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SYDNEY WATER ANNUAL REPORT 2004

ENVIRONMENTAL, SOCIALAND ECONOMIC PERFORMANCE

LETTER TO SHAREHOLDER MINISTERS

CONTENTS1 Who We Are

Our Vision, Values and Objectives2 Area of Operations Map3 What We Do

Our Services at a Glance4 About This Report5 Chairman’s Message 6 Corporate Plan Snapshot 20048 Managing Director’s Message

Summary Review of Operations9 Protecting Our Environment9 Water Conservation and Recycling12 Wastewater Management14 Recycling of Treatment By-products14 Stormwater Management15 Trade Waste Management16 Waste Minimisation17 Heritage and Natural Resource Management18 Energy Management19 Environmental Management Systems

20 Embracing Our Social Responsibilities20 Safe and Reliable Water Services22 Investing in the Community23 Affordable Access24 Open and Honest Relationships25 Improving Customer Service26 Protecting Health and Safety27 An Equitable Workplace

30 Ensuring Our Business is a Success30 Financial Performance34 Capital Expenditure and Maintenance35 Pricing Reform36 Social Program Activities37 Research and Development39 Managing Risk

40 Corporate Governance42 Board Members44 Organisational Chart45 Executive Team46 Sustainability Snapshot47 Assurance Statement48 Global Reporting Initiative Content Index51 Glossary and Shortened Forms52 Content IndexIBC Annual Report 2004 CD

Annual Report (PDF)Annual Report Appendix (PDF)Financial Statements (PDF)ESD Indicators and Environment Plan Report (PDF)Environmental Indicators Compliance Report (PDF)Annual Drinking Water Quality Report (PDF)

BC Contact Sydney Water

The Hon MR Egan MLCTreasurerMinister for State Development andVice-President of the Executive CouncilLevel 33Governor Macquarie Tower1 Farrer PlaceSYDNEY NSW 2000

Dear Treasurer and Minister

Report on performance for the year ended 30 June 2004

We are pleased to submit the Annual Report of Sydney Water Corporation for the year ended 30 June 2004, for presentation to Parliament.This year’s Annual Report again presents an integrated sustainabilityreporting format, covering the Corporation’s environmental, social andeconomic performance.The Annual Report was prepared in accordance with Section 24A of the State Owned Corporations Act 1989 and the Annual Reports (StatutoryBodies) Act 1984.The Financial Statements for 2003–04, which form part of the Annual Report, have been submitted to and certified by the Auditor-General of New South Wales.

Yours sincerely

Gabrielle Kibble David EvansCHAIRMAN MANAGING DIRECTOR

The Hon JJ Della Bosca MLCSpecial Minister of StateMinister for CommerceMinister for Industrial RelationsAssistant TreasurerMinister for the Central CoastLevel 30Governor Macquarie Tower1 Farrer PlaceSYDNEY NSW 2000

COVERSydney Water monitors the health of Second Ponds Creek atRouse Hill by sampling for macro-invertebrates after its ecologywas all but destroyed by urban development. The creek’s ecologyis recovering since development stabilised and is being assistedby the high quality of discharged effluent and its reduced volumefrom diversion to the Rouse Hill Recycled Water Scheme.

WHO WE ARE

OUR VISION, VALUES AND OBJECTIVES

1Sydney Water Annual Report 2004

Sydney Water Corporation (Sydney Water),the largest water services provider inAustralia, is responsible for meeting thewater and wastewater needs of more thanfour million people.Sydney Water is a State owned corporation,fully owned by the people of NSW and is amajor contributor to the State’s economy.Sydney Water employs 3,435 staff, hasassets worth over $11 billion and an annualcapital works program valued in excess of$500 million.

As a monopoly service provider, SydneyWater’s activities are governed by anOperating Licence, which is issued under theSydney Water Act 1994 and regulated by theIndependent Pricing and Regulatory Tribunal(IPART). Sydney Water is also accountableunder the State Owned Corporations Act1989.

VISIONSydney Water’s vision is to be a successfulbusiness that protects the environment andpublic health through the provision ofsustainable water services to thecommunities it serves.

VALUESSydney Water’s values underpin everythingit does. They are to:• respect people• deliver quality• care for the environment• be open and honest• be willing to learn, share and change.

OBJECTIVESTo realise its vision, Sydney Water pursuesthree equal, principal objectives:• protect public health• protect the environment• be a successful business.

TURNING VISION INTO ACTIONSydney Water’s vision, objectives and valuesare delivered via a strategic framework ofpolicies and plans that are coordinatedunder WaterPlan 21, the Corporate Plan, theStatement of Corporate Intent and theEnvironment Plan.WaterPlan 21 is Sydney Water’s long-termstrategic plan. It is designed to providesustainable water and wastewater servicesto meet the needs of the growingpopulations of Sydney, the Blue Mountainsand the Illawarra. It establishes clear goals:• clean, safe drinking water• sustainable water supplies• clean beaches and harbours• wise resource use• smart growth.Sydney Water’s 2003–2008 Corporate Plan isSydney Water’s medium-term strategic plan.It identifies corporate initiatives, actions andassociated performance measures for a five-year period and is designed to move the organisation forward to achieve its long-term goals.

The corporate initiatives for the CorporatePlan are:• balance water supply-demand and develop

new water resources• support Sydney’s growth through smart

development• reducing sewer overflows• achieve commercial sustainability through

efficient and cost effective serviceprovision

• develop the organisation’s capability todeliver new approaches

• manage catchment to tap water quality• operate and maintain water assets to

required standards• operate and maintain wastewater and

stormwater assets to required standards• biosolids management• deploy energy and greenhouse strategy.

An overview of Sydney Water’s performanceagainst the Corporate Plan in 2003–04 ispresented on pages 6 and 7.The Statement of Corporate Intent specifiesannual commercial performance targets.Information on Sydney Water’s commercialperformance begins on page 30.Sydney Water’s 2000–2005 EnvironmentPlan identifies ways to minimise impact onthe environment. The sustainability ofSydney Water’s operations is measuredthrough a suite of indicators. Performanceagainst these is summarised in theSustainability Snapshot on page 46.

Sydney Water has adopted an open, participatory and proactive approach to addressing social, economic and environmental responsibilities.

Broken Bay

Port Jackson

Botany Bay

Lake Illawarra

Lake Yarrunga

Sydney

GosfordWisemans Ferry

Palm Beach

HornsbyDee Why

ChatswoodBlacktown

Parramatta

Bankstown

Rockdale

SutherlandCampbelltown

Katoomba

Lithgow

Penrith

HelensburghStanwell Park

WollongongConiston

Shellharbour

Kiama

Gerroa

Fairfield

Liverpool

Mt. Victoria

Mittagong

Woronora River

Lake Burragorang

Shoalhaven

Kangaroo River

River

Woll

emi C

reek

Mac Donald

River

Colo

River

River

Hawke

sbury

Kowm

ung

Rive

r

Rive

r

River

Grose River

Nepe

an

Geor

ges

Coxs River

River

Wollondilly

Rive

r

Wingecarribee River

Cordeaux River

Avon

Riv

er

Riv

er

Nepe

an

Area of Operations

Cataract

AREA OF OPERATIONS MAP

2

WHAT WE DO

OUR SERVICES AT A GLANCE


Water ServicesSydney Water supplies more than 1.5 billionlitres of water to more than 1.6 millionhomes and businesses each day.Sydney Water buys water from the SydneyCatchment Authority (SCA), the organisationresponsible for bulk water supply in theGreater Sydney region. About 80 per centof our supply comes from theWarragamba Dam.The water is treated in accordance with theAustralian Drinking Water Guidelinesat 10 water filtration plants. Organic matter,sediment and minerals such as iron andmanganese are removed, the water isdisinfected with chlorine, and fluoride isadded to prevent tooth decay. The largestplant at Prospect treats approximately80 per cent of the water.Sydney Water then distributes the water to customers via a network of 260 servicereservoirs, 152 pumping stations and20,867 kilometres (km) of water mains.

Wastewater ServicesSydney Water collects and treats more than1.2 billion litres of wastewater from homesand businesses each day. Of this, more than39 million litres are recycled each day.The sewerage network services around1.6 million homes and businesses in theGreater Sydney region. It consists of23,014 km of sewer pipes in 28 separatesewerage systems with 31 SewageTreatment Plants (STPs).Wastewater collected in the seweragesystem flows to STPs where it is treatedbefore being reused or discharged to riversor oceans in accordance with strict licenceconditions issued by the Department ofEnvironment and Conservation (DEC).Around 76 per cent of wastewater isprocessed at the three biggest plants atMalabar, North Head and Bondi. The effectof discharges on water quality and aquaticlife is monitored every week to ensureperformance standards are met.Sydney Water has a number of waterrecycling schemes in place that help reducedischarges of treated wastewater to theenvironment and reduce demand onexisting and future water supplies.

Stormwater ServicesSydney Water is responsible for around 2 per cent of Sydney's trunk drainageinfrastructure, which provides stormwaterdrainage facilities to over 450,000 homesand businesses.These stormwater channels are mostlylocated in the south and south-westernsuburbs of Sydney, total 436 km in lengthand help minimise the pollution ofwaterways and mitigate flooding risks.Sydney Water also operates and maintainsstormwater pollution control devices, withapproximately 1,930 cubic metres ofrubbish and 1,567 tonnes of sedimentcollected by our gross pollutant andsediment traps in the past year.

+ Estimated population is based on the most recentinformation available from the Department ofInfrastructure, Planning and Natural Resourcesand relates only to properties serviced bySydney Water.

++ Average population for reporting period iscalculated from the figures at 30 June 2003 and30 June 2004, which equals 4,169,414.

∆ Updated in line with revised information providedby the Department of Infrastructure, Planning and Natural Resources. The revised figures arecalculated from the final Estimated ResidentPopulation provided by the Australian Bureau of Statistics.

* Property numbers are calculated using amethodology developed by Water ServicesAssociation of Australia, which records theindividual number of property connections to a Sydney Water water main.

# Does not include unfiltered water supplied to BHP.~ Total length of sewer or water mains in reporting

year is the total from previous year, plus newmains laid in the reporting year, plus the mainslaid data lag from previous year, minus mainsdisused during the reporting year.

A more detailed summary of Sydney Water’s principalstatistics for 2003–04 is available in the AnnualReport Appendix on the CD attached to the insideback cover of this report.

WATER SERVICES

2003–04 2002–03

Estimated population supplied by Sydney Water at 30 June+ 4,189,081 4,149,747∆

Properties with a water main available at 30 June* 1,661,394 1,637,656Quantity of water – potable and non-potable supplied 562,746 ML 634,742 MLPer person consumption per day based on average population for period++ 369 L 416 LAverage day’s potable consumption# 1,500 ML 1,701 MLMaximum day’s consumption 1,915 ML/d 2,494 ML/d

on 23 Sept 2003 on 31 Jan 2003Minimum day’s consumption 1,275 ML/d 1,330 ML/d

on 6 Dec 2003 on 2 Jan 2003

WASTEWATER SERVICES

2003–04 2002–03

Estimated population served by Sydney Water at 30 June+ 4,060,689 4,021,479∆

Properties for which a sewer was available at 30 June* 1,610,804 1,592,456Sewers laid during year 96 km 149 kmSewers laid data lag from previous year 64 km 98 kmSewers rehabilitated during year 65 km 118 kmTotal length of sewers owned and operated by Sydney Water at 30 June~ 23,014 km 22,868 km

STORMWATER SERVICES

2003–04 2002–03

Stormwater channels under Sydney Water control at 30 June 436 km 486 kmProperties with drainage available at 30 June* 456,808 443,958

ABOUT THIS REPORT

SYDNEY WATER’S SUITE OF PUBLIC REPORTS

4

This report details Sydney Water’senvironmental, social and economicperformance for the 2003–04 financial year.Specifically, this report:• reviews Sydney Water’s performance

against the Corporate Plan and recordsfinancial performance for the 2003–04financial year

• reviews Sydney Water’s performanceagainst its Ecologically SustainableDevelopment (ESD) Indicators andprogress towards its Environment Planactions and targets for the 2003–04financial year

• has considered the voluntary sustainabilityreporting guidelines developed by theGlobal Reporting Initiative (GRI), an officialcollaborating centre of the United NationsEnvironment Program.

Relationships to Other ReportsThe Annual Report 2004 is supported byspecialised reports that provide more detailed information on our performance in specific areas of operations.These reports are available on the CD attached to the inside back cover of this report and at the Sydney Water websitewww.sydneywater.com.au, Sydney WaterCustomer Centres and public libraries.

Listening to Your ViewsSydney Water welcomes comments on itsenvironmental, social and economicperformance.Please direct your feedback to:Email: [email protected]: Sydney Water Annual Report 2004,PO Box A53 Sydney South NSW 1232.

ÿAnnual Report Corporate Plan objectives Social, environmental and economic objectives

ÿFinancial Statements Financial performance

ÿESD Indicators and Environment Plan Report ESD Indicators and Environment Plan performance

ÿEnvironmental Indicators Compliance Report Environmental Indicators Monitoring Program performance

ÿAnnual Drinking Water Quality Report Drinking water quality performance

Specialised ReportsProvide detailed information on specific areas of Sydney Water’sperformance to regulators, key stakeholders and the general public

CHAIRMAN’S MESSAGE


The past year has been one of significantchange and challenges for Sydney Waterwith a new Managing Director, a worseningdrought, the introduction of mandatorywater restrictions and the pressures of agrowing population.Firstly I am pleased to welcome David Evanswho was appointed Managing Director inApril. David, who was previously ManagingDirector of Hunter Water, brings more than10 years of water management expertise tothe organisation.Sydney Water welcomes the development ofthe NSW Government’s Metropolitan WaterPlan 2004, which recognises that theachievement of a sustainable balancebetween supply and demand requires awhole of Government approach as well asthe assistance of the entire community.As Sydney’s population grows, more andmore people are sharing the same waterresources. Current population estimatesindicate that greater Sydney will grow to4.5 million people by 2011 and to almost4.9 million by 2021. To accommodate thisgrowth an additional 300,000 new houseswill be needed.Sydney Water continues to help manageSydney’s demand for water through acomprehensive demand managementprogram. In the past year, Sydney Water alsosponsored water smart industry awards,formed cooperative arrangements withdevelopers and contributed to thedevelopment of the Government’s BuildingAssessment Sustainability Index (BASIX),which now requires new homes to use40 per cent less water.By world standards, water storages inSydney are large on a per person basis,however, the severe drought conditionsexperienced over the past few years havehighlighted the need to permanentlyincorporate water conservation practicesand behaviours as part of our everyday life.Despite a significant commitment ofresources to the demand managementprogram and a 20 per cent reduction in perperson water use since 1991, the increasingpopulation’s demand for water continues to outgrow the available capacity of existing storages.In October 2003, level one mandatory waterrestrictions were introduced across Sydney,the Blue Mountains and Illawarra and inJune 2004 level two water restrictionscommenced, as Sydney’s dams droppedbelow half of their capacity.

To highlight the restrictions and encouragewater savings Sydney Water undertook anadvertising campaign throughout the year.Water Restrictions Patrols were introducedto enforce restrictions and supportresidential and business customers in the adoption of water saving practices.Customers responded positively withdemand for water dropping by more than70 gigalitres during the year compared to 2002–03.To improve the delivery of services tocustomers, provide infrastructure to service population growth and to ensurethat Sydney Water continues to satisfyenvironmental and safety standards$507 million was invested in capital worksduring the year.The Board of Sydney Water supports astrong focus on Occupational Health andSafety, as the safety of people is somethingwe are not prepared to compromise. Sadlythere were two tragic incidents at worksites, which resulted in the deaths of twocontractors. A thorough review of our riskand safety procedures was carried out andsome new procedures developed andfurther training undertaken.I was also deeply saddened at the passing offellow Director, Jim Grant. Jim brought agreat deal of experience and commitmentto his role as a Director of the Board and asChairman of the Audit, Risk, Finance andMajor Projects Committee. His support andfriendship will be greatly missed.On behalf of my colleagues on the Board I would like to thank the management andstaff of Sydney Water for their continuedcommitment and focus and our customersfor their ongoing support, especially duringthe current drought conditions.

Gabrielle KibbleCHAIRMAN

“Sydney Water continues to help manage Sydney’sdemand for water through a comprehensive demandmanagement program.”

6

CORPORATE PLAN SNAPSHOT 2004Corporate Initiatives Action Measure

Support Sydney’s growththrough smartdevelopment

Develop and communicate a smart growth strategy inpartnership with stakeholders.Integrate smart growth into internal planning processes.

Develop practical smart growth solutions and work withdevelopers to incorporate practices into mainstream projects.

Strategy and action plan developed and communicated to staff.

Sustainability tools incorporate the principles of smart growth and used for growth areas.New business opportunities with smart growth components.Implement smart growth pilot projects.Number of new developments incorporating smart growthcomponents.

Reducing sewer overflows Improve sewerage system performance to meet licencerequirements and customer standards.

Review sewer overflow abatement program.

Enhance system planning and analysis.

Dry weather overflows from licensed sewage pumping stations.

Less than 60 chokes per 100 km per EPA licences.

Customers’ properties affected by overflows.Program objectives and outcomes reviewed and changesimplemented.Number of sewer catchment area management plans.

Achieve commercialsustainability throughefficient and cost effectiveservice provision

Reduce costs and increase efficiency by implanting a commercialreform program.

Prepare and communicate Sydney Water’s pricing framework forthe 2005 Pricing Determination.Increase revenue generated from non-regulated sources.

Savings in delivery of capital program.

Savings in delivery of operating program (per property).Pricing framework prepared and stakeholders accept Sydney Water’spricing framework. Progress against IPART determination targets.Revenue generated by Australian Water Technologies.

Develop the organisation’scapability to deliver newapproaches

Improve Sydney Water’s capability to deliver innovation andincrease the availability of information.

Enhance internal and external customer focus to help ensurethe needs of customers are understood and met.

Strengthen health and safety.

New business innovations captured and implemented. Knowledgemanagement activities in place in line with KnowledgeManagement Strategy.2004 Annual Residential Customer Survey:

• Customer trust in Sydney Water out of 10• Customer satisfaction with tap water quality• Customer satisfaction with sewerage services.

Number of Customer complaints.Regulators’ satisfaction index survey.Employee perception index – job satisfaction.Lost time injury frequency.

Manage catchment to tapwater quality

Maintain drinking water quality by complying with AustralianDrinking Water Quality Guidelines (ADWQG) and deliveringrequired asset renewals.

Compliance with ADWQG (health related).Disinfection residuals targets met.Filtered water turbidity targets met.

Operate and maintainwater assets to requiredstandards

Effectively operate and maintain the water system, includingdevelopment of network models and information tools to helpdeliver asset renewals and maintenance.

Water main breaks and leaks per 100 km.

Customers’ properties affected by unplanned critical waterinterruptions.Planned maintenance completed.

Operate and maintainwastewater andstormwater assets torequired standards

Meet EPA requirements for wastewater and stormwater andmaintain high level asset performance.

Phosphorus and nitrogen from Hawkesbury–Nepean STPs (kg per day).

Deliver responsibilities under stormwater management plans.Critical planned maintenance completed.

Biosolids management Implement key projects in biosolids strategy, expand biosolidsactivities into new markets (including energy recovery) andidentify new biosolids technologies that improve programefficiency and effectiveness.

Captured biosolids beneficial reuse.

Grade A stabilised biosolids produced.Market diversification plan developed.

Deploy energy andgreenhouse strategy

Develop and communicate an energy and greenhouse strategyand energy management plan with input from relevant internalstaff and external stakeholders.

Energy and greenhouse framework and energy managementplan developed.Renewable energy generated.Renewable energy used (per cent).

Balance water supply-demand and develop newwater resources

Contribute to a whole of government sustainable water strategyfor Sydney.Continue water conservation program to meet demandmanagement targets.

Maximise recycling opportunities to help balance water supplyand demand.

Influence new Operating Licence to achieve regulationsupporting sustainable water.

Strategies and options developed and acceptable to stakeholdersand Sydney Water.Program delivers expected outcomes (total ML per day water use reduction).Active leakage reduction (ML per day water conserved).

Wastewater reuse (per cent of total wastewater treated).Deliver planned recycled water schemes.Preferred positions on key issues developed.


Performance at June 2004 Comment

Underway or complete.

Plumbing guidelines and Asset Creation processrevised for BASIX.AUSTRALAND agreed to a joint investigation intoonsite treatment opportunities.

Negotiations underway for an agreementwith LANDCOM.

Priority projects substantially completed or underway. Communications complete.

Complete.

Sydney Water to seek R&D funding for operation and maintenance of onsite facilities to monitorperformance.

Agreement will focus on short to medium-term LANDCOM projects that can be used to exploreintegrated water solutions.

3 overflows

10 catchments cleaned, 8 complied

19,612 propertiesOngoing

11 completed

Department of Environment and Conservation (DEC) advised no further action would be taken over these incidents as they were caused by power outages outside Sydney Water’s control.Performance has been impacted by accelerated tree root regrowth as a result of prolonged droughtconditions. This indicator is likely to be amended pending discussions with DEC.

Operating Licence standard is less than 25,000 properties per annum.Review to date confirmed Sydney Water’s original approach. Further review pending.

Discussions ongoing with DEC with a view to amend the requirements to focus on impacts on waterways.

IPART target achieved.

$284 per propertyProject plans implemented for 2005 pricingdetermination.$22.8 million

Total expenditure for price path estimated to be below 2.3% as forecast in the IPART determination.

Betters the 2002–03 result by 7% and the IPART determination target by 2%.Performance against IPART determination targets to be accessed as part of the Efficiency Review of Sydney Water’s capital and operating expenditure.This is an increase on the 2002–03 result of $16 million.

Innovations Awards Scheme implemented.

6.888%83%49,162Survey not undertaken.70% positive9.7

The Knowledge Management and Innovation Program is under review within Sydney Water’s overall organisational change program.

A decrease from 7.2, a likely response to ongoing drought and mandatory water restrictions.

Satisfaction result for tap water and the sewerage system remained steady during the year.

Betters 2002–03 result with a reduction of 8,589 complaints.

An increase from the 2002 survey that showed 66% of employees had positive job satisfaction.Result reflects Sydney Water’s ongoing commitment to the health and safety of its employees.

99.75%94.2%100%

Drinking water quality continues to comply with the ADWQG.Good microbiological performance was maintained in all systems during the year.All water filtration plants complied.

37.6

16,345

100%

Performance reflects a return to a level in line with the long-term trend due to stabilisation of ground movement as the drought has progressed.

Operating Licence standard of less than 35,000 properties per annum was met.

All critical planned maintenance was completed to schedule.

Phosphorus 33 kg per dayNitrogen 1,195 kg per day Delivered to schedule.100%

The STPs are performing well within the licence limits.

Operating Licence responsibilities for stormwater services during the year met.All critical planned maintenance was completed to schedule.

99.8%

49% capacityCompleted as planned.

Currently reviewing the need to produce Grade A product as investigations showed Grade B product issufficient to meet customers’ needs.

Completed as planned.

1,297 MWH in June 046.5%

Trend is improving.Trend is improving.

Completed contribution to Metropolitan Water Plan 2004.80.6 ML per day

41.5 ML per day

3.2%

General licence sections agreed.

Sydney Water has actively participated in the development of the NSW Government’s Metropolitan Water Plan 2004.Sydney Water runs Australia’s largest urban water conservation program.

Future target will be set following completion of analysis on the economic level of leakage.Sydney Water inspects 7,000 km of water mains each year.

Represents total annual volume of 14 gigalitres including reuse at STPs, irrigation and urban schemes.Recycled water scheme at BlueScope Steel due for completion by June 2005.Licence updated in line with Sydney Water objectives. Agreement on performance indicators and supply-demand licence sections pending.

MANAGING DIRECTOR’S MESSAGE

8

Sydney is a global city. While significantcapital investments have been made overthe past two decades to meet improvedenvironmental standards and risingcommunity expectations, Sydney Waterfaces additional challenges as thepopulation continues to increase and thedemand on our resources grows.New residents need to be provided with thesame high level of services as existingresidents while improvements to ourwaterways are maintained. We also need tocontinue to work closely with governmentand the community in managing thedemand and supply of water.In a year dominated by severe droughtconditions, Sydney Water undertooksignificant initiatives via its comprehensiveDemand Management Program to achieve areduction in water consumption.Sydney Water’s Demand ManagementProgram is the largest delivered by anAustralian utility and one of the mostdiverse urban demand reduction programsinternationally. During the year, significantwater savings were achieved throughcustomer education, business partnerships,residential retrofits and rebates as well asthrough our Active Leakage ReductionProgram and water main renewals.Leak reduction and proactive identificationof leaks has never been more importantthan during this current period of prolongeddrought. As a result of the work undertakento date on our Active Leakage ReductionProgram water lost through leakage hasfallen from 10.7 to 9.3 per cent. Since theprogram began in 1999, we have checkedmore than 80 per cent of the network forleaks and are saving more than42 megalitres per day from the subsequentrepair of these leaks.Through our demand managementprograms we are saving an estimated29 billion litres of water per year, which isequivalent to the water demand of about118,000 households.To conserve water Sydney Water has alsodeferred all precautionary water mains andreservoir cleaning until the drought is over.However, we still have a responsibility toprovide high quality drinking water to ourcustomers and to protect public health. Tomeet these objectives we need to carry outsome essential activities, such as flushingwater mains following repair work.

Sydney Water also recycles 14 billion litres ofwastewater per year and is activelyinvestigating future recycled water markets.As part of the Illawarra WastewaterStrategy, Sydney Water will by mid 2005 beproviding BlueScope Steel with 20 millionlitres of recycled water per day. This will bethe largest industrial wastewater recyclingscheme in Australia and will result in justover 4.6 per cent of Sydney’s wastewaterbeing recycled. It will also save 7,300 millionlitres of drinking water each year – whichwould otherwise have come fromAvon Dam.Sydney Water aims to protect both publichealth and the environment throughminimising sewage overflows from ournetwork. The SewerFix program, which aimsto dramatically reduce dry and wet weatheroverflows, this year delivered an $80 millionprogram of works to upgrade sewagepumping stations across Sydney. Thebenefits of this investment have recentlybeen demonstrated by a fall in propertiesaffected by sewage overflows.Despite the continuing drought, theNorthside Storage Tunnel operated 17 timesduring 2003–04, preventing over 1.7 billionlitres of diluted sewage from enteringSydney Harbour. On three of theseoccasions, the tunnel prevented dry weatheroverflows at Shelly Beach due to powerfailures impacting the Shelly BeachPumping Station. Since its commissioning,the Northside Storage Tunnel has operated61 times and stopped around 12.3 billionlitres of diluted sewage from enteringSydney Harbour.With the water industry under increasingscrutiny from our customers I am pleased toreport that customer complaints aboutwater quality fell in the past year by 25 percent. This is on top of the 15 per cent fall incomplaints for each of the two previousyears. The reduction in complaints isreflected in Sydney Water maintaining itshigh level of customer satisfaction with thecore products and services of water andwastewater. Annual research reported that88 per cent of residential customers aresatisfied with their tap water, while 83 percent are satisfied with sewerage services.In addition Sydney Water’s Contact Centrewas awarded, for the second consecutiveyear, the Teleperformance Grand Prix Awardfor the best Call Centre in the Public Serviceand Utilities sector. The Contact Centre wasalso placed in the top five across all sectors– public and private. This is excellentrecognition for the ongoing dedication ofstaff in a key frontline function.

Over the coming year, Sydney Water will need to continue to drive operatingefficiency and performance and adapt tochanging circumstances and expectationsfrom both the community and our regulators.I am confident Sydney Water is well on theway to establishing a strong commercialfoundation to ensure we providesustainable water and wastewater servicesfor Sydney’s growing population into the future.I thank everyone for welcoming me toSydney Water and look forward to workingwith the Board, management and staff in what will be a challenging yet excitingtime ahead.

David EvansMANAGING DIRECTOR

Sydney Water Annual Report 2004 9

SUMMARY REVIEW OF OPERATIONSProtecting Our Environment

SYDNEY WATER IS COMMITTED TO PROTECTING THE ENVIRONMENT BY CONDUCTING ITS OPERATIONS IN COMPLIANCE WITH THE PRINCIPLES OF ECOLOGICALLY SUSTAINABLE DEVELOPMENT.

WATER CONSERVATION AND RECYCLINGSydney Water’s Operating Licence requires itto take action to reduce the demand forwater and to meet specific per person wateruse targets. The focus of Sydney Water’sdemand management program is to work inpartnership with the community to reducewater use, harvest and reuse alternativesources of water and recycle wastewater.

Water UseThe residential sector accounts for thegreatest water use, representing 70 per centof total customer demand during 2003–04,with the average single household wateruse around 825 litres per day, or 275 litresper person for an average three personhousehold.Sydney Water monitors progress towardsencouraging efficient water use andincreasing recycled water use by customers.Daily per person water use has fallensignificantly over the past decade, from 506litres in 1991–92 to 369 litres in 2003–04.This decrease is due to reduced industrialdemand, the introduction of user payspricing, changes in the housing mix,increased use of water efficient fittings andwater restrictions.

Unaccounted For WaterUnaccounted for water is the differencebetween the volume of water released fromall water storage reservoirs and the meteredvolume of water delivered to customers, lessan estimate of the relatively small volume ofunmetered but legitimate water use. Wateris lost from the water system through leaksin pipes, water theft and meters that underrecord customers’ water use.The percentage of unaccounted for water as a proportion of total system releases hasfallen steadily over the past decade to11.7 per cent during 2003–04. Real losses orsystem leakage during the year was 9.3 percent, a reduction from 10.7 per cent in2002–03.

Water RecyclingWater recycling helps to reduce the demandfor potable water. It also helps Sydney Waterto reduce discharges of wastewater tooceans and rivers and to manage this wateras a resource instead of a waste.Sydney Water currently operates majorrecycling schemes at Rouse Hill (residentialreuse for more than 15,000 homes),Dunheved, Richmond, Ashlar, Castle Hill andKiama Golf Courses, Warwick Farm RaceCourse, the University of Western Sydney(Hawkesbury Campus), Picton and Gerroa(agricultural reuse).

More detailed information on SydneyWater’s environmental performance is presented in the ESD Indicators andEnvironment Plan Report 2003–04 and the Environmental IndicatorsCompliance Report 2003–04, which areavailable on the CD attached to theinside back cover of this report. Bothreports are also available online atwww.sydneywater.com.au

< 46% Residential single dwelling< 16% Residential multi-unit< 2% Apparent losses*< 9% Real losses< 8% Government and other< 9% Commercial< 10% Industrial

BREAKDOWN OF TOTAL WATER SUPPLIED 2003–04 DAILY WATER DEMAND PER PERSON JUNE 1991 TO JUNE 2004*

300

350

400

450

500

550

<Per capita trend <Climate corrected trend<2005 target <2011 target

Litre

s per

capi

ta p

er d

ay (L

CD)

* Apparent losses = Unauthorised consumption plus metering inaccuracies.

Mandatory Water Restrictions1 Nov 1994 to 16 Oct 1996

Voluntary Water Restrictionsfrom 15 Nov 2002

Mandatory Water RestrictionsLevel 1: 1 Oct 2003Level 2: 1 Jun 2004

Observed 369 lcd at 30 Jun 2004

Climate Corrected 367 lcd at 30 Jun 2004

June

199

1

June

199

2

June

199

3

June

199

4

June

199

5

June

199

6

June

199

7

June

199

8

June

199

9

June

200

0

June

200

1

June

200

2

June

200

3

June

200

4

* 12-month average litres per day.

Protecting Our Environment

10

Achievements• Total water system releases for 2003–04

were 562,746 ML, well below thesustainable yield of 600,000 ML.

• An 11.3 per cent reduction in waterdemand was recorded, largely due tovoluntary and mandatory waterrestrictions and educational campaignssuch as Go Slow on the H2O.

• The Demand Management Strategy hasachieved estimated water savings of29,405 ML per year since 1999. This isequivalent to the annual water demand of118,000 households.

• Water saving devices were installed in28,892 households under the subsidisedResidential Retrofit program. Since 1999,233,927 homes have been serviced,resulting in water savings of 4,889 ML per year.

• The water efficient Washing MachineRebate Program provided rebates to 6,545Sydney Water customers. This represents118 ML of water savings per year. Theresulting increase in market share of waterefficient machines could see potentialsavings of 3,700 ML per year by 2011.

• The Rainwater Tank Rebate Schemecontinued with 3,532 applications receivedand 3,185 rebates paid to customers.The rainwater tank rebate program isestimated to have reduced water use by160 ML per year and will continue untilJuly 2008.

• Sixty-two customers joined the Every DropCounts Business Program, bringing thetotal participants to 206. At 30 June 2004,program participants had achieved watersavings of 11.8 ML per day or 4,315 ML peryear.

• The percentage of water lost throughleakage has fallen from 10.7 to 9.3 percent, placing Sydney Water in the top30 per cent of major world cities forleakage control performance.

• The Active Leakage Reduction Programachieved water savings of 41.5 ML per dayor 15,148 ML per year. The program aimsto deliver water savings of around 60 MLper day by 2005–06 by detecting andrepairing leaks in the 21,000 km of SydneyWater’s underground water pipes.

• Recycled water use increased by 2.8 ML perday to an average of 39.1 ML per day.

Challenges• The progress made by the Demand

Management Program has been offset bythe effect of drought, continued strongeconomic and housing growth and higherthan predicted population growth.

• Under normal operating conditions withno water restrictions, Sydney Water wouldnot expect to meet the 2005 total and perperson demand targets, due to factorsinfluencing demand beyond theorganisation’s control.

Next Steps• Aim to inspect at least one third of the

entire water main network in 2004–05 forhidden leaks and schedule them for repair.

• Continue to deliver residential retrofit andtargeted business programs. This includesretrofits in residential and public housingfor 30,000 households in 2004–05.

• Work with the NSW Government indeveloping the Metropolitan Water 2004,a long-term adaptive strategy to ensurethat water supply and demand is balancedin a sustainable manner, at the least costto the community.

• Support reform options including pricingreforms, appliance rating, labelling andminimum performance standards, urbanplanning regulation and building codesand limiting outdoor water use.

• Deliver new recycled water schemes atBlueScope Steel, Port Kembla and NorthHead Sewage Treatment Plants. Continueexpansion of the recycling scheme atRouse Hill to meet the growth needs inthis area.

10

11

12

13

14

15

16

17

18

19

20

UNACCOUNTED FOR WATER JUNE 1993 TO JUNE 2004

June

199

3

June

199

4

June

199

5

June

199

6

June

199

7

June

199

8

June

199

9

June

200

0

June

200

1

June

200

2

June

200

3

June

200

4

1950

1955

1960

1965

1970

1975

1980

1985

1990

1995

2000

2004

<Sustainable yield <Total supplied<Population

Unac

coun

ted

for w

ater

(%)

0

100

200

300

400

500

600

700

800

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

Popu

latio

n su

pplie

d (m

illio

ns)

Tota

l ann

ual s

uppl

y (‘0

00)

TOTAL SYSTEM RELEASES COMPARED TO POPULATION GROWTH 1950 TO 2004

ACCUMULATED SAVINGS FROM DEMAND MANAGEMENT PROGRAMS 1999–00 TO 2003–04

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

<Residential indoor <Residential outdoor

<Business program <Leakage reduction<Recycled water

ML p

er ye

ar sa

ving

1999

–00

2000

–01

2001

–02

2002

–03

2003

–04

Sydney Water’s Demand Management Programfocuses on working in partnership with thecommunity using a combination of education and incentives to reduce water use.Behavioural change eg, shorter showers,turning off running taps, is a key factor inreducing water use but needs to be combinedwith other long-term sustainable measures such as water efficient fixtures and fittings to improve water efficiency.The Residential Retrofit Program targetsresidential water use in showers, toilets and tapswhich are among the largest end uses of water,accounting for about 39 per cent of customerdemand, or around 200,000 ML per year.

The program offers householders the opportunityto have a qualified plumber visit their house toprovide a water efficiency ‘tune-up’. The serviceincludes installation of a 3A-rated showerhead,tap flow regulators, a toilet cistern flush arrestorand the repair of minor leaks.During 2003–04, most areas across Sydney wereoffered the program for a second time and somesuburbs received a third round offer. During theyear, an additional 28,892 households receivedthe service, which delivered around 600 ML peryear in potable water savings.Total retrofits to 30 June 2004 numbered 233,000,providing long-term water savings of 4,900 MLper year. A statistical study of propertiesretrofitted since 1999 has shown the impactof a retrofit does not diminish over time as thesehouseholds continue to save on average20,900 litres per year.

The program continues to target suburbsprioritised by a combination of large householdsize, high water consumption, high water supplyand wastewater treatment costs. Increasingemphasis is being placed on modifying themarketing of water efficient fixtures and fittingsto attract specific demographic groups with lowparticipation in the program to date.

CASE STUDYRESIDENTIAL RETROFIT PROGRAM

A Sydney Water contract plumber installing a water efficient showerhead as part of a residential retrofit.



12

WASTEWATER MANAGEMENT

Sewage Treatment Plant PerformanceThe level of treatment at each of SydneyWater’s 31 sewage treatment plants (STPs)is designed to meet the environmentalrequirements specified in the SewageTreatment System Licences issued by theDepartment of Environment andConservation (DEC) and to facilitatewastewater reuse where opportunities exist.

Sewage Transport System PerformanceEach of Sydney Water’s 28 sewerage systemshas overflow points that act as safety valves.They are designed to protect public healthby preventing sewage backing up intohouses and businesses.

Improving Sewerage Services in Unsewered AreasThe NSW Government’s Priority SewerageProgram (PSP) was introduced in 1997 toaddress concerns about the impact onwater quality from unsewered suburbs,towns and villages. Under the program,Sydney Water is progressively deliveringsewerage services to priority areas.

Achievements• There were 16,915 field-verified overflows

from the sewerage systems, a decrease of14 per cent from 2002–03.

• Sydney Water exceeded the OperatingLicence target of 96 per cent for customerswith no sewage overflows on theirproperties (98.9 per cent unaffected).

• Sydney Water’s Operating Licence requiresthe number of private properties reportedas affected by dry weather uncontrolledsewage overflows to be no more than25,000. Sydney Water met this target with19,612 affected properties reported.

• Under the SewerFix Pipes Program, whichaims to reduce sewage overflows, 518 kmof sewers were cleaned and 65 km ofsewer mains were relined.

• During the year, 83 sewage pumpingstations were upgraded, bringing the totaladdressed under the SewerFix PumpingStations Program to 259. The upgradesreduce the risk of dry weather overflowsdue to pump failure. In addition,$13.5 million was spent during the yearinstalling IICATS telemetry at sewagepumping stations.

• The Northside Storage Tunnel (NST)operated 17 times, preventing over 1.7 billion litres of diluted sewage fromentering Sydney Harbour. Since the NSTwas commissioned, there has been asubstantial reduction in bacteria levelsnear the overflow locations during wetweather events with an estimated 12.3 billion litres of diluted sewagestopped from entering Sydney Harbour.

• The nutrient loads discharged from inlandSTPs to the Hawkesbury–Nepean Riversystem were reduced – phosphorus by 19 per cent and nitrogen by 6 per cent.All inland STPs complied with nutrientload licence limits. This is a direct resultof upgrades to inland STPs.

• Odour complaints from coastal STPs fell by28 per cent, due to the completion ofmajor odour abatement works andimproved management practices.

• Construction commenced on sewerageschemes at Belimbla Park and Jamberootownships.

SUSPENDED SOLIDS DISCHARGE FROM COASTAL TREATMENT PLANTS 1994–95 TO 2003–04

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

1994

–95

1995

–96

1996

–97

1997

–98

1998

–99

1999

–00

2000

–01

2001

–02

2002

–03

2003

–04

<Suspended solids <Flow (ML)

Susp

ende

d so

lids l

oads

(ton

nes)

Flow

(ML)

0

100,000

200,000

300,000

400,000

500,000

PHOSPHORUS DISCHARGED FROM INLAND TREATMENT PLANTS 1994–95 TO 2003–04

0

5

10

15

20

25

30

35

40

1994

–95

1995

–96

1996

–97

1997

–98

1998

–99

1999

–00

2000

–01

2001

–02

2002

–03

2003

–04

<Total phosphorus <Flow (ML)

Tota

l pho

spho

rus l

oads

(ton

nes)

Flow

(ML)

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000


Challenges• The suspended solids load discharged in

2003–04 was 52,133 tonnes, a marginalincrease from 51,457 tonnes in 2002–03.Despite the increase in suspended solidsloads discharged from ocean STPs, therewere improvements at North Head, downby 9 per cent, Cronulla, down by 9 per centand Shellharbour, down by 49 per cent.All ocean STPs complied with suspendedsolids load licence limits.

• One Pollution Reduction Program was notmet during 2003–04. Delivery of Stage 1of the Illawarra Wastewater Strategy wasdelayed with completion now anticipatedfor March 2005.

• During the year, only eight of the 10 sewercatchments cleaned in 2002–03 met thelicence target of having fewer than 60 chokes per 100 km of main. Whilstthis is an increase from last year’sperformance, the result has been impactedby accelerated tree root regrowth due to prolonged drought conditions. Thisindicator is likely to be amended pendingdiscussions with DEC.

Next Steps• Complete delivery of Stage 1 of the

Illawarra Wastewater Strategy, which willsee the transfer of dry weather flows fromBellambi and Port Kembla STPs to theupgraded Wollongong STP by 2005.

• Commence Stage 2 of the IllawarraWastewater Strategy including BlueScopeSteel reuse component.

• Commence amplification of theShellharbour STP to ensure increased flowsare catered for in this rapid-growth area bymid 2006.

• Deliver IICATS telemetry upgrades for 148sewage pumping stations over the nexttwo years to reduce the risk of dry weatheroverflows and improve response capability.

• Deliver all work under Liverpool STPUpgrade – Stage 4a (formerly Stage 1 ofthe Georges River Project) by late 2004.

• Progress construction in the NorthernIllawarra Towns Sewerage Scheme withresidents of Otford and Stanwell Tops toprogressively connect from late August2004. Construction is expected to becomplete by the end of 2004.

• Complete the upgrade of the RichmondSTP to service growth and improverecycling opportunities with RichmondGolf Course and the University of Western Sydney Hawkesbury Campus by early 2005.

• Commence upgrading the West CamdenSTP to ensure increased flows are cateredfor in this growth area by late 2004.

TOTAL OVERFLOWS PER ANNUM 1994–95 TO 2003–04

1994

–95

1995

–96

1996

–97

1997

–98

1998

–99

1999

–00

2000

–01

2001

–02

2002

–03

2003

–04

Tota

l num

ber o

verf

low

s

0

5,000

10,000

15,000

20,000

25,000

30,000

NITROGEN DISCHARGED FROM INLAND TREATMENT PLANTS 1994–95 TO 2003–04

0

100

200

300

400

500

600

700

800

1994

–95

1995

–96

1996

–97

1997

–98

1998

–99

1999

–00

2000

–01

2001

–02

2002

–03

2003

–04

<Total nitrogen <Flow (ML)

Tota

l nitr

ogen

load

s (to

nnes

)

Flow

(ML)

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

16,798 dry weather *117 wet weather **

* Field-verified discharges from both uncontrolled and directed overflow sites. Definition of dry weather overflows has been amended in line with the ‘choke’ definition in DEC Environment Protection Licences and Water Services Association of Australia (WSAA) Facts (ie, choke = blockage + collapse).** Field-verified discharges from both uncontrolled and directed overflow sites only. Total wet weather overflows would be much higher than the numbers shown.


14

RECYCLING OF TREATMENT BY-PRODUCTSTwo important by-products of SydneyWater’s treatment processes are biosolids,organic matter removed during thetreatment of sewage, and water treatmentresiduals, matter removed during thefiltration and treatment of potable water.

BiosolidsBefore 1990, biosolids were disposed of viathe ocean, landfill or incineration. However,biosolids, which are rich in plant nutrientsand embodied energy, are now considered avaluable resource rather than a wasteproduct.Sydney Water aims to recycle a minimum of90 per cent of the biosolids capturedthrough its treatment processes. This isachieved through beneficial recyclingmarkets in agriculture, composting and landrehabilitation.Sydney Water’s Biosolids Program meetsworld’s best practice in terms of thepercentage of captured biosolids recycled.However, not all solids present in thesewage entering STPs were captured forrecycling as biosolids. Coastal STPs removed50 per cent of solids from incoming sewage,while inland STPs removed more than 99 percent. Suspended solids not captured bythese processes were discharged to theenvironment with the effluent.

Water Treatment ResidualsSydney Water has programs to recycle orstore for later use, water treatment residualsfrom the 10 water filtration plants in itswater supply system.The volume of water treatment residualsdepends on raw water quality and on thequantity of water treated. This determinesthe amount of chemicals needed to treat itto required standards. The weather alsoplays an important role – in wet years moresediment and other materials need to beremoved from the water due to increasedrunoff in catchment areas.

Achievements• Almost 100 per cent of recycled biosolids

(45,956 dry tonnes) were beneficiallyreused in 2003–04. A small amount(102 tonnes) was unsuitable foragricultural reuse and was sent to landfill.This result is due to Sydney Water’sstringent source control program andimproved processing facilities at its STPs.

• For the fifth consecutive year, SydneyWater recycled or stored for later use 100 per cent of water treatment residualsfrom its 10 water filtration plants.

Next Steps• Continue to monitor the quality of

biosolids at all STPs to ensure recyclingstandards continue to be met.

• Continue to investigate options for marketdiversification for biosolids in accordancewith the long-term Biosolids and ResidualsManagement Strategy.

STORMWATER MANAGEMENT

Pollutant RemovalStormwater runoff can carry pollutants suchas coarse sediments, oils, greases and litter,which can affect the quality of the receivingwaters as well as impact on the visualamenity of the environment.Gross pollutant traps, litter booms andsediment traps are designed to reduce such impacts. Sydney Water operates 27stormwater gross pollutant and sedimenttraps in its area of operations, as well aslitter booms on four waterway systemsdraining to Sydney Harbour and two in theBotany Bay catchment.

Achievements• Approximately 1,930 cubic metres of

rubbish and 1,567 tonnes of sedimentwere collected from stormwater pollutiondevices and a further 9,292 tonnes ofsediment removed from drainage systems.

• Construction of a second gross pollutanttrap at Botany was completed in 2003–04with more than 377 tonnes of sedimentand nearly 274 cubic metres of rubbishcollected.

CAPTURED BIOSOLIDS RECYCLED 1994–95 TO 2003–04*

0

10

20

30

40

50

60

70

80

90

100

1994

–95

1995

–96

1996

–97

1997

–98

1998

–99

1999

–00

2000

–01

2001

–02

2002

–03

2003

–04

<Target (minimum) 90%

Perc

enta

ge o

f bio

solid

s rec

ycle

d (%

)

SOLIDS REMOVAL RATE AT COASTAL TREATMENT PLANTS 2003–04

0

10

20

30

40

50

60

70

80

90

100

Nort

h He

ad

Mal

abar

Bond

i

Bella

mbi

Port

Kem

bla

Bom

bo

Wol

long

ong

War

riew

ood

Cron

ulla

Shel

lhar

bour

Tota

l

Solid

s rem

oval

rate

(%)

* Dry tonnes


• System management plans have now beencompleted for all stormwater systems.

• The ecological health of the BotanyWetlands continued to improve with theremoval of approximately one tonne ofcarp and goldfish and the introduction of4,000 Australian Bass fingerlings.

Challenges• Sydney Water’s five-year Stormwater

Environment Improvement Plan (SEIP) wasbehind schedule during the year. In August2003, the DEC issued a revised list of SEIPprojects to be delivered by 2005.

Next Steps• Continue delivery of revised SEIP projects.• Continue delivery of the Rouse Hill

Development Area works including theimplementation of Stage 3 of the project,which will include seven detention basins,road culverts and acquisition of 108hectares of drainage land.

• Continue to work with NSW Governmentto improve the institutional arrangementsfor stormwater management.

TRADE WASTE MANAGEMENTSydney Water’s Trade Waste Programimproves the quality of wastewater enteringsewers, protects the safety of its workersand ensures that after treatment this waterand the treatment by-products can bereused or disposed of in a way that protectsthe environment and complies with strictregulatory requirements.

Trade Waste Policy A key component of the program is theTrade Waste Policy, which applies to allcommercial and industrial customers.The policy focuses on reducing the mass ofpollutants, including toxic chemicals, whichare discharged to the sewer. The applicationof the policy for commercial and industrialcustomers is described in Trade WasteManagement Plans specific to those sectors.

Achievements• The quality of trade waste contributed to

Sydney Water achieving 99.8 per centbeneficial reuse of captured biosolids.

• The Wastesafe system ensured 15,879tonnes of grease trap waste were divertedfrom the sewerage system for furthertreatment and disposal. This systemprovides comprehensive electronictracking to manage the collection,transport, treatment and disposal ofwaste.

• All trade waste pollution reduction targetsand licence conditions were met.

• Sydney Water collected 16,550 kg ofchemicals from four household chemicalcollection days.

• Most contaminant loads received at STPsimproved during the year, and overall,contaminant loads have decreasedsignificantly.

• Online trade waste monitoringcommenced with three sites nowoperational. An additional 30 customerswill be connected to the online monitoringsystem during 2004–06.

• Continued to improve wastewater qualityby working collaboratively with over16,000 trade waste customers to reducepoor quality waste. During the year SydneyWater entered into 1,173 new trade wasteagreements or permits.

Challenges• At 30 June 2003, 21 per cent of all

industrial trade waste agreementsrequired an effluent improvementprogram as a result of customers’compliance breaches.

Next Steps• Develop the Wastesafe tracking system to

track other liquid waste types such as oilywaste from the motor vehicle industry.

COMMERCIAL AND INDUSTRIAL TRADE WASTE AGREEMENTS 1994–95 TO 2003–04

1994

–95

1995

–96

1996

–97

1997

–98

1998

–99

1999

–00

2000

–01

2001

–02

2002

–03

2003

–04

Num

ber o

f tra

de w

aste

per

mits

/agr

eem

ents

0

5,000

10,000

15,000

20,000


16

WASTE MINIMISATIONWaste minimisation is the application ofactivities such as waste avoidance,reduction, reuse and recycling andbehaviour modification to minimise theamount of solid waste sent to landfill.Sydney Water’s Waste Minimisation Plan(WMP) is consistent with the NSWGovernment’s Waste Reduction andPurchasing Policy (WRAPP) and contributesto the organisation’s goal of responsibleresource use. The WMP includes anoverarching waste minimisation policy, astrategy and implementation program foractions and targets and is founded on theprinciple of continual improvement.

Achievements• The overall level of recycling and reuse of

waste materials was 62 per cent. Thiscomprised waste from office operations,construction and demolition, water,wastewater and stormwater processing.

• Sydney Water’s target of 80 per cent ofoffice paper recycled in Head Office wasmet with a total of 84 per cent recycledduring the year.

• Low waste technologies avoided thegeneration of an estimated 1,000 cubicmetres of waste associated with watermain and sewer repairs.

Challenges• The proportion of waste recycled overall

dipped slightly from a previous high of 69 per cent in 2002–03.

• Current data collection systems andlogistics require some rationalisation andstreamlining to enable a more efficientmeasuring and reporting structure.

Next Steps• Broaden the scope of waste materials

monitored and reported in wasteminimisation systems, particularly therecycling of organics.

• Endeavour to further reduce constructionand demolition waste generated byexternal contractors so that Sydney Watercontinues to meet obligations under NSWGovernment WRAPP.

• Develop a system to ensure waste isminimised and appropriately managedwhen there is a major physical change inSydney Water workplaces eg, office fit-out,closure or relocation.

HERITAGE AND NATURAL RESOURCEMANAGEMENT

Natural Resource ManagementSydney Water has significant land holdings,many of which contain threatened orendangered species, populations andecological communities of animals andplants. It is essential Sydney Water’s worksand activities are managed to avoidnegative impact on these species andsensitive environmental areas.

HeritageSydney Water is the owner of a significantstock of heritage assets, many of which arestill operational within the reticulated waterand sewerage systems. Sydney Watercarefully monitors the management ofheritage assets, including Aboriginalheritage items, to avoid damage in thecourse of its operations.At 30 June 2004, the Sydney Water Heritageand Conservation Register contained 222items, including 59 items of State heritagesignificance and 163 items of local heritagesignificance.A table detailing items listed on the registerin 2003–04 is available in the Annual ReportAppendix, which is located on the CDattached to the inside back cover of thisreport.

MATERIAL PURCHASED CONTAINING RECYCLED CONTENT 2003–04

Product Percentage tonnes

Paper products• A4 copy paper 77%• other sheet paper 83%• stationery 100%• publications 50%Toner cartridges 5%Landscaping materials 34%Construction • internal 87%• external 21%


Contaminated Lands ManagementContaminated lands owned by SydneyWater fall into two categories. In asignificant number of cases Sydney Waterhas acquired sites already contaminated bythe activities of previous owners. In othercases potential contaminants have beengenerated as a by-product of formerbusiness activities, some dating back overmany decades.Practices that contaminate land arerecognised as inappropriate and SydneyWater endeavours to ensure they no longeroccur.Sydney Water assesses all propertiesproposed for acquisition or disposal toprevent land with a contamination riskbeing sold, bought or leased for anunsuitable use. No sites were identifiedduring 2003–04 as posing a ‘significant riskof harm’.

Achievements• Construction and operational activities

were managed to ensure there were nounauthorised disturbances of flora andfauna species listed under the ThreatenedSpecies Conservation Act 1995.

• The Natural Resources Inventory wasconverted to an online tool to provide staffwith access via the Sydney Water intranet.The inventory contains information on1,350 sites.

• Conservation Management Plans weredeveloped for a further 12 State HeritageListed items, bringing the total number oflisted items covered by such plans to 20.

• No Sydney Water sites investigated duringthe year required notification to the DECfor determination of potential ‘significantrisk of harm’ under the Contaminated LandManagement Act 1997.

• A Voluntary Remediation Agreement wassuccessfully completed on the Cooks RiverAqueduct site and the DEC determinedthat the site no longer constitutes asignificant risk of harm.

Challenges• Two Sydney Water sites remain classified

as a significant risk of harm, including anold landfill and a major stormwater canal.Sydney Water is overseeing the preparationof remediation plans for the first site andfollowing a DEC issued ‘do not disturb’Remediation Order for the second site.

Next Steps• Ensure all of Sydney Water’s 59 State

significant heritage assets are covered byConservation Management Plans by 2005.

WASTE RECYCLED OR REUSED 2000–01 TO 2000–04

0

25

50

75

100

Office waste Construction Process Construction Total (head office) and demolition wastes and demolition waste waste – external waste – internal

<2000–01 <2001–02 <2002–03 <2003–04

Perc

enta

ge (%

)


18

ENERGY MANAGEMENTSydney Water is one of the largestconsumers of electricity in the NSWGovernment sector. The majority of itsoperating equipment uses electricity,generated mostly from coal-fired powerstations. The largest users are sewagetreatment plants (STPs) and water pumpingstations.

Energy Use and Greenhouse Gas EmissionsSydney Water’s energy use includeselectricity, motor vehicle fuel and gas, withelectricity use accounting for 86.7 per centof the total energy requirement in 2003–04.The main environmental impacts associatedwith energy consumption result from theuse of fossil fuels to generate electricity.Burning fossil fuels produces greenhousegases such as carbon dioxide, as well asother forms of air pollutants such as sulfurdioxide and nitrous oxide. Fossil fuels are‘non-renewable’ resources and cannot beused indefinitely as an energy source.

Energy Conservation and Renewable EnergySydney Water is currently working to reducegreenhouse gas emissions through energyefficiency initiatives and the purchase ofGreen Power electricity products. Energy isalso generated from Sydney Water’s ownrenewable energy generation facilities atthe Malabar and Cronulla STPs.

Achievements• The energy efficiency of water services

remained steady. Electricity consumed permegalitre of water supplied was 252kilowatt hours, down from 252.2 kilowatthours per megalitre in 2002–03.

• Total energy use fell by 6 per cent, andtotal energy use per customer also fell,from 0.392 gigajoules to 0.369 gigajoulesper customer.

• Vehicle fuel consumption fell from 5.35 MLin 2002–03 to 5.28 ML in 2003–04,decreasing the greenhouse impact ofvehicle fuel by 1.3 per cent.

• Greenhouse savings of approximately27,000 tonnes (CO2 equivalent) wereachieved by a reduction in total energyuse. The generation of electricity fromrenewable sources including cogenerationand electricity purchased as Green Powerreached a new high of 6.8 per cent.

• Greenhouse savings of 140,000 tonnes(CO2 equivalent) were achieved throughthe rollout of the Residential RetrofitProgram to more than 233,000 homes.The retrofit program helps save waterindoors and, therefore, energy for waterheating. The combined greenhousesavings from program participants isequivalent to over one third of SydneyWater’s total greenhouse gas emissions.

Challenges• The reduction in energy intensity and

greenhouse gases during 2003–04 wasprimarily due to reduced water demand asa result of water restrictions.

• A 6 per cent increase in electricityconsumed per megalitre of sewage treatedin 2003–04 is an indication of an upwardtrend in electricity consumption due toimprovements to the wastewatertreatment system.

• Head Office energy consumption isexpected to increase during 2004–05 withmore staff relocating to Head Officethough it is anticipated the target of a 25 per cent reduction in building energyconsumption between 1995 and 2005 willbe achieved.

Next Steps• Continue to work with the Sydney Water

Energy Partners to implement strategiesand carry out activities detailed in theEnergy Management Plan.

• Continue sustainable energy planning forSydney Water’s proposed new Head Officeat Parramatta. This is planned to be apurpose built building that achieves a 4.5 star rating in the Australian BuildingGreenhouse Rating Scheme.

• Finalise strategies to deliver all feasiblemethane cogeneration and hydroelectricprojects.

• Monitor energy use and impacts through anew online energy managementinformation system, Enterprize EM.

• Implement energy efficiency programsacross Sydney Water’s 10 biggest energyconsuming assets, which account for over50 per cent of total energy consumption.

< 48% Sewage treatment plants< 9% Sewage pumping stations< 35% Water pumping stations< 3% Water filtration plants< 4% Buildings< 1% Miscellaneous

ELECTRICITY USE BY ASSETS 2003–04 ELECTRICITY CONSUMED PER ML OF WATER DELIVERED AND SEWAGE TREATED 1994–95 TO 2003–04

1994

–95

1995

–96

1996

–97

1997

–98

1998

–99

1999

–00

2000

–01

2001

–02

2002

–03

2003

–04

kWh/

unit

of se

rvice

200

250

300

350

400

450

500

<Sewage services (kWh/ML sewage treated)<Water services (kWh/ML water delivered)


ENVIRONMENTAL MANAGEMENT SYSTEMSSydney Water’s Environment ManagementSystem (EMS) provides a practicalmanagement system framework to ensureenvironmental impacts and risks arisingfrom its activities are identified, controlledand monitored.

Environmental Due Diligence andRegulatory ComplianceSydney Water is responsible for managingthe environmental impacts of its works andactivities, whether undertaken by staff orcontractors. Staff and contractors mustadhere to all of Sydney Water’senvironmental requirements and controls toensure the work meets environmental anddue diligence standards.Environment Impact Assessment (EIA) is akey component of Sydney Water’s approachto environmental management and isapplied to all major and minor works, capitaland maintenance.

Environmental and Ecologically SustainableDevelopment (ESD) Education andAwarenessSydney Water has an obligation to ensure allstaff are aware of the principles of ESD andappropriate environmental standards, andare committed to their implementation.

Achievements• Sydney Water’s EMS underwent an

implementation audit in December 2003.All issues arising from the audit wereaddressed and the EMS has been furtherenhanced by incorporation with a numberof internal management systems such asthe Procurement Management System.

• Coverage of the EMS has improved byincorporating heritage management andproperty procedures.

• As at 30 June 2004, nearly 2,300 staff hadcompleted the compulsory ESD AwarenessProgram.

Challenges• The 142 inspection audits of major capital

works resulted in 87 action requests beingissued to contractors for non-conformancewith construction EnvironmentalManagement Plans.

• One Penalty Infringement Notice (Tier 3)was incurred under the Protection of theEnvironment Operations (POEO) Act during2003–04 for the amount of $1,500. Thiswas due to a wall collapse at Quakers HillSTP that allowed 13 ML of effluent flow tothe environment without full filtration ordisinfection. The DEC considered theincident required a regulatory responseand issued the penalty infringementnotice.

Next Steps• Prepare for the EMS certification audit in

December 2004, following third partyassessment of compliance with ISO 14001.

• Develop next generation ESD awarenesstraining as well as a range of otherenvironmental training initiatives.

• Continue the implementation of an annualenvironmental audit program.

• Incorporate ESD principles into SydneyWater’s annual corporate planningobjectives.

TOTAL ENERGY RELATED GREENHOUSE GAS EMISSIONS 1994–95 TO 2003–04*

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

<Electricity <Transport fuel and gas

Kilo

tonn

es C

O 2 e

quiva

lent

1994

–95

1995

–96

1996

–97

1997

–98

1998

–99

1999

–00

2000

–01

2001

–02

2002

–03

2003

–04

* Emissions from transport fuel and gas have been recorded since 1998–99.

SUMMARY REVIEW OF OPERATIONSEmbracing Our Social Responsibilities

SYDNEY WATER STRIVES TO BE A GOOD CORPORATE CITIZEN. IT TAKES PRIDE IN SERVINGAND SUPPORTING THE COMMUNITY AND PROTECTING PUBLIC HEALTH. SYDNEY WATERVALUES ITS STAFF AND SEEKS TO SAFEGUARD AND ENHANCE THEIR WELLBEING.

SAFE AND RELIABLE WATER SERVICESSydney Water’s most important socialresponsibility is to protect public healththrough the provision of safe drinking water.Sydney Water’s Operating Licence requires itto comply with the health-related guidelinevalues in the Australian Drinking WaterGuidelines.To confirm that these guidelines are met,Sydney Water develops and implements anAnnual Drinking Water Quality MonitoringPlan, which is approved by NSW Health.The results of extensive water qualitymonitoring are reported to NSW Health in monthly, quarterly and annualreports. Sydney Water also communicatesthe results to customers atwww.sydneywater.com.au and in the ‘Your Water’ brochure mailed out withquarterly bills.

Achievements• Compliance with the health-related

guideline values in the Australian DrinkingWater Guidelines specified by NSW Healthwas demonstrated by Sydney Water’sassessment. Of the 37,510 samplesanalysed, 99.75 per cent met guidelinevalues. Water quality performance in2003–04 will be independently audited inSeptember 2004.

• No drinking water quality incidents wereconsidered by NSW Health to have harmedpublic health.

• Sydney Water achieved Full Compliance forall Operating Licence requirementsassessed by the Operational Audit inSeptember 2003.

• Water quality related customer complaintsdecreased by approximately 25 per cent onthe previous year.

• Sydney Water met Operating Licencestandards for continuity of water services.The number of properties affected by anunplanned shut off of water for more thanfive hours was 16,345 compared to thestandard of 35,000. The number ofproperties affected by a planned andwarned shut off of water for more thanfive hours was 16,064 compared to thestandard of 32,000.

• Sydney Water also met the OperatingLicence standard for continuous waterpressure. The number of properties thatexperienced one or more instances of lowwater pressure (less than 15 metres head)was 1,304 compared to the standard of15,000.

Next Steps• Develop a new five-year Drinking Water

Quality Management Plan 2004–2009,following the completion of the currentfive-year plan in 2004.

20

More information on drinking waterquality is presented in Sydney Water’sAnnual Drinking Water Quality Report2004, which is located on the CDattached to the inside back cover ofthis report. It is also available atwww.sydneywater.com.au

WATER QUALITY PERFORMANCE 2003–04

0 10 20 30 40 50 60 70 80 90 100

< Percentage of samples meeting guidelines <Compliance percentage required

Faecal coliforms (0cfu/100 mL)

Total coliforms (0cfu/100 mL)

Free chlorine (<5mg/L)

Monochloramines (<3mg/L)

Manganese (<0.5mg/L)

Fluoride

The National Safety Council of Australia (NSCA)has recognised the SewerFix Pumping StationsProgram’s commitment to safety with the 2003 NSCA/Telstra National Safety Award for Excellence for best management of anoccupational health and safety specific workplace risk.The SewerFix Pumping Stations Program Alliancepartners, Bovis Lend Lease, CH2M HILL, PhillipsGroup, Sinclair Knight Merz, Tenix Alliance and Sydney Water, commenced upgradingapproximately 230 sewage pumping stationsacross Sydney, the Blue Mountains and theIllawarra in late 2001.

The program successfully managed some ofconstruction’s highest risk activities includingworking with live sewer operations, confinedspaces and heights. Despite the difficulty, the Lost Time Injury Frequency Rate was 1.47 over 650,000 hours worked at the time of the awardsubmission. The NSW construction industryaverage was 19 times that rate.The program applied best practice safetymanagement to ensure safety was embedded in all functional areas and phases – planning,design and delivery – to eliminate or mitigate risk. This was supported by a considerableinvestment in training on safety legislation and management practices for programpersonnel and subcontractors.As well as achieving independently auditedresults of outstanding safety performance, theinnovative approach and extensive training (over25,000 hours of safety training) has improved theindustry’s skill base and holds potential for widerapplication across the construction industry.

The program used Key Performance Indicators(KPIs) to drive a culture of high performance.Project Managers and their teams took a holisticproject view, sharing responsibility for all KPIs –safety, community, environment, quality andlegacy as well as cost and schedule.The program has also been recognised during the year with The National Association of Womenin Construction’s Merit Award for Innovation forits community relations and environmentalmanagement training; and with a HighCommendation from the Australian Institute of Project Management.

CASE STUDYNATIONAL SAFETY AWARD

Workers safely manoeuvre micro-drilling equipment into place as part of the SewerFix Pumping Stations Program.


Embracing Our Social Responsibilities

22

INVESTING IN THE COMMUNITY

Community Investment ProgramSydney Water supports the communities inwhich it operates through a variety ofcommunity investment initiatives.The Community Investment Program isdesigned to build positive relationships withthe community and key stakeholders,provide opportunities for staff involvementand support Sydney Water’s educationcampaigns and programs.The program comprises corporate andcommunity partnerships, in-kind supportand philanthropic commitments. Supportranges from short-term commitments tolong-term partnerships, such as the 14-yearpartnership with Taronga Zoo.The impact and results of the CommunityInvestment Program are regularly evaluated,with the findings contributing to itscontinuous improvement.

Achievements• Sydney Water provided $1,022,956 to help

over 60 organisations conduct educationaland environmental, general community,arts, and sport initiatives.

• High profile sponsorship initiativesincluded the Sydney Water–Taronga ZooBackyard to Bush Project and the BellShakespeare Water Education Program.

• Local community partnerships, such as theIllawarra and South Coast Sydney WaterSurf Club Premiership, Sydney Water ManlyChalkfest and the Sutherland ShireAustralia Day celebrations, wereestablished in areas where Sydney Watercarried out key capital works or repairs.

• Sydney Water employees raised $6,946 forAustralia’s Biggest Morning Tea, whichSydney Water matched ‘dollar for dollar’,providing a total donation to the CancerCouncil of $13,892. For the Give As YouEarn payroll deduction scheme, SydneyWater also matched ‘dollar for dollar’ eachnew and additional donation made bystaff to charities of their choice.

• Sydney Water extended support tophilanthropic causes including theChildren’s Hospital Westmead and the WarWidows Guild of Australia.

• The program has delivered results ineducation and behavioural change. Forexample, 55 per cent of surveyed SydneyWater customers who visited Taronga Zooduring Sydney Water Month in 2004 statedthat they received useful information onhow to save water.

Next Steps• Proactively seek partnerships with

organisations whose long-term strategicobjectives and values align with those ofSydney Water and enable key messages to be communicated in a creative andeffective manner.

< 37% Corporate partnerships< 7% Community partnerships< 9% Philanthropic commitments< 47% In-kind and servicing of partnerships

SPREAD OF COMMUNITY INVESTMENT 2003–04 FUNDS GRANTED TO NON-GOVERNMENT COMMUNITY ORGANISATIONS 2003–04

Corporate partnerships $377,540.50Community partnerships $73,396.36Philanthropic commitments $96,475.30In-kind and servicing of partnerships $475,543.67Total $1,022,955.83


AFFORDABLE ACCESSAll Sydney Water customers are entitled tothe essential services the organisationprovides – clean drinking water, sewerageservices and stormwater services. In2003–04, Sydney Water continued toimplement a range of strategies designed tomeet this core social responsibility.

Customer ContractSydney Water’s Customer Contract assurescustomers of Sydney Water’s commitmentto providing high quality products andservices that effectively meet their needs.The Contract sets out the minimumstandards of service customers can expectand outlines their rights and responsibilities.

Customer AssistanceTo help customers with special needsmaintain access to services, Sydney Wateroperates a Payment Assistance Scheme(PAS). The scheme provides hardship reliefvouchers that can be used for payment ofSydney Water accounts. Customersexperiencing financial difficulty may receivethe vouchers from welfare agencies after anindependent assessment.

Continuity of AccessIn accordance with its Customer Contractand Code of Practice on Debt andDisconnection, Sydney Water may restrict ordisconnect the supply of water to aproperty, should a customer fail to pay theiraccount by the due date and fail to makealternative arrangements for payment orassistance. In 2003–04, Sydney Waterpromoted various forms of paymentassistance and hardship relief to minimisethe number of restrictions anddisconnections.

Achievements• Special needs customers received

$419,411 through the PAS. Communityaccess to PAS was assessed and additionalagencies with specialised skills in assistingindigenous and non-English speakingsections of the community were used.

• The Sewer Connection Assistance forDisadvantaged Customers Policy wascontinued in 2003–04, focussing onspecial needs customers in outlyingvillages and working with local welfareagencies and councils.

• The total number of restrictions anddisconnections for non-payment during2003–04 was 3,257 including onedisconnection. This total represents 1.96restrictions and disconnections per 1,000properties and is a 3.7 per cent decreasefrom the previous year.

• The Residential Retrofit service continuesto be provided free-of-charge to pensionerconcession cardholders, Veterans’ AffairsGold cardholders and Department ofSocial Security Health Care cardholders.For all other Sydney Water customers, theretrofit service was provided at adiscounted rate of $22. The service has aretail value of more than $130.

TRUST IN SYDNEY WATER – AVERAGE RATINGS 1995–96 TO 2003–04*

1995

–96

1996

–97

1997

–98

1998

–99

1999

–00

2000

–01

2001

–02

2002

–03

2003

–04

* 1 = don’t trust at all, 10 = trust a lot.

0

1

2

3

4

5

6

7

8

9

10

Aver

age

ratin

gs

PAYMENT ASSISTANCE SCHEME EXPENDITURE 1999 TO 2004

AverageVouchers Recorded assistance

Year Expenditure issued cases per case

1999–00 $514,500 20,580 5,205 $98.852000–01 $506,475 20,259 5,037 $100.552001–02 $469,951 18,798 4,662 $100.802002–03 $469,167 18,767 4,699 $99.842003–04 $419,411 16,777 4,421 $94.87


24

OPEN AND HONEST RELATIONSHIPS

Customer ResponseTo provide better customer service, SydneyWater continued to implement a system toquickly and effectively resolve customerenquiries and complaints. If a customer isnot satisfied with the solution proposed bySydney Water for their complaint, they maycontact the Energy and Water Ombudsmanof NSW (EWON). EWON provides anindependent and alternative means toreview customer complaints.In 2003–04, Sydney Water received 115complaints per 10,000 customers, includingtelephone calls reporting service difficultiesand faults. In addition EWON dealt with 877contacts.

Customer ResearchEach year Sydney Water researches itsresidential, commercial and industrialcustomers, seeking feedback to helpimprove customer service.

StakeholdersSydney Water’s stakeholders include thosewho may be affected by, or those who caninfluence the organisation’s activities.They include regulators, NSW and FederalGovernment, politicians, peak lobby groups,special interest groups, the community,industry bodies, professional organisations,suppliers and Sydney Water staff.Sydney Water aims to foster collaborationwith stakeholders based on trust andcredibility. Sydney Water holds stakeholderforums with key regulators such as DEC,NSW Health and IPART.Sydney Water’s Customer Council makes animportant contribution in helping SydneyWater understand customer needs andexpectations.In addition, the community is consultedwith on specific capital works projects, toensure their needs and expectations areunderstood and incorporated into thedecision making process.Sydney Water is currently reviewing itsStakeholder Relations Strategy to ensure itmeets the needs of the organisation andstakeholders.

PublicationsIn 2003–04, Sydney Water produced itsAnnual Report, Ecologically SustainableDevelopment and Environment Plan Report,Environmental Indicators ComplianceReport, Annual Drinking Water QualityReport and Quarterly Drinking Water QualityReports.

Comprehensive information about SydneyWater’s operations is also available via thewebsite: www.sydneywater.com.au

Freedom of Information (FOI)In 2003–04, Sydney Water received 59 newapplications under the Freedom ofInformation Act 1989, compared to 26 in2002–03. This represents an increase of over126 per cent in applications received fromthe previous financial year.No Ministerial Certificates were issued overthis period. Sydney Water received fourapplications for internal review. In two casesthe original determination was upheld,while in two cases the originaldetermination was varied.During the year, the Ombudsman did notconduct any formal reviews of FOIdeterminations made by Sydney Water.There have been no appeals to theAdministrative Decisions Tribunal in thepast 13 years.

PrivacySydney Water remained voluntarilycommitted to complying with the NSWPrivacy and Personal Information ProtectionAct 1998 in 2003–04.

CUSTOMER SATISFACTION WITH TAP WATER QUALITY 1993 TO 2004

0

10

20

30

40

50

60

70

80

90

100

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

<Very satisfied <Quite satisfied<Total satisfied

Perc

enta

ge (%

)

CUSTOMER SATISFACTION WITH SEWERAGE SYSTEM 1993 TO 2004

0

10

20

30

40

50

60

70

80

90

100

1993

1994

1995

1996

1997

1998

1999

2000

2001

2001

2002

2003

2004

<Very satisfied <Quite satisfied<Total satisfied

Perc

enta

ge (%

) Sewage treatment system Sewerage system

Change in survey question

NOISE COMPLAINTS 2000–01 TO 2003–04

0

20

40

60

80

100

120

140

160

2000

–01

2001

–02

2002

–03

2003

–04

Tota

l noi

se co

mpl

aint

s


Achievements• Customer satisfaction with water and

sewerage services remained high with 88 per cent of residential customerssatisfied with their tap water, and 83 percent satisfied with the sewerage system.

• Community ratings on the water quality ofthe oceans and harbour are at theirhighest levels since being recorded at 7.1and 6.7 out of 10 respectively.

• Community awareness and support forwater restrictions increased over the pastyear with 75 per cent of customerssurveyed in June 2004 believing they areusing less water than 12 months ago.

• The total number of noise complaintsdecreased by 29 per cent from theprevious year due to improved noisemanagement planning, staff training and work practices.

• The Sydney Water Annual Report 2003 wasjoint winner of the best SustainabilityReport at the Association of CharteredCertified Accountants Awards forSustainability Reporting 2003.

Challenges• The overall trust rating was 6.8 out of 10, a

decrease on last year’s figure. Ratings inthe last year decreased on all measures.This is likely a response to the ongoingdrought and the introduction ofmandatory water restrictions in October2003.

IMPROVING CUSTOMER SERVICE

Convenient Service OptionsDuring the year, Sydney Water continued to provide a variety of service optionsspecifically tailored to customers’ needs.These ranged from bill payment, throughenquiry options to the provision of services.Sydney Water dealt with more than 1.4 million customer contacts, answeringquestions ranging from general billing andwater restriction information, through to emergency services and repairs.Ask Sydney Water is a new online serviceoption that provides customers with quickand accurate responses to a broad range offrequently asked questions. The system alsohas an automated email back-upmechanism when information is not readilyavailable or suitable for the enquiry.A new payment option, Bill Express, wasintroduced, enabling customers to paywater bills at over 200 newsagencies.This provides customers with greater choice and convenient access.Property Link services enabled solicitors,conveyancers and retail customers to dobusiness with Sydney Water electronically.Quick Check services located in over 20plumbing trade stores made it easy forplumbers, builders and retail customers toapply for products and services relating toconnection to and working with SydneyWater’s infrastructure.

Twenty-seven Water Servicing Coordinatorsenabled developers to process theirdevelopment applications and build suitableinfrastructure in connecting to SydneyWater’s sewer and water systems.

Achievements• For the second consecutive year, Sydney

Water won the Teleperformance GrandPrix Award for the best call centreperformance in the Public Services andUtilities sector and was in the top five callcentres across all sectors (public andprivate) in Australia.

• A survey of residential customers showedthat 83 per cent of those who contactedSydney Water reported that they weresatisfied or very satisfied with theexperience.

• A new process for issuing and fitting watermeters was implemented to ensure thatmeters are fitted earlier in theconstruction of new properties and helpencourage water saving.

• The onset of water restrictions broughtmany calls to the customer serviceenquiries line. Despite this, Sydney Watermet its target of having 85 per cent of allcalls answered within 30 seconds.

FREEDOM OF INFORMATION 2003–04*

Personal Other

Requests– Total to process – 60– Total processed – 40

Result– Granted in full – 14– Granted in part – 16– Refused – 10– Deferred – –– Completed – 40* A more detailed summary of Sydney Water’s FOI statistics for 2003–04

is available in the Annual Report Appendix, which is located on the CDattached to the inside back cover of this report.


26

PROTECTING HEALTH AND SAFETYSydney Water is committed to protectingthe health, safety and welfare of allemployees, contractors and visitors at, oraffected by, its worksites. At Sydney Water,safety is not negotiable. All employees areresponsible for their own health and safety,and the health and safety of others,including colleagues, contractors andvisitors in the workplace.During the year, Health and SafetyImprovement Plans were established in eachdivision. A key focus area of these plans isrisk management. Risk assessments werecompleted on all activities in Sydney Waterand the top 12 health and safety risksidentified. Action plans were established forfive of these key risks for implementation in2004–05.Another key focus is improving SydneyWater’s workplace safety culture. This isbeing achieved through the delivery of abehavioural safety improvement program.The program builds on work to date byproviding a mentoring/coaching leadershipand communication program for supervisorsand team leaders. The program is beingtrialled in three of the nine CivilMaintenance depots with the aim ofexpanding a customised package across allMaintenance business areas.Contractor safety management, incidentmanagement, injury/illness managementand health and safety monitoring were alsoareas of focus during the year and willremain so in 2004–05.

FatalitiesSadly there were two fatalities associatedwith the work of Sydney Water contractorsduring 2003–04.In November 2003, a subcontractor workingon the Northern Towns Sewerage Schemedied when the truck he was driving rolledover on a steep section of road near theOtford Bridge.In February 2004, a tradesman providing aquote died after falling into a newlyconstructed pumping station wet-well atPort Kembla STP. The work was beingundertaken by Sydney Water and theWalter–Veolia joint venture. Sydney Waterstopped all construction activities by thecontractor while the National Safety Councilof Australia undertook a major hazardassessment of all sites and an audit on thesafety systems of both companies.Sydney Water and Walter–Veolia undertooka thorough review of their risks and safetyprocedures and, where necessary, developednew procedures and re-inducted projectpersonnel in these new procedures. SydneyWater issued a safety alert to all itsemployees and contractors outliningrequirements for managing penetrations(open holes in the floor or roof of a structureunder construction).

ProsecutionsIn July 2003, Sydney Water was fined$19,500 after pleading guilty for an incidentin which an employee was seriously injuredwhen he fell while dismantling scaffoldingat a sewage pumping station in Rouse Hill inAugust 2001.

Achievements• A Wellness and Healthy Lifestyle Program

was established to help improve thehealth and wellbeing of employees.

• As the initial steps in the healthmanagement monitoring program, anexternal company was engaged to providemedical and health services and a detailedreview of health hazards associated withtrade waste commenced.

• Sydney Water’s internal health and safetyaudit capability was improved and anextensive internal compliance auditcarried out.

• The Lost Time Injury Frequency Ratedecreased by 8 per cent for Sydney Wateremployees overall and by 25 per cent inthe Maintenance business.

Challenges• To ensure Sydney Water never has another

fatality concerned with any aspect in theoperation of its business.

• During the year there was an average of10.3 days lost for each lost time injury. Thiswas an improvement on the previousyear’s average of 11.0 and 13.9 in 1999–00.However, there were still 56 employee losttime injuries and nearly 5,000 lost hours.In addition there were 102 employeemedical treatment injuries.

• Sydney Water needs to consolidate thewide range of activities commencedduring the year, including the leadershipand coaching program in the Maintenancebusiness.

LOST TIME INJURY FREQUENCY RATE 1994–95 TO 2003–04

1994

–95

1995

–96

1996

–97

1997

–98

1998

–99

1999

–00

2000

–01

2001

–02

2002

–03

2003

–04

Inju

ries p

er m

illio

n ho

urs w

orke

d

0

5

10

15

20

25

30


Next Steps• Issue key requirement statements

(called Sydney Water Health and SafetyStandards) on all 12 of the key health andsafety risks. These detail the minimumrequirements that must be met by anySydney Water employee or contractor.

• Implement new processes for employeeswho project manage minor workscontractors.

• Conduct a detailed analysis of incidentinvestigation data for employees andcontractors and reassess and modifyhealth and safety strategies based on thatinformation.

• As a responsible employer Sydney Waterhas commissioned a study to investigateany potential health effects on staffworking in Sydney’s sewerage system, toensure their long-term health andwellbeing.

AN EQUITABLE WORKPLACE

Employee RelationsSydney Water employees are engaged in adiverse range of activities reflecting theoperational, commercial and regulatoryenvironment in which Sydney Wateroperates.Sydney Water is committed to developing aworkplace culture which aligns with itsvalues, including ethical behaviour. SydneyWater’s Code of Conduct sets a frameworkof expected standards and behaviours.Currently the Code is being reviewed andredrafted to more clearly include SydneyWater’s values.An Employee Opinion Survey is carried outevery two years to enable employees toshare their views on the way Sydney Waterworks. The 2004 Survey recorded animproved job satisfaction rating of 7 out of10, compared to 6.4 in 2002. Staff agreedthat Sydney Water is good at teamwork,safety, talent, role clarity, work/life balance,ethics and customer satisfaction. Areas thatneed improvement include changemanagement, career opportunities,recruitment and selection, leadership,facilities, organisational performance andprocesses. Managers are working with staffto put in place actions to improve SydneyWater as a workplace and a high performingorganisation.In line with ‘employer of choice’characteristics, Sydney Water providessupport to employees affected byorganisational change. The TransitionsProgram has been introduced to providecoordinated and managed support toemployees who have lost their position dueto change within the business.

Equity and Diversity Sydney Water’s Equity and Diversity Strategy2002–2004 continued the commitment toproviding an equitable, diverse andproductive environment where staff aretreated fairly and encouraged to reach theirfull potential. The strategy involves fourspecific programs to promote employmentopportunities and increase retention ofEqual Employment Opportunity (EEO)groups including indigenous people,women, people whose first language is notEnglish and people with disabilities.During the year, improvements were notedin the representation of target groupsincluding people from racial, ethnic andethno-religious minorities, people with adisability, and people whose first languageis not English. The share of women in theworkforce declined slightly whilst the shareof women in senior management positionsremained static.In addition, during the year Sydney Water:• introduced the Even Flow Flexible Options

to Work program to provide greaterflexibility in work arrangements soemployees can balance the demands ofwork and their personal life

• consulted with the Anti DiscriminationBoard to review grievance handlingprocesses and revise the Grievance Policyto align with the Sydney Water Award

• held a Youth Summit to identify thespecific attraction and retention issuesimportant to staff under 30 years of age.


28

Industrial RelationsThe major policy focus for industrialrelations during the year has beenimproving employee and unionconsultation. With research support fromthe Australian Centre for Industrial RelationsResearch and Training, a consultativeframework was implemented to strengthenprocesses around employee and union inputinto organisational change. This includes aquarterly forum between unions and theManaging Director.During the year there was also a majorreview and redrafting of the Sydney WaterAward. This was timed to coincide with theelimination of the Sydney Water EnterpriseAgreement. It will result in thesimplification of the Award, as well asensuring all recently proclaimedemployment standards are incorporated.The review was conducted through jointunion/management working parties at bothdivisional and corporate level. Finalnegotiations with the unions will becompleted in late 2004.In consultation with the unions, theDisciplinary Policy was reviewed and a newpolicy developed which came into effect on1 September 2003. It presents a shift infocus from the previous procedural-basedapproach to a values-based approach.The policy highlights the responsibilities ofemployees and also places emphasis on theprinciples of natural justice in dealing withemployee behaviours.Sydney Water ensures employees andapplicants are not discriminated againstor victimised on the basis of membership of industrial associations. In 2003–04,65 per cent of Sydney Water employees were members of an industrial associationor trade union.

Employee and Organisational DevelopmentDuring the year, Sydney Water began a keydevelopment program called Towards aPerformance Culture. This program aims tostrengthen the organisation’s performanceover a three-year period by focussing onimprovements to leadership,communications, employee development,reward and recognition and performancemanagement processes.The program incorporates findings of bestpractice studies as well as internal SydneyWater research to address the underlyingdrivers of individual performance.Sydney Water’s framework for training anddevelopment has been reviewed with theaim of integrating and aligning training toorganisational goals and business plans andproviding improved quality assurance.Benefits of this review will begin to flow in2004–05.In 2003–04, employees completed 7,529days of operational training andapproximately 1,950 training days ofdevelopmental training. Sydney Water alsoprovided training to external contractorsand developers totalling 4,574 days.Sydney Water continued to provideprofessional development opportunities foremployees such as study assistance,external secondment and attendance atexternal conferences and seminars. Therotation and secondment policy was alsorevised to facilitate more flexible staffdeployment across the organisation.

Achievements• The Performance Leadership Program

aimed at the executive and selected seniormanagers commenced, with excellentfeedback received.

• A Youth Direction Program was establishedto increase attraction, retention andparticipation of youth in decision making.

• Development of an enhanced HumanResource Information System commenced.The system will provide a platform forimproved people management throughoutthe organisation.

Challenges• The adoption of a stronger performance

culture across the organisation.• Gaining a better understanding of the

areas highlighted as weaknesses in the2004 Employee Opinion Survey andaddressing these in an integrated manner.

• Strengthening workforce planning andcapability to cope with retirements, theimpact of the move to Parramatta andknowledge management issues.

• The representation of females in full-timeemployment is still well below the NSWGovernment target and the share offemales in senior management needs tobe improved.

Next Steps• Deliver performance culture programs to

middle managers and supervisors.• Analyse the results of the 2004 Employee

Opinion Survey.• Finalise and communicate new grievance

procedures and provide education andtraining to all employees andmanagement.

• Integrate workforce planning into thebusiness planning cycle.

• Introduce the improvementsrecommended through the Review ofRecruitment and Selection Project,including online recruiting and pilotingthe career management module.


WORKFORCE STATISTICAL INFORMATION

SYDNEY WATER WORKFORCE*

2001–02 2002–03 2003–04

FTE – Permanent 3,354 3,343 3,289FTE – Temporary 128 90 45FTE – Part-time 74 83 101Total 3,556 3,516 3,435

OtherAgency personnel 453 335 136Redundancies 72 103 81Appointments 258 275 155Average turnover 2.65% 2.65% 2.56%Unplanned absences 2.58% 2.73% 3.37%

NUMBER OF SENIOR EXECUTIVE SERVICE EQUIVALENT OFFICERS

2002–03 2003–04

Female 19 17Male 93 82Total 112 99

REPRESENTATION OF EEO GROUPS**

2001–02 2002–03 2003–04No. % No. % No. %

Women 802 22.6 832 23.4 805 23.1ATSI1 26 0.7 36 1.0 35 1.0REEM2 687 19.4 712 20.0 720 20.7Language3 762 21.5 763 21.4 759 21.8PWD4 192 5.4 214 6.0 224 6.4PWD-RA5 66 1.9 69 1.9 60 1.7Total staff 3,544 3,559 3,485

REPRESENTATION OF EEO GROUPS WITHIN SALARY LEVELS**

Total Surveystaff respondents Women ATSI1 REEM2 Language3 PWD4 PWD-RA5

No. % No. % No. % No. % No. % No. %

< $30,146 5 0 0 0.0 0 0.0 0 0.0 0 0.0 0 0.0 0 0.0$30,146 – $39,593 243 93 37 15.2 6 2.5 33 13.6 37 15.2 15 6.2 6 2.5$39,594 – $44,264 544 301 142 26.1 9 1.7 80 14.7 101 18.6 42 7.7 12 2.2$44,265 – $56,012 934 663 300 32.1 14 1.5 174 18.6 179 19.2 73 7.8 22 2.4$56,013 – $72,434 1,043 841 213 20.4 4 0.4 266 25.5 282 27.0 51 4.9 12 1.2$72,435 – $90,543 351 295 60 17.1 1 0.3 86 24.5 87 24.8 19 5.4 3 0.9> $90,543 365 310 53 14.5 1 0.3 81 22.2 73 20.0 24 6.6 5 1.4

3,485 2,503 805 23.1 35 1.0 720 20.7 759 21.8 224 6.4 60 1.7* Workforce numbers are calculated by apportioning the full time equivalent (FTE) hours worked to the actual headcount employee numbers.** All EEO figures are based on an actual headcount of employees, excluding casuals. The number of women indicates their actual representation within Sydney Water.

Figures for all other EEO groups are based on a voluntary EEO survey with response rate of 72 per cent. All percentages indicate the representation of EEO groupsagainst headcount total staff numbers. In some salary bands this may understate the actual representation due to low survey response rates.

Definitions1 Aboriginal and Torres Strait Islanders.2 People from racial, ethnic and ethno-religious minority groups.3 People whose first language spoken as a child was not English.4 People with a disability.5 People with a disability requiring work-related adjustment.

SUMMARY REVIEW OF OPERATIONSEnsuring Our Business is a Success

SYDNEY WATER SEEKS TO BALANCE AN ECONOMIC RETURN TO ITS SHAREHOLDERS WITH AFFORDABLE WATER SERVICES AND THE DELIVERY OF A SIGNIFICANT CAPITAL WORKS PROGRAM.

FINANCIAL PERFORMANCEFundamental business drivers for SydneyWater’s financial management are to addvalue for its shareholders, protect andmaximise return on community andgovernment investment, deliver value tocustomers and meet regulatoryrequirements.In 2003–04, Sydney Water’s financialperformance continued to be impacted bythe ongoing drought and the introductionof mandatory water restrictions. Thoughrevenues were materially impacted, SydneyWater continued to meet its customer andregulatory requirements, whilst decreasingoperating expenditure.

Statement of Corporate IntentSydney Water is a community asset. Itsshareholders are the NSW Treasurer andNSW Assistant Treasurer, who hold theshares non-beneficially on behalf of theState of NSW.Sydney Water’s annual Statement ofCorporate Intent (SCI) specifies commercialperformance targets agreed by SydneyWater and its voting shareholders. Thesetargets form the basis for Sydney Water’sannual budget and are also driven downinto divisional budgets.In 2003–04, the profit after income taxincreased and exceeded the SCI target.Profit was positively impacted by a numberof factors, including:• lower superannuation costs owing to

improved investment performance by thesuperannuation fund managers

• a write-back of general insurance andworkers’ compensation provisions due tolower than budgeted premiums andreduced claim payments

• lower depreciation, reflecting therevaluation and segmentation of assets,and

• lower bulk water purchases and treatmentcosts due to the impact of waterrestrictions.

This was partially offset by lower watersales revenue, reflecting the impact ofmandatory water restrictions and lowercapital contributions due to less thanexpected developer activity. Whilst the profittarget for 2003–04 was exceeded, this was largely due to the impact of severalnon-recurrent factors that do not improvethe underlying profitability and cashposition of the Corporation.

Key ResultsFor the 12-month period, consolidated pre-tax operating profit after capitalcontributions and income tax totalled$306 million and after tax totalled$270 million. This result is above the2003–04 SCI target of $150 million.Commensurate with the increase inprofitability, the return on net operatingassets rose to 3.1 per cent.Underlying operating costs per propertydecreased by almost 7 per cent in 2003–04.This improvement can be attributed to areduction in agency hire and contractorcosts.The Directors have recommended toshareholders an after-tax dividend of$115 million on the 2003–04 operatingprofit.Consultants’ costs within Sydney Watertotalled $3.3 million over the 12-monthperiod. A table detailing our expenditure onconsultants in 2003–04 is available in theAnnual Report Appendix, which is located onthe CD attached to the inside back cover ofthis report.

30

More detailed information on SydneyWater’s financial performance can befound in the Financial Statements forthe Corporation and its controlledentities located on the CD attached tothe inside back cover of this report.They also are available online atwww.sydneywater.com.au

During the year, work neared completion on aPriority Sewerage Program scheme to service thenorthern Illawarra towns of Otford, Stanwell Tops,Stanwell Park and Coalcliff. Wastewater fromthese towns will now be transferred to theCronulla Sewage Treatment Plant and treated to a tertiary level.The $45 million scheme will service over 800 lotsin these communities and help protect publichealth and the local marine environment byreducing sewage runoff and overflows fromseptic and pump-out systems.The scheme involved the construction of threesewage pumping stations, approximately 6.5 kmof sewerage reticulation and over 6.5 km oftransfer sewer mains.

Cutting edge horizontal directional drillingtechniques were used to install pipelines tominimise environmental disturbance anddisruption to surface land uses. The longestdirectional bore was from Otford to Stanwell Parkwith a total length of 1.74 km.This section of the work utilised the heritagelisted Otford railway tunnel, with a directionaldrilling expert able to monitor the progress of the bore using a tracking system located withinthe tunnel. This method delivered a high degreeof accuracy – the bore exited half a metre from its target – and delivered the mostchallenging section of the scheme ahead ofschedule and on budget.

The local communities showed great interest inthe scheme. Regular and ongoing communicationensured that residents were aware of the issuesthat had the potential to affect them and as aresult the scheme recorded an extremely low levelof customer complaints.Sydney Water recently notified all residents and property owners of Stanwell Tops thatconnections to the new system could commence.Work in the remaining four towns will becompleted by early 2005.

CASE STUDYNORTHERN ILLAWARRA TOWNS SEWERAGE SCHEME

Work is nearing completion on the Stanwell Park pumping station as part of the Priority Sewerage Program.


Ensuring Our Business is a Success

32

Property DisposalSydney Water disposed of 11 propertiesduring 2003–04, at a total value of$12.7 million net of GST. One of theproperties was the subject of exchangedcontracts that had not been settled at30 June 2004. No properties were disposedof by means other than public auction ortender and which had a value of more than$5 million.The properties disposed of were surplus toSydney Water’s needs and the proceeds fromthe sales were placed in general revenue.Sydney Water is not aware of any familyconnection or business association betweenany party who acquired the properties andany member of Sydney Water who approvedthe sale. Application for access todocuments concerning details of theproperties disposed of may be made inaccordance with the Freedom ofInformation Act 1989.

InvestmentTo protect the value of the Corporation,Sydney Water seeks to maximise investmentreturns and minimise interest exposurewithin an appropriate risk profile. Consistentwith NSW Treasury guidelines, Sydney Waterbenchmarked its investment performanceagainst the NSW Treasury Corporation (T-Corp) hourglass facility.Additionally, benchmarking occurs againstthe UBS Composite Index for fixed interestfunds.As at 30 June 2004, Sydney Water had aninvestment portfolio of approximately$47 million, managed by its own internalTreasury. The Corporation’s Treasury Unitperformed well, exceeding all benchmarksfor 2003–04.

Managing DebtIn 2003–04, financial liabilities weremanaged to minimise risk against volatilityin financial markets, protect the value ofSydney Water’s equity and minimise the costof these liabilities. As at 30 June 2004,Sydney Water had financial liabilities ofapproximately $2.5 billion (market value),which have built up over time, mostly tofund capital investments. The internalTreasury Unit manages the debt portfolioand the bulk of transactions are affectedthrough T-Corp.

During 2003–04, fixed loans of $525 millionmatured and were refinanced. In addition,$250 million of new loans were raised. Theaverage interest rate on the refinancing andnew loans was 5.71 per cent. Debt portfoliomix at 30 June 2004 comprised 75 per centfixed and 25 per cent floating rate exposure.The benchmark portfolio is constructed andmaintained in accordance with NSWTreasury guidelines.

Achievements• Achieved real cost reductions.• Achieved SCI and IPART efficiency targets.

Challenges• Achieving a price determination outcome

that adheres to principles of full costrecovery and provides an adequate returnon investment.

Next Steps• Continue commercial and business

reforms. Sydney Water will receive a PriceDetermination in 2004–05 from IPARTwhich will impact on the Corporation’sfinancial outlook.

<Service charges revenue <Usage charge revenue

<Investment revenue <Other revenue

CONTROLLABLE OPERATING COSTS PER PROPERTY 1999–00 TO 2003–04

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RETURN ON NET OPERATING ASSETS 1999–00 TO 2003–04

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REVENUE SOURCES 1999–00 TO 2003–04

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AVERAGE RETURN ON INVESTMENT 2003–04

Corporation Hourglass UBS Composite Index

Cash 5.28% 5.25% N/AFixed interest 4.56% 3.31% 3.48%

PERFORMANCE AGAINST SCI 2003–04

Financial performance target SCI 2003–04 Result 2003–04

Operating profit (after tax and capital contributions) $150m $270mEarnings before interest and tax (before capital contributions) $273m $351.1mReturn on net operating assets 2.1% 3.1%Funds flow interest cover 2.8 2.8New borrowings $250m $250mDebt to equity ratio 23.3% 27.1%Dividend payable $115m $115m

DEBT PORTFOLIO MIX 2003–04

SWC actively managed Benchmark

Market valuation $2,532m $2,370mNominal cost of funds 6.16% 8.0%Generalised cost of funds 2.88% 2.79%

2004–05 BUDGET OUTLOOK

$M

Service and usage revenue $1,293.0Other income $67.6Total income $1,360.6Operating expenses $861.5Depreciation $190.0Financing charges $157.4Total expenses $1,208.9Profit before tax and capital contributions $151.7Capital contributions $103.9Profit after capital contributions and before tax $255.6Capital investment $507.0

OPERATING PROFIT BEFORE INCOME TAX AND CAPITAL CONTRIBUTIONS 1999–00 TO 2003–04

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34

CAPITAL EXPENDITURE AND MAINTENANCESydney Water invests around half a billiondollars per year in new infrastructure tomeet customer and regulatory expectationsfor maintaining and improving servicelevels.

Capital ExpenditureTotal capital expenditure for 2003–04totalled $507 million. This included$204 million spent on projects to satisfyregulatory standards, $61 million spent onproviding infrastructure to servicepopulation growth and $40 million investedin extending sewerage services under thePriority Sewerage Program. A further$16 million was invested in businessimprovement projects, $24 million wascapitalised from borrowing costs and$162 million was spent on asset and servicereliability and the renewal and rehabilitationof existing assets.Several components of major projects werecompleted and became operational duringthe year, including: Penrith STPamplification; the Oaks and Oakdale villagesas part of the Oaks–Oakdale and BelimblaPark Sewerage Scheme; elements of theHoxton Park Carrier; and the Liverpool STPcomponent of the larger Liverpool STPupgrade project.

The Chatswood Sewer Upgrade wasdelivered within budget, with the majorbenefits being the reduction of risks of dryweather sewage overflows, servicing growthin the Chatswood CBD and meetingregulator requirements.

Maintenance Sydney Water is responsible for maintainingthe reliability and performance of its assets.In 2003–04, Sydney Water continuedinvestment in a focussed program ofpreventive maintenance and renewalsacross its water, wastewater andstormwater assets.

Achievements• The Chatswood sewerage upgrade that

services the rapidly growing ChatswoodCBD and reduces the risk of sewageoverflows was completed below budgetthrough innovative delivery methods.

• Liverpool STP Upgrade and Hoxton ParkSewer Carrier progressed towardscompletion with parts of the project nowoperational. The project is designed tomeet population growth in south-westernSydney and improve wastewatermanagement.

• Work progressed on the IllawarraWastewater Strategy which will improvewater quality at local beaches and supplyrecycled water for industrial use.

• Upgrade works at Penrith STP werecompleted and the 9 km transfer sewerfrom Glenbrook STP to Penrith STPprogressed. The project provides forgrowth and enables the decommissioningof Glenbrook STP.

• The $45 million Northern Illawarra TownsSewerage Scheme to provide sewerageservices to over 800 properties progressedto 70 per cent completion.

• Major construction started on a$95 million project to progressively renewand modernise Bondi STP. The upgrade willreduce the risk of process failure impactingbeach water quality and improve thehealth, safety and operational efficiency ofthe plant.

• Rehabilitation works progressed on theMalabar Trunk Sewerage System withconstruction commencing on the maincarriers in and around Sydney Airport toensure their structural integrity.

• Upgrade of Richmond STP to cater forfuture growth in and around Richmondand preserve water quality in theHawkesbury River commenced.

MAJOR WORKS IN PROGRESS AT 30 JUNE 2004

Expenditure to Current estimate as Forecast completionProject 30 June 2004 $M at 30 June 2004 $M date as at 30 June 2004

Illawarra Wastewater Strategy 172.3 200.5 Jan 2006Blue Mountains Sewerage Scheme Stage Two 12.7 90.0 Jun 2008Stormwater Environmental Improvement Program 2.9 18.4 Dec 2005Penrith STP Amplification Stage 8 and Glenbrook STP Transfer 27.6 33.3 Dec 2004Northern Illawarra Towns Sewerage Scheme 34.1 45.3 Late 2004Brooklyn and Dangar Island Sewerage Scheme 3.6 34.2 Late 2006West Camden STP Amplification and Upgrade 1.6 49.8 Late 2006Liverpool STP Upgrade – Stage 4a (formerly Georges River Program Stage 1) 102.0 115.0 Late 2004Mulgoa, Wallacia and Silverdale Sewerage Scheme 3.6 66.7 Mid 2006South Western Sydney Sewerage Scheme 14.0 125.0 Mid 2008Blue Mountains SewerFix Stages 1 and 2 16.2 30.1 Stage 1 June 2005

Stage 2 DeferredIICATS Wastewater (automation and telemetry) 58.3 100.0 Mid 2006Bondi STP – Reliability Improvement and Modernisation Program 39.0 95.0 Oct 2006Malabar System (formerly Southern and Western Suburbs Ocean Outfall Sewer) Risk Reduction Program 43.5 168.0 OngoingRichmond STP Stage 2 Upgrade 9.6 15.0 Late 2004Jamberoo Sewerage Scheme 6.3 18.0 Mid 2005SewerFix Pumping Station Upgrade Program 218.1 248.0 Late 2004The Oaks/Oakdale Sewerage Scheme 26.2 31.4 Late 2004Shellharbour STP amplification 2.0 32.2 Mid 2006Ryde Water Pumping Station Renewal Works 3.7 29.0 Late 2008North Head STP Reliability and Performance 2.5 106.0 Mid 2009


• The annual water main renewal targetwas exceeded below budget with$35 million being spent renewing 55 km ofwater mains.

• Construction started on the JamberooSewerage Scheme, providing sewerageservices to 350 lots in Jamberoo andprotecting public health and theMinnamurra River from septic run-off.

• Work on the $248 million SewerFixPumping Station Program, designed toreduce sewage overflows to theenvironment, approached completionahead of schedule.

• Work progressed on the Oaks–Oakdale andBelimbla Park Sewerage Schemes whichprovide sewerage services to 1,147properties with the Oaks–Oakdalecomponent becoming available forconnection. This project reduces localpublic health risks and eliminates effluentrun-off into one of Sydney’s drinking watercatchments.

PRICING REFORM

Pricing As a government-owned monopoly serviceprovider, Sydney Water’s prices are regulatedby the Independent Pricing and RegulatoryTribunal (IPART).In September 2002, Sydney Water soughtprice movements for its services over thenext two years in line with inflation asdetermined by the Consumer Price Index(CPI). In May 2003, after a public review,IPART set new prices for Sydney Water tostart to signal to customers the value ofwater.During 2003–04 and 2004–05, servicecharges for water, sewerage and stormwaterservices will remain relatively stable.However, a small increase in the usagecharge for water will mean that highvolume water users will experience anincrease in their bill, unless waterconsumption is reduced.

Usage-based ChargesOver the past decade, Sydney Water has setabout influencing the reform of prices toalign the demands of customers with thecost of providing the service.Sydney Water introduced a two-part tariffcomprising a fixed charge and a usagecharge. The usage charge indicates tocustomers the cost of their consumptionand provides a clear pricing signal to helpinfluence their decisions about water use.

As a result of this reform, a significantproportion of Sydney Water’s revenue is nowgenerated from usage charges, particularlywater usage charges.Sydney Water’s user pays approach topricing extends to new developments.To ensure that the true cost of providingwater and sewerage services to newdevelopments is covered, Sydney Waterraises revenue via developer charges.Revenue is also generated from trade waste charges.

Achievements• Usage-based charges as a source of

revenue were 45 per cent of SydneyWater’s total water, sewerage anddrainage revenue.

• All new developments in Sydney Water’sarea of operations paid a developer charge.

• The use of sewerage service and non-residential stormwater property-basedvalue charges ceased on 30 June 2004.

• Trade waste revenue fell by $0.6 million in2003–04, following an increase incompliance with trade waste agreementsand an increase in trade waste quality,hence lower trade waste costs forcustomers.

CAPITAL EXPENDITURE 1999–00 TO 2003–04

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REVENUE FROM SERVICE CHARGES BASED ON PROPERTY VALUE 1993 TO 2004

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USAGE-BASED REVENUE 1991–92 TO 2003–04

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36

Challenges• There was a slight decrease in usage-based

charges for water revenue, down to80.8 per cent, and sewerage revenue, downto 11.3 per cent. This is a decrease from2002–03 and is a result of reduced waterdemand and associated sewage volumesdue to mandatory restrictions.

• To fund the costs associated withmaintaining current service levels,balancing water supply and demand andimproving environmental outcomes,further pricing reform may be necessary.

Next Steps• Examine alternate pricing approaches in

preparation for the next review of pricingarrangements, taking cost recovery, equityand impact on customer demand intoconsideration.

• Support pricing reform with commercialreforms that improve efficiencies withinSydney Water’s business.

SOCIAL PROGRAM ACTIVITIESEach year Sydney Water carries out anumber of non-commercial social programactivities at the direction of the NSWGovernment, for which it receives fullreimbursement from the State Budget.In 2003–04, Sydney Water was reimbursed atotal of $79 million for the followingactivities:• $68.7 million for provision of pensioner

rebates• $8.1 million for property exemptions• $0.8 million for the Blue Mountains Septic

Pumpout Subsidy• $1.4 million for the Priority Sewerage

Program.

Pensioner RebatesSydney Water provides a rebate on its water,sewerage and drainage service charges topensioner concession cardholders.Determined by IPART, the rebate is designedto ensure that all residential customers haveadequate access to water, sewerage anddrainage services.

Exempt PropertiesCertain properties are exempt from thepayment of certain Sydney Water charges.Land owned and used by organisations thatprovide non-profit community services andamenities are generally treated as ‘exemptproperties’.

Blue Mountains Septic PumpoutIn 2003–04, as in previous years, SydneyWater subsidised the Blue Mountains SepticPumpout Service. Demand for this service isexpected to fall over coming years asproperties are connected to the newreticulated sewerage service provided bySydney Water.

Priority Sewerage ProgramUnder the Priority Sewerage Program,Sydney Water extends sewerage services tocurrently unsewered areas in accordancewith agreed government priorities andfunding arrangements.

Achievements • More than 210,000 pensioner households

were provided with a rebate on water,sewerage and drainage service charges.The typical rebate was in excess of$300 per annum.

• Exemptions to service charges weregranted to around 12,000 propertiesowned or used by non-profit communityservices and local government.

• The Blue Mountains Septic PumpoutService was subsidised, to benefitapproximately 710 properties.

• Construction progressed for a reticulatedsewerage service to the Northern Illawarratowns of Coalcliff, Otford, Stanwell Parkand Stanwell Tops, which will enableapproximately 850 properties to connectin 2004–05.

Next Steps • Introduce reticulated sewerage services

into high priority unsewered areasincluding Jamberoo and Mulgoa, Wallaciaand Silverdale.

FIVE-YEAR HISTORY OF SOCIAL PROGRAM FUNDING1999–00 TO 2003–04

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20

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<Pensioner rate rebate <Exempt properties<Blue Mountains septic pumpout <Priority sewerage program*

Socia

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($m

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2003

–04 * Reimbursement in 1999–00 reflects previous

funding arrangements, whereby total program cost reimbursement was provided, pending appropriate pricing arrangements.


RESEARCH AND DEVELOPMENTSydney Water’s research and development(R&D) program spans a range of projects,from improving process control at sewagetreatment plants to community-basedurban water cycle management. SydneyWater contributes to national andinternational research organisations andassesses international best practice andemerging trends in providing drinking waterand wastewater services, in theenvironment and public health.R&D projects are conducted by in-housestaff in collaboration with universities andother organisations. Sydney Water is amember of several cooperative researchorganisations including:• Cooperative Research Centre for Waste

Management and Pollution Control(Australia)

• Cooperative Research Centre for WaterQuality and Treatment (Australia)

• American Water Works AssociationResearch Foundation (US)

• Water Environment Research Foundation(US)

• Water Services Association of Australia(WSAA).

Sydney Water maintains an R&D portfoliothat aims to achieve investment across aspectrum of projects, from strategicresearch regarding new services andtechnologies through to research improvingoperations of existing infrastructure andprocesses.

In 2003–04 Sydney Water invested$5.36 million in its R&D program.

Achievements• A better understanding of the attitudes

and mindsets driving high waterconsumption was gained and strategiesidentified to influence consumerbehaviour to reduce water consumption.

• New technology to assess the condition ofcritical water mains. This technologyallows the proactive determination of thecondition of critical water mains and hasdemonstrated significant cost savings inwater main renewals.

• A system to use radar rainfall mapping toimprove the accuracy of data input toSydney Water’s sewer models. This allowsthe collection of more accurate rainfalldata without the cost of installingadditional rainfall gauges.

• An innovative sewer lining system that hasthe potential to reduce sewer repair costsby 10 per cent. The system has beensuccessfully used in a section of one ofSydney Water’s main sewers. The systemhas advantages in terms of occupationalhealth and safety and speed of applicationover existing repair systems.

• Real time polymerase chain reactionmethods were developed collaborativelyand implemented in Sydney Water’sanalytical laboratory to increase theaccuracy and timely identification ofviruses and protozoa in water.

• A system for the use of Global PositioningSystems and hand held computers wasdeveloped to find and track assets likevalves and sewer inspection points. Thiswill reduce the time and cost of locatingassets in situations that are difficult toaccess.

Challenges• Ensure that Sydney Water’s R&D

investments are targeted to meetemerging challenges in the provision ofsustainable water services in a growingcity.

• Ensure a return on investment in R&D byfocusing on the implementation ofresearch outcomes in the business.

Next Steps• Continue to invest in strategic R&D that

meet emerging challenges in the provisionof sustainable water services thatconsiders integrated water cyclemanagement, new technologies, recycling,water conservation and social research.

• Continue to invest in operational R&D andprocess optimisation that improves theefficiency and cost effectiveness of waterand wastewater treatment anddistribution.

• Continue to invest in collaborativeresearch in external research alliances andensure delivery of research outcomes fromthese arrangements.

• Continue to monitor emerging trends indrinking water quality and public healthand invest in R&D to close knowledgegaps and continually improve thecapability of Sydney Water’s water sciencelaboratories.


38

COLLABORATIVE PROJECTS – AUSTRALIAN RESEARCH COUNCIL LINKAGE GRANT SCHEME

Research provider Project scope

Murdoch University Optimisation of cell culture for CryptosporidiumUniversity of Technology, Sydney The impact of endocrine disrupting compounds in receiving waters on aquatic biotaUniversity of Queensland Enhancing biological denitrification by addition of external carbon sources

COLLABORATIVE RESEARCH ARRANGEMENTS

Expenditure Research provider Area of focus 2003–04

American Water Works Association Research Foundation Drinking water quality and public health $30,000Water Services Association of Australia (WSAA) Water quality, public health and sustainable water supplies $350,000Cooperative Research Centre for Waste Management Wastewaterand Pollution Control $300,000Cooperative Research Centre for Water Quality and Treatment Water quality and public health $150,000Water Environment Research Foundation Wastewater and water recycling $100,000

COMPLETED MAJOR RESEARCH AND DEVELOPMENT PROJECTS 2003–04

Actual expenditure to ExpenditureDescription 30 June 2003 2003–04 Final cost

Influencing the behaviour of high water users Nil $130,000 $130,000Community views on water conservation Nil $97,840 $97,840Customer views on pricing for water conservation Nil $87,500 $87,500Radar rainfall mapping facility development $74,842 $12,070 $86,912Development of an application system for Biocrete, an innovative sewer repair technology $254,249 $241,415 $468,664Real time polymerase chain reaction for viruses and protozoa $174,500 $61,648 $236,148Review of existing recycled water irrigation systems $7,841 $30,506 $38,347Investigations of the state of rubber ring joints in Sydney $18,742 $20,983 $39,725Carbon source for denitrification $45,155 $25,790 $70,945Modelling of sulphide generation and control $119,299 $64,479 $183,778Online instrumentation for process control for sewage treatment plants $126,840 $25,769 $152,609

CONTINUING MAJOR RESEARCH AND DEVELOPMENT PROJECTS 2003–04


Condition assessment of critical water mains – R&D using MainscanTM

equipment Nil $210,000 $253,000Recycled water quality requirements for industrial and commercial applications Nil $43,003 $107,600Residential landscape assessment Nil $16,073 $250,000Extending sewer asset life by alkaline coating Nil $41,300 $63,500Identification of substances interfering with the recovery of Cryptosporidium in raw waters Nil $41,662 $134,000Production of granulated biosolids and impacts of application of granulated biosolids on turf $11,119 $110,045 $326,092The National Biosolid Research Program – evaluation of benefits and risks from lime amended biosolids $28,870 $42,647 $93,268Demonstrating opportunities for water sensitive western Sydney $29,055 $97,604 $200,000Small to medium scale integrated water cycle management methodology $16,019 $207,570 $356,000Modelling of large service reservoirs for improved reservoir mixing and water quality $124,383 $42,144 $148,000Demonstration of an innovative community-based water cycle management system $87,096 $62,089 $511,000

OPERATIONAL IMPROVEMENT PROJECTS


Characterisation and minimisation of disinfection by-products in the Prospect Water System* $99,000 $86,000 $250,000Removal of manganese – pilot plant study* $278,000 $40,200 $322,300NOM characterisation and removal for disinfection by-products minimisation* Nil $52,493 $81,000UV to monitor disinfection by-products* Nil $65,400 $74,400* Build Own Operate (BOO) operational R&D funded under BOO contract arrangements.


MANAGING RISKSydney Water has a systematic approach toidentifying and managing risks and its RiskManagement Framework complies with theAustralian & New Zealand Standard(AS/NZS 4360). Sydney Water faces a broadrange of external, commercial, operational,project specific and other risks that canpotentially impact on the performance ofthe Corporation.Sydney Water is implementing a BusinessAssurance Framework that incorporates theexisting Corporate Risk ManagementFramework and methodology. The BusinessAssurance Framework provides a strategic,integrated approach to Corporate RiskManagement and an effective tool fordemonstrating and communicating theimportant governance links betweencorporate objectives, compliance, riskmanagement, audits and reporting.The Audit, Risk, Finance and Major ProjectsCommittee of the Board receives updatesand reports on the key enterprise and highresidual risks on a regular basis as well askey mitigation activities.

InsuranceSydney Water maintains an extensiveinsurance program as part of its RiskManagement Strategy. The key policies coverthe Corporation’s assets, works underconstruction and legal liabilities.The program was reviewed during the yearwith most policies renewed at 31 May 2004.Total premiums were significantly lowerthan the previous year reflecting currenttrends in the insurance market.Additionally, Sydney Water is a licensed self-insurer for Workers’ Compensation inNew South Wales. Appropriate interstatepolicies and Excess of Loss Workers’Compensation Insurance mitigate this risk.

During the year Sydney Water identifiedissues associated with the Corporation’sinsurance broking services contract thatwarranted further investigation. The matterwas subsequently referred to the NSWPolice and proceedings have commenced inthe NSW Supreme Court against the broker.

Legal ChangeSydney Water Amendment (WaterRestrictions) Bill 2003The NSW Governor approved amendmentsto the Sydney Water Act on 29 October2003, designed to facilitate the enforcementof water restrictions.The amendments provide that each personwho is the owner or occupier of the land onwhich an offence occurs is taken to have acommitted the offence if the identity of theactual offender cannot be ascertained atthe time.The amendments also empower personsauthorised to issue penalty notices for waterrestriction offences to enter land for thepurpose of investigating suspected offences.Access Application to National Competition CouncilIn March 2004, an application was made bya third party to the National CompetitionCouncil (NCC) for declaration of certainservices provided by the Corporation inconnection with what the applicationdescribed as Sydney Water’s Sydney SewageReticulation Network.The process of declaration is one option (for access to infrastructure) provided forunder Part IIIA of the Trade Practices Act,subject to certain criteria being met.Declaration of services establishes the rightfor access seekers to commercially negotiateaccess with the service provider.

Building Assessment Sustainability Index (BASIX)The introduction of BASIX on 1 July 2004 willresult in more sustainable homesthroughout NSW. A typical development willmeet the target for water conservation if itincludes:• showerheads and tap fittings with at least

a AAA rating• dual flush toilets, and• a rainwater tank or equivalent communal

system of a minimum specified volume, ora connection to an appropriate recycledwater supply for outdoor water use andtoilet flushing and/or laundry.

The implementation of the prescribedtargets will result in a cumulative reductionin water consumption of 182,000 ML and a cumulative reduction in greenhouseemissions of 7.2 million tonnes across NSWover the next 10 years.

Challenges• Sydney Water previously insured some of

its risks with the HIH Insurance Group.As a result of the liquidation of Companiesin that Group, a number of claims remainoutstanding. Sydney Water continues topursue strategies to mitigate the potentialshortfall in recoveries on these claims.

CORPORATE GOVERNANCE

Corporate Governance FrameworkThe Board of Sydney Water is committed to achieving excellence in corporategovernance.Within a framework determined by relevantprovisions of the Sydney Water Act 1994 andthe State Owned Corporations Act 1989,the Board has initiated and implementedcorporate governance systems andprocesses to manage and monitor SydneyWater and its subsidiary companies.All decisions relating to the operation ofSydney Water are made by or under theauthority of the Board of Directors. TheBoard is accountable to the NSWGovernment through a portfolio Ministerand two shareholder Ministers.Under the corporate governance framework,the Chairman and Directors are appointedby the shareholder Ministers; and theManaging Director is appointed by theGovernor of NSW following the initialrecommendation of the Board.The Chairman has stewardship of the Board and presides over Board meetings.The Managing Director is responsible for theday-to-day management of Sydney Water’soperations in accordance with the generalpolicies and specific directions of the Board.In turn, the Managing Director has authority to delegate some of his powers and functions to other positions in Sydney Water.The Managing Director is accountable to theBoard through an Instrument of Conferral ofPowers and Authority granted by the Board,an Employment Agreement, and aPerformance Agreement. Performance ofthe Managing Director is reviewed every sixmonths. The Managing Director is the soleExecutive Director on the Board.

Removal of Managing DirectorOn 26 February 2004, the Board of SydneyWater resolved to recommend to theportfolio Minister that Greg Robinson be removed from the office of ManagingDirector for the reason that the Board hadlost confidence in his ability to offercontinuing leadership.Mr Robinson was removed from the office of Chief Executive Officer (ManagingDirector) by Order of the Governor made 27 February 2004.David Evans was appointed by the portfolioMinister to the office of Acting ChiefExecutive Officer (Acting ManagingDirector) on 1 March 2004. By Order of theGovernor made on 23 June 2004, Mr Evanswas appointed to the office of ManagingDirector, retrospectively from 1 April 2004.Mr Evans’ appointment to the office ofManaging Director was made following the recommendation of the Board of Sydney Water.

Board Composition and MembershipThe Board may consist of up to 10 memberswith the Chairman and Directors appointedby the shareholder Ministers for a set term,which must not exceed five years.In May 2004, nominations for appointmentto the Board of Sydney Water wereadvertised in various newspapers.Advertising for nominations is arequirement under section 5A of the Sydney Water Act 1994 and ensures thatBoard composition and candidacy is sourced widely.Under the Sydney Water Act, appointmentsmust be made to the Board so that theBoard is composed of Directors withseparate expertise in:• business management• protection of the environment• public health.During the year ended 30 June 2004, theBoard operated, at various times, with aminimum number of seven and a maximumnumber of eight appointed Directors.Changes to Sydney Water’s Board ofDirectors in 2003–04 were as follows:• Greg Robinson was removed as a Director

on 27 February 2004• Brian Gilligan was appointed as a Director

from 12 May 2004• David Evans was appointed as a Director

retrospectively from 1 April 2004.

Directors’ DutiesSchedule 10 of the State OwnedCorporations Act 1989 provides for aminimum standard for Directors’ duties.Under the Act and Sydney Water’sConstitution, the Directors are required to:• act honestly in the exercise of their power

as a Director• exercise reasonable care and diligence• avoid conflicts of interests• disclose actual or potential conflicts of

interests and remove themselves fromdecision making on such matters

• not make improper use of their position asa Director or information obtained byvirtue of their position as a Director.

Directors’ Code of ConductThe Board has adopted a Code of Conductthat is an adaptation of principles developedby the Australian Institute of CompanyDirectors. Although not an exhaustivestatement of Directors’ obligations, the Codeis intended to provide Directors withguidance in carrying out their duties andresponsibilities.

The Code of Conduct requires Directors:1 To act honestly, in good faith and in the

best interests of Sydney WaterCorporation as a whole.

2 To use care and diligence in fulfilling thefunctions of office and exercising thepowers attached to that office.

3 To use the powers of office for a properpurpose, in the best interests of SydneyWater Corporation as a whole.

4 To recognise responsibility andaccountability to the State of New SouthWales, the shareholder Ministers andother stakeholders of Sydney WaterCorporation.

5 Not to make improper use ofinformation acquired as a Director.

6 Not to take improper advantage of theposition of Director.

7 Not to allow personal interests, or theinterests of any associated person, toconflict with the interests of SydneyWater Corporation.

8 To be independent in judgement andactions and to take reasonable steps tobe satisfied as to the soundness ofdecisions taken by the Board ofDirectors.

9 To ensure that confidential informationreceived in the course of directorialduties remain the property of SydneyWater Corporation and not to disclose it,or allow it to be disclosed unless thatdisclosure has been authorised bySydney Water Corporation or the personfrom whom the information wasprovided, or as required by law.

10 Not to engage in conduct likely to bringdiscredit upon Sydney WaterCorporation.

11 To comply, in good faith, with the spirit,as well as the letter of this Code.

Board MeetingsThe Board meets every month exceptJanuary, with a schedule of meeting datessettled annually, in advance.A quorum of a Board meeting is establishedwhen four Directors are present either inperson or by proxy. A Director may bepresent ‘in person’ at a Board meeting bytelephone or video conference.Matters arising at Board meetings aredecided by discussion, consensus and formal resolution.

Board CommitteesIn December 2003, the Board reviewed andrestructured its committees.Under Sydney Water’s Constitution,Directors may delegate any of their powersto committees which consist of at least oneDirector.

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The Board now has five regular committees,being:• Audit, Risk, Finance and Major Projects

Committee• Environment Committee• Property and Growth Committee• Public Health, Research and Development

Committee• Remuneration and Performance

Committee.Audit, Risk, Finance and Major ProjectsCommittee – oversees governance,management of major risks, ethics,compliance, financial matters, and themanagement of major capital projects.The Committee assists the Board and its subsidiaries in progressing theircorporate governance responsibilities byensuring the implementation of effectiveassurance systems.Environment Committee – oversees Sydney Water’s approach to environmentalmanagement, including its strategicdirection, environmental risk managementand corporate environmental performanceand reporting.Property and Growth Committee – overseesthe development and implementation ofthe Corporation’s strategic property disposalplan and the workplace accommodationstrategy. The Committee also oversees thecontribution by Sydney Water to assist withthe NSW Government’s growth strategy forSydney and Sydney Water’s plans to allowreasonable public access to its properties.

Public Health, Research and DevelopmentCommittee – oversees Sydney Water’sstrategic approach to public health andresearch and development. In particular, theCommittee advises the Board on publichealth matters relating to Sydney Water’soperations and monitors emerging issues.Remuneration and Performance Committee– reviews the remuneration levels of all staff.In particular, the Committee monitors theperformance of the senior manager groupand makes recommendations regarding theremuneration packages of senior managershaving consideration for marketcomparisons and for the achievement ofcorporate performance targets.Each committee has a Charter approved bythe Board. As the Board is the principaldecision maker in Sydney Water, it is notconsidered necessary to authorisecommittees to make decisions. Accordingly,committees are consultative, advisoryand/or problem solving in nature.Each committee consists of a Chairman,nominated from amongst the Directors,with a convenor, nominated from amongstthe Executive. Other Directors may also benominated for committee membership.To keep the Board fully informed, anopportunity is provided to each CommitteeChairman to brief the Board when theCommittee Minutes are tabled at Boardmeetings.Special Purpose Committees may also beconvened on an ad hoc basis. For example, acommittee may be convened in relation to aparticular major project or other initiative.

Indemnity and Insurance Under the State Owned Corporations Act1989 and Sydney Water’s Constitution,Sydney Water may indemnify its Directorsonly with the approval of the shareholderMinisters.All non-executive Directors have beengranted such approval and have been givena Deed of Indemnity. The Deed entitlesDirectors to be indemnified for liability forcosts and expenses in defending criminal orcivil proceedings provided that:• the liabilities relate to their position as a

Sydney Water Director• the proceedings are not brought against

the Director by Sydney Water or any of itssubsidiaries

• judgement is given in favour of theDirector, or the Director is acquitted, or theproceedings against the Director arewithdrawn before judgement, or relief isotherwise granted to the Director.

Indemnity does not extend to circumstanceswhere the liability arises out of conductinvolving lack of good faith.Sydney Water maintains insurance withrespect to Directors’ and Officers’ Liability.The policy underpins and augments theDeed of Indemnity. Insurance does notextend to deliberate acts of fraud ordishonesty.

ATTENDANCE AT BOARD AND COMMITTEE MEETINGS 2003–04

Director Board of Audit and Risk Environment Public Health, Remuneration Strategic Audit, Risk, Remuneration Property Directors Management Committee Research and Committee Property Finance and and and GrowthMeeting Committee No. Held Development No. Held Planning Major Projects Performance CommitteeNo. Held No. Held (Attended) Committee (Attended) Committee Committee Committee No. Held(Attended) (Attended) No. Held No. Held No. Held No. Held (Attended)

(Attended) (Attended) (Attended) (Attended)1 Jul 2003 to 1 Jul 2003 to 1 Jul 2003 to 1 Jul 2003 to 1 Jul 2003 to 1 Jul 2003 to 1 Jan 2004 to 1 Jan 2004 to 1 Jan 2004 to30 Jun 2004 31 Dec 2003 30 Jun 2004 30 Jun 2004 31 Dec 2003 31 Dec 2003 30 Jun 2004 30 Jun 2004 30 Jun 2004

G Kibble 13 (13) (C) 3 (3) – 2 (2) 2 (2) (C) 1 (1) 3 (3) 1 (1) (C) 1 (1)G Robinson* 8 (7) 3 (3) 1 (1) 1 (1) 2 (2) 1 (1) 1 (1) – –D Evans^ 5 (4) – 1 (1) 1 (1) – – 2 (2) 1 (1) 1 (1)P Baume 13 (12) – – 2 (2) (C) – – – – –B Gilligan# 3 (3) – – – – – – – –J Grant∆ 13 (13) 3 (3) 1 (1) – – – 3 (3) (C) – –R Kelly 13 (13) 3 (3) – 2 (2) – 1 (1) 3 (3) – 1 (1)G McCully 13 (13) – 2 (2) – 2 (2) 1 (1) (C) – 1 (1) 1 (1) (C)J Priest 13 (12) 3 (3) (C) – – – 1 (1) 3 (2) – 1 (1)A Peters 13 (13) – 2 (2) (C) – – 1 (1) – – 1 (0)

* Greg Robinson was removed as Managing Director on 27 February 2004.^ David Evans commenced as Acting Managing Director on 1 March 2004.# Brian Gilligan was appointed a Director on 12 May 2004.∆ Jim Grant retired from the Environment Committee following the Committee’s restructure effective 1 January 2004.(C) Chairman of the Board and/or Committee.Note: The Board adopted a revised committee structure from January 2004.

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BOARD MEMBERS

A non-executive Directorof Sydney WaterCorporation sinceNovember 1997 andChairman since September1998. Chairman of theRemuneration andPerformance Committee;a member of the Propertyand Growth Committee;Public Health, Researchand DevelopmentCommittee; and the Audit,Risk, Finance and MajorProjects Committee.Chairman of SydneyWater’s trading subsidiary,Australian WaterTechnologies Pty Ltd.Gabrielle is also theAdministrator of LiverpoolCouncil; Director of SydneyOlympic Park Authority;Director of Questacon –The National Science andTechnology Centre; andTrustee and DeputyChancellor of theUniversity of WesternSydney.Gabrielle is a Fellow of theRoyal Australian PlanningInstitute and an HonoraryAssociate of the GraduateSchool of Government,University of Sydney.

Managing Director ofSydney Water since April2004. As ManagingDirector, David attends theAudit, Risk, Finance andMajor Projects Committee;Environment Committee;Remuneration andPerformance Committee;Public Health, Researchand DevelopmentCommittee; and theStrategic Property andGrowth Committee. Davidis the sole executiveDirector on the Board.A Director of SydneyWater’s trading subsidiary,Australian WaterTechnologies Pty Ltd.David was previouslyManaging Director ofHunter Water Corporationfrom 1993 and is ChiefExecutive Officer of the Regional LandManagement Corporation.

A non-executive Directorof Sydney Water sinceSeptember 1998.Chairman of the PublicHealth, Research andDevelopment Committee.Chairman of BCB ServicesPty Ltd; Chancellor of theAustralian NationalUniversity since 1994having served as aCouncillor since 1984;Emeritus Professor at theUniversity of NSW.Professor Baume is aGovernor of the Foundationfor DevelopmentCooperation and anHonorary ResearchAssociate, Social PolicyResearch Centre, Universityof New South Wales.Professor Baume was aCommissioner of theAustralian Law ReformCommission. Former Headof School of CommunityMedicine at University ofNew South Wales; FederalMinister for AboriginalAffairs; Federal Minister forEducation; FederalMinister Assisting forNational Development andEnergy; Federal Ministerfor Health and Senator forNew South Wales.

A non-executive Directorof Sydney Water since May2004. A member of theEnvironment Committee.Brian is a Member of theWorld Commission onProtected Areas; a memberof the EnvironmentInstitute of Australia; aDirector of the Council ofWetlands International –Oceania Program and aDirector of the HunterValley ResearchFoundation. Brian’s formerappointments includeDirector-General, NSWNational Parks and WildlifeService 1998–2003;Executive DirectorOperations, NSWEnvironment ProtectionAuthority 1996–1998; andDirector, Hunter WaterCorporation 1989–1992.Brian is a Fellow of boththe Australian Institute ofCompany Directors andthe Australian Institute ofManagement.

GABRIELLE KIBBLE AO CHAIRMANBA, DipTCP, FRAPI, D Sc Hc UNSW

DAVID EVANSMANAGING DIRECTORB Ec (Hons)

THE HON EMERITUSPROFESSOR PETER BAUME AO,MB BS, MD (SYD), Hon D Litt (USQ),FRACP, FRACGP, FAFPHM

BRIAN GILLIGANBA, DipEd, MA


A non-executive Directorof Sydney Water sinceSeptember 2001.A member of the PublicHealth, Research andDevelopment Committee;Strategic Property andGrowth Committee andAudit, Risk, Finance andMajor Projects Committee.Experienced in corporatefinance advice, Ralph is aDirector in the SpecialisedCapital Group withinWestpac InstitutionalBank. A Director of DelhiPetroleum Pty Ltd;Delhi Holdings Limited;Australian PetroleumInvestments Pty Ltd; andAusflag Limited.Ralph is a Fellow of boththe Securities Institute ofAustralia and theAustralian Institute ofCompany Directors.

A non-executive Directorof Sydney Water sinceMarch 1999. Chairman ofthe Strategic Property andGrowth Committee; amember of theEnvironment Committee;Remuneration andPerformance Committee;and a member of theSpecial EnvironmentLevy Trust.Gary is General Managerof Liverpool City Council.A member of the RoyalAustralian PlanningInstitute; the LocalGovernment ManagersAustralia; the InternationalCity Managers'Association; and a LifeMember of CurtinUniversity Alumni.

A non-executive Directorof Sydney Water sinceSeptember 2001.Chairman of SydneyWater’s EnvironmentCommittee; a member of the Audit, Risk, Financeand Major ProjectsCommittee; and theStrategic Property andGrowth Committee.Alison is the DeputyAssistant Secretary for the Labor Council of NSW.A member of the NSW Co-operatives Council; theNSW Seafood IndustryConference; United WaySydney; and the NSWPrivacy AdvisoryCommittee.

A non-executive Directorof Sydney Water sinceSeptember 1998. Amember of the Audit, Risk,Finance and Major ProjectsCommittee; and StrategicProperty and GrowthCommittee. A Director of Sydney Water’s tradingsubsidiary, AustralianWater Technologies Pty Ltd.John is currently Chairmanof Macquarie CorporateTelecommunications Ltd;Chairman of Betcorp Ltd;Chairman of Apollo LifeSciences Limited; andCouncil Member of theAustralian GraduateSchool of Management.Formerly of Coca-ColaAmatil Limited, John heldthe positions of ExecutiveDirector, Chief FinancialOfficer and Director ofCorporate Development.John is a Fellow of theAustralian Institute ofCompany Directors.

A non-executive Directorof Sydney Water sinceSeptember 2001, Jim sadlypassed away in July 2004.Jim was Chairman of theAudit, Risk, Finance andMajor Projects Committeeand a member of theEnvironment Committee.Jim was a Director of ArabBank Australia Limited andVRI Biomedical Ltd andalso acted as a consultantto a number of companies.Jim was a fellow of theInstitute of CharteredAccountants in Australiaand the AustralianInstitute of CompanyDirectors.

RALPH KELLYB Com, MBA, FSIA, FAICD

GARRY MCCULLYMRAPI, MIMM, MICMA

ALISON PETERSLLB, B Com

JOHN PRIESTB Bus, FCPA, FAICD

MR JIM GRANT FCPA, FICA, FAICD

ORGANISATIONAL CHART*

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BOARD OF DIRECTORS

MANAGING DIRECTORDAVID EVANS

CORPORATE SERVICES FINANCE PEOPLE AND PROPERTY SUSTAINABILITY

ANGELA TSOUKATOS• Regular strategy and pricing• Business assurance• Corporate communications and marketing• Corporate relations

DENISE DAWSON• Management reporting and budgeting• Group financial control• Corporate planning• Business improvement• Shared services• Information technology

IAN GREY• Health and safety • Organisation development • Industrial relations • HR operations • Workers’ compensation• Workplace accommodation program• Group property• Property rationalisation program

JUDI HANSEN• Planning• Environment planning and management• Research and development• Urban growth

ASSET MANAGEMENT ASSET SOLUTIONS CUSTOMER SERVICES WATER SERVICES

PAUL FREEMAN• Asset management, planning and maintenance• Network planning and operations• Water treatment and operations• Wastewater treatment and operations• Science and technology• Analytical and field services

RON QUILL• Capital works program • Design• Survey• Procurement and contract management services• AWT

COLIN RIDLEY• Customer contact centres • Customer service and income processing • Billing and revenue • Developer operations • Trade waste disposal• Demand management • Customer research• Streamwatch

MICHAEL KEELAN• Mechanical, electrical and civil maintenance• Construction

* Sydney Water Organisational Chart at 30 June 2004


DENISE DAWSONCHIEF FINANCIAL OFFICER

Denise was appointed Chief FinancialOfficer in January 2004. Denise joinedSydney Water as General Manager,Customer Service in September 2001,and brings 20 years of experience in theelectricity industry. Prior to joining Sydney Water, she held a number of roles at United Energy Melbourne, the mostrecent being General Manager responsiblefor Full Retail Contestability (Electricity andGas). Her other positions have includedGeneral Manager, Finance andAdministration at Powerlink Queensland,General Manager, Corporate Services atLegal Aid Brisbane, and finance roles atSouth East Queensland Electricity Board.She has a Bachelor of Business and aGraduate Diploma in Accounting.

IAN GREYGENERAL MANAGER, PEOPLE AND PROPERTY

Ian joined Sydney Water as GeneralManager, People and Quality, in July 2001.The division was subsequently restructuredto People and Property in January 2004.His previous role was as Director of HR for P&O Ports, where he was involved withwaterfront reform in Australia. At P&O, healso managed the human resource aspectsof international mergers and acquisitionsaround the world and led the company’ssafety and environment management.He previously worked for Sydney Waterdesigning and then project managing anextensive change program in the sewagetreatment plants. He was also theorganisation’s Personnel Manager. His otherpositions have included Industrial RelationsManager at the Maritime Services Boardand a decade as a union official spentmainly in shipping and related industries.He has a Bachelor of Economics and aMasters of Commerce (Industrial Relations).

MICHAEL KEELANGENERAL MANAGER, WATER SERVICES

Michael was appointed General Manager,Water Services in July 2001. Michael joinedSydney Water in January 1975 as a civilengineering cadet and has worked insystem planning, the hydraulics laboratory,construction and operations andmaintenance. Since 1990, he has held seniormanagement positions including WaterManager Greater Western Region, Purchaseand Delivery Breakthrough Manager,Manager System Services and BusinessDevelopment and CommunicationsManager, Distribution. He joined AWT inApril 2000 as General Manager, NetworkServices. He has a Civil Engineering Degreeand a Masters of Business Administration.

JUDI HANSENGENERAL MANAGER, SUSTAINABILITY

Judi was appointed General Manager,Environment and Innovation in July 2001.The division was subsequently restructuredto Sustainability in September 2003.Judi joined Sydney Water in 1990 as amarine scientist, subsequently moving into environmental management andstrategic planning. Her positions haveincluded Environmental Manager, CleanWaterways Program, Manager, GroupProduct and Asset Planning, and GeneralManager, Strategy and Change. Prior toworking for Sydney Water, her backgroundwas in academic research, working onecological processes in urban coastal, coralreef and Antarctic marine waters. She hasheld positions at CSIRO, the AustralianInstitute for Marine Science and theUniversity of Sydney. She has a Bachelor of Science (Biology) a Masters of Science(Microbiology) and a PhD (Marine Ecology).

ANGELA TSOUKATOSGENERAL MANAGER, CORPORATE SERVICES

Angela was appointed General Manager,Corporate Affairs and Corporate Secretary in May 1999. The division was subsequentlyrestructured to Corporate Services inSeptember 2003. Angela joined SydneyWater in 1990. She has held manychallenging roles in the areas of policy,standards of service, regulatory complianceand executive support. In 1998, she wasappointed Manager, Group Environment,Regulation and Compliance, and alsomanaged the Corporation’s response to theNSW Government inquiry into the watercrisis. Prior to joining Sydney Water, Angelaheld positions in the non-governmentsector, and in local government as acaseworker, community worker and policyofficer. Her first role at Sydney Water was asthe Ethnic Affairs Adviser. She has a Bachelorof Social Work, a Masters in Management(Public Sector Management) and is aGraduate Member of the AustralianInstitute of Company Directors.

RON QUILLGENERAL MANAGER, ASSET SOLUTIONS

Ron was appointed General Manager, AssetSolutions in April 2000. Ron has been withSydney Water for over 30 years. With hisengineering background, he worked incorporate planning and as a ministerialpolicy adviser before becoming the BulkWater Manager and Regional Manager forIllawarra and the Greater Western Regions.He was then promoted to the role ofGeneral Manager of TransWater. He has a Bachelor of Engineering (Civil).

PAUL FREEMANGENERAL MANAGER, ASSET MANAGEMENT

Paul was appointed General Manager,Asset Management in July 2000. Paul joined Sydney Water in 1978 as a traineemechanical engineer. In a career spanning25 years with Sydney Water, he startedworking in design, water planning,maintenance workshops, plant branch andat the Malabar STP. He then moved on tooperation and management roles within the Wastewater Treatment business.He was promoted in 1998 to WastewaterDistribution Manager in the newly formedDistribution business, and became GeneralManager, Distribution, in 1999. He has aBachelor of Engineering (Mechanical).

COLIN RIDLEYACTING GENERAL MANAGER, CUSTOMER SERVICES

Colin assumed the role of General Manager,Customer Services in an acting capacityfrom January 2004. Colin commenced with Sydney Water in October 1990 afterspending 15 years in the manufacturingsector. In July 1992, he was appointed asBusiness and Operations Manager, AWTEnsight. From January 1995 Colin performedthe role of Manager Wastewater SourceControl in the Utilities business until 1998when he was appointed ManagerResidential Retail. Subsequently, Colin wasappointed as Manager, CustomerOperations in Customer Services division.He has a Bachelor of Science degree.

EXECUTIVE TEAM*

* Sydney Water Executive Team at 30 June 2004

SUSTAINABILITY SNAPSHOT

Sydney Water has measured its environmental, social and economic performance in 2003–04 against a number of key signposts, assigning a progress rating.

Signposts Progress rating Comment Further detailWater Conservation and Recycling Demand Management Programs have reduced water 9

consumption. However, gains have been offset by droughtand high population growth.

Wastewater Management Plant upgrades have delivered significant reductions in 12nutrient loads to inland waterways. However, overflows have been reduced primarily due to drought.

Recycling of Treatment By-products 99.8% of captured biosolids and 100% of water treatment 14residuals reused or stored on site for later use.

Stormwater Management Stormwater systems maintenance and improvement 14program progressing.

Trade Waste Management Education and partnership with industry resulted in 15meeting all quality requirements for effluent and biosolids.

Waste Minimisation A significant reduction in waste generated from the 16previous year.

Heritage and Natural Resource Management Improved planning and management of operations have 16avoided major impacts to natural and cultural heritage.

Energy Management Energy use and greenhouse gas emissions have decreased. 18However, this is largely due to decreased water consumption because of drought. Increase in energy consumption due to a higher level of wastewater treatment.

Environmental Management Systems Management of environmental risks enhanced through 19integration of processes and systems and incorporation of ESD principles into decisions and planning.

Safe and Reliable Water Services Drinking water quality compliance achieved. 20Investing in the Community Continued to strengthen ties with partner organisations. 22Affordable Access Continued to protect rights to water services, maintaining 23

and enhancing existing programs to meet customers’special needs.

Open and Honest Relationships Customer satisfaction is stable, but trust in Sydney Water 24has been impacted by the current water shortages.

Improving Customer Service Continued to build on customer service programs and 25channels and were awarded for excellence in this area.

Publications Continued to improve communication tools and were 24awarded for excellence in this area.

Protecting Health and Safety Despite implementation of programs on the importance 26of safety, there were two fatalities during the year.

An Equitable Workplace Representation of all EEO categories remains relatively static. 27Financial Performance Despite improvement in underlying cost effectiveness, 30

overall financial performance constrained by the impact ofthe drought on both revenue and expenditure items.

Capital Expenditure and Maintenance 96% of capital programs on track or within acceptable 34tolerances for on time, on budget, and risk profile performance.

Pricing Reform Seeking cost reflective prices that encourage efficient use 35of services.

Social Program Activities Continued to administer subsidies and rebates to a variety 36of groups and individuals.

Research and Development Internal research effort and partnerships delivered process 37improvements that promise better environmental performance.

Managing Risk Risk management became more strategic and integrated 39during the year.

46

= On trackevidence demonstrating a positive long-term trend in relevant indicators towards the objective.

= Inconclusiveno clear long-term trend in relevantindicators towards or away from theobjective. Mixed results, positive trendsfor some indicators and negative trendsfor others towards the objective.

= Need more workdata demonstrating a negative long-term trend in relevant indicatorstowards the objective.


ASSURANCE STATEMENT

To the Board and Stakeholders of Sydney Water CorporationSydney Water Corporation (Sydney Water) commissioned URS Australia Pty Ltd (URS) to provide independent assurance of the non-financial contentof this Sydney Water Annual Report 2004: Environmental, Social and Economic Performance (the ‘report’). The report presents Sydney Water'ssustainability performance over the period 1 July 2003 to 30 June 2004. Sydney Water was responsible for the preparation of the report and thisstatement represents the auditor’s independent opinion. URS was not responsible for preparation of any part of this report. URS has undertaken anumber of other commissions for Sydney Water in the reporting period. Consequently, independence was ensured by selecting a verification teamfrom the Melbourne office of URS that had no other involvement with Sydney Water during the reporting period. The audit team comprisedindividuals with expertise in the water sector and in environmental and social performance measurement. Inclusion of key stakeholderengagement as part of the assurance process means that, for the first time, the assurance is stakeholder-engaged, and thus is more comprehensive.

Assurance ObjectiveThe objective of the assurance process is toprovide the stakeholders of Sydney Water withan independent opinion on the credibility ofthe report, and underlying systems, processand competencies that deliver the relevantinformation.

Assurance ProcessOur approach to assurance provision has beenaligned with the AA1000 Assurance Standardand assurance provisions of the GlobalReporting Initiative’s 2002 SustainabilityReporting Guidelines.The assurance engagement was undertaken inSeptember and October 2004. The processinvolved:• interviewing senior management and key

external stakeholders to ascertain their viewson, and responses to, the materialsustainability issues faced by theorganisation, and the communication ofthese issues;

• a review of Sydney Water’s key sustainabilitystrategies, policies, objectives, managementsystems, measurement and reportingprocedures, background documentation anddata collection and reporting procedures;

• a review of the report for any materialanomalies;

• an overview of the embeddedness of SydneyWater’s key social and environmental policies;

• a series of interviews with key personnelresponsible for collating and writing variousparts of the report in order to ensure selectedclaims were discussed and substantiated;

• the examination of the aggregation andderivation of, and underlying evidence for,over 115 selected data points and statementsmade in the report; and

• a review of selected external media sourcesrelating to Sydney Water’s adherence to itssustainability policies.

The scope of the assurance process this yearincludes a review of the Annual Report 2004Environmental, Social and EconomicPerformance, as well as verification of theEnvironmental Indicators Compliance Report2004, the National Pollutant Inventory AnnualReport 2004, the ESD and Environment PlanReport 2004 and the Annual Drinking WaterQuality Report 2004.

Assurance Limitations• Our scope of work did not involve verification

of financial data, other than that relating toenvironmental, social or broader economicperformance.

• Responsiveness: The responsiveness tostakeholder concerns at Sydney Water iscommendable. Sydney Water has establisheda detailed Stakeholder Relations Strategy andassociated indicators. The organisation hasundertaken a robust stakeholderengagement program to gauge stakeholderperceptions on its sustainability performance,and the public reporting undertaken.Stakeholder input has been considered in thepreparation of the report.

• Recommendations: URS has providedsuggestions for reporting improvement insome areas. These suggestions include morein-depth reporting on how key challenges arebeing addressed. Internal verification anddata review prior to the external audit isrecommended to assist in ensuring thatpotential minor discrepancies are identifiedand corrected. Our recommendations havebeen outlined in a more detailed reportpresented to Sydney Water management.

On behalf of the audit team13 October 2004Melbourne, Australia

Terence JeyaretnamPRINCIPAL, URS

Our OpinionBased on the scope of the assurance process,the following represents URS’ opinion:• The level of data accuracy presented within

the report is considered high, but someadditional improvements to datamanagement, including the reduction ofmanual transcription processes, arerecommended to reduce potential for minoranomalies. Data trails selected were easilyidentifiable and traceable, and the personnelresponsible were able to reliably demonstratethe origin(s) and interpretation of data.

• The statements made in the reportappropriately reflect environmental, socialand economic performance achieved duringthe period.

Overall, the auditor is satisfied that the reportis a fair and accurate representation of theorganisation’s environmental, social andeconomic performance. Our opinion is basedon the conclusions drawn from the assuranceprocess, details of which are provided below.

Conclusions • Accuracy of reported information: The

findings of the assurance program provideconfidence in the reporting processesestablished. The examination of selected datapoints and statements made in the reportresulted in URS identifying a low percentageof minor inaccuracies in the reportedinformation. The identified inaccuracies wereamended by Sydney Water prior topublication of the report.

• Materiality: Issues material to stakeholdershave been considered and communicatedwithin the report. Material environmental,social and broader economic aspects ofSydney Water’s sustainability performanceare also comprehensively addressed.

• Completeness: The report represents acomplete account of organisationalperformance. Sydney Water has developedappropriate procedures for identifying keyaspects of its sustainability performance.

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This Content Index outlines the sections of this report that meet requirements of Part C of the Global Reporting Initiative (GRI) Guidelines 2002.Additional information on the GRI can be found at www.globalreporting.org

GRI element Sydney Water Annual Report section PageVision and Strategy1.1 Sustainable development vision and strategy Our Vision, Values and Objectives 11.2 MD statement Managing Director’s Message 8Profile2.1 Name of reporting organisation Who We Are 12.2 Major products and services What We Do 32.3 Operational structure of the organisation Corporate Governance 402.4 Major divisions and subsidiaries Who We Are 1

Corporate Governance 40Financial Statements CD, IBC**

2.5 Countries in which the organisation’s operations are located Financial Statements CD, IBC**2.6 Nature of ownership (legal form) Who We Are 1

Financial Performance 302.7 Nature of markets served Who We Are 12.8 Scale of the reporting organisation What We Do 3

Our Services at a Glance 3Annual Report Appendix, Principal Statistics CD, IBC**

2.9 List of stakeholders Open and Honest Relationships 242.10 Contact person for the report, including email and web address About This Report 4

Contact Us BC***2.11 Reporting period Letter to Shareholder Ministers IFC*2.12 Date of most recent previous report Publications 242.13 Boundaries of report About This Report 42.14 Changes in size and ownership since previous report Who We Are 12.15 Basis for reporting on joint ventures Who We Are 1

Research and Development 37Financial Statements CD, IBC**

2.16 Explanation of any restatements of information Throughoutin previous reports

2.17 Decisions not to apply GRI principles GRI Content Index 482.18 Criteria/definitions used Throughout2.19 Changes in previous methods applied Throughout2.20 Policies and practices to provide assurance on accuracy, Assurance Statement 47

completeness and reliability2.21 Policy and practice of independent assurance of full report Assurance Statement 472.22 Additional information ThroughoutGovernance Structure and Management Systems3.1 Governance structure Corporate Governance, Corporate Governance Framework 403.2 Percentage of the board of directors that are independent, Corporate Governance, Board Members 42

non-executive directors3.3 Process for determining the expertise of board members Corporate Governance, Board Composition and Membership 403.4 Board-level processes for the identification and Corporate Governance, Board Committees 40, 41

management of risks3.5 Executive compensation and achievement of the goals Executive Performance and Remuneration CD, IBC**3.6 Organisational structure and responsibilities Corporate Governance, Organisational Chart 443.7 Mission and values statements and codes of conduct Our Vision, Values and Objectives 1

Employee Relations 27Corporate Governance, Directors’ Code of Conduct 40

3.8 Mechanisms for shareholders to provide comment Financial Performance 303.9 Identification and selection of major stakeholders Open and Honest Relationships, Stakeholders 243.10 Stakeholder consultation Open and Honest Relationships, Stakeholders 243.11 Information generated by stakeholder consultations Open and Honest Relationships, Stakeholders 24

GLOBAL REPORTING INITIATIVE CONTENT INDEX

* IFC – Inside Front Cover** IBC – Inside Back Cover*** BC – Back Cover


GRI element Sydney Water Annual Report section Page3.12 Use of information resulting from stakeholder engagements Environmental Management Systems 19

Open and Honest Relationships 243.13 The precautionary principle Our Vision, Values and Objectives 1

Environmental Management Systems 193.14 Externally developed charters and sets of principles adhered Our Vision, Values and Objectives 1

to by Sydney Water Throughout3.15 Industry and business associations Research and Development (incomplete listing of memberships) 37, 383.16 Policies and systems for managing upstream and Environmental Management Systems 19

downstream impacts Sydney Water adheres to the NSW Government procurementpolicy which recognises these issues

3.17 Approach to managing indirect economic, environmental Water Conservation and Recycling 9and social impacts Stormwater Management 14

Energy Management 18Affordable Access 23Pricing Reform 35

3.18 Major operational decisions during the reporting period Throughout3.19 Programs and procedures pertaining to economic, Turning Vision Into Action 1

environmental and social performance Corporate Plan Snapshot 6, 7Sustainability Snapshot 46

3.20 Certification of management systems Environmental Management Systems 19Economic Performance IndicatorsEC1. Net sales Financial Performance 30EC2. Geographic breakdown of markets Area of Operations 2EC3. Cost of all purchases Financial Statements CD, IBC**EC4. Percentage of contracts paid in accordance with agreed terms This information is not currently captured by Sydney Water,

although internal policies guide performance in this areaEC5. Total payroll and benefits Financial Statements CD, IBC**EC6. Distributions to providers of capital Financial Statements CD, IBC**EC7. Change in retained earnings Financial Performance 30

Financial Statements CD, IBC**EC8. Total sum of taxes Financial Performance 30

Financial Statements CD, IBC**EC9. Subsidies received Social Program Activities 36EC10. Community donations Investing in the Community 22Environmental Performance IndicatorsEN1. Total materials use by type (excluding water) This information is not currently captured by Sydney WaterEN2. Percentage of materials used that are wastes Recycling of Treatment By-products 14

(from external sources) Waste Minimisation 16EN3. Direct energy use Energy Management 18EN4. Indirect energy use Energy Management 18EN5. Total water use This information is not currently captured by Sydney WaterEN6. Biodiversity-rich habitats This information is not currently captured by Sydney WaterEN7. Impacts on biodiversity (in terrestrial, freshwater and Heritage and Natural Resource Management. 16

marine environments) Additional information can be found in the Environmental IndicatorsCompliance Report located on the CD attached to the IBC**

EN8. Greenhouse gas emissions Energy Management 18EN9. Use and emissions of ozone-depleting substances This information is not currently captured by Sydney WaterEN10. NOx, SOx and other air emissions This information is provided to Sydney Water’s environmental

regulators in the Pollution Reduction Targets and National Pollutant Inventory. It is not included in this report

EN11. Total amount of waste Recycling of Treatment By-products 18Additional information can be found in the ESD Indicators and Environment Plan Report and the Environmental Indicators Compliance Report located on the CD attached to the IBC**

EN12. Discharges to water Wastewater Management 12Additional information can be found in the ESD Indicators and Environment Plan Report and the Environmental Indicators Compliance Report located on the CD attached to the IBC**

Global Reporting Initiative Content Index

50

GRI element Sydney Water Annual Report section PageEN13. Spills of chemicals, oils Environmental Management Systems 19EN14. Environmental impacts of products and services Protecting Our Environment 9 to 19EN15. Reclaimable products used and percentage that Water Conservation and Recycling 9

is actually reclaimed Recycling of Treatment By-products 18Additional information can be found in the ESD Indicators and Environment Plan Report located on the CD attached to the IBC**

EN16. Incidents of fines Environmental Management Systems, Challenges 19Protecting Health and Safety, Prosecutions 26

Social Performance IndicatorsLA1. Workforce breakdown An Equitable Workplace, Workforce Statistical Information 27 to 29LA2. Net employment creation An Equitable Workplace, Industrial Relations 29LA3. Employees represented by trade unions An Equitable Workplace, Industrial Relations 28LA4. Policy and procedures involving consultation and negotiation An Equitable Workplace 28

with employeesLA5. Practices on recording and notification of occupational Protecting Health and Safety 26

accidents and diseasesLA6. Joint health and safety committees This information is not currently captured by Sydney WaterLA7. Injury, lost day and absentee rates Protecting Health and Safety 26LA8. Description of policies or programs on HIV/AIDS Policies and programs for immune compromised customers

and employees exist, but are not expressly stated in this reportLA9. Average hours of training An Equitable Workplace, Employee and Organisation Development 28LA10. Equal opportunity policies and programs An Equitable Workplace, Equity and Diversity 27LA11. Composition of senior management An Equitable Workplace, Workforce Statistical Information 29HR1. Policies relevant to human rights Sydney Water adheres to national laws governing this issueHR2. Human rights impacts as part of investment Sydney Water adheres to national laws governing this issue

and procurement decisionsHR3. Policies and procedures to evaluate and address human rights This information is not currently captured by Sydney Water

within the supply chain and contractorsHR4. Policy and procedures preventing discrimination An Equitable Workplace, Equity and Diversity 27HR5. Freedom of association policy/programs An Equitable Workplace, Industrial Relations 28HR6. Child labour policies (ILO Convention 138) Sydney Water adheres to national laws governing this issueHR7. Policy to prevent forced and compulsory labour Sydney Water adheres to national laws governing this issueSO1. Policies to manage impacts on communities Wastewater Management 12 to 13

Protecting Health and Safety 26Open and Honest Relationships 24

SO2. Policies and procedures to address bribery and corruption Corporate Governance 40Additional policies exist but are not expressly stated in this report

SO3. Policy, procedures for managing political lobbying This information is not currently captured by Sydney WaterPR1. Policy for preserving customer health and safety Safe and Reliable Water Services 20

Wastewater Management 12 to 13PR2. Policy and procedures related to product information Safe and Reliable Water Services 20

Additional information can be found in the Annual Drinking Water Quality Report, the ESD Indicators and Environment Plan Report and the Environmental Indicators Compliance Report located on the CD attached to the IBC**

PR3. Policy and procedures for consumer privacy Privacy 24


GLOSSARY AND SHORTENED FORMS


AWT: Australian Water Technologies Pty Ltd,a subsidiary of Sydney Water.

Beneficial reuse: The recovery of usedmaterials for subsequent uses that deliver a net environmental benefit.

Biosolids: Solids from sewage treatmentprocessed into products suitable forbeneficial uses such as agriculture or forestry.

Catchment: An area from which rainwaterdrains into a stream, lake or dam.

Climate corrected demand: Customerdemand for water that is adjusted toaccount for weather conditions that aresignificantly above or below average for thatperiod of the year and which have a heavyinfluence over customer water use.

Conservation: Use, management andprotection of resources so that they are not degraded, depleted or wasted and areavailable on a sustainable basis for present and future generations.

DEC: Department of Environment andConservation – the primary NSW publicsector organisation responsible forprotecting the environment.

Demand management: Strategies to reduce water consumption by residential,commercial and industrial sectors.

EEO: Equal employment opportunity.

Effluent: A waste product that is dischargedto the environment, usually used to meanwastewater discharged from sewagetreatment plants.

Environmental impact: Any change to the environment, whether adverse orbeneficial, wholly or partially resulting from an organisation’s activities, productsand services.

ESD: Ecologically sustainable development –development that improves the quality oflife, both now and in the future, in a way that maintains the ecological processes onwhich life depends.

EWON: Energy and Water Ombudsman NSW– a body that provides an independent wayof resolving customer complaints aboutmember water providers and electricity andgas providers in NSW.

Faecal coliforms: Bacteria that inhabit theintestines of humans and other vertebratesand are present in faeces.

Greenhouse gas emissions: Gases such ascarbon dioxide and other forms of airpollutants, resulting from the burning fossilfuels such as coal, natural gas or oil, whichcontribute to the warming of the Earth’satmosphere.

GRI: Global Reporting Initiative – an officialcollaborating centre of the United NationsEnvironment Program that has developedvoluntary sustainability reporting guidelines.

Gross Pollutant Trap: a stormwater controldevice for capturing sediment and rubbish.

IICATS: Integrated Instrumentation, Control,Automation and Telemetry System.

IPART: Independent Pricing and RegulatoryTribunal – the independent body thatoversees regulation in the water, gas,electricity and public transport industries in NSW.

LTIFR: Lost Time Injuries Frequency Rate –number of injuries/illnesses where one or more full days were lost due to a workrelated incident, per million hours worked.

ML: Megalitre – measurement of volumeequal to one million litres.

Nutrients: Compounds required for growthby plants and other organisms. Major plantnutrients are phosphorus and nitrogen.

OHS: Occupational health and safety –protection of the health, safety and welfareof employees, contractors and visitors whoare at, or may be affected by, a worksite.

Operating Licence: A licence issued under theSydney Water Act 1994, that defines many of Sydney Water’s performance standards.

PENGOs: Peak environmental non-government organisations.

Potable: Fit or suitable for drinking.

Receiving water: A stream, river, pond, lake or ocean that receives stormwater or effluent discharges.

Recycled water: Highly treated wastewaterthat can be used in industrial processes,for irrigation in agriculture, urban parks andlandscapes, and in the home for flushingtoilets, car washing and watering gardens.It is not for drinking or personal use.

Regulators: Organisations that set standardsand guidelines for Sydney Water.

SCA: Sydney Catchment Authority – the NSW Government agency responsible formanaging and protecting Sydney’scatchments and supplying bulk water toSydney Water and a number of local councils.

SCI: Statement of Corporate Intent – anannual statement that specifies businessdrivers for financial management andcommercial performance targets agreed bySydney Water and its voting shareholders.

SEL: Special Environment Levy – a levy onSydney Water customers to be spent onprojects providing environmental benefitin addition to the normal program of workplanned by the Corporation.

Sewage: The wastewater from homes,offices, shops, factories and other premisesdischarged to the sewer. About 99 per centof sewage is water.

Sewage overflow: Any liquid that escapesfrom the sewerage system, as well aspartially treated sewage that is dischargedfrom a sewage treatment plant.

Sewerage system: The network of pipes,pumping stations and treatment plants used to collect, transport, treat and discharge sewage.

Stakeholder: A stakeholder is any individualor group, which can affect or is affected byan organisation’s activities.

Stormwater: Rainwater that runs off theland, frequently carrying various forms ofpollution such as litter and detritus, animaldroppings and dissolved chemicals. Thisuntreated water is carried in stormwaterchannels and discharged directly into creeks,rivers, the harbour and the ocean.

STP: sewage treatment plant – a facility toimprove sewage quality before discharge to receiving waters.

Suspended solids: Particles in water that canbe removed by sedimentation or filtration.

Sustainability: see ESD.

Waste: Discarded, rejected, unwanted,surplus or abandoned substances, excludinggas, water, wastewater, beneficially usedbiosolids and reuse water.

Wastewater: Another name for sewage.

WaterPlan 21: Sydney Water’s long-termstrategic plan to provide water, wastewaterand stormwater services to communities in a sustainable way.

WFP: water filtration plant – a facility thatimproves water quality by removingimpurities through filtration.

CONTENT INDEX

52

A–BAffordable access 23Annual Drinking Water Quality Report 2003–04 CD IBC**Annual Report Appendix 2003–04 CD IBC**Area of operations map 2Assurance statement 47Australian Water Technologies (AWT)Biosolids 1, 6, 14, 15, 38, 46Board members 42, 48, 50Budget outlook 2004–05 33

C–DCapital expenditure 34Chairman's message 5Code of conduct, Sydney Water's 27Code of conduct, Director's 40, 48Consultants (see also Annual Report Appendix) 30, CD IBC**Contact Sydney Water BC***Convenient service options 25Corporate governance 40Corporate plan initiatives 1, 6Corporate plan snapshot 6, 7Customer complaints 6, 8, 20, 24, 31Customer contract 23Customer research 24, 44Customer service 24, 25, 44, 45, 46Drinking water quality 6, 7, 20, 24, 37, 38, 46, 47, 50

EEcologically sustainable development 4, 9, 19, 24Energy management 6, 18, 46, 49Environmental Indicators Compliance Report 2003–04 CD IBC**Environmental managements systems 19, 46, 49, 50Environmental performance 9, 41, 46, 49Equal employment opportunity 27, 50ESD Indicators and Environment Plan Report 2003–04 CD IBC**

FFinancial performance 4, 30, 46, 48, 49Financial Statements 2003–04 CD IBC**• Sydney Water Corporation• Australian Water Technologies (AWT) Pty Ltd• Special Environmental Levy (SEL) Unit Trust• AWT International (Thailand) Limited• AWT Philippines Inc.Freedom of information (see also Annual Report Appendix) 25, 32, CD IBC**Funds granted to non-governmentcommunity organisations 22

G–LGlobal Reporting Initiative 4, 48Greenhouse gas emissions 18, 19, 46, 48Heritage 16, 17, 19, 31, 46, 49Heritage and Conservation Register (Annual Report Appendix) 16, CD IBC**Independent Pricing and Regulatory Tribunal (IPART) 1, 6, 7, 24, 32, 35, 36Innovation 6, 7, 21, 45Insurance 30, 39, 41Investment performance 30, 32Knowledge management 6, 7, 28Legal change 39Letter to shareholder ministers IFC*

M–RMajor works in progress (table) 34Managing Debt 32Managing Director’s message 8Natural resource management 16, 46, 49Number of executive officers 29Occupational health and safety 26Organisational chart 44Overseas travel (see also Annual Report Appendix) CD IBC**Our services at a glance (see also Annual ReportAppendix principal statistics table) 3, CD IBC**Pricing reform 35, 36, 46, 49Privacy 24, 50Property disposal 32, 41Publications 16, 24Research and development 7, 37, 38, 41, 42, 43, 44, 46, 48, 49Risk management 26, 39, 41, 46

SSewerFix 8, 12, 21, 34, 35Social performance 47, 49, 50Sponsorships 22Stakeholders 24, 40, 48Stormwater management 6, 14, 15, 46, 49

T–VTrade waste management 15, 46Training 5, 19, 21, 24, 28, 50Vision, values and objectives 1, 48, 49

WWaterPlan 21 1Water conservation and recycling 9, 46, 49, 50Water recycling 3, 9, 38Water use 9Waste minimisation 16, 46, 49Wastewater management 12, 34, 46, 49, 50


The Sydney Water Annual Report 2004 is supported by a suite of documents that provide more detailedinformation on Sydney Water’s performance during the 2003–04 financial year:• Financial Statements• ESD Indicators and Environment Plan Report• Environmental Indicators Compliance Report• Annual Drinking Water Quality Report.These documents, along with the Sydney Water AnnualReport 2004, are available on the CD below and also atwww.sydneywater.com.au

Paper StockThe Sydney Water Annual Report 2004 is printed on environmentally-friendly paper stock.Cover – Monza satin 300gsm: 50 per cent recycled.Inside – Monza satin 130gsm: 50 per cent recycled.

External Production CostsSignificant savings in Annual Report production costs have been achieved during the yearthrough reducing consultant costs, streamlining processes and using in-house expertise.The external production costs for the Sydney Water Annual Report 2004 totals $65,098.This is an $81,784 saving over the cost of producing the same report in 2003. The 2004external production costs include:• photography• proofreading• design, production and printing (2,000 copies)• design, production and burning of the CD-Rom containing the supporting reports.

LETTER TO SHAREHOLDER MINISTERS

CONTENTS1 Who We Are

Our Vision, Values and Objectives2 Area of Operations Map3 What We Do

Our Services at a Glance4 About This Report5 Chairman’s Message 6 Corporate Plan Snapshot 20048 Managing Director’s Message

Summary Review of Operations9 Protecting Our Environment9 Water Conservation and Recycling12 Wastewater Management14 Recycling of Treatment By-products14 Stormwater Management15 Trade Waste Management16 Waste Minimisation17 Heritage and Natural Resource Management18 Energy Management19 Environmental Management Systems

20 Embracing Our Social Responsibilities20 Safe and Reliable Water Services22 Investing in the Community23 Affordable Access24 Open and Honest Relationships25 Improving Customer Service26 Protecting Health and Safety27 An Equitable Workplace

30 Ensuring Our Business is a Success30 Financial Performance34 Capital Expenditure and Maintenance35 Pricing Reform36 Social Program Activities37 Research and Development39 Managing Risk

40 Corporate Governance42 Board Members44 Organisational Chart45 Executive Team46 Sustainability Snapshot47 Assurance Statement48 Global Reporting Initiative Content Index51 Glossary and Shortened Forms52 Content IndexIBC Annual Report 2004 CD

Annual Report (PDF)Annual Report Appendix (PDF)Financial Statements (PDF)ESD Indicators and Environment Plan Report (PDF)Environmental Indicators Compliance Report (PDF)Annual Drinking Water Quality Report (PDF)

BC Contact Sydney Water

The Hon MR Egan MLCTreasurerMinister for State Development andVice-President of the Executive CouncilLevel 33Governor Macquarie Tower1 Farrer PlaceSYDNEY NSW 2000

Dear Treasurer and Minister

Report on performance for the year ended 30 June 2004

We are pleased to submit the Annual Report of Sydney Water Corporation for the year ended 30 June 2004, for presentation to Parliament.This year’s Annual Report again presents an integrated sustainabilityreporting format, covering the Corporation’s environmental, social andeconomic performance.The Annual Report was prepared in accordance with Section 24A of the State Owned Corporations Act 1989 and the Annual Reports (StatutoryBodies) Act 1984.The Financial Statements for 2003–04, which form part of the Annual Report, have been submitted to and certified by the Auditor-General of New South Wales.

Yours sincerely

Gabrielle Kibble David EvansCHAIRMAN MANAGING DIRECTOR

The Hon JJ Della Bosca MLCSpecial Minister of StateMinister for CommerceMinister for Industrial RelationsAssistant TreasurerMinister for the Central CoastLevel 30Governor Macquarie Tower1 Farrer PlaceSYDNEY NSW 2000

COVERSydney Water monitors the health of Second Ponds Creek atRouse Hill by sampling for macro-invertebrates after its ecologywas all but destroyed by urban development. The creek’s ecologyis recovering since development stabilised and is being assistedby the high quality of discharged effluent and its reduced volumefrom diversion to the Rouse Hill Recycled Water Scheme.

Websitewww.sydneywater.com.au

Sydney Water Customer Centres

Customer Enquiries 13 20 92

Sydney City115–123 Bathurst StreetSydney

Emergency Services13 20 90

Wollongong120 Smith StreetWollongong

Postal AddressPO Box A53 Sydney South NSW 1232

Katoomba103 Katoomba StreetKatoomba

Sydney Water Corporation ABN 49 776 225 038115–123 Bathurst Street Sydney NSW 2000 Australia Telephone 13 20 92 Internet www.sydneywater.com.au

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