Connecting with customers

Transcription

1 Connecting with customers Annual Report

2 1 Seqwater Annual Report

3 About this report This annual report records our achievements in delivering a safe, secure and cost-effective water supply to the people of South East Queensland in Our performance is measured against the objectives and targets in our Operational Plan and the Statement of Obligations set by the responsible Ministers. The report also sets out our financial position for the year. Our report theme, Connecting with customers, reflects our focus this year on increased partnering and engagement with stakeholders and communities while at the same time making water more affordable for our customers. This report is a key accountability document and the principal way in which we report on our activities to Parliament and the SEQ community. The report has been produced in accordance with the standards detailed in the following Queensland legislation and Government guidelines: Financial Accountability Act 2009 Financial Performance Management Standard 2009 South East Queensland Water (Restructuring) Act 2007 Annual report requirements for Queensland Government agencies requirements for the reporting period. The report is available on our website. A printed copy of the report is available on request. Translation and interpreting assistance Seqwater is committed to providing accessible services to Queenslanders from all culturally and linguistically diverse backgrounds. If you have difficulty understanding this annual report please contact us and we will arrange an interpreter to share the report with you. Your feedback is welcome We invite your feedback on our report. Please contact our Corporate and Community Relations team, telephone , fax , communications@seqwater.com.au or complete our survey at Seqwater Annual Report ISSN: Queensland Bulk Water Supply Authority Seqwater Annual Report

4 Table of contents Letter of compliance... 1 About this report... 2 Who we are and what we do... 4 Our strategic direction... 6 Foreword from our Chairman and CEO...7 Major assets... 9 Highlights of our year...11 Performance report card...13 Knowledgeable and engaged community and Trusted and respected brand...17 Integrated whole-of-industry approach Water and catchment services Sustainable financial capacity Capable and innovative people Delivering on the Statement of Obligations...32 Corporate governance...37 Our organisational structure Economic and financial performance Financial report Glossary Annual reporting requirements for Queensland Government agencies compliance checklist Seqwater Annual Report

5 Who we are and what we do Seqwater is the Queensland Government statutory authority responsible for ensuring a safe, secure and cost-effective bulk drinking water supply for 3.1 million people across South East Queensland (SEQ). We provide irrigation water to 1,200 rural customers in 7 water supply schemes, as well as essential flood mitigation services. Our operations extend from the New South Wales border to the base of the Toowoomba ranges and north to Gympie. This makes us one of Australia s largest water businesses, with the most geographically spread and diverse asset base of any capital city water authority. On behalf of our communities, we manage and maintain $11.9 billion of water supply assets, including dams, weirs, conventional water treatment plants, reservoirs, pumps and pipelines, as well as climate resilient water sources, such as the Gold Coast Desalination Plant and the Western Corridor Recycled Water Scheme. We also manage parts of the natural catchments of the region s water supply sources and recreation facilities that provide more than 50% of the green space in SEQ, outside of national parks. Over , a record 2.7 million people visited our recreation areas. We are one of the few bulk water providers in Australia that manage open catchments, allowing the community to enjoy recreational activities on the dams and lakes that supply our drinking water. Seqwater strives to balance the ongoing health of the catchments and quality of the region s drinking water supply while providing access to a range of water-based and on-shore activities at our dams, lakes and parks. Seqwater was formed on 1 January 2013 through a merger of 3 State-owned water businesses, the SEQ Water Grid Manager, LinkWater and the former Seqwater, in accordance with the South East Queensland Water (Restructuring) Act 2007 as amended by the South East Queensland Water (Restructuring) and Other Legislation Amendment Regulation (No.1) At the same time, Seqwater assumed some responsibilities undertaken by the former Queensland Water Commission, including long-term urban water planning. On 6 July 2015, we published our Water Security Program a 30-year plan for SEQ s drinking water supply. Our role in the water sector Water gives and sustains life. It supports healthy communities and a prosperous SEQ. As the region s bulk water supply authority, our role is to source, store and supply water from catchments and other sources. We work in partnership with SEQ water service providers, Unitywater, Queensland Urban Utilities, and the water operations of the Redland, Logan and City of Gold Coast Councils, to deliver a safe, secure and cost-effective water supply to customers. Source People live, farm, work and play on and around our dams. We must maintain a careful balance between community access to our lakes and catchment land and protecting the quality of the region s bulk drinking water supply. Water treatment begins in the catchments. Helping to manage catchment health is an important part of ensuring a costeffective and safe water supply. We aim to partner with our neighbours, all levels of government, water service providers and the broader community, with a clear objective of a wholeof-catchment approach to source water protection so we can reliably produce safe water. Our catchments contribute to a productive and liveable SEQ. Seqwater Annual Report

6 Store On behalf of our community, Seqwater owns and operates 26 dams, 51 weirs and 2 bore fields that supply as much as 90% of the region s drinking water. The remaining 10% is supplied from small dams, bores and rainwater tanks on private property. The 2 largest dams in the region, Wivenhoe and Somerset, have flood water storage compartments over and above their drinking water storage capacity to help mitigate floods. Gates on these dams are used to control the release of water. North Pine Dam also has gates but does not have additional floodwater storage capacity. The remaining 23 dams are un-gated. These dams are designed to spill once full, so that excess water continues its journey through our waterways. Due to our current high level of water security, the recycled water scheme has been placed in care and maintenance mode for future use if required. Our interconnected water grid allows us to move water to where it is needed in the region from Noosa in the north to Coolangatta in the south. About 53,000 people living in smaller communities are supplied by 16 standalone water treatment plants. We also supply untreated water to rural irrigator customers. This water is used to support a wide variety of agriculture, such as orchards, vegetable and fodder crops, dairying and grazing. Supply Our water treatment and supply infrastructure includes 37 water treatment plants, 22 bulk water pump stations and 18 bulk water reservoirs, 600 kilometres of bulk water supply pipelines, the Gold Coast Desalination Plant and the Western Corridor Recycled Water Scheme. Water supply (dams) produced 291,354 ML IRRIGATION we supplied 31,131 ML of untreated water to 1,200 irrigators (bores) produced 1,258 ML 5 Seqwater Annual Report

7 Our strategic direction Our vision Healthy communities. Prosperous region. Our purpose Partnering to deliver safe, secure and cost-effective water and catchment services to our customers and communities. Our values Our values guide us in achieving our vision and purpose. Our values are: we work safe we deliver we work together we continually improve we each make a difference. Our contribution to regional prosperity Water is fundamental to regional prosperity. Our water and catchment services support the economy and enhance the lives and livelihoods of the people living and working in our region. The affordability of water is a key issue for our customers. We continue to reduce our costs by: maximising the productivity of our existing water supply infrastructure taking a whole-of-water-cycle approach working with our industry partners to meet customer needs in the most cost-effective way supporting the ongoing growth and prosperity of our region by planning for the future Our Statement of Obligations The Government has set standards of performance for our business through a Statement of Obligations. The statement provides a comprehensive framework for our performance, requiring us to: focus on core business (safe, secure, resilient and reliable water supplies) support government objectives and directions be an effective and efficient business communicate, consult and collaborate with customers, stakeholders and the community achieve long-term business sustainability be innovative. Critical issues for regional water supply The issues most critical to our long-term business performance include: affordable water for our customers attraction and retention of a skilled and committed workforce a customer-focused workforce that understands and meets customer expectations planning and operating water supply infrastructure in a variable climate and during extreme weather events collaborative whole-of-water-cycle management partnering to improve catchment health influencing the long-term regional planning agenda. developing long-term water supply plans that seek to meet community expectations and needs in the most efficient way possible. Seqwater Annual Report

8 Foreword from our Chairman and CEO Since formed from the merger of the state water entities in 2013, Seqwater has been committed to providing affordable, safe and reliable bulk drinking water to the people of SEQ. In our first year of operation in 2013, we delivered real savings in the order of $80 million per annum to assist the State Government to cap bulk water prices for 2 years. Seqwater has worked hard to identify further savings to continue to put downward pressure on bulk water prices and in delivered an actual operating cost result of $232.9 million. This is a $127 million per annum or 35% reduction compared to the pre-merger budgets of the previous water entities, which totalled $360 million. In April 2015, the Queensland Competition Authority (QCA), the independent body responsible for assessing Seqwater s costs, endorsed the organisation s additional saving measures which have now been accepted by the State Government and reflected in new bulk water prices applying from 1 July It is particularly satisfying that the QCA recognised the speed at which the savings have been achieved. The outcome is welcome news for all South East Queenslanders and a source of genuine pride for our business. Our people live and work in communities across the region. We remain acutely aware that we are in the unique position of being able to make a positive impact on the affordability of drinking water through our decisions and actions, for our families, our neighbours and the broader community. As a result of the efficiencies, the common bulk water price will now be 12% lower than the previously forecast price path by This will reduce the cost of living for South East Queenslanders. Importantly for , 6 of the 11 Councils covered by the bulk water price will see the price actually decrease. Other Councils, which are currently paying less, will see an increase, however lower than previously forecast. We continued to focus on capital efficiencies, delivering $75 million of infrastructure improvements this year, including upgrades to improve the resilience of our infrastructure during floods and natural events. We are pleased to have achieved savings on many of those projects. Specifically, $12.8 million of capital savings were realised through prudent and efficient project planning and application of value engineering to key projects in our capital program. These savings, combined with reductions in our operating costs, have delivered a real and ongoing reduction in the cost of providing bulk water to the communities we serve. Working with our partners Seqwater led the region s water industry partnership of water businesses, including Unitywater, Queensland Urban Utilities, and the Redland, Logan and City of Gold Coast Councils water operations. The SEQ Water Service Providers Partnership identified a range of joint initiatives to achieve more effective and efficient provision of water supply services to our community. A joint Seqwater and Unitywater project will enable the decommissioning of a metropolitan water treatment plant at Petrie, eliminating the need for a future upgrade. The project involves the construction of a new pipeline and will yield a $20 million saving for water customers. Seqwater has also worked closely with the Council of Mayors (SEQ) and the State Government on the region s integrated catchment management plan. This Resilient Rivers Initiative is a targeted and coordinated approach to improving and better protecting our drinking water catchments and productive agricultural land. The Lockyer catchment and mid-brisbane River are a priority for action. Projects in these areas directly impact the source water for the region s largest water treatment plants at Mt Crosby. These plants are critical to the water grid, providing 40% of the region s drinking water. Regional water security The wet season boosted dam levels, with SEQ enjoying a high level of water security. Before these rains, our assessment showed that seasonal weather forecasts, rainfall, inflows and dam levels were trending towards the same pattern the region experienced leading into the Millennium Drought. It was a timely reminder that we live in a climate of extremes. Our challenge is to manage our water supplies to be resilient against these extremes. 7 Seqwater Annual Report

9 Seqwater Annual Report

10 Major assets Legend Northern Pipeline Interconnector Western Corridor Recycled Water Scheme Southern Regional Water Pipeline Eastern Pipeline Interconnector Network Integration Pipeline Other bulk water pipelines connecting the SEQ water grid Local government boundary Reservoirs Water treatment plants Western Corridor Recycled Water Scheme Desalination plant Water Treatment Plants (WTP) 1 Amity Point WTP 2 2 Atkinson Dam WTP 1 3 Banksia Beach WTP 4 Beaudesert WTP 2 5 Boonah Kalbar WTP 2 6 Borumba Dam WTP 1 7 Canungra WTP 2 8 Capalaba WTP 9 Dayboro WTP 2 10 Dunwich WTP 2 11 East Bank (Mount Crosby) WTP 12 Enoggera WTP 13 Esk WTP 2 14 Ewen Maddock WTP 15 Hinze Dam WTP 1 16 Image Flat WTP 17 Jimna WTP 2 18 Kenilworth WTP 2 19 Kilcoy WTP 2 20 Kirkleagh WTP 1 21 Kooralbyn WTP 2 22 Landers Shute WTP 23 Linville WTP 2 24 Lowood WTP 2 25 Maroon Dam WTP 1 26 Molendinar WTP 27 Moogerah Dam WTP 1 28 Mudgeeraba WTP 29 Noosa WTP 30 North Pine WTP 31 North Stradbroke Island WTP 32 Petrie WTP 33 Point Lookout WTP 2 34 Rathdowney WTP 2 35 Somerset Dam (Township) WTP 2 36 West Bank (Mount Crosby) WTP 37 Wivenhoe Dam WTP 1 Western Corridor Recycled Water Scheme 38 Bundamba Advanced Water Treatment Plant (AWTP) 39 Gibson Island AWTP 40 Luggage Point AWTP Desalination Plant 41 Gold Coast Desalination Plant Reservoirs 42 Alexandra Hills Reservoirs 43 Aspley Reservoir 44 Camerons Hill Reservoir 45 Ferntree Reservoir 46 Green Hill Reservoirs 47 Heinemann Road Reservoirs 48 Holts Hill Reservoir 49 Kimberley Park Reservoirs 50 Kuraby Reservoir 51 Lumley Hill Reservoir 52 Molendinar Reservoir 53 Mt Cotton Reservoir 54 Narangba Reservoirs 55 North Beaudesert Reservoirs 56 Robina Reservoir 57 Sparkes Hill Reservoirs 58 Stapylton Reservoir 59 Wellers Hill Reservoirs 1 Recreation water treatment plant 2 Standalone community water treatment plant 9 Seqwater Annual Report

11 Gympie Regional Council Cedar Pocket Dam Noosa Shire Council Six Mile Creek Dam (Lake Macdonald) 29 Borumba Dam (Lake Borumba) 6 18 Cooloolabin Dam (Lake Cooloolabin) Wappa Dam Poona Dam Somerset Regional Council Sunshine Coast Regional Council Baroon Pocket Dam (Lake Baroon) Ewen Maddock Dam Somerset Dam (Lake Somerset) 20 Moreton Bay Regional Council Toowoomba Regional Council 13 Wivenhoe Dam (Lake Wivenhoe) North Pine Dam (Lake Samsonvale) 9 30 Sideling Creek Dam (Lake Kurwongbah) Clarendon Dam (Lake Clarendon) Lockyer Valley Regional Council Atkinson Dam 2 Bill Gunn Dam (Lake Dyer) Ipswich City Council Brisbane City Enoggera Dam 46 Council 39 (Enoggera Reservoir) Cabbage Tree Creek Dam 12 (Lake Manchester) Gold Creek Dam Leslie Harrison Dam (Tingalpa Reservoir) Redland City Council Logan City Council City of Gold Coast 58 5 Wyaralong Dam Moogerah Dam (Lake Moogerah) 27 Bromelton Dam (Bromelton Weir) 4 Hinze Dam (Advancetown Lake) 7 15 Maroon Dam (Lake Maroon) Nindooinbah Dam Scenic Rim Regional Council Little Nerang Dam Gold Coast Desalination Plant Seqwater Annual Report

12 Highlights of our year Making water more affordable for our customers Seqwater is committed to providing an affordable bulk drinking water supply for the people of SEQ. We continued to drive down expenditure, reducing actual operating costs to $232.9 million in a $127 million or 35% reduction compared to the pre-merger budgets of the previous water entities, which totalled $360 million. We streamlined our operational structure, bringing 2 business groups into 1, with a greater regional focus. A new maintenance sourcing strategy, to be implemented in , will enable further efficiencies to be achieved in asset maintenance. Our savings resulted in a competitive bulk water price submission to the Queensland Competition Authority (QCA). The Queensland Government has endorsed the QCA s recommendation for the final 3 financial years (2016 to 2018) of the current bulk water price path. The common price will be 12% or $0.40/kL lower in than previously forecast, benefiting all South East Queenslanders. Planning for a sustainable water future We completed our first Water Security Program - starting the development of a 30-year plan to meet SEQ s future water supply needs. In , we will engage with stakeholders and communities region-wide to discuss our possible water futures and enable us to incorporate community views and values in an updated program, due in early Ensuring safety at work and play We fostered a strong safety culture and supported our employees in implementing our comprehensive Safety Management System. Our principles for workplace safety are encompassed in Our Golden Rules, which were produced by our employees to guide their behaviours. We reduced our lost time injury frequency rate from 11.1 to 4.7 in just 16 months. Our continuing journey towards a safer workplace was recognised in October, when our Be healthy, be wealthy program received the Best Workplace Health and Wellbeing Initiative Award at the Queensland Safe Work Awards. This was the second year running we have won a Safe Work Award in 2013 we received the Best Work Health and Safety Management System Award. To improve public safety at our dams, lakes and parks we launched our Play it safe education campaign. Our research showed many people do not have the same level of awareness about safety around lakes as they do in pools or at the beach. More than a third (35%) of all drowning deaths in Australia involve inland waterways rivers, creeks and dams; that is more than beaches and pools combined (31%) 1. The education campaign encouraged lake visitors to plan ahead and follow all safety rules. An independent evaluation found almost half the community members surveyed felt they connected with the education campaign at an emotional level and were affected by it. This was an important outcome as an emotive response leads to behavioural change the main aim of the campaign. Public awareness of Seqwater more than doubled during the year from 12% to 26%, surpassing the campaign s target of 22%. We continued our Dam Improvement Program a phased work program to ensure our dams meet national standards into the future. We completed Stage 1 improvements at Maroon Dam, Stage 1a works at Moogerah Dam, commenced preliminary design for the future upgrade of Leslie Harrison Dam and completed phase 1 investigations at Lake Macdonald Dam. 1 Royal Life Saving National Drowning Report Seqwater Annual Report

13 Delivering on our recreation review This year we completed our landmark community consultation on recreation at our dams, lakes and parks and began making improvements to recreation access and facilities based on public feedback. We produced recreation guides and management plans for all 20 lakes reviewed and delivered more than 20 projects to encourage people to enjoy our dams, lakes and parks. Highlights include the opening of Enoggera Reservoir to swimming and paddle craft activities for the first time, a new 16 kilometre trail network at Wivenhoe Dam, and improved picnic and playground facilities at Moogerah, Wyaralong, Hinze and Wappa dams. We also received the Government Achievement Award for producing positive outcomes for outdoor recreation. The recreation review was also highly commended in the Australasian Project - Planning category at the International Association for Public Participation (IAP2) Australasia Core Values Awards. Celebrating excellence Our people are our greatest asset and this year we received a number of accolades for their outstanding achievements. Our work with the Department of Energy and Water Supply (DEWS) on the Wivenhoe and Somerset Dams Optimisation Study was honoured at the Premier s Awards for Excellence. We received the Integrity and Accountability Award for undertaking an innovative, rigorous and complex optimisation study of flood mitigation dams in a transparent and consultative way. We won a coveted national Australian Human Resources Institute (AHRI) Award for Workplace Relations. We were recognised for our work following the merger of the former Seqwater with LinkWater and the Water Grid Manager in January Our recreation review scooped 2 awards at the Queensland Outdoor Recreation Federation Awards the first time in the awards history that 1 organisation or individual has won 2 categories. Seqwater won the Outstanding Achievement Award (Organisation) for making a valuable contribution to the outdoor community, with professionalism and a high standard of conduct. Seqwater Annual Report

14 Performance report card Our performance report card shows our progress in delivering against our Strategic Plan and Operational Plan We measured success by using key performance indicators and targets to drive continuous improvement across 6 strategic outcome areas, listed in the table below. Performance summary Strategic outcome area KPI Result 1. Knowledgeable and engaged community 2. Trusted and respected brand Customer and community attitudes Achieved 3. Integrated whole-of-industry approach Joint initiatives established Achieved 4. Water and catchment services 5. Sustainable financial capacity 6. Capable and innovative people Lake availability to community Service standards: Supply Service standards: Water quality Water supply security Commercial performance: EBIT Commercial performance: EBIT (capital budget) Commercial performance: EBIT (interest cover) Lost time injury frequency rate (LTIFR) Employee availability Achieved Achieved Achieved Achieved Achieved Not achieved Achieved Achieved Achieved Performance breakdown For each key performance indicator, the annual result against target is shown, together with brief commentary on any variances and page references for more detailed analysis of performance. STRATEGIC OUTCOME AREAS 1 AND 2 Knowledgeable and engaged community Trusted and respected brand KPI Measure Target Result Customer and community attitudes A survey that measures the level of unprompted community awareness of Seqwater and our role in the water cycle in SEQ 22% 26% Achieved Customer and community attitudes Due to the related nature of these strategic outcomes areas, for the past 2 years we have measured our performance using the same KPI. We exceeded our target by 4%, with 26% of survey respondents aware of Seqwater. Our Play it safe public education campaign and stakeholder and community engagement activities played an integral role in building awareness of the work we do in the provision of water and the importance of personal safety at our dams, lakes and parks. See page Seqwater Annual Report

15 STRATEGIC OUTCOME AREA 3 Integrated whole-of-industry approach KPI Measure Target Result Joint initiatives (cumulative) The number of joint initiatives which are underway to drive value through cross-business collaboration and planning Achieved Joint initiatives We continued to lead the SEQ Water Service Providers Partnership. The purpose of the Partnership is to undertake whole-ofsystem initiatives to drive efficiencies across the water supply chain. We commenced 21 initiatives to drive customer value through cross-business collaboration during the year. See page 21. STRATEGIC OUTCOME AREA 4 Water and catchment services KPI Measure Target Result Lake availability to The percentage of lake availability in accordance 92% 92.7% Achieved community with the framework set out in the National Health and Medical Research Council Guidelines for Managing Risks in Recreational Waters and Seqwater management plans Service standards (a) The instances of non-compliance with Bulk 0 0 Achieved Water Agreements for supply obligations (in accordance with section 7) (b) The number of zones not compliant with 0 0 Achieved Australian Drinking Water Guidelines for water quality criteria 1 Water supply security The probability of water storage levels dropping to 40% of full supply volume in key water grid storages in five years as outlined in the South East Queensland System Operating Plan as a lead indicator of our ability to meet Level of Service objectives 2 <5% 0.4% Achieved 1 For water quality criteria, number of zones not compliant with the Australian Drinking Water Guidelines 2011 [ADWG] guideline values based on the 95th Percentile for Health parameters, 98% for Microbiological parameters and arithmetic Mean for Aesthetic parameters [with impacts downstream] over a rolling 12-month period. Compliance to these criteria is calculated quarterly. 2 Probability calculated using the South East Queensland Regional Water Balance Model. Seqwater Annual Report

16 Lake availability to community We strive to balance the ongoing health of the catchments and quality of the region s drinking water supply with providing community access to a range of water-based and on-shore recreation activities at our dams, lakes and parks. Sometimes, we need to reduce or restrict access to our lakes due to severe weather, algal blooms or health and safety concerns. We achieved our target of lake availability above 92% for 3 of the 4 quarters in We did not achieve our target in the December 2014 quarter due to blue green algal blooms at 3 lakes. These blooms are a natural occurrence during warmer weather. Service standards There were no instances of non-compliance with Bulk Water Agreement supply obligations during the year. All drinking water supply zones were compliant with water quality criteria for the 12 months to 30 June Water supply security The probability of water storage levels in key dams dropping to 40% of full supply volume within 5 years is very low at 0.4%. On 1 July 2014 the combined storage level of the 12 key water supply dams was 88.5%. During the first half of the year the combined storage level fell to 80.1%, but rain over the summer months topped up storages across the region. By 30 June 2015, the storage level had increased to 98.5%. We actively monitor demand and dam storage levels to review the water balance position. We model possible storage inflow conditions to assess the future water security position for the region. Water security is currently high. See page 23. STRATEGIC OUTCOME AREA 5 Sustainable financial capacity KPI Measure Target Result Commercial performance Earnings Before Interest and Tax (EBIT) 3 EBIT measured against original budget Budget $305.5M Achieved Capital budget 5 EBIT interest cover 6 original capital budget appropriation at group level EBIT covers interest paid > 0.56 Actual $314.9M Budget $122.4M Actual $87M Actual 0.58 Not achieved Achieved 3 EBIT, also called operating profit or (loss), is a measure of profit or (loss) that excludes interest and income tax expenses. It is the difference between operating revenue and operating expenses. 4 Measured and aggregated from team level. 5 Total capital expenditure includes: Capital Infrastructure Program and Non Infrastructure capital expenditure 6 One of the key credit metrics expected for a B rated water company is EBIT interest cover (EBIT divided by gross interest expense) in the range of 1.0 to 1.2 times. 15 Seqwater Annual Report

17 EBIT The earnings before interest and tax outcome for the year improved by 3% compared to budget and improved 33% compared to Revenue received was consistent with the budget Operating expenses less borrowing costs and depreciation were 14% under budget. Depreciation charge as a result of the annual asset revaluation increased 17%, affecting depreciable asset values. Capital budget Capital expenditure was 29% less than the budget. The capital improvement program has been optimised to defer some planned works and reduce the scope of others. Savings have also been achieved through efficient program delivery to reduce administrative overheads. The capital infrastructure program accounts for 79% of this variance. The balance relates to the non-infrastructure program. The infrastructure 8 component of the capital budget was $96.5 million. Budget expended and savings achieved comprised more than 90% of that budget. We delivered $74.8 million of infrastructure improvements in and achieved a further $12.8 million of savings through the planning and delivery phases. The non-infrastructure budget was underspent by $13.8 million. About $10 million of this underspend relates to land compensation payments for the construction of the Northern Pipeline Interconnector, which are being managed by the Coordinator-General. The budget allowed for settlement of all payments in , but this did not occur. EBIT interest cover We achieved earnings before interest and tax interest cover of 0.58, exceeding budget and the 0.44 achieved in Our target for a B rated entity (to achieve EBIT interest cover in the range of 1.0 to 1.2 times) is currently forecast in STRATEGIC OUTCOME AREA 6 Capable and innovative people KPI Measure Target Result LTIFR The lost time injury frequency rate (LTIFR) <5 4.7 Achieved Employee availability LTIFR The percentage of hours employees have attended work 95% 96% Achieved The LTIFR for was 4.7, below our target of 5, and a reduction from an LTIFR of 7.8 in It is important to note that all LTIs were the result of low potential consequence incidents and that 8 of the 12 months were LTI free. We continue to work to reduce our LTIFR through the implementation of our Work Health and Safety Management System and our Safety Culture and Behaviour Program, including Our Golden Rules and safety leadership training. See page 29. Employee availability Our employee availability was maintained above the 95% target, at 96%. 7 Refer to accompanying note 30 of the financial statements for details regarding the restatement of prior period adjustments. 8 Infrastructure refers to the fundamental facilities, systems and service assets essential to water production. Seqwater Annual Report

18 STRATEGIC OUTCOME AREAS 1 AND 2 Knowledgeable and engaged community Trusted and respected brand We engage with our customers and communities, providing opportunities to understand what we do and seeking feedback to improve our services. We aim to be a trusted and valued partner in the communities in which we operate, and play a central role in supporting a liveable and productive SEQ. Delivering increased recreation opportunities Our water storage lakes form a large and important part of the recreational landscape in SEQ. Lakes Wivenhoe, Somerset and Samsonvale combined provide a recreation area that equates to about 50,000 football fields. In 2013, we launched the most extensive review ever undertaken of recreation on and around our lakes. The review covered 20 lakes, grouped into 9 clusters, and involved extensive consultation to capture the diverse views and recreation needs of local communities, recreation users and special interest groups. In October 2014 we concluded the recreation review engagement process, having produced new recreation guides and management plans for all 20 lakes. An implementation plan was produced for each lake included in the review, which contained a snapshot of review recommendations and delivery timeframes for outcomes. Between July 2014 and June 2015, we implemented the following recreation review outcomes: installed new access and launch points at Lake Kurwongbah, Lake Maroon, Lake Somerset and Hinze Dam opened Lake Kurwongbah, Enoggera Reservoir, Lake Manchester and Lake Clarendon to paddle craft created designated swimming areas at Lake Moogerah, Enoggera Reservoir and Lake Dyer introduced fishing at Enoggera Reservoir, Lake Manchester and Lake Clarendon permitted dogs on leashes in designated areas of Lake Macdonald and Hinze Dam upgraded picnic facilities at Lake Moogerah, Lake Wyaralong and Hinze Dam installed or upgraded wash down facilities at Lake Kurwongbah and Lake Macdonald to help prevent the spread of aquatic weeds improved safety by gazetting a 6 knot speed limit in treed areas of Lake Moogerah built a new car park and toilets at Lake Wyaralong improved our trail network by establishing new trails at Lake Wivenhoe and Lake Clarendon, extending trails at Lake Baroon and Lake Manchester, and improving trail signage at Hinze and Ewen Maddock dams upgraded playgrounds at Wappa and Hinze dams installed rigging areas at the Hinze Dam boat ramps. The Department of National Parks, Sport and Racing has funded the implementation of a number of outcomes. We continue to work with the Department on further funding opportunities. We kept the community informed about recreation review outcomes though our website, social media channels and a recreation e-newsletter. Our achievements in recreation were recognised at the Queensland Outdoor Recreation Federation Awards, where we won the Outstanding Achievement Award (Organisation) and the Government Achievement Award the first time 1 organisation or individual has taken out 2 categories at these awards. Our engagement approach was also highly commended in the Australasian Project - Planning category at the International Association for Public Participation (IAP2) Australasia Core Values Awards. 17 Seqwater Annual Report

19 Balancing recreation access to our drinking water storages During the recreation review, the community sought greater access to Lake Samsonvale (North Pine Dam) for paddle craft activities. Preliminary water quality assessments indicated this change could increase the water quality risk to undesirable levels. Further detailed investigations were required to better understand the risk. Lake Samsonvale is our fourth largest drinking water storage. It is critical to balance recreational access to our lakes with their primary role as drinking water storages. The Lake Samsonvale Quantitative Microbial Risk Assessment (QMRA) seeks to establish the level of pathogen risk in this water supply and explore how it is affected by current and potential future recreational activities. The assessment began in October 2014 and is due to be completed in early This approach is an example of world-class science informing the long-term decisions for Lake Samsonvale. We completed development of a catchment model and a 3D reservoir model. We also completed a detailed literature review, a methodology for model application and assessed the information required to populate multiple scenarios to test the impacts of recreation on overall water quality risk. We held a community forum to explain the study and keep interested locals and recreation stakeholders informed. The remaining phases of the research will involve using the model for a number of catchment health and recreational pressure scenarios to see how these would impact drinking water quality and the cost of water treatment. Further community engagement is planned in to share updates on the project and explore broader community perceptions about the balance between protecting drinking water quality and recreation. Promoting visitor safety On 2 November 2014 we launched our Play it safe public education campaign to improve visitor safety at our dams, lakes and parks by reducing complacency around still water and increasing awareness of safety risks, rules and resources. Our research showed many people did not have the same level of awareness about safety around lakes as they did about pools or beaches. More than a third of all drowning deaths (35%) in Australia involve inland waterways rivers, creeks and dams; that is more than beaches and pools combined (31%) 9. Play it safe television, radio and cinema education messaging was supplemented by website and social media communication. Campaign elements were integrated into our education program and community engagement activities. The campaign evaluation revealed strong campaign cut-through, effectiveness and recall of safety messaging. By April 2015, campaign awareness was greater than 70%, with more than two thirds of respondents to an independent survey able to recall elements of the paid components of the campaign (e.g. cinema, radio, television information). Of those who had seen the campaign, almost a third could recall the key message and 15% of these respondents could directly quote, unprompted, the Play it safe tagline. Almost half of those surveyed felt they connected with the content at an emotional level and were affected by it. This indicates people had an emotive response which leads to behavioural change - an important outcome of this campaign. Before the campaign, around 1 in 10 people knew Seqwater without prompting. That number rose to more than 1 in 4 by the end of the campaign. Overall awareness of Seqwater has more than doubled since the campaign launch from 12% to 26%, surpassing the campaign s target of 22%. Involving our communities in water management and planning Engaging our communities in water management and planning is important to us. In we connected with customers through public forums, surveys, reference groups and focus groups. The Banksia Beach Community Reference Group (CRG) continued to provide us with valuable information on the operation of the northern borefield. 9 Royal Life Saving National Drowning Report Seqwater Annual Report

20 The community was kept informed of monitoring outcomes and the annual reporting on fauna and flora assessments. The borefield was rested during the year and the local water treatment plant is not currently in use. We worked with local Queensland Parks and Wildlife Service officers, the Department of National Parks, Recreation, Sport and Racing and Traditional Owners to develop a plan to install new observation bores with minimal impact to environmentally and culturally sensitive areas. The observation bores help to ensure the sustainability of the potable water extracted from the northern aquifer. In May 2015, we established the Lake Macdonald Dam Improvement Project Community Reference Group (CRG) to build community understanding of this important project and gain feedback. The CRG provides a forum for members to discuss issues of community interest about the planned dam upgrade, and draws on local knowledge about Lake Macdonald and its uses. On 6 July 2015, we launched Water for life: SEQ s Water Security Program This is our plan for providing safe, secure and cost-effective drinking water for our growing region over the next 30 years. In the year ahead, we will begin a conversation with the community about our long-term water future. To help us better understand how to engage with South East Queenslanders about the plan, we asked our community about water their values, perceptions, preferences, priorities and interest in being involved in water planning. The views of more than 1,350 people were canvassed through online surveys and focus groups in The research indicated that South East Queenslanders are seeking an affordable water supply that is resilient during drought or floods. Alongside stakeholders, Seqwater will engage the community to determine people s preferences on values, and possible water futures, and gather feedback that will shape future updates of the Water Security Program. This year we developed a digital engagement strategy, including a 3-year plan to enhance our digital channels and increase our online engagement with customers. The first year of the plan builds on the basics, including refreshing and refining existing digital channels, such as the Seqwater website. The strategy will be refined in with learnings from website usability testing and the online engagement associated with the Water Security Program. Sharing the water story We established our popular school and community education program in September 2008 and since then it has grown into one of the largest regional water education programs in SEQ. In , almost 8,500 students and adults participated in learning experiences, tours, exhibitions and community events. The program builds a narrative around the role of Seqwater in the community what we do now, and how we are planning for the future. Using outdoor education and learning experiences at our water supply assets, the program extends beyond the classroom to tell the story of water through nature and our urban environment. In , we launched our new look online education portal, Up a dry gully. The portal provides access to resources for primary, secondary and tertiary students and community groups. Our education program is linked to the Australian National Curriculum. We supported more than 900 educators through curriculum-based resources, an online portal, 2 purpose-built facilities, and dedicated education officers who conducted learning experiences at our Hinze, Wivenhoe, Baroon Pocket and North Pine dams and our Mt Crosby and North Pine water treatment plants. We also partnered with State and local government, community groups and stakeholders to increase awareness and foster a collaborative learning environment through events and networks. We understand the importance of reaching out to our community through both traditional and new media channels. 19 Seqwater Annual Report

21 We were active participants in the Australian Water Association Water Educators Network, the Department of Energy and Water Supply Educators Network, and the Healthy Waterways Communication, Education and Motivation Network and regional behaviour change campaign. We signed a Memorandum of Understanding with Nature Play QLD, an innovative program which promotes health benefits, cognitive and social development through outdoor play-based activities. Our interactive visitor centres at Hinze Dam and Wivenhoe Dam bring the water story to life. In , we welcomed more than 38,500 visitors to Hinze Dam Visitor Centre and 13,800 to the Lake Wivenhoe Visitor Centre. Engaging with our customers In , we took part in 35 community events, 12 education events and 7 industry events, and recorded more than 3,000 customer engagements as part of our community relations program. Here is a snapshot of just a few ways we connected with our customers. Royal Queensland Show (Ekka 2014) We partnered with Queensland Urban Utilities and Healthy Waterways to promote a Catchment to your tap theme for the Learning Trail at the Ekka. The display and presentations depicted the water cycle from source and store (catchments, waterways and dams), to supply (treatment and transport) and finally to end use and treatment (potable supply through the sink and sewage treatment). A total of 6,166 students from 117 registered schools visited our stand, as well as thousands of other Ekka patrons over the 10-day event. Weir safety day In the time since the annual safety presentation was instigated in 2009, there have been no recorded incidents of students playing at the Caboolture Weir. Community partners and teachers are particularly supportive of the safety presentation each year, given the proximity of the schools to the weir. Play it safe day and school art competition As part of the broader Play it safe education campaign, we hosted a Play it safe day at Logan s Inlet, Lake Wivenhoe for more than 600 students and teachers from 8 schools. The day was supported by community partners from State and local government, Queensland Urban Utilities, Healthy Waterways, Queensland Police, Surf Lifesaving Queensland, St John s Ambulance, Queensland Fire and Rescue and the State Emergency Service, the local Lions Club, and Freshwater Fishing and Stocking Association Queensland. To maximise the learning outcomes from the event, we developed lesson plans for teachers to use with their classes ahead of their visit. Students took on an active role as an Aqua Ranger on the day and displayed a good understanding of safe behaviours when playing in and around the dam. Students reflective pieces received after the event demonstrated a sound understanding of safe water play. As a supporting follow-up activity, in February 2015, we launched the inaugural Play it safe school art competition. Students who attended Play it safe day were invited to submit art entries that depicted what it meant to play it safe in and around our lakes. Chapel Hill State School Class 6A won a water testing kit for their classroom to enable students to further explore and care for the region s waterways. We will hold another art competition to promote National Water Week in October This annual event increases young people s awareness of the potentially fatal consequences of swimming in weirs and flooded waterways. More than 600 students from Caboolture State School and Tullawong State High School participated, and heard presentations from Seqwater, Swift Water Rescue and Hannah s Foundation. Seqwater Annual Report

22 STRATEGIC OUTCOME AREA 3 Integrated whole-of-industry approach We continued our drive to be a sought after partner, trusted to lead collaboration across the region to improve performance and capitalise on new opportunities for the benefit of our customers. Partnering with industry We lead the SEQ Water Service Providers Partnership, meeting regularly to progress whole-of-system initiatives to drive efficiencies across the water supply chain. We set an ambitious target for the year of 20 initiatives to drive greater value for water customers. We ended the year with 21 initiatives underway, including: A joint project with Unitywater to develop an alternative supply option for the Petrie water supply zone. This project eliminates the need for a costly upgrade of Petrie Water Treatment Plant. Instead, customers will be serviced from the nearby, and much larger, North Pine plant, while the Petrie plant is decommissioned, saving more than $20 million. The installation of 400 customer smart water meters across the region to better inform demand forecasts and monitor changes in demand in a more accurate and timely way. A joint procurement opportunities project for major purchases, such as energy and chemicals. The first phase of the project is the development of a shared register of major contracts and renewal dates. A partnership with Logan City Council and Queensland Urban Utilities to investigate future water supply options for Beaudesert. A partnership with Unitywater to plan water supply options for the standalone water treatment plants at Kenilworth and Dayboro. We worked on asset planning and network optimisation to identify whole-of-supply chain efficiencies, develop consistent approaches to common assets (such as reservoirs and pipes) and investigated the opportunity to bundle future capital works. We also commenced the Partnership Water Quality Plan to complement the existing water quality risk plans of each organisation with an overarching framework for integrated water quality management from catchment to tap. The plan will be completed in Improving our incident and emergency response We have comprehensive incident and emergency management plans to support the continuation of our essential service, regardless of weather or other unexpected events. We conducted the biennial review of the Bulk Supply Authority Emergency Response Plan (ERP), incorporating lessons learned during the past 2 years and the latest in emergency management good practice. To inform the updated ERP, we reviewed all incidents and emergencies recorded since the 2013 ERP was implemented, conducted a scan of emergency arrangements at comparable utilities, and developed recommendations for improvement. We obtained expert peer review of these recommendations and consulted with our water service provider partners and the Department of Energy and Water Supply. After extensive testing through desktop scenarios, the proposed ERP was finalised in mid-2015 for submission to the Minister for Energy and Water Supply for approval. 21 Seqwater Annual Report

23 As part of our preparations for the annual wet season, we conducted the SEQ Water Service Providers Partnership emergency management exercise, a requirement under the ERP. We also proactively prepared and responded to the security risks surrounding the G20 Leaders Summit in Brisbane in November In , we will increase our emergency management capability through the establishment of 2 Emergency Operations Centres in Ipswich and Brisbane. For more information about our response to the severe weather events during the year and our dam release notification service, please see page 26. Seqwater Annual Report

24 STRATEGIC OUTCOME AREA 4 Water and catchment services Water supports healthy communities and a prosperous SEQ. We deliver this essential service to 3.1 million people across our region every day. Planning for our water future As the region s bulk water supply authority, we are charged with delivering safe, secure and cost-effective water to our customers and communities today, and in the future. In our region, we experience both drought and flood, and we need to plan for a sustainable water future that meets the needs of all South East Queenslanders. In , we completed the first phase in the development of a 30-year plan to meet SEQ s future water supply needs. The Water Security Program includes our overall approach to managing current water infrastructure and the issues that need to be considered in developing the region s long-term plan, including future demand, climate variability and emerging technologies. We worked closely with the water service providers to develop the Program, which is underpinned by rigorous modelling and assessment. Our initial assessment has shown that apart from a severe drought or a sharp increase in demand, no new water supply infrastructure will be required until beyond This means no decision on future water supply options will be required for at least 10 years. Our work so far demonstrates there are many options and differing approaches available to maintain SEQ s water security. In , we will undertake region-wide community engagement on the Program. Stakeholder and community views will be integrated with technical assessments and evaluations to deliver an updated long-term water plan that reflects community values. Developing our Asset Portfolio Master Plan It includes all capital expenditure for natural, storage, treatment, transport and recreation infrastructure assets, but excludes manufactured water assets. The plan sets our forecast capital expenditure over the next 5 years at an estimated $576 million. Total forecast capital expenditure over the 14 years covered by the plan is $1.7 billion, based on the best available project cost information at the time. The plan will be updated in Managing our diverse asset base With a strong focus on asset management, we started reconfiguring our asset management systems to better align our asset information with our supply network. We continued to refine the information framework by linking our business processes, asset information and performance reporting into a whole-of-business asset management system. We also implemented an asset standards framework and produced a suite of asset standards. This work was supported by the implementation of an engineering change framework to ensure correct standards are applied when engineering changes occur through regular maintenance or for new projects. More than 45,000 of our historic engineering drawings were reviewed and stored in our electronic document management system and made available to planners, project managers and maintenance personnel. Standard designs and drawings were developed for the processes used in our water treatment plants and across our transportation assets to streamline future projects, deliver consistency and enable ongoing engineering and maintenance efficiency. In , we prepared our first comprehensive long-term infrastructure investment plan. The Asset Portfolio Master Plan 2014 covers the period from 1 July 2014 to 30 June 2028 to align with the QCA regulatory review process. 23 Seqwater Annual Report

25 Delivering our Dam Improvement Program In , Seqwater commissioned an independent assessment of all 26 regulated dams against contemporary design standards. The reviews identified that improvements can be made to some of the dams and these are being scoped and prioritised for implementation using a risk-based approach. Importantly, based on the regular monitoring program and the assessments and actions already undertaken, all Seqwater dams continue to operate as they should. The Dam Improvement Program is about ensuring that our dams continue to perform as required in the future. We delivered: Maroon Dam Stage 1 improving the weighting berm stability and extending the grout curtain and drainage on both abutments. Moogerah Dam Stage 1a improving anchoring at the dam toe, upgrading and widening access tracks and constructing a crane hardstand area. Leslie Harrison Dam lowering the dam water level, completing initial field investigations, and removing the spillway gates. Leslie Harrison Dam now operates as an un-gated dam, so whenever the dam reaches its temporary full supply level, water flows over the spillway into Tingalpa Creek. We began preliminary design for a potential future dam upgrade. Lake Macdonald (Six Mile Creek Dam) completing Phase 1 of the dam improvement project in late Site and geotechnical investigations on the dam spillway confirmed the need for an upgrade. Further site and geotechnical investigations informed dam upgrade options and preliminary design. We expect to complete the options assessment and preliminary design in before moving to the detailed design and approval phase. Lake Kurwongbah (Sideling Creek Dam) lowering the dam water level by cutting a slot on the western side of the spillway, reducing the full supply level of the lake by 2 metres to about 60% of its capacity. Detailed investigations are underway to identify improvement options and inform the longer term strategy for the dam. Working with irrigators We supplied about 1,200 rural irrigation customers with untreated water for a wide variety of agriculture, such as orchards, vegetable and fodder crops, dairying and grazing. Our irrigation customers are important stakeholders and we held customer forums across the 7 water supply schemes to share information and gather feedback. The annual network service plans were published on our website as required. We continued to implement the QCA s irrigation pricing recommendations as directed under the Rural Water Pricing Direction Notice (No 1) New approved irrigation water prices were applied and the efficient costs underpinning those prices adopted. Caring for our catchments Water treatment starts in our catchments. We take a wholeof-catchment approach to managing and improving water quality. In response to degradation of the Lockyer Valley and subsequent turbidity issues in the Brisbane River, in January 2013, we developed our Catchment Greenprint. The Greenprint sets out our vision and strategy for catchment management and is a long-term adaptive plan to ensure a healthy source of water for our growing region. Catchment management requires a coordinated approach across multiple stakeholders. Since its inception, the Greenprint has sparked a number of initiatives, including: The establishment of a Source Protection Planning unit at Seqwater to better align catchment and infrastructure investment planning processes. The development of an integrated solution for the standalone water treatment plant at Kenilworth. The project involved riverbank stabilisation works and augmentation of treatment at the plant to ensure a more resilient water supply for the Kenilworth community. Seqwater Annual Report

26 In 2014, Seqwater became a founding member of the Resilient Rivers Initiative, a partnership between the Council of Mayors (SEQ), the Queensland Government, water utilities, key regional waterways and catchment organisations, and the community. The initiative aims to improve the health of our waterways and Moreton Bay by delivering more coordinated catchment management to protect our water and keep soil on the land and out of waterways. The initiative recognises that we can deliver more together than alone. On 21 April 2015 we hosted the initiative s launch at one of our project sites on the banks of the Brisbane River, near Fernvale. In the year ahead, Resilient Rivers will develop action plans for the Lockyer and mid-brisbane catchments. A Resilient Rivers taskforce will formalise the operating model for the initiative and consider and formalise the regional strategy for SEQ waterways. We were also an active member of the Healthy Waterways Partnership, participating in a number of panels, working groups and committees. We provided direct and in-kind funding support to Healthy Waterways to drive advocacy in waterway health. Managing water quality Under the Water Supply (Safety and Reliability Act) 2008 we must conduct water quality management activities and manage risk and issues in line with our Drinking Water Quality Management Plan. In , all drinking water zones met the criteria for health, microbiological and aesthetic water quality parameters. Our annual report on drinking water quality was accepted by the Queensland Water Supply Regulator in January As required under the Statement of Obligations, we are committed to achieving external third-party certification for drinking water activities (AS/NZS ISO 22000). During , Noosa, North Pine and Landers Shute water treatment plants achieved full certification and the supply system was re-certified. An internal audit in January 2015 assessed 3 assurance mechanisms established to monitor compliance with water quality regulatory obligations and management of associated operational risks. The audit found key controls were applied consistently and systemically. Our Hazard Analysis and Critical Control Points (HACCP) plans are the site-based risk management component of the Drinking Water Quality Management Plan and cover all water treatment plants and the bulk supply system. We completed all required internal audits and risk assessment workshops for HACCP plans within the period. We also began streamlining procedures and record keeping to provide better information and instructions for water treatment plant operators. This project will run until the end of Looking after the environment We continued the development and expansion of our Environmental Management System (EMS). The system now encompasses 22 sites and achieved ISO14001 certification for an additional 4 water treatment plants during the year. The total certification scope now includes: the bulk water supply system 6 water treatment plants (North Pine, Molendinar, Mudgeeraba, Landers Shute, Image Flat and Noosa) Ipswich and Brisbane offices. We amalgamated environmental authorities into 3 regional approvals, achieving a 50% reduction in annual return fees and standardising common conditions across all approvals in each region. We also: conducted internal pre-certification audits, identified opportunities for improvement and captured these within an action database commenced an environmental compliance audit and inspections program across dam and catchment assets 25 Seqwater Annual Report

27 streamlined a trackable waste compliance process, including procedure development and the establishment of agent agreements with regulated waste transport contractors implemented a targeted environmental education program for frontline employees investigated beneficial waste reuse and disposal options for water treatment plant residuals (sludge) and fluoride analyser waste streams assessed a second stage of contaminated land to evaluate environmental compliance risk and provide input for source protection planning projects. There were no environmental harm events recorded in Optimising our dam operations and flood management While our dams function as water storages, they also help mitigate floods. All dams help mitigate flooding to some extent. This is because the peak flow from a dam during a flood event is always less than the peak flow that would have occurred had the dam not been built. We updated the operational procedure manuals for Wivenhoe and Somerset dams, and North Pine Dam ahead of the wet season. Changes were made in response to the recommendations of the Wivenhoe and Somerset Dams Optimisation Study and the North Pine Dam Optimisation Study. The studies considered ways to further optimise the operations of our gated dams to deliver better flood management outcomes without putting future water supplies at risk. Seqwater conducted state-of-the-art flood modelling to inform the studies, considering 32 alternative dam operating scenarios and modelling more than 4,000 simulated floods and 20 historical floods for each scenario to identify the best flood mitigation strategies. As a result, the State Government made the decision to alter Wivenhoe Dam s flood mitigation strategies to improve flood mitigation outcomes for urban areas. This means some low-lying bridges downstream of the dam will be closed more regularly during flood events. However, the duration of submergence in some floods will be less than what would have occurred under the previous manual. The State Government also decided to adopt a new full supply level for North Pine Dam which is equivalent to 90% of the original design full supply volume. The manual for North Pine Dam was also amended to potentially improve environmental outcomes by limiting release rates during small flood events and when draining the dam back to the full supply level at the end of an event. Our work with the Department of Energy and Water Supply on the Wivenhoe and Somerset Dams Optimisation Study was honoured at the Premier s Awards for Excellence. We received the Integrity and Accountability Award for undertaking an innovative, rigorous and complex optimisation study of flood mitigation dams in a transparent and consultative way. Managing severe weather events Severe weather events present challenges for us in maintaining a safe and reliable bulk water supply and mitigating flood impacts. We successfully maintained the region s bulk water supply and managed dam operations during events in February and May February event With extreme weather forecast in the region, we mobilised our Flood Operations Centre on 19 February The Centre operated in alert status, continuously monitoring our dams throughout the event. The Centre also directed operational water releases from Somerset Dam into Wivenhoe Dam to manage inflows and balance the water storage levels across both dams. At the height of the event, 14 un-gated dams were spilling, and we proactively engaged the community through the media and online channels to provide information and encourage people to register for Seqwater s free dam release notification service. Seqwater Annual Report

28 Some 736 community members took the opportunity to sign up for the service during the event. As a proactive measure to maintain supply, treated water reservoirs were topped up ahead of the severe weather. All major water treatment plants remained operational throughout the event and there were no interruptions to the bulk water supply. The event did result in 3 small standalone water treatment plants being taken offline. Access to Jimna water treatment plant was cut by floodwaters and the rainfall caused source water quality challenges at Dayboro and Kenilworth water treatment plants. Supply was maintained to these communities from treated water reservoirs, with supplementary water carting where required. The Kenilworth community continues to be supplied by carting due to damage caused by the event. We have completed a riverbank remediation project at Kenilworth ahead of a plant upgrade later in 2015, which will restore the normal supply. May event We again mobilised our Flood Operations Centre on 1 May 2015 in response to a low pressure system in the region. By late that afternoon, heavy rainfall and catchment inflows had increased the water levels of North Pine, Wivenhoe and Somerset dams above full supply and gated releases began from North Pine Dam at 6pm and Wivenhoe Dam at 8pm. The gates at North Pine Dam were closed at 4pm on 3 May, with continued inflows to Somerset and Wivenhoe dams requiring gate operations at Wivenhoe until 4pm on 5 May. At the height of the event, 3 gated dams were releasing water and a further 16 un-gated dams were spilling. The flood operations team worked around the clock for 4 days and successfully managed the high inflows in line with the updated manuals. Floodwater release warning system review On 20 May 2015, the Queensland Government announced the Inspector-General of Emergency Management would undertake an independent review into the floodwater release warning systems provided by Seqwater and SunWater to communities downstream of their dams. The review encompasses Seqwater and SunWater s flood release communications with the community and other stakeholders, such as Local Disaster Management Groups, and will assess the timeliness and effectiveness of existing communication approaches and recommend strategies to improve them. After every flood event, Seqwater undertakes a comprehensive review and debrief to determine areas for improvement across all areas of our flood operations. As a business focused on continual improvement and learning, we have been working hard on ways to improve our dam release notification service based on learnings from the 1 May flood event. This review offers a unique opportunity for us to gain expert advice and learn from the experience of other agencies. The resulting report will help us improve the service we provide to the community. The Inspector-General of Emergency Management s report is expected to be tabled in Parliament in September There was no interruption to the bulk water supply during the weather event. Community and media interest in the releasing and spilling dams was strong and updates were provided through traditional media and social media channels, as well as dam release notifications to service subscribers. 27 Seqwater Annual Report

29 STRATEGIC OUTCOME AREA 5 Sustainable financial capacity As the region s bulk water supplier, we have a responsibility to make water as affordable as possible. We continue to make efficiencies that lead to more affordable bulk water prices for our customers. Making water more affordable Our customers expect us to do everything we can to keep water price increases to a minimum. We manage the largest component of the urban water cycle and have an opportunity to make a positive difference to water affordability. In our first year of operation, we delivered real savings to assist the State Government to cap bulk water prices for 2 years. Our focus on efficiency has continued to put downward pressure on bulk water prices. The bulk water price is the price we charge to the 5 water service providers. The providers purchase our water for sale to the community. For historical reasons, bulk water prices vary from Council to Council in SEQ. We are working towards a single common price across the region by Last year, it was forecast that a common price of $3.22/kL would be in place for 8 of the 11 councils in The efficiency savings we have made as a business, amongst other changes, will deliver a common price 12% lower than expected in at $2.82/kL. In April 2015, the QCA endorsed Seqwater s saving measures, and made its final price path recommendation to the Queensland Government. In June 2015, the Minister for Energy and Water Supply announced the price path. Seqwater s savings mean that in , customers in 6 of the 11 Council regions we serve will see their bulk water charges decrease. Some Council areas are paying less for bulk water and will therefore see increases in , however these price increases are lower than the previously forecast price path. Driving efficiencies We continued to challenge our budget and look for ways to make operational efficiencies. Water service sales were $71.7 million favourable compared to The sale of our former office in Margaret Street, Brisbane resulted in an $11.1 million profit. We saved $8.5 million in Supplies and Services as a result of the following initiatives: reviewed the asset investment program and asset class plans savings achieved in the environmental management system improvements made in the ALS Water Quality Monitoring Program reduced planned, scheduled and reactive maintenance as a result of the Maintaining our future project used hot standby mode at the Gold Coast Desalination Plant reduced breakdown maintenance and maintenance associated projects through contract optimisation identified opportunities to use internal resources over external contractors. Depreciation expenses were lower than by $5 million as a result of the annual valuation of assets at fair value. In , we adopted a post-tax approach in the valuation of assets (a change from the previous pre-tax approach) to bring our valuation practices in line with general practice. Property, plant and equipment and intangibles were valued at $12.2 billion as at 30 June Interest costs were slightly higher (1.5%), when compared with the previous year. We continued to take a careful and considered approach to the management of working capital. We had no requirement to draw down additional debt, other than for the capitalisation of water grid debt. Seqwater Annual Report

30 STRATEGIC OUTCOME AREA 6 Capable and innovative people Our people are our greatest asset. We know engaged and skilled employees enable a safe, efficient and effective operation. We concentrated on developing and implementing programs that gave our employees the support, tools and knowledge to deliver water for life every day. Working safely Safety is our priority. We are committed to the health, safety and wellbeing of everyone in the workplace. This year we continued to progress and improve our work health and safety program. We implemented a safety culture and behaviour program, featuring a variety of initiatives to encourage positive safety behaviours and help prevent unsafe acts in the workplace by addressing attitudes and beliefs through training, consultation and communication. In the second half of 2014, we launched Our Golden Rules. The Golden Rules provide the foundation for a strong and proud safety culture and help us to mitigate risk in our workplace. We developed a booklet to explain the rules to our workforce, and gave every employee a copy. Another initiative was our safety leadership training. In an industry first, we provided training that incorporated neuroscience to support safety culture and leadership discussions and help leaders to recognise and reflect on their behaviour preferences, with the aim of improving the way they engage with employees about safety. After senior leaders completed the training, we launched our safety walks program, which saw leaders regularly tour operational sites to talk about safety with employees. Improvements in our safety culture led us to achieve our lowest LTIFR in 10 years. In less than 16 months, we reduced our LTIFR from 11.1 to 4.7. Our award-winning health and wellbeing program also had a direct influence on employee injury management, with a focus on proactive return-to-work and rehabilitation support. We won Best Workplace Health and Wellbeing Initiative at the 2014 Queensland Safe Work Awards. This year we completed actions arising from a workplace accident in November 2010, when one of our apprentices received an electric shock after the system he was working on was inadvertently re-energised. Thankfully, the apprentice was not badly injured but the potential for serious harm, and the need to review the business systems and processes that should have prevented the incident, resulted in Seqwater entering into an Enforceable Undertaking with the Electrical Safety Office. As part of this undertaking, we committed to making a series of systemic improvements to our management of work health and safety. In February 2015, an independent auditor reported that our Safety Management System has been developed and implemented to a standard that is effective for managing Seqwater s health and safety risks in most circumstances, and is now trending towards continual improvement and even best practice in some areas. The auditor also commended us for a consistently high standard of infrastructure, amenities, facilities and hazard controls. Increasing capability We know how important it is to create an environment where employees are able to perform to the best of the abilities and encouraged to develop and extend their skills and knowledge. In , we consulted with our employees to develop our Core Capability Framework. 29 Seqwater Annual Report

31 The framework sets out the capabilities we need to deliver our strategic outcomes and drive success and engagement. Employees completed a Core Capability Assessment, giving us a foundation upon which to assess current strengths, and identify the areas where we can improve. Based on these assessments, we responded with development opportunities for employees. We also launched our online performance management system to create employee performance and development plans to help build capabilities. The system also enabled us to report on individual Key Performance Indicators across the business to ensure alignment with our strategy. In , we will introduce performance targets for all employees subject to our Enterprise Bargaining Agreement. This initiative will connect individual performance indicators with our strategic outcome areas and priorities. Planning for our workforce We are charged with delivering safe, secure and cost-effective water and catchment services to our customers today and into the future. We need to plan ahead to make sure we have the right people, with the right skills, working in the right place, at the right time. To continue to attract suitably qualified candidates, we implemented a Recruitment and Retention Strategy, which built on our 2015 Day in the life campaign and cemented our position as a regional employer of choice. We developed a Workforce Planning Framework to identify future staffing requirements. The framework was successfully piloted in several teams across the business, with a condensed version introduced during the annual budgeting and planning cycle. We will fully integrate the framework into the planning cycle in In , our establishment was 620 equivalent full-time employees and our permanent separation rate was 11.5%. In the year ahead, we will implement an online recruitment tool to build manager capability in the recruitment process and make hiring new staff more efficient. Fostering a savings culture We remain committed to challenging the way we operate to continually improve our business and drive efficiency. As part of the 2013 Enterprise Bargaining Agreement, a portion of wage increases was contingent upon savings targets being reached. Employees identified permanent savings throughout the year, achieving the required $266,507 in the first 6 months of the year to earn employees a 0.5% wage increase from 1 January 2015, and again achieving the required $496,605 in the second half of the year, with a resultant 1% pay increase for employees from 1 July With the attitude of every idea counts, over the course of the year our people came up with more than 30 individual savings initiatives, ranging from a few thousand dollars to $2 million. All made a difference to reducing the operating costs of our business and improving water affordability for our customers. Overall, staff-led saving ideas totalled $8.7 million. We will continue to look for ways to achieve efficiency and excellence in our work in the new financial year. Our savings target to qualify for the next contingent wage increase is $288,628 in the period 1 July 2015 to 31 December Designing our future We commenced implementation of an integrated operational structure late in the financial year. Designing our future is a 5-year plan to transition to an empowered and commercially competitive operations team that continues to deliver a safe and reliable water supply to customers. The plan establishes a framework to drive continuous improvement by: developing the skills and capability of our people putting in place an asset owner / operator model that allows progression to an operating team where we know we are competitive and can do our jobs better than anyone else can embedding a strong performance-orientated culture ensuring value for customers. Seqwater Annual Report

32 Our 2 operations groups have been brought together and streamlined to optimise the performance of our built assets and catchments. The structure is designed to deliver the right capability to achieve our strategic outcomes. The structure will be fully implemented in early Improving processes and systems Following Seqwater s establishment in January 2013, we acquired a host of legacy and depreciated systems from our predecessor organisations. As a result, we identified inconsistent business processes, data quality and integrity issues, system performance issues and inconsistencies and gaps in general controls for our information and communication technology (ICT) function. In , we delivered a portfolio of activities to improve business processes and system performance. This year we rationalised existing ICT assets and removed some of our redundant systems to reduce duplication and unnecessary complexity. The project matched the capacity of ICT assets to the identified needs of the business, both now and in the future. Finally, to support our safety program, we invested in a new site access and permit management system to manage access to, and work performed at, all Seqwater sites. The Permit Access Safety System (PASS) brings the existing 2 site access systems into a single integrated system. PASS will be fully implemented in The Better Business project is a 3-year program to improve business process management. Phase 1 established standards, methods, tools and education, and process hierarchy; identified current state processes; and documented a plan to improve key processes. We improved our ability to efficiently make informed decisions through the Business Intelligence project. By streamlining corporate reporting and delivering high quality data quickly and in an easily accessible dashboard format, we made great strides in improving the reporting and understanding of the data we hold, and how we can use it to make better business decisions. The Procure to Pay project enables the organisation to get the right price, from the right supplier, for the goods and services it procures. The project will reduce the cost and time required to procure from and manage contracts, streamline end-to-end activity, improve data quality and usability, and maximise our spend through preferred suppliers. Phase 1 delivered an upgraded shopping cart procurement tool and a more efficient process for replenishing critical spares for the inventory team. Phase 2, to be rolled out in , will address all end-to-end processes associated with the supply of goods and services to meet operational need. 31 Seqwater Annual Report

33 Delivering on the Statement of Obligations The following table demonstrates the alignment of our initiatives with the Statement of Obligations. Statement of Obligations Strategic outcome area section 4.1 Operational and All strategic planning 4.2 Water security Water and catchment services Integrated whole-of-industry approach initiatives We submitted the Operational Plan and Strategic Plan to Government. We finalised our first Water Security Program, including demand management measures, supply options and operating strategies. This involved: consideration of service obligations developed by the Department of Energy and Water Supply updating a long-term 30-year SEQ demand forecast in consultation with water service providers development of a preliminary adaptive drought response framework evaluating all possible supply and demand management options, including 131 supply options and 177 demand management options evaluating the bulk water supply system performance and ability to meet future demand, including peak demand resting ideas, approaches and evaluation results with an Independent Review Panel. We met regularly with the SEQ water service providers. The Partnership was consulted about the Water Security Program. The Partnership also progressed 21 initiatives, including: Future SEQ restriction regime and schedule Petrie water system reconfiguration Demand forecasting validation project Standalone community drought response principles Water Outlook for SEQ Meter accuracy project. We continued to support and maintain the Waterhub system for bulk billing processes and enable Seqwater to track water production trends. We reviewed the hosting service for this system and completed the successful transition to a new provider that will save about $100,000 a year. Seqwater Annual Report

34 4.3 Water quality Water and catchment services Integrated whole-of-industry approach We maintained a safe, high quality bulk water supply, complying with the requirements of the Australian Drinking Water Quality Guidelines and the Public Health Act We completed all required internal audits and risk assessment workshops for HACCP plans within the period. 4.4 Customers Water and catchment services As detailed above, we worked with our water service provider partners to undertake joint initiatives to drive greater value for customers. For irrigation customers, Seqwater continued to implement the QCA s irrigation pricing recommendations as directed under the Rural Water Pricing Direction Notice (No 1) New approved irrigation water prices were applied and the efficient costs underpinning those prices adopted. Annual customer consultation was undertaken and the annual network service plans were published on Seqwater s website. 4.5 Employees Capable and innovative people We implemented our Core Capability Framework, which identified the required behaviours for strategic success. We completed a capability review of all staff and identified opportunities to up-skill our workforce. We implemented an online performance management system to enhance the performance management framework. Within this system is a module that enabled all employees to create a development plan to build their capability. 4.6 Community Knowledgeable and engaged community Trusted and respected brand Water and catchment services Integrated whole-of-industry approach We undertook an annual employee cultural survey, with 86% of employees participating. We continued to make efficiencies and our competitive bulk water price submission to the QCA will see the common bulk water price be 12% lower than previously forecast in , benefiting all South East Queenslanders. We concluded our recreation review community consultation and implemented improvements to recreational access and facilities at our dams, lakes and parks across the region. 33 Seqwater Annual Report

35 We launched our Play it safe public education campaign, creating a greater public understanding of personal safety behaviours at our assets and the essential role Seqwater plays in the provision of water and the operation of recreational facilities. We engaged the community, issued notifications and communicated with the media about the February and May severe weather events. We took part in 35 community events, 12 education events and 7 industry events, and recorded more than 3,000 customer engagements as part of our community relations program. Our interactive visitor centres at Hinze and Wivenhoe dams saw more than 38,500 visitors and 13,800 visitors respectively. Almost 8,500 students and adults participated in learning experiences, tours, exhibitions and community events. We launched an updated Up a dry gully website, an online water resource centre for schools and the community. We commissioned independent research to inform community consultation on the Water Security Program, and conducted community focus groups to inform the development and delivery of the program. 4.7 Assets Water and catchment services We developed asset class plans for identified asset classes. The plans assisted in the establishment of the Asset Lifecycle Strategy in development for all Seqwater built assets. We developed the infrastructure improvement program, with more than 300 projects proposed, costing an estimated $118 million. The program provides for efficiency savings of a minimum of 5% through innovation in design and delivery, ranging from the reuse of equipment from decommissioned assets to bundling of similar works for contracting purposes. Seqwater Annual Report

36 Following February s severe weather event, we began urgent improvements to the damaged Dayboro and Kenilworth water treatment plants. Ultraviolet disinfection will be installed at both plants to ensure water quality. We developed and implemented an Asset Information Strategy, which clearly defines all of our information requirements, and a plan to collect asset information and as-constructed plans that describe our built assets. We developed a comprehensive governance framework for the management of ICT assets. Information assets are stored against a security classification and the core ICT systems have full audit capabilities to ensure unauthorised access is not granted. 4.8 Environment Water and catchment services No environmental harm events were recorded in We amalgamated environmental authorities into 3 regional approvals to streamline processes and standardise common conditions. This also reduced our annual return by 50%. We reviewed water treatment plant residuals (i.e. sludge) data content and sought re-classification under current waste legislation, to open up beneficial reuse and low cost disposal opportunities and provide information for the development of a waste management strategy. We continued to be an active member of the Healthy Waterways Partnership, providing membership and chairmanship to a number of panels, working groups and committees. Seqwater also provided both direct and in-kind funding support to Healthy Waterways to drive advocacy in waterway health. We joined the Resilient Rivers Initiative to improve catchment and waterway health. We maintained a targeted monitoring program to assess the quality of raw water supplies and identify water quality risks within catchments. We delivered more than 70 projects aimed at improving our knowledge of catchment-based risks to water quality and better targeting of investment in catchment improvements to ensure positive water quality outcomes. 35 Seqwater Annual Report

37 4.9 Safety and Emergency Management Capable and innovative people Integrated whole-of-industry approach Water and catchment services We continued the development and expansion of the Environmental Management System (EMS). The system now encompasses 22 sites and we achieved ISO14001 certification for an additional 4 water treatment plants. We finalised the implementation of all 37 Workplace Health and Safety Management System (WHSMS) procedures, to support our 2 policy statements and framework. We introduced safety leadership training to executives, managers and line supervisors. We achieved certification to AS4801 of 2 additional sites as part of the continued site accreditation of the integrated WHSMS. We conducted the biennial review of the Bulk Supply Emergency Response Plan, incorporating lessons learned during the past 2 years and emergency management good practice Governance Sustainable financial capacity Capable and innovative people We continued our comprehensive approach to emergency management - prevention, preparedness, response and recovery. This includes maintenance and capital works scheduling, supply system operation planning, seasonal threat assessments, business continuity planning, training, rehearsals, testing and incident investigation for continuous improvement. We maintained critical business functions during severe weather events and proactively prepared and responded to the escalated physical and cyber security risks surrounding the G20 Leaders Summit in Brisbane in November We continually improved our internal governance to ensure compliance requirements were met. We implemented new policies and procedures to meet governance requirements and business needs. Through an improved controlled document procedure, we improved operational efficiency. As of 16 September 2014, the responsible Ministers advised us that we were no longer required to comply with State Water Authorities Governance Framework, and should instead comply with 7 of the Government Owned Corporations Governance Framework guidelines. We selected high level governance obligations from its legislative and policy obligations, to be monitored and reported on centrally. Seqwater Annual Report

38 Corporate governance Good corporate governance encourages excellent performance, innovation and the generation of value, while providing high levels of accountability and risk management. In everything we do, we put our customers at the heart of our decision making. Our Board The Seqwater Board is responsible for the way we perform our functions and exercise our powers under the South East Queensland Water (Restructuring) Act The Board s role is to: set strategy and direction, and provide the governance framework for the organisation through the endorsement of financial, administrative and operational policies ensure we perform our functions and exercise our powers in a proper, effective and efficient way ensure strategic and operational planning objectives are achieved be accountable to the responsible Ministers for our performance review the annual performance of the Chief Executive Officer. Board members are appointed for 3 years. Mr Warren Traves was appointed as a Board member on 1 January 2013 and resigned as a Board member effective 31 July Mr Shane McGrath was appointed as a Board member on 18 December Board meetings were held monthly. In 2014, the Board s peformance was reviewed by an independent expert in effective governance. The Board discussed the review outcomes and implemented initiatives. The Board also conducted a self-evaluation survey and reviewed the results. The Chief Executive Officer and Executives performance is measured against Key Performance Indicators in line with the State Government Policy for Government Owned Corporation Chief and Senior Executive Employment Agreement. Board members Mr Noel Faulkner (Chairman) Noel has 38 years experience in utilities, combined with 10 years in government. He has led the integration of a number of large businesses in Queensland and Victoria. Noel has been involved in SEQ s water reforms since 2007, including leading the establishment of the distributor/retailer Queensland Urban Utilities. Noel has been a Board member of Unitywater, and the Chief Executive Officer of Queensland Urban Utilities, Powercor Australia Ltd, United Energy Ltd and Capricornia Electricity, as well as holding senior executive roles with Brisbane City Council. He is also the Chairman of Jacana Energy and Chairman of Mackay Water Advisory Board. Mr Michael Arnett Michael has extensive board and management experience in natural resources and professional services organisations, with significant experience in the corporate, commercial, mining and natural resources, banking, finance and securities sectors. Michael is a Board member of NRW Holdings Limited and Queensland Energy Resources Limited. He has sat on the Boards of Unitywater and New Guinea Energy Limited and is a former partner of international law firm Norton Rose, predominantly consulting in the mining, resources, and oil and gas areas. Ms Leith Boully Leith has many years experience in business and natural resource management, particularly water, at local, state and national levels. She is Chair of the Australian Water Recycling Centre of Excellence and serves on the Boards of Murrumbidgee Irrigation Limited and Isis Central Sugar Mill. She is also a Director of Australian Water Partners Pty Ltd. Leith was formerly Chair of Healthy Waterways. 37 Seqwater Annual Report

39 Mr Shane McGrath Shane is a civil engineer with more than 30 years experience in the water industry. He has extensive experience in senior leadership roles for asset creation and management of water supply infrastructure, including major dams, both in Australia and overseas. Shane is a Director of SGM Consulting, an executive member of the Australian National Committee on Large Dams, a member of the Dam Safety Committee of the International Commission on Large Dams, a Fellow of the Institution of Engineers and a Chartered Professional Engineer. Ms Jenny Parker Jenny has many years experience in the provision of governance of risk consulting services to government and corporate clients. She has been a partner with EY since 1999 and is currently the Oceania Risk Leader for EY. Jenny chairs the Audit and Risk Committee of the Department of the Premier and Cabinet and the Public Service Commission. She is a Fellow of the Institute of Chartered Accountants in Australia. Board Committees The Board has formed 2 standing Committees that meet at least quarterly: Audit and Risk Committee: Jenny Parker (Chair), Noel Faulkner, Leith Boully Investment and Procurement Committee: Michael Arnett (Chair), Noel Faulkner (resigned from this committee in May 2015) and Shane McGrath (appointed May 2015). All Board members are entitled to attend committee meetings. The Board may form other committees; however the Board has requested that any other matter be considered at a whole of Board level. Audit and Risk Committee The Audit and Risk Committee provided independent assurance and assistance to the Board on governance, risk and compliance frameworks and our external accountability responsibilities as prescribed in the Financial Accountability Act 2009 and Accounting Policy Standards. Our internal audit function regularly reviewed and tested the effectiveness of the system and reported to the Audit and Risk Committee. The Committee s duties and responsibilities are outlined in the Committee s Charter, and encompass oversight of compliance with all mandatory requirements of our corporate governance, including: financial statements risk management performance management external audit compliance reporting to the Board. The Committee observed the terms of the Charter and followed Queensland Treasury s Audit Committee Guidelines. During , the Committee considered amendments to and compliance with the requirements of the Committee s Charter and oversaw: the Enterprise Risk Management Framework fraud and corruption control activities, including recommendation to the Board of the annual Fraud and Corruption Control Plan the Delegations and Authorisation Manual and recommendation to the Board of amendments to same the annual budget process and financial reporting the subsidiary s financial reporting Queensland Treasury Corporation s management of Seqwater s debt pool Seqwater Annual Report

40 the internal audit function and considered associated reporting, including recommendation to the Board for approval of the Internal Audit Plan the external audit function and consideration of associated reporting. The Committee also considered our insurance program renewal and reviewed the Committee s performance during the previous period and associated reporting to the Board. Investment and Procurement Committee The Investment and Procurement Committee reviewed capital and operational investment and procurement decisions. The Committee ensured we met strategic, corporate and technical aspects of asset delivery and operational performance objectives, while managing the associated business risks and ensuring risk management systems were in place. The Committee s role, functions and duties are outlined in its Charter. The Committee: assesses and oversees implementation of a high quality asset investment plan consistent with the strategic plan oversees the development and implementation of asset delivery and non-infrastructure capital programs and maintenance program operations, in line with the strategic plan ensures strategic procurement objectives are developed and implemented through an annual strategy ensures compliance with the Queensland Procurement Policy oversees the establishment and monitoring of appropriate operations and service delivery targets for any long standing contracts. The Committee observed the terms of its Charter. During , the Committee: contributed to the development and finalisation of the Asset Portfolio Master Plan, which presents an integrated and optimised suite of infrastructure improvements needed to meet service requirements and manage risk over the next 15 years contributed to the development and finalisation of QCA submission elements related to asset management, including planning for and delivery of infrastructure improvements oversaw the infrastructure improvement program, including consideration of the dam portfolio risk assessment and recommended Board approval of same oversaw the delivery of the infrastructure improvement program, with a focus on efficient and effective outcomes oversaw the development of the infrastructure improvement program and recommended Board approval of same considered major capital investment and maintenance program business cases and critical supply contracts, including monitoring and control systems, asset upgrades, disposal of assets, and recommended approval by the Board was delegated authority to consider the approval of contracts up to a value of $10 million associated with Board approved projects considered proposed organisational changes involving the operations business units and underlying service delivery functions, the strategy for implementation of subsequent changes in commercial arrangements, and recommended Board approval of same reviewed the Committee s performance during the previous period and associated reporting to the Board. 39 Seqwater Annual Report

41 Meeting attendance 1 July 2014 to 30 June 2015 Board member Board meetings Special Board meetings Audit and Risk Management Committee meetings Investment and Procurement Committee meetings Special Investment and Procurement Committee meetings A B A B A B A B A B Mr Noel Faulkner Mr Michael Arnett Ms Leith Boully Mr Shane McGrath Ms Jenny Parker Mr Warren Traves 1 1 A = Number of meetings attended B = Number of meetings held / eligible to attend Notes: Warren Traves resigned as a Board member effective 31 July Shane McGrath was appointed as a Board Member effective 18 December Remuneration Board members are paid for their work on our Board and Committees. Board members are not remunerated for their role as directors of the Australian Water Recycling Centre of Excellence Ltd. Remuneration is as nominated by our responsible Ministers: Role Per annum Chairman $100,000 Board members $45,000 Audit and Risk Committee Investment and Procurement Committee Chair - $8,000 Members - $4,500 Related entities Seqwater is the host organisation for the Australian Water Recycling Centre of Excellence (AWRCE) Ltd. AWRCE is a national research organisation which aims to enhance the efficiency, expansion and acceptance of water recycling in Australia through industry, government and research partnerships. The centre is a company limited by guarantee, with Seqwater its sole member. AWRCE is funded by the Commonwealth Government as part of the National Urban Water and Desalination Plan. Seqwater participates in AWRCE research planning as a research partner, and provides limited non-financial administrative and organisational support. Seqwater Annual Report

42 Governance As a Government-owned statutory authority, we have Board approved governance arrangements, which reflect the governance requirements in relevant legislation and government guidelines. We provided quarterly and annual performance reports to our responsible Ministers and worked cooperatively with their relevant departments, Queensland Treasury and the Department of Energy and Water Supply. We also have a regulatory relationship with Queensland Health (under the Water Fluoridation Act 2008 and Public Health Act 2005). From time to time, the delivery of major water projects may require us to report, communicate or engage with other government departments. Risk We are committed to assessing and managing the risks that impact our business. To do this, we have developed a system of internal controls policies, procedures, processes and tasks designed to respond to operational, financial, compliance and other risks. The system aligns with AS/NZS ISO 31000: Risk Management Principles and Guidelines and meets the requirements of the Financial Accountability Act 2009 and the Financial and Performance Management Standard It is approved and overseen by the Audit and Risk Committee and the Board. We recognise the importance of organisational culture in the success of our risk management approach and we actively sought ways to embed risk based thinking into our business through training, targeted communications and assurance processes to check the controls we rely on are operating as intended. We have a Board approved commercial insurance program. As part of the annual insurance renewal process, we consulted with key stakeholders and reviewed the program s structure, including consideration of our Enterprise Risk Register and any emerging risks. This approach ensured our program aligned with our risk profile, and enabled us to obtain a fit for purpose program from the insurance market. We achieved reductions in premium costs through the prudent setting of policy limits and conditions, and selection of insurers. A similar approach will be adopted in Accountability We are committed to high standards of integrity, professionalism and accountability. To achieve our vision and deliver on our purpose, we developed strategies to guide what we do and values to guide how we do it. Our Code of Conduct outlines the standards of behaviour expected of our employees, contractors and Board members, and aligns these behaviours with our values. After updating our Code of Conduct in , we reviewed the Code in The review found the Code was well integrated into the business and working well. In , we will continue to embed our behaviours and values through annual education programs. We rolled out a compliance program in line with AS Compliance Programs. The compliance function reported regularly to the Board, the Audit and Risk Committee, the Chief Executive Officer and the Executive Leadership Team. Our Securities Trading and Investments Policy and Procedure and Executive and Senior Management Trading/Investment Policy were in place to guard against potential conflicts due to trading and investments by our officers and management. In May 2015, we surveyed employees to better understand their awareness of fraud controls and whistleblowing procedures, and to gather their thoughts on the effectiveness of our Fraud and Corruption Control Plan. Survey results were used to improve the plan. Internal audit Our internal audit function provided an independent, objective assurance function that added value and improved operations. Internal audits helped us to achieve our objectives by systematically evaluating and improving the effectiveness of risk management, internal control systems and governance processes. 41 Seqwater Annual Report

43 Core audit activities were conducted by an independent, specialist external service provider. The function operated in line with a Board approved Charter and was overseen by the Board and the Audit and Risk Committee. The Charter sets out a framework for internal audit to function independently, objectively and effectively and in a manner that aligns with Queensland Treasury s Audit Committee Guidelines, the Financial Accountability Act 2009, the Financial Performance Management Standard 2009 and the relevant aspects of the Government Owned Corporations Governance Framework. The annual Internal Audit Plan was developed and implemented with the status of audit recommendations reviewed quarterly and reported to the Board, the Audit and Risk Committee, the Chief Executive Officer and the Executive Leadership Team. In we completed a number of advisory and audit engagements that resulted in findings and recommendations to improve the overall efficiency and effectiveness of the internal control environment at Seqwater. Management worked with the internal audit team to develop robust action plans to implement these recommendations. Corporate entertainment We did not hold any single corporate hospitality event during that cost more than $5,000. Open data Information about consultancies and overseas travel will be published online in lieu of inclusion in the annual report. This information will be available on the Seqwater website (seqwater.com.au) and on the Queensland Government Open Data website (qld.gov.au/data). External scrutiny We strive to continuously improve our services and we welcome external scrutiny. This year we were 1 of 6 Queensland Government-owned water entities independently reviewed by the Queensland Audit Office (QAO). The resulting QAO report detailed its findings on the financial management practices of the 6 entities and recommended that the Department of Energy and Water Supply performance reporting framework used to measure the performance of the entities adopt the measures of financial sustainability used in the report. The QCA is the independent economic regulator of water services in Queensland and provided oversight of Seqwater s capital and operating costs. The QCA examined the costs and revenues of Seqwater and then recommended prices for safe, reliable supply of water at the lowest possible cost as part of its bulk water price review. See page 28. Seqwater Annual Report

44 Our organisational structure Our workforce is structured into 7 business groups, each led by a member of the Executive Leadership Team. Chief Executive Officer Office of the CEO External Relations General Counsel and Company Secretary Board Administration Fraud and Corruption Control Governance and Compliance Internal Audit Legal and Insurance Right to Information Water Supply Strategy and Policy Policy, Strategy, Research and Innovation Regulatory and Investment Governance Water Supply Planning Strategy, People and Safety Operations Dam, Catchment, and Water Treatment Operations and Asset Maintenance Flood Operations and Emergency Management Manufactured Water Contracts and Reporting Network Operations Water Quality, Environment, Recreation and Catchment Services Asset Portfolio Development and Delivery Asset Capability and Sustainability Asset Planning Engineering and Technical Support Information Communication and Technology Program Delivery Corporate Finance Brand and Customer Insights Corporate and Community Relations People and Culture Strategy and Risk Work Health and Safety Commercial Services External Audit Finance Property, Fleet and Facilities 43 Seqwater Annual Report

45 Executive Leadership Team Executives provide leadership and direction to our staff and ensure we meet our strategic priorities and legislative responsibilities. As at 30 June 2015, the Executive Leadership Team comprised: Mr Peter Dennis, Chief Executive Officer Peter has extensive water sector experience, providing leadership across Australia, the Asia-Pacific and New Zealand. A chemical engineer by profession, Peter has held executive leadership roles at both Hunter Water Corporation and Hunter Water Australia. In these roles there was significant focus on strategic planning, capital portfolio management, infrastructure planning and delivery, strategic operations and water resource management. Peter is a Fellow of Engineers Australia and a member of the Mackay Regional Council Water Advisory Board. Mr David Delaporte, Chief Financial Officer David is a Fellow of CPA Australia (FCPA), with more than 25 years experience in the resources, energy, water and manufacturing sectors. During the past 10 years, David served as CFO for Tinguiririca Energia Joint Venture (a hydroelectric joint venture based in Chile, South America) and Power and Water Corporation (Northern Territory). David has experience in management and statutory reporting, strategic planning, project finance and lender management, treasury and cash management, operational insurance, procurement, contracts, risk management and commercial activities. Ms Sally Frazer, General Counsel and Company Secretary Sally has been a lawyer for more than 25 years, with 13 years experience in the water industry. She has worked in both the private sector and State Government as a senior executive and lead departmental lawyer, with a focus on legal, governance, compliance, risk and company secretarial functions, as well as water infrastructure development. Most recently, Sally was the General Manager, Legal Services at LinkWater, where she was responsible for advising on all legal aspects of the water transportation infrastructure network, and also held the position of Alliance Board Member for the entities construction projects. Sally is also the Company Secretary for the Australian Water Recycling Centre of Excellence. Ms Alanna Herbst, Acting General Manager, Strategy, People and Safety Alanna is a motivated human resources management professional with more than 15 years experience in the utilities, customer service, distribution and construction industries. Alanna brings to the role a wealth of experience in change management, leadership, capability development, work health and safety, and industrial relations. Alanna has a passion for leading transformational change. Mr Jim Pruss, General Manager, Water Supply Strategy and Policy Jim has more than 20 years experience in the water industry. He previously led the former Water Delivery, Operations and Sustainable Water, and Asset Delivery groups within Seqwater. He was formerly with the Redland Shire Council, where he was General Manager, Water and Waste. Jim came to Queensland from New South Wales, where he spent 15 years in various roles at Sydney Water. Mr Daniel Spiller, General Manager, Asset Portfolio Development and Delivery Daniel has extensive experience in infrastructure planning, delivering complex projects, as well as a strong understanding of the region s integrated water assets. He was previously Seqwater s Manager, Water Supply and System Planning. His background includes time as Director of Operations for the SEQ Water Grid Manager and a period as Acting Chief Executive of the Queensland Water Commission. Mr Stan Stevenson, Acting General Manager, Operations Stan has extensive knowledge of the water grid, with more than 30 years experience in the water industry. He began his career as a wastewater treatment plant operator at the Albert Shire Council, before becoming the coordinator of water and wastewater treatment plants at Queensland s second large water utility, Gold Coast Water. Stan joined Seqwater in 2008 and has held operational management roles in the area of treated water across SEQ. Seqwater Annual Report

46 Realigning our operations functions In May 2015, we announced a new functional structure for our operations. This involved bringing our Treated Water, and Catchments and Raw Water groups together under one General Manager, Operations. The new General Manager, Operations, Mr Liam Tobin, joined us on 10 August He will lead an integrated operations structure and implement the 5-year Designing our future plan. The plan will see us build an empowered and commercially competitive operations team that continues to deliver a safe and reliable water supply to customers. The aim is to ensure we are doing our jobs from managing our catchments, dams and water treatment plants to moving water around the water grid better than anyone else can. 45 Seqwater Annual Report

47 Economic and financial performance We are committed to improved financial performance, taking a disciplined approach to financial management. We continued to deliver efficiencies in our operating costs, ensuring value for money and delivering solid customer and community service outcomes. Where does the money come from? ($805.1 million) Other revenue $8,960 Asset revaluation $15,409 Grants and contributions $14,376 Gains on asset disposal $5,186 Water sales $761,217 The majority (95%) of our revenue comes from water sales of 291,354 ML to council-owned water businesses, power stations and others. This was an an increase of 9% on restated* total revenue ($741.6 million). Income ($000) Where was the money allocated? ($1.034 billion) Total spending in was $1.034 billion compared to restated* total operating expenditure of $1.040 billion. Seqwater s payment of interest costs to service debts continues to account for more than half of Seqwater s operating expenditure. The next largest expense is depreciation and amortisation, recording the loss in value of long-term assets at 25% of expenses. The remaining funds represent our dedicated workforce costs and operating expenditure, as well as maintenance of the $11.9 billion in water supply assets to ensure ongoing operation and delivery of affordable bulk drinking water to the people of SEQ. Supplies and services $143,665 Depreciation $257,268 Expenses ($000) Employee expenses $79,069 Other expenses $10,206 Borrowing costs $543,879 *Refer to accompanying note 30 for details regarding the restatement as prior period adjustments. Seqwater Annual Report

48 What do we own ($12.4 billion) and what do we owe ($10 billion)? The current assets of $209 million principally represent liquid assets for day-to-day operating requirements, including trade and other receivables relating to the sale of water. Equity (assets less liabilities) $2,269,067 Current assets $208,812 Non-current assets are separated into core long term property, plant and equipment assets fundamental to the business, such as land, dams, water treatment plants ($12 billion) and intangible assets such as software licences. Our current liabilities are what we owe to trade creditors ($46.2 million), employee benefits ($10.2 million), our lender Queensland Treasury Corporation ($35.7 million) and others ($10.8 million) that are payable within a 12 month period. Non-current liabilities are long-term borrowing ($9.3 billion) from Queensland Treasury Corporation on our extensive asset infrastructure. Net deferred tax liabilities ($398.4 million) are a result of temporary differences between our accounting and tax carrying values, and estimated taxes payable for the current year. Non-current liabilities $10,016,081 Statement of financial position ($000) Current liabilities $103,914 Non-current assets $12,180,250 Financial summary ($000) ($000) (restated)* Total revenue $805,148 $741,585 Total expenses $1,034,087 $1,040,371 Earnings before interest tax (EBIT) $314,940 $237,530 Net result (loss) before tax ($228,939) ($298,786) Income taxation credit adjustment $66,867 $301,539 Increase/(decrease) in asset valuation surplus $123,806 $1,664,309 Total comprehensive income ($38,266) $1,667,062 Key financial ratios (restated)* Return on assets before tax (%) (1.88) (2.46 ) Return on assets after tax (%) (1.31) 0.02 Interest coverage (times) Debt to total assets (%) EBIT margin on revenue (%) * Refer to accompanying note 30 for details regarding the restatement as prior period adjustments. 47 Seqwater Annual Report

49 Government approved Seqwater s application for no payment of dividends or tax equivalents for due to the net loss before tax. The key financial ratios of continue to reflect the high gearing of Seqwater. The EBIT results reflect a combination of higher revenues and lower operational costs. Seqwater Annual Report

50 Financial report General information Abbreviations...51 Statement of Comprehensive Income...52 Statement of Financial Position...53 Statement of Changes in Equity...54 Statement of Cash Flows...55 Index to notes to the financial statements...56 Certificate of Queensland Bulk Water Supply Authority for the year ended 30 June Independent Auditor s Report to the Board of Queensland Bulk Water Supply Authority Seqwater Annual Report

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57 Queensland Bulk Water Supply Authority Index to notes to the financial statements 1. Reporting entity Basis of preparation Significant accounting policies Determination of fair values Water sales Employee expenses Supplies and services Other expenses Income tax Property, plant and equipment Intangible assets Impairment testing for cash generating unit Trade and other receivables Non-current assets classified as held for sale Tax assets and liabilities Cash and cash equivalents Interest bearing liabilities Employee benefits Trade and other payables Other liabilities Asset revaluation surplus by class Financial instruments Operating leases Capital and other commitments Contingencies Controlled entities Key management personnel and remuneration Related parties Economic dependency Prior period adjustments Seqwater Annual Report

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