and equipment have a replacement cost of approximately $1.1 billion. See Table 6, below.

A revaluation of this asset class is required to be conducted every five years for financial reporting purposes. The last revaluation was conducted in the

2010-11 year which determined that our infrastructure is approximately 36% through its 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 their role of providing water and wastewater services to the region’s communities.

Table 6 - Value of infrastructure, land and buildings, and plant and equipment assets owned by North East Water as of30 June 2013

Asset Replacement cost$'0001

Written down value$'0002

Wastewater reticulation 242,414 164,496

Water reticulation 321,258 225,591

Water infrastructure 256,601 147,627

Wastewater infrastructure 205,797 93,379

Land 25,742 25,742

Plant, equipment and motor vehicles 11,998 4,871

Buildings 8,867 2,163

Work in progress 34,549 34,549

Total 1,107,226 698,418

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 EXPENDITURE

2012-13 was the final year of the regulatory five-year period (Water Plan 2) capital expenditure programme. In 2012-13 the Corporation delivered a diverse portfolio of projects, including:

• the construction of a spillway upgrade for the Loombah dam (Benalla) with the objective of increasing its capacity to safely pass flood events

• the completion of a new water treatment plant and treated water storage servicing the townships of Corryong and Cudgewa

• the completion of a new water treatment plant and treated water storage servicing the township of Whitfield

• the completion of a new dual pipe water supply system for Bundalong, delivering drinking water from Yarrawonga and providing water for outdoor use, through a raw water supply directly from Lake Mulwala. A storage tank was also constructed within the township to increase treated water storage capacity

• the delivery of low pressure sewerage infrastructure to support sewerage services to the backlog areas of Parfitt and Wilson Roads in Wangaratta

• the construction of an additional winter storage dam to support increased reuse capacity at North Wangaratta supporting reductions in discharges to waterways from the Wangaratta wastewater treatment plant, and

• the substantial completion of reticulated sewerage systems in the townships of Tungamah, Milawa and Oxley.


North East Water made significant progress on other major projects that will be completed in 2013-14, including:

• a reticulated sewerage system and treatment plant in the township of Glenrowan

• a new Regional Headquarters for North East Water in Wodonga to provide improved productivity and deliver improved services and access for customers

• an off-river storage dam and pipeline infrastructure to secure the water supply needs of Bright, Wandiligong and Porepunkah, and

• the construction of a reuse irrigation system linked to the new winter storage dam at North Wangaratta, further supporting reductions in discharges to waterways from the Wangaratta wastewater treatment plant.

Additionally, the following projects will continue in 2013-14:

• the ongoing development of improvements to Wangaratta’s Trade Waste Treatment management, to improve environmental performance and meet the emerging needs of customers

• the instigation of a sewerage scheme for the township of Moyhu

• dam safety improvement works on the Bakers Gully dams in Bright.

See Table 7 below, for details of our capital expenditure.

Table 7 - Capital expenditure

2012-13$'000

2011-12$'000

2010-11$'000

2009-10$'000

2008-09$'000

Wastewater environmental improvements 20,140 1,838 1,813 1,214 3,634

Renewal of wastewater infrastructure 1,431 2,142 2,334 2,010 705

Water quality and reliability improvements 12,245 5,080 9,000 5,399 9,430

Renewal of water infrastructure 1,691 1,488 1,556 1,298 818

Corporate and fleet management 7,196 2,742 2,404 6,770 2,821

Total 42,709 13,265 17,107 16,691 17,408


CUSTOMERS AND COMMUNITY

MANAGEMENT OF SOCIALAND ECONOMIC IMPACTS

North East Water’s operations support the regional economy of North East Victoria through the delivery of high quality water and wastewater services. The Corporation has continued to innovate to ensure water supplies are secured and appropriate wastewater facilities are available for customers and community based assets. Demand planning ensures North East Water is well positioned to respond to the changing community and economic needs as well as delivering social and public health benefits to current and future customers.

The Corporation understands the importance of water security to regional communities and their economies. Investment in infrastructure of over $105 million in the current regulatory period has supported this objective. Water Plan 2013-2018 maintains and extends this focus and ensures North East Water continues its investment in new and existing infrastructure.

In the 2012-13 year, North East Water had a number of contacts from customers concerned about high consumption meter readings. Generally such consumption is attributed to undetected leaks or changing weather conditions impacting usage patterns and resulting in higher water consumption than the previous four years. Water saving opportunities and rebate schemes continue to be offered to assist such customers. Customers are also encouraged to contact the customer service team to discuss the various options available to help manage their accounts.

COMMUNITY & STAKEHOLDERENGAGEMENT

North East Water is committed to actively engaging with customers and communities to listen to and understand their expectations and the value they place on North East Water services.

North East Water follows the International Association for Public Participation (IAP2) approach in developing engagement plans and methodologies. A variety of engagement tools have been utilised throughout the year including project reference groups, a community advisory committee, public meetings, community information sessions, facilitated small group discussions, surveys, newsletters, online information and fact sheets.

Over the past 12 months the Corporation has sought customer and community input on both strategic matters and to support the achievement of successful infrastructure project outcomes.

Key engagement activities relating to strategic issues important to the Corporation included:

• Water Plan 3 (WP3) Community Reference Group – The WP3 Reference Group provided feedback on issues including future capital projects, long-term reliability of supply, guaranteed service levels and customer tariff design. Two years of input and consultation with the WP3 Community Reference Group culminated in the submission of North East Water’s draft determination to the Essential Services Commission (ESC). The final determination was handed down by the ESC in June 2013.

• Mindshop Excellence Youth Program – a youth engagement workshop was conducted with Wodonga Catholic College Year 10 students to explore how to improve engagement with future generation of customers.

• Annual Business Breakfast – approximately twenty representatives from North East Water’s major customers and partners attended the annual business breakfast held on Anzac Eve at Wodonga TAFEspace. The event provided an opportunity for North East Water Board and Executives to meet and speak with major customers and local partners.

2012-13 was a busy period for finalising and progressing many Water Plan 2 infrastructure projects, which subsequently created a busy community engagement and communication schedule. Major engagement and communication activities relating to infrastructure project implementation are summarised in Table 8, page 15.

North East Water is committed to

actively engaging with its customers and communities.


Table 8 - Summary of Infrastructure Project Community Engagement & Communications Activities

Community Project Communication & Engagement Activities

Whitfield Whitfield Water Treatment Plant • Community Newsletters• Official Opening Ceremony by the Minister for

Water• Website updates• Media Releases

Corryong Corryong Water Treatment Plant • Community Newsletters• Project launch with Minister for Water• Website updates• Media Releases

Bright, Porepunkah, Wandiligong Bright Off-River Storage Facility • Community Newsletters• Stakeholder Liaison Group meetings• Community Information Sessions• Website updates• Media Releases• Project launch with Minister for Water

Tungamah Small Towns Sewerage Scheme • Community Newsletters• Community Information Sessions• Resident Information Packs• Website updates• Media Releases• Community Progress Group meetings

Milawa

Oxley

Glenrowan

Moyhu Small Towns Sewerage Scheme • Community Newsletters• Community Information Sessions• Public Meetings• Moyhu Action Group meetings• Website updates• Media Releases

Bundalong Bundalong Dual Water Supply • Bundalong Action Group Meetings• Community Newsletters• Community Information Sessions• Facilitated small group meetings• Resident Information Packs• Website updates• Media Releases

All North East Water Customers North East Water Regional Headquarters • Community Newsletters• Website updates• Media Releases

Goorambat Goorambat Water Supply • Community newsletters• Small community group meetings

North East Water is continuously reviewing and identifying ways to improve customer, community and stakeholder engagement approaches. The Corporation is committed to meeting engagement obligations and highly values the improved outcomes for both customers and communities that can be realised as a result of strong public participation.

The following focus engagement activities will be undertaken in 2013-14

• Developing and delivering a proactive customer, community and stakeholder engagement strategy. This strategy will include target audiences for engagement, engagement objectives for each audience (leveraging the IAP2 public participation spectrum) and engagement approaches for each audience.

• Embedding community and stakeholder engagement as an integral part of project development and delivery.

• Engaging customers and communities early in the decision making process to ensure their objectives, issues and concerns are understood. North East Water will actively manage risks and impacts to improve customer satisfaction, during project implementation.

• Provision of training and support for staff involved in engaging with customers and community. This will be underpinned by a suite of tools and templates to assist staff in effective community engagement.


COMMUNITY EDUCATIONAND AWARENESS

North East Water actively supports the development of community awareness regarding sustainable water use and the Corporation’s services, by conducting community and school presentations, organising tours of North East Water facilities and participation at community events within the Corporation’s service region.

Visits to Educational Institutions such as Early Childhood Centres and Primary Schools continued to be a major component of the education and awareness program throughout 2012-13. Presentation topics included the water cycle, local water and wastewater treatment and supply, and efficient water use. Curriculum resources were also made available to further support educators following the North East Water presentation.

Tours of major North East Water sites provide an opportunity to directly demonstrate the technical processes involved in North East Water operations. The tours also provided schools and community groups with an understanding of the provision of water as an essential service.

Community presentations covered a broad spectrum of the community groups with presentations made to Lion’s Clubs, Rotary, Probus, War Widows, Senior Citizens and a garden club. Topics included ‘One Resource’, ‘Water Supply and Demand’, ‘Understanding your Water Bill’ and ‘Water and Wastewater Treatment’.

Participation in community events held across the region provided the opportunity to engage directly with local communities. Attendance at these events enabled North East Water to share information on sustainable and efficient water use, the status of local infrastructure projects and government initiatives such as ‘Living Victoria’ rebates. Events attended included Towong Shire Sustainability Workshops & Fair, Bright Markets & Wodonga Children’s Fair.

Partnerships with North East Catchment Management Authority and NEVRwaste have continued through

support of the School Environment Education Directory (SEED). The central components of the SEED program include the website, which hosts information and resources focussed on sustainability, and the Student Environment Day events featuring free hands-on activities provided by regional natural resource management groups and organisations, aimed at Year 5 students.

Other partnerships formed during 2012-13 have included the ResourceSmart AuSSI Vic Hume Consortium, Murray Darling Basin Network and Wodonga Urban Landcare Educators Network. Contact continued with the Victorian Water Educators Network.

North East Water again implemented customer, community and staff activities to support the 2012 National Water Week. Activities included:

• breakfast and tours held at Myrtleford and Yarrawonga water treatment plants

• competitions relating to the 2012 theme of ‘Valuing our Water’ for schools, junior sporting clubs and community groups, and

• a staff photographic competition.

CUSTOMER SURVEY

North East Water conducted the 2012-13 Customer Perception Survey in June 2013 gathering responses from a minimum of 1% of customers in each of the towns serviced. The survey is conducted by telephone and aims to:

• give customers the opportunity to provide feedback and comment on the services provided

• measure what is important to customers across 16 key aspects of water supply services, sewerage services and water resource management, and

• measure how well customers perceive North East Water is performing in these areas.

This year 1,104 customers responded to the survey. The following table (Table 10, page 17) outlines the findings from the survey and lists what customers perceive to be the five most important aspects of North East Water’s business along with the five best areas of performance. It has been pleasing to note that the top three ranked most “important” aspects of North East Water’s business are also ranked as the top “performance” aspects.

This year’s survey results also:

• indicated a high level of general satisfaction, and

• whilst performing slightly under the 2011-12 results, performance has been maintained with results consistently higher than each of the four years preceding.

Table 9 - Community Awareness & Education Participation Summary

Activity Organisations / Events

Number of participants

Early Childhood Visits 30 1,124

School Visits 20 1,115

Tours 19 521

Community Presentations 17 607

Community Events 5 260

Professional Development Sessions 1 64


The information obtained through the Customer Perception Survey is used as an opportunity to improve performance in meeting customers’ expectations. This year’s results demonstrate that North East Water has continued to deliver a high quality service to customers and the community.

CUSTOMER COMPLAINTS

2012-13 has seen a reduction in the number of recorded customer complaints, with 61 complaints recorded compared with 146 in 2011-12. Approximately 50% of the complaints received related to water quality issues, predominantly around taste and odour. These complaints cannot be attributed to a specific incident or location. North East Water continues to work to address specific complaints promptly when received.

ENERGY & WATER OMBUDSMANOF VICTORIA (EWOV)

North East Water has seen an increase in the number of cases referred to the Energy and Water Ombudsman of Victoria (EWOV) from 20 in 2011–12 to 37 in 2012-13 (see Figure 10, below). Results again reflect that the Corporation’s focus on resolving customer contacts at the earliest possible opportunity minimises cases escalating to full investigation by EWOV. This year only four cases proceeded to this level (11% of contacts comparable to 15% in 2011-12).

This result reflects the commitment of staff in serving customers and the benefits being achieved through ongoing staff training and skill development.

Over 40% of customer contacts in 2012-13 have been related to undetected leaks or unexplained high water usage.

Four cases have been subject to a full investigation by EWOV. Two have been finalised throughout the year with the remainder awaiting EWOV’s response.

North East Water continues to work with EWOV to ensure appropriate and equitable resolutions are achieved for customers.

Table 10 - Top 5 importance and performance aspects 2012-13

Importance Performance

1. Having a reliable sewerage service that does not suffer from blockages or back up

1. Having a reliable sewerage service that does not suffer from blockages or back up

2. Having an odour free sewerage service

2. Having an odour free sewerage service

3. Having a water supply free of interruptions to service

3. Having a water supply free of interruptions to service

4. Water/sewerage service interruption: Communication about your interruption

4. Water Clarity

4. Water/sewerage service interruption: A fast repair time / timely response

5. The customer is adequately informed about water restrictions

Figure 9 - Number of customer complaints 2012-13

Notes:1. Water supply complaints include reliability of service and pressure issues2. Wastewater service complaints include reliability of service and odour

issues3. Other complaints include quality and timeliness of other services,

such as connections, account confidentiality, responding to correspondence and staff behaviour

Figure 10 - Breakdown of the number of referrals to EWOV 2012-13


WATER SYSTEMSWATER EXTRACTIONS -BULK ENTITLEMENTS

During 2012-13, North East Water extracted 16,794 megalitres of water from surface water and groundwater sources. The Corporation extracted water in accordance with the conditions in Bulk Entitlements (BEs) and groundwater and surface water licences. The Corporation complied with the requirements contained in each of the twenty BEs. A number of temporary transfers of entitlement were made during the year to the water market and one internally to cover an entitlement shortfall. No permanent transfers occurred.

A breakdown of our water extractions and BE compliance can be found in Table 11, page 19-22.

High storage volumes on the Murray River system saw the Corporation's River Murray Bulk Entitlement reach 100% of allocation for the fourth year running. Allocation on the Broken system also reached 100% for the third year in a row. High levels were maintained in North East Water’s reservoirs throughout the year however stream flows were generally low on unregulated systems.

During the year, the Corporation continued to receive credits for flows returned to the Murray River from the West Wodonga Wastewater Treatment Plant. In 2012-13 North East Water received return flow credits in the order of 1,391 megalitres against the River Murray BE in accordance with the Murray River Return Flow Protocol.

157 megalitres of water was used for irrigation purposes at the Corporation's Benalla farm in 2012-13.

CHANGES TO BULK ENTITLEMENTS AND LICENCES

Three amendments to existing Bulk Entitlements were made in 2012-13. In March 2013, North East Water’s Bundalong surface water licence was converted to a new offtake point in its River Murray Bulk Entitlement via a minor amendment under Section 47CB of the Water Act 1989. This will provide increased water security for the Bundalong raw water supply.

Also in March 2013, an additional entitlement of 391.1 megalitres was added to the River Murray Bulk Entitlement via a minor amendment under Section 47CB of the Water Act 1989. This amendment consolidated water shares that were held by North East Water outside of the Bulk Entitlement.

In June 2013, additional entitlement of 31.3 megalitres was added to the Yackandandah Bulk Entitlement via a minor amendment under Section 45 of the Water Act 1989. This amendment consolidated water shares that were held by North East Water outside of the Bulk Entitlement.

In May 2013, a new zero megalitre surface water licence was issued to North East Water on the Ovens River to be used temporarily for the construction of the Bright off-river storage.

No water shares were held by the Corporation at 30 June 2013.

The Minister for Water approved an updated Bulk Entitlement Metering Program in March 2013 to reflect changes at Bundalong. The Corporation continues to work towards implementing improvements identified.


Table 11 - Bulk water extractions and bulk entitlement compliance for 2012-13

Bulk Entitlement/Licence Name

SpecifiedPoint(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)

1,100 513 (12.1 (e)) 0 (12.1 (f)) 12.1 (d) Environmental and metering program - 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

Bright(Ovens River)

704 583 (12.1 (e)) 0 (12.1 (f)) 12.1 (d) Environmental and metering program - Nil






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

Bulk Entitlement(Chiltern) Conversion Order 2000

Chiltern (Barambogie Creek)

180 0 (13.1 (d)) 0 (13.1 (e)) 13.1 (c) Environmental and metering programs - Nil

13.1 (f) Any BE or licence transfer - Nil





Bulk Entitlement(Corryong)Conversion Order 2000

Corryong (Nariel Creek)

680 256 (12.1 (c)) 0 (12.1 (d)) 12.1 (b) Environmental and metering program - 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)

29 0 (12.1 (d)) 0 (12.1 (e)) 12.1 (c) Environmental and metering program - Nil






Bulk Entitlement(Dartmouth) Conversion Order 2000

Dartmouth (Mount Tabor Creek, Mitta Mitta River)

60 28 (13.1 (e)) 0 (13.1 (f)) 13.1 (d) Environmental and metering programs - Nil






Bulk Entitlement(Glenrowan)Conversion Order 1999

Glenrowan (Fifteen Mile Creek)

90 0 (13.1 (d)) 0 (13.1 (f)) 13.1 (c) Environmental and metering programs - Nil

13.1 (e) Volume added to (0 ML), in (40 ML) and subtracted from (0 ML) carryover account - see Note 2







Table 11 - Bulk water extractions and bulk entitlement compliance for 2012-13 (continued)


SpecifiedPoint(s)

Entitlement Volume

(ML)



(ML)


Bulk Entitlement(Harrietville)Conversion Order 1999

Harrietville (Ovens River, Simmons Creek)







Bulk Entitlement(Kiewa - Tangambalanga)Conversion Order 1999

Kiewa (Kiewa River)







Bulk Entitlement(Loombah - McCall Say)Conversion Order 2001

Benalla(Ryans Creek)

2,324 1,478 (15.1 (e)) 0 (15.1 (h)) 15.1 (g) Any credits granted

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

Total

West Kiewa River Simmonds Creek Diversion Tunnel

719 48 (11.1 (e)) 0 (11.1 (h)) 11.1 (g) Environmental and metering programs - Nil

63 (11.1 (f)) 11.1 (i) Any BE or licence transfer - Nil

279 (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

390 11.1 (m) Any difficulties in complying - Nil

Bulk Entitlement(Myrtleford)Conversion Order 2001

Myrtleford (Buffalo Creek)

1,212 624 (12.1 (e)) 0 (12.1 (f)) 12.1 (d) Environmental and metering program - Nil

12.1 (e) The annual (624 ML) and two year(1,239 ML) amount of water taken






ConsolidatedBulk Entitlement(Ovens System - Moyhu, Oxley and Wangaratta - North East Water)Conversion Order 2004

Total

Wangaratta 7,720 3,630 (12.1 (b)) 0 (12.1 (e)) 12.1 (c) Any credits granted - Nil

Oxley 67 (21.1 (b)) 0 (12.1 (e)) 12.1 (d) Metering program - Nil

Moyhu 112 35 (12.1 (b)) 0 (12.1 (e)) 12.1 (f) Degree and period of restriction - Nil




3,732 12.1 (j) Any difficulties in complying - Nil

Bulk Entitlement(Porepunkah)Conversion Order 1999

Porepunkah (Buckland River)

166 0 (12.1 (e)) 0 (12.1 (f)) 12.1 (d) Environmental and metering programs - Nil







Table 11 - Bulk water extractions and bulk entitlement compliance for 2012-13 (continued)


SpecifiedPoint(s)

Entitlement Volume

(ML)



(ML)


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

Bellbridge 56 (20.1 (b)) -18, 150 (20.1 (f)) 20.1 (c) New offtake points - see Note 3

Bundalong 14 (20.1 (b),20.1 (c))13 (20.1 (b))

20.1 (d) Volume of water returned - 1,391 ML

Eskdale 20.1 (e) Metering program - see Note 4

Tallangatta 187 (20.1 (b)) 20.1 (g) Transfer of entitlement or assignment of allocation - see Note 5 and 6

Wodonga 6,221 (20.1 (b)) 20.1 (h) Any amendment to BE - see Notes 3 and 6

Wahgunyah / Rutherglen

695 (20.1 (b)) 20.1 (i) Any new BE granted - Nil

Yarrawonga 1,357 (20.1 (b)) 20.1 (j) Any failure to comply with BE - Nil

Total 13,236 8,551 20.1 (k) Any difficulties in complying - Nil

Bulk Entitlement(Springhurst)Conversion Order 1999

Springhurst(Diddah Diddah Creek)







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 (g) Any amendment to BE - see Note 7




Diversion Licence Benalla (Broken River)8

296 157 0 n/a

Diversion Licence Freeburgh (Ovens River)

0 0 0 n/a

Diversion Licence Whitfield (King River)9

150 13 0 n/a

Groundwater Licence Barnawartha 293 0 0 n/a

Groundwater Licence Bright 0 46 75 n/a

Groundwater Licence Goorambat 24 11 0 n/a

Groundwater Licence Moyhu 15 0 -2 n/a

Groundwater Licence Mytleford 75 0 -75 n/a

Groundwater Licence Springhurst 20 0 0 n/a

Groundwater Licence Wangaratta (Anker Lane)

50 0 0 n/a

Groundwater Licence Wangaratta (Faithfull Street)

200 11 0 n/a

Groundwater Licence Wangaratta (Kerr Street)

415 125 0 n/a

Please refer to notes on page 22.


Notes:1. Numbers in brackets refer to the relevant clause of the Bulk Entitlement Order.2. No volume was added to the Glenrowan carryover account in 2012-13. The account currently holds the maximum permitted carryover volume of 40 ML.3. Bundalong was added as new offtake to the River Murray BE via minor amendment under Section 47CB of the Water Act 1989.4. The metering program, for the River Murray BE was updated to reflect the addition of the Bundalong offtake. 5. In addition to 100% allocation available to the River Murray BE, 1,391 ML of return flow credits was also allocated in 2012-13.6. An additional 391.1 ML of entitlement was added to the River Murray BE via a minor amendment under Section 47CB of the Water Act 1989.7. An additional 31.3 ML of entitlement was added to the Yackandandah BE via minor amendment under Section 45 of the Water Act 1989. 8. This diversion licence is used for irrigation purposes.9. The Whitfield diversion licence is made up of 100 ML high reliability water shares and 50 ML spill reliability water shares. In 2012-13 all usage was

recorded against high reliability water shares.

The Corporation complied with all requirements of our Bulk Entitlements. Temporary transfers were made from three BEs/licences in 2012-13. No permanent transfers were made. One new diversion licence was issued to the Corporation.

WATER CONSUMPTION

Of the 16,794 megalitres of water the Corporation extracted from catchments within the region during 2012-13, 13,650 megalitres of potable water was sold to customers.

Not all water is sold to customers due to losses and other uses in systems. These include:

• usage in the water treatment process (filter backwash water)

• mains cleaning

• bursts and leaks in water mains

• commissioning of new water treatment plants

• theft – unmetered connection, and

• fire fighting.

The difference between the amount of water delivered into our reticulation network and the amount of water sold to our customers is referred to as non-revenue water.

This year’s non-revenue water was 2,216 megalitres, compared with 1,559 megalitres in 2011-12. This increase reflects the greater volume of water processed this year in comparison to last year, which includes additional system losses i.e. filter backwash, as a consequence. The ongoing leak detection program has proven successful in identifying and addressing system losses across the region and will be continued.

This year the Corporation’s residential customers consumed on average, 216 kilolitres per connection, which is higher than the 174 kilolitres consumed in 2011-12. North East Water attributes this increase in consumption to the hot dry summer and increased outdoor water usage. Average residential water consumption over the past five years can be found in Figure 11.

Figure 11 - Residential Water ConsumptionKilolitres per residential connection

Notes:Residential water consumption increased in 2012-13 after a decline in the previous two years. This increase is attributed to an increase in outdoor water usage during the hot, dry summer that was experienced this year after two successive wetter years.

Appendices 3 and 4, pages 101-102, detail water consumption by town and provide an overview of revenue versus non-revenue water volumes.

This year the Corporation's residential customers consumed an average of 216 kilolitres

per connection.


MAJOR CUSTOMERS

In 2012-13 the Water Management Action Plans (waterMAP) program continued to be a voluntary program. Those customers who triggered the 5,000 kilolitre threshold have made water savings of 11.6% or 302 ML.

The Corporation offered a free water audit to customers using more than 500 kilolitres of potable water per year. Fifty-four customers took advantage of this opportunity to save water from these audits, and of these, 34 customers were successful in receiving funding of up to $2,000 from the "Living Victoria Water Rebate Program" to install water saving devices.

The Corporation was able to provide a further six of these sites with a grant of up to $5,000 through funding made available via the Small Business Grants Scheme. The estimated savings from these projects is 23,000 kilolitres of potable water per year.

Funding from the "Living Victoria Water Rebate Program" is still open to all small business customers within Victoria that have up to 50 employees.

Further information about this funding is available by contacting North East Water or visiting the Department of Environment and Primary Industry website atwww.depi.vic.gov.au.

CORPORATE WATER CONSUMPTION

In 2012-13 water consumption for the Corporation’s Head Office facilities in Wodonga was 749 kilolitres, which equates to 7.6 kilolitres per full time equivalent employee (FTE) (see figure 12, below).

North East Water occupies 966 square metres of floor space. For 2012-13, our corporate water consumption per square metre was 776 litres. It should be noted that we share building facilities with other occupants, and this consumption is a calculated volume based on an agreed rate of 27.8% of the total metered volume at one site, and 50% of the total metered volume at our second site.

DROUGHT RESPONSE

After two successive wet years, 2012-13 saw a return to drier conditions. It was the hottest summer on record with less than half the long-term average rainfall occurring across the region. Storages remained near full capacity during summer and ensured a secure water supply for the majority of towns. ‘Run of river’ towns with no available storage were less secure as unregulated stream flows fell to their lowest since the drought broke in 2010.

North East Water’s Drought Response Plan lists operational trigger points and actions to maintain water supply continuity. The following Drought Response Plan actions were invoked in 2012-13:

Demand Management:

All towns remained on the Permanent Water Savings Plan all year. The Plan is designed to reduce water wastage and applies whenever a town is not on water restrictions. It restricts daily watering times, prohibits the use of water to clean hard surfaces, and mandates the use of trigger nozzles to clean vehicles.

In January 2013, the Public Awareness Drought Response Plan trigger level was reached for Bright, Wandiligong and Porepunkah based on passing flows in the Ovens River. This prompted the communication of a water conservation message to customers via the media.

North East Water’s five-year tariff strategy has been designed to encourage water conservation by changing the ratio of fixed service and water volume charging. With a greater emphasis on the volume charge, customers can better control the size of their overall bill by constraining usage.

Alternative supplies:

The Bright drought relief groundwater bore was commissioned as passing flows in the Ovens River declined in January 2013. Groundwater was used to supplement the Ovens River supply on a number of occasions after the Harrietville fires and subsequent rainfall caused dirty water events in the Ovens River at Bright.

North East Water carted water on a number of occasions to towns including Moyhu, Oxley, Whitfield, Harrietville and Bright. Carting enables North East Water to provide supply continuity in times when water shortages or water quality issues arise. Water carting was utilised during heavy rainfall events when water from rivers can be too dirty to treat to safe drinking water standards.

Measure to Improve Future Drought Response:

To ensure that the Drought Response Plan and the way North East Water responds to drought is continually improved, the Plan is reviewed after it is invoked and upon any major system change. The next review will occur in 2013-14.

Figure 12 - Corporate Water ConsumptionKilolitres per full-time equivalent employee

Notes:Corporate water consumption for 2012-13 has increased from the previous year.


DRINKING WATER QUALITY

North East Water clearly states the importance of supplying safe, high-quality water to customers in the policy statement, Our Commitment to Water Services. The Corporation’s Drinking Water Quality Management System is the key to meeting that obligation, combining elements of established risk management and continuous improvement frameworks.

During 2012-13 North East Water undertook several initiatives to improve water quality to customers, including:

• the completion of a new water treatment plant to supply Whitfield

• the completion of a new water treatment plant to supply Corryong and Cudgewa

• supply to Bundalong via pipeline connection to the Yarrawonga potable supply, and

• construction of a temporary water treatment plant (filtration) at Harrietville after fires degraded water quality in the catchment.

The Safe Drinking Water Act 2003 and Safe Drinking Water Regulations 2005 state that North East Water must prepare and implement a framework that encompasses catchment-to-tap risk management plans. These plans are updated regularly and are subject to independent auditing.

An independent laboratory undertakes all regulatory sampling and analysis for bacteriological, physical and chemical quality of water supplied to customers.

Compliance is determined via the limits outlined in the Safe Drinking Water Regulations 2005.

North East Water was fully compliant with regulatory limits for 2012-13. Full details on individual supply/town water quality results are included in the Corporation's Annual Water Quality Report. This report is available on the North East Water website: www.newater.com.au.

WATER DISTRIBUTION

North East Water manages and maintains 1,654 kilometres of water reticulation mains across 37 localities. The Corporation's water distribution performance is presented in Table 12, below.

Drier conditions this year led to changes to the soil moisture profile resulting in increased ground movement and associated impacts on water mains compared to the 2011-12 period. Accordingly North East Water experienced a spike in unplanned interruptions per 100 km of mains.

Wangaratta, Wodonga and Yarrawonga all experienced an increase in 100mm diameter or less main failures over this summer period with the majority failing due to radial cracking as a result of ground movement.

The introduction of the hydro excavators into six of the Corporation's nine depots has seen the majority of these failures repaired under pressure as the teams are able to excavate to the site of the break without turning off the supply main. A repair clamp is then able to be installed over the break resulting in no loss of supply to customers.

Table 12 - Water distribution performance

Water service standards2012-13Result

2012-13Target1

Targetmet?

5 YearAverage

Unplanned supply interruptions1

No. per 100km water mains13.97 13.7 ✗ 11.91

Restoration of water supply following unplanned interruptions1

% interruptions restored within 5 hrs100 98 ✓ 97.72

Restoration of water supply following planned interruptions1

% interruptions restored within 5 hrs99 98 ✓ 98.44

Average unplanned time off water supply1

Total customer-minutes2 off7.12 7.70 ✓ 9.45

Average frequency of unplanned interruptions1

No. customers affected divided by total no. water customers0.082 0.1 ✓ 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 the loss of supply to 100 customers and lasts for 150 minutes counts as 15,000 customer-minutes off supply.

WASTEWATER COLLECTION

North East Water manages 1,095 kilometres of sewer mains across 24 towns, including 143 sewer pump stations and 18 wastewater treatment plants. The Corporation collected and treated 6,565 megalitres of wastewater in 2012-13 compared with 9,686 megalitres in 2011-12.

In 2012-13 North East Water experienced 63 unplanned sewer blockages compared with 100 in

2011-12. This has been the best result for this water plan period as shown in Table 13, page 25.

The continuation of North East Water's sewer renewals program, root foaming program and preventative jetting program of known troublesome areas has again shown a marked reduction in blockages per 100km. This is the lowest of all Victorian Water Corporations.


Table 13 - Wastewater collection performance

Wastewater service standards2012-13Result

2012-13Target1

Targetmet?

5 YearAverage

Sewer blockages1

No. per 100km sewer mains5.72 9.00 ✓ 11.12

Containment of sewer overflows1 % spills contained within 5 hrs 100 99 ✓ 97.79

Average time to unblock/repair sewer1

Total minutes to unblock sewer/no. of sewer blockages (including spills)111.7 160 ✓ 138.23

Notes:1. ESC service standards.

TRADE WASTE MANAGEMENT

In managing trade waste customers, North East Water supports the principles of the Environment Protection Authority’s Industrial Waste Management Policy (Waste Minimisation). In particular, trade waste customers are encouraged to adopt environmental policies and apply best-available technology to minimise the generation and concentration of trade waste requiring disposal to sewer. For management purposes, trade waste customers are classified as minor and major in line with the definitions outlined in the Minor and Major Trade Waste Control by-laws.

MINOR TRADE WASTE

Minor trade waste comprises discharges from premises such as food preparation businesses, mechanical workshops, petrol stations and hospitals. These discharges can have an impact on the sewer treatment network if the correct pre-treatment device, such as a grease trap or petrol/oil separator, is not installed and maintained correctly.

There are currently 836 minor trade waste customers in North East Water’s region. North East Water employs a contractor to carry out inspections of sites to provide continual monitoring of device cleaning and identification of new trade waste customers.

MAJOR TRADE WASTE

The Corporation currently has 25 major trade waste customers who can discharge to North East Water wastewater treatment plants. Major trade waste customers have the capacity to damage sewerage infrastructure and can potentially impact greatly on treatment processes. Major trade waste customers enter a stringent trade waste agreement with North East Water to mitigate the likelihood and consequences of these impacts. The customers range from small wineries that discharge 5 kilolitres during their production season, to a large abattoir that discharges up to 32 megalitres per month. Major trade waste customers contributed approximately 9.7% of the total amount of wastewater entering treatment plants in 2012–13.

Each Major Trade Waste Agreement stipulates limits for quality and quantity of trade waste. Limits are based on the capacity of the receiving sewer and wastewater treatment plant. The quality of trade waste is randomly tested by an approved testing laboratory on a weekly, monthly or quarterly basis. Failure to

comply with these limits means that the customer pays higher charges for all loads that are above the set limits. Continued non-compliance can result in termination of the agreement. In the past 12 months, North East Water imposed penalty charges on 19 of 25 customers.

The Corporation will continue to work closely with all major trade waste customers to ensure their discharges do not impact on North East Water operations.

TRADE WASTE CHARTER

The Essential Services Commission released the Trade Waste Customers Service Code in September 2011. In line with this code, North East Water produced a new Trade Waste Customer Charter for the management of all trade waste customers. This Charter came into effect from 1 July 2012. The major outcomes from the introduction of this new Charter are:

1 Three levels of trade waste customers were defined – Deemed, Commercial and Industrial.

2 Deemed customers will not be required to apply or sign an agreement to discharge trade waste to sewer.

3 New risk based models have been developed to manage both commercial and industrial trade waste customers. This ensures there is a consistent approach to management of trade waste services across the North East Water region, and

4 There are now three levels of commercial trade waste customers and each level receives a charge based on the risk posed by their discharge.

The new Trade Waste Customer Charter will standardise the assessment process of trade waste customers across the Corporation. Customers will be able to clearly see why they have been placed in a particular risk category.

In order to support the implementation of the Trade Waste Charter, North East Water has sent letters to all existing commercial trade waste customers. This letter requested information as to the type of device that is installed at each premises to treat the trade waste and the cleaning arrangements in place to clean and manage the device. During 2013–14, North East Water will commence field inspection of these sites to verify information supplied and to confirm the risk rating for the site. Once this inspection is concluded, the new commercial trade waste fees will be applied.


WASTEWATER QUALITY

During 2012-13, North East Water achieved 95.8% compliance with the discharge licence for the Corporation’s wastewater treatment plants that discharge to water (see Figure 13, below). The percentage compliant is based on the number of analyses complying with licence limits as a percentage. This result is the same as last year and met the corporate key performance target of 95%.

Wastewater discharges are monitored for a range of parameters, including E. coli, suspended solids, and nutrients (nitrogen and phosphorus). The measurement of E.coli indicates the extent of pathogen removal and treatment plant performance, while suspended solids and nutrients can present a risk to the environment, including impacting water quality and contributing to promoting algal blooms.

Table 14 below, shows a decrease in the amount of nitrogen, phosphorous and suspended solids discharged during 2012-13 compared to 2011-12. This result is attributed to the decrease in volume discharged and process improvements.

North East Water continues to investigate opportunities to reduce the impact of wastewater discharges on the environment, including:

• reviewing wastewater treatment plant infrastructure, process modifications and increasing capacity for agricultural use

• monitoring of discharge water to understand the risks and impacts to values of receiving waterways, and

• reviewing and developing appropriate corporate targets that reflect compliance obligations and ensuring the Corporation continues to improve business processes and minimise environmental impact.

Table 14 - Performance measures are provided as per ESC definitions

Performance Indicator2012-13Result

2011-12Result

E1 Reuse indicators

E1.1E1.2

Effluent reuse (volume)Biosolids reuse (dry mass)

23.9%0%

20.8%0%

E2Sewage treatment standards

E2.1

Number of analyses complying with licence agreements as % of samples

95.8% 95.8%

Figure 13 - Wastewater discharge qualityTonnes discharged to waterways from wastewater treatment plants

Notes:Megalitres discharged each year were: 2008-09 3,7612009-10 4,3972010-11 6,4312011-12 5,9192012-13 4,737

NON-ROUTINE DISCHARGES

North East Water conducted discharges in addition to those recognised under the EPA Licence, from two of its wastewater treatment plants and one water treatment plant in 2012-13. Each of the non-routine discharges was conducted in accordance with approval under S30A of the Environment Protection Act (1970). The discharges were conducted at the WWTPs to ensure treatment capability was maintained and storages could continue to be operated safely. Non-routine discharges were conducted at:

• Beechworth WWTP

• Corryong WWTP, and

• Wangaratta WTP where a non-routine discharge was conducted to maintain water quality in the presence of high sediment loads within the Ovens River due to the Harrietville bushfires.

RECLAIMED WATER

North East Water is committed to the sustainable use of water resources, providing economic and social benefit and reducing the impacts on the environment. A key element in that commitment is the substitution of potable supplies, where appropriate, with a fit- for-purpose product reclaimed from wastewater treatment.

The Corporation produces two fit-for-purpose reclaimed water products:

• Premium Reclaimed Water is produced from extensive treatment, which allows a greater range of applications, such as industrial use and high quality irrigation water for public open spaces, and

• General Reclaimed Water suitable for use in irrigation in agriculture and low-risk urban landscapes such as golf courses.

Reclaimed water is managed both on land owned by North East Water and by third parties. It is also used to substitute potable supplies where appropriate in industry.


Reclaimed water is used in accordance with the EPA Guidelines for Environmental Management: Use of Reclaimed Water.

These guidelines are a key part of third party customer sale agreements, which help to minimise risk to the environment and public health.

North East Water had twenty-three reclaimed water customers for 2012-13. We supplied premium reclaimed water to seven customers and general reclaimed water to the remaining sixteen.

The further development of North East Water's third party customer reuse scheme enabled the Corporation to increase the volume of reclaimed water used to 2,203 megalitres, compared with 2,019 megalitres in 2011-12. Our agricultural reuse accounted for 1,161 megalitres, producing lucerne fodder, wool, prime lamb and beef cattle. The remainder was reused by third party customers for agricultural irrigation, the maintenance of urban landscapes and a range of industrial applications.

Reclaimed water is regularly tested to ensure compliance with the EPA guidelines. This year the Corporation achieved 98% compliance. See Figure 14 for the Corporation’s performance in this area over the past five years.

North East Water did not conduct biosolids reuse activities in 2012-13. All biosolids produced from wastewater management activities were dried, stored and retained on-site. Plans are in place to conduct these activities in the future.

Figure 14 - Reclaimed water quality performance% compliance with Guidelines for Reclaimed Water 464.2 limits for E.coli

Notes:Percentage compliance is calculated as the volume of treated wastewater reclaimed that was within the maximum allowable limits as stated in the EPA’s Guidelines for Use of Reclaimed Water, divided by the total volume reclaimed.

North East Water is committed to the sustainable use of water resources.


ENVIRONMENTAL & SOCIAL SUSTAINABILITYSustainability at North East Water is a key strategic goal. Sustainability means more than simply reducing impact on the environment. Sustainability at North East Water means...

"the delivery of water and wastewater services for future generations, in partnership with the community and in harmony with the environment."

In 2012-13, this was underpinned by the following:

SUSTAINABILITY STRATEGY

The Sustainability Strategy communicates the importance and relevance of sustainability for the Corporation, and enables plans to be developed and implemented consistent with North East Water's strategic direction and that of the Victorian Government.

Key achievements in 2012-13:

• Enhancing the One Resource approach. The approach, piloted in 2010-11, was adopted as the basis through which new projects are assessed. The approach has been used to support the Alternative Water Atlas developed as part of the Water Supply and Demand Strategy. It has been used to support the development of options for consideration for the provision of services to unserviced areas and it has been a key factor in the development of new approaches to the co-ordinated delivery of sustainable water services as part of the Water Smart Cities project. The lessons from the One Resource approach were distilled and presented at the Australian Water Association National Conference Ozwater12.

• Enhancing the understanding of groundwater resources. A cross-industry forum identified key barriers and opportunities for the broader utilisation and management of groundwater resources as a means of underpinning resilient urban water service delivery. A key outcome was the commitment to explore a managed aquifer recharge project to support service delivery in a stressed community.

• Protecting the environment. North East Water has actively pursued opportunities to conserve and improve existing natural assets

and has maintained its conservation sites on the Ovens and Kiewa Rivers.

• Participation in cross-industry activities. North East Water is represented on both the VicWater Sustainability Task Group and the Australian Water Association Sustainability Network.

• Community partnerships. A Green Corps team was able to bring a practical application to its TAFE-based learning through planning for and contributing to the rehabilitation of our environmental assets on the Kiewa River at Baranduda.

SUSTAINABLE WATER SUPPLIES

North East Water is committed to the sustainable delivery of water services. This commitment is underpinned by the Corporation's Wastewater Strategy, adopted in 2011, and the 50 year Water Supply and Demand Strategy (WSDS) reviewed this year. Further information on the WSDS can be found on page 33.

Despite the general uncertainty surrounding climate variability and access to water, North East Water's location at the head of the Murray system strengthens the reliability of services for a large portion of the region. Approximately 37% of the flows entering the Murray system arise in North East Victoria, either directly or through key tributaries such as the Mitta Mitta, Ovens, King and Kiewa rivers. The Corporation's water entitlement and capacity to access these waterways are a key part of our future sustainability.

The Corporation fulfils existing obligations to provide drinking water supplies through strategic management of its bulk entitlement, including seasonal carryover and participation in the commercial water market.

The relative reliability of water resources in the delivery area and the effective use of market tools ensure secure access to water resources to fulfil the Corporation's water service obligations. While securing supplies is a key part of fulfilling obligations, sustainable service delivery is more complex. Sustainable water service delivery is dependent on securing cost-effective delivery of the suite of available fit-for-purpose resources, working with customers to ensure appropriate and efficient use of available resources, in a manner that does not place unnecessary risks on the environment.

WATER RECYCLING

Water recycling and reuse is a key part of sustainable water service delivery. This element of the Corporation's service is captured in the Reclaimed water section (page 26-27).


SUSTAINABLE WATER USE

An irrigation expansion project commenced in Wangaratta and this major expansion to sustainable wastewater irrigation saw the completion of a second 300 megalitre storage which will be supported by the development of an additional 80 hectares of irrigation during 2013-14. The project provides for growth of the Rural City of Wangaratta and reduces the impact on the riverine environment by reducing the volume of treated wastewater being discharged. Agreement was reached with a third party user at Yarrawonga for a further expansion of agricultural reuse of wastewater, enhancing the agricultural productivity and ensuring more sustainable reuse from the town.

ONE RESOURCE APPROACH TO SUSTAINABLE WATER MANAGEMENT

The One Resource approach reflects the strategic goal of the Corporation to deliver sustainable water services that meet the outcomes sought by customers, that is, delivering water that is fit-for-purpose. Infrastructure business cases reflect One Resource analysis of technical options to assess any preferred outcome.

In 2012-13 the One Resource Strategic Initiative focused on:

Building an understanding: Groundwater. Entry level Managed Aquifer Recharge (MAR) assessment was completed at Goorambat under an initiative to evaluate the feasibility of storing water underground as an option to upgrade supply to the town. The initial work identified several technical aspects that need to be further investigated. This project has the potential to provide an upgraded, more reliable water supply system that reduces the frequency of water restrictions experienced by the Goorambat community. It also presents a potential lower cost option compared with the business as usual option of a pipeline from Devenish.

Exploration of funding opportunities for an infrastructure constrained community. The One Resource framework has been used to evaluate integrated water cycle management options for Bellbridge. Alternative integrated options and third party reuse options are being evaluated to identify more efficient wastewater management options than the more traditional business as usual option of agricultural reuse. In investigating innovative solutions for Bellbridge wastewater management, it has become evident that to achieve a fully integrated water management system, water supply constraints need to be considered in the same project. Consequently, a Concept Design for Potential Urban Reuse Options at Bellbridge has been developed in order for a preferred option to be scoped in 2013-14.

Water Smart Cities. North East Water commenced planning for the expansion of its services into the Leneva area of Wodonga, which is the future major growth corridor for this provincial city. North East Water coordinated a regional workshop to develop a shared understanding of the dynamics of both the water service delivery and the urban planning environments to identify actions for a coordinated response to Integrated Water Cycle Management Planning (IWCMP) in Wodonga. The workshop forum has established a critical network for future assessment of options with the Office of Living Victoria, broader water sector and industry experts. Significantly, this approach provides a basis to support urban planning and community development in a manner consistent with the goals of Living Melbourne, Living Victoria Plan for Water.

Water recyclingand reuse is a key part of sustainable

water service delivery.


Table 15 - Summary of Significant Environmental Incidents

Where What When Our Action

Barnawartha

Sewage spill from a manhole into Indigo Creek as a result of actions taken to alleviate backing up of the sewer network during an intense rainfall event.

July 2012• Response and implementation of spill

management procedures to minimise risks to environment and public health.

Beechworth

Sewage spill from the Beechworth WWTP inlet structure due to intense rainfall, to Spring Creek.

July 2012

November 2012

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

Odour complaint involving private sewer line in Beechworth.

September 2012

October 2012

November 2012

• Discussions with complainant, EPA and private line customer to determine appropriate controls for discharging into North East Water’s sewer reticulation to ensure odour control.

• Installation of temporary odour scrubbing unit until final solution is implemented.

Benalla

An intense rainfall event and subsequent inundation into the wastewater reticulation resulted in a spill of partially treated wastewater at the Benalla WWTP into the Broken River.

February 2013• Containment of spill

• New site drainage system completed ensuring flows are maintained on site

WangarattaSewer spill into Ovens River as a result of an interruption to power supply at sewer pump station.

March 2013

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

• Changes to alarming at pump station for earlier warning.

Corryong

Offsite discharge of reclaimed water due to over application of irrigation water.

April 2013• Review and changes to farming

irrigation practices.

A sewer block caused by tree roots resulted in sewer spills into a nearby stormwater drainage creek and flowed into a farm dam.

May 2013

• Rapid response to clear the blockage and restore flows.

• Flushing of contaminated areas.

• Removal of tree and roots from sewer main.

Tallangatta

An offsite discharge of approximately 100kL from the water treatment plant as a result of dirty water and subsequent water treatment challenges.

June 2013• Sampling & monitoring of

discharge to verify minimal impact to receiving environment.


OTHER STATUTORY OBLIGATIONS

ENVIRONMENTAL MANAGEMENT SYSTEM

North East Water is committed to minimising the operational impacts on the environment. The Corporation maintains an externally certified Environmental Management System (EMS) in accordance with ISO 14001:2004.

North East Water's environmental performance is measured in a number of ways, including:

• compliance with its EPA Licence and relevant regulations or guidelines

• performance against ESC service standards for wastewater management

• performance against corporate environmental objectives and targets, and

• the number of environmental incidents.

ENVIRONMENTAL OBJECTIVES AND TARGETS

Each year North East Water develops Environmental Objectives and Targets to reduce our environmental impact and improve environmental and systems performance.

In 2012-13, the objectives program focused on improving staff environmental awareness, odour management, biosolids management, understanding environmental impacts from water treatment as well as reviewing and improving general waste management.

ENVIRONMENTAL AUDITS

An independent audit of the EMS is a requirement of certification in accordance with ISO14001:2004. Auditing is also an important step in demonstrating the effective implementation of the EMS. An external recertification audit was conducted in March 2013, with recommendation that certification continued. It acknowledged the strengths of North East Water’s EMS; including acknowledgement that there is strong management commitment to continually improve the system as well as being a mature system with robust documented processes. Numerous internal inspections and audits were also conducted in 2012-13 with emphasis on Environmental Management.

ECOLOGICAL RISK ASSESSMENTS

Ecological 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.

North East Water has finalised all ERAs for the systems that discharge to water. The risk assessments identified that the Corporation's activities pose a relatively low risk to the environment and beneficial uses downstream from the discharge points. The findings of the risk assessments have been used to inform discussions with the EPA, as the agencies work together to develop appropriate licence limits that enable the delivery of key services to communities as well as protecting the environment in which it operates.

ENVIRONMENTAL INCIDENTS

Environmental incidents are unplanned events that can have a negative impact on the environment and/or public amenity as a result of North East Water’s activities.

During 2012-13, there were fifteen incidents comprising sewage overflows, reclaimed water spills, odour events, chemical spill, wastewater treatment plant overflow and a water treatment plant discharge.

Of the fifteen incidents in 2012-13, eight were classified as ‘significant’ due to being unplanned, unapproved or repeated and involved either the general public and/or the EPA. A key lesson from the majority of these significant incidents is the recognition that existing infrastructure performance is impacted by an increasingly variable climate.

EnvironmentISO 14001


GREENHOUSE GAS EMISSIONSGreenhouse 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 as well as from staff travel and vehicle use.

In 2012-13, the Corporation has marginally increased its greenhouse impact primarily due to a significant increase in water demand, as well as expanding distribution networks and commissioning of new water treatment infrastructure. The Corporation's greenhouse gas emissions totalled 39,737 tonnes CO2–eq. From this total, scope one emissions totalled 17,267 tonnes CO2–eq and were contributed from wastewater treatment plants, fuel consumption, agricultural activities and staff travel. Scope two emissions totalled 22,470 tonnes CO2–eq and were derived from electricity consumption exclusive of Greenpower purchases.

In 2012-13, key greenhouse achievements were:

• continued emphasis on identifying and upgrading energy intensive assets ensuring solutions for a long term sustainable business, including significant efficiency gains through upgraded pump sets at Wahgunyah, Moyhu and Eskdale, and

• further development of a climate variability framework which identifies key infrastructure and the impacts of a variable climate. This will assist the business in future planning and asset upgrades, including opportunities for energy efficient initiatives.

The result is an important reminder of the energy intensive nature of the water business and the value in continued efforts to reduce the Corporation's greenhouse footprint.

Figure 15 - Greenhouse gas emissionsTonnes CO- equivalents

Notes:1. Wastewater treatment emissions are based on total chemical

oxygen demand and nitrogen content of inflows into the wastewater treatment plants.

2. Total fuel consumption for 2012-13 was 338,371 litres.3. Total electricity consumption for 2012-13 was 18,569,974 kWh.4. Total Non-Fuel Agriculture includes livestock and fertiliser application


THE FUTUREWATER SUPPLY DEMAND STRATEGY

A review and update of the Corporation's Water Supply Demand Strategy (WSDS) was last completed in 2012.

The objectives of the WSDS are to facilitate efficient and effective urban water planning and investment across North East Victoria, to:

• ensure safe, secure, reliable and affordable water supplies that meet society’s needs

• enable customers to have access to desired water products and services, and to choose to use water for activities they value highly

• encourage the use of all water resources, such as rainwater, stormwater and reclaimed water, in ways that are efficient and fit-for-purpose, ensuring that public and environmental health are protected

• encourage water projects to also enhance the liveability, productivity, prosperity and environment of the region's cities and towns – wherever possible

• ensure that water needs of environmental assets are transparently considered and delivered, and

• ensure that water planning is subject to a transparent and rigorous decision-making process, with clear roles and responsibilities and accountabilities, which can adapt to the changing environment.

The WSDS seeks to identify the best mix of measures to maintain a balance between the demand for water in urban supply systems and available supply now and into the future. The WSDS incorporates the principles of scenario-based planning, considering the actions needed to meet increased demand for water arising from population and industry growth, together with the possible effects of climate change and other environmental factors. The strategy informs supply augmentation and capital investment requirements for consideration in North East Water’s next Water Plan. In the context of the WSDS, a level of service is defined to reflect the long-term security of supply of a water supply system. There are two aspects to North East Water’s level of service; an agreed level of service and minimum level of service as shown in the following boxes.

North East Water’s agreed level of service provides a 90% likelihood that customers will not be asked to reduce water consumption in any given year, based on forecast community needs for water over the 50 year planning horizon.

North East Water’s minimum level of service meets the demand for unrestrictable in-house and commercial/industrial use. This component of demand is what would be provided to customers under Stage 4 restrictions, as outlined on the Corporation's website www.newater.com.au.

North East Water’s levels of service have been developed in consultation with the community and reflect community expectations about the environmentally, socially and economically responsible use of water, with the minimum level of service reflecting the appropriate use of water in times of drought or water shortage.

Approaches to the balancing of supply and demand may be categorised as addressing either demand management, supply enhancement, or in some cases both. The strategy identified five key approaches available for balancing supply and demand with the levels of service, as provided below:

• delivery system performance (demand management)

• demand management (demand management)

• One Resource (demand management/supply enhancement)

• using water markets (supply enhancement), and

• secure water sources (supply enhancement)

See Table 16, page 34 for a summary of the initiatives under each key approach to balancing supply and demand.

ENVIRONMENTAL OBJECTIVES AND TARGETS

A strategy was completed for the receipt of septic tank waste that is collected by private contractors from properties that are generally located outside of declared sewerage districts. The purpose of the strategy is to ensure the Corporation is able to provide an effective and sustainable service supporting regional on-site wastewater management practices. The strategy produced a number of actions to enhance the service we provide.


Table 16 - Approaches to balancing supply and demand and initiatives

Key Approach Description Initiatives

Delivery system performance

(demand management)

A program to improve the efficiency of delivery systems. The focus is on the audit of delivery systems, leakage control, and use of backwash water from water treatment plants and metering of water delivery.

a. Improve the understanding of water losses in each delivery system and management of these systems, ultimately reducing water losses.

b. Five-year target to reduce water losses in head works and distribution by 5% and 60%, respectively, resulting in annual water savings of more than 600 ML/yr. The system performance for 2012-13 was consistent with the previous year.

c. The significance of the Delivery System Performance approach is highlighted in Corryong, where reducing water losses over the next five years could defer an expensive supply augmentation by 20 years. The outcome for this system will be monitored during 2013-14 following the introduction of full water treatment in March 2013.

Demand management

(demand management)

Measures to reduce individual customers’ demand for water. Three broad categories within this strategy are education, pricing and regulation.

a. Given the success of North East Water’s demand reduction initiatives to date, the objective of this approach is to maintain current levels of demand and minimise the risk of “bounce back” and customers reverting back to their higher water use behaviour prior to the 2006-07 drought. Accordingly water savings from this initiative have been set at zero across the region.

One Resource Alternatives

(demand management/ supply enhancement)

The One Resource approach aims to deliver sustainable water services that meet the outcomes sought by customers by delivering water that is fit-for-purpose. It investigates opportunities to use alternative water sources and implement those where economies of scale can be realised and/or resource constraints warrant the investment. For example, raw water, stormwater (urban runoff) and reclaimed water from wastewater treatment plants.

a. The One Resource approach has been utilised in reviewing groundwater options for Goorambat and Water Smart Cities planning for Bellbridge and the Leneva area of Wodonga.

b. A dual-pipe water supply for Bundalong providing both potable and raw water was completed in March 2013.

Using Water markets

(supply enhancement)

Access to additional bulk entitlements through the water trading market to allow for annual variation in demand and future growth. North East Water recognises that, for delivery systems that are located downstream of large dams, the most effective method for balancing supply and demand is a combination of water conservation measures in addition to accessing additional water entitlements.

a. North East Water will continue to purchase additional entitlement through the water trading market to cater for future growth and to manage the annual variation in demand.

b. The WSDS indicates that only an additional 113 ML of water entitlement is required by 2060 for communities supplied by the River Murray. This sum does not include the benefits from wastewater return flow credits or utilising carryover which provide additional access to water.

c. Should the need arise, North East Water will operate its Urban Water Trading Scheme again during severe restrictions to allow customers, which would otherwise be limited in their water use due to urban water restrictions, to access water. During 2012-13 North East Water traded surplus water as temporary water.

d. No temporary or permanent water purchases were required for any of our systems in 2012-13.

Secure water sources

(supply enhancement)

Where systems do not have access to secure supplies investigate options to secure water from secure sources and implement these options where the circumstances warrant the investment.

a. Work is continuing with the development of an off-river storage to secure supply for Bright, Porepunkah and Wandiligong with the government approval to the business case and commencement of construction on ancillary works. The construction of the storage will commence during 2013-14.

b. Investigations for enhancement of supply to Goorambat to bring its level of service to greater than 90% commenced looking into the establishment of a groundwater storage option.

c. All other systems have a supply reliability greater than 90% so no immediate works are planned apart from a commitment to investigate the next level of augmentations required for systems where the supply reliability is between 90%-95% - Wangaratta, Corryong and Harrietville.


WASTEWATER STRATEGY

Following the completion of the Corporation’s first Wastewater Strategy initiative in June 2010 and subsequent investigation work, the improvement needs were prioritised for wastewater treatment based on compliance requirements and environmental risk assessment. This work enabled the Corporation to rank the improvement needs in all wastewater treatment plants that discharge to the riverine environment thus

ensuring investment in environmental improvements is made where the best environmental outcomes can be delivered. The wastewater treatment facilities assessed using this approach were Beechworth, Wangaratta, Bright and Myrtleford. Priority projects from this assessment are included in Water Plan 3.

SOCIAL SUSTAINABILITYCOMMUNITY SERVICE OBLIGATIONS

North East Water delivered $3.59 million in direct community service obligations during 2012-13, a 4% increase from the previous year. The vast majority of these obligations were paid in the form of direct concessions to pensioners. Actual numbers of

recipients increased in almost all aspects of community service grants and payments. Table 17, below, details the number and dollar value of these obligations and compares the Corporation's performance with previous years.

Table 17 - Community service obligations

Provision 2012-2013 2011-2012 2010-2011 2009-2010 2008-2009

No. $'000 No. $'000 No. $'000 No. $'000 No. $'000

Concession to pensioners 17,118 3,323 16,536 3,217 16,213 2,843 16,008 2,499 15,758 2,182

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

841 207 809 203 779 189 738 176 723 171

Utility relief grant scheme 129 52 99 36 71 23 40 10 27 3.1

Water concessions on life support machines – haemodialysis 4 1 7 2 7 2 8 0.75 6 0.94

Hardship relief grant scheme 3 4 0 0 0 0 0 0 0 0

CORPORATE CITIZENSHIP

North East Water regards good corporate citizenship as an important aspect of its responsibilities both within the region and beyond. We continue to contribute to a wide range of programs and organisations.

Our contributions during 2012-13 included:

• staff fundraising for local and national charities

• presentations to community groups on our services and management of the water supply

• supporting sporting and community groups, charity events and schools through the distribution of water bottles, water supply (including the use of the Water Cart) and other merchandise free of charge. These events included the Tour of Bright cycling event, Lake Moodemere Rowing Regatta, Wodonga Childrens Fair, Wangaratta West Primary School, Yarrawonga Dash for Cash, Indigo Shire “Milk Run”, and Yackandandah Folk Festival.

In March 2013, North East Water in conjunction with Alpine Shire Council supplied two drinking water re-fill stations to the township of Bright.

The stations were installed in Howitt Park and in the public open space area off Burke Street, Bright and were officially opened on Monday 4 March, 2013. The drinking water re-fill station will supply drinking water to residents, visitors as well as our canine friends.


PEOPLE

OUR WORKFORCE

North East Water’s 2012-13 workforce of 155 full-time equivalents (FTEs) includes all permanent full-time, permanent part-time, temporary and casual staff. This compares with 149 FTEs as at 30 June 2012.

2012-13 saw an increase in staff numbers due to the peak in capital investment delivery and an organisational review undertaken in 2012. The additional six positions are made up of temporary and permanent positions. The organisation is forecasting no net increase in positions in the short-medium term.

Table 18, below, shows the different employment types as a percentage of the workforce in 2012-13, compared with 2011-12 and the Victorian Water Sector more broadly.

The total staff turnover for the year was 13% (including temporary employees and casuals), which is a decrease when compared to 2011-12 and is above the Victorian Water Sector average (Figure 16, below).

Our male-female ratio was 70% to 30%, which is comparable to the Victorian Water Sector average (Figure 17, below).

Table 18 - Employment type

Employment typePercentage of total workforce

2012-13 2011-12 Victorian Water Sector

Permanent full-time and part-time (%) 94 95 90

Fixed term temporary (%) 5 4 9

Casual (%) 1 1 1

Notes:This table shows that there has been a decrease in the number of full-timeand part-time numbers but an increase in fixed-term temporary.

Figure 16 - Employee turnover compared with Victorian Water Sector 2012-13Source data for Victorian Water Sector: Report on the 2012 Workforce Data Collection; State Services Authority (Published October 2012)

Figure 17 - Male/female ratio 2012-13Source data for Victorian Water Sector: Report on the 2012 Workforce. Data Collection; State Services Authority (Published October 2012)

Notes:This graph represents employee-initiated separations only. Turnover rates decreased in 2012-13 compared with 2011-12. These departures have been employee initiated for a variety of reasons, including retirement of long-term employees, and employees seeking career advancement external to North East Water. Generally the Corporation has a good record of retaining long-term employees, and we are also active in generating internal development opportunities to encourage staff to remain with us.

Notes:Female employees made up 30% of our workforce during 2012-13, a slight increase compared to 2011-12.


INVESTING IN THE FUTURE

To build North East Water's future workforce the Corporation has invested in a number of programs to encourage people to start and continue their career within the organisation.

During 2012-13 there has been a planned approach to training with every employee having a twelve month development plan. Through the development plan 26 courses have been undertaken involving compliance training, competency training and a variety of skills based testing.

In 2012-13, 429 courses were completed using the E-Learning centre. E-Learning is an online learning centre that allows us to provide learning and development opportunities to all employees across North East Water via the web.

In 2012-13, thirteen Operations staff were in the process of completing Certificate II or III in Water Industry Operations. Trainees are supported by the Water Industry Training Centre and TAFE courses, through which they gain theoretical understanding to complement their practical skills. Four Operations staff have commenced the Certificate IV in Water Industry Operations.

North East Water continues to support the principles of providing work or industry experience for students and have extended the Corporation's traineeship program in conjunction with the Water Industry Training Centre and from local university and TAFE institutions. North East Water has also commenced school based traineeships and developed partnerships with many local high schools within the North East.

VALUING EXPERIENCE

While North East Water values the importance of attracting the next generation of employees, the Corporation also places emphasis on the role of existing staff members and works hard to retain them.

The average age of employees is 42, with 48% of staff aged 40 years and older. The average length of tenure of employees is eight years’ service. The Corporation’s percentages for both length of service and age are generally comparable to that of the Victorian Water Sector.

North East Water encourages employees to remain in the workforce longer, which allows staff to continue contributing to the organisation, allows the Corporation to retain its skilled and valued employees and preserve corporate knowledge. The Corporation has strategies in place to allow flexible work practices, support for health and well-being, superannuation planning and phased retirement.

More than twenty different professions and trades are represented at the Corporation in permanent, casual and temporary roles. The Corporation's expertise now extends beyond civil engineering and plant operators to environmental scientists, chemical, electrical, and mechanical engineers, plumbers, accountants, journalists, farm managers, information technology and human resource professionals.

The Corporation’s expertise now incorporates

environmental scientists, chemical, electrical and mechanical engineers,

plumbers, accountants, journalists, farm managers,

information technology and human resource

professionals.


BUILDING OUR TEAMCOMMUNICATING WITH OUR TEAM

Internal communication is essential in keeping employees informed and engaged in the organisation. As North East Water covers such a vast geographical area, it is essential to continue to develop and improve the lines of communication with all areas of the Corporation.

Throughout the year North East Water adopted improvements to communication tools, and will continue the improvements as opportunities arise. The Corporation continues to publish staff news, external news and events on the internal website Splash, incorporating a thank you page, which gives employees the opportunity to publically thank other employees.

CELEBRATING SUCCESS

In 2012-13, two employees were recognised at the Victorian Water Industry Engineers and Operators Conference. The first won best paper presented at the conference with the second employee achieving runner-up. North East Water continues to support all employees in their endeavors to be recognised external to the organisation.

To celebrate the success of the Corporation's workforce, each year the Managing Director presents special achievement awards to recognise employees who have shown leadership or who have excelled while facing the many inherent challenges in their work. This year the awards included Driving Change, Living The Values, Quiet Achiever and Over & Above categories.

PROMOTING HEALTH AND WELL-BEING

The health and wellbeing of employees is of high priority. North East Water has many workplace initiatives in place to improve employee health and wellbeing. The My Health initiative delivers an annual program that promotes the health, safety and wellbeing of all employees. In 2012-13 the focus of the My Health initiative was general health and wellbeing.

STAFF SATISFACTION

North East Water staff sat an on-line survey based on the Business Excellence Framework and comprised forty core statements that staff rate using a seven-point scale. The survey attracted a high response rate of 90%, in line with the previous year, indicating that employees are engaged in the survey process and willing to continue to improve the organisation.

The overall weighted performance score of 75.1%, as shown in Figure 18 below, represents a significant increase on previous years results, and places North East Water in the top quartile of all organisations that participate in the survey. This increase in staff satisfaction has been an organisational wide effort to listen, analyse and implement strategies to keep driving improvement.

In 2012-13 the annual survey transitioned from satisfaction to engagement with both an engagement and satisfaction score assessed. The engagement survey measures ten alignment and engagement factors that fall under the headings Energise, Execute and Engage. These factors show whether day-to-day operations are aligned with strategic goals and/or whether employees are engaged. The overall engagement score for 2012-13 was 63% which reflects a performance within the second and third quartiles when compared to other organisations in the benchmark database.

STRATEGIC FOCUS

A key ‘People' project of the Strategic Intent 2018 is Achieving Through People. The objective of the Human Resource Strategy is to increase the effectiveness of Human Resource Management while developing a sustainable organisation, a culture of high performance and a workforce that is best equipped to meet the Corporation’s objectives. For 2012-13 the key focus areas were Engagement Focus and Organisational Values. The aim for the Engagement Focus was to shift from the Satisfaction Survey to the Engagement Survey. The Organisational Values project focussed on reviewing the current organisational values to test their suitability for the organisation going forward. This work will be completed in the next year.

Figure 18 - Staff satisfaction survey results 2012-2013Overall weighted performance score

Notes:The result is calculated as a weighted performance score across seven business categoriesAreas identified by employees as working well at North East Water include:• Providing a safe work environment• Providing for the health and wellbeing of employees• Producing or delivering quality products and services in my work area


VALUING DIVERSITY

The Corporation has a diverse workforce, and values all employees equally. North East Water is also committed to providing a workplace free of discrimination and harassment.

To ensure North East Water remains a diverse workplace, the Corporation is committed to the fundamentals of Equal Employment Opportunity (EEO), merit-based appointments and equity in recruitment and selection. To ensure impartiality and equity underpin all business practices, rules and policies are in place. The Corporation's Equal Opportunity Policy deals specifically with a commitment and approach to issues including harassment, bullying and workplace violence. This, along with our Code of Conduct, is available to all employees on the intranet.

Internally, the Corporation has appointed both male and female Equal Opportunity Contact Officers to be first-line contacts for employees who may be experiencing workplace difficulties or other issues. The program is based on the concept of an early-intervention assisted self-help approach. Matters may be referred to the Human Resources department if further assistance is required.

DIVERSITY IN OUR WORKFORCE

North East Water actively promotes EEO and employs an increasing number of women. Almost one-third of the workforce is currently made up of women. At the most senior levels, women account for four out of the eight-member Board (including the Chair) and one of the five-member Executive Team.

INDUSTRIAL RELATIONS

North East Water takes a positive approach to building relationships with staff and other stakeholders, with 85% of staff employed under award/enterprise bargaining agreement conditions. Executive/senior officer employment arrangements account for the remaining 15% of staff.

The Corporation enjoys the benefits of good working relationships. There were no industrial disputes in 2012-13.

HEALTH AND SAFETY CULTURE AND PRACTICE

Health and Safety at North East Water has continued to evolve and is under a process of improvement. The organisational redesign that took place during 2012 has promoted higher standards of health, safety and welfare and has translated into an active and positive health and safety culture across the business.

Changes and improvements to the Health and Safety Management System (HSMS) have been embraced by staff and there is clear evidence that health and safety is culturally accepted as an integral aspect of all North East Water activities.

Noteworthy examples include:

• enhanced consultation and communication of health and safety across all facets of the business in the pursuit of improved health and safety outcomes

• inclusion of health and safety specialists in business unit meetings and requests for more information relating to health and safety performance and health and safety training

• enhanced engagement of staff in health and safety matters across all business units as evidenced in the North East Water Staff Engagement Survey conducted in 2013

• continued implementation and utilisation of the Corporate TAKE 5 program with continued use and development of Job Safety Assessments (JSAs) and project risk assessments for non-routine activities, and

• enhancement and continued implementation and cultural embedment of the three tiered health and safety action plans provide a clear line of sight through to Corporate Objectives and Targets and align to the Health and Safety Strategic Plan.

HEALTH AND SAFETY


HEALTH AND SAFETY MONITORINGAND COMPLIANCE

North East Water’s management system is accredited to AS/NZS4801:2001 Occupational Health and Safety Management Systems and was externally audited in October 2012.

Further internal audits have been performed by accredited external agencies thoughout the year.

Key activities implemented during the 2012-13 year to enhance the functionality and effectiveness of the Health and Safety Management System (HSMS) include:

• ongoing development of Standard Operating Procedures (SOP’s). SOP’s have been developed in video format and in a voice over power point format to enhance the useability of training methods

• enhanced use of the North East Regional Development Scheme to compliment the training SOP’s and to ensure that information has been assimilated

• development of an Access database providing a single point of data capture with increased reporting capability

• enhanced, tailored, reporting metrics that provide health and safety information to a wider audience across the business

• implementation of positive performance indicators that are tracked through the health and safety database with regular reporting through Business Units. Positive, lead indicators include:

− performance of safe activity observations

− inspections

− hazard identification and control

− audit of high risk activities

• development of an inter-management system risk assessment template for non-routine activities that can be utilised for any Business Unit

• development of an internal audit template for application across operational areas that supports and enhances the tri-management inspection program, and

• development of a health and safety management review template that is applied by the Executive Management of North East Water to objectively evaluate, assess and advise on the effectiveness and efficiency of the HSMS.

Health &SafetyAS 4801

Table 19 - Health and safety performance

Performance Indicator 2012-13 2011-12 2010-11 2009-10 2008-09

Positive (lead) indicators

Internal / external audits 2 3 3 5 3

Workplace inspections1 121 101 56 78 30

Controlled hazards 305 269 155 N/A N/A

High risk audits (new from March 2012) 21 10 N/A N/A N/A

Safe activity observations (new from March 2012) 41 5 N/A N/A N/A

Negative (lag) indicators

Injuries reported - no lost time2 7 6 11 20 17

Lost-time injury (LTI)3, 6 2 1 3 6 3

Medical treatment injury (MTI)4, 6 0 3 4 7 5

Significant incidents5 0 0 0 3 1

Notes:1. Includes accompanied WorkSafe inspections2. Minor injuries, first aid administered only.3. An injury that resulted in the loss of one day or more of work time.4. An injury that lost less than one day of work time and/or required medical intervention.5. Significant incidents are reportable to WorkSafe as defined in the Health and Safety Act 2004. These incidents may also be LTIs or MTIs.6. Injuries that result in time lost from work are either LTIs or MTIs, hence these are always separate incidentsThe result highlights a reduction in reported injuries overall and in total a reduction in the number of injuries requiring treatment other than first aid. Positive reporting indicators have received a higher priority during this reporting period as evidenced by the number of inspections completed. This has driven an increase in hazard reporting through the inspection process, which have been either closed or controlled to a level that is reasonably acceptable, Safe Activity Observations that require the officers of the business to conduct health and safety audits of the organisational activities has increased by 12%.


INJURIES AND INJURY MANAGEMENT

North East Water is committed to ensuring its workplaces are safe for all staff, contractors, visitors and members of the public.

During 2012-13 two employees suffered lost time injuries (LTI’s) compared to one employee during 2011-12. There were no medically treated injuries for the organisation which is a reduction of three from the previous year.

North East Water takes all incidents and injuries very seriously and although there has been an increase in the number of LTI’s it is worthy of note that the number of injuries that required medical treatment overall reduced from four in 2011-12 to two in 2012-13.

COMMUNICATING HEALTH AND SAFETY

Communication and consultation are the key drivers for health and safety to develop an inclusive, embedded and positive health and safety culture.

The Health and Safety Representatives Committee (HSC) has continued to develop and has been instrumental in the communication of health and safety initiatives and dissemination.

The HSC has continued to be a strong reference group for the Corporation and is fully supported by the Board and Executive Management.

Examples of increased communication include:

• dissemination of safety alerts that are developed through knowledge gained from data available within North East Water and external agencies

• increased mobility of the health and safety team that has provided a greater profile of the team in the operational areas of the business

• the Health and Safety Coordinator has been elected onto the Steering Committee for the VicWater OHS Network which continues to disseminate information and include North East Water in discussion forums that affect the whole of the water industry, and

• continued membership of the local Albury Wodonga Safety, Health and Environment Group.

MAKING OUR PEOPLE SAFER

Health and Safety Initiatives in 2012-13

North East Water has implemented a number of new health and safety initiatives in 2012-13 to increase health, safety and wellbeing of all staff, including:

• consultation with the whole of business and the HSC to vary the designated work groups at North East Water to provide greater efficiencies and improved effectiveness of representation for employees

• practical hazard awareness and risk perception in house training packages targeted to areas of the business that are not operational focussed

• enhanced working relationships with other management systems and strong alignment with security and emergency management

• contractor evaluation processes for the assessment of contractors outside of capital works programs

• continuation of My Health programs with WorkSafe health checks and skin checks for employees

• provision of free flu vaccinations for all staff

• enhanced use of health and safety video training with accompanying e-learning assessment targeted at staff in administration roles

• increased communication with customers, administration and outdoor staff on matters of health and safety that may be present in the workplace, such as dogs at customers premises

• review and simplification of the Health and Safety Management System (HSMS) in accordance with the North East Water Governance Framework to provide the end user with simple ease of use documents to enhance their health and safety, and

• continued provision of training in accordance with regulatory obligations and, where required as refresher training for work practices that have no regulatory requirement.

Each year North East Water develops a Health and Safety Action Plan that identifies objectives and targets for health and safety to address key areas of improvement.

This year five objectives were set relating to:

• incident reduction

• positive performance indicators

• improvement of HSMS

• Health and Safety Committee structure, and

• developing and empowering safety leaders.

Figure 19 - Lost Time Injury Frequency RatePer million hours worked


Table 20 - Health and Safety Objectives and targets for 2012-13

Objectives TargetTarget

achievedComments

Objective 1:Reduce incidents by 5% during year one of the 2013-15 Strategic Plan

To develop health and safety actions plans for individual Business Units that reflect the dynamics of that unit, its statistical health and safety performance and provide clear line of sight to support the Corporate Objectives ✓

Plans were developed in consultation with Senior Managers and Health and Safety Representatives in the following areas:

• Operations• Planning and Infrastructure• Electrical, and• Administration

The plans were implemented and reviewed at regular intervals with a formal quarterly review.

Incidents reduced from ten during 2011-12 to nine during 2012-13, a reduction of 10%.

Objective 2:Positive Health and Safety Culture

Embed a positive culture of health and safety acceptance

✓

Positive performance indicators were identified and agreed with Business Unit Managers and tracked through the health and safety database.

Reporting mechanisms were developed and monthly reports forwarded to Senior Management Team members in operational areas

Positive performance indicators were:

• safe activity observations• inspections• high risk audits• hazard raised and controlled, and• HSR focus meetings.

Objective 3:Continued Improvement of the Health and Safety Management System

Enhance usability and functionality of the HSMS

✓

The Tri-Management inspection program was used to test and enhance the management system for useability at operational level.

Reports were prepared for each inspection that was performed against a schedule developed in consultation with operations management.

Reports highlighted non-conformities, areas for concern and opportunities for improvement.

Objective 4:Align Health and Safety Committee and Safety Strategic Plan

Review Designated Work Groups (DWG’s) in consultation with all stakeholders

✓

All staff were consulted on the current structure of DWG’s and a proposed model developed that incorporates a Steering Committee with two sub-committees, Operations and Corporate.

Consultation took place with:

• All departments• Executive• Senior Management Team• Health and Safety Committee, and• Whole of Business.

The committee structure is due to be enacted in July 2013 with formal variation of the DWG’s.

Objective 5:Develop and Empower safety Leaders

Build leadership competency that promotes positive health and safety culture and supports the Human Resources and Health and Safety Strategic Plans

✓

Senior Management and Team Leaders have engaged in “Leading teams” training in line with the Human Resources Strategy.

Tri-Management inspections have promoted safety leadership at depot area Coordinator level, this has been complimented by the introduction of positive performance indicator KPI’s that are regularly assessed and reported upon through Area Managers.

Training has been undertaken by Area Coordinators in chemical management risk assessment and handling following the identification of training needs through the health and safety.


OCCUPATIONAL HEALTH, SAFETY & WELFARE POLICYNorth East Water is committed to providing and maintaining a safe and healthy work environment for all employees, contractors, customers, visitors and the public.

North East Water will maintain a structured Health & Safety Management System (HSMS) integrating all other business systems in accordance with the:

• Victorian OHS Act 2004 and associated legislation

• Australian Standard AS/NZ 4804:2001 - Occupational Health and Safety Management Systems.

To fulfil this commitment North East Water will:

• provide and maintain safe plant, equipment and systems of work

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

• comply with relevant OHS legislation, Regulations, Codes of Practice, and the Australian Standards to which the Corporation subscribes

• regularly set and review objectives and targets to minimise work related incident and injury and continually improve health, safety and welfare performance

• provide appropriate information, instruction, training and supervision for all employees, contractors and visitors to ensure their safety

• support the OHS Committee to ensure there is effective consultation with all relevant stakeholders

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

• investigate all incidents, accidents and near misses within 48 hours.

Manager / Supervisor Responsibilities

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

All Business Unit Managers, Area Managers and Supervisors 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.

Employee / Contractor and Others Responsibilities

All persons inclusive of Board Members, employees and 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.


GOVERNANCE

CORPORATE GOVERNANCE

Governance is an umbrella term that covers the administration of an organisation, and the interaction between its Board, senior management and corporate stakeholders. At North East Water, governance is an ongoing process of:

• setting appropriate strategic direction to ensure we remain a sustainable and resilient organisation

• managing risk to mitigate loss and seize opportunity

• engaging with stakeholders and the community to ensure we understand our obligations and meet expectations, and

• making decisions supported by solid analytical evidence.

The Corporation is committed to good governance to provide a transparent, accountable, fair and responsive method for directing and controlling the organisation.

At North East Water good governance is achieved through:

• clearly defined roles and responsibilities for Board members, including the Managing Director and the Executive Management team

• embedding the Governance Framework which provides the Board and employees with a clear understanding of their governance roles, responsibilities and ethical conduct standards

• establishment of Board Committees (page 47)

• implementation of a comprehensive Risk Management Framework (page 50) and an internal audit function reporting to the Board’s Audit, Safety & Finance Committee (page 47), and

• implementation of strategic and operational policies and procedures throughout the organisation.

The Corporation’s operations are overseen by the Department of Environment and Primary Industries (DEPI) on behalf of the Minister for Water, and the Department of Treasury and Finance (DFT) on behalf of the Treasurer.

Customers

Victorian Government

Board

ManagingDirector

Craig Heiner

Performance, Remuneration,

Risk & Governance Commitee

Audit, Safety & Finance Committee

Capital Development Committee

Strategy & Planning

Committee

Executive ManagerPlanning & Infrastructure

Kevin Freeman

Manager Human Resources

ManagerCustomer Service

ManagerCommunications

Manager Governance

Manager Finance

ManagerBusiness Systems

Manager Risk & Business

Sustainability

ManagerStrategic Planning

Manager Reticulation

Development

Manager Infrastructure & Engineering

Services

Executive ManagerCorporate Services

Anthony Herman

Executive ManagerOperations

John Day

Executive ManagerCustomer & Community

Ann Telford

Manager Assets & Operations North

Manager Assets & Operations South

Manager Assets & Operations Alpine

Manager Assets

Manager SystemsOptimisation

ORGANISATIONAL STRUCTURE

Figure 20 - Organisational Structure

Notes:As a result of an organisational review undertaken in 2012, the Executive Management portfolio was reduced from five to four.


DIRECTORS

We have a skills-based eight-person Board (seven non-executive Directors appointed by the Minister for Water, and the Managing Director) whose task is to set the Corporation’s strategic direction and ensure it continues to operate in line with Victorian Government policy.

The Board participates in an annual performance review incorporating individual, group and Chair performance. This process assists in identifying any skills gaps and training requirements for Directors. Throughout the year various Directors members have participated in industry conferences and Australian Institute of Company Directors (AICD) training.

Joanne AndersonChairAppointed 1 October 2006Appointed Chair 1 July 2010

Joanne Anderson was first appointed as a Director of the North East Water Board in October 2006. She was appointed as Deputy Chair in October 2008 and has held the position of Chair since July 2010. As Chair of the Board, Joanne is also Chair of the Board's Performance, Remuneration, Risk and Governance Committee; Chair of the Strategy and Planning Committee; and an ex-officio member of the Audit, Safety and Finance Committee, and the Capital Development Committee.

Joanne’s experience and knowledge provides her with a thorough understanding of the water industry. She is a member of the VicWater Council, and in 2011 Joanne was elected to the VicWater Board of Directors, the peak industry association for Victorian water businesses.

Joanne is a Fellow of the Australian Institute of Company Directors.

Joanne has had an extensive career in Victorian local government, including roles as Chief Executive Officer of the Rural City of Wangaratta , Administrator of the Benalla Rural City, and served seven years as a member of the Victoria Grants Commission. In November 2012, she concluded a three year term as one of the three Administrators of the Brimbank City Council.

In July 2012 Joanne was appointed to the Victorian Government’s Sustainability Fund Advisory Panel, having previously served two terms as a Member of the Victorian Catchment Management Council, the Victorian Government’s principal advisory body on catchment management.

Joanne now resides on a small property in Lancefield having spent the previous 20 years with her husband, John, running a cattle and blueberry farm on the Strathbogie plateau.

Steve BirdAppointed 1 October 2011

Steve Bird is a member of the Strategy and Planning Committee; and has been a member of the Audit, Safety and Finance Committee since 23 April 2013. Steve was a member of the Performance, Remuneration, Risk and Governance Committee until 23 April 2013.

Steve retired from his role as Chief Executive Officer of the Victorian Water Industry Association in September 2011. He previously held various management positions with Grampians Wimmera Mallee Water and its predecessors (1992–2004) and the Rural Water Corporation (1974–1992).

Steve is an Alternate Director of Vision Super (2004–current) and is Chairman of the Heathmont Bowls Club Inc (2005–current). He is also an external member of the Audit and Risk Committee of Wannon Region Water Corporation (2008–current).

He has a Bachelor of Business (Accounting), is a Fellow Certified Practising Accountant and is a member of the Australian Institute of Company Directors. Steve resides in Heathmont.

Catherine BottaAppointed 1 October 2012

Catherine Botta is a member of the Board’s Capital Development Committee; and a member of the Strategy and Planning Committee; and was a member of the Audit, Safety and Finance Committee until 23 April 2013.

Catherine, with her partner, owns and manages, PCB Consulting. She is a consultant in soil health, facilitation, mediation and community engagement. Prior to this Catherine was a lecturer at Dookie College for the University of Melbourne.

Catherine is Deputy Chair of the Benalla Health Board and Treasurer of the Federal Council of the Australian Society of Soil Science. 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.


Denis FlettAppointed 1 October 2012Appointed Deputy Chair 1 October 2012

Denis Flett is the Deputy Chair of the Board; a member of the Board’s Capital Development Committee; a member of the Performance, Remuneration, Risk and Governance Committee; and a member of the Strategy and Planning Committee.

Denis is the Chairperson of the Victorian Environmental Water Holder.

Previously he was a Principal Consultant of DG Consulting (Aus) providing advice on water and natural resource management, a Director of Goulburn Valley Water, the foundation Chief Executive of Goulburn-Murray Water and a Victorian Commissioner on the Murray Darling Basin Commission.

Denis holds a Bachelor of Civil Engineering and is a fellow of the Australian Institute of Company Directors.

Debi GaddAppointed 1 October 2012

Debi Gadd is a member of the Board’s Strategy and Planning Committee; and has been a member of the Performance, Remuneration, Risk and Governance Committee since 23 April 2013. Debi was a member of the Audit, Safety and Finance Committee until 23 April 2013.

Debi in partnership with her husband owns and manages a beef and sheep grazing property at Mount Alfred in the Upper Murray.

Debi has a Diploma of Frontline Management, is qualified and has worked as a Registered Nurse Division 1, a Program Manager in Aged Care/Practice Support and was the Regional/Site Manager of Workways Association. She has been a member of the Australian Institute of Company Directors since completing the Director’s Course in 2013.

Debi is currently a Councillor of Towong Shire Council.Previously she was a member of the Ministerial Mayors Advisory Panel and the Community Liaison Reference Group for the North East Catchment Management Authority.

Jonathan KoopAppointed 1 October 2011

Jonathan Koop is the Chair of the Board's Capital Development Committee; a member of the Strategy and Planning Committee; and has been a member of the Audit, Safety and Finance Committee since 23 April 2013.

Jonathan owns and manages a grazing/cropping property in North East Victoria, where he resides with his wife and four young children.

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 and is a Chartered Accountant as well as a member of the Australian Institute of Company Directors.

Rowan O'HaganAppointed 1 October 2011

Rowan O’Hagan is the Chair of the Board’s Audit, Safety and Finance Committee; a member of the Performance, Remuneration and Governance Committee; and a member of the Strategy and Planning Committee.

Rowan is the Principal of Regional Economic and Community Development Solutions and the National Project Manager, Benchmarking Project for the Pork Cooperative Research Centre.

Rowan is a Director of the Ovens & King and Gateway Community Health Services and an independent member of Charles Sturt University Audit and Risk Committee.

Rowan has a Bachelor of Agricultural Science (Honours), Master of Agricultural Science, Doctor of Philosophy, Certificate IV Workplace Training and Assessment and is a graduate of the Australian Institute of Company Directors. She resides in Wangaratta.

Craig Heiner (Managing Director)Appointed 1 August 2008

Craig Heiner is an ex-officio member of the Board’s Performance, Remuneration, Risk and Governance Committee; Audit, Safety and Finance Committee; Capital Development Committee; and the Strategy and Planning Committee.

Craig was appointed as Managing Director in July 2008 and carries responsibility for ensuring the governance and strategic initiatives of the Board are implemented. With a broad background across governance, finance and operations, 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 the Columbia Senior Executive Program; and is a member of the Institute of Water Administration.


BOARD COMMITTEES

The Board assumes overall responsibility for corporate governance of the Corporation. It monitors the performance of the Corporation both directly and through the following Board Committees:

• Audit, Safety & Finance Committee

• Capital Development Committee

• Performance, Remuneration, Risk & Governance Committee, and

• Strategy and Planning Committee.

The Capital Development Committee is the only Committee that has delegated authority. This financial delegation relates to the approval of tenders.

Audit, Safety & Finance CommitteeThe primary role of the Audit, Safety and Finance Committee is to assist the Board in fulfilling its corporate governance responsibilities in regard to financial reporting, audit and financial management, including:

• the integrity of financial reporting;

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

• the effectiveness of the internal control framework;

• oversight of the strategic direction and policy on financial management;

• maintaining the independence of the external and internal auditors; and

• the monitoring of Health and Safety Performance and continuous improvement initiatives.

As at 30 June 2013 the Committee consisted of three Non-Executive Directors:

• Rowan O Hagan (Chair)

• Steve Bird

• Jonathan Koop.

The Committee's achievements in 2012-13 included:

• ongoing compliance of all management systems, including environmental, health & safety and drinking water quality

• oversight of the three Year Strategic Internal Audit Plan

• review of Service Contracts Management

• ongoing monitoring of the Corporation’s financial ratios, and

• review of accounts payable and recievable controls.

Capital Development CommitteeThe Capital Development Committee oversees the Corporation’s capital works program and has delegated authority to approve tenders that are within its delegation level and beyond the Managing Director’s delegation level.

The Committee’s primary responsibility is to ensure that the Corporation takes responsible and reasonable measures to develop and implement its capital requirements ensuring service delivery and strategic objectives are met.

The primary role of the Committee is to review, monitor and, where necessary, recommend improvements in the areas of:

• Capital Works Programs

• Tenders, and

• Asset Performance.

The Committee also establishes and reports to the Performance, Remuneration, Risk and Governance Committee on the Corporation’s capital projects.

As at 30 June 2013 the Committee consisted of three Non-Executive Directors:

• Jonathan Koop (Chair)

• Catherine Botta, and

• Denis Flett.

The Committee’s achievements for the 2012-13 year included:

• sponsorship and development of proposed capital projects / programs for consideration

• review and approval of tenders under its delegation and review and recommendation to the Board of tenders above its delegation, and

• expanding the areas of Asset Management.


Performance, Remuneration, Risk & Governance CommitteeThe role of the Performance, Remuneration, Risk & Governance Committee is to assist the Board in fulfilling its corporate governance responsibilities in regard to performance monitoring, good governance practices and risk management, including:

• performance monitoring of the Board, the Corporation and the Managing Director

• determining the organisation's policy and practice for Executive remuneration ensuring compliance with the Victorian Government Sector Executive Remuneration Panel (GSERP) guidelines

• monitoring the succession planning for the role of the Managing Director, and

• overseeing the development and operation of the Corporation’s governance practices, and taking responsible and reasonable measures to identify, control and finance corporate risks.

As at 30 June 2013 the Committee consisted of four Non-Executive Directors:

• Joanne Anderson (Chair)• Denis Flett• Debi Gadd, and• Rowan O’Hagan.

The Committee refined the Managing Director’s and Corporation’s Key Performance Indicators and targets and provided constructive feedback on performance. The Committee also provided oversight and direction to the development of the Corporation's Governance Framework and Director Induction Pack.

As at 1 July 2013, all future matters relating to risk will be overseen by the Strategy and Planning Committee.

Strategy & Planning CommitteeThe purpose of the Strategy & Planning Committee is to act in an advisory capacity to the Board in developing its strategic plans and objectives in areas of priority such as the Corporation’s Strategic Intent, Corporate Plan, Water Plan and Water Supply Demand Strategy.

The Committee is Chaired by Joanne Anderson and membership consists of all Non-Executive Directors and the Managing Director.

Table 21 - Board members meeting attendance 2012-13

Member name Board Meetings Audit, Safety and Finance Committee

Capital Development Committee

Performance, Remuneration & Governance

Strategy and Planning

Committee

Attended Attended Attended Attended Attended

Joanne Anderson 11 of 11 4 of 4 3 of 3 5 of 5 3 of 3

Steve Bird 10 of 11 1 of 11 5 of 52 3 of 3

Cath Botta 7 of 83 2 of 24 1 of 25 2 of 26

Frank Burfitt 3 of 37 1 of 18 1 of 19

Suzanne Evans 3 of 310 1 of 111 1 of 112

Denis Flett 8 of 813 2 of 214 3 of 315 2 of 216

Debi Gadd 8 of 817 2 of 218 0 of 019 2 of 220

Craig Heiner 8 of 11 1 of 4 2 of 3 2 of 5 3 of 3

Jonathon Koop 10 of 11 1 of 121 2 of 3 3 of 3

Rowan O'Hagan 11 of 11 4 of 4 5 of 5 3 of 3

Geoff Vincent 4 of 422 1 of 123 3 of 324 1 of 125

Total number of meetings 11 4 3 5 3

Notes:1. Steve Bird became a member of the Committee on 23 April 2013.2. Steve Bird was a member of the Committee until 23 April 2013.3. Catherine Botta became a member of the Board on 1 October 2012.4. Catherine Botta was a member of the Committee from 1 October

2012 to 23 April 2013.5. Catherine Botta became a member of the Committee on 1 October 2012.6. Catherine Botta became a member of the Committee on 1 October 2012.7. Frank Burfitt was a member of the Board until 30 September 2012.8. Frank Burfitt was a member of the Committee until 30 September 2012.9. Frank Burfitt was a member of the Committee until 30 September 2012.10. Suzanne Evans was a member of the Board until 30 September 2012.11. Suzanne Evans was a member of the Committee until September

2012.

12. Suzanne Evans was a member of the Committee until September 2012.

13. Denis Flett became a member of the Board on 1 October 2012.14. Denis Flett became a member of the Committee on 1 October 2012.15. Denis Flett became a member of the Committee on 1 October 2012.16. Denis Flett became a member of the Committee on 1 October 2012.17. Debi Gadd became a member of the Board on 1 October 2012.18. Debi Gadd was a member of the Committee from 1 October 2012 to

23 April 2013.19. Debi Gadd became a member of the Committee on 23 April 2013.20. Debi Gadd became a member of the Committee on 1 October 2012.21. Jonathan Koop became a member of the Committee on 23 April

2013.22. Geoff Vincent was a member of the Board until 31 August 2012.23. Geoff Vincent was a member of the Committee until 31 August 2012.24. Geoff Vincent was a member of the Committee until 31 August 2012.25. Geoff Vincent was a member of the Committee until 31 August 2012.

BOARD MEMBER ATTENDANCE AT MEETINGS


EXECUTIVE MANAGEMENT TEAM

The Executive Management Team is responsible for managing the operations of the Corporation and meeting the strategic direction set by the Board. The team meets weekly to ensure there is cohesion in the management of the Corporation’s day to day activities.

Craig HeinerManaging Director

Craig’s details can be found in the Board section on page 46.

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 waste water 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 a current 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 & Infrastructure

Kevin began working with the Corporation in 1998 and was first appointed to an Executive role in 2007. With 20 years of water industry experience, Kevin brings strong technical and management experience in the delivery of water related infrastructure projects.

Leading the Planning & Infrastructure unit, Kevin manages a team responsible for the strategic planning, reticulation development, delivery and project management of the Corporation’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 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 work groups.

During his 19 year involvement with the Corporation, Anthony has been able to develop 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 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 & Community team, Ann is responsible for the Marketing & Communications, Human Resources and Customer Service teams.

A major focus for Ann is strengthening relationships between North East Water and the communities it serves through engagement, communications and customer service. Another key area of Ann’s role is leadership of the “people and culture” aspects of the business, including the health, safety and welfare of the Corporation’s staff.

Ann holds a Bachelor of Arts and the ANZSOG Executive Master of Public Administration, and is also a qualified Mediator and Project Management Practitioner.


ATTESTATION OF CONSISTENCY WITH THE AUSTRALIAN STANDARD AS/NZS ISO 31000:2009 RISK MANAGEMENT - PRINCIPLES & GUIDELINES

I, Joanne Anderson, certify that North East Water has risk management processes in place consistent with the Australian/New Zealand Standard AS/NZS ISO 31000:2009 Risk Management – Principles and Guidelines, and an internal control system is in place that enables the Executive Management Team to understand manage and satisfactorily control risk exposures. The Board verifies this assurance and that the risk profile of North East Water has been critically reviewed within the last 12 months.

Joanne Anderson (Chair) 27 August 2013

RISK MANAGEMENTThe Board is principally responsible and accountable for the actions of the Corporation and is obliged to ensure that we have taken responsible and reasonable measures to identify and control financial and corporate risks. Through this oversight role the Board establishes the Corporation’s risk tolerance.

In 2012-13 the Board was supported by the Audit, Safety and Finance Committee and the Performance, Remuneration Risk & Governance 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

• ensuring the delivery of appropriate internal audits.

The Corporation's risk profile, areas of issue or concern and threats to the organisational objectives are reported to the Board on a quarterly basis. 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 and assets.

Three key factors influenced the ongoing improvements in risk management at North East Water in 2012-13. These were:

• Review and restatement of the Corporate Risk Appetite. The Board has reviewed the Risk Appetite Statement taking into account the changes in the operating environment since 2011.

• Review of the Risk Management Framework. Adoption of improved methodology to more clearly link the Corporation Risk Appetite to the performance of control measures has enabled a more strategic approach to the management of Corporate risks.

• Statewide benchmarking of business risk conducted by DEPI. 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 risks.


INTERNAL AUDIT AND FINANCIAL GOVERNANCEINTERNAL AUDIT

The role of internal audit 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, Safety & Finance Committee. The Executive Managers of Corporate Services and Operations are the responsible Executives, accountable for internal audit.

In 2012-13 all internal audits were outsourced to RSM Bird Cameron and conducted in accordance with the Australian Standard ASAE 3000 Assurance Engagements other than Audits or Reviews of Historical Financial Information.

During 2012-13 the internal auditor completed two internal audits on:

• Accounts Payable and Accounts Receivable, and

• Service Contracts Management Review.

Details on the purpose and findings of these audits are shown in Table 22, below.

Audit title ObjectiveIdentified non-conformances and improvements

Audit status

Accounts Payable and Accounts Receivable

To review the adequacy of processes and controls in place over Accounts Payable and Receivable including:a) Identifying and assessing procedures and

controlsb) Undertaking data analysis of procurement datac) Assessing the validity and accuracy of data

processed on transactions and reconciliations.

The findings recommended the following:• That North East Water reviews its

policies and procedures every 2 to 3 years.

• The creation and approval of purchase order continues to be segregated.

Completed

Services Contract ManagementReview

To review the adequacy of the processes and controls in place over Service Contracts Management including:a) The approval and management of contract

variationsb) Identify and review those processes that identify

issues or problems with adherence to contract terms and conditions and performance criteria

c) Procedures for contract payments.

The findings recommended the following:• That North East Water reviews the

Contracts and Services performance and payments to assess whether to re-engage contractors and assess current service provider’s performance against contracts.

Completed

Table 22 - Internal audits conducted in 2012-13


ETHICAL AND RESPONSIBLE DECISION MAKINGCODES OF CONDUCT

Two 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 public entity Boards. 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 issued to all new Board members during their induction.

• Code of Conduct for Victorian Public Sector Employees 2007 – This code promotes the public sector values contained in the Public Administration Act 2004. A copy of this code is issued to all employees at the commencement of employment.

All Board members 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 ANDEMPLOYMENT PRINCIPLES

The 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.

Values

All 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. The Corporation has also developed a set of behaviours that underpin the Strategic Intent to 2018.

There are six personal competencies that encourage behaviour:

• customer focus• continuous improvement• relationship building• quality focussed• teamwork, and• develop others.

Employment principles

The 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.

The Corporation's behaviour and performance will always aim 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 awareness and supervisor management training programs to support the rights and obligations of employees and ensure compliance with legislative requirements and internal Corporation standards. With the Equal Opportunity Act being updated, the Corporation will roll out new training to all employees during the remainder of 2013.

ORGANISATIONAL DIVERSITYAND CULTURAL RECOGNITION

North 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 within the Corporation's customer base and community.

North East Water provides the following to meet our commitments to organisational diversity and cultural recognition:

• telephone interpreter services

• family-friendly benefits, including 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 our education program

• traineeships and vacation employment

• community engagement activities, and

• cultural heritage and native title assessments for capital projects.

PROTECTED DISCLOSURE

The Protected Disclosure Act 2012 is designed to protect people who disclose information about serious wrongdoing within the Victorian Public Sector and to provide a framework for the investigation of these matters.

North East Water had no whistleblowers during 2012-13.

The Protected Disclosure Coordinator for the Department of Environment & Primary Industries acts as an agent for the Corporation to receive disclosures under the Protected Disclosure Act 2012 and applies departmental procedures in managing disclosures. Disclosures may also be made directly to the Ombudsman.

The contact details for the Protected Disclosure Coordinator and the Ombudsman are:

• Jennifer Berensen, Protected Disclosure Coordinator Department of Environment & Primary Industries PO Box 500 East Melbourne Victoria 3002 Telephone: 03 9637 8697 Facsimile: 03 9637 8128 Email: [email protected]

• Ombudsman Victoria Level 9, 459 Collins Street (North Tower) Melbourne Victoria 3000 Telephone: 03 9613 6222 Toll free: 1800 806 314

Information about our disclosures under the Protected Disclosure Act 2012 can be found in Appendix 7, page 103.

INFORMATION PRIVACY ACT

The 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 or complaints about potential breaches during 2012-13.

NATIONAL COMPETITION POLICY

Competitive 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 INTERESTS

Board members and nominated officers fulfilled the pecuniary interest requirements of Section 115 of the Water Act 1989 during 2012-13.

COMPLIANCE INFORMATIONFREEDOM OF INFORMATION

North East Water is considered a Government Agency under the terms of the Freedom of Information Act 1982 (FOI). Accordingly, we are 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 FOI Officer or Principal Officer.

In 2012-13 North East Water received four formal requests for information which complied with the requirements under the FOI legislation:

• information sought regarding tender documentation and correspondence between North East Water and a third party

• information sought on construction records relating to a commercial customer’s property

• information sought by a customer regarding correspondence between North East Water and other agencies in relation to the customer’s property, and

• details sought by an agency relating to an independent financial report.

No Freedom of Information decisions were subject to internal review or referrred to the FOI Commissioner.

Requests for access to information held by the Corporation should be made in writing to the authorised FOI Officer:

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

Each request attracts a fee to be paid at the time of requesting the information. The applicable fee for 2012-13 was $25.10. Under the FOI legislation the Corporation has 45 days to respond to the request.


BUILDING ACT 1993

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

FINANCIAL MANAGEMENT COMPLIANCE FRAMEWORK

Our Financial Management Compliance Framework reflects the intentions of the Victorian Government’s initiative of promoting responsible financial management. Inherent in this is a process for the Department of Treasury & 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 2012-13 the Corporation is compliant with 33 of the 34 applicable Directions in the framework.

TERRORISM (COMMUNITY PROTECTION) ACT 2003

In March 2008, the Governor in Council declared that water and sewerage services are essential services to which Part 6 of the Terrorism (Community Protection) Act 2003 applies. As an operator of a declared essential service, the Corporation is required to prepare risk management plans that identify and mitigate the risk of terrorist acts. It is also required to audit the plan and conduct a training exercise each year.

Accordingly, the Corporation conducted a systems audit and training exercise in June 2013. The exercise tested systems and interoperability with emergency services and support agencies under the State Government’s “all hazards, all agencies” policy. The exercise confirmed the Corporation met compliance requirements and that its risk management plan and application is appropriate.

BUSINESS DISCLOSURESCONSULTANCIES GREATER THAN $10,000

Consultant Purpose of ConsultancyTotal Approved

Project Fee (excluding gst)

Expenditure 2012-13

(excluding gst)

Future Expenditure

Commitments

GHD Pty Ltd Dams Portfolio Risk assessment $98,050 $98,050 Nil

GHD Pty Ltd Condition Assessment – West Wodonga Wastewater Treatment Plant

$68,485 $68,485 Nil

GHD Pty Ltd Dam Safety Inspections $54,533 $54,533 Nil

GHD Pty Ltd Asset Management Options $49,800 $49,800 Nil

Bird Strategy Water Plan 3 – Capital Program $19,110 $19,110 Nil

Coffey GeotechicsPty Ltd

Geotechnical Assessment for Proposed Wastewater Storage

$14,450 $14,450 Nil

Nous Group Information Technology Review $29,205 $29,205 Nil

Vincent Project Management

Management Services $67,499 $67,499 Nil

Spiire Australia Dams Monitoring Survey $13,640 $13,640 Nil

Yabbie Pond Tradewaste review $15,900 $15,900 Nil

Jo Leonard & Associates Board Performance Reviews $16,285 $16,285 Nil

Table 23 - Applicable consultancies for 2012-13


CONSULTANCIES LESS THAN $10,000

In 2012-13, the Corporation engaged 22 consultancies where the total fees payable to the consultant were less than $10,000, with a total expenditure of $95,082.

GOVERNMENT GRANTS

North East Water did not receive any government grants in 2012-13.

VICTORIAN INDUSTRY PARTICIPATION POLICY

In 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 2012-13 and, hence, was not required to implement the VIPP.

MAJOR CONTRACTS

No new contracts with a value greater than $10 million were executed in 2012-13.

SUBSEQUENT EVENTS

We are not aware of any events that have occurred after the balance date which materially affect the financial position disclosed at 30 June 2013.

AUDITORS

Victorian Auditor-GeneralLevel 2435 Collins StreetMelbourne Victoria 3000Agent: Johnsons MME, Chartered AccountantsLevel 2, 520 Swift StreetPO Box 375Albury NSW 2640

Safe Drinking Water Act AuditorNCS InternationalSuite 2123 Whitehorse RoadBalwyn Victoria 3103

OHS and Environmental AuditorsSAI Global19-25 Raglan StreetLocked Bag 90South Melbourne Victoria 3205

Internal Auditor RSM Bird Cameron, Level 8 Rialto Towers525 Collins StreetMelbourne Victoria 3000

ADVISER AND BANKERS

Legal AdvisorsTrivett Keating9 Stanley StreetPO Box 678Wodonga, Victoria 3689Meerkin & Apel Lawyers56 Greville StreetPO Box 2207Prahran Victoria 3181

BankersANZ BankLevel 1, 576 Kiewa StALBURY NSW 2640

Insurance BrokersMarsh Pty Ltd727 Collins StMELBOURNE VIC 300


PERFORMANCE REPORTOur Performance Report is prepared pursuant to section 51 of the Financial Management Act 1994 under the direction from our Minister, the Hon. Peter Walsh MLA.

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

This performance Report consists of two parts:

• Indicator Definitions, and

• Indicator Results (schedules 1, 2 and 3) and Notes on Variations


INDICATOR DEFINITIONSFinancial Performance Indicator Definitions

Financial Performance Indicators

F1 Internal Financing Ratio Net Operating cash flow – dividends / Capital expenditure

F2 Gearing Ratio Total debt (including finance leases) / total assets

F3 Interest Cover (EBIT) Earnings before net interest and tax expense / net interest expense

F4 Interest Cover (Cash) Cash flow from operations before net interest and tax payments / net interest payments

Service & Environmental Performance Indicator Definitions

Water supply interruptions

S1.1 Two interruptions per year (number) Number of customers receiving two unplanned interruptions in the year

Interruption time indicators

S2.1 Water supply – unplanned (minutes) Average duration of unplanned water supply interruptions

Restoration of water supply

S3 Unplanned water supply interruptions restored within 5 hours (%)

The number of unplanned interruptions restored within five hours expressed as a percentage of the total number of unplanned interruptions

Reliability of sewerage collection services indicators

S4.1 Sewer spills - Priority 1 (number) Sewer spills from reticulation and branch sewers. Priority 1 spills are those that result in:

• A public health concern• Significant damage to property• A discharge to a sensitive receiving environment• A discharge from a sewer pipe that is 300 mm diameter or greater;

or• A flow >80 L/min

S4.2 Sewer spills - Priority 2 (number) Sewer spills from reticulation and branch sewers. Priority 2 spills are minor failures to contain sewage within the sewerage system. They are also any spill affecting several users that results in minor property damage or a surcharge outside a building that does not pose a health risk.

Containment of sewer spillages

S5 Sewerage spills contained within 5 hours (%)

The number of sewer spills contained within five hours expressed as a percentage of the total number of sewer spills


S6.1 Water quality (number) Water quality complaints per 1,000 water customers

S6.2 Sewerage service quality and reliability (number)

Sewerage service quality and reliability complaints per 1,000 sewerage customers

S6.3 Billing (number) Billing complaints per 1,000 water customers

S6.4 Sewage odours (number) Sewage odours complaints per 1,000 sewerage customers

Reuse indicators

E1.1 Effluent reuse (volume) Effluent reused as a percentage of the volume of treated wastewater available for reuse

E1.2 Biosolids reuse (dry mass) Biosolids reused as a percentage of the dry mass of biosolids extracted from the treatment system

Sewage treatment standards

E2.1 Level of compliance with licence agreements (%)

Number of analyses complying with licence agreements as % of samples. This is based on compliance with monthly notifications limits within each licence.


INDICATOR RESULTS

Ref Indicator Note 2011-12Actual

2012-13Actual

2012-13Target

Variance%

Financial Performance Indicators

F1 Internal Financing Ratio 1 1.14 0.51 0.25 104

F2 Gearing Ratio 2 3.36 5.23 9.20 -43

F3 Interest Cover (EBIT) 3 0.75 6.55 -0.95 -789

F4 Interest Cover (Cash) 4 10.22 16.28 4.34 274

Water supply interruptions

S1.1 Two unplanned interruptions per year (number)a

5 1,202 574 300 91

Interruption time indicators

S2.1 Water supply – unplanned (minutes)a 6 199 87 110 21

Restoration of water supply

S3.1 Unplanned water supply interruptions restored within 5 hours (%)a

98 100 98 2

Reliability of Sewerage Collection Services Indicator

S4.1 Sewer spills - Priority 1 (number) 0 0 No target setb

S4.2 Sewer spills - Priority 2 (number) 12 13 No target setb


S5 Sewerage spills contained within 5 hours (%)a 100 100 99 1

Customer Complaints Indicator

S6.1 Water quality (number) 7 1.97 0.68 No target setb

S6.2 Sewerage service quality and reliability (number)

8 0.29 0.12 No target setb

S6.3 Billing (number) 9 0.28 0.13 No target setb

S6.4 Sewerage odours (number) 10 0.17 0.02 No target setb

Reuse indicators

E1.1 Effluent reuse – volume (%) 11 25 32 No target setb

E1.2 Biosolids reuse - dry mass (%) 0 0 No target setb

Sewage treatment standards

E2.1 Number of analyses complying with license agreements as % of samples

97 95.8 No target setb

Notes:(a) ESC service standard(b) Targets were not set as a service standard by the ESC

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 five percent.

FINANCIAL PERFORMANCE

Note 1 – Internal Financing Ratio

This favourable result compared to target is due to an increase in net cash flows from operations due to an increase in water sales over budget of $5.7 million or 23%.

The reduction compared to the prior year is due to an increase in the capital expenditure in 2012-13 of $41.6 million compared to 2011-12 of $13.6 million.


Note 2 – Gearing Ratio (EBIT)

This favourable result compared to target is due to a reduction in actual borrowings compared to budget in the 2011-12 financial year which impacts on total borrowings at the end of the 2012-13. Actual borrowings at 30 June 2013 are $39.5 million against a target of $70 million.

The deterioration in the actual result for 2012-13 compared to 2011-12 is due to the take up of new borrowings of $15 million in 2012-13 in line with our capital works program.

Note 3 – Interest Cover (EBIT)

This favourable variance compared to both target and the prior year is due to an increase in earnings compared to budget. This was driven by an increase in actual water sales of $5.7 million or 23% compared to budget. Net interest expense is also significantly less than budget due to the reduced borrowing position at 30 June 2013 compared to budget.

The improvement in the actual result for 2012-13 compared to the previous year is due to the increase in earnings before net interest and tax. Earnings before net interest and tax was $8.05 million in 2012-13 compared to negative $0.7 million. Interest on borrowings also reduced in 2012-13 compared to the previous year.

Note 4 – Interest Cover (Cash)

This favourable variance compared to target is due to an increase in cash flows from operations due to additional water sales above budget of $5.7 million. Net interest expense is also significantly less than budget due to the reduced borrowings ($39.5 million) compared to target ($70.5 million).

The improvement in the actual result for 2012-13 compared to the previous year is due to the increase in cash flows before interest and tax driven by an increase in volumetric sales of $6.5 million. Interest on borrowings also reduced in 2012-13 compared to the previous year.

WATER SUPPLY INTERRUPTION

Note 5 - Two unplanned interruptions per year

This unfavourable result compared to target is driven by an increase in interruptions at Wangaratta and Wodonga.

This result compares favourably to the prior year which was adversely influenced by a main break in Myrtleford which resulted in an overnight outage in the town.

INTERRUPTION TIME INDICATORS

Note 6 - Water supply – unplanned (minutes)

The result shows a favourable variance against target and the previous year with water main failures in Myrtleford and Yarrawonga in 2011-12, adversely effecting this result.

CUSTOMER COMPLAINTS INDICATORS

Note 7 – Water quality (number)

This favourable variance compared to the prior year relates primarily to a reduction in water quality complaints driven by the upgrade of our water treatment facilities at Myrtleford and Corryong.

Note 8 – Sewerage Service quality and reliability (number)

This favourable variance compared to the prior year relates primarily to a reduction in sewerage quality and reliability complaints in 2012-13. This is due to an improved preventative maintenance program and increased sewer relining.

Note 9 – Billing (number)

This favourable variance compared to the prior year relates to a reduction in billing complaints from 13 in 2011-12 to 6 in 2012-13. There has been an increase in the number of customers being placed on instalment plans which is directly related to the 20% increase in volumetric sales in 2012-13.

Note 10 – Sewerage Odours (number)

There was one sewerage complaint in 2012-13 compared to seven in 2011-12. There is no discernible link between the number of sewerage complaints received from one year to the next, i.e., there were no major upgrades to plants where we traditionally receive odour complaints.

Note 11 – Sewerage Odours (number)

The increase in effluent re-use compared to prior year is due to a reduction in total wastewater discharged to water in 2012-13 at the Wangaratta Wastewater Treatment site compared to 2011-12.


We certify that the accompanying Performance Report of North East Water Corporation in respect of the 2012-13 financial year is presented fairly in accordance with the Financial Management Act 1994.

The statement outlines the relevant performance indicators as determined by the responsible Minister, the actual results achieved for the financial year against predetermined performance targets and these indicators, and an explanation of any significant variance between the actual results and performance targets.

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

________________

Joanne AndersonChairpersonNorth East Water

________________

Craig HeinerManaging DirectorNorth East Water

27 August 2013

STATUTORY CERTIFICATION


Level 24, 35 Collins StreetMelbourne VIC 3000

Telephone 61 3 8601 7000Facsimile 61 3 8601 7010Email [email protected] www.audit.vic.gov.au





ANNUAL FINANCIAL STATEMENTSTable of Contents

Financial Statements

Operating Statement 64

Statement of Comprehensive Income 65

Balance Sheet 66

Statement of Changes in Equity 67

Cash Flow Statement 68

Notes to the Financial Report

Note 1 Significant Accounting policies 69

Note 2 Revenues 77

Note 3 Net gain/(Loss) on disposal of non-current assets 77

Note 4 Expenses 78

Note 5 Income tax 79

Note 6 Cash and cash equivalents 79

Note 7 Receivables 80

Note 8 Agricultural assets 81

Note 9 Other assets 81

Note 10 Deferred tax assets 81

Note 11 Non-current assets – infrastructure, property, plant and equipment 82

Note 12 Intangible assets 84

Note 13 Payables 84

Note 14 Interest bearing liabilities 85

Note 15 Employee benefits 85

Note 16 Deferred tax liabilities 86

Note 17 Contributed capital 86

Note 18 Reserves 86

Note 19 Financial Instruments 87

Note 20 Financial risk management objectives and policies 89

Note 21 Contingent liabilities and contingent assets 90

Note 22 Cash flow statement 91

Note 23 Commitments for expenditure 91

Note 24 Responsible persons and executive officer disclosures 92

Note 25 Superannuation 93

Note 26 Remuneration of auditors 94

Note 27 Events occurring after the balance sheet date 94

Appendices

Statutory Certification 95

Auditor-General’s report 96-97


OPERATING STATEMENT FOR THE REPORTING YEAR ENDED 30 JUNE 2013

Notes 2013$'000

2012$'000

Revenue from operating activities

Service charges 1(b), 2 20,986 20,235

Water usage charges 1(b), 2 33,258 26,574

Government grants and contributions 1(b), 2 - 75

Interest 1(b) 16 4

Developer contributions 1(b), 2 4,751 4,183

59,011 51,071

Revenue from non-operating activities

Net gain/(loss) on disposal of non-financial assets 3 362 (824)

Other income 4,039 1,439

Total revenue 63,412 51,686

Expenses from operating activities

Borrowing Costs 1(c), 4 1,793 1,989

Depreciation 1(f), 4 18,784 18,707

Amortisation 1(f), 4 805 561

Employee benefits 1(n), 4 14,629 15,545

Environmental contribution 1(s) 1,580 1,580

Asset impairment 1(d) 2,043 -

Other 4 15,890 15,690

Total expenses 55,524 54,072

Net result before tax 7,888 (2,386)

Income tax (expense)/revenue 5 (2,369) 712

Net result for the period 5,519 (1,674)

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


STATEMENT OF COMPREHENSIVE INCOME FOR THE REPORTING YEAR ENDED 30 JUNE 2013

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

Notes 2013$'000

2012$'000

Net results for the period 5,519 (1,674)

Other comprehensive income - -

Items that will not be reclassified to net result

- Impairment adjustment on previously revalued non-current assets 11 (5,317) -

- Income tax relating to these items 16 1,595 -

Other comprehensive income for the period, net of tax (3,722) -

Total comprehensive result for the year 1,797 (1,674)


BALANCE SHEET AS AT 30 JUNE 2013

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

Notes 2013 $'000

2012 $'000

ASSETS

Current assets

Cash and cash equivalents 1(h), 6 2,559 197

Receivables 1(j), 7 6,143 4,996

Agricultural assets 1(k), 8 500 457

Prepayments 1(i) 153 141

Other assets 1(b), 9 5,883 4,868

Total current assets 15,238 10,659

Non-current assets

Receivables 1(j), 7 117 40

Infrastructure, property, plant and equipment 1(d), 11 698,418 680,418

Intangible assets 1(e), 12 3,214 2,918

Deferred tax assets 1(p), 10 38,078 37,660

Total non-current assets 739,827 721,036

TOTAL ASSETS 755,065 731,695

LIABILITIES

Current liabilities

Payables 1(l), 13 7,687 3,823

Interest bearing liabilities 1(u), 14 6,902 8,417

Employee benefits 1(n), 15 3,154 3,131

Total current liabilities 17,743 15,371

Non-current liabilities

Payables 1(l), 13 48 2,049

Interest bearing liabilities 1(u), 14 32,583 16,176

Employee benefits 1(n), 15 319 277

Deferred tax liabilities 1(p), 16 139,003 137,810

Total non-current liabilities 171,953 156,312

TOTAL LIABILITIES 189,696 171,683

NET ASSETS 565,369 560,012

EQUITY

Contributed capital 1(o), 17 264,716 261,156

Reserves 18 163,014 166,736

Accumulated funds 137,639 132,120

TOTAL EQUITY 565,369 560,012


STATEMENT OF CHANGES IN EQUITY FOR THE REPORTING YEAR ENDED 30 JUNE 2013

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

Notes Contributions by owners

Reserves Accumulated funds

Total

$’000 $’000 $’000 $’000

Balance at 1 July 2011 260,506 166,736 133,794 561,036

Net result for the period - - (1,674) (1,674)

Other comprehensive income

Net gain on revaluation of land, buildings and infrastructure assets

18 - - - -

Transactions with the State in its capacity as owner:

Contributions by owners 17 650 - - 650

Balance at 30 June 2012 261,156 166,736 132,120 560,012

Net Result for period - - 5,519 5,519

Other comprehensive income

Impairment adjustment on previously revalued non-current assets

18 - (3,722) - (3,722)

Transactions with the State in its capacity as owner:

Contributions by owners 17 3,560 - - 3,560

Balance at 30 June 2013 264,716 163,014 137,639 565,369


CASH FLOW STATEMENT FOR THE REPORTING YEAR ENDED 30 JUNE 2013

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

Notes 2013 $'000

2012 $'000

Cash Flows from Operating Activities

Receipts

Service and usage charges 52,587 46,018

Interest received 17 4

Net GST received from the ATO 4,536 2,665

Other income 3,892 1,298

Developer Contributions 1,233 1,344

Receipts from Government - other - 75

62,265 51,404

Payments

Payments to suppliers and employees (37,170) (32,013)

Interest and other costs of finance paid (1,742) (1,994)

Environmental contributions (1,580) (1,580)

(40,492) (35,587)

Net cash (outflow)/inflow from operating activities 22 21,773 15,817

Cash Flows from Investing Activities

Payments for infrastructure, property, plant & equipment (38,097) (14,221)

Payments for intangible assets (1,101) (315)

Proceeds from sale of infrastructure, property, plant & equipment 1,393 271

Net cash (outflow)/inflow from investing activities (37,805) (14,265)

Cash flows from Financing Activities

Repayment of borrowings (4,000) (8,000)

Proceeds from borrowings 19,000 5,750

Repayment of finance leases (166) (149)

Government capital contributions 3,560 650

Net cash (outflow)/inflow from financing activities 18,394 (1,749)

Net increase/(decrease) in cash held 2,362 (197)

Cash and cash equivalents at the beginning of the financial year 197 394

Cash and cash equivalents at the end of the financial year 6 2,559 197

Financing arrangements 14 39,250 24,250


NOTES ACCOMPANYING THE FINANCIAL STATEMENTS

NOTE 1 - SIGNIIFICANT 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. 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’s 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 27 August 2013.

The principal address is: North East Region Water Corporation P.O Box 863Wodonga 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

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(n) for a variation in relation to employee benefits.

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, as modified by the revaluation of certain classes of infrastructure, property, plant and equipment.

Accounting estimates

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 deferred tax assets and liabilities • unearned revenue • provisions • contingent assets and liabilities, and• fair value of infrastructure, property, plant and

equipment.

(b) Revenue Recognition

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).


(b) Revenue Recognition (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, 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.

Interest

Interest income is recognised using the effective interest rate method.

(c) Borrowing Costs

Borrowing costs are recognised as expenses in the period in which they are incurred. Borrowing costs include interest on bank overdrafts and short-term and long-term borrowings, and finance lease charges.

(d) 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.

Assets acquired at no cost or for nominal consideration by the Corporation are recognised at fair value at the date of acquisition.

Acquisition

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 20 year period.

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.

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 Financial Reporting Direction (FRD) 103D.

Revaluations are conducted in accordance with FRD 103D. 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.

For the plant, equipment and vehicles asset class, where the Corporation is able to demonstrate that there is no evidence that a reliable market-based fair value (or other fair value indicators) exist for these assets, depreciated replacement cost is used to represent a reasonable approximation of 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 103D. 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.


(d) Recognition and Measurement of Non-Current Physical Assets (continued)

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 infrastructure, property, plant and equipment are offset against one another within that class but are not offset in respect of assets in different classes.

Revaluation reserves are not transferred to accumulated funds on derecognition of the relevant asset.

Impairment of Assets

Infrastructure, property, plant and equipment are assessed annually for indicators of impairment. 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.

Revaluation Methodology

Land and Buildings were independently valued at 30 June 2011 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 2011 by the Valuer General of Victoria (using AECOM 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 2010. 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.

(e) Intangible Assets

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

Purchased permanent water entitlements are recognised at cost. Water entitlements are deemed to have an infinite life and are therefore not amortised. Instead, water entitlements are tested for impairment annually, or more often if events or circumstances indicate that they might be impaired.

No impairment has been recognised in respect of water entitlements for the year ended 30 June 2013. Impairment is only likely to be recognised when there is a permanent restriction over the use of the water entitlements. Refer Note 12.

(f) 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.


(f) Depreciation and Amortisation of Non-Current Assets (continued)

Major depreciation periods used are listed below and are consistent with the prior year.

Land and Buildings

Buildings 50 years

Leasehold Improvements 20 years

Infrastructure

Water

- Storages 25-350 years

- Reticulation network 50-110 years

- Pump Stations 25-70 years

- Treatment plants 20-75 years

Wastewater

- Storages 25-350 years

- Reticulation network 50-100 years

- Pump Stations 25-70 years

- Treatment plants 20-75 years

Plant & Equipment

- Equipment 5-30 years

- Machinery 10 years

- Furniture & computers 3-20 years

- Motor Vehicles 5 years

Intangible assets

- Software 3-5 years

(g) Leased Assets

Finance Leases

Leases of infrastructure, 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 infrastructure, 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.

(h) Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value, and bank overdrafts. Bank overdrafts are shown within interest bearing liabilities on the balance sheet, but are included within cash and cash equivalents for cash flow statement presentation purposes. Refer Note 6.

(i) 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.

(j) Receivables

Trade 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.

Collectibility of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off. An allowance for impaired receivables is established when there is objective evidence that the Corporation will not be able to collect all amounts due according to the original terms of receivables. The amount of the allowance is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. The amounts credited to the allowance are recognised as an expense in the operating statement. Refer Note 7.

(k) Agricultural Assets

Agricultural assets consist of livestock and produce held and grown on the Corporation’s wastewater reuse facilities. All agricultural assets are measured at fair value based on current market value.


(l) Payables

Payables consist predominantly of trade and sundry creditors. These amounts represent liabilities for goods and services provided to the Corporation, prior to the end of the financial year, which are unpaid at financial year end. The amounts are unsecured and are usually paid within 28 days of recognition.

Payables are initially recognised at fair value, being the cost of the goods and services, and subsequently measured at amortised cost.

(m) Financial Instruments

Recognition

Financial instruments are initially measured at fair value. 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 and other receivables in the balance sheet. Loans and receivables are recorded at amortised cost less impairment.

Fair value

Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value for all unlisted securities, including recent arm’s length transactions, reference to similar instruments and option pricing models.

(n) Employee Benefits

Wages and salaries, annual leave and sick leave

Liabilities for wages, salaries and annual leave expected to be settled within 12 months of the reporting date are recognised in employee benefit liabilities in respect of employees’ services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled, at their nominal values. Employee benefits which are not expected to be settled within 12 months are measured at the present value of the estimated future cash outflows to be made by the entity, in respect of services rendered by employees up to the reporting date. Regardless of the expected timing of settlements, liabilities in respect of employee benefits are classified as a current liability, unless there is an unconditional right to defer the settlement of the liability for at least 12 months after the reporting date, in which case it would be classified as a non-current liability. Refer Note 4 and 15

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.

Long Service Leave (LSL)

Current Liability – unconditional LSL (representing 7 or more years of continuous service) is disclosed as a current liability even where the Corporation does not expect to settle the liability within 12 months because it does 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:

• Present value – component that the Corporation does not expect to settle within 12 months, and

• Nominal value – component that the Corporation expects to settle within 12 months.

Non-Current Liability – conditional LSL (representing less than 7 years of continuous service) is disclosed as a non-current liability. There is an unconditional right to defer the settlement of the entitlement until the employee has completed the requisite years of service. Conditional LSL is required to be measured at present value.

In calculating present value, consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.

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 the Corporations 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.

Employee Benefit On-Costs

Employee benefit on-costs, including payroll tax and worker’s compensation are recognised and included in employee benefit liabilities and costs when the employee benefits to which they relate are recognised as liabilities.

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.


(o) 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. Transfers of net assets arising from administrative restructurings are treated as distributions to or contributions by owners.

(p) Taxation

The 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.

(q) Contingent Assets and Contingent Liabilities

Contingent assets and contingent liabilities are not recognised in the balance sheet, but are disclosed by way of a note (refer to Note 21) and, if quantifiable, are measured at nominal value. Contingent assets and liabilities are presented exclusive of GST receivable or payable respectively.

(r) Dividend Policy

The 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.

The Corporation propose that a dividend is not payable based on the 2012-13 result due to the pre-tax adjusted losses incurred for each year of the previous four years.

(s) Environmental Contributions

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.

(t) Goods and Services Tax

Revenues, expenses and assets are recognised net of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the Australian Taxation Office (ATO). In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of an item of expense.

Receivables and payables are stated inclusive of GST. The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the Balance Sheet. Cash flows arising from operating activities are disclosed in the Cash Flow Statement on a gross basis – i.e., inclusive of GST. The GST component of cashflows arising from investing and financing activities which is recoverable or payable to the taxation authority is classified as operating cash flows.

(u) Interest Bearing Liabilities

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings 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.

Borrowings 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.

(v) Commitments

Commitments for future expenditure include operating and capital commitments arising from contracts. These commitments are disclosed by way of a note (refer to Note 23) at their nominal value and exclusive 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.

(w) Comparative Amounts

Where necessary, figures for the previous year have been re-classified to facilitate comparison. There has been no material change to prior year balances.


(x) New Accounting Standards and Interpretations issued that are not yet effective

Certain new accounting standards and interpretations have been published that are not mandatory for the 30 June 2013 reporting period. As at 30 June 2013, the following standards and interpretations had been issued but were not mandatory for financial year ending 30 June 2013. The Corporation has not and does not intend to adopt these standards early.

Standard / Interpretation Summary Applicable for annual reporting periods

beginningon or after

Impact on financial statements

AASB 9 Financial Instruments, AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2010) and AASB 2012-6 Amendments to Australian Accounting Standards - Mandatory Effective Date of AASB 9 and Transition Disclosures

AASB 9 Financial Instruments addresses the classification, measurement and derecognition of financial assets and financial liabilities. The standard is not applicable until 1 January 2013 but is available for early adoption. The derecognition rules have been transferred from AASB 139 Financial Instruments: Recognition and Measurement and have not been changed. The Corporation has not yet decided when to adopt AASB 9.

1 January 2013 The Corporation is yet to assess its full impact. However, these amendments are not expected to have any impact on the Corporation’s financial statements.

AASB 1053 Application of Tiers of Australian Accounting Standards, AASB 2010-2 Amendments to Australian Accounting Standards arising from Reduced Disclosure Requirements, AASB 2011-2 Amendments to Australian Accounting Standards arising from the Trans-Tasman Convergence Project – Reduced Disclosure Requirements and AASB 2011-6 Amendments to Australian Accounting Standards – Extending Relief from Consolidation, the Equity Method and Proportionate Consolidation – Reduced Disclosure Requirements

On 30 June 2010 the AASB officially introduced a revised differential reporting framework in Australia. Under this framework, a two-tier differential reporting regime applies to all entities that prepare general purpose financial statements. Tier 1 are the Australian Accounting Standards as currently applied and Tier 2 is the reduced disclosure regime which retains the recognition and measurement requirements of Australian Accounting Standards but with reduced disclosure requirements.AASB 2011-6 extends the relief for intermediate parent entities from consolidation, equity accounting and proportionate consolidation to parent entities that report under tier 2, where the parent higher up the group is reporting either under tier 1 or tier 2.

1 July 2013 The impact of this standard will depend on instructions provided by DTF on its applicability to the entity. The entity will assess its impact once DTF has provided guidance on this standard.

AASB 119 Employee Benefits, AASB 2011-10 Amendments to Australian Accounting Standards arising from AASB 119 and AASB 2011-11 Amendments to AASB 119 (September 2011) arising from Reduced Disclosure Requirements.

These standards require the recognition of all re-measurements of defined benefit liabilities/assets immediately in other comprehensive income (removal of the so-called ‘corridor’ method) and the calculation of a net interest expense or income by applying the discount rate to the net defined benefit liability or asset.

1 January 2013 / 1 July 2013

The Corporation is yet to assess its full impact. However, these amendments are not expected to have any impact on the Corporation’s financial statements.

AASB 2011-4 Amendments to Australian Accounting Standards to remove Individual Key Management Personnel Disclosure Requirements

Removes the individual key management personnel disclosure requirements from AASB 124 Related Party Disclosures, to a--chieve consistency with the international equivalent standard and remove a duplication of the requirements with the Corporation Act 2001. The amendments cannot be adopted early.

1 July 2013 This amendment is expected to have a limited impact.


Standard / Interpretation Summary Applicable for annual reporting periods

beginningon or after

Impact on financial statements

AASB 13 Fair Value Measurement and AASB 2011-8 Amendments to Australian Accounting Standards arising from AASB 13

It explains how to measure fair value and aims to enhance fair value disclosures.

1 January 2013 The Corporation has yet to determine which, if any, of its current measurement techniques will have to change as a result of the new guidance. It is therefore not possible to state the impact, if any, of the new rules on any of the amounts recognised in the financial statements.However, application of the new standard will impact the type of information disclosed in the notes to the financial statements. The Corporation will adopt the new standard from its operative date, which means that it will be applied in the annual reporting period ending 30 June 2014.

AASB 2012-1 Amendments to Australian Accounting Standards – Fair Value Measurement – Reduced Disclosure Requirements [AASB 3, AASB 7, AASB 13, AASB 140 & AASB 141]

This Standard applies to annual reporting periods beginning on or after 1 July 2013. Earlier application is permitted for annual reporting periods beginning on or after 1 July 2009 but before 1 July 2013, provided that the following are also adopted for the same period:

(a) AASB 1053 Application of Tiers of Australian Accounting Standards;

(b) AASB 13 Fair Value Measurement; and

(c) AASB 2011-8 Amendments to Australian Accounting Standards arising from AASB 13.

1 July 2013 As noted above, the Corporation does not plan to adopt these standards until their effective date. As such, this amendment will not be adopted until the year ended 1 July 2013

AASB 2012-3 Amendments to Australian Accounting Standard - Offsetting Financial Assets and Financial Liabilities

This Standard adds application guidance to AASB 132 to address inconsistencies identified in applying some of the offsetting criteria of AASB 132, including clarifying the meaning of “currently has a legally enforceable right of set-off” and that some gross settlement systems may be considered equivalent to net settlement.

1 January 2014 As noted above, the Corporation does not plan to adopt these standards until their effective date. As such, this amendment will not be adopted until the year ended 1 January 2014

AASB 2012-5 Amendments to Australian Accounting Standard arising from Annual Improvements- 2009-2011 Cycle

These amendments are a consequence of the annual improvements process, which provides a vehicle for making non-urgent but necessary amendments to Standards.


AASB 2012-9 Amendments to AASB 1048 arising from the Withdrawal of Australian Interpretation 1039

This Standard makes an amendment to Australian Accounting Standard AASB 1048 Interpretation of Standards. The amendment arises from the withdrawal of Australian Interpretation 1039 Substantive Enactment of Major Tax Bills in Australia.


AASB 1055 Budgetary Reporting

AASB 1055 extends the scope of budgetary reporting that is currently applicable for the whole of government and general government sector (GGS) to NFP entities within the GGS provided that these entities present separate budget to the parliament.

1 January 2014 The Corporation does not plan to adopt these standards until their effective date. As such, this amendment will not be adopted until 1 July 2014

(x) New Accounting Standards and Interpretations issued that are not yet effective (continued)


NOTE 2 - REVENUES

2013$'000

2012$'000

Service chargesWater service charges 10,535 9,950

Wastewater service charges 10,451 10,285

20,986 20,235Usage chargesWater volume charges 30,069 23,488

Tradewaste charges 3,189 3,086

33,258 26,574Developer contributionsFees paid by developers 1,233 1,344

Assets received from developers 3,518 2,839

4,751 4,183

Government grants and contributionsNon operating - water saving initiative - 75

- 75

2013$'000

2012$'000

Gross proceeds from sale of non-current assets 1,393 271

Less – carrying value of non-current assets disposed (1,031) (1,095)

362 (824)

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:


NOTE 4 - EXPENSES

2013$'000

2012$'000

DepreciationBuildings 175 176Leasehold improvements 5 4Water infrastructure 5,328 5,355Water reticulation 3,979 3,926Wastewater infrastructure 4,935 4,922Wastewater reticulation 3,049 3,010Plant, equipment and motor vehicles 1,313 1,314

18,784 18,707AmortisationSoftware licenses 805 561

805 561Employee benefitsSalaries and wages 11,568 10,562Annual leave 846 821Long service leave 272 401Payroll tax 657 592Employer superannuation contributions (note 25) 1,057 2,958

Other 229 21114,629 15,545

Other costsElectricity 3,062 1,991Service contracts 113 2,433Direct wastewater 3,218 1,966Direct water 4,890 4,528Administration 4,517 4,689Bad and doubtful debts 71 61Rental expense - operating lease 19 22

15,890 15,690Borrowing costsInterest on borrowings 1,424 1,703Interest on finance leases 14 17Financial accommodation levy 355 269

1,793 1,989


NOTE 5 - INCOME TAX

The income tax expense for the financial year differs from amounts calculated on the profit. The differences are reconciled as follows:

2013$'000

2012$'000

(a) Components of tax expenseCurrent tax payable - -Deferred tax relating to temporary differences 2,369 (712)Total tax expense/(income) 2,369 (712)

Deferred income tax (revenue) expense included in income tax expense comprises:Decrease/ (increase) in deferred tax assets (note 10) (418) (3,237)(Decrease)/ increase in deferred tax liability (note16) 2,787 2,525Total tax expense/(income) 2,369 (712)

(b) Reconciliation of income tax to prima facie tax payableNet result before income tax expense 7,888 (2,386)

Tax at the Australian tax rate of 30% (2012:30%) 2,366 (716)Expenditure not allowed for income tax purposes 3 4Income tax as reported in the Operating Statement 2,369 (712)

(c) Tax expense (income relating to items of other comprehensive income)Impairment adjustment on previously revalued non-current assets 1,595 -Income tax as reported in the Operating Statement 1,595 -

NOTE 6 - CASH AND CASH EQUIVALENT ASSETS

2013$'000

2012$'000

Cash on hand 2 2

Cash at bank 2,557 195

2,559 197

The above figures represent cash at the end of the financial year as shown in the cash flow statement.


NOTE 7 - RECEIVABLES

(a) Provision for impaired receivablesAs at 30 June 2013, current receivables of the Corporation with a nominal value of $24,849 (2012: $23,732) were impaired.The ageing of these receivables is as follows:

2013$'000

2012$'000

1 to 3 months 4 4

Over 3 months 21 20

25 24

As at 30 June 2013, trade receivables of $1,237,993 (2012: $947,833) 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:

2013$'000

2012$'000

1 to 3 months 580 540

Over 3 months 658 407

1,238 947

2013$'000

2012$'000

Current

Trade receivables 5,205 4,481

Provision for impaired receivables (83) (83)

5,122 4,398

Other receivables 1,021 598

6,143 4,996

Non current

Other receivables 117 40

117 40

Movements in the provision for impaired receivables are as follows:

2013$'000

2012$'000

As at 1 July 83 83

Amounts written off during the year (71) (61)

Amounts recovered during the year - -

Increase/(decrease) in allowance recognised in profit or loss 71 61

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 recievables do not contain impaired assets and are not past due. Based on credit history, it is expected these amounts will be recieved when due.


NOTE 8 - AGRICULTURAL ASSETS

NOTE 9 - OTHER ASSETS

NOTE 10 - DEFERRED TAX ASSETS

2013$'000

2012$'000

Produce – at fair value 16 18

Livestock – at fair value 484 439

500 457

2013$'000

2012$'000

Accrued operating income 5,883 4,867

Accrued investment income - 1

5,883 4,868

2013$'000

2012$'000

The balance comprises temporary differences relating to:

Prior and current tax losses 37,001 36,605

Provisions 1,042 1,023

Trade and other payables 10 7

Trade and other receivables 25 25

38,078 37,660

Movements:

Opening balance 1 July 37,660 34,423

Charged to the operating statement (refer to note 5a) 418 3,237

Closing balance 30 June 38,078 37,660

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.


NOTE 11 - NON-CURRENT ASSETS – INFRASTRUCTURE, PROPERTY, PLANT & EQUIPMENT

2013$'000

2012$'000

Land

At fair value 23,506 23,739

At cost 2,236 78

25,742 23,817

Buildings


At cost 16 16

Accumulated depreciation (6,704) (6,524)

2,163 2,343

Water infrastructure

At fair value 242,223 247,415

At cost 14,378 7,097


147,627 150,206

Water reticulation

At fair value 311,380 315,075

At cost 9,878 4,235


225,591 226,507

Wastewater infrastructure

At fair value 203,803 204,055

At cost 1,994 1,329


93,379 97,796

Wastewater reticulation

At fair value 236,080 236,830

At cost 6,334 3,339


164,496 165,186

Plant, equipment and motor vehicles


At cost 1,558 -


4,871 4,982

Work in progress 34,549 9,581

Total Infrastructure, Property, Plant & Equipment 698,418 680,418


NOTE 11 - NON-CURRENT ASSETS – INFRASTRUCTURE, PROPERTY, PLANT & EQUIPMENT(CONTINUED)

Reconciliations

Reconciliations of the carrying amounts of each class of infrastructure, property, plant and equipment at the beginning and end of the current financial year are set out below

Contributed Assets

Infrastructure asset contributions made to North East Water by private developers of $3,517,850(2012: $2,839,384) 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.

2013 Carrying amount

at 1-7-12

$’000

Additions

$’000

Disposals

$’000

Transfers between

categories

$’000

Contributed assets

$’000

Impairment

$’000

Depreciation

$’000

Revaluations

$’000

Carrying amount

at 30-6-13

$’000

Land 23,817 - (233) 2,158 - - - - 25,742

Buildings 2,343 - - - - - (180) - 2,163


150,206 1 (275) 7,281 - (4,258) (5,328) - 147,627

Water reticulation

226,507 - (7) 3,496 2,047 (2,473) (3,979) - 225,591


97,796 - (148) 551 115 - (4,935) - 93,379


165,186 - (7) 1,638 1,356 (628) (3,049) - 164,496


4,982 - (359) 1,561 - - (1,313) - 4,871

Work in progress

9,581 41,653 - (16,685) - - - - 34,549

680,418 41,654 (1,029) - 3,518 (7,359) (18,784) - 698,418

2012 Carrying amount

at 1-7-11

$’000

Additions

$’000

Disposals

$’000

Transfers between

categories

$’000

Contributed assets

$’000

Impairment

$’000

Depreciation

$’000

Revaluations

$’000

Carrying amount

at 30-6-12

$’000

Land 23,739 - - 78 - - - - 23,817

Buildings 2,507 - - 16 - - (180) - 2,343


148,401 - (235) 7,395 - - (5,355) - 150,206

Water reticulation

226,183 68 (56) 3,111 1,127 - (3,926) - 226,507


102,165 - (609) 1,048 114 - (4,922) - 97,796


164,857 46 - 1,695 1,598 - (3,010) - 165,186


4,960 - (194) 1,530 - - (1,314) - 4,982

Work in progress

10,963 13,491 - (14,873) - - - - 9,581

683,775 13,605 (1,094) - 2,839 - (18,707) - 680,418


NOTE 12 - INTANGIBLE ASSETS

NOTE 13 - PAYABLES

2013 Purchased Permanent Water Entitlements

$’000

Software

$’000

Total

$’000

Carrying value 1 July 2012 1,766 1,152 2,918

Additions - 1,101 1,101

Impairment - - -

Amortisation - (805) (805)

Carrying value 30 June 2013 1,766 1,448 3,214

2012 Purchased Permanent Water Entitlements

$’000

Software

$’000

Total

$’000

Carrying value 1 July 2011 1,766 1,398 3,164

Additions - 315 315

Impairment - - -

Amortisation - (561) (561)

Carrying value 30 June 2012 1,766 1,152 2,918

2013 $'000

2012 $'000

Current

Trade creditors 3,107 1,600

Sundry creditors 14 1

Accrued expenses 2,732 1,322

Deposits and retentions 1,834 900

7,687 3,823

Non current

Deposits and retentions 48 84

Vision Super – Defined benefits unfunded liability (note 25) - 1,965

48 2,049


NOTE 14 - INTEREST BEARING LIABILITIES

NOTE 15 - EMPLOYEE BENEFITS

2013 $'000

2012 $'000

Current

Treasury Corporation Victoria 6,750 8,250

Finance lease liabilities (note 23) 152 167

6,902 8,417

Non current

Treasury Corporation Victoria 32,500 16,000

Finance lease liabilities (note 23) 83 176

32,583 16,176 New borrowings from Treasury Corporation Victoria for the year ended 30 June 2013 totalled $19 million. (30 June 2012: $5.75 million). Principal repayments of $4 million were 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 $26.3 million for 2013-14 to fund its capital expenditure program.

Finance leases are secured against the relevant assets subject to lease.

2013 $'000

2012 $'000

Current

Annual leave and unconditional long service leave entitlements,representing 7 years of continuous service:

Annual leave 1,257 1,176

Long service leave (1) 1,897 1,955

3,154 3,131 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 $38,341 (2013: $152,912) will be taken within the next 12 months.

2013 $'000

2012 $'000

Non current

Long service leave (1) 319 277

319 277 The employee benefit provisions reflect 152.34 (2012: 151.20) fulltime equivalent employees at the reporting date.

(1) Long service leave entitlements for employees with seven or more years continuous service are treated as a current liability. Long service leave entitlements for those employees with less than seven years continuous service are treated as a non-current liability.

The following assumptions were adopted in measuring the present value of long service leave entitlements:

2013 2012

Weighted average increase in employee costs 4.50% 4.13%

Weighted average discount rates 3.79% 3.06%

Weighted average settlement period 12 years 12 years


NOTE 16 - DEFERRED TAX LIABILITIES

NOTE 17 - CONTRIBUTED CAPITAL

NOTE 18 - RESERVES

2013 $'000

2012 $'000

The balance comprises temporary differences attributable to:

Amounts recognised in the statement of comprehensive income:

Infrastructure, property, plant and equipment 69,225 64,463

Livestock 89 83

69,314 64,546

Amounts recognised in equity:

Revaluation of infrastructure, property, plant & equipment 69,689 71,264

139,003 137,810

Movements:

Opening balance 1 July 137,810 135,286

Charged to the statement of comprehensive income (refer note 5a) 2,787 2,524

Charged to equity (1,595) -

Closing balance 30 June 139,003 137,810

2013 $'000

2012 $'000

Opening balance at 1 July 261,156 260,506

Capital transactions with the state in its capacity as owner arising from:

Capital contributions 3,560 650

Closing balance at 30 June 264,716 261,156

Asset revaluation reserve 2013 $'000

2012 $'000

Opening balance at 1 July 166,736 166,736

Revaluation increment/decrement on non-current assets (5,317) -

Tax effect of revaluation 1,595 -

Closing balance at 30 June 163,014 166,736


NOTE 19 - FINANCIAL INSTRUMENTS

(a) Interest Rate Exposure

North 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:

2013

Floating interest

rate

Fixed Interest Maturity dates Noninterest bearing

Total Less than 1 year

1-5 years Over 5 years

$'000 $'000 $'000 $'000 $'000 $'000

Financial assets

Cash and cash equivalents 2,557 - - - 2 2,559

Receivables - debtors - 2 14 77 5,442 5,534

Total financial assets 2,557 2 14 76 5,444 8,093

Weighted average interest rate 0.1% 6.5% 6.5% 6.5%

Financial liabilities

Interest bearing liabilities - 6,750 16,500 16,000 - 39,250

Lease liabilities - 152 83 - - 235

Payables and accruals - - - - 7,735 7,735

Total financial liabilities - 6,902 16,583 16,000 7,735 47,220

Weighted average interest rate 2.87% 4.62% 4.7%

Net financial assets/(liabilities)

2,557 (6,900) (16,569) (15,924) (2,291) (39,127)

2012

Floating interest

rate

Fixed Interest Maturity dates Noninterest bearing

Total Less than 1 year

1-5 years Over 5 years

$'000 $'000 $'000 $'000 $'000 $'000

Financial assets

Cash and cash equivalents 195 - - - 2 197

Receivables - debtors - - - - 4,745 4,745

195 - - - 4,747 4,942

Weighted average interest rate 0.1%


Interest bearing liabilities 4,250 4,000 8,000 8,000 - 24,250

Lease liabilities - 167 176 - - 343

Payables and accruals - - - - 5,872 5,872

Total financial liabilities 4,250 4,167 8,176 8,000 5,872 30,465

Weighted average interest rate 3.67% 7.17% 5.92% 5.18%

Net financial assets/(liabilities)

(4,055) (4,167) (8,176) (8,000) (1,125) (25,523)


NOTE 19 - FINANCIAL INSTRUMENTS (CONTINUED)

(b) Fair Value

2013 2012

Carrying amount $'000

Fair value $'000

Carrying amount $'000

Fair value $'000

Financial assets:

Cash and cash equivalents

2,559 2,559 197 197

Receivables - debtors 5,534 5,534 4,745 4,745

Total financial assets 8,093 8,093 4,942 4,942


Interest bearing liabilities 39,250 40,201 24,250 25,579

Lease liability 235 235 343 343

Payables and accruals 7,735 7,735 5,872 5,872

Total financial liabilities 47,220 48,171 30,465 31,794

Statutory receivable/payable balances have been deducted from financial assets and liabilities.

The following methods and assumptions are used to determine fair values of financial assets and financial liabilities:

Cash, cash equivalents and short-term investments:These financial instruments have a short-term to maturity, accordingly, it is considered that carrying amounts reflect fair values.

Receivables, creditors and accrualsCarrying amounts reflect fair values.

Short-term borrowingsCarrying amounts reflect fair values.

Long-term borrowingsThe fair value of these borrowings is estimated using discounted cash flow analysis, based on current incremental borrowing rates for similar types of borrowing arrangements. The borrowings will be repaid in accordance with the agreed terms.


NOTE 20 - FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The 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 Performance, Remuneration, Risk and Governance 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.

Objectives, policies and processes used to manage these risks are disclosed in the paragraphs below:

Interest Rate Risk

The Corporation minimises its exposure to interest rate changes on its long term borrowings by holding 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 and other financial assets.

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.

30 June 2013Carrying amount

$‘000

Interest rate risk

-1% +1%

Result $‘000

Equity $‘000

Result $‘000

Equity $‘000

Financial assets

Cash and cash equivalents 2,557 (25) (25) 25 25

Receivables 5,535 - - - -

8,092 (25) (25) 25 25


Payables 7,735 - - - -

Interest bearing liabilities 39,250 (393) (393) 393 393

46,985 (393) (393) 393 393

Total increase/(decrease) (418) (418) 418 418


30 June 2012Carrying amount

$‘000

Interest rate risk

-1% +1%

Result $‘000

Equity $‘000

Result $‘000

Equity $‘000

Financial assets

Cash and cash equivalents 196 (2) (2) 2 2

Receivables 4,745 - - - -

4,941 (2) (2) 2 2


Payables 5,872 - - - -

Interest bearing liabilities 24,250 (243) (243) 243 243

30,122 (243) (243) 243 243

Total increase/ (decrease) (245) (245) 245 245

(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 by 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 19.

The carrying value less impairment provision of trade receivables and payables is a reasonable approximation of their fair values due to the short-term nature of trade receivables. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Corporation for similar financial facilities.

The carrying amounts and aggregate net fair values of financial assets and financial liabilities at balance date have been provided in Note 19.

NOTE 21 - CONTINGENT LIABILITIESAND CONTINGENT ASSETS

North East Water has no known contingent liabilities or contingent assets.

NOTE 20 - FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)


NOTE 22 - CASH FLOW STATEMENT

Reconciliation of net cash provided by operating activities to operating surplus.

2013 $'000

2012 $'000

Net result for the period after income tax 5,519 (1,674)

Add/(less) non cash flows in the net result:

Depreciation and amortisation 19,588 19,268

Net (profit)/loss on sale of non-current assets (362) 824

Non cash contributed assets (3,518) (2,839)

Impairment of non-current assets 2,043 -

Income tax effect of impairment adjustment 1,595 -

Change in operating assets and liabilities:

Decrease/ (increase) in current assets (2,215) (1,205)

Decrease/ (increase) in non-current assets (495) (3,224)

Increase/ (decrease) in current liabilities 384 (46)

Increase/ (decrease) in non-current liabilities (766) 4,713

Net cash from operating activities 21,773 15,817

Capital Commitments

Finance Lease Commitments

2013 $'000

2012 $'000

Commitments for the acquisition of plant and equipment contracted for at the reporting date but not recognised as liabilities, payable:

- Within one year 10,612 11,780

- Later than one year but not later than five years - -

- Later than five years - -

10,612 11,780

All commitments are exclusive of GST.

2013 $'000

2012 $'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 158 180

- Later than one year but not later than five years 85 184


- Minimum lease payments 243 364

- Less: Future finance charges 8 21

- Recognised in the balance sheet as: 235 343

Represented by:

- Current liability (note 14) 152 167

- Non current liability (note 14) 83 176

235 343

NOTE 23 - COMMITMENTS FOR EXPENDITURE


NOTE 23 - COMMITMENTS FOR EXPENDITURE (CONTINUED)

NOTE 24 - RESPONSIBLE PERSONS AND EXECUTIVE OFFICER DISCLOSURES

In 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 Persons

The names of persons who were responsible persons at anytime during the financial year were:

Minister: Honourable Peter Walsh MLA, Minister for Water

Members: Joanne Anderson (Chairperson) Frank Burfitt (1/10/2007 – 30/09/2012) Suzanne Evans (1/10/2007 – 30/09/2012) Geoffrey Vincent (1/10/2010 – 31/08/2012), Stephen Bird Jonathan Koop Rowan O’Hagan Catherine Botta (appointed 1/10/2012) Deborah Gadd (appointed 1/10/2012) Denis Flett (Deputy Chair, appointed 01/10/2012) Craig Heiner (Managing Director 1/7/2012- 31/8/2012, 1/11/2012 – 1/4/2013 & 4/5/2013 – 30/6/2013) Geoffrey Vincent (Acting Managing Director 1/9/2012 – 31/10/12) Anthony Hernan (Acting Managing Director 2/4/2013 – 3/5/2013)

Income received, or due and receivable by responsible persons of North East Water.

The number of Responsible Persons whose remuneration from North East Water was within the specified bands is as follows:

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 the Corporation in connection with the retirement of responsible persons of the Corporation during the financial year.

2013 $'000

2012 $'000

Environmental Contribution

- Within one year 2,083 1,580

- Later than one year but not later than five years 4,166 6,249


6,249 7,829

Income Band $ 2013 No.

2012 No.

0 – 9,999 3 310,000 – 19,999 3 220,000 – 29,999 2 430,000 – 39,999 1 -50,000 – 59,999 1 1240,000 – 249,999 - 1250,000 – 259,999 1 -

Capital Commitments

2013 $’000

2012 $’000

Remuneration 538 454538 454


Remuneration of Executives

The number of executive officers, other than responsible persons, whose total remuneration falls within the specified bands above $100,000, is as follows:

Income Band $Total remuneration Base remuneration

2013 No.

2012 No.

2013 No.

2012 No.

100,000 – 109,999 - 1 - 1

120,000 – 129,999 - - - 1

130,000 – 139,999 1 2 - 1

140,000 – 149,999 - - 1 1

150,000 – 159,999 2 2 1 1

160,000 – 169,999 1 - 1 -

160,000 – 169,999 1 - - -

Total number of executives 5 5 3 5

Total annualised employee equivalent (AEE) (a) 4.74 4.75 3 4.75

$’000 $’000 $’000 $’000

Total Remuneration 797 680 456 655

Note:(a) Annualised employee equivalent (AEE) is based on working 38 ordinary hours per week over the reporting period.

There were no payments to contractors with significant management responsibility.

North 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. The defined benefit section provides lump sum benefits based on years of service and final average salary. The defined contribution section receives fixed contributions from the Corporation and the Corporation’s legal or constructive obligation is limited to these contributions. Obligations for contributions to the Fund are recognised as an expense in Operating Statement when they are due.

Accumulation

The Fund's accumulation category, 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 2013, this was 9% required under Superannuation Guarantee legislation). No further liability accrues to the employer as the superannuation benefits accruing to employees are represented by their share of the net assets of the Fund. Effective from 1 July 2013, the Superannuation Guarantee contribution rate will increase to 9.25%, and will progressively increase to 12% by 2019.

Defined Benefit

The Fund's Defined Benefit category is a multi-employer sponsored plan. As the Fund's assets and liabilities are pooled and are not allocated to each employer, the Actuary is unable to allocate benefit liabilities, assets and costs between employers. As provided under Paragraph 32(b) of AASB 119, the Corporation does not use defined benefit accounting for these defined benefit obligations.

The Corporation 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. On the basis of the results of the most recent full actuarial investigation conducted by the Fund's Actuary as at 31 December 2011, the Corporation makes employer contributions to the Fund’s Defined Benefit category at rates determined by the Fund’s Trustee. This rate is currently 9.25% of members' salaries (9.25% in 2011/12).

In addition, the Corporation reimburses the Fund to cover the excess of the benefits paid as a consequence of retrenchment above the funded resignation or retirement benefit (the funded resignation or retirement benefit is calculated as the VBI (multiplied by the benefit). The Corporation is also required to make additional contributions to cover the contribution tax payable on the contributions referred to above.

Employees are also required to makes member contributions to the Fund. As such, assets accumulate in the Fund to meet member benefits, as defined in the Trust Deed, as they accrue.

NOTE 24 - RESPONSIBLE PERSONS AND EXECUTIVE OFFICER DISCLOSURES (CONTINUED)

NOTE 25 - SUPERANNUATION


Type of scheme Rate %

2013 $’000

Rate %

2012 $’000

Vision Super Defined Benefits 9.25 166 9.25 2,150

Vision Super Accumulation 9.00 617 9.00 581

Other various Accumulation 9.00 264 9.00 193

Total contributions to all Funds 1,047 2,924

Shortfall amounts

The Local Authorities Superannuation Fund’s latest actuarial investigation as at 31 December 2011 identified an unfunded liability of $406 million (excluding contributions tax) in the defined benefit category of which the Corporation is a contributing employer. The Corporation was made aware of the expected shortfall during the 2011/12 year and was informed of its share of the shortfall on 2 August 2012. The Corporation has not been advised of any further adjustments.

The projected value of the Corporation’s contribution to the shortfall at 30 June 2012 (excluding contributions tax) amounted to $1,670,714 which was accounted for in the 2011/12 Comprehensive Operating Statement within Employee Benefits (Note 4) and in the Balance Sheet in Current Payables (Note 13).

The Corporation received an early payment discount of $4,628 and this has been accounted for in the 2012/13 Operating Statement within Employee Benefits (Note 4).

The Fund surplus or deficit (ie the difference between fund assets and liabilities) is calculated differently for funding purposes (ie calculating required contributions) and for the calculation of accrued benefits as required in AAS 25 to provide the values needed for the AASB 119 disclosure in the Corporation's financial statements. AAS 25 requires that the present value of the defined benefit liability be calculated based on benefits that have accrued in respect of membership

of the plan up to the measurement date, with no allowance for future benefits that may accrue.

The amount of the unpaid shortfall at 30 June 2013 is nil (2011/12 : $1,965,546).

Accrued benefitsThe Fund’s liability for accrued benefits was determined in the 31 December 2011 actuarial investigation pursuant to the then requirements of Australian Accounting Standard AAS25 as follows:

31 Dec 2011 ($’000)

Net Market Value of Assets $4,315,324

Accrued Benefits(per accounting standard)

$4,642,133

Difference between assets and accrued benefits

($326,809)

Vested Benefits

(Minimum sum which must be paid to members when they leave the fund) $4,838,503

The financial assumptions used to calculate the Accrued Benefits for the defined benefit category of the Fund were:

Net Investment Return 7.50% p.a

Salary Inflation 4.25% p.a

Price Inflation 2.75% p.aSuperannuation Contributions

The Contributions by North East Water (excluding any unfunded liability payments) to the above superannuation plans for the financial year ended 30 June 2013 are detailed below:

NOTE 26 - REMUNERATION OF AUDITORS

NOTE 27 - EVENTS OCCURING AFTER BALANCE SHEET DATE

2013 $’000

2012 $’000

Auditor-General for audit of financial statements 44 43Internal audit – Deloitte Touche Tohmatsu - 19Internal audit – RSM Bird Cameron 37 28Regulatory Auditors – Moore Stephens 14 28

95 118

No matters or circumstances have arisen since the end of the reporting period which significantly affected or may significantly affect the operations of the Corporation, the results of these operations or state of affairs of the Corporation in future financial years.

NOTE 25 - SUPERANNUATION (CONTINUED)


ACCOUNTABLE OFFICERS' AND CHIEF FINANCE & ACCOUNTING OFFICER'S DECLARATION

The 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 2013 and the financial position of the Corporation at 30 June 2013.

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 27 August 2013.

________________

Joanne AndersonChairpersonNorth East Water

________________

Craig HeinerManaging DirectorNorth East Water

27 August 2013

NORTH EAST WATER CORPORATION








APPENDICESAPPENDIX 1 – DISCLOSURE INDEX

The annual report of North East Water is prepared in accordance with all relevant Victorian legislations and pronouncements. This index has been prepared to facilitate identification of the Corporation’s compliance with statutory disclosure requirements.

Legislation Requirement Page ReferenceMinisterial Directions

Charter and purpose

FRD 22C Manner of establishment and the relevant Ministers Page 4

FRD 22C Objectives, functions, powers and duties Page 4

FRD 22C Nature and range of services provided Page 4

Management and structure

FRD 22C Organisational structure Page 44

Financial and other information

FRD 8B Budget portfolio outcomes Page 11

FRD 10 Disclosure index Page 98

FRD 12A Disclosure of major contracts Page 55

FRD 15B Executive officer disclosures Page 92

FRD 22C, SD 4.2(k) Operational and budgetary objectives and performance against objectives Page 11

FRD 22C Employment and conduct principles Page 52

FRD 22C Occupational health and safety policy Page 43

FRD 22C Summary of the financial results for the year Page 10

FRD 22C Significant changes in financial position during the year Page 10

FRD 22C Major changes or factors affecting performance Page 10

FRD 22C Subsequent events Page 55

FRD 22C Application and operation of Freedom of Information Act 1982 Page 53

FRD 22C Compliance with building and maintenance provisions of Building Act 1993 Page 54

FRD 22C Statement on National Competition Policy Page 53

FRD 22C Application and operation of the Protected Disclosure Act 2012 Page 53

FRD 22D Details of consultancies over $10 000 Page 54

FRD 22D Details of consultancies under $10 000 Page 55

FRD 22C Statement of availability of other information Page 1

FRD 24C Reporting of office based environmental impacts Page 23

FRD 25A Victorian Industry Participation Policy disclosures Page 55

FRD 29 Workforce Data disclosures Page 36

SD 4.5.5 Risk management compliance attestation Page 50

SD 4.5.5.1 Ministerial Standing Direction 4.5.5.1 compliance attestation N/A

SD 4.2(g) Specific information requirements Page 4

SD 4.2(j) Sign off requirements Page 60

Ministerial Reporting Directions

MRD 01 Performance Reporting Page 56

MRD 02 Reporting on water consumption and drought response Page 22-23

MRD 03 Environmental and social sustainability reporting Page 28

MRD 04Disclosure of information on bulk entitlements, transfers of water entitlements, allocations and licences, irrigation water usage and licence requirements

Page 18

MRD 05 Annual reporting of non-residential major water users Page 23

Financial Report

Financial statements required under Part 7 of the FMA

SD4.2(a) Statement of changes in equity Page 67

SD4.2(b) Operating statement Page 64

SD4.2(b) Balance sheet Page 66

SD4.2(b) Cash flow statement Page 68


APPENDIX 1 – DISCLOSURE INDEX (continued)

Legislation Requirement Page Reference

Other requirement under Standing Directions 4.2

SD4.2(c) Compliance with Australian accounting standards and other authoritative pronouncements

Page 95

SD4.2(c) Compliance with Ministerial Directions Page 95

SD4.2(d) Rounding of amounts Page 69

SD4.2(c) Accountable officer’s declaration Page 95

SD4.2(f) Compliance with Model Financial Report Page 69

Other disclosures as required by FRDs in notes to the financial statements

FRD 9A Departmental Disclosure of Administered Assets and Liabilities by Activity N/A

FRD 11 Disclosure of Ex Gratia Payments NIL

FRD 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 92

FRD 102 Inventories Page 72

FRD 103D Non current Physical Assets Page 70

FRD 104 Foreign Currency Page 69

FRD 106 Impairment of Assets Page 71

FRD 109 Intangible Assets Page 84

FRD 107 Investment Properties N/A

FRD 110 Cash Flow Statements Page 68

FRD 112C Defined Benefit Superannuation Obligations Page 93

FRD 113 Investments in Subsidiaries, Jointly Controlled Entities and Associates N/A

FRD 114A Financial Instruments – General Government Entities and Public Non Financial Corporations

Page 87

FRD 119 Contributions by Owners Page 74

Legislation

Freedom of Information Act 1982 Page 53

Building Act 1983 Page 54

Protected Disclosure Act 2012 Page 53

Victorian Industry Participation Policy Act 2003 Page 55

Financial Management Act 1994 Page 54


APPENDIX 2 – SERVICES PROVIDED BY NORTH EAST WATER

Towns with population and water and sewage services

Town PopulationHousehold

factor1 Water Treatment Process Sewerage Treatment Process

Baranduda 602 3.4 Full treatment (from Wodonga supply) Pumped to Wodonga

Barnawartha 696 2.9 Full treatment (from Wodonga supply) Lagoons

Beechworth 3,555 2.5 Full treatment Lagoons and phosphorus removal

Bellbridge 458 2.4 Full treatment Lagoons - primary aerated

Benalla 10,958 2.4 Full treatment Lagoons - primary aerated

Bright 3,253 2.5 Full Treatment Pumped to Porepunkah

Bundalong 226 2.6 Full treatment (from Yarrawonga supply) Lagoons

Chiltern 1,262 2.4 Full treatment (from Wodonga supply) Lagoons

Corryong 1,538 2.5 Full treatment Lagoons

Cudgewa 134 2.5 Full Treatment (from Corryong supply) No service

Dartmouth 215 2.5 Full treatment Lagoons

Devenish 122 2.7 Full treatment (from Yarrawonga supply) No service

Eskdale 127 2.3 Full treatment No service

Glenrowan 358 2.5 Full treatment (from Wangaratta supply) No service2

Goorambat 151 2.7 Chlorine disinfection only No service

Harrietville 392 2.2 Full treatment No service

Kiewa 412 2.9 Full treatment (from Wodonga supply) Pumped to Wodonga

Mount Beauty 1,408 2.2 Full treatment Tertiary treatment

Moyhu 253 2.5 Full treatment No service2

Myrtleford 3,605 2.5 Full treatment Lagoons - primary aerated and phosphorus removal

Oxley 375 2.7 Full treatment No service2

Porepunkah 835 2.5 Full treatment (from Bright supply) Lagoons - primary aerated

Rutherglen 2,694 2.6 Full treatment (from Wahgunyah supply) Lagoons - primary aerated

Springhurst 197 2.7 Full treatment (from Wodonga supply) No service

St James 103 2.7 Full treatment (from Yarrawonga supply) No service

Tallangatta 1,113 2.5 Full treatment Lagoons

Tangambalanga 525 2.9 Full treatment (from Wodonga supply) Pumped to Wodonga

Tawonga 1,327 2.2 Full treatment (from Mount Beauty supply)

Partly serviced - pumped to Mount Beauty

Tawonga South 2.2 Full treatment (from Mount Beauty supply)

Pumped to Mount Beauty

Tungamah 418 2.4 Full treatment (from Yarrawonga supply) No service2

Wahgunyah 1,105 2.6 Full treatment Pumped to Rutherglen

Walwa 108 2.2 Full treatment Not serviced by North East Water

Wandiligong 455 2.5 Full treatment No service

Wangaratta 20,180 2.5 Full treatment Lagoons and phosphorus removal

Whitfield 122 2.3 Full treatment No service

Wodonga3 49,660 3.4 Full treatment Tertiary treatment

Yackandandah 1,010 2.7 Full treatment Lagoons

Yarrawonga 9,015 2.5 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 2006 Census

Data. The town population is based on this factor multiplied by the number of residential water connections.2. Sewerage treatment currently under development.3. Includes Bandiana, Bonegilla, Ebden and Killara


APPENDIX 3 – WATER CONSUMPTION BY TOWN

Water consumption data listed by town with comparison against average

Town Residential Customers Non-residential Customers Total Water Consumption3

(ML)

Average Annual Water Consumption4

(ML)

Number of Customers1

Volume of Water

Consumed2

(ML)

Number of Customers

Volume of Water

Consumed(ML)

Baranduda 642 214 41 241 455 364

Barnawartha 241 60 21 51 111 98

Beechworth 1,430 299 173 141 440 387

Bellbridge 176 42 5 2 44 39

Benalla 4,589 939 532 325 1,265 1,209

Bright 1,311 197 228 137 334 326

Bundalong 87 17 1 0 17 13

Chiltern 530 100 60 22 122 114

Corryong 632 115 139 52 167 158

Cudgewa 57 10 15 2 11 14

Dartmouth 88 9 9 9 18 16

Devenish 49 8 9 2 9 9

Eskdale 55 8 9 4 12 8

Glenrowan 148 27 42 21 48 42

Goorambat 57 10 9 1 11 11

Harrietville 194 26 29 17 44 45

Kiewa 143 47 4 3 50 43

Mount Beauty 561 70 85 44 114 104

Moyhu 103 23 19 4 28 26

Myrtleford 1,454 292 227 225 517 505

Oxley 139 33 4 1 35 30

Porepunkah 335 61 30 20 81 72

Rutherglen 1,047 277 142 82 358 345

Springhurst 75 14 8 2 16 15

St James 40 8 9 1 9 8

Tallangatta 449 90 112 53 143 151

Tangambalanga 182 44 29 9 53 44

Tawonga 176 33 17 7 40 39

Tawonga South 526 75 34 20 95 92

Tungamah 183 38 26 6 44 40

Wahgunyah 432 115 34 76 191 189

Walwa 50 9 28 4 13 14

Wandiligong 191 30 9 6 36 32

Wangaratta 8,110 1,798 1,049 1,087 2,885 2,885

Whitfield 54 10 17 5 15 13

Wodonga5 14,169 3,128 1,120 1,529 4,656 4,174

Yackandandah 376 78 67 43 121 107

Yarrawonga 3,645 854 381 187 1,041 974

Total 42,726 9,208 4,773 4,442 13,650 12,757

Notes:1. Includes vacant allotments.2. All volume figures are derived from water sold as measured at customer water meters. All figures have been rounded to the nearest whole number.3. Total water consumption is the sum of residential and non-residential consumption and does not include non-revenue water.4. The average annual consumption is calculated between the years of 2008-09 and 2012-13.5. Includes Bandiana, Bonegilla, Ebden and Killara.


APPENDIX 4 – NON-REVENUE WATER

Non-revenue water data for 2012-13 reporting period, with average data for comparison

Volume Delivered1 (ML)Revenue Water Soldto Customers (ML)

Non-revenue Water2 (ML)

2012-13 Average3 2012-13 Average 2012-13 Average

Whole of Corporation 15,868 14,140 13,650 12,723 2,218 1,384

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.3. The average is calculated between the years of 2008-09 and 2012-13.

APPENDIX 6 – PUBLICATIONS

The Corporation produces a number of publications for the information of customers and stakeholders information, and to comply with the Victorian Government’s reporting regulations.

These include:

• Water Plans 1, 2 and 3

• Water Supply-Demand Strategy

• Wastewater Strategy

• Customer Charter

• Developers Handbook

• Board Agendas and Meeting Highlights

• Permanent Water Savings Plan

• Annual Reports

• Corporate Plans

• drinking water quality performance reports

• wastewater treatment plant performance reports

• various informational brochures

• quarterly customer newsletter

• media releases and community information flyers, and

• emergency and faults reporting methods.

All publications can be downloaded from the Corporation’s website www.newater.com.au.

APPENDIX 5 – MAJOR WATER CUSTOMERS

Information on our major water customers during 2012-13 is provided in accordance with Section 122ZJ of the Water Act 1989, with 2011-12 data for comparison.

Number of Customers Within Selected Volume Ranges

Volumetric Range - ml per yearnumber of Customers

2012-2013 2011-2012

Equal to or greater than 200ML and less than 300ML 1 0




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

Greater than 1,000ML 0 0

Total number of customers 2 2

Major Customers Participating in waterMAP

Changes to the waterMAP program now mean that it is not compulsory to participate in the program, however North East Water made contact with all customers that used more than 500 kilolitres of water per year and offered a free water audit. North East Water staff and contractor performed 56 audits during the year. Six of these sites also received grants of up to $5,000 to help with the installation of identified water saving projects.


APPENDIX 7 – DISCLOSURES UNDER THE PROTECTED DISCLOSURE ACT

The 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: 2012-13Number

2011-12Number

Public interest disclosures 0 0

Protected disclosures 0 0

The number of disclosures referred during the year by the public body to the Ombudsman of 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 theOmbudsman 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



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ANNUAL REPORT2012 -13

North East WaterLevel 1, 104-106 Hovell Street, Wodonga VIC 3690

T: 1300 361 622E: [email protected]

W: www.newater.com.au

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